Final Rules – Short Term Medical

10-31-2016

The final rules for short term medical products were released by the Department of the Treasury, Department of Labor and Department of Health and Human Services (the “Departments”). The final rules make some, but not all of the changes that were expected. Overall, BUA is very pleased to share these rules with you. Here is a synopsis of how we are interpreting the new rules as of today; please note that this is not designed to be a legal opinion and any decisions that are made in reliance on this information should be discussed with your legal counsel.

Short Term Medical
The Departments express concern that insureds are purchasing short term medical insurance in place of an Obamacare plan and therefore have issued the following rules effective January 1, 2017: 1) the policy must be limited to 90 days or less in duration and 2) the policy and application must state that short term medical is not minimum essential coverage and that a penalty may be owed.

  • There are several pieces of good news in this new rule! Although the effective date for the rule is January 1, 2017, the Departments will not enforce this new rule until April 1, 2017. The delayed enforcement has one catch - any policies sold must terminate on or before December 31, 2017, they cannot continue into 2018. This means that we will continue selling short term medical policies for durations of longer than 90 days until March 31, 2017 (as allowed by carrier).

  • Also, the Departments chose not to enforce a proposed rule that an insured may not reapply with the same carrier. As such, should an insured’s need for short term medical exceed 90 days, it is possible for the insured to reapply for short term medical coverage with the same carrier. This is subject to the state laws, so states may choose to impose rewrite limitations or enforce their current limits.
Summary
While we will all adjust to the shortened duration of short term medical policies, the great news is that we have product available for you to sell throughout 2017. Please let us know how we can help you have your best sales year yet!

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Contact

Jim LaFleur
Vice President
Phone: 330.576.1100
Toll Free: 1.800.792.6795
JimL@buaweb.com