Short-Term Limited Duration Insurance

STLD insurance is any health insurance coverage that has a policy term of fewer than 365 days, other than excepted benefits (described below) or student health insurance coverage. STLD insurance is a health insurance product that was originally designed to fill in health insurance coverage gaps that occur when a consumer is transitioning from one major medical plan or coverage to another, such as a period in between jobs or after a person graduates from college.

STLD coverage is exempt from the definition of “individual health insurance coverage” under the Patient Protection and Affordable Care Act (ACA) and is not subject to any ACA provisions or protections.

STLD insurance is not comprehensive health insurance and does not offer full coverage traditionally afforded under comprehensive health insurance. Issuers may deny coverage to consumers who have pre-existing conditions, and many STLD plans do not cover traditional services such as specialist visits or hospital stays. Unfortunately, many consumers who purchase an STLD plan are not aware of these coverage shortfalls when they sign up for a plan.

Beginning September 1, 2024, federal rules will require that an initial STLD policy coverage contract shall last no longer than three (3) months. Then, beginning January 1, 2025, under Public Act Public Act 103-0649, insurance companies conducting business in Illinois are prohibited from selling STLD policies to Illinois residents.

Excepted benefits are types of coverage that are not typically covered by traditional health insurance, such as disability insurance or travel insurance. Excepted benefits insurance is also exempt from ACA (Affordable Care Act) protections.

Excepted benefits policies may also be sold as a hospital indemnity or other fixed indemnity excepted benefits policy. These policies cover a specific medical expense, such as a hospital stay or illness visit. Most fixed indemnity excepted benefits policies pay a set amount for each occurrence (e.g., $50 per exam or visit).

Excepted benefit policies are also not comprehensive health insurance and do not offer full coverage traditionally afforded under comprehensive health insurance.

Beginning September 1, 2024, federal rules will require than an initial STLD policy coverage contract shall last no longer than three (3) months. Federal rules will reinforce existing State law prohibiting STLD policy issuers from “stacking” policies, meaning that an issuer cannot sell multiple STLD insurance policies to a consumer within a 12-month period.

However, if a consumer buys an STLD policy from one issuer, an affiliate of the original issuer may extend that policy by up to one additional month as long as the extension does not cause the total policy term to exceed four (4) months.

Issuers must differentiate STLD coverage from comprehensive health insurance coverage and place a notice on the first page of an STLD’s policy document. Issuers must also advertise that an STLD policy is not a comprehensive health insurance policy. Violators will be subject to federal action and penalties.

Beginning January 1, 2025, hospital and other fixed indemnity policy issuers must differentiate their policy from a comprehensive policy and display these differences on policy documents, marketing materials, and advertisements. Issuers are also required to notify policyholders of enrollment and reenrollment options. The federal rules do not apply to excepted benefits that are not hospital indemnity or fixed indemnity.

Beginning January 1, 2025, insurance companies conducting business in Illinois are prohibited from selling STLD policies to Illinois residents. This prohibition includes both new STLD policies and STLD policy renewals: Illinois General Assembly - Full Text of Public Act 103-0649 (ilga.gov). Even an affiliated issuer will not be allowed to provide an extension to an STLD policy on or after January 1, 2025.

Please note that this prohibition also applies to insurance companies that sell STLD coverage to Illinois residents through groups or associations based in another state.

This new prohibition does not include excepted benefit policies, such as travel insurance or hospital indemnity insurance. It also does not prohibit student health insurance coverage from being issued for fewer than 365 days, as student health insurance coverage typically aligns with the academic term. However, student health insurance coverage must comply with certain ACA and State protections.

If you experience an issuer attempting to sell an STLD policy, please contact the Illinois Department of Insurance at 866-445-5364 or at DOI.Complaints@illinois.gov. You may also file a complaint online through the Department’s website , or you can download a complaint form  and mail or fax it to the Department for review.

If you are an Illinois resident, or if you are a non-resident with coverage under a group STLD policy issued to an organization that is domiciled in Illinois, your coverage will continue through the end of your policy term, but after your policy expires no issuer will  be able to renew or extend your current STLD policy or sell you a new STLD policy in Illinois.

If you experience problems with an agent, broker, or issuer, please contact the Department and file a complaint using the contact information or online forms linked and listed above.

Illinois is currently part of the federal health insurance marketplace and helps consumers sign up for coverage through Get Covered Illinois. If you wish to learn more about your coverage options, please visit getcoveredillinois.gov. You can also shop for coverage at Shop / Enroll (illinois.gov).

If you are in a coverage gap or have experienced household changes or a qualifying life event (QLE), you may be able to sign up for comprehensive health insurance via a special enrollment period (SEP) through the federal health insurance marketplace. If you wish to learn more about the federal SEP qualifications, please visit the Get Covered Illinois website.

• NOTE: the loss of STLD coverage or excepted benefit coverage does not qualify you for an SEP, so you will either need to qualify for an SEP for a different reason or else enroll during the annual Open Enrollment period. We strongly urge Illinoisans to check out their coverage options during Open Enrollment to avoid missing a chance to enroll in an ACA-compliant, comprehensive Marketplace plan.

The next Open Enrollment for the Marketplace occurs between November 1, 2024, and January 15, 2025. For coverage to start on January, you must select a plan by December 15. To learn more about Open Enrollment, please review the Get Covered Illinois Open Enrollment Handout.

Many Marketplace enrollees receive tax credits to help pay for premiums. To see if you qualify, please visit HealthCare.gov.

Others may qualify for Medicaid coverage. If you wish to learn more and apply, please visit Illinois.gov - IL Application for Benefits Eligibility (ABE) ABE Home Page or call 1-800-843-6154.

If you are 65 or older, you are likely eligible for Medicare benefits. Please visit Welcome to Medicare | Medicare or call 1-800-MEDICARE (1-800-633-4227) to learn more.