Tokio Marine HCC – MIS Group announced that it will no longer issue Short Term Medical policies because of new rules from the federal government that limits their duration to less than 90 days. Before the new rule, Short Term Medical policies could be issued up to six months. Individuals, sometimes with lapse of one day, could then renew the policy for another six months to provide them with coverage for a full year.
Effective June 1, 2017 we will no longer accept new Short Term Medical Insurance business.
We have made the decision to EXIT the Short Term Medical Insurance Marketplace. We will be modifying our websites during the month of May to eliminate the STM promotional content and ecommerce capability.
We have made this decision based on the 90 day policy duration limitation to the STM insurance marketplace that was effective April 1, 2017. This has caused many producers in the web broker community to focus their efforts on other supplemental health insurance products like limited medical plans. As a result of marketplace conditions, we are no longer able to profitably maintain this business.
First and foremost, we will continue to honor our obligations to our policyholders.
No new Short Term Medical business will be allowed to be transacted after May 31, 2017.
Effective dates of policies will be allowed after June 1, 2017 provided the transaction date occurs before June 1, 2017.
All policies will run until their natural expiry and all commission arrangements will be honored.
CEO, Tokio Marine HCC – MIS Group
Editors note: Tokio Marine HCC had already stop issuing Short Term Medical policies in some states, including California, earlier this year.
A Rule by the Internal Revenue Service, the Employee Benefits Security Administration, and the Health and Human Services Department on 10/31/2016
Short-Term, Limited-Duration Insurance
The Departments have become aware that short-term, limited-duration insurance is being sold in situations other than those that the exception from the definition of individual health insurance coverage was initially intended to address. In some instances, individuals are purchasing this coverage as their primary form of health coverage and, contrary to the intent of the 12-month coverage limitation in the current definition of short-term, limited-duration insurance, some issuers are providing renewals of the coverage that extend the duration beyond 12 months. Because short-term, limited-duration insurance is exempt from certain consumer protections, the Departments are concerned that these policies may have significant limitations, such as lifetime and annual dollar limits on essential health benefits Start Printed Page 75318(EHB) and pre-existing condition exclusions, and therefore may not provide meaningful health coverage. Further, because these policies can be medically underwritten based on health status, healthier individuals may be targeted for this type of coverage, thus adversely impacting the risk pool for Affordable Care Act-compliant coverage.
To address the issue of short-term, limited-duration insurance being sold as a type of primary coverage, the Departments proposed regulations to revise the definition of short-term, limited-duration insurance so that the coverage must be less than three months in duration, including any period for which the policy may be renewed. The proposed regulations also included a requirement that a notice must be prominently displayed in the contract and in any application materials provided in connection with enrollment in such coverage with the following language: THIS IS NOT QUALIFYING HEALTH COVERAGE (“MINIMUM ESSENTIAL COVERAGE”) THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON’T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.
In addition to proposing to reduce the length of short-term, limited-duration insurance to less than three months, the proposed regulations modified the permitted coverage period to take into account extensions made by the policyholder “with or without the issuer’s consent.” This modification was intended to address the Departments’ concern that some issuers are taking liberty with the current definition of short-term, limited-duration insurance—either by automatically renewing such policies or having a simplified reapplication process with the result being that such coverage, which does not contain the important protections of the Affordable Care Act, lasts longer than 12 months and serves as an individual’s primary health coverage.