Updated Estimates of the Potential Impact of Short-Term, Limited Duration Policies

Brief

Updated Estimates of the Potential Impact of Short-Term, Limited Duration Policies

Abstract

The Trump administration finalized regulations expanding access to short term limited duration policies in early August 2018. These new regulations increase the maximum length of short-term, limited-duration insurance policies to just less than one year. These plans, sold to individuals and families, are not federally required to comply with the ACA regulations that prohibit annual and lifetime benefit limits, require coverage of all essential health benefits, and otherwise prohibit insurers from setting premiums or choosing whether to sell coverage to people based on applicants’ health status and health history. As such, these plans do not meet minimum essential coverage standards under the law. The rule permits these plans to compete against ACA-compliant plans.
In March, we released an analysis of the potential consequences of the proposed expansion of short-term, limited-duration policies. Since that release, Hawaii and Vermont have passed legislation that will effectively prevent the expansion of short-term, limited-duration policies in their markets. Plus, New Jersey passed a state individual mandate to replace the federal penalties eliminated in 2019 under the 2017 Tax Cuts and Jobs Act. This brief provides updated tables taking these state legislative changes into account.

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