Rule Expanding Short-Term, Limited-Duration Insurance 'Junk Plans' Harms Consumers

By Caren Howard, MHA Advocacy Manager, Nathaniel Counts, MHA Senior Policy Director, and Debbie Plotnick, MHA Vice President of Mental Health & Systems Advocacy

Yesterday, on World Mental Health Day, the Senate voted on S. J. Res. 63, Senator Tammy Baldwin’s resolution of disapproval of short-term, limited-duration (STLD) insurance.

STLD insurance was intended for individuals going through a transition, like going from school to work, who would lose insurance for a few months. These plans were to last no longer than three months, to be nonrenewable, and were not designed to be a substitute for comprehensive long-term insurance coverage.

A new rule from the Administration expanding use of STLD insurance took effect on October 2nd. Now STLD insurance plans can be offered for up to 12 months and are renewable up to three years – making it an alternative to regular insurance. This is a problem because these plans are exempt from Affordable Care Act protections and can:

• Set higher premiums based on age, gender, and health status;
• Afford no coverage of mental health, maternity, prescription drug benefits;
• Deny coverage for any preexisting condition;
• Have low upfront premiums, but very high deductibles and high out-of-pocket costs; and
• Charge higher outof-pocket costs for mental health benefits than surgical benefits.

An analysis by Kaiser Family Foundation found 43% of STLD plans in its study did not cover mental health services and 62% of STLD plans did not cover substance abuse treatment, sidestepping the federal mental health parity law. At a time when youth mental health is worsening, 63% of youth with major depression do not receive any mental health treatment, and access to behavioral health care is limited, these plans will make it even more difficult for individuals to pay for needed services.

Mental Health America (MHA) took early action to oppose the rule expanding the definition of STLD, and now we are one of the plaintiffs in a lawsuit against the Treasury, Health and Human Services, Labor, and Justice Departments to stop this rule from hurting consumers.

You, too, can go on record to protect mental health by contacting your state insurance commissioner and telling them you are against expanding ‘junk’ insurance.