Marketplace Letter to CMS on Short-Term Insurance Plans

August 9, 2016

CC:PA:LPD:PR (REG-135702-15)
Internal Revenue Service
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

Submitted electronically via:

To Whom It May Concern:

The Association for Community Affiliated Plans (ACAP) thanks the Centers for Medicare and Medicaid Services (CMS) for its continued efforts to strengthen the Health Insurance Marketplace risk pool. We are pleased to support CMS’ efforts to curb abuse of short-term, limited-duration plans.

ACAP is an association of 57 not-for-profit, community-based Safety Net Health Plans (SNHPs) located in 26 states. Our member plans provide coverage to nearly 17 million individuals enrolled in Medicaid, the Children’s Health Insurance Program (CHIP) and Medicare Special Needs Plans for dually-eligible individuals. Nationally, ACAP plans serve roughly one-half of all Medicaid managed care enrollees. Seventeen of ACAP’s SNHP members have elected to offer QHPs in the Marketplaces in 2016—serving nearly half a million Marketplace consumers—and an additional two plan to enter in 2017.

Short-Term, Limited-Duration Coverage

ACAP recognizes that short-term, limited-duration health plans may fill an important role for consumers experiencing temporary gaps in coverage. They can also be more affordable for consumers without access to Marketplace subsidies—particularly in states that did not expand Medicaid. However, at the same time, the presence of such plans as an “alternative” to Marketplace coverage makes them ripe for abuse. Furthermore, these plans are permitted to discriminate based on health status and are thus able to keep premiums low by only accepting enrollees who pass a health questionnaire, at the same effectively keeping some of the healthiest consumers out of the Marketplace risk pool. Yet this demographic is vitally important to balancing the risk pool and keeping prices low for all consumers. Additionally, such plans are exempted from the ACA market rules and protections that guarantee consumers access to comprehensive coverage. From both an enrollee and a risk pool standpoint, we have concerns about the offering of coverage exempt from pre-existing condition exclusion and annual or lifetime limit requirements, just to name a few.

ACAP’s member plans do not generally offer short-term, limited-duration products. We support the proposed regulations, which would limit any such policy to a three-month duration, thereby ensuring that they are truly used as stopgap coverage—as intended. We also support a notice on any application and contract materials that make clear such coverage does not qualify as minimum essential coverage and that as such, enrollees may still be required to pay a tax penalty.


In sum, ACAP supports the Departments proposed regulation to limit the offering of shortterm, limited duration products. We believe this proposal will strengthen the risk pool and limit potential abuse of these products being used other than as the stopgap coverage they were intended to be.

ACAP thanks CMS and the Internal Revenue Service (IRS) for its willingness to discuss these issues with us. We look forward to providing feedback on any specific policies or proposals that are developed in response to comments on this risk adjustment white paper. If you have any additional questions or comments, please contact Heather Foster, Vice President for Marketplace Policy at ACAP (202-204-7510 or


Margaret A. Murray
Chief Executive Officer

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