Final Rules Curb Non-Compliant Health Plans, Protect Consumers

During the past several weeks, the Biden-Harris administration has finalized two rules that curtail the sale of “junk insurance” and other health plans that skirt Affordable Care Act (ACA) rules. The Medicare Rights Center welcomes these changes. We previously urged the administration to take these actions to better protect consumers.

The ACA established basic benefits and protections for individual and small-group market consumers, including a prohibition on discrimination in coverage based on preexisting conditions, limitations on pricing based on age, and access to a set of essential health benefits. While not all health plans are required to be ACA compliant, the law limited the availability of those substandard coverage options. The Trump administration subsequently loosened some of those rules, leading to sharp growth in health plans that did not meet ACA standards. The two new rules from the Biden administration restore and strengthen the original guardrails.

The first to be finalized was the Short-Term Limited-Duration Insurance (STLDI) rule. Under the loosened standards, STLDIs could be sold for 12 months at a time, with a maximum coverage period of 36 months. The finalized rule reverts to limiting STLDI contracts to no longer than three months and sets a maximum coverage period of no more than four months, restoring these plans to their original function of providing temporary, stop-gap coverage. We supported these changes. While STLDIs can appeal to consumers because they appear to be more affordable than ACA-compliant plans, they come with hidden costs and harmful restrictions; they can limit coverage amounts, deny coverage for pre-existing conditions, and often have major gaps, leaving consumers on the financial hook.

The second recently finalized rule deals with Association Health Plans (AHPs)—coverage offered by an entity such as a business or professional association exclusively to their members. In 2018, the Trump administration sought to relax rules around AHPs in a way that would have expanded their reach and disproportionately burdened people aged 50-64. Those revisions never took full effect because of legal challenges, and the new rule from the Biden administration rescinds that language in its entirety. We similarly supported this rescission. Though the harmful 2018 interpretation never went into effect, it left a cloud of uncertainty about the future of AHPs.

Together, these rules strengthen ACA protections, lessen confusion, and reduce predatory marketing and fraud. Medicare Rights applauds the Biden administration for advancing these important reforms.

Read the fact sheet on STLDIs, the final rule, and our comments.

Read the fact sheet on AHPs, the final rule, and our comments.

Read more about our policy recommendations to the Biden-Harris administration.