For Consumers

Kreidler rule restricts sale of less-protective short-term medical plans

Contact Public Affairs: 360-725-7055

October 30, 2018

OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler adopted a rule that restricts the sale of short-term limited duration (STLD) medical plans to three months, prohibits renewal, and requires improved disclosure to consumers about coverage limits. 

Short-term limited duration plans are not considered health insurance under state law and are not required to cover pre-existing conditions. Currently, only one insurer sells these plans in Washington state. 

Earlier this year, the Trump administration adopted a federal rule lifting the restrictions on the sale of STLD plans, allowing them to be renewed for up to three years. However, states maintained their authority to enact additional regulations at their discretion. President Trump promoted this regulation, as well as one encouraging the formation of association health plans in an effort erode the protections of the Affordable Care Act. 

“Some consumers may be caught in a coverage gap and really need a short-term medical plan,” Kreidler said. “But they need to beware of the limits of the coverage they’re buying. We’ve heard horror stories from people who either had or developed a serious medical condition while covered by one of these plans and were left with huge medical bills.”

Under the new rule, effective Jan. 1, 2019: 

  • Short-term limited duration (STLD) medical plans can last no more than three months and cannot be renewed.
  • A consumer can have STLD coverage for no more than three months in a 12-month period.
  • Insurers selling STLD medical plans must provide consumers with a specific disclosure form that clearly states the limitations of the coverage and prompts consumers to check to see if they are eligible to purchase coverage through Washington’s Exchange before they buy a STLD medical plan. 
  • STLD medical coverage must offer major medical coverage with a maximum total payment of at least $1 million. Any pre-existing condition look-back period cannot exceed 24 months. Consumer coinsurance cannot exceed 50 percent, and any insurer offering an STLD medical plan must offer at least one plan with a deductible of $2,000 or less.
  • STLD application forms, policies and rates must be approved by OIC prior to being offered or sold. 
  • STLD medical plan rescission and cancellation is limited to defined circumstances with requirements for adequate consumer notice. 

“Unfortunately, there’s likely to be confusion about these plans and what they really cover, given some of the political rhetoric out there,” said Kreidler. “These plans are not required to cover pre-existing conditions. The only coverage that guarantees that protection is the Affordable Care Act. Currently, President Trump and 20 states have asked a Texas federal court to overturn the law and revoke protections for pre-existing conditions.” 

States fighting to overturn the Affordable Care Act and remove protections for pre-existing conditions include: Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Maine, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wisconsin.