CMS Ruling on Short-Term Medical Plans

There has been a lot of talk about the recently finalized ruling on short-term medical coverage by CMS under the Biden Administration.

The ruling is a significant step towards protecting consumers from low-quality health coverage, commonly associated with what some term as "junk" health plans.

However, I believe it's crucial to recognize that there are quality short-term plans available, especially for healthy individuals who may not qualify for tax credits through the marketplace.

Here's a quick overview of what the ruling entails:

1. Clear Guidelines: The ruling sets clear guidelines, limiting short-term durations to a maximum coverage period of 4 months, down from the previous allowance of 3 years. This aims to prevent consumers from being misled into purchasing inadequate coverage.
2. Transparency Mandate: Health insurance companies are now mandated to provide clear and upfront information about the coverage being offered, including short-term plans and fixed indemnity policies. This ensures that consumers can make informed decisions regarding their coverage.
3. Addressing Practices: The ruling also addresses the concerning practice of "stacking," where multiple short-term plans are issued to circumvent duration limits. By defining renewals and extensions more strictly, the regulation aims to prevent such practices that could obscure the difference between short-term plans and comprehensive coverage.

Looking ahead, it's clear that innovation in the private market will be essential to cater to healthy clients who don't qualify for subsidies but still want major medical coverage outside of the marketplace.

Additionally, revisions for fixed indemnity accepted benefit coverage are introduced, ensuring that consumers are fully aware of the limitations of such coverage options.

For those of you dealing with existing policies issued before September 1st, 2024, the previous regulations will still apply, subject to state law limitations.

I recommend rewriting short-term clients on a two or three-year plan in August to get them grandfathered in while we await more adequate options in the private market.

Short Term Medical plans can be a great option for a lot of consumers who don't meet the qualifications to receive a subsidized marketplace plan. We'll be doing our best to keep you updated as the private market adapts to these changes before the ruling goes into effect.

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