Buying short-term health plans in Vermont
- Vermont law technically allows short-term plans to have terms of up to three months, although renewal is not allowed.
- But extensive additional rules (including a ban on pre-existing condition exclusions) make the state’s market unappealing to insurers, and no short-term plans are for sale in Vermont.
- Long-standing rules and new regulations impose significant restrictions on short-term plans in Vermont, if any insurers were to want to begin offering such plans in the state.
Duration of short-term limited to three months, but no insurers offer short-term plans in the state
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, due to the state’s restrictive regulations regarding the plans. 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 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.
Extensive rules for short-term plans in Vermont
The legislation passed in 2018 (H.892/Act 131) also directed 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 would soon be drafted, and they were published in May 2019 under Rule I-2018-03. The rule clarifies that short-term health plans in Vermont must conform to numerous state regulations:
- They must include coverage for essential health benefits (this is clarified in the regulation that notes that the benefits mandate in 33 V.S.A. § 1806(b)(1)-(2) must be covered; that section refers to essential health benefits as called for in the ACA).
- They must conform to Vermont regulations for health insurance and health care administration.
- They cannot impose exclusions or waiting periods for pre-existing conditions.
- They cannot be renewable, and a person can only have a maximum of three months of short-term coverage within any 12-month period. The state is requiring short-term plan applications to contain a statement in which the applicant must attest to the fact that enrollment in this plan will not cause the applicant to have more than three months of short-term coverage within a 12-month period.
- They must conform to the medical loss ratio rules that the Affordable Care Act imposed on individual market plans, which means they must have an MLR of at least 80 percent (in most states, loss ratio requirements for short-term plan are more lenient, and they generally don’t follow the ACA’s formula for calculating the ratio). Vermont already had statutory language requiring short-term plans to have loss ratios of at least 45 percent, but the new regulations are much more stringent.
- In addition to the federally-mandate disclosure that must be included on short-term plan marketing materials, Vermont has its own disclosure language that must be displayed above the federal disclosure. It notes that Vermont’s consumer protections regarding short-term plan are much stronger than the federal requirements, but that short-term plans can only be used to bridge a short gap in coverage and should not be purchased to serve as long-term, comprehensive coverage.
Since there were already no short-term plans for sale in Vermont, these regulations don’t currently apply to any plans. But if an insurer were to want to offer short-term plans in Vermont, they’d have to conform to those rules.
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 healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.