Law Alert
April 3, 2024
The IRS, the Department of the Treasury, the Employee Benefits Security Administration, the Department of Labor, the Centers for Medicare & Medicaid Services, and the Department of Health and Human Services (collectively the federal departments) published a proposed rule on July 12, 2023, addressing short-term limited-duration insurance, independent noncoordinated excepted benefits coverage, level-funded plan arrangements, and the tax treatment of certain accident and health insurance.
The final rule, published on April 3, 2024, addressed only short-term limited-duration insurance (not discussed here as they are typically not in the group market) and the independent noncoordinated excepted benefits, specifically fixed-indemnity and specific-disease or illness policies. Level-funded plan arrangements and tax treatment were not addressed but may be in future rules.
The final rule includes a new notification requirement on the first page of any marketing materials and enrollment (or re-enrollment) applications for fixed-indemnity and specific-disease or illness policies issued (or renewed) on or after January 1, 2025. The new notice is intended to inform individuals that the policy does not provide comprehensive benefits. A sample model notice is included in the rule. However, the federal departments plan to create a notice that will not require modification or customization.
Employers must ensure the notice requirement is met when reviewing marketing and enrollment materials from the issuing insurer.
For more information, refer to our GHP: Excepted Benefits page.
