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News Release

New Jersey Department of
Banking and Insurance

Acting Commissioner Marlene Caride

For Immediate Release:
May 1, 2018

For Further Information:
Trish Graber or Marshall McKnight (609) 292-5064

Department of Banking and Insurance Informs CMS of New Jersey’s Prohibition of Short-Term Limited Duration Insurance, Warns of Harm to Consumers Under Federal Proposal

TRENTON — Department of Banking and Insurance Acting Commissioner Marlene Caride recently notified the federal government that the sale of Short-Term, Limited Duration Insurance is prohibited in New Jersey’s individual market and warned that permitting the sale of these plans elsewhere in the country would cause harm to the nation’s health insurance market and to consumers.

The Department sent a letter to the Centers for Medicare and Medicaid Services on federal regulations that would permit the sale of “skimpy health plans,” Short-Term, Limited Duration Insurance that does not comply with the strong protections provided by the Affordable Care Act. The rule proposal is the result of an Executive Order signed by President Trump that seeks to roll back important consumer protections implemented under the ACA.

The Department emphasized that New Jersey’s prohibition on the sale of such plans could not be preempted by federal rulemaking.

“Although it may appear that allowing short-term, limited duration plans will provide additional choices to consumers, the sale of short term plans would only allow for significantly inferior coverage. New Jersey’s Legislature made an express determination that New Jersey citizens should be provided with comprehensive coverage in the individual insurance market, and this decision to protect our consumers cannot be preempted by federal rule,” Acting Commissioner Caride wrote.

“In general, the sale of short-term, limited duration plans would create significant adverse selection in the individual market whereby younger, healthier individuals could opt for such inferior coverage leaving those with significant health care needs in the individual market. This would exert further upward pressure on health premiums in the individual market, and could result in an adverse selection ‘death spiral.’ Additionally, the sale of short-term, limited duration plans and the resulting adverse selection could further incent carriers to withdraw from, or reduce the number of plan offerings in, the individual market,” the acting commissioner wrote.

The full letter is attached.

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