On August 7, 2025, the U.S. Departments of Labor, Health and Human Services (HHS) and Treasury (“Departments”) released a joint statement that they are reconsidering the definition of “short-term, limited-duration insurance” (STLDI), through a formal rulemaking process.
Specifically, the Departments are reconsidering how short-term medical insurance fits into the definition of “individual health insurance coverage” in the Public Health Service Act. With that in mind, here’s what’s changing in the short-term medical market for 2025.
Our short-term medical carriers will be joining us for webinar on September 23 at 11AM ET to discuss their plans! This is a great opportunity to learn more about plan updates, and attendees can even earn an Amazon gift card!* Register to attend.
HHS Will Not Enforce STLDI 2024 Final Rule
As they reconsider the definition of STLDI, the Departments state they will not prioritize consequences for insurers failing to meet the current definition of STLDI. This definition was most recently updated in the 2024 Final Rule.
The Departments have also encouraged states to adopt a similar approach.
Currently, the 2024 STLDI rules limit short-term insurance coverage to a maximum of three months initially, or a total of four months, including renewals and extensions.
Breaking Down the Statement
Because federal agencies plan to review these rules, it could signal a potential shift in policy, where states could allow longer STLDI plans if they choose. With enhanced subsidies ending and premiums going up in the ACA market, this review by the federal agencies is a timely and significant change.
For now, states can decide whether to allow short-term health insurance plans at a longer duration, which may provide insurers with more freedom on these policies.
Insurers to Review STLDI Offerings
Due to this statement, insurers are reviewing their offerings within various states. We may see changes to product availability, including insurers reverting to their offerings pre-September 2024. Some carriers may once again offer tri-term (three-year) plans where state regulation does not prohibit these products and terms. Be on the lookout for any changes from carriers you may already be contracted with or want to contract with!
Note: Short-term medical plans (STM) are still not approved at the state level in several states including CA, CO, CT, NJ, and NY.
What Does This Mean for You?
This adjustment might leave you, and your clients, with some confusion and uncertainty.
We encourage you to:
- Keep your eye on any future changes to federal or state STLDI regulations
- Notice changes in the states that do not currently allow short-term health plans
- Follow specific STLDI rules regarding duration limits, renewals, and sales prohibitions for the states you sell in
- Explain the limitations of STLDI plans compared to ACA-compliant plans to your clients, ensuring they are aware of any risks associated with them
The more knowledge you retain and relay to your clients, the more trustworthy you become to them.
Ultimately, we may see the STLDI market reset to pre-fall 2024. It depends on future rulemaking. While this may be an evolving shift in the short-term medical market, rest assured we’ll keep you in the know about any future changes. Check back on our blog occasionally to see if there are any updates!
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