The MPS submitted a letter of support for SB28, short-term limited duration insurance plans, to the Maryland General Assembly. That legislation requires short-term limited duration insurance plans to cover mental health and substance use disorder benefits and meet the requirements of the Federal Parity Law. Currently these plans do not have to cover MH/SUD benefits, nor do they have to comply with the Federal Parity Law. Senate Bill 28 is an important piece of legislation that extends Maryland’s mental health and substance use disorder insurance coverage law to short-term limited duration insurance plans. Under current statute, short-term limited duration plans that individuals may purchase are explicitly excluded from the definition of an “individual health benefit plan” (see Insurance Code 15-1301(o)(2)). Because of this exclusion in that section, the section that requires individual health benefit plans to cover mental health and substance use disorder benefits does not apply to these short-term limited duration plans (see Insurance Code 15-802). Additionally, short-term limited duration plans are not considered “individual health insurance coverage” under federal law and therefore are not required to provide mental health and substance use disorder benefits as an essential health benefit nor must they comply with the federal parity law (see 42 U.S.C. 300gg-91(b)(5)).
SB 28 amends section 15-802 of the Insurance Code to extend the state’s mental health and substance use disorder coverage law to these short-term limited duration plans. That section also requires all plans under its jurisdiction to comply with the federal parity law. This simple legislative fix is necessary because the Trump Administration issued a final rule last year that expand short-term limited duration plans maximum coverage period from three months to 12 months. The rule also allows for these plans to be renewed for a period of up to 36 months. The harm of this rule is twofold: one, individuals may see these plans as appealing because they are much cheaper while not realizing that they do not cover mental health and substance use disorder services, among other basic benefits that ordinary individual plans must cover. Two, many of those who buy these plans are likely to be younger and healthier than the average purchaser of individual health insurance, which will lead to a greater proportion of older and sicker people in the individual market. This will likely drive up the cost of individual plans and further destabilize the market.
The subject of short-term limited duration insurance plans became much more prominent last year after the Trump Administration issued rules that allowed short-term limited duration plans to span up to 364 days and be extended for up to 36 months. These plans are not subject to any of the protections of the ACA. The harm of these plans is twofold: one, they are generally junk insurance that don’t really cover anything; two, they entice young, health people to purchase them thereby weakening the individual market by inflating the percentage of sicker consumers that purchase ordinary individual plans.
Fortunately, the General Assembly took steps to combat this last session by passing HB 1782, which specified that short-term limited duration plans could only run 90 days and could not be renewed. This bill takes another step towards by closing the MH/SUD coverage gap these plans currently have.