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Short-term health insurance in Vermont

New law limits short-term plans to three months, but there aren't currently any short-term plans for sale in Vermont.

Buying short-term health plans in Vermont

Duration of short-term limited to three months

Vermont enacted legislation in 2018 to limit short-term plans to three months in duration and prohibit renewal. The new law also prohibits the sale of a short-term plan if it would result in the applicant having more than three months of short-term coverage in any 12-month period. But even before that legislation was enacted, there were no short-term plans for sale in Vermont.

Prior to the enactment of the Vermont legislation and the finalization of the Trump Administration’s rules for short-term health plans, the Vermont Department of Financial Regulation published an overview of short-term plans in Vermont. The Department has confirmed that short-term health plans in Vermont must conform to the state’s health plan mandates, including a ban on pre-existing condition exclusions.

State is unappealing to short-term carriers

So although Vermont does not prohibit short-term plans, the benefit mandates and the requirement that plans cover pre-existing conditions make Vermont’s short-term market unappealing for insurers.

Vermont does also have statutory language requiring short-term plans to have loss ratios of at least 45 percent (ie, at least 45 percent of premiums are spent on medical claims). But this is much lower than the federal loss ratio requirements that apply to individual market plans, and it’s also considerably lower than the average loss ratio for short-term plans.

Vermont regulators noted in early 2018 that United States Fire Insurance Co. had filed a short-term plan for review, but that the review was “on hold pending federal action as well as state action.” In September 2018, the Department of Financial Regulation confirmed that the plan was back under review, and that the state had raised objections about various aspects of the plan that weren’t in compliance with state regulations. It’s unclear whether the proposed plan will be modified to conform to Vermont regulations, or withdrawn.

The legislation passed in 2018 (H.892/Act 131) also directs the Vermont Insurance Commissioner to adopt rules that establish “the minimum financial, marketing, service, and other requirements” for short-term plans in the state — in other words, comprehensive written regulations pertaining specifically to short-term health plans. The Department of Financial Regulation confirmed in September 2018 that these regulations have not yet been drafted, but will be soon.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.