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Guidance for short-term health insurance

The marketing, sale, or offer of short-term health insurance policies in Oregon

The Oregon Division of Financial Regulation reviewed the federal rule about short-term, limited-duration insurance. Insurance companies and professionals who market, sell, or offer short-term health plans to Oregonians should note that the federal regulation does not limit a state’s ability to establish laws regarding these plans.

It is a violation of Oregon law to market, sell, or offer short-term health insurance policies that exceed three months, including renewals. A new policy cannot be issued by an insurer to a customer within 60 days of expiration of a policy previously issued by the insurer to the policyholder.

Anyone aware of the unlawful marketing, sale or offering of short-term health insurance policies in Oregon is encouraged to contact the division at 888-877-4894 (toll-free).

Background

On Aug. 3, 2018, the United States departments of Health and Human Services, Labor, and Treasury published a final regulation on short-term, limited-duration insurance,  38 FR 38212 . The regulation defines short-term health insurance plans as lasting less than 12 months, and has a total duration of 36 months or less, including renewals and extensions. For purposes of federal law, short-term health insurance is not subject to Affordable Care Act market reform regulations, such as guaranteed availability and coverage for pre-existing conditions.

The federal regulation does not prevent states from enforcing stricter requirements for short-term health plans, including shorter duration limits.

Application of short-term, limited-duration insurance regulation in Oregon

Insurers, health care service contractors, producers, and all other entities transacting health insurance in Oregon are reminded that ORS 743B.005(16)(b)(H) and (c) defines the short term health benefit plan.

ORS 743B.005(16)(b)(H) provides a limited exception from the definition of health benefit plan for “short-term health insurance policies that are in effect for periods of three months or less, including the term of a renewal of the policy.” ORS 743B.005(16)(c) further provides that “renewal of a short-term health insurance policy includes the issuance of a new short-term health insurance policy by an insurer to a policyholder within 60 days after the expiration of a policy previously issued by the insurer to the policyholder.”

Accordingly, Oregon law limits short-term health insurance policies to a maximum of three months, including renewals, and new policies cannot be issued by the same insurer who issued the short-term policy within 60 days of expiration. A health insurance policy that is in effect for a longer period violates the exception for short-term health insurance under ORS 743B.005(16)(b)(H), and would need to comply with the Oregon requirements for a health benefit plan.

A person who participates in the marketing, sale, or offering of a health insurance policy that does not comply with these requirements may violate the insurance code and be subject to civil penalties.

Entities transacting health insurance in Oregon are also reminded that health insurance policy forms, and the rates associated with them, must be approved by the Division of Financial Regulation before issuance of the policy, see ORS 742.003 (forms) and ORS 743.018 (rates). The division’s current product standards for short-term, limited-duration insurance and health benefit plans are available here:  dfr.oregon.gov/rates-forms/health/Pages/health.aspx .

The division encourages regulated entities, insurance producers, and consumers to report possible violations of the insurance code. If you are aware of the unlawful marketing, sale, or offering of short-term health insurance policies in Oregon, please contact a consumer advocate at 888-877-4894 (toll-free).

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