Washington, D.C. – U.S. Rep. Kathy Castor (D-FL), Ranking Member of the Energy and Commerce Oversight and Investigations Subcommittee, Energy and Commerce Ranking Member Frank Pallone, Jr. (D-NJ) and Health Subcommittee Ranking Member Anna G. Eshoo (D-CA) wrote to the Biden Administration today in support of the proposed rule to rein in Short-Term, Limited Duration Health Insurance (STLDI) plans, or junk plans. 

The letter was sent to Health and Human Services Secretary Xavier Becerra, Treasury Secretary Janet Yellen, and Labor Acting Secretary Julie Su. 

“We applaud the Administration’s action to increase access to high quality, affordable health care and reverse the Trump Administration’s dangerous expansion of junk plans,” the Democratic Committee leaders wrote. “By limiting the availability of junk plans, we believe the proposed rule will ensure families have access to affordable, comprehensive health coverage. We support the policies in the proposed rule and strongly encourage the Departments to further strengthen some of the policies in the proposed rule.”

STLDI plans were originally designed to help individuals during short-term gaps in comprehensive coverage. In 2018, the Trump Administration greatly expanded the availability of STLDI plans, extending the maximum duration of coverage from three months to up to 364 days and allowed insurers to renew these junk plans for up to 36 months.  

The Biden Administration’s proposed rule would amend the definition of STLDI to limit the contract duration to no more than three months with a maximum one-month extension to realign STLDI plans with their traditional purpose of bridging short gaps in comprehensive coverage.  

In 2020, Energy and Commerce Committee Democrats investigated STLDI plans and found that the Trump Administration’s expansion of them created a threat to the health and financial well-being of American families. The report documented STLDI plans systematically discriminating against individuals with pre-existing conditions and offering wholly inadequate protection against catastrophic medical costs. The investigation also found that these plans excluded coverage for most major medical conditions and included major coverage limitations for health care items and services such as emergency services, hospitalization, and prescription drugs.

“We are concerned STLDI plans leave consumers uninsured and with large medical bills by denying claims for medical care through post-claims underwriting and, in some instances, rescinding coverage altogether,” the Democrats continued. “The refusal of STLDI plans to pay legitimate claims results in tremendous financial burden for consumers. We believe the proposal to limit the coverage period to three months will protect consumers' financial well-being, and we strongly urge the Administration to finalize this proposal.”

The Democrats’ investigation also found that coverage limitations are not always made clear in STLDI marketing materials, making it extremely difficult for consumers to understand what they are purchasing. The report documented cases of brokers who sold these plans engaging in questionable tactics, such as pushing consumers to purchase plans over the phone without reviewing any written information or coverage documents, misleading consumers about the type of coverage they are purchasing and failing to disclose STLDI plans’ significant coverage limitations and exclusions.

“We support the Department’s proposal to require STLDI plans to provide consumers with robust information on the plans’ limitations and exclusions, and information on how to enroll in comprehensive coverage,” the Committee leaders wrote. “We also believe the Departments should limit the sale of STLDI plans during the ACA’s annual open enrollment period when consumers are eligible to enroll in comprehensive coverage. Enrollment by brokers into STLDI plans can increase in December and January, which suggests that these junk plans are benefiting from, and possibly capitalizing on, the marketing and advertising around the ACA’s open enrollment period.”

The full letter is available HERE.