Update: Tri-Agency Final Rule
After months of waiting and speculation, we finally have received a final rule from the Departments of Health and Human Services, Labor, and the Treasury (Tri-Agency Rule) on Fixed Indemnity and Short-Term, Limited-Duration (STLDI) insurance policies.
If you are like us and enjoy reading 237 pages of regulatory language, feel free to dive in here.
For those of you who would like some quick highlights instead, we did the work for you! Keep reading…
For Fixed Indemnity Excepted Benefit plans, the final rule:
Revises the existing consumer notice in the individual market; and
Implements a consumer notice in the group market.
The notice must be displayed in marketing, application, and enrollment (and reenrollment) materials in both individual and group markets, and the policy, certificate, or contract of insurance in the individual market. The notice can be found on page 236 of the finalized rule, and applies to both new and existing coverage beginning January 1, 2025.
The proposed rules of July 2023 had included significant amendments to tax treatment of fixed indemnity benefits, payment standards, and a non-coordination requirement, but these amendments were not finalized. The fact sheet does note the intention to revisit these proposed changes after additional study of issues raised in comments.
For Short-Term, Limited-Duration plans, the final rule:
Revises the definition of STLDI to limit the length of the initial contract term to three months and the maximum coverage duration to no more than four months, including any renewals or extensions sold by the same issuer, or any issuer that is a member of the same controlled group, to the same policyholder within a 12-month period;
Clarifies coverage sold to individuals through a group trust or association, other than in connection with a group health plan, is not group coverage, and must meet the federal definition of STLDI or it is subject to the federal consumer protections and requirements for comprehensive individual health insurance coverage; and
Amends the consumer notice to be displayed in the policy, certificate, or contract of insurance, and marketing, application, and enrollment (and reenrollment) materials.
The final term and duration limits apply to STLDI plans sold or issued on or after September 1, 2024. Plans sold or issued before September 1, 2024, including renewals or extensions, may continue to provide coverage for an initial term of less than 12 months with a maximum duration of 36 months. The STLDI notice can be found on page 217 of the finalized rule, and applies to coverage beginning September, 2024, including renewals and extensions.
Telos Actuarial’s team of experienced regulatory compliance professionals has over 40 combined years of experience and is ready to help YOU stay informed of regulatory changes, remain compliant, and improve the speed to market of your Accident & Health products, by providing the following services:
Policy form, rider, and application development
State filing preparation, submission, monitoring, and correspondence
Forms, advertisements, rate modifications, statutory modifications, and block closure
Impact assessment of laws, regulations, and bulletins to product forms
Regulatory intermediary between client and state departments of insurance
Advertising review
State data call and survey assistance
Competitive language and underwriting conditions assessment
Customized insurance regulatory compliance research
Reach out to compliance@telosactuarial.com to learn more.
