State policymakers spent their summer crafting policies to educate and protect consumers in response to federal actions that threaten to alter state individual insurance markets. In recent months, the federal government issued new rules expanding the availability and sale of association health plans and short-term, limited duration plans and passed legislation effectively eliminating the individual mandate that required all consumers to purchase insurance.
While proponents claim the sale of these new association and short-term plans provide more low-cost choices for consumers, opponents express concerns that the plans do not comply with Affordable Care Act (ACA) mandates and may provide significantly fewer benefits (such as coverage of pre-existing conditions) that could destabilize state’s individual markets. (For more information, read The New Association Health Plan Rule: What Are the Issues and Options for States and Lower-Cost, Short-Term Insurance Plan Approved, But at What Cost to State Markets and Consumers?)
Below is a summary of recent state administrative and legislation actions taken in response to new federal changes:
Short-term Insurance Policies
- California’s legislature passed a bill to prohibit the sale of short-term, limited duration health insurance in the state. The bill is expected to be signed by the governor.
- Iowa issued proposed rules to align Iowa regulations with the new federal regulation granting longer terms and renewability of short-term plans. The regulation adds benefit, coinsurance, and dollar limit, minimum requirements for short-term plans. The rule establishes a 10-day cancellation period during which an enrollee can cancel coverage after enrollment, and it prohibits rescissions (when insurers rescind a plan and don’t have to make payments) and underwriting based on claims made after-enrollment. It also includes explicit language defining the warning information short-term plans must communicate to enrollees about their coverage.
- Washington State’s Insurance Commissioner Mike Kreidler has filed proposed rules to restrict the sale of short-term, limited duration insurance medical plans. The rule outlines specific benefits that must be covered by short-term plans, stipulates that plans can only cover a three-month period, prohibits plan renewals, prevents rescissions except in cases of fraudulent activity by the enrollee, and requires that all short-term plans are filed and approved by the insurance commissioner. The rule also includes specific and comprehensive language that all short-term plan carriers must include in their disclosure notices to all consumers who apply for a short-term plan.
- Connecticut issued a bulletin asserting the applicability of essential health benefits (mandated by the ACA) and pre-existing condition protection requirements to short-term plans as specified under Connecticut law.
- Pennsylvania’s Insurance Commissioner Jessica Altman announced filing requirements for short-term plans, so the state is able to review short-term plans that are offered under the new federal rules. The announcement also included a caution to consumers about the limits of these plans, with links to an educational brochure to help consumers compare short-term plans with other forms of coverage.
- The Colorado Department of Regulatory Agencies issued a consumer advisory on short-term plans, including a comparison of ACA-compliant insurance and short-term plans, an explanation of the risks from out-of-pocket spending that can accompany short-term plans, and resources for consumers to consult to help them understand their insurance options.
- Montana published guidance summarizing the new federal rule on short-term plans, with links to applicable state legislation and regulation governing short-term plans.
- Indiana and South Carolina issued similar educational bulletins, clarifying that federal regulations do not pre-empt existing state laws that regulate short-term plans.
- The Minnesota Commerce Department issued an FAQ for consumers about short-term plans, explaining the new federal rule and Minnesota law.
Association Health Plans (AHPs)
- Vermont issued emergency and proposed rules in response to the new federal AHP. The new rules impose regulations on AHPs, including:
- A prohibition on AHP rating based on demographic, or health status;
- A requirement that AHPs offer coverage to all people and dependents within an association;
- A mandate that AHPs meet Medical Loss Ratio rebate requirements; and
- Minimum benefit offerings.
The rule also extends the authority of Vermont’s insurance commissioner to conduct oversight over AHPs.
- Pennsylvania sent a letter to the US Department of Health and Human Services outlining the state’s interpretation of its authority in governing AHPs given existing state laws under the new federal AHP regulation. The US Department of Labor later affirmed Pennsylvania’s existing authority to regulate AHPs, as interpreted in the letter.
- Iowa issued new rules to assert “membership stability” requirements for associations, intended to protect consumers who participate in an AHP.
- New Hampshire announced plans to convene a working group of stakeholders to develop legislation that will set clear standards for AHPs sold in the state. It also released guidance to clarify the relationship between AHPs and the Employee Retirement Income Security Act (ERISA).
- Connecticut, Idaho, Louisiana, Maryland, and New Hampshire issued bulletins or guidance clarifying how state law works to regulate AHPs in conjunction with the new federal AHP rule, primarily clarifying where state law is not preempted by the new federal AHP rule.
- California’s legislature has passed a bill that prohibits the sale of group health insurance plans (such as AHPs) to a sole proprietorship or partnership without employees, limiting the effects of the new federal regulation which does allow for these sales. SB 1375 now awaits the governor’s signature.
- Washington, DC enacted an individual responsibility requirement, largely modeled after the ACA. The requirement, included as part of its 2019 Budget Support Act, will go into effect in January 2019. (For details, see DC Health Benefit Exchange Authority Executive Director Mila Kofman’s slides from the National Academy for State Health Policy’s (NASHP) 2018 annual conference.
NASHP will continue to track and report on new developments as states continue to weigh options and strategies to stabilize their markets and offer choice and affordable coverage to their consumers.