Last week, the Departments of Treasury, Labor, and Health and Human Services (the “Departments”) issued final regulations to redefine the meaning of “short-term, limited duration insurance” (“short-term insurance”). The controversial regulations are likely to expand the use of this limited form of health insurance among consumers who do not receive coverage through their employers.
The Affordable Care Act (“ACA”) imposes strict requirements on most individual health insurance coverage. Short-term insurance is exempt from most of those requirements. Significantly, short-term insurance (unlike other forms of individual insurance) is: (1) allowed to exclude or limit coverage for preexisting conditions; (2) not required to provide coverage for essential health benefits (such as coverage for emergency care, inpatient care, prescription drugs, and mental health services); and (3) permitted to impose annual and lifetime maximums to limit the amount that the insurance company pays.