Hard-pressed HR leaders and their organizations might have something different to offer workers, or departing workers, in 2026: a suggestion that they buy short-term health insurance.
The U.S. Labor Department, with the U.S. Treasury Department and the U.S Department of Health and Human Services, released a statement earlier this month that blesses the use of “short-term, limited-duration insurance” policies that last more than three months.
During President Trump’s first term in the White House, the departments adopted regulations allowing short-term policies to remain in effect, with renewals, for up to 36 months.
Last year, under President Biden, the departments completed regulations that limit the term of short-term health insurance policies to three months.
See also: 9 federal health policies that could change with the Trump administration
In January, Trump rescinded a Biden executive order that served as a foundation for the 2024 regulations.
In the new statement, the Labor Department, the Treasury Department and HHS did not change the 2024 final federal regulations but wrote that they will avoid enforcing the three-month duration limit.
“Until future rulemaking is issued and applicable, the departments do not intend to prioritize enforcement actions for violations related to failing to meet the definition of ‘short-term, limited-duration insurance’ in the 2024 final rules,” reads the departments’ statement.
The departments posted the short-term health insurance statement without announcing it in a press release or giving it other publicity.
Sam Melamed, CEO of health benefits marketer NCD Agency, drew attention to the statement in a LinkedIn post.
Related: Trump rescinds Biden-era supplemental health benefits notice requirement foundation
The new non-enforcement policy appears to mean that insurers and others can return to letting these health insurance policies stay in effect for up to 36 months.
In theory, employers that are too small to face Affordable Care Act coverage requirements could cope with turmoil in the individual major medical market and the employer plan market by sending workers to short-term health insurance providers.
Short-term health insurance isn’t subject to ACA rules
The states regulate short-term health insurance issuers, which are not subject to the ACA requirements that apply to major medical insurance.
Some states ban the sale of short-term health insurance.
In most states where the policies are available, such health insurance issuers can use medical underwriting, reject applicants with health problems, charge applicants with health problems higher rates and put low limits on annual benefits.
But because the policies are exempt from ACA benefits and product design rules, they may offer coverage with deductibles that are much lower than those offered by the least-expensive individual major medical insurance policies.
FlexBenefits.co CEO on how Trump admin can push things along
Jeff Smedsrud, the CEO of FlexBenefits.co, a benefits program designer and marketer, also addressed the non-enforcement statement on LinkedIn. He wrote that he believes the Trump administration can use such a statement to allow for the sale of short-term health insurance policies free from the three-month duration limit.
An insurer can probably use the new non-enforcement statement to write old-rule short-term health insurance policies in Texas, a state that has been friendly to short-term health insurance. However, Smedsrud cautioned insurers about trying to use the statement to sell old-rule coverage in a state where officials have been cool toward short-term health insurance.
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This article was originally published on BenefitsPRO, a sister site of HR Executive. For more content like this delivered to your inbox, sign up for BenefitsPRO newsletters here.
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