Length of Short-term, Limited Duration policies to change September 1, 2024
Since July 2023, Blue Cross and Blue Shield of Kansas City (Blue KC) has closely followed the ongoing proposed rule related to changes of products filed as Short-Term Limited Duration Insurance (STLDI). We mentioned this during the 2024 Blue KC Broker Rollouts.
On March 28, 2024, the Departments of Health and Human Services (HHS), Labor, and the Treasury (collectively, the Departments) released final rules for STLDI.
As we move forward and navigate this change, it’s important to know that until September 1, 2024, it’s business as usual and you can continue to offer your clients the 365-day Short-Term Plus Plans up to 365 Days, as well as the Short-Term Plans Up to 90 days.
New regulations for Short-Term Medical Limited Duration Insurance
Changes to coverage duration and renewal:
- Initial STLDI contract terms are limited to no more than three months, and the maximum coverage period to no more than four months, including renewal or extensions.
- STLDI policies cannot be sold or renewed by the same issuer, or any issuer that is a member of the same controlled group to the same policyholder within a rolling 12-month period.
- Implementation date: The new STLDI contract length terms will apply to policies effective on or after September 1, 2024. Policies effective before September 1, 2024 (including any subsequent renewals or extensions) may continue to have an initial contract term of fewer than 12 months and a maximum duration of up to 36 months.
Changes to disclosure requirements:
- The new rule requires a change in the Consumer Notices. As of September 1, 2024, all applicable material must have the new information prominently displayed on all communications.
Health insurance companies’ responsibility
The Departments state the final rule will require health insurance companies to be clear and up front with what consumers are buying by providing a clear, easy-to-understand consumer notice on marketing, application, enrollment, and re-enrollment materials. The final rule also has implications for hospital indemnity and other fixed indemnity supplemental health plans.
For more information on the final rules, please read this fact sheet.
To view the final rules, visit the Federal Register.
