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May 30, 2024

Federal agencies publish final regulations affecting fixed indemnity and short-term, limited duration insurance coverage

On March 28, 2024, the U.S. Departments of Labor, Health and Human Services, and Treasury (collectively referred to as the “Agencies”) published limited final regulations (the “final regulations”) affecting fixed indemnity insurance and short-term, limited duration insurance coverage (STLDI).

The final regulations revise the rules for fixed indemnity insurance to qualify as an excepted benefit with a new notice requirement. The revised fixed indemnity rules are effective for policy plan years beginning on or after January 1, 2025. The final regulations also include policy term limits for STLDI coverage that are effective for policies issued or sold on or after September 1, 2024, and a new notice requirement for coverage periods beginning on or after that date.

This Alert addresses the revised rules for fixed indemnity and STLDI insurance as well as certain items from the 2023 proposed regulations left out of the final regulations that the Agencies intend to revisit in the future. This Alert is relevant for all employers.