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Final Rule Released on Short-term, Limited-duration Insurance and Fixed Indemnity Coverage
Apr 01, 2024
Highlights
The final rule’s changes are intended to help consumers differentiate between comprehensive health coverage and certain types of coverage that are not subject to the ACA’s consumer protections. These changes:
- Amend the federal definition of STLDI to reduce the initial contract period to no more than three months;
- Prohibit a practice known as “stacking” that allows issuers to evade the duration limits for STLDI; and
- Expand a consumer notice requirement to apply to fixed indemnity excepted benefits coverage sold in the group market.
On March 28, 2024, the U.S. Departments of Labor, Health and Human Services, and the Treasury (Departments) released a final rule on certain types of health coverage that are not subject to the Affordable Care Act’s (ACA) consumer protections, namely short-term, limited-duration insurance (STLDI) and fixed indemnity coverage. This rule finalizes some of the changes included in a proposed rule from July 2023.
The Departments are making changes to STLDI and fixed indemnity coverage to help consumers distinguish them from comprehensive health coverage and increase consumer awareness of coverage options that include the ACA’s consumer protections. These protections include, for example, the prohibition of discrimination based on health status, the prohibition of preexisting condition exclusions, and the prohibition of lifetime and annual dollar limits on essential health benefits.
STLDI
STLDI is a type of health insurance coverage designed to fill temporary gaps in coverage when an individual transitions from one plan or coverage to another. STLDI is specifically exempt from the definition of “individual health insurance coverage” and, therefore, is not subject to the ACA’s requirements for comprehensive coverage.
Currently, STLDI is defined as coverage with an initial contract period of less than 12 months and a maximum total duration of up to 36 months, which includes renewals and extensions. Effective for coverage periods beginning on or after Sept. 1, 2024, the final rule limits the length of the initial contract period to no more than three months and the maximum coverage period to no more than four months, taking into account any renewals or extensions.
In addition, the final rule:
- Prohibits a practice known as “stacking,” where the same insurer issues multiple STLDI policies to the same policyholder within a 12-month period; and
- Amends the consumer notice requirement to further clarify the differences between STLDI and comprehensive coverage and identify options for consumers to obtain comprehensive coverage. The notice must be prominently displayed on the first page of the policy, certificate or contract of insurance—including for renewals and extensions—and included in any marketing, application and enrollment (or reenrollment) materials.
The final rule also includes a reminder that coverage sold to individuals through a group trust or association, other than in connection with a group health plan, is not group coverage for purposes of federal law 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.
Fixed Indemnity Excepted Benefits Coverage
Certain categories of coverage—called “excepted benefits”—are not subject to certain federal consumer protections, including the ACA’s requirement for comprehensive coverage. Fixed indemnity coverage is exempt from these protections because it is designed to provide a source of income replacement rather than full medical coverage.
Effective for plan years beginning on or after Jan. 1, 2025, the final rule requires a consumer notice to be provided when offering fixed indemnity excepted benefits coverage in the group market to ensure that consumers can distinguish between this coverage and comprehensive medical coverage. Health plans and issuers must prominently display the notice in marketing, application and enrollment (and reenrollment) materials.
In the July 2023 proposed rule, the Departments proposed new standards regarding the payment standards and noncoordination requirement for fixed indemnity excepted benefits. The Departments are not finalizing these proposed standards at this time, but they intend to address the issues in future rulemaking after additional study and consideration.
Tax Treatment of Fixed Indemnity Health Coverage
In the July 2023 proposed rule, the Departments proposed to clarify that payments from employer-provided fixed indemnity health insurance plans are not excluded from a taxpayer’s gross income if the amounts are paid without regard to the actual amount of any incurred medical expenses and where the premiums or contributions for the coverage are paid on a pre-tax basis. This rule also proposed to clarify that the taxpayer must meet substantiation requirements for reimbursements for qualified medical expenses from any employer-provided accident and health plan to be excluded from the taxpayer’s gross income. To provide more time to study the issues and concerns raised by commenters, the Departments are not finalizing these proposed changes at this time.
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As we step into May, we're reminded of the importance of mental health and well-being. May marks Mental Health Awareness Month, offering us an opportunity to renew our commitment to nurturing our minds and fostering supportive environments, both in and out of the workplace. In this blog post, we'll explore practical strategies for enhancing mental health, including small tips that can refresh you mentally during the workday. Embracing Self-Care Amid life's hustle and bustle, it's crucial to carve out time for self-care. Whether it's practicing mindfulness, engaging in hobbies, or simply taking a moment to breathe deeply, prioritizing self-care nurtures mental resilience and fosters a sense of inner peace. Cultivating Work-Life Balance In today's fast-paced world, achieving a healthy work-life balance is essential for mental well-being. Set boundaries between work and personal life, establish a routine that includes breaks and leisure activities, and strive to unplug from technology during downtime. Remember, balance is key to sustaining productivity and happiness. Fostering a Supportive Workplace Culture Employers play a pivotal role in promoting mental health in the workplace. Encourage open dialogue about mental health, offer resources such as counseling services or mental health days, and prioritize flexibility to accommodate employees' well-being needs. By fostering a supportive culture, organizations cultivate environments where employees feel valued, understood, and empowered to prioritize their mental health. Supporting Loved Ones If someone you care about is struggling with mental health challenges, your support can make a significant difference. Listen without judgment, offer empathy and reassurance, and encourage them to seek professional help if needed. Remember, your presence and understanding can provide comfort and strength during difficult times. Practicing Gratitude Gratitude is a powerful tool for enhancing mental well-being. Take time each day to reflect on moments of gratitude, whether it's appreciating the beauty of nature, expressing gratitude for supportive relationships, or acknowledging personal achievements. Cultivating a mindset of gratitude fosters resilience and enhances overall happiness. Small Tips to Refresh Your Mind During the Workday Take short breaks: Step away from your desk for a few minutes to stretch, walk around, or simply gaze out the window. These brief pauses can rejuvenate your mind and boost productivity. Practice deep breathing: Incorporate deep breathing exercises into your day to reduce stress and promote relaxation. Close your eyes, inhale deeply through your nose, hold for a few seconds, and exhale slowly through your mouth. Connect with nature: Spend time outdoors during your lunch break or coffee breaks. Even a brief stroll in a nearby park or green space can invigorate your senses and clear your mind. Listen to music: Create a playlist of soothing music or uplifting tunes to listen to during work breaks. Music has the power to uplift your mood, reduce anxiety, and enhance focus. Stay hydrated: Drink plenty of water throughout the day to stay hydrated and maintain mental alertness. Dehydration can impair cognitive function, so keep a water bottle handy and sip regularly. Practice mindfulness: Take a few moments to practice mindfulness or meditation exercises. Focus on your breath, observe your thoughts without judgment, and cultivate a sense of presence and calm. Declutter your workspace: A clutter-free workspace can promote mental clarity and productivity. Take a few minutes to tidy up your desk, organize files, and create a calming environment conducive to focus. Engage in positive self-talk: Replace negative self-talk with affirming and encouraging statements. Remind yourself of your strengths, accomplishments, and capabilities, and cultivate a mindset of self-compassion and resilience. Connect with colleagues: Build supportive relationships with coworkers by engaging in meaningful conversations, sharing experiences, and offering mutual support. A sense of camaraderie and connection can foster a positive work environment and bolster mental well-being. As Mental Health Awareness Month unfolds, let's commit to nurturing our minds and supporting those around us. By embracing self-care, fostering work-life balance, promoting workplace well-being, and offering compassionate support to loved ones, we contribute to a culture of mental health awareness and resilience. Remember, you are not alone. Reach out for support if you need it, and let's journey toward better mental health together.
On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule to amend current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024. Increased Salary Level The FLSA white-collar exemptions apply to individuals in executive, administrative, professional, and some outside sales and computer-related occupations. Some highly compensated employees may also qualify for the FLSA white-collar overtime exemption. To qualify for this exemption, white-collar employees must satisfy the standard salary level test, among other criteria. This salary level is a wage threshold that white-collar employees must receive to qualify for the exemption. Starting July 1, 2024, the DOL’s final rule increases the standard salary level from: $684 to $844 per week ($35,568 to $43,888 per year); and $107,432 to $132,964 per year for highly compensated employees. On Jan. 1, 2025, the standard salary level will then increase from: $844 to $1,128 per week ($43,888 to $58,656 per year); and $132,964 to $151,164 per year for highly compensated employees. Automatic Updates The DOL’s final rule also includes mechanisms allowing the agency to automatically update the white-collar salary level thresholds without having to rely on the rulemaking process. Effective July 1, 2027, and every three years thereafter, the DOL will increase the standard salary level. The agency will apply up-to-date wage data to determine new salary levels. Impact on Employers The first salary level increase in July is expected to impact nearly 1 million workers, while the second increase in January is expected to affect approximately 3 million workers. Employers should become familiar with the final rule and evaluate what changes they may need to adopt to comply with the rule’s requirements. Legal challenges to the rule are anticipated, which may delay the final rule’s implementation.
The recently enacted New York budget for fiscal year 2024-25 includes provisions mandating paid prenatal leave for the state’s workers, beginning Jan. 1, 2025, and repealing the New York COVID-19 sick leave law, effective July 31, 2025. Paid Prenatal Personal Leave The budget amends the state sick leave law by adding what is being touted as a first-in-the-nation requirement that all employers provide their employees with 20 hours of paid prenatal personal leave per 52-week period, starting Jan. 1, 2025. The amendment does not require employees to accrue the new leave, nor does it impose a waiting period before employees may use the leave; the full 20 hours must be made available on Jan. 1, 2025. Employees on leave must be paid their regular rate of pay or minimum wage if the applicable minimum wage is higher; however, employers are not required to pay out unused prenatal personal leave when an employee separates from employment. Permitted Uses of Prenatal Personal Leave Prenatal personal leave may be taken for health care services received by an employee during their pregnancy or related to the pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussions with a health care provider related to the pregnancy. The new provisions do not require advance notification or documentation after the fact for using leave. Interaction With Paid Sick Leave and FMLA Leave The new requirement is in addition to the annual sick leave the law already mandates, which ranges from 40-56 hours and may be paid or unpaid, depending on the employer’s size and income. The amendment does not indicate that the leave runs concurrently with any federal Family and Medical Leave Act (FMLA) leave taken for prenatal care, meaning the state prenatal personal leave would be in addition to any FMLA leave taken for this purpose. Sunset Date for COVID-19 Leave The budget also establishes July 31, 2025, as the expiration date for New York’s COVID-19 employee sick leave law . The law took effect at the beginning of the COVID-19 pandemic, on March 18, 2020, and requires leave of up to 14 days, depending on the size and income of the employer. As with the regular sick leave law, whether leave must be paid also depends on the size and income of the employer. The sunsetting of the law comes in the wake of expired states of emergency and changed recommendations for isolation and quarantine. Steps for Employers New York employers should prepare for the start of paid prenatal personal leave in January 2025 and watch for any agency regulations and guidance implementing the new leave entitlement. Employers should also train managers and supervisors about the new requirements and make sure employee policies and handbooks are up to date. Employers should continue to allow COVID-19 sick leave when it applies and keep in mind that other leave requirements, such as paid sick leave, may allow employees to take time off from work for illness, including COVID-19.
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As we step into May, we're reminded of the importance of mental health and well-being. May marks Mental Health Awareness Month, offering us an opportunity to renew our commitment to nurturing our minds and fostering supportive environments, both in and out of the workplace. In this blog post, we'll explore practical strategies for enhancing mental health, including small tips that can refresh you mentally during the workday. Embracing Self-Care Amid life's hustle and bustle, it's crucial to carve out time for self-care. Whether it's practicing mindfulness, engaging in hobbies, or simply taking a moment to breathe deeply, prioritizing self-care nurtures mental resilience and fosters a sense of inner peace. Cultivating Work-Life Balance In today's fast-paced world, achieving a healthy work-life balance is essential for mental well-being. Set boundaries between work and personal life, establish a routine that includes breaks and leisure activities, and strive to unplug from technology during downtime. Remember, balance is key to sustaining productivity and happiness. Fostering a Supportive Workplace Culture Employers play a pivotal role in promoting mental health in the workplace. Encourage open dialogue about mental health, offer resources such as counseling services or mental health days, and prioritize flexibility to accommodate employees' well-being needs. By fostering a supportive culture, organizations cultivate environments where employees feel valued, understood, and empowered to prioritize their mental health. Supporting Loved Ones If someone you care about is struggling with mental health challenges, your support can make a significant difference. Listen without judgment, offer empathy and reassurance, and encourage them to seek professional help if needed. Remember, your presence and understanding can provide comfort and strength during difficult times. Practicing Gratitude Gratitude is a powerful tool for enhancing mental well-being. Take time each day to reflect on moments of gratitude, whether it's appreciating the beauty of nature, expressing gratitude for supportive relationships, or acknowledging personal achievements. Cultivating a mindset of gratitude fosters resilience and enhances overall happiness. Small Tips to Refresh Your Mind During the Workday Take short breaks: Step away from your desk for a few minutes to stretch, walk around, or simply gaze out the window. These brief pauses can rejuvenate your mind and boost productivity. Practice deep breathing: Incorporate deep breathing exercises into your day to reduce stress and promote relaxation. Close your eyes, inhale deeply through your nose, hold for a few seconds, and exhale slowly through your mouth. Connect with nature: Spend time outdoors during your lunch break or coffee breaks. Even a brief stroll in a nearby park or green space can invigorate your senses and clear your mind. Listen to music: Create a playlist of soothing music or uplifting tunes to listen to during work breaks. Music has the power to uplift your mood, reduce anxiety, and enhance focus. Stay hydrated: Drink plenty of water throughout the day to stay hydrated and maintain mental alertness. Dehydration can impair cognitive function, so keep a water bottle handy and sip regularly. Practice mindfulness: Take a few moments to practice mindfulness or meditation exercises. Focus on your breath, observe your thoughts without judgment, and cultivate a sense of presence and calm. Declutter your workspace: A clutter-free workspace can promote mental clarity and productivity. Take a few minutes to tidy up your desk, organize files, and create a calming environment conducive to focus. Engage in positive self-talk: Replace negative self-talk with affirming and encouraging statements. Remind yourself of your strengths, accomplishments, and capabilities, and cultivate a mindset of self-compassion and resilience. Connect with colleagues: Build supportive relationships with coworkers by engaging in meaningful conversations, sharing experiences, and offering mutual support. A sense of camaraderie and connection can foster a positive work environment and bolster mental well-being. As Mental Health Awareness Month unfolds, let's commit to nurturing our minds and supporting those around us. By embracing self-care, fostering work-life balance, promoting workplace well-being, and offering compassionate support to loved ones, we contribute to a culture of mental health awareness and resilience. Remember, you are not alone. Reach out for support if you need it, and let's journey toward better mental health together.
On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule to amend current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024. Increased Salary Level The FLSA white-collar exemptions apply to individuals in executive, administrative, professional, and some outside sales and computer-related occupations. Some highly compensated employees may also qualify for the FLSA white-collar overtime exemption. To qualify for this exemption, white-collar employees must satisfy the standard salary level test, among other criteria. This salary level is a wage threshold that white-collar employees must receive to qualify for the exemption. Starting July 1, 2024, the DOL’s final rule increases the standard salary level from: $684 to $844 per week ($35,568 to $43,888 per year); and $107,432 to $132,964 per year for highly compensated employees. On Jan. 1, 2025, the standard salary level will then increase from: $844 to $1,128 per week ($43,888 to $58,656 per year); and $132,964 to $151,164 per year for highly compensated employees. Automatic Updates The DOL’s final rule also includes mechanisms allowing the agency to automatically update the white-collar salary level thresholds without having to rely on the rulemaking process. Effective July 1, 2027, and every three years thereafter, the DOL will increase the standard salary level. The agency will apply up-to-date wage data to determine new salary levels. Impact on Employers The first salary level increase in July is expected to impact nearly 1 million workers, while the second increase in January is expected to affect approximately 3 million workers. Employers should become familiar with the final rule and evaluate what changes they may need to adopt to comply with the rule’s requirements. Legal challenges to the rule are anticipated, which may delay the final rule’s implementation.
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