Guidance for Short-Term Health Insurance

On Sept. 20, 2018, Superintendent Cioppa released Bulletin 431 to remind carriers and producers issuing policies in Maine of the state insurance requirements for short-term health insurance. This bulletin was intended to remind carriers doing business in the state that state law isn’t preempted regarding short-term health insurance and, thus, carriers doing business in ME must continue to comply with state law.

As background, the federal government issued a rule in Aug. 2018 that extended the initial contract term of short-term policies issued on or after Oct. 2, 2018, to be no more than 12 months while limiting renewals or extension of such policies to no more than 36 months. Similar to the federal rule, ME law limits a short-term policy to a term that is less than 12 months. However, in ME, short-term policies are nonrenewable and the combined term of successive short-term policies can be no more than 24 months, regardless of whether the policies are issued by the same carrier or a different carrier.

The bulletin also mentions that although federal law doesn’t require short-term policies to meet the essential health benefit requirements of the ACA, these policies are still subject to ME’s mandated benefits for individual health insurance. In addition, short-term policies are subject to more requirements for health plans in ME, such as preventive health services and the prohibition against aggregate dollar limits on coverage.

The bulletin highlights that short-term policies may be appropriate for some consumers, but producers should keep in mind that the federal regulation expressly describes short-term coverage as “a type of health insurance coverage that was primarily designed to fill temporary gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another plan or coverage.” A producer has a duty of competence to ensure that consumers considering these policies are fully advised of the terms, benefits and limitations of the coverage.

This bulletin was for informational purposes only and employers need not take any action at this time. The intent was to remind carriers that ME insurance law continues to apply to short-term health insurance and carriers must factor in ME policies before issuing a product in response to the federal guidelines.

Bulletin 431 »