Legal Alert

U.S. District Court Upholds Short-Term Limited Duration Insurance Rule

July 26, 2019

The U.S. District Court for the District of Columbia upheld a rule that expanded the maximum length of time for short-term, limited duration insurance (STLDI). 

STLDI is coverage that lasts a limited period of time and is exempt from many of the requirements that apply to plans in the individual health insurance market. Concerned that STLDI was drawing healthy lives away from the individual health insurance market that the Affordable Care Act (ACA) sought to support, the Obama administration shortened the length of time an individual could enroll in STLDI from 12 months to three months. Seeing STLDI as a low cost alternative to individual insurance, the Trump administration reversed course. Final regulations issued last year restored the period to 12 months and allowed for up to two renewals, for a total period of 36 months of coverage. One month later, seven organizations representing small health insurers, mental health patients and providers, and others brought suit challenging these regulations.

The court denied the challenge. It found that the ACA–and HIPAA, which first introduced STLDI–did not define the length of time STLDI could remain in effect and that the U.S. Departments of Treasury, Labor, and Health and Human Services could extend the length of time STLDI may remain available to enrollees without posing a threat to the ACA’s “structural core.” 

The plaintiffs have already expressed their intent to appeal the decision. In the meantime, states continue to consider the question of whether and how to regulate the availability and terms of STLDI policies issued within their borders.

Ballard Spahr attorneys established the Health Care Reform Dashboard as a one-stop resource under the Affordable Care Act. We have expanded the scope of the Dashboard to extend to certain other laws, but continue the mission of providing our readers with information about significant changes affecting health care and health benefits in the United States and to establish a repository for analysis and original source material of significant developments that have occurred over time. Change is ongoing, and we will continue to update the Dashboard to reflect new legislation, administrative guidance, and judicial decisions as they are published.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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