Short-term, limited duration (STLD) health insurance has long been offered to individuals through the non-group market and through associations. The product was designed for people who experience a temporary gap in health coverage.1 Unlike other products that are considered "limited benefit" or "excepted benefit" policies--such as cancer-only policies or hospital indemnity policies that pay a fixed dollar benefit per inpatient stay--short-term policies are generally considered to be "major medical" coverage; however, short-term policies are distinguished from other comprehensive major medical policies because they only provide coverage for a limited term, typically less than 365 days. Short-term policies are also characterized by other significant limitations, including the types of services covered, often with a dollar maximum. Late last year, Congress repealed the Affordable Care Act's individual mandate penalty, the requirement that individuals have minimum essential health coverage or face a tax penalty. Starting in 2019, the tax penalty will be reduced to $0. It is possible this change could lead more consumers to consider purchasing short-term policies. In addition, late last year, President Trump issued an executive order directing the Secretary of Health and Human Services to take steps to expand the availability of short-term health insurance policies, and a proposed regulation to increase the maximum coverage term under such policies was published in February. This brief provides background information on short-term policies and how they differ from ACA-compliant health plans.
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