Navigating Regulatory Shifts: Insights into the Final Rule for Health Insurance

In the dynamic landscape of health insurance, keeping abreast of regulatory changes is pivotal for brokers and clients alike. Here we offer a comprehensive analysis of the recent Final Rule issued by the Departments of Labor, Treasury, and Health and Human Services (HHS), shedding light on its implications for Short-Term, Limited-Duration Insurance (STLDI), Fixed Indemnity coverage, and the taxation of health plan benefits.

Fixed Indemnity Enhancements

Under the Final Rule, Fixed Indemnity coverage in both group and individual markets must adhere to new notice requirements to attain excepted benefits status. These notices, prominently featured in marketing, application, and enrollment materials, aim to clarify the coverage details of Fixed Indemnity and avoid confusion with comprehensive plans. Effective for plan years commencing on or after January 1st, 2025, these enhancements fortify consumer protection measures.

Tax Exclusion Considerations

While the Final Rule addresses various facets of health insurance regulations, certain elements remain subject to review. The Treasury and IRS opted not to finalize the portion of the Proposed Rule pertaining to the tax exclusion for accident and health plan benefits under Code section 105(b). This decision underscores persistent concerns regarding inconsistent application and highlights the necessity for additional study and guidance.

Level-Funded Plans Monitoring

Additionally, the Final Rule spotlights the continuous monitoring of level-funded plans. While immediate alterations were not enacted, the government acknowledges the prevalence of these arrangements and endeavors to comprehensively understand their implications. This emphasis on monitoring signals a potential future regulatory framework to ensure adherence and safeguard consumer interests.

Conclusion

The Final Rule represents a significant step towards ensuring clarity and safeguarding consumer interests within the realm of health insurance. However, as taxation and level-funded plans remain under scrutiny, all stakeholders must remain vigilant and adaptable in navigating these evolving regulatory landscapes. Your awareness and proactive engagement are vital in upholding compliance and maximizing benefits. Contact The American Worker today to stay informed and ensure your continued success in this ever-changing landscape.

For more than 40 years, The American Worker, provided by Fringe Benefit Group, has specialized in providing benefits plans for hourly employee groups. We provide turnkey solutions for hourly groups across the country.

Source: Groom Law Group. “Tri-Agencies Finalize Rule on STLDI but Kick the Can Down the Road on Fixed Indemnity and the Health Plan Tax Exclusion.” Groom Law Group, [July 31, 2023]

Source: Woodruff Sawyer. “Proposed Regulations for Fixed Indemnity Insurance.” Woodruff Sawyer, [April 10, 2024]