Association for Community Affiliated Plans v. U.S. Department of Treasury

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Brief Summary: This case challenges a rule issued by the U.S. Department of Health and Human Services (HHS), the U.S. Department of Labor (DOL), and the U.S. Department of Treasury (Treasury), which expanded the maximum length of short-term, limited-duration insurance (STLDI) plans. The plaintiffs claim that this expansion violates the Patient Protection and Affordable Care Act (ACA).

Overview: On August 1, 2018, HHS, DOL, and Treasury issued a regulation that expanded access to STLDI plans. This regulation extended the maximum duration of these plans from three months to 12 months and allowed these plans to be renewed or extended for up to 36 months. STLDI plans do not have to comply with the ACA’s patient protections, which places consumers at risk of having inadequate coverage when they need to access health care. This issue is compounded by the fact that these plans are often less expensive than ACA-compliant plans, which makes them attractive to consumers looking to save money.

On September 14, 2018, a group of consumer advocates and health plans sued the Departments that issued the rule, claiming that broadening the availability of STLDI plans is contrary to the congressional intent of the ACA. They argued that the Departments sought to circumvent the ACA by creating an alternative health insurance regime. The plaintiffs assert that the final rule is arbitrary and capricious and, therefore, should be invalidated under the APA.

Court Updates: U.S. District Court for the District of Columbia – Opinion, July 19, 2019

The court concluded that HHS, DOL, and Treasury acted reasonably and within their power when they extended the maximum term and duration of STLDI plans through regulation, and the regulation did not violate the APA. The court noted that Congress delegated to the Departments the authority to define STLDI plans under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the ACA retained HIPAA’s exceptions of STLDI plans from individual market insurance regulations. Therefore, the Departments have not exceeded their congressionally delegated power when they defined short-term plans. The court also pointed to a lack of evidence that the regulation would destabilize the individual insurance market in any state with a federal exchange.

Current Status: On July 29, 2019, the case was appealed to the U.S. Court of Appeals for the D.C. Circuit. Oral arguments were heard on March 20, 2020.

Impact: STLDI plans will continue to be available to consumers, subject to state law. Consumers will need to be vigilant in determining whether these plans are appropriate for their needs.

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