The IRS and other agencies today issued proposed rules to amend the definitions and requirements of certain short-term limited-duration insurance (STLDI) plans to better distinguish STLDI and fixed indemnity excepted benefits coverage from comprehensive coverage.

A fact sheet issued by the Centers for Medicare & Medicaid Services (CMS) provides the following summary:

The Departments propose to amend the federal definition of STLDI to limit the length of the initial contract period to no more than three months and the maximum coverage period to no more than four months, taking into account any renewals or extensions. This proposal would reduce the maximum length of STLDI from the current initial contract term length of less than 12 months and maximum total duration of up to a total of 36 months, including renewals and extensions. This proposal would more clearly differentiate STLDI from comprehensive coverage, realign the federal definition of STLDI with its traditional purpose of bridging short gaps in comprehensive coverage, and ultimately reduce the financial risk associated with enrolling in this limited coverage as a long-term alternative to comprehensive coverage.

The Departments also propose to redefine STLDI to prohibit the same issuer from issuing multiple STLDI policies to the same policyholder within a 12-month period. 

Written comments on the proposed regulations are due by September 11, 2023. Comments are specifically requested on coverage only for a specified health condition that qualifies as excepted benefits, as well as input on level-funded plan arrangements.

• 182-page text of the proposed regulations
• CMS fact sheet
• White House fact sheet
• Department of Health and Human Services press release
   

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