Falling under the rubric of news that you can no longer use, beginning January 1st, 2019 the State of California has effectively banned the sale of Short Term Medical insurance (STM) for all intents and purposes.  This is unfortunate because while we only sold perhaps a half a dozen plans per year, STM was a tool that we would resort to using when all else failed.

People who bought STM did so for varying reasons but chief among them were:

  1. Individuals who missed or where late signing up at special enrollments including people who repatriated from overseas or lost employer based coverage, added family members such as newborns, and people who simply missed the window.
  2. Individuals who ignored or missed the annual open enrollment period.
  3. People who lapsed their policy including for non-payment.

California Department of Insurance

Dave Jones

Insurance Commissioner

California Department of Insurance NOTICE

Prohibition Regarding Short-Term Limited Duration Health Insurance Policies

December 10, 2018

This notice alerts insurance companies and agents that, effective January 1, 2019, short-term limited duration health insurance cannot be issued, amended, sold, renewed, or offered in California. Short-term limited duration health insurance is health insurance coverage provided pursuant to a health insurance policy that has an expiration date specified in the policy that is less than 12 months after the original effective date of coverage.

This prohibition is the result of the enactment of Senate Bill 910 (Stats. 2018, ch. 687), which added Insurance Code section 10123.61 to define and prohibit short-term limited duration health insurance policies.1

Questions regarding compliance with the requirements of Senate Bill 910 should be directed to Bruce.Hinze@insurance.ca.gov.

1 http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB910

Protecting California’s Consumers www.insurance.ca.gov

Consumer Hotline (800) 927-HELP · Producer Licensing (800) 967-9331

There was a small market for STM, particularly in other states, where it was sold in lieu of regular ACA plans.  We assiduously avoided doing this but some agents did market it this way and to combat it the California Legislature put the kibosh it.  Their primary motivation was that it potentially eroded the viability of the exchange plans by creaming off the healthiest risks.

While we understand the reasoning behind the decision, it took away one of the few tools we had for individuals who had fallen through the cracks.  The best advice we can give is for people to not lapse their coverage!  The second best advice is to notify use as far in advance as possible if they think they are going to lose their coverage because once the open enrollment window closes, the carriers will not enroll anyone.  The risk to the carrier, particularly special enrollments, is high and there are many procedural obstacles they put in the way to discourage stragglers.