The Proposed Federal Triagency Rule and a PostChevron Landscape By Hunter Sexton, JD, MHA
I. Current Regulatory Unfavorable
Environment
has
been
It is no secret that the recent insurance regulatory environment has decidedly been anti-industry. This is especially true for supplemental health benefits. We’ve experienced a marked uptick in state regulators prohibiting entire benefit categories (Wellness is one notable example), promulgating onerous new regulations, and relying more heavily upon ambiguous statutory language to achieve desired outcomes. The culmination of this increased regulatory pressure is, of course, the federal government’s proposed rule on Hospital Indemnity and Other Fixed Indemnity Plans (Federal Register Document Number 2023-14238 at XXX).
II. Federal Tri-Agency Proposed Rule on Hospital and Other Fixed Indemnity Plans On July 12th, 2023 the Internal Revenue Service, Employee Benefits Security Administration, and The Department of Health and Human Services published a Notice of Proposed Rulemaking that sent shockwaves through the supplemental benefits community; proposing drastic changes to Hospital Indemnity benefit design, and asking the public for comments about a potential similar future rulemaking for Specified Disease (Critical Illness) plans. There are two major policy aims of the proposed rule with respect to Hospital Indemnity and other fixed-indemnity excepted-benefits plans. First, is a “clarification” of tax treatment for noncoordinated benefits, wherein the agencies claim that all benefit amounts received from claimed excepted benefits are taxable. Next, is the agencies’ desire to reduce consumer confusion between comprehensive major medical health insurance and Hospital Indemnity plans.
