What Are The Rules For Short Term Health Coverage?

Many people buy short term medical coverage to fill in gaps in long term coverage.  For instance, if you start a new job, you’ll often lose coverage from your former employer’s medical plan prior to becoming eligible for coverage under your new employer’s medical plan.  This gap can often last several months.  To maintain coverage for medical expenses, people often purchase short term medical coverage for just a few weeks or months.  Short term coverage isn’t designed to be your primary insurance but just to cover the gap while you transition between health insurance policies.

Short term medical coverage isn’t subject to all the same rules as typical medical coverage.  In particular, short term coverage is not required to meet the Affordable Care Act’s minimum standards for health insurance.  Moreover, the federal agencies responsible for overseeing short term medical plans, including the Department of Labor, Department of Health and Human Services, and IRS, frequently tweak the rules by issuing updated regulations, most recently on August 3, 2018.

So what are the current rules for short term medical insurance?  Here are some of the highlights:

  1. The ACA Individual Mandate:  Under the current rule as of August 3, 2018, short term medical coverage isn’t considered “Minimum Essential Coverage” under the Affordable Care Act.  Ordinarily, that would mean a person covered only by short term medical insurance isn’t complying with the Affordable Care Act’s individual mandate, and could be subject to tax penalties.  However, Congress’ tax overall bill passed in late 2017 effectively eliminates the Affordable Care Act’s individual mandate.  That means as of today, individuals covered solely under short term medical coverage won’t have to worry about paying the Affordable Care Act individual mandate penalty.
  2. No Minimum Standards: Since short term medical insurance isn’t subject to the Affordable Care Act’s minimum standards, short term medical insurance can do things like exclude pre-existing conditions, refuse to cover essential health services like emergency care, and impose annual caps on coverage.
  3. Duration of Coverage: Short term medical coverage with the same carrier may last no longer than 36 consecutive months.  This also applies if a shorter-duration policy is renewed with the same carrier.  This rule likely doesn’t preclude coverage under a short term medical policy for longer than 36 months so long as the coverage is under multiple carriers.
  4.  State Regulations Apply: Regardless of regulations under federal law, many states still regulate short-term medical coverage.  Washington State’s insurance commissioner recently proposed new rules that, among other things, limit short term medical coverage plans’ duration to three months and establish certain minimum standards for coverage.

The rules for short term medical coverage are very much influx due to changes by federal regulators, Congress and states.  It’s important to carefully review your policy and any applicable rules to determine your rights under short term medical coverage.

Health Plans Can’t Discriminate Against Mental Health Treatment Says Ninth Circuit

Among the challenges of a mental health condition is the difficulty persuading health insurers to cover treatment.  Mental health conditions can be difficult to objectively diagnose and can require lengthy and expensive treatment often with little prospect of a conventional “cure.”  Hence, health plans have a powerful incentive to minimize coverage for mental health conditions to reduce costs.

In response, the federal government, as well as Washington and many other states, have enacted mental health parity laws.  In general, these laws prohibit health insurers and health plans from discriminating against mental health conditions by mandating mental health conditions be covered to the same degree as physical ailments.

On June 6, 2018, the Ninth Circuit Court of Appeals confirmed the federal Mental Health Parity Act prohibits health plans from discriminating against mental health conditions for the purposes of health insurance coverage. In Danny P. v. Catholic Health Initiatives, the court determined the health plan violated the law by denying the plaintiff’s claim for the cost of an inpatient stay at a residential mental health treatment facility.

In ruling for the plaintiffs, the court determined the Mental Health Parity Act required the health plan’s coverage of inpatient mental health treatment facilities be no more restrictive than coverage for stays at skilled nursing facilities.  Since the Act prohibited imposing more restrictive coverage requirements on mental health treatment than on treatment for physical conditions, the Act precluded the health plan from deciding to cover room and board at skilled nursing facilities for medical patients while refusing to provide the same coverage for mental health inpatient care.

The Danny P. decision is an important win for patients seeking mental health treatment and vindicates Congress’ intent in passing the Mental Health Parity Act that mental health patients be free from discrimination by their health plans.