There are new regulations requiring employers who offer hospital indemnity or other fixed indemnity insurance benefits for plan years starting on or after January 1, 2025, to provide specific notice of the benefit to all employees “on the first page of any marketing, application, and enrollment materials … in at least 14-point font.”
Fixed indemnity insurance products pay a pre-determined amount for covered medical services which does not vary based on the total bill or services provided, unlike a claim under traditional health insurance. These products are marketed using many different names, but their defining feature is a fixed payment per occurrence of a covered event, regardless of the actual costs incurred. The new mandatory notice is designed to highlight the differences between fixed indemnity products and traditional health insurance coverage, to ensure employees are aware of the limitations of fixed indemnity products prior to enrollment and do not mistakenly purchase them as an alternative to, or replacement for, comprehensive health insurance coverage. A summary of the new regulations and notice requirements can be found here and the mandatory notice can be found within the regulations, which are available here (notice begins on PDF pg. 75, regulation page 23412). Insurance policies that provide reimbursements for specified illnesses and other types of excepted benefits coverage are exempt from this notice requirement.
If you offer a fixed indemnity product to your employees, you and the insurance company issuing your fixed indemnity product are required to provide the new notice to all employees. Before finalizing this coming year’s open enrollment materials, confer with the insurance company to see if they are able to assist you in meeting this new notice requirement. Foley’s Health Benefits Practice has counseled numerous employers on how to comply with this new notice requirement without overwhelming employees with overburdensome legal notices and is happy to help.
