Federal Agencies Release Proposed Rule Amending the Definition of Short Term Medical (STM) Insurance to Lengthen the Maximum Coverage From 90 Days to Less Than 12 Months

Agencies Cite a Lack of Consumer Options and Rising Cost of Insurance


STAMFORD, Conn., Feb. 20, 2018 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) commented on the rule released today by three federal agencies (the “Agencies”) proposing the extension of the duration of temporary health insurance plans to a period of up to 364 days, subject to state law. The proposed rule also asks for comments on allowing STM (also known as short-term, limited duration insurance) to continue for 12 months or longer. 

The proposed rule lists the following benefits of short-term, limited duration insurance: (i) offers consumers increased insurance options at lower premiums (in their example, $124 per month compared to $393 per month for an unsubsidized Affordable Care Act (ACA)-compliant plan), and (ii) possibly offers broader access to health care providers compared to ACA-compliant plans with narrow provider networks.  It goes on to say that the Agencies “anticipate that the rule, if finalized, would encourage more consumers to purchase short-term limited-duration insurance for longer durations, including individuals who were previously uninsured.”  They further comment that “Issuers would benefit from higher enrollment … and likely … experience an increase in premium revenues and profits because such policies can be priced in an actuarially fair manner.”

As a leader since 2005 in underwriting STM, should the rule go into effect, IHC expects to increase not only the sale of its STM products, but also its Fusion and other specialty health products. IHC began selling Fusion, which bundles two of IHC's industry leading products (a fixed-indemnity medical benefit plan with a high deductible STM plan), in the fall of 2017. The combination of the two plans provides an affordable option for consumers who are priced out of the ACA market, find themselves in a county without a compliant plan or have a short-term need for health insurance. IHC selectively distributes these products through co-branded arrangements with many of the largest health insurers and e-brokers in the country, as well as through IHC’s own distribution channels, including www.HealtheDeals.com, HealtheDeals Advisors, and AspiraAMas.

David Kettig, President and Chief Operating Officer, commented: “STM has for many years filled a vital purpose for individuals with limited duration health insurance needs, and was specifically permitted by the Affordable Care Act.  In our experience, STM is primarily purchased by people between jobs, people in counties with only a single insurer offering exchange plans, people with limited coverage networks and people who missed the open enrollment period but still want insurance. When STM is coupled with our hospital indemnity coverage, individuals have very affordable first-dollar hospitalization coverage coupled with limited duration catastrophic insurance. IHC is gratified that the Trump Administration has validated the importance of short-term medical as an affordable alternative for many Americans who cannot afford expensive, high-deductible ACA plans. Many of our customers have asked us why they were forced to reapply for another short-term medical policy after only 90 days instead of maintaining it for up to 364 days as was permitted in many states prior to the action by the Obama Administration.  Other customers have expressed an interest in buying Fusion, but only if the STM portion were available for more than 90 days.  IHC will unveil a new short-term plan in select states in April that will redefine the market for affordable health insurance, which we believe will solidify our position as a market leader for these products through www.HealtheDeals.com, our key distribution partners, and independent producers throughout the country.”

More information: https://www.hhs.gov/about/news/2018/02/20/trump-administration-works-give-relief-americans-facing-high-premiums-fewer-choices.html

About The IHC Group

Independence Holding Company (NYSE:IHC) is a holding company that is principally engaged in underwriting, administering and/or distributing group and individual specialty benefit products, including disability, supplemental health, pet, and group life insurance through its subsidiaries since 1980.  The IHC Group owns three insurance companies (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company), and IHC Specialty Benefits, Inc. (IHC SB), a technology-driven full-service marketing and distribution company that focuses on small employer and individual consumer products through general agents, telebrokerage, advisor centers, private label arrangements, and through the following brands: www.HealtheDeals.com; Health eDeals Advisors; Aspira A Mas; www.PetPartners.com; and www.PetPlace.com.  IHC creates value for insurance producers, carriers and consumers (both individuals and small businesses) through a suite of proprietary tools and products, all of which are underwritten by IHC’s carriers or placed with highly rated insurance companies.

Forward-looking Statements

Certain statements and information contained in this release may be considered “forward-looking statements,” such as statements relating to management's views with respect to future events and financial performance.  Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements.  Potential risks and uncertainties include, but are not limited to, economic conditions in the markets in which IHC operates, new federal or state governmental regulation, IHC’s ability to effectively operate, integrate and leverage any past or future strategic acquisition, and other factors which can be found in IHC’s other news releases and filings with the Securities and Exchange Commission.  IHC expressly disclaims any duty to update its forward-looking statements unless required by applicable law.

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