NCOIL Adopts Model Act Aimed At Short Term Health Insurance

Manasquan, NJ – At the NCOIL “Summer” Meeting in Alexandria, VA on September 26, the organization adopted the NCOIL Short Term Limited Duration Insurance Model Act (Model) sponsored by IN Representative Martin Carbaugh.  The measure passed on a voice vote by both the NCOIL Health Insurance & Long Term Care Issues Committee and NCOIL Executive Committee.

Short-term limited-duration insurance (STLDI) is a type of health insurance that provides coverage to policyholders for a period of as little as a month to as long as three years.  This type of coverage is exempt from the definition of individual health insurance coverage under the Patient Protection and Affordable Care Act (PPACA) and is therefore not subject to the PPACA provisions that apply to the individual market.  States regulate STLDI in varying ways.

The Model was introduced at the NCOIL 2019 Summer Meeting in Newport Beach, California and is based on Indiana HB 1631 which was also sponsored by Rep. Carbaugh and signed into law in 2019.  The Model provides a framework for those states that permit the sale of STLDI.  Importantly, the Model includes a drafting note that makes clear that states are not required to offer STLDI, and notes that “for states that choose to offer such plans, this Model is intended to serve as a framework that can be adjusted accordingly to meet each state’s needs.”

Rep. Carbaugh said, “Thank you to everyone who worked on this Model.  When comparing the first draft of the Model to the version that was adopted, it is clear that we made sure to hear from those with differing views on short-term plans and make necessary changes.  I am a strong supporter of short-term plans and firmly believe that they can help people meet their healthcare needs.  Immediately after sponsoring similar legislation in Indiana, I proposed to develop this Model at NCOIL knowing that it was the perfect forum to provide states guidance who are looking to foster a short-term plan marketplace.”

During the drafting discussions, NCOIL legislators and staff heard from a wide array of interested parties including Jim Parker, Senior Advisor to the Secretary of Health and Human Services (HHS) for Health Reform; Jan Dubauskas, VP, Senior Counsel at Health Insurance Innovations (HII); Jeff Smedsrud, President of Pivot Health; Michelle Lilienfeld, Sr. Attorney at the National Health Law Program (NHLP); The Honorable Glen Mulready, Commissioner of the Oklahoma Department of Insurance; Brian Blase, President & CEO of Blase Policy Strategies; the National Association of Insurance and Financial Advisors (NAIFA); the American Medical Association (AMA); the Health Benefits Institute; and the BlueCross BlueShield Association.

“This Model is a great example of how NCOIL can examine an issue and develop policy in a fair and efficient manner,” said NY Assemblywoman Pam Hunter, Chair of the NCOIL Health Committee.  “Opinions differ on the value of short-term plans, but nonetheless the Model represents a solid framework for states to utilize when offering such plans.”

“It is great to see that NCOIL is still being productive and offering states guidance in the form of model legislation even during these unprecedented times”, said IN Representative Matt Lehman, NCOIL President.  “I am also proud to see my colleague and fellow Hoosier guide this Model through towards final adoption.  We’ve seen positive results in Indiana following enactment of our short-term plan law, and I am confident that the states that choose to adopt the Model will see the same.”

The purpose of the Model is to establish standards for the regulation of short-term plans that may be sold in a State.

Highlights of the Model include requiring that a short-term plan have an annual limit of at least two million dollars ($2,000,000) and requiring that short-term plans provide coverage for ambulatory patient services, hospitalization, emergency services, and laboratory services.

The Model also requires that an insurer that issues a short-term plan to disclose to an applicant, in bold, 12 point type: that the short term insurance plan is not required to include coverage for all ten (10) of the essential health benefits required under the PPACA and specify the essential health benefits where no coverage is offered; that the short term insurance plan does not necessarily provide the full coverage that is required under PPACA; and that the full coverage required by the PPACA may be secured during the next PPACA annual open enrollment, which typically commences on November 1 and can be found at https://www.healthcare.gov/quick-guide/dates-and-deadlines/.  An insurer is also required to obtain the signature of an applicant to whom those disclosures are made.

NCOIL CEO, Commissioner Tom Considine, stated, “Thank you both to Rep. Carbaugh for sponsoring this Model and to Chairwoman Hunter for holding productive hearings that resulted in significant changes, and thank you also to the Committee for deliberating on the Model in a careful but efficient manner.  I think short-term plans can really provide help to consumers, particularly when Exchange programs may be unaffordable.  For example, in instances where a consumer is close to Medicare age and wants to put as much money as possible into their business, a short-term plan can be a great, cost-effective option that still provides robust coverage.”