Insurance Commissioner proposes rule for restrictions on new short-term medical plans

State Insurance Commissioner
Mike Kreidler

Insurance Commissioner Mike Kreidler has proposed a rule to restrict the sale of short-term limited duration medical plans to three months, prohibit renewal and require enhanced disclosure to consumers about the limitations of coverage. 

Currently, any insurer that wants to sell a short-term limited duration health plan in Washington state must first receive approval from the Office of the Insurance Commissioner (OIC). 

The federal rule expanding the duration of these plans to up to one year, with renewals for up to three years, also permits state insurance regulators to set standards for their own health insurance markets.

“Some consumers may be caught in a coverage gap and need a short-term medical plan,” Kreidler said. 

“But I want to be sure they understand the limitations of the coverage they’re buying, set minimum requirements for that coverage and do what I can to make sure that these plans do not destabilize our individual health insurance market.”

Kreidler’s office determined that although some circumstances exist where these types of plans can fill a coverage gap for consumers, they should not be considered an alternative to comprehensive health insurance. 

In addition, improved disclosure is needed to make sure that people understand what is not covered by these plans.

Under the proposed rule:

• Short-term limited duration (STLD) medical plans can last no more than three months and are not renewable.
• A consumer can have STLD coverage for no more than three months in a 12-month period.
• Insurers selling STLD medical plans must provide consumers with the disclosure form included in the proposed rule that clearly states the limitations of the coverage and prompts consumers to check to see if they are eligible to purchase coverage through Washington’s Health Benefit Exchange before they buy an STLD medical plan. 
• STLD medical coverage must offer major medical coverage, with a maximum total payment of at least $1 million. Any pre-existing condition look-back period cannot exceed 24 months. Consumer coinsurance cannot exceed 50 percent, and any insurer offering an STLD medical plan must offer at least one plan with a deductible of $2,000 or less.
• STLD application forms, policies and rates must be approved by OIC prior to being offered or sold. 
• STLD medical plan rescission and cancellation is limited to defined circumstances with requirements for adequate consumer notice. 

A public hearing on the proposed rule is scheduled for 1pm, September 26 at the Office of the Insurance Commissioner, 5000 Capitol Blvd. SE, Tumwater, WA 98501.