Federal judge upholds extension of short-term insurance plans
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Federal judge upholds extension of short-term insurance plans

A federal judge on Friday ruled that the Trump administration can expand the sale of short-term health insurance policies that do not meet the standards of the Affordable Care Act (ACA).

The final rule, originally promulgated by the Department of Labor, Treasury, and Human and Health Services in August 2018, redefined the requirements of a “short-term, limited duration insurance” plan (STLDI) so that they can now last up to 12 months.

These plans were originally envisioned as an option for individuals before they gained more permanent coverage. Restricted to lasting only three months, the plans often cost less and are not required to comply with many ACA coverage requirements. For example, STLDI insurers can deny coverage to individuals with preexisting conditions and are not required to cover maternity care.

In response to the final rule, a group of insurers filed suit, claiming the extension of STLDI plans caused them to lose money. As a result, they had to raise premiums on other members. The insurers claim their need to increase prices has resulted in the loss of long-term insurance customers. Overall, because the ACA requirements for long-term insurance are mandatory, the insurers claim they are forced to incur an unfair disadvantage.

In his opinion, Judge Richard Leon of the US District Court for the District of Columbia explained the insurers were unable to prove that the rule effected their long-term insurance enrollment. He went on to further write the “potential negative impact from the 2018 rule is minimal, but its benefits are undeniable.”