2018 Final Rule Allows Policies Lasting up to 12 Months

On July 17, 2020, a federal appeals court upheld a 2018 final rule expanding short-term, limited-duration insurance (STLDI) for purposes of the Affordable Care Act (ACA). The final rule:

  • Provides a maximum coverage period for STLDI of up to 12 months; and
  • Allows STLDI to continue for up to 36 months in total, taking into account renewals or extensions.

The plaintiffs in this case argued that extending the duration of STLDI is inconsistent with HIPAA’s plain text and an unreasonable interpretation in light of the ACA’s structure and purpose. However, the Court of Appeals for the District of Columbia upheld the final rule as a reasonable exercise of federal agencies’ authority. The court ruled that federal agencies are entitled to deference in defining STLDI because Congress delegated the authority to define STLDI to those federal agencies. The court also concluded that the interpretation of STLDI in the final rule was reasonable, pointing out that, between 1997 and 2016, STLDI had historically been defined under HIPAA as lasting up to 12 months in duration.

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