The regulation of components included in a travel insurance policy continues to be a hot topic for state regulators across the country. Recently, the Massachusetts Division of Insurance (DOI) released a “Draft Bulletin” for comment by interested parties. In the “Draft Bulletin,” Massachusetts takes the position that travel insurance products, which offer consumers a unique blend of health benefits incidental to the property and casualty coverage, would be subject to regulation as a “health benefit plan” under Massachusetts law. However, the DOI is willing to make an exception so long as the travel insurance policy meets certain requirements, including:
- The health benefits include all statutorily-required Massachusetts mandated benefits.
Presumably, this “exception” would require travel insurance policies to include all mandated health benefits defined in 956 CMR 5.00 dictating the benefits required for “minimum creditable coverage.” What would travel insurance policies be forced to include?
- Medical/Surgical care, including preventive and primary care;
- Mental health and substance abuse services; and
- Radiation therapy and chemotherapy.
The minimum creditable coverage is required to avoid the imposition of fines or penalties from the Department of Revenue. The requirement is analogous to the Federal Requirement under the Affordable Care Act. However, the Internal Revenue Service has specifically excluded travel insurance from its definition of a health insurance when considering what insurance plans are subject to the payment of the health insurance provider’s fee.
The IRS exclusion is practical and should be adopted nationwide by individual states. When was the last time you, the consumer, went on a vacation and scheduled your annual physical to occur during your trip to a remote location? It’s clear. Travel insurance and travel protection products are simply not health insurance, and are not designed to serve as a replacement for an individual’s health insurance. Instead travel insurance offers a unique blend of protections that close gaps in an individual’s present insurance coverage, and provide the consumer with peace of mind to know that if disaster occurs when traveling, they’re protected. These short term protections designed to be in force during a covered trip should not be forced to include irrelevant benefits which would only serve to decrease their availability and affordability.