Employers offering hospital and other fixed indemnity benefits are required to provide a notice for plan years beginning on or after January 1, 2025, telling participants that the coverage is not comprehensive health coverage.
Who this applies to:
- Large employers offering fixed indemnity benefits
- Small employers offering fixed indemnity benefits
Go Deeper:
Hospital and other fixed indemnity benefits provide a fixed dollar amount per day (or per other period) of hospitalization or illness, regardless of the amount of expenses incurred. Examples include policies that pay $1000 per week of hospitalization or $250 per day of intensive care unit. It would not apply to a plan that pays a lump sum of $5,000 for a cancer diagnosis or broken arm.
Specifically, the notice must be provided at the time or before participants have the chance to enroll or re-enroll in the benefits. The notice is required to be included on the insurance policy provided by the carrier of the benefit. However, it is also required to be included in the enrollment materials using 14-point font.
Thus, employers offering fixed indemnity policies need to add the notice to open enrollment packets on the first page that discusses applicable benefits beginning for the 2025 plan year.
The final rules provide a model notice (see page 75) https://www.govinfo.gov/content/pkg/FR-2024-04-03/pdf/2024-06551.pdf
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