What You Need to Know
Background:
In April 2024, The Departments of Labor, Treasury and Health and Human Services (the Departments) issued a new rule that required health plans and insurers to provide employees with a notice in connection with employer-sponsored fixed indemnity policies. The notice was intended to inform employees that these policies do not provide comprehensive health insurance coverage. Failure to provide the notice meant that the policies will not qualify as excepted benefits and must therefore comply with the ACA’s health insurance mandates. Because fixed indemnity policies, by design, do not meet those requirements, an employer that failed to give the notice could be subject to fines for offering a plan that is not ACA-compliant.
More information on fixed indemnity policies.
Court Rejected New Fixed Indemnity Notice Requirement:
In December 2024, the U.S. District Court for the Eastern District of Texas vacated a new notice requirement for fixed indemnity coverage in the group market via a Final Judgement. This new notice requirement was scheduled to be effective for plan years beginning in 2025.
By setting aside and vacating the provisions related to this required notice condition, the court effectively removed the requirement, impacting how fixed-indemnity insurance policies are regulated and potentially easing the compliance burden on insurers.
What Does This Mean for Group Health Plans?
Group health plans offering fixed indemnity policies should take immediate steps to evaluate their compliance strategies:
As predicted, judicial orders are becoming a bigger factor in the group health benefits space. Subscribe to our blog for the latest updates and insights!
