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Biden Administration Finalizes Limits On Junk Health Plans

The U.S. Departments of Health & Human Services, Labor, and Treasury have released final regulations on short-term, limited duration health insurance (STLDI) and hospital and fixed indemnity insurance, effective 75 days after publication in the Federal Register. Click here for article.

  • Final regulations revise the federal definition of STLDI to a policy with an end date of 3 months and require updated disclosures for STLDI and hospital/fixed indemnity policies.

  • No regulations relating to the regulation and tax treatment of hospital and fixed indemnity insurance were finalized.

  • The regulations aim to address consumer protection concerns, as STLDI and fixed indemnity policies often provide limited benefits and can expose consumers to significant financial liability.

  • STLDI can create risk pool concerns, as healthier individuals may opt for these plans, leading to higher premiums for those remaining in the individual market.

  • The final rule requires STLDI issuers to display a standard notice prominently stating that the coverage is not comprehensive health coverage and does not comply with ACA protections.

  • The rule closes the "stacking" loophole, limiting renewals or extensions of STLDI policies within a 12-month period.

  • For hospital and fixed indemnity insurance, the final rule does not change the tax treatment but requires issuers to provide updated consumer notices, effective for plan years on or after January 1, 2025.

  • The tri-agencies estimate increased enrollment in ACA Marketplaces and overall lower average premiums, leading to savings of approximately $120 million for taxpayers in 2026-2028.

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