Internal Revenue Bulletin 2024-19 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2024–19
May 6, 2024
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE, INCOME TAX
Rev. Proc. 2024-21, page 1054.
This Revenue Procedure provides issuers of qualified mort-
gage bonds and mortgage credit certificates with (1) the
nationwide average purchase price for residences located in
the United States, and (2) the average area purchase price
safe harbors for residences located in statistical areas in
each state, the District of Columbia, Puerto Rico, the North-
ern Mariana Islands, American Samoa, the Virgin Islands, and
Guam.
EMPLOYEE PLANS, EXCISE TAX
Notice 2024-35, page 1051.
This notice provides relief with respect to certain required
minimum distributions (RMDs) that are not made in 2024.
This relief was provided with respect to certain RMDs in
2021, 2022, and 2023, and is being extended in this notice
to certain RMDs in 2024. Specifically, the notice provides
that if certain requirements are met, a plan will not fail to be
qualified for failing to make a specified RMD in 2024, and a
taxpayer will not be assessed an excise tax for failing to take
the RMD. This notice also announces that the final regulations
intended to be published relating to RMDs are anticipated to
apply for purposes of determining RMDs for calendar years
beginning on or after January 1, 2025.
T.D. 9990, page 966.
These final rules amend the definition of short-term, limit-
ed-duration insurance for purposes of the exclusion from the
definition of “individual health insurance coverage” in 26 CFR
part 54, 29 CFR part 2590, and 45 CFR part 144. These
final rules also amend the requirements for hospital indem-
nity and other fixed indemnity insurance to be treated as an
excepted benefit in the group and individual health insurance
markets.
EXEMPT ORGANIZATIONS
Announcement 2024-20, page 1069.
Revocation of IRC 501(c)(3) Organizations for failure to meet
the code section requirements. Contributions made to the
organizations by individual donors are no longer deductible
under IRC 170(b)(1)(A).
INCOME TAX
Rev. Proc. 2024-20, page 1053.
Revenue Procedure 2024-20 provides domestic asset/lia-
bility percentages and domestic investment yields needed
by foreign life insurance companies and foreign property
and liability insurance companies to compute their minimum
effectively connected net investment income under section
842(b) of the Internal Revenue Code for taxable years begin-
ning after December 31, 2022.
Rev. Rul. 2024-9, page 964.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, and the long-term tax-exempt rate. For purposes
of sections 382, 1274, 1288, 7872 and other sections of
the Code, tables set forth the rates for May 2024.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
May 6, 2024 Bulletin No. 2024–19

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2024-09
This revenue ruling provides vari-
ous prescribed rates for federal income
tax purposes for May 2024 (the current
month). Table 1 contains the short-
term, mid-term, and long-term applica-
ble federal rates (AFR) for the current
month for purposes of section 1274(d)
of the Internal Revenue Code. Table 2
contains the short-term, mid-term, and
long-term adjusted applicable federal
rates (adjusted AFR) for the current
month for purposes of section 1288(b).
Table 3 sets forth the adjusted fed-
eral long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropri-
ate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. How-
ever, under section 42(b)(2), the appli-
cable percentage for non-federally sub-
sidized new buildings placed in service
after July 30, 2008, shall not be less
than 9%. Finally, Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.
REV. RUL. 2024-09 TABLE 1
Applicable Federal Rates (AFR) for May 2024
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR4.97%4.91%4.88%4.86%
110% AFR5.47%5.40%5.36%5.34%
120% AFR5.98%5.89%5.85%5.82%
130% AFR6.48%6.38%6.33%6.30%
Mid-term
AFR4.42%4.37%4.35%4.33%
110% AFR4.87%4.81%4.78%4.76%
120% AFR5.31%5.24%5.21%5.18%
130% AFR5.76%5.68%5.64%5.61%
150% AFR6.67%6.56%6.51%6.47%
175% AFR7.80%7.65%7.58%7.53%
Long-term
AFR4.55%4.50%4.47%4.46%
110% AFR5.01%4.95%4.92%4.90%
120% AFR5.47%5.40%5.36%5.34%
130% AFR5.94%5.85%5.81%5.78%
REV. RUL. 2024-09 TABLE 2
Adjusted AFR for May 2024
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR3.76%3.73%3.71%3.70%
Mid-term adjusted AFR3.35%3.32%3.31%3.30%
Long-term adjusted AFR3.45%3.42%3.41%3.40%
May 6, 2024 964 Bulletin No. 2024–19

REV. RUL. 2024-09 TABLE 3
Rates Under Section 382 for May 2024
Adjusted federal long-term rate for the current month3.45%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)
3.45%
REV. RUL. 2024-09 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for May 2024
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit8.04%
Appropriate percentage for the 30% present value low-income housing credit 3.45%
REV. RUL. 2024-09 TABLE 5
Rate Under Section 7520 for May 2024
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest
5.40%

Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2024. See Rev. Rul. 2024-09, page 964.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2024. See Rev. Rul. 2024-09, page 964.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of May 2024. See Rev.
Rul. 2024-09, page 964.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2024. See Rev. Rul. 2024-09, page 964.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of May 2024. See Rev. Rul.
2024-09, page 964.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2024. See Rev. Rul. 2024-09, page 964.
Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2024. See Rev. Rul. 2024-09, page 964.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month of
May 2024. See Rev. Rul. 2024-09, page 964.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of May 2024. See Rev. Rul.
2024-09, page 964.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
May 2024. See Rev. Rul. 2024-09, page 964.

Bulletin No. 2024–19 965 May 6, 2024

May 6, 2024 966 Bulletin No. 2024–19
26 CFR 54.9801-2: Definitions; 26 CFR 54.9831-1:
Special rules relating to group health plans; 26 CFR
54.9833-1: Applicability dates
T.D. 9990
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 54
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2590
DEPARTMENT OF HEALTH
AND HUMAN SERVICES
45 CFR Parts 144, 146,
and 148
Short-Term, Limited-
Duration Insurance
and Independent,
Noncoordinated Excepted
Benefits Coverage
AGENCY: Internal Revenue Service,
Department of the Treasury; Employee
Benefits Security Administration, Depart-
ment of Labor; Centers for Medicare &
Medicaid Services, Department of Health
and Human Services.
ACTION: Final rules.
SUMMARY: This document sets forth
final rules that amend the definition of
short-term, limited-duration insurance,
which is excluded from the definition
of individual health insurance cover-
age under the Public Health Service Act.
This document also sets forth final rules
that amend the regulations regarding the
requirements for hospital indemnity or
other fixed indemnity insurance to be con-
sidered an excepted benefit in the group
and individual health insurance markets.
DATES: These regulations are effective
on June 17, 2024.
FOR FURTHER INFORMATION
CONTACT: Shannon Hysjulien or
Rebecca Miller, Employee Benefits Secu-
rity Administration, Department of Labor
at (202) 693-8335; Jason Sandoval, Inter-
nal Revenue Service, Department of the
Treasury at (202) 317-5500; Cam Clem-
mons, Centers for Medicare & Medic-
aid Services, Department of Health and
Human Services at (206) 615-2338; Lisa
Cuozzo, Centers for Medicare & Medic-
aid Services, Department of Health and
Human Services at (667) 290-8537.
SUPPLEMENTARY INFORMATION:
I. Background
These final rules set forth revisions to
the definition of “short-term, limited-du-
ration insurance” (STLDI) for purposes of
its exclusion from the definition of “indi-
vidual health insurance coverage” in 26
CFR part 54, 29 CFR part 2590, and 45
CFR part 144. The definition of STLDI is
also relevant for purposes of the disclo-
sure and reporting requirements in section
2746 of the Public Health Service Act (the
PHS Act), which require health insurance
issuers offering individual health insur-
ance coverage or STLDI to disclose to
enrollees with individual health insurance
or STLDI coverage, and to report annually
to the Department of Health and Human
Services (HHS), any direct or indirect
compensation provided by the issuer to an
agent or broker associated with enrolling
individuals in such coverage.
These final rules also set forth amend-
ments to the regulations regarding the
requirements for hospital indemnity and
other fixed indemnity insurance to be
treated as an excepted benefit in the group
and individual health insurance markets
(fixed indemnity excepted benefits cover-
age).
1
As explained in greater detail later in
this section of the preamble, the Department
of the Treasury (Treasury Department), the
Department of Labor, and HHS (collec-
tively, the Departments) are not finaliz-
ing certain aspects of the proposed rules
regarding fixed indemnity excepted bene-
fits coverage and the Treasury Department
and the Internal Revenue Service (IRS) are
not finalizing the proposed amendments to
Treasury Reg. § 1.105-2 at this time.
In proposed rules published on July
12, 2023, in the Federal Register titled
“Short-Term, Limited-Duration Insur-
ance; Independent, Noncoordinated
Excepted Benefits Coverage;
Level-Funded Plan Arrangements; and
Tax Treatment of Certain Accident and
Health Insurance” (2023 proposed rules),
2

the Departments proposed revisions
to define and more clearly distinguish
STLDI and fixed indemnity excepted ben-
efits coverage from comprehensive cover-
age. Comprehensive coverage is coverage
that is subject to the Federal consumer
protections and requirements established
under chapter 100 of the Internal Reve-
nue Code (Code), part 7 of the Employee
Retirement Income Security Act of 1974
(ERISA), and title XXVII of the PHS Act
(hereinafter referred to as the Federal con-
sumer protections and requirements for
comprehensive coverage),
3
such as the
prohibition on exclusions for preexist-
ing conditions, the prohibition on health
status discrimination, and the require-
ment to cover certain preventive services
without cost sharing. The Departments
proposed these revisions to promote equi-
table access to high-quality, affordable,
comprehensive coverage by increasing
consumers’ understanding of their health
coverage options and reducing misinfor-
mation about STLDI and fixed indemnity
excepted benefits coverage, consistent
with Executive Orders 14009 and 14070
as described in section I.B of this pream-
ble. The Treasury Department and the IRS
also proposed amendments to Treasury
Reg. § 1.105-2 to clarify the tax treatment
1
For simplicity and readability, this preamble refers to hospital indemnity or other fixed indemnity insurance that meets all requirements to be considered an excepted benefit under the Federal
framework as “fixed indemnity excepted benefits coverage” to distinguish it from hospital indemnity or other fixed indemnity insurance that does not meet all such requirements.
2
88 FR 44596 (July 12, 2023).
3
While STLDI is generally not subject to the Federal consumer protections and requirements for comprehensive coverage that apply to individual health insurance coverage, the agent and
broker compensation disclosure and reporting requirements in section 2746 of the PHS Act apply to health insurance issuers offering individual health insurance coverage or STLDI.

Bulletin No. 2024–19 967 May 6, 2024
of benefit payments in fixed amounts
under hospital indemnity or other fixed
indemnity coverage purchased on a pre-
tax basis.
The Departments also solicited com-
ments regarding coverage only for a
specified disease or illness that qualifies
as excepted benefits (specified disease
excepted benefits coverage),
4
and regard-
ing level-funded plan arrangements
5
to
better understand the key features and
characteristics of these arrangements and
whether additional guidance or rulemak-
ing is needed to clarify plan sponsors’
and issuers’ obligations with respect to
coverage provided through these arrange-
ments. While specified disease excepted
benefits coverage and level-funded plan
arrangements are not addressed in these
final rules, the Departments appreciate the
comments received on these topics and
will take them into consideration as they
determine whether additional guidance or
rulemaking is warranted in the future.
A. General Statutory Background
The Health Insurance Portability and
Accountability Act of 1996 (HIPAA)
(Pub. L. 104-191, August 21, 1996) added
chapter 100 to the Code, part 7 to ERISA,
and title XXVII to the PHS Act, which
set forth portability and nondiscrimina-
tion rules with respect to health coverage.
These provisions of the Code, ERISA,
and the PHS Act were later augmented by
other laws, including the Mental Health
Parity Act of 1996 (Pub. L. 104-204, Sep-
tember 26, 1996), the Paul Wellstone and
Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (MHPAEA)
(Pub. L. 110-343, October 3, 2008), the
Newborns’ and Mothers’ Health Protec-
tion Act (Pub. L. 104-204, September 26,
1996), the Women’s Health and Cancer
Rights Act (Pub. L. 105-277, October
21, 1998), the Genetic Information Non-
discrimination Act of 2008 (Pub. L. 110-
233, May 21, 2008), the Children’s Health
Insurance Program Reauthorization Act of
2009 (Pub. L. 111-3, February 4, 2009),
Michelle’s Law (Pub. L. 110-381, Octo-
ber 9, 2008), the Patient Protection and
Affordable Care Act (Pub. L. 111-148,
March 23, 2010) (as amended by the
Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111–152, March 30,
2010) (collectively known as the Afford-
able Care Act (ACA)), and Division BB
of the Consolidated Appropriations Act,
2021 (CAA, 2021) (Pub. L. 116-260,
December 27, 2020), which includes the
No Surprises Act.
The ACA reorganized, amended, and
added to the provisions of part A of title
XXVII of the PHS Act relating to group
health plans and health insurance issuers
in the group and individual markets. The
ACA added section 9815 of the Code and
section 715 of ERISA to incorporate the
provisions of part A of title XXVII of the
PHS Act, as amended or added by the
ACA, into the Code and ERISA, making
them applicable to group health plans and
health insurance issuers providing health
insurance coverage in connection with
group health plans. The provisions of the
PHS Act incorporated into the Code and
ERISA, as amended or added by the ACA,
are sections 2701 through 2728.
In addition to market-wide provisions
applicable to group health plans and health
insurance issuers in the group and individ-
ual markets, the ACA established Health
Benefit Exchanges (Exchanges) aimed at
promoting access to high-quality, afford-
able, comprehensive coverage. Section
1401(a) of the ACA added section 36B to
the Code, providing a premium tax credit
(PTC) for certain individuals with annual
household income that is at least 100 per-
cent but not more than 400 percent of the
Federal poverty level (FPL) who enroll in,
or who have a member of their tax house-
hold enrolled in, an individual market
qualified health plan (QHP) through an
Exchange who are not otherwise eligible
for minimum essential coverage (MEC).
Section 1402 of the ACA provides
for, among other things, reductions in
cost sharing for essential health benefits
for qualified low- and moderate-income
enrollees in silver-level QHPs purchased
through the individual market Exchanges.
Section 1402 also provides for reduc-
tions in cost sharing for American Indians
enrolled in QHPs purchased through the
individual market Exchanges at any metal
level.
Section 5000A of the Code, added by
section 1501(b) of the ACA, provides that
individuals must maintain MEC, or make
a payment known as the individual shared
responsibility payment with their Federal
tax return for the year in which they did
not maintain MEC, if they are not other-
wise exempt.
6
On December 22, 2017, the
Tax Cuts and Jobs Act (Pub. L. 115-97)
was enacted, which included a provision
under which the individual shared respon-
sibility payment under section 5000A
of the Code was reduced to $0, effective
for months beginning after December 31,
2018.
The American Rescue Plan Act of
2021 (ARP) (Pub. L. 117-2) was enacted
on March 11, 2021. Among other policies
intended to address the health care and
economic needs of the country during
the coronavirus disease 2019 (COVID-
19) pandemic, the ARP increased the PTC
amount for individuals with annual house-
hold income at or below 400 percent of
the FPL and extended PTC eligibility for
the first time to individuals with annual
household incomes above 400 percent of
the FPL. Although the expanded PTC sub-
sidies under the ARP were applicable only
for 2021 and 2022, the Inflation Reduc-
tion Act of 2022 (IRA) (Pub. L. 117-169,
August 16, 2022) extended the subsidies
for an additional 3 years, through Decem-
ber 31, 2025.
The No Surprises Act was enacted on
December 27, 2020, as title I of Division
BB of the CAA, 2021. The No Surprises
Act added new provisions in Subchap-
ter B of chapter 100 of the Code, part 7
of ERISA, and part D of title XXVII of
the PHS Act, applicable to group health
plans and health insurance issuers offer-
ing group or individual health insurance
coverage. These provisions provide pro-
tections against surprise medical bills for
certain out-of-network services and gen-
erally require plans, issuers, providers,
and facilities to make certain disclosures
regarding balance billing protections to
the public and to individual participants,
4
88 FR 44596 at 44632 (July 12, 2023).
5
Id. at 44632-34.

May 6, 2024 968 Bulletin No. 2024–19
beneficiaries, and enrollees. In addition
to the new provisions applicable to group
health plans and issuers of group or indi-
vidual health insurance coverage, the
No Surprises Act added a new part E to
title XXVII of the PHS Act, establishing
corresponding requirements applicable
to health care providers, facilities, and
providers of air ambulance services. The
CAA, 2021 also amended title XXVII of
the PHS Act to, among other things, add
section 2746, which requires health insur-
ance issuers offering individual health
insurance coverage or STLDI to disclose
the direct or indirect compensation pro-
vided by the issuer to an agent or broker
associated with enrolling individuals in
individual health insurance coverage or
STLDI to the enrollees in such coverage
as well as to report such compensation
annually to HHS.
The Secretaries of the Treasury, Labor,
and HHS have authority to issue such reg-
ulations as may be necessary or appro-
priate to carry out the parallel provisions
under the Code, ERISA, and the PHS Act,
including the definitions in section 9832
of the Code, section 733 of ERISA, and
section 2791 of the PHS Act.
7, 8
B. Recent Executive Orders
On January 28, 2021, President Biden
issued Executive Order 14009, “Strength-
ening Medicaid and the Affordable Care
Act,” which directed the Departments to
review policies to ensure their consistency
with the Administration’s goal of protect-
ing and strengthening the ACA and mak-
ing high-quality health care accessible and
affordable for every American.
9
Execu-
tive Order 14009 also directed Federal
agencies to examine policies or practices
that may undermine protections for peo-
ple with preexisting conditions and that
may reduce the affordability of coverage
or financial assistance for coverage. Exec-
utive Order 14009 also revoked the pre-
vious Administration’s Executive Order
13813, “Promoting Healthcare Choice and
Competition Across the United States,”
which directed agencies to expand the
availability of STLDI.
10
On April 5, 2022,
President Biden issued Executive Order
14070, “Continuing to Strengthen Ameri-
cans’ Access to Affordable, Quality Health
Coverage,” which directed the heads of
Federal agencies with responsibilities
related to Americans’ access to health
coverage to examine polices or practices
that make it easier for all consumers to
enroll in and retain coverage, understand
their coverage options, and select appro-
priate coverage; that strengthen benefits
and improve access to health care pro-
viders; that improve the comprehensive-
ness of coverage and protect consumers
from low-quality coverage; and that help
reduce the burden of medical debt on
households.
11
In addition, on January 21, 2021,
President Biden issued Executive Order
13995, “Ensuring an Equitable Pandemic
Response and Recovery,” which directed
the Secretaries of Labor and HHS, and the
heads of all other agencies with authorities
or responsibilities relating to the COVID-
19 pandemic response and recovery, to
consider any barriers that have restricted
access to preventive measures, treatment,
and other health services for populations
at high risk for COVID-19 infection, and
modify policies to advance equity.
12
Consistent with these executive orders,
the Departments reviewed the regulatory
provisions related to STLDI and fixed
indemnity excepted benefits coverage
and, after carefully considering public
comments received, are finalizing amend-
ments to those provisions in these final
rules.
C. Short-Term, Limited-Duration
Insurance (STLDI)
STLDI is a type of health insurance
coverage sold by health insurance issuers
that typically fills temporary gaps in cov-
erage that may occur when an individual
is transitioning from one plan or coverage
to another, such as transitioning between
health coverage offered by one employer
to health coverage offered by another
employer. Section 2791(b)(5) of the PHS
Act provides that “[t]he term ‘individual
health insurance coverage’ means health
insurance coverage offered to individu-
als in the individual market, but does not
include short-term, limited duration insur-
ance.”
13
The PHS Act does not, however,
define the phrase “short-term, limited
duration insurance.” Sections 733(b)(4) of
ERISA and 2791(b)(4) of the PHS Act pro-
vide that group health insurance coverage
means, “in connection with a group health
plan, health insurance coverage offered
in connection with such plan.” Sections
733(a)(1) of ERISA and 2791(a)(1) of the
PHS Act provide that a group health plan
is generally any plan, fund, or program
established or maintained by an employer
(or employee organization or both) for
the purpose of providing medical care to
employees or their dependents (as defined
under the terms of the plan) directly, or
through insurance, reimbursement, or oth-
erwise. There is no corresponding provi-
sion excluding STLDI from the definition
of group health insurance coverage. Thus,
6
Section 5000A of the Code and Treasury regulations at 26 CFR 1.5000A-3 provide exemptions from the requirement to maintain MEC for the following individuals: (1) members of
recognized religious sects; (2) members of health care sharing ministries; (3) exempt noncitizens; (4) incarcerated individuals; (5) individuals with no affordable coverage; (6) individuals
with household income below the income tax filing threshold; (7) members of Federally recognized Indian tribes; (8) individuals who qualify for a hardship exemption certification; and (9)
individuals with a short coverage gap of a continuous period of less than 3 months in which the individual is not covered under MEC. The eligibility standards for exemptions can be found
at 45 CFR 155.605.
7
Section 9833 of the Code, section 734 of ERISA, and section 2792 of the PHS Act.
8
See also 64 FR 70164 (December 15, 1999).
9
Executive Order 14009 of January 28, 2021, 86 FR 7793 (February 2, 2021).
10
Executive Order 13813 of October 12, 2017, 82 FR 48385 (October 17, 2017).
11
Executive Order 14070 of April 5, 2022, 87 FR 20689 (April 5, 2022).
12
Executive Order 13995 of January 21, 2021, 86 FR 7193 (January 26, 2021).
13
The definition of individual health insurance coverage (and its exclusion of STLDI) has some limited relevance with respect to certain provisions that apply to group health plans and group
health insurance issuers. For example, an individual who loses coverage due to moving out of a health maintenance organization (HMO) service area in the individual market is eligible for a
special enrollment period to enroll in a group health plan. See 26 CFR 54.9801-6(a)(3)(i)(B), 29 CFR 2590.701-6(a)(3)(i)(B), and 45 CFR 146.117(a)(3)(i)(B).

Bulletin No. 2024–19 969 May 6, 2024
any health insurance that is sold in the
group market and purports to be STLDI
must nonetheless comply with applicable
Federal group market consumer protec-
tions and requirements for comprehensive
coverage, unless the coverage satisfies
the requirements of one or more types of
group market excepted benefits.
Because STLDI is not individual health
insurance coverage, it is generally exempt
from the Federal individual market con-
sumer protections and requirements for
comprehensive coverage. STLDI is not
subject to PHS Act provisions that apply
to individual health insurance coverage
under the ACA including, for example,
the prohibition of preexisting condition
exclusions or other discrimination based
on health status (section 2704 of the PHS
Act), the prohibition on discrimination
against individual participants and ben-
eficiaries based on health status (section
2705 of the PHS Act), nondiscrimination
in health care (section 2706 of the PHS
Act), and the prohibition on lifetime and
annual dollar limits on essential health
benefits (section 2711 of the PHS Act).
In addition, STLDI is not subject to the
Federal consumer protections and require-
ments added to the PHS Act by other laws
that apply to individual health insurance
coverage, including MHPAEA (Pub. L.
110-343, October 3, 2008) (section 2726
of the PHS Act), and the No Surprises Act,
as added by the CAA, 2021. Thus, indi-
viduals who enroll in STLDI are not guar-
anteed these key consumer protections
under Federal law.
14
The lack of these key
Federal consumer protections is especially
problematic when the differences between
STLDI and comprehensive individual
health insurance coverage are not readily
apparent to consumers.
In 1997, the Departments issued interim
final rules implementing the portability
and renewability requirements of HIPAA
(1997 HIPAA interim final rules).
15
Those
interim final rules included definitions of
individual health insurance coverage, as
well as STLDI. That definition of STLDI,
which was finalized in rules issued in
2004 and applied through 2016, defined
“short-term, limited-duration insurance”
as “health insurance coverage provided
pursuant to a contract with an issuer that
has an expiration date specified in the con-
tract (taking into account any extensions
that may be elected by the policyholder
without the issuer’s consent) that is less
than 12 months after the original effective
date of the contract.”
16
To address the issue of STLDI being
sold as a type of primary coverage, as well
as concerns regarding possible adverse
selection impacts on the individual mar-
ket risk pools that were created under the
ACA,
17
the Departments published pro-
posed rules on June 10, 2016, in the Fed-
eral Register titled “Expatriate Health
Plans, Expatriate Health Plan Issuers, and
Qualified Expatriates; Excepted Benefits;
Lifetime and Annual Limits; and Short-
Term, Limited-Duration Insurance” (2016
proposed rules). Those rules proposed to
revise the Federal definition of STLDI
by shortening the permitted duration of
such coverage, and adopting a consumer
notice provision.
18
On October 31, 2016,
the Departments published final rules in
the Federal Register titled “Excepted
Benefits; Lifetime and Annual Limits;
and Short-Term, Limited-Duration Insur-
ance” (2016 final rules).
19
The 2016 final
rules amended the definition of STLDI
to specify that the maximum coverage
period must be less than 3 months, taking
into account any extensions that may be
elected by the policyholder with or with-
out the issuer’s consent.
20
In addition, the
2016 final rules stated that the following
notice must be prominently displayed in
the contract and in any application mate-
rials provided in connection with enroll-
ment in STLDI, in at least 14 point type:
THIS IS NOT QUALIFYING
HEALTH COVERAGE (“MINIMUM
ESSENTIAL COVERAGE”) THAT SAT-
ISFIES THE HEALTH COVERAGE
REQUIREMENT OF THE AFFORD-
ABLE CARE ACT. IF YOU DON’T
HAVE MINIMUM ESSENTIAL COV
-
ERAGE, YOU MAY OWE AN ADDI-
TIONAL PAYMENT WITH YOUR
TAXES.
21
On June 12, 2017, HHS published a
request for information (RFI) in the Fed-
eral Register titled “Reducing Regulatory
Burdens Imposed by the Patient Protec-
tion and Affordable Care Act & Improv-
ing Healthcare Choices to Empower
Patients,”
22
which solicited comments
about potential changes to existing regu-
lations and guidance that could promote
consumer choice, enhance affordability
of coverage for individual consumers, and
affirm the traditional regulatory authority
of the States in regulating the business
of health insurance, among other goals.
23

In response to this RFI, HHS received
comments that recommended maintain-
ing the definition of STLDI adopted in
the 2016 final rules, and comments that
recommended expanding the definition
to allow for a longer period of coverage.
Commenters in support of maintaining the
definition adopted in the 2016 final rules
expressed concern that expanding the
definition could leave enrollees in STLDI
at risk for significant out-of-pocket costs
and cautioned that expanding the defini-
tion of STLDI could facilitate its sale to
individuals as their primary form of health
coverage, even though such insurance
lacks key Federal consumer protections
that apply to individual health insurance
coverage. Commenters in favor of main-
taining the definition in the 2016 final
rules also suggested that amending the
14
Some State laws apply some consumer protections and requirements that parallel those in the ACA to STLDI.
15
62 FR 16894 (April 8, 1997).
16
62 FR 16894 at 16928, 16942, 16958 (April 8, 1997); see also 69 FR 78720 (December 30, 2004).
17
See Pub. L. 111-148, March 23, 2010, section 1312(c)(1) and 45 CFR 156.80.
18
81 FR 38019 (June 10, 2016).
19
81 FR 75316 (October 31, 2016).
20
Id. at 75317 – 75318.
21
Id.
22
82 FR 26885 (June 12, 2017).
23
See also Executive Order 13813 of October 12, 2017, 82 FR 48385 (October 17, 2017) (directing the Secretaries of the Treasury, Labor and HHS “...to consider proposing regulations or
revising guidance, consistent with law, to expand the availability of [STLDI]. To the extent permitted by law and supported by sound policy, the Secretaries should consider allowing such
insurance to cover longer periods and be renewed by the consumer.”).

May 6, 2024 970 Bulletin No. 2024–19
2016 final rules to include coverage last-
ing 3 months or more could have the effect
of pulling healthier people out of the indi-
vidual market risk pools, thereby increas-
ing overall premium costs for enrollees in
individual health insurance coverage and
destabilizing the individual market.
In contrast, several other commenters
stated that changes to the 2016 final rules
may provide an opportunity to achieve
the goals outlined in the RFI (for exam-
ple, to promote consumer choice, enhance
affordability, and affirm the traditional
authority of the States in regulating the
business of insurance). These comment-
ers stated that shortening the permitted
length of STLDI policies in the 2016 final
rules had deprived individuals of afford-
able coverage options. One commenter
explained that due to the increased costs
of comprehensive coverage, many finan-
cially stressed individuals could be faced
with a choice between purchasing STLDI
or going without any coverage at all.
One commenter highlighted the need for
STLDI for individuals who are between
jobs for a relatively long period and for
whom enrolling in Consolidated Omnibus
Budget Reconciliation Act (COBRA)
24

continuation coverage is financially infea-
sible. Another commenter noted that
States have the primary responsibility
to regulate STLDI and encouraged the
Departments to defer to the States’ author-
ity with respect to such coverage.
On February 21, 2018, the Depart-
ments published proposed rules in the
Federal Register titled “Short-Term,
Limited-Duration Insurance” (2018
proposed rules) in which the Depart-
ments proposed changing the definition
of STLDI to have a maximum coverage
period of less than 12 months after the
original effective date of the contract, tak-
ing into account any extensions that may
be elected by the policyholder without the
issuer’s consent.
25
Among other things,
the Departments solicited comments on
whether the maximum length of STLDI
should be less than 12 months or some
other duration and under what conditions
issuers should be able to allow such cover-
age to continue for 12 months or longer.
26

In addition, the Departments proposed to
revise the content of the consumer notice
that must appear in the contract and any
application materials provided in connec-
tion with enrollment in STLDI. The 2018
proposed rules included two variations of
the consumer notice—one for policies that
had a coverage start date before January 1,
2019, and the other for policies that had
a coverage start date on or after January
1, 2019, the latter of which excluded lan-
guage referencing the individual shared
responsibility payment (which was
reduced to $0 for months beginning after
December 2018).
27,28
Some commenters on the 2018 pro-
posed rules acknowledged that STLDI fills
an important role by providing temporary
coverage but stated that STLDI should not
take the place of comprehensive coverage.
These commenters expressed concern
that allowing STLDI to be marketed as a
viable alternative to comprehensive cov-
erage would subject uninformed consum-
ers to potentially severe financial risks.
Commenters who opposed the proposed
changes to the definition also expressed
concern that such plans would siphon
off healthier individuals from the market
for individual health insurance coverage,
thereby raising premiums for individual
health insurance coverage.
Many of these commenters also
expressed concerns about the lack of
protections for consumers who purchase
STLDI, stating that such policies are
not a viable option for people with seri-
ous or chronic medical conditions due to
potential coverage exclusions and ben-
efit limitations in STLDI policies. These
commenters further observed that STLDI
policies can discriminate against individ-
uals with serious illnesses or preexisting
conditions, including individuals with
mental health and substance use disor-
ders, older consumers, women, transgen-
der patients, persons with gender identi-
ty-related health concerns, and victims of
rape and domestic violence. Many of these
commenters also expressed concern about
aggressive and deceptive marketing prac-
tices utilized by marketers of STLDI.
Other commenters highlighted the
important role that STLDI could play in
providing temporary coverage to individ-
uals who would otherwise be uninsured.
These commenters, who supported the
proposed changes to the definition, also
noted that such changes would allow pur-
chasers of STLDI to obtain the coverage
they want at a more affordable price for a
longer period.
With respect to the maximum length of
the initial contract term for STLDI, most
commenters opposed extending the max-
imum duration beyond 3 months. Others
suggested periods such as less than 6 or 8
months. However, most commenters who
supported extending the maximum initial
contract term beyond 3 months suggested
it should be 364 days. A few comment-
ers suggested more than 1 year. Other
commenters stated the maximum length
of coverage should be left to the States.
Commenters who supported the 2018 pro-
posed rules generally favored permitting
renewals of STLDI policies, while those
who opposed the 2018 proposed rules
generally opposed permitting such renew-
als.
After reviewing comments and feed-
back received from interested parties, on
August 3, 2018, the Departments pub-
lished final rules in the Federal Regis-
ter titled “Short-Term, Limited-Duration
Insurance” (2018 final rules)
29
with some
modifications from the 2018 proposed
rules. Specifically, in the 2018 final rules,
the Departments amended the definition
of STLDI to provide that STLDI is cov-
erage with an initial term specified in the
contract that is less than 12 months after
the original effective date of the contract,
and taking into account renewals or exten-
sions, has a duration of no longer than 36
months in total.
30
The 2018 final rules
also finalized the provision that issuers of
24
Pub. L. 99-272, April 7, 1986. COBRA added parallel provisions at Code section 4980B, ERISA sections 601-608, and PHS Act sections 2201-2208.
25
83 FR 7437 (February 21, 2018).
26
Id. at 7441.
27
Id. at 7440-7441.
28
Pub. L. 115–97, December 22, 2017.
29
83 FR 38212 (August 3, 2018).
30
Id.

Bulletin No. 2024–19 971 May 6, 2024
STLDI must display one of two versions
of a notice prominently in the contract and
in any application materials provided in
connection with enrollment in such cov-
erage, in at least 14-point type. Under the
2018 final rules, the notice must read as
follows (with the final two sentences omit-
ted for policies sold on or after January 1,
2019)
31
:
This coverage is not required to
comply with certain Federal mar-
ket requirements for health insur-
ance, principally those contained in
the Affordable Care Act. Be sure to
check your policy carefully to make
sure you are aware of any exclusions
or limitations regarding coverage
of preexisting conditions or health
benefits (such as hospitalization,
emergency services, maternity care,
preventive care, prescription drugs,
and mental health and substance use
disorder services). Your policy might
also have lifetime and/or annual dol-
lar limits on health benefits. If this
coverage expires or you lose eligi-
bility for this coverage, you might
have to wait until an open enrollment
period to get other health insurance
coverage. Also, this coverage is not
“minimum essential coverage.” If
you don’t have minimum essential
coverage for any month in 2018, you
may have to make a payment when
you file your tax return unless you
qualify for an exemption from the
requirement that you have health
coverage for that month.
D. Independent, Noncoordinated
Excepted Benefits: Hospital Indemnity or
Other Fixed Indemnity Insurance
Section 9831 of the Code, section 732
of ERISA, and sections 2722(b)-(c) and
2763 of the PHS Act provide that the
respective Federal consumer protections
and requirements for comprehensive
coverage do not apply to any individual
coverage or any group health plan (or
group health insurance coverage offered
in connection with a group health plan)
in relation to its provision of certain types
of benefits, known as “excepted benefits.”
These excepted benefits are described
in section 9832(c) of the Code, section
733(c) of ERISA, and section 2791(c) of
the PHS Act.
HIPAA defined certain types of cov-
erage as “excepted benefits” that were
exempt from its portability require-
ments.
32
The same definitions are applied
to describe benefits that are not required
to comply with the ACA requirements.
33

There are four statutory categories of
excepted benefits: independent, noncoor-
dinated excepted benefits, which are the
subject of these final rules; benefits that
are excepted in all circumstances;
34
lim-
ited excepted benefits;
35
and supplemental
excepted benefits.
36
The category “independent, noncoor-
dinated excepted benefits” includes cover-
age for only a specified disease or illness
(such as cancer-only policies) and hospital
indemnity or other fixed indemnity insur-
ance. These benefits are excepted under
section 9831(c)(2) of the Code, section
732(c)(2) of ERISA, and section 2722(c)
(2) of the PHS Act only if all of the fol-
lowing conditions are met: (1) the bene-
fits are provided under a separate policy,
certificate, or contract of insurance; (2)
there is no coordination between the pro-
vision of such benefits and any exclusion
of benefits under any group health plan
maintained by the same plan sponsor; and
(3) the benefits are paid with respect to an
event without regard to whether benefits
are provided with respect to such event
under any group health plan maintained
by the same plan sponsor or, with respect
to individual coverage, under any health
insurance coverage maintained by the
same health insurance issuer.
37
In addi-
tion, under existing regulations, hospital
indemnity and other fixed indemnity insur-
ance in the group market must pay a fixed
dollar amount per day (or other period) of
hospitalization or illness, regardless of the
amount of expenses incurred, to be con
-
sidered an excepted benefit.
38
By contrast,
in the individual market, under existing
regulations, hospital indemnity and other
fixed indemnity insurance must also pay
benefits in a fixed dollar amount, regard-
less of the amount of expenses incurred,
to be considered an excepted benefit, but
is permitted to pay on either a per period
of hospitalization or illness, or a per-ser-
vice basis (for example, $100/day or $50/
visit).
39,40
The amendments to the regulations
regarding independent, noncoordinated
excepted benefits coverage that were
proposed in the 2023 proposed rules and
those finalized in these final rules address
31
See id. at 38222-38225.
32
See sections 9831(b) – (c) and 9832(c) of the Code, sections 732(b) – (c) and 733(c) of ERISA, and sections 2722(b) – (c), 2763 and 2791(c) of the PHS Act.
33
Section 1551 of the ACA. See also section 1563(a) and (c)(12) of the ACA. Excepted benefits are also not subject to the consumer protections and requirements added by other Federal laws
that apply to comprehensive coverage, including MHPAEA, the Newborns’ and Mothers’ Health Protection Act, the Women’s Health and Cancer Rights Act, the Children’s Health Insurance
Program Reauthorization Act of 2009, Michelle’s Law, and Division BB of the CAA, 2021.
34
Under section 9832(c)(1) of the Code, section 733(c)(1) of ERISA, and section 2791(c)(1) of the PHS Act, this category includes, for example, accident and disability income insurance,
automobile medical payment insurance, liability insurance and workers compensation, as well as “[o]ther similar insurance coverage, specified in regulations, under which benefits for medical
care are secondary or incidental to other insurance benefits.”.
35
Under section 9832(c)(2) of the Code, section 733(c)(2) of ERISA, and section 2791(c)(2) of the PHS Act, this category includes limited scope vision or dental benefits, benefits for long-
term care, nursing home care, home health care, or community-based care, or other, similar limited benefits specified by the Departments through r
egulation.
36
Under section 9832(c)(4) of the Code, section 733(c)(4) of ERISA, and section 2791(c)(4) of the PHS Act, this category includes Medicare supplemental health insurance (also known as
Medigap), TRICARE supplemental programs, or “similar supplemental coverage provided to coverage under a group health plan.” To be considered “similar supplemental coverage” and thus
an excepted benefit, the coverage, whether offered in the group or individual market, must supplement coverage provided under a group health plan. This category does not include coverage
that supplements individual health insurance coverage. 26 CFR 54.9831-1(c)(5), 29 CFR 2590.732(c)(5), 45 CFR 146.145(b)(5) and 148.220(b)(7).
37
See also section 2763(b) of the PHS Act (providing that “[the] requirements of this part [related to the HIPAA individual market reforms] shall not apply to any health insurance coverage in
relation to its provision of excepted benefits described in paragraph (2), (3), or (4) of section 2791(c) if the benefits are provided under a separate policy, certificate or contract of insurance.”).
38
26 CFR 54.9831-1(c)(4), 29 CFR 2590.732(c)(4), and 45 CFR 146.145(b)(4).
39
45 CFR 148.220(b)(4)(iii).
40
As discussed further in section I.D.2 of this preamble, the existing individual market regulation also provides that hospital indemnity and other fixed indemnity insurance cannot coordinate
between the provision of benefits and an exclusion of benefits under any health coverage to be considered an excepted benefit. See 45 CFR 148.220(b)(4)(ii).

May 6, 2024 972 Bulletin No. 2024–19
the conditions that must be met for hos-
pital indemnity and other fixed indemnity
insurance in the group or individual mar-
kets to be considered excepted benefits
under the Federal regulations.
Like other forms of excepted benefits,
fixed indemnity excepted benefits cov-
erage does not provide comprehensive
coverage. Rather, its primary purpose is
to provide income replacement benefits.
41

Benefits under this type of coverage are
paid in a flat (“fixed”) cash amount fol-
lowing the occurrence of a health-related
event, such as a period of hospitalization
or illness, subject to the terms of the con-
tract. In addition, benefits are provided at
a pre-determined level regardless of any
health care costs incurred by a covered
individual with respect to the health-re-
lated event. Although a benefit payment
may equal all or a portion of the cost of
care related to an event, it is not neces-
sarily designed to do so, and the benefit
payment is made without regard to the
amount of health care costs incurred.
42
Traditionally, benefits under fixed
indemnity excepted benefits coverage
are paid directly to a policyholder, rather
than to a health care provider or facility.
The policyholder has discretion over how
to use such benefits – including using the
payment to cover non-medical expenses,
such as childcare or transportation – that
may or may not be related to the event that
precipitated the payment.
43
1. Group Market Regulations and
Guidance
The Departments’ 1997 interim final
rules implementing the portability and
renewability requirements of HIPAA cod-
ified at 26 CFR 54.9831-1(c)(4), 29 CFR
2590.732(c)(4), and 45 CFR 146.145(b)
(4) established requirements for hospi-
tal indemnity and other fixed indemnity
insurance to qualify as an excepted benefit
in the group market. These requirements,
which were effective until February 27,
2005, provided that coverage for hospital
indemnity or other fixed indemnity insur-
ance is excepted only if it meets each of
the following conditions: (1) the benefits
are provided under a separate policy, cer-
tificate or contract of insurance; (2) there
is no coordination between the provision
of the benefits and an exclusion of benefits
under any group health plan maintained by
the same plan sponsor; and (3) the benefits
are paid with respect to an event without
regard to whether benefits are provided
with respect to the event under any group
health plan maintained by the same plan
sponsor.
44
The Departments’ group market regu-
lations for fixed indemnity excepted ben-
efits coverage were first amended in the
2004 HIPAA group market final rules.
Those amendments added language to fur-
ther clarify that to be hospital indemnity or
other fixed indemnity insurance that is an
excepted benefit, the insurance must pay a
fixed dollar amount per day (or per other
time period) of hospitalization or illness
(for example, $100/day) regardless of the
amount of expenses incurred.
45
An exam-
ple was also added as part of these amend-
ments illustrating that a policy providing
benefits only for hospital stays at a fixed
percentage of hospital expenses up to a
maximum amount per day does not qual-
ify as an excepted benefit.
46
As explained
in the 2004 HIPAA group market final
rules, the result is the same even if, in
practice, the policy pays the maximum for
every day of hospitalization.
47
The Departments later released Fre-
quently Asked Questions (FAQ) on Janu-
ary 24, 2013, to offer additional guidance
on the types of hospital indemnity or other
fixed indemnity insurance that meet the
criteria for fixed indemnity excepted ben-
efits coverage.
48
The Departments issued
the FAQ in response to reports that poli-
cies were being advertised as fixed indem-
nity coverage, but were paying a fixed
amount on a per-service basis (for exam-
ple, per doctor visit or surgical procedure)
rather than a fixed amount per period (for
example, per day or per week). The FAQ
affirmed that, under the 2004 HIPAA
group market final rules, to qualify as fixed
indemnity excepted benefits coverage,
the policy must pay benefits on a per-pe-
riod basis as opposed to on a per-service
basis.
49
The FAQ also affirmed that group
health insurance coverage that provides
benefits in varying amounts based on
the type of procedure or item, such as
the type of surgery actually performed
or prescription drug provided, does not
qualify as fixed indemnity excepted bene-
fits coverage because it does not meet the
condition that benefits be provided on a
per-period basis, regardless of the amount
of expenses incurred.
50
The Departments proposed amend-
ments to the group market regulations for
fixed indemnity excepted benefits cov-
erage in the 2016 proposed rules.
51
As
explained in those proposed rules, the
Departments were concerned that some
individuals may mistake these policies for
comprehensive coverage that would be
considered MEC.
52
To address this confu-
sion, the Departments proposed to adopt
41
The original version of HIPAA that the House Ways & Means Committee referred to the House floor referred to hospital indemnity or other fixed indemnity insurance as a “hospital or fixed
indemnity income-protection policy” (emphasis added). See H.R. Rep. No. 104-496 part I, at 32 (1996), available at: https://www.govinfo.gov/content/pkg/CRPT-104hrpt496/pdf/CRPT-
104hrpt496-pt1.pdf. See also 79 FR 15818 (March 21, 2014) (“The primary reason fixed indemnity insurance is considered to be an excepted benefit...is that its primary purpose is not to
provide major medical coverage but to provide a cash-replacement benefit for those individuals with other health coverage.”).
42
Jost, Timothy (2017). “ACA Round-Up: Market Stabilization, Fixed Indemnity Plans, Cost Sharing Reductions, and Penalty Updates,” Health Affairs, available at: https://www.healthaf-
fairs.org/do/10.1377/forefront.20170208.058674/full. (“Fixed indemnity coverage is excepted benefit coverage that pays a fixed amount per-service or per-time period of service without
regard to the cost of the service or the type of items or services provided.”).
43
America’s Health Insurance Plans (2019). “Supplemental Health Insurance: Hospital or Other Fixed Indemnity, Accident-Only, Critical Illness,” available at: https://www.ahip.org/docu-
ments/Supplemental-Health-Insurance-Fast-Facts.pdf.
44
62 FR 16894 at 16903, 16939 through 16940, 16954, and 16971 (April 8, 1997).
45
69 FR 78720 at 78735, 78762, 78780, and 78798 – 78799 (December 30, 2004).
46
Id. See also 26 CFR 54.9831-1(c)(4)(iii), 29 CFR 2590.732(c)(4)(iii), and 45 CFR 146.145(b)(4)(iii).
47
Id.
48
Frequently Asked Questions about Affordable Care Act Implementation (Part XI) (Jan. 24, 2013), Q7, available at: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/
resource-center/faqs/aca-part-xi.pdf and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.
49
Id.
50
Id.
51
81 FR 38019 at 38031-38032, 38038, 38042-38043, and 38045-38046 (June 10, 2016).
52
Id. at 38031-38032.

Bulletin No. 2024–19 973 May 6, 2024
a notice provision to inform enrollees and
potential enrollees that the coverage is a
supplement to, rather than a substitute for,
comprehensive coverage, and also pro-
posed to add two illustrative examples to
further clarify the condition that benefits
must be provided on a per-period basis.
53

The Departments also requested com-
ments on whether to more substantively
align the rules for hospital indemnity or
other fixed indemnity insurance in the
group and individual markets.
54
After con-
sideration of comments, the Departments
did not finalize the proposed changes to
the group market regulation but noted
their intention to address hospital indem-
nity and other fixed indemnity insurance
in future rulemaking.
55
2. Individual Market Regulations and
Guidance
HHS also issued an interim final rule
in 1997 establishing the regulatory frame-
work for the HIPAA individual market
Federal requirements and addressing the
requirements for hospital indemnity and
other fixed indemnity insurance to qualify
as an excepted benefit in the individual
market.
56
The initial HIPAA individual
market fixed indemnity excepted benefits
coverage regulation, which was effective
until July 27, 2014, provided an exemp-
tion from the Federal individual market
consumer protections and requirements
for comprehensive coverage if the hospital
indemnity or other fixed indemnity insur-
ance provided benefits under a separate
policy, certificate, or contract of insurance
and met the noncoordination-of-benefits
requirements outlined in the HHS group
market excepted benefits regulations.
57
Following issuance of the Departments’
January 24, 2013 FAQ,
58
State insurance
regulators and industry groups represent-
ing health insurance issuers expressed con-
cerns that prohibiting hospital indemnity
and other fixed indemnity insurance from
payment on a per-service basis to qualify
as an excepted benefit could limit con-
sumer access to an important supplemen-
tal coverage option.
59
Based on this feed-
back, HHS announced in an FAQ released
in January 2014 that it intended to pro-
pose amendments to the individual market
fixed indemnity excepted benefits cover-
age regulation to allow hospital indemnity
or other fixed indemnity insurance sold in
the individual market to be considered an
excepted benefit if four conditions were
met.
60
First, such coverage would be sold
only to individuals who have other health
coverage that is MEC, within the meaning
of section 5000A(f) of the Code. Second,
no coordination between the provision
of benefits and an exclusion of benefits
under any other health coverage would be
permitted. Third, benefits would be paid
in a fixed dollar amount regardless of the
amount of expenses incurred and without
regard to whether benefits are provided
with respect to an event or service under
any other health insurance coverage.
Finally, a notice would have to be prom-
inently displayed to inform policyholders
that the coverage is not MEC and would
not satisfy the individual shared respon-
sibility requirements of section 5000A of
the Code. HHS explained that if these pro-
posed revisions were implemented, hos-
pital indemnity or other fixed indemnity
insurance in the individual market would
no longer have to pay benefits solely on a
per-period basis to qualify as an excepted
benefit.
In the proposed rule, titled “Patient
Protection and Affordable Care Act;
Exchange and Insurance Market Standards
for 2015 and Beyond” (2014 proposed
rule), HHS proposed to amend the crite-
ria in 45 CFR 148.220 for fixed indemnity
insurance to be treated as an excepted ben-
efit in the individual market.
61
Consistent
with the framework outlined in the Janu-
ary 2014 FAQ, the amendments proposed
to eliminate the requirement that indi-
vidual market fixed indemnity excepted
benefits coverage must pay benefits only
on a per-period basis (as opposed to a
per-service basis) and instead proposed to
require, among other things, that it be sold
only as secondary to other health cover-
age that is MEC to qualify as an excepted
benefit.
62
On July 28, 2014, in the rule titled
“Patient Protection and Affordable Care
Act; Exchange and Insurance Market
Standards for 2015 and Beyond” (2014
final rule), HHS finalized the proposed
amendments to 45 CFR 148.220(b)(4)
with some modifications. Pursuant to the
finalized amendments, hospital indemnity
or other fixed indemnity insurance in the
individual market may qualify as fixed
indemnity excepted benefits coverage if
payments are made on a per-period and/or
per-service basis subject to several addi-
tional requirements that do not apply to
fixed indemnity excepted benefits cover-
age in the group market.
63
Under 45 CFR
148.220(b)(4)(i), to qualify as excepted
benefits coverage, benefits under an indi-
vidual market hospital indemnity or other
fixed indemnity insurance policy may
only be provided to individuals who attest
in their application that they have other
health coverage that is MEC within the
meaning of section 5000A(f) of the Code,
or that they are treated as having MEC due
to their status as a bona fide resident of
any possession of the United States pur-
suant to section 5000A(f)(4)(B) of the
53
Id. at 38031-38032, 38038, 38042-38043, and 38045-38046.
54
As described in section I.D.2 of this preamble, HHS amended the individual market fixed indemnity excepted benefits coverage regulation to provide additional flexibility, subject to several
additional requirements that do not apply in the group market. 79 FR 30239 (May 27, 2014).
55
81 FR 75316 at 75317 (October 31, 2016).
56
62 FR 16985 at 16992 and 17004 (April 8, 1997).
57
Id.; 45 CFR 146.145(b)(4)(ii)(B) and (C).
58
Frequently Asked Questions about Affordable Care Act Implementation (Part XI) (Jan. 24, 2013), available at: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/
resource-center/faqs/aca-part-xi.pdf and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.
59
While the FAQ only addressed fixed indemnity insurance sold in the group market, the same statutory framework and legal analysis also applies to hospital indemnity and fixed indemnity
insurance sold in the individual market.
60
Frequently Asked Questions about Affordable Care Act Implementation (Part XXVIII) and Mental Health Parity Implementation (Jan. 9, 2014), Q11, available at: https://www.dol.gov/sites/
dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-xviii.pdf and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.
61
79 FR 15807 at 15818-15820, 15869 (March 21, 2014).
62
Id.
63
79 FR 30239 (May 27, 2014).

May 6, 2024 974 Bulletin No. 2024–19
Code.
64
Further, to qualify as an excepted
benefit, 45 CFR 148.220(b)(4)(iv) out-
lines specific notice language that must be
prominently displayed in the application
materials for individual market hospital
indemnity or other fixed indemnity insur-
ance. Finally, consistent with the group
market fixed indemnity excepted benefits
coverage regulations, 45 CFR 148.220(b)
(4)(ii) implements the statutory noncoor-
dination standard and requires that there is
no coordination between the provision of
benefits under the individual market fixed
indemnity excepted benefits insurance
policy and an exclusion of benefits under
any other health coverage.
HHS made these changes in the 2014
final rule for two reasons. First, as stated
previously, interested parties, including
State insurance regulators and indus-
try groups representing health insurance
issuers, communicated to HHS that fixed
indemnity plans that paid benefits on a
per-service basis were widely available as
a complement to comprehensive coverage
in the group and individual markets. The
National Association of Insurance Com-
missioners (NAIC) also expressed that
State insurance regulators believed fixed
indemnity plans that paid benefits on a
per-service basis provided consumers an
important supplemental coverage option
by helping consumers that purchase MEC
pay for out-of-pocket costs.
65
Second,
beginning in 2014, most consumers were
required to have MEC to avoid being sub-
ject to an individual shared responsibil-
ity payment under section 5000A of the
Code. HHS adopted the MEC attestation
requirement to prevent fixed indemnity
excepted benefits coverage in the indi-
vidual market from being offered as a
substitute for comprehensive coverage
while also accommodating the concerns
of interested parties who supported allow-
ing fixed indemnity excepted benefits
coverage in the individual market to pay
benefits on a per-service basis, rather than
only on a per-period basis.
66
However,
in its 2016 decision in Central United
Life Insurance Company v. Burwell, the
U.S. Court of Appeals for the District of
Columbia invalidated the requirement at
45 CFR 148.220(b)(4)(i) that an individ-
ual must attest to having MEC prior to
purchasing fixed indemnity excepted ben-
efits coverage in the individual market.
67

The Court did not engage in a severability
analysis to determine whether HHS would
have intended to leave the remaining pro-
visions of the regulation in place, and
left intact the language permitting fixed
indemnity excepted benefits coverage in
the individual market to provide benefits
on a per-service basis.
E. Ta x Treatment and Substantiation
Requirements for Amounts Received from
Fixed Indemnity Insurance and Certain
Other Arrangements
As part of the 2023 proposed rules, the
Treasury Department and the IRS pro-
posed amendments to 26 CFR 1.105-2.
For the reasons that follow, the Treasury
Department and the IRS are not finalizing
the proposed amendments at this time.
Hospital indemnity or other fixed
indemnity insurance, as well as coverage
only for a specified disease or illness, gen-
erally are considered “accident or health
insurance” under sections 104, 105, and
106 of the Code, regardless of whether
they are “excepted benefits” as defined in
section 9832(c) of the Code. Premiums
paid by an employer (including by salary
reduction pursuant to section 125 of the
Code) for accident or health insurance
are excluded from an employee’s gross
income under section 106(a) of the Code.
The Treasury Department and the IRS also
have recognized the ability of employers
and employees to agree to include them in
employees’ gross income notwithstanding
section 106(a) of the Code.
68
Amounts received through accident
or health insurance are excluded from an
employee’s gross income under section
104(a)(3) of the Code if the premiums
were paid on an after-tax basis. How-
ever, amounts received are included in an
employee’s gross income if the amounts
are attributable to contributions by an
employer that were excluded from the
employee’s gross income under section
106(a) of the Code. Whether amounts
received by an employee through accident
or health insurance are excluded from an
employee’s gross income where the pre-
miums or contributions were paid on a
pre-tax basis is determined under section
105. Section 105(a) of the Code provides
that such amounts are included in gross
income except as otherwise provided in
section 105 of the Code. Section 105(b)
of the Code excludes such amounts from
gross income amounts if they are paid to
reimburse the employee’s expenses for
medical care (as defined in section 213(d)
of the Code). Under 26 CFR 1.105-2,
this means the exclusion “applies only
to amounts which are paid specifically
to reimburse the taxpayer for expenses
incurred by him for the prescribed medi-
cal care.”
69
The 2023 proposed amendments to
26 CFR 1.105-2 would provide that the
exclusion from gross income under sec-
tion 105(b) of the Code does not apply to
64
As discussed later in this section and in section III.B.2 of this preamble, the U.S. Court of Appeals for the District of Columbia vacated the requirement at 45 CFR 148.220(b)(4)(i) that an
individual attest to having MEC prior to purchasing a hospital indemnity or other fixed indemnity policy in order for the policy to qualify as an excepted benefit. Central United Life Insurance
Company v. Burwell, 827 F.3d 70 (D.C. Cir. 2016).
65
National Association of Insurance Commissioners (2013). “Letter to Secretaries of Labor, Treasury, and Health and Human Services,” available at: https://naic.soutronglobal.net/Portal/
Public/en-GB/RecordView/Index/23541. (“State regulators believe hospital and other fixed indemnity coverage with variable fixed amounts based on service type could provide important
options for consumers as supplemental coverage. Consumers who purchase comprehensive coverage that meets the definition of ‘minimum essential coverage’ may still wish to buy fixed
indemnity coverage to help meet out-of-pocket medical and other costs.”).
66
79 FR 30239 at 30255 (May 27, 2014).
67
827 F.3d 70 (D.C. Cir. July 1, 2016).
68
See, for example, IRS Rev. Rul. 2004-55, which concludes that long-term disability benefits received by an employee who has irrevocably elected, prior to the beginning of the plan year,
to have the coverage paid by the employer on an after-tax basis for the plan year in which the employee becomes disabled are attributable solely to after-tax employee contributions and are
excludable from the employee’s gross income under section 104(a)(3) of the Code.
69
Additionally, an employer-provided accident or health insurance policy or plan that reimburses an employee for any expenses incurred for medical care is a group health plan subject to
section 4980B of the Code, regardless of whether the reimbursements are included in an employee’s income under section 105(a) of the Code or excluded under section 104(a)(3) or 105(b)
of the Code. In contrast, a policy or plan that does not reimburse an employee for any expenses incurred for medical care is not a group health plan subject to section 4980B of the Code (and
section 105(b) of the Code cannot apply to it).

Bulletin No. 2024–19 975 May 6, 2024
amounts that are paid without regard to
the amount of incurred medical expenses
as defined in section 213(d) of the Code.
The proposed amendments also would
clarify that, consistent with guidance
issued by the Treasury Department and
the IRS relating to certain specific types
of health plans, the substantiation require-
ments for qualified medical expenses
apply to reimbursements under all types
of accident and health plans.
70
Finally, the
proposed amendments would update sev-
eral cross-references in 26 CFR 1.105-2
to reflect statutory changes since the rules
were issued in 1956.
71
The Treasury Department and the IRS
issued the proposed amendments because
uncertainty regarding the exclusion under
section 105(b) of the Code has resulted
in inconsistent treatment by taxpayers of
benefits under different types of accident
and health plans and has encouraged some
taxpayers to apply the exclusion to situa-
tions where the amount or even the exis-
tence of medical expenses is doubtful. The
Treasury Department and the IRS also are
concerned that uncertainty regarding the
related Federal Insurance Contributions
Act (FICA)
72
and Federal Unemployment
Tax Act (FUTA)
73
exclusions, and the
Federal income tax withholding rules,
74

has resulted in instances where no FICA,
FUTA, or Federal income taxes are with-
held from or paid with respect to taxable
benefits from accident and health plans
and policies by either employers or pay-
ors. Although these issues are not limited
to fixed indemnity plans and policies, the
Treasury Department’s and the IRS’s con-
cerns have recently escalated after iden-
tifying an increasing number of arrange-
ments, some involving fixed indemnity
plans and policies, that distribute cash
benefit payments, purportedly for medical
expenses, even if any expenses incurred
may already have been reimbursed
through other coverage, or participants do
not incur any medical expenses within the
meaning of section 213(d) of the Code.
In some cases, no medical expenses are
incurred and participants simply com-
plete certain health-related activities.
Benefit payments from such accident and
health plans that are not made on account
of medical expenses incurred generally
would not qualify for exclusion from
gross income, FICA, FUTA, or Federal
income tax withholding.
The Treasury Department and the IRS
received comments in support of and in
opposition to the proposed amendments
to 26 CFR 1.105-2. Commenters who
opposed the proposed amendments pri-
marily argued that the exclusion under
section 105(b) of the Code should apply
with respect to the amount of any medical
expenses associated with the health-re-
lated event that precipitates payments
under accident or health insurance, even
if the amount paid is determined without
regard to the amount of actual medical
expenses incurred (as is required for hos-
pital indemnity or other fixed indemnity
insurance to be considered an excepted
benefit). These commenters generally
argued that only the amount in excess of
the medical expenses associated with the
health-related event should be included in
gross income.
The preamble to the 2023 proposed
rules noted that, if the proposed amend-
ments to 26 CFR 1.105-2 were finalized,
taxpayers would need to consider the
impact the proposal would have on deter-
minations of whether amounts received
under accident and health plans constitute
wages for employment tax and income tax
withholding purposes. Many commenters
responded that the proposed amendments
would, if finalized, prompt the need for
additional guidance regarding collecting
and paying employment taxes on some or
all of the amounts paid through accident
or health insurance that are not excluded
from gross income, and proper reporting
of such amounts on the employee’s Form
W-2. Commenters also requested further
clarification on how incurred medical
expenses must be substantiated.
The Treasury Department and the IRS
intend to address these issues in more
detail in future guidance. Accordingly,
to provide more time to study the issues
and concerns raised by commenters, the
Treasury Department and the IRS are not
finalizing the proposed amendments to 26
CFR 1.105-2 at this time. No inference
should be drawn regarding whether or the
extent to which the Treasury Department
or the IRS agree with any comments on
the scope of section 105(b) of the Code
based on this decision.
IRS compliance efforts regarding the
exclusion from gross income under sec-
tion 105(b) of the Code will continue to
assist taxpayers to satisfy their existing tax
responsibilities. Employers are reminded
that amounts received through accident
or health insurance are not taxable if pre-
miums for the coverage are paid on an
after-tax basis, thereby avoiding many of
the practical concerns relating to benefits
that do not meet the criteria to be excluded
from gross income. The Treasury Depart-
ment and IRS understand that is how most
premiums for hospital indemnity or other
fixed indemnity insurance are paid.
II. Promoting Access to High-Quality,
Affordable, and Comprehensive
Coverage
The Departments recognize that
STLDI can provide temporary health
coverage for individuals who are experi-
encing brief periods without comprehen-
sive coverage (for example, due to appli-
cation of a waiting period for employer
coverage). They also recognize that
fixed indemnity excepted benefits cover-
age can provide consumers with income
replacement that can be used to cover
out-of-pocket expenses not covered by
comprehensive coverage or to defray
70
See, for example, 84 FR 28888, 28917 (June 20, 2019) (describing substantiation requirements for employer-sponsored health reimbursement arrangements); see also Q44-55 of IRS Notice
2017-67, 2017-47 IRB 517; Prop. Treas. Reg. § 1.125-6(b)(4) (2007); IRS Notice 2002-45, 2002-2 CB 93.
71
The current rules reference section 105(d) of the Code, which has been repealed. The rules also reference the definition of a dependent in section 152(f) of the Code which may, in some
circumstances, not include children up to the age of 26 that must be eligible to enroll in a group health plan or group or individual health insurance coverage under section 2714 of the PHS
Act (which is incorporated by reference in section 9815 of the Code) if the plan or coverage makes available dependent coverage of children.
72
Subtitle C, chapter 21 of the Code.
73
Subtitle C, chapter 23 of the Code.
74
Subtitle C, chapter 24 of the Code.

May 6, 2024 976 Bulletin No. 2024–19
non-medical expenses (for example,
mortgage or rent) upon the occurrence of
a health-related event. Both STLDI and
fixed indemnity excepted benefits cov-
erage generally provide limited benefits
at lower premiums than comprehensive
coverage,
75
and enrollment is typically
available at any time (sometimes subject
to medical underwriting) rather than being
restricted to open and special enrollment
periods. However, the Departments are
concerned about the financial and health
risks that consumers face if they use either
form of coverage as a substitute for com-
prehensive coverage, particularly as a
long-term substitute. Consumers who do
not understand key differences between
STLDI, fixed indemnity excepted bene-
fits coverage, and comprehensive cover-
age may unknowingly take on significant
financial and health risks if they purchase
STLDI or fixed indemnity excepted ben-
efits coverage under the misapprehension
that such products provide comprehen-
sive coverage. Consumer confusion can
be exacerbated when the products are
designed in ways that resemble compre-
hensive coverage. As discussed further in
this section II of this preamble, given sig-
nificant changes in the legal landscape and
market conditions since the Departments
last addressed STLDI and fixed indem-
nity excepted benefits coverage, and the
low value that STLDI and fixed indem-
nity excepted benefits coverage provide to
some consumers when used as a substitute
for comprehensive coverage, the Depart-
ments have determined that it is necessary
and appropriate to amend the existing
Federal regulations governing both types
of coverage to more clearly distinguish
them from comprehensive coverage and
increase consumer awareness of cover-
age options that include the full range of
Federal consumer protections and require-
ments.
A. Access to Affordable Coverage
In the preamble to the 2018 final rules,
the Departments explained the decision to
amend the definition of STLDI to expand
the initial term and total duration of such
policies by citing STLDI as an important
means to provide more affordable cover-
age options and more choices for consum-
ers.
76
The Departments cited a 21 percent
increase in individual health insurance
coverage premiums between 2016 and
2017, and a 20 percent decrease in aver-
age monthly enrollment for individuals
who did not receive PTC, along with a
10 percent overall decrease in monthly
enrollment during the same period.
77

Additionally, the Departments noted that
in 2018 about 26 percent of enrollees (liv-
ing in 52 percent of counties) had access
to just one issuer on the Exchange.
78
Since the publication of the 2018
final rules, comprehensive coverage for
individuals has generally become more
accessible and affordable. For example,
a study examining issuer participation
trends from 2014 to 2021 in every county
in the United States found that the number
of consumers with multiple issuer options
for individual health insurance coverage
on the Exchanges has grown consistently
since 2018. In 2021, 78 percent of enroll-
ees (living in 46 percent of counties) had
a choice of three or more health insurance
issuers, up from 67 percent of enrollees
in 2020, 58 percent of enrollees in 2019,
and 46 percent of enrollees in 2018. Only
3 percent of enrollees (residing in 10 per-
cent of counties) resided in single-issuer
counties in 2021 – down from 26 per-
cent of enrollees (residing in 52 percent
of counties) in 2018.
79
Issuer participa-
tion in the Exchanges has continued to
trend positively in recent years, with the
average number of issuers offering indi-
vidual health insurance coverage on the
Exchanges per State increasing from 5
in 2021 to 6 in 2024.
80
The Centers for
Medicare & Medicaid Services (CMS)
reported that a record 21.3 million people
enrolled in Exchange coverage during the
2024 Open Enrollment Period, including 5
million consumers (approximately 24 per-
cent of total enrollments) who were new
to Exchanges in 2024, and 16.3 million
returning customers.
81
Nearly 5 million
more consumers signed up for coverage
during the 2024 Open Enrollment Period
compared to the same period in 2023 (an
increase of more than 30 percent). This
follows an increase of approximately 13
percent in 2023 and an increase of approx-
imately 21 percent in 2022.
82
The enroll-
ment gains in recent years were influ-
enced by the expansion of PTC subsidies,
as first provided under the ARP and then
extended through 2025 under the IRA, as
discussed in section I.A of this preamble.
83

In an analysis prior to the passage of the
IRA, the Congressional Budget Office
stated that if the ARP subsidies were made
permanent, they would attract 4.8 mil-
lion new people to the Exchanges each
75
Although it is typically true that the unsubsidized premium price for comprehensive coverage is greater than STLDI or fixed indemnity excepted benefits coverage, consistent with the
greater level of benefits provided under comprehensive coverage, see the additional discussion in this section II of this preamble regarding the availability of financial subsidies for eligible
individuals to reduce the premium and out-of-pocket costs for comprehensive coverage purchased on an Exchange.
76
83 FR 38212 at 38217 (October 2, 2018).
77
Id. at 38214 (citing CMS (2018). “Trends in Subsidized and Unsubsidized Individual Health Insurance Market Enrollment,” available at: https://www.cms.gov/CCIIO/Programs-and-Initia-
tives/Health-Insurance-Marketplaces/Downloads/2018-07-02-Trends-Report-2.pdf.)
78
Id. (citing KFF (2017). “Insurer Participation on ACA Marketplaces, 2014-2018,” now available at: https://www.kff.org/private-insurance/issue-brief/insurer-participation-on-the-aca-mar-
ketplaces-2014-2021/.)
79
McDermott, Daniel and Cynthia Cox (2020). “Insurer Participation on the ACA Marketplaces, 2014-2021,” KFF, available at: https://www.kff.org/private-insurance/issue-brief/insurer-par-
ticipation-on-the-aca-marketplaces-2014-2021.
80
See KFF (2024). “Number of Issuers Participating in the Individual Health Insurance Marketplaces, 2014-2024,” available at: https://www.kff.org/other/state-indicator/number-of-issu-
ers-participating-in-the-individual-health-insurance-marketplace.
81
See CMS (2024). “Marketplace 2024 Open Enrollment Period Report: Final National Snapshot,” available at: https://www.cms.gov/newsroom/fact-sheets/marketplace-2024-open-enroll-
ment-period-report-final-national-snapshot.
82
See CMS (2023). “Health Insurance Marketplaces, 2023 Open Enrollment Report,” available at: https://www.cms.gov/files/document/health-insurance-exchanges-2023-open-enrollment-re-
port-final.pdf.
83
Although unsubsidized premiums for 2023 increased on average between 2.2 percent and 4.7 percent compared to the previous year, after 4 years of declines, the expanded PTC subsidies
under the IRA largely shielded many consumers from these premium increases. See Ortaliza, Jared, Justin Lo, Krutika Amin, and Cynthia Cox (2022). “How ACA Marketplace Premiums Are
Changing By County in 2023,” KFF, available at: https://www.kff.org/private-insurance/issue-brief/how-aca-marketplace-premiums-are-changing-by-county-in-2023.

Bulletin No. 2024–19 977 May 6, 2024
year, and that 2.2 million fewer individ-
uals would be without health insurance,
on average, over the period from 2023
through 2032.
84
Additionally, on October 13, 2022, the
Treasury Department and the IRS issued
final regulations under section 36B of
the Code to provide that affordability of
employer-sponsored MEC for family
members of an employee is determined
based on the employee’s share of the cost
of covering the employee and those fam-
ily members, not the cost of covering only
the employee (2022 affordability rule).
85
It
was estimated that this rule change, aimed
at addressing the issue often called the
“family glitch,” would increase the num-
ber of individuals with PTC-subsidized
Exchange coverage by approximately 1
million per year for the next 10 years.
86
These recent and projected enroll-
ment trends and the availability of the
enhanced subsidies lessen the accessibil-
ity and affordability concerns expressed
by the Departments in the preamble to the
2018 final rules regarding the availability
of affordable options for comprehensive
coverage, and offer further support for the
provisions in these final rules, which are
aimed at helping consumers differentiate
between comprehensive coverage and
other forms of more limited health cov-
erage to decide which option is best for
them.
Although access to affordable compre-
hensive coverage has improved in recent
years, the Departments recognize that
affordability concerns continue to per-
sist among consumers, including among
consumers who are enrolled in compre-
hensive coverage. A 2022 national sur-
vey conducted by the Commonwealth
Fund found that 29 percent of people with
employer-sponsored coverage and 44 per-
cent of those with coverage purchased in
the individual market (including coverage
purchased through an Exchange) were
underinsured, meaning that their cover-
age did not provide them with affordable
access to health care.
87
As benchmarks
for affordability, the study considered
whether out-of-pocket costs over the prior
12 months, excluding premiums, were
equal to 10 percent or more of household
income; out-of-pocket costs over the prior
12 months, excluding premiums, were
equal to 5 percent or more of household
income for individuals living under 200
percent of the FPL ($27,180 for an indi-
vidual or $55,500 for a family of four in
2022); or the deductible constituted 5 per-
cent or more of household income. The
performance of STLDI products along
these affordability dimensions has been
proven worse, often to striking degree, as
discussed in section II.B of this preamble.
The Departments also recognize that
these affordability concerns could be exac-
erbated when the expanded PTC subsidies
under the IRA end in 2025 or if health
expenditures (and therefore premiums)
continue to grow at a relatively high rate.
88

The Departments are of the view that it
is important to ensure consumers have
access to a wide range of products that can
support access to affordable health care.
However, neither STLDI nor fixed indem-
nity excepted benefits coverage represent
a complete solution to larger issues of
affordable access to health care and health
coverage, and current marketing practices
and benefit designs that mimic compre-
hensive coverage exacerbates affordabil-
ity and accessibility concerns. Consumers
who enroll in these plans as a substitute
for comprehensive coverage or under the
misapprehension that STLDI and fixed
indemnity excepted benefits coverage are
a lower-cost equivalent to comprehensive
coverage are at risk of being exposed to
significant financial liability in the event
of a costly or unexpected health event,
often without knowledge of the risk asso-
ciated with such coverage.
B. Risks to Consumers
As noted in the introduction to this
section II of this preamble, the limitations
on benefits and coverage under STLDI or
fixed indemnity excepted benefits cover-
age may allow some issuers to offer such
coverage at lower monthly premiums than
comprehensive coverage. The Depart-
ments are concerned about additional
costs to consumers who enroll in STLDI
or fixed indemnity excepted benefits cov-
erage and incur medical expenses that are
not covered by such coverage. The typical
limits on coverage provided by STLDI
and fixed indemnity excepted benefits
coverage can lead to more and higher
uncovered medical bills than consum-
ers enrolled in comprehensive coverage
would incur, exposing consumers with
STLDI or fixed indemnity excepted ben-
efits coverage to greater financial risk.
89

Healthy consumers who enroll in STLDI
or fixed indemnity excepted benefits cov-
erage as an alternative to comprehensive
coverage may not realize their STLDI or
fixed indemnity excepted benefits cover-
age excludes or limits coverage for pre-
existing conditions (including conditions
the consumer did not know about when
they enrolled), or conditions contracted
after enrollment,
90
such as COVID-19,
as discussed in this section and in section
V.B.2.a.
Additionally, a consumer enrolled in
STLDI may discover that a newly-diag-
nosed medical condition is categorized
84
Congressional Budget Office (2022). “Letter from Phillip L. Swagel to Rep. Mike Crapo, “Re: Health Insurance Policies,” available at: https://www.cbo.gov/system/files?file=2022-
07/58313-Crapo_letter.pdf.
85
87 FR 61979 (October 13, 2022).
86
Id. at 61999.
87
Collins, Sara, Lauren Haynes, and Relebohile Masitha (2022). “The State of U.S. Health Insurance in 2022: Findings from the Commonwealth Fund Biennial Health Insurance Survey,”
Commonwealth Fund, available at: https://www.commonwealthfund.org/publications/issue-briefs/2022/sep/state-us-health-insurance-2022-biennial-survey.
88
Regarding trends in national health expenditure, see CMS (2023). “NHE Fact Sheet,” available at: https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expendi-
ture-data/nhe-fact-sheet.
89
Palanker, Dania, JoAnn Volk, and Kevin Lucia (2018). “Short-Term Health Plan Gaps and Limits Leave People at Risk,” Commonwealth Fund, available at: https://www.commonwealth-
fund.org/blog/2018/short-term-health-plan-gaps-and-limits-leave-people-risk. (Describing STLDI marketing materials that list coverage limits that would fall far short of typical costs to a
consumer, including $1,000 a day for hospital room and board coverage, $1,250 a day for the intensive care unit, $50 a day for doctor visits while in the hospital, $100 a day for inpatient
substance abuse treatment, and $250 for ambulance transport).
90
See Williams, Jackson (2022). “Addressing Low-Value Insurance Products With Improved Consumer Information: The Case of Ancillary Health Products,” National Association of Insur-
ance Commissioners, Journal of Insurance Regulation, available at: https://content.naic.org/sites/default/files/cipr-jir-2022-9.pdf.

May 6, 2024 978 Bulletin No. 2024–19
as a preexisting condition, and related
medical expenses will not be covered by,
or will be only partially covered by, their
STLDI policy.
91
For example, a con-
sumer in Illinois who was diagnosed with
Stage IV cancer a month after enrolling in
STLDI was denied coverage for treatment
by the STLDI issuer, both for treatments
that led to his successful remission and
for a potentially life-saving bone marrow
transplant. In his case, the issuer of his
STLDI policy determined that his cancer
was a preexisting condition because he
had disclosed experiencing back pain of
undiagnosed cause to the broker who sold
him his STLDI policy – leaving him with
$800,000 of medical debt and without
meaningful health coverage as he contin-
ued to fight his illness.
92
The financial risk for consumers
enrolled in STLDI increases with the
length of their policy, as the longer con-
sumers are enrolled in STLDI, the more
likely they are to incur costs that are not
covered. This is especially the case for
consumers who encounter newly diag-
nosed conditions or have a significant
medical event while enrolled in STLDI.
Researchers found that the maximum out-
of-pocket health care spending limit for
STLDI was on average nearly three times
that of comprehensive coverage in 2020.
93

A 2020 report found that over 60 per-
cent of the STLDI policies surveyed had
a maximum out-of-pocket limit greater
than the $7,900 limit that was permitted
for self-only comprehensive coverage in
2019, and 15 percent had limits in excess
of $15,000; as is typical for STLDI, these
limits apply only to the coverage period,
which in some cases was only 6 months,
compared to the annual limits required
under the ACA for comprehensive cover-
age.
94
Consumers enrolled in STLDI who
ultimately require medical care are more
likely to incur higher out-of-pocket costs
than if they had enrolled in comprehen-
sive coverage.
95
Refer to section V.B.2.c
of this preamble for additional discussion
of the financial risks to consumers.
As noted in section I.D of this pre-
amble, consumers who enroll in fixed
indemnity excepted benefits coverage
as an alternative to comprehensive cov-
erage bear similar risk and exposure to
significant out-of-pocket expenses due
to their health care costs exceeding the
fixed cash benefit to which they may be
entitled, if benefits are even provided at
all for their illness or injury. Comments
received in response to the 2023 proposed
rules affirmed the Departments’ concerns
by offering several examples of con-
sumer risk and exposure resulting from
enrollment in fixed indemnity insurance.
For example, one commenter described a
fixed indemnity plan that advertised that it
would pay $25 for a doctor visit, $100 for
a diagnostic exam, and $300 for neonatal
intensive care, and contrasted those bene-
fits to one hospital’s pricing schedule for
NICU service, Level 4. The commenter
observed that a consumer with such fixed
indemnity insurance alone could still face
$8,500 daily for NICU services. Another
commenter stated that indemnity plans
that are structured to pay various dollar
amounts for different services appear very
similar to comprehensive insurance, even
though they offer much less coverage.
Consumers who enroll in STLDI and
fixed indemnity excepted benefits cover-
age and do not also have comprehensive
coverage may experience financial hard-
ship when their medical bills are unafford-
able.
96
Notably, the protections against
balance billing and out-of-network cost
sharing for certain out-of-network ser-
vices established under the No Surprises
Act, which are intended to shield consum-
ers from surprise bills that can result in
medical debt,
97
do not apply to STLDI or
fixed indemnity excepted benefits cover-
age.
98
Because STLDI is typically subject
to medical underwriting and is not guar-
anteed renewable, consumers enrolled in
STLDI in lieu of comprehensive cover-
age may be unable to renew their STLDI
policy at the end of the coverage period.
These consumers therefore face the risk of
being uninsured until they are eligible to
purchase comprehensive coverage in the
individual market during an open enroll-
ment or when a special enrollment period
occurs. It is therefore critical for consum-
ers to understand, prior to purchase, that
STLDI serves better as a bridge between
different sources of comprehensive cover-
age than as an alternative to comprehen-
sive coverage, and that choosing to substi-
tute STLDI for comprehensive coverage
may reduce access to coverage. Similarly,
as noted in section I.D of this preamble,
consumers need to understand, prior to
purchase, that fixed indemnity excepted
benefit coverage serves best as an income
replacement policy
99
that supplements
91
See Lueck, Sarah (2018). “Key Flaws of Short-Term Health Plans Pose Risks to Consumers,” Center on Budget and Policy Priorities, available at: https://www.cbpp.org/research/health/
key-flaws-of-short-term-health-plans-pose-risks-to-consumers. See also Hall, Mark and Michael McCue (2022). “Short-Term Health Insurance and the ACA Market,” Commonwealth Fund,
available at: https://www.commonwealthfund.org/blog/2022/short-term-health-insurance-and-aca-market. See also Partnership to Protect Coverage (2021). “Under-Covered: How ‘Insur-
ance-Like’ Products are Leaving Patients Exposed,” available at: https://www.nami.org/NAMI/media/NAMI-Media/Public%20Policy/Undercovered_Report_03252021.pdf.
92
Partnership to Protect Coverage (2021). “Under-Covered: How ‘Insurance-Like’ Products are Leaving Patients Exposed,” available at: https://www.nami.org/NAMI/media/NAMIMedia/
Public%20Policy/Undercovered_Report_03252021.pdf.
93
Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-term Limited-duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, available at: https://
www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
94
Id. See also Palanker, Dania, Kevin Lucia, and Emily Curran (2017). “New Executive Order: Expanding Access to Short-Term Health Plans Is Bad for Consumers and the Individual
Market,” Commonwealth Fund, available at: https://www.commonwealthfund.org/blog/2017/new-executive-order-expanding-access-short-term-health-plans-bad-consumers-and-individual.
(“When considering the deductible, the best-selling plans have out-of-pocket maximums ranging from $7,000 to $20,000 for just three months of coverage. In comparison, the ACA limits
out-of-pocket maximums to $7,150 for the entire [2017 calendar] year.”).
95
Id.
96
Unaffordable medical debt increasingly impacts members of disadvantaged and marginalized communities. See Lopes, Lunna, Audrey Kearney, Alex Montero, Liz Hamel, and Mollyann
Brodie (2022). “Health Care Debt In The U.S.: The Broad Consequences Of Medical And Dental Bills,” KFF, available at: https://www.kff.org/health-costs/report/kff-health-care-debt-survey.
See also Himmelstein, David, Samuel Dickman, Danny McCormick, David Bor, Adam Gaffney, and Steffie Woolhandler (2022). “Prevalence and Risk Factors for Medical Debt and Subse-
quent Changes in Social Determinants of Health in the US,” JAMA Network Open, Volume 5, Issue 9, available at: https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2796358.
97
Families USA (2019). “Surprise Medical Bills, Results from a National Survey,” available at: https://familiesusa.org/wp-content/uploads/2019/11/Surprise-Billing-National-Poll-Report-FI-
NAL.pdf.
98
See 26 CFR 54.9816-2T, 29 CFR 2590.716-2(b), and 45 CFR 149.20(b).
99
As an income replacement policy, the policyholder of a fixed indemnity excepted benefits coverage plan typically has broad discretion in how to use the fixed cash benefits provided, includ-
ing but not limited to payment for medical expenses not covered by comprehensive coverage (for example, deductibles, coinsurance, copays) or to defray non-medical costs (for example,
mortgage or rent).

Bulletin No. 2024–19 979 May 6, 2024
comprehensive coverage by providing
financial assistance, rather than serving as
an alternative to comprehensive coverage.
In the preamble to the 2018 final rules,
the Departments stated that individuals
who purchased STLDI would potentially
experience improved health outcomes
and have greater protection from cata-
strophic health care expenses than if those
individuals were uninsured.
100
However,
experience with the COVID-19 public
health emergency (PHE)
101
has prompted
the Departments to reassess the degree of
protection generally afforded by STLDI
and fixed indemnity excepted benefits
coverage, and to reassess the value of a
framework that instead encourages unin-
sured individuals to purchase compre-
hensive coverage. Enrollees in STLDI
with COVID-19 typically face significant
limitations on coverage for COVID-19
related treatments, and high out-of-pocket
expenses.
102
In addition, neither STLDI
nor fixed indemnity excepted benefits
coverage was subject to requirements
under section 6001 of the Families First
Coronavirus Response Act (Pub. L. 116-
127, March 18, 2020), as amended by the
Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) (Pub. L. 116-
136, March 27, 2020), to cover COVID-
19 diagnostic testing, without cost shar-
ing, furnished during the COVID-19
PHE; or the requirement under section
3203 of the CARES Act to cover qual-
ifying coronavirus preventive services,
including COVID-19 vaccines, without
cost sharing.
103
Instead, both of these
important coverage expansions enacted by
Congress as part of the nation’s response
to the COVID-19 PHE applied only to
comprehensive coverage. Any coverage
by STLDI of (or, with respect to fixed
indemnity excepted benefits coverage,
benefits provided related to) COVID-19
diagnostic testing or vaccines was subject
to the discretion of individual issuers of
these policies and applicable State law.
Notably, the Health Resources and Ser-
vices Administration’s COVID-19 Cov-
erage Assistance Fund, which reimbursed
eligible health care providers for provid-
ing COVID-19 vaccines to underinsured
individuals, included enrollees in STLDI
and excepted benefits coverage within the
definition of underinsured.
104
The CARES
Act also amended the definition of “unin-
sured individual” in Social Security Act
section 1902(ss) to include individuals
enrolled only in STLDI. Even individu-
als enrolled in STLDI or fixed indemnity
excepted benefits coverage who are gen-
erally healthy are at risk of needing health
care, and thus at risk of incurring unaf-
fordable medical bills at any time. The
COVID-19 PHE underscored the unpre-
dictability of when the need for medical
care will arise, and the importance of
encouraging individuals to enroll in com-
prehensive coverage.
The Departments have also become
aware of potentially deceptive or aggres-
sive marketing of STLDI and fixed
indemnity excepted benefits coverage
to consumers who may be unaware of
the coverage limits of these plans or the
availability of Federal subsidies that could
reduce the costs of premiums and out-of-
pocket health care expenditures for com-
prehensive coverage purchased through an
Exchange.
105
A recent study that engaged
100
83 FR 38212, 38229 (October 2, 2018).
101
On January 31, 2020, HHS Secretary Alex M. Azar II declared that as of January 27, 2020, a nationwide public health emergency exists as a result of the 2019 novel coronavirus (COVID-
19). See HHS Administration for Strategic Preparedness and Response (January 31, 2020). “Determination That A Public Health Emergency Exists,” available at: https://aspr.hhs.gov/legal/
PHE/Pages/2019-nCoV.aspx. This declaration was last renewed by HHS Secretary Xavier Becerra on October 13, 2022, following previous renewals on April 21, 2020, July 23, 2020, October
2, 2020, January 7, 2021, April 15, 2021, July 20, 2021, October 18, 2021, January 14, 2022, April 12, 2022, and July 15, 2022. See “HHS Administration for Strategic Preparedness and
Response, Renewal of Determination That A Public Health Emergency Exists,” available at: https://aspr.hhs.gov/legal/PHE/Pages/covid19-13Oct2022.aspx. On January 30, 2023, and Febru-
ary 9, 2023, the Biden-Harris Administration announced that it intended to end the PHE at the end of the day on May 11, 2023. See Executive Office of the President, Office of Management
and Budget (January 30, 2023). “Statement of Administration Policy: H.R. 382 and H.J. Res. 7,” available at: https://www.whitehouse.gov/wp-content/uploads/2023/01/SAP-H.R.-382-H.J.-
Res.-7.pdf; HHS Secretary Xavier Becerra (February 9, 2023). “Letter to U.S. Governors from HHS Secretary Xavier Becerra on renewing COVID-19 Public Health Emergency (PHE),”
available at: https://www.hhs.gov/about/news/2023/02/09/letter-us-governors-hhs-secretary-xavier-becerra-renewing-covid-19-public-health-emergency.html. The PHE ended at the end of the
day on May 11, 2023.
102
See, for example, Curran, Emily, Kevin Lucia, JoAnn Volk, and Dania Palanker (2020). “In the Age of COVID-19, Short-Term Plans Fall Short for Consumers,” Commonwealth Fund,
available at: https://www.commonwealthfund.org/blog/2020/age-covid-19-short-term-plans-fall-short-consumers. This study found that STLDI policies provide less financial protection than
comprehensive coverage if an enrollee needs treatment for COVID-19. The study found that among the 12 brochures reviewed for STLDI policies being sold in Georgia, Louisiana, and
Ohio, 11 excluded nearly all coverage for prescription drugs, with some providing limited coverage of inpatient drugs. The study further found that STLDI imposed high cost sharing, with
deductibles ranging from $10,000 to $12,500 (which did not count toward the enrollees’ maximum out-of-pocket costs) and that enrollees may be required to meet separate deductibles for
emergency room treatment, forcing some enrollees to face out-of-pocket costs of more than $30,000 over a 6-month period. Additionally, the study found that STLDI did not cover services
related to pre-existing conditions.
103
Additional Policy and Regulatory Revisions in Response to the COVID–19 Public Health Emergency, 85 FR 71142, 71173 (Nov. 6, 2020); See also Departments of the Treasury, Labor, and
Health and Human Services. “FAQs about Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security Act Implementation Part 42, Q1,” (April 11, 2020),
available at: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-42.pdf and https://www.cms.gov/files/document/FFCRA-Part-42-FAQs.pdf
(FAQs Part 42); “FAQs about Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security Act Implementation Part 50,” (October 4, 2021), available
at: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-50.pdf and https://www.cms.gov/cciio/resources/fact-sheets-and-faqs/downloads/faqs-
part-50.pdf (FAQs Part 50); “FAQs about Affordable Care Act Implementation Part 51, Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security Act
Implementation,” (Jan. 10, 2022), available at: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-51.pdf and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-51.pdf (FAQs Part 51); FAQs about Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security
Act Implementation Part 52” (February 4, 2022), available at: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-52.pdf and https://www.
cms.gov/cciio/resources/fact-sheets-and-faqs/downloads/faqs-part-52.pdf (F
AQs Part 52); and “FAQs about Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic
Security Act and Health Insurance Portability and Accountability Act Implementation Part 58” (March 29, 2023), available at: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/
resource-center/faqs/aca-part-58 and https://www.cms.gov/cciio/resources/fact-sheets-and-faqs/downloads/faqs-part-58.pdf (FAQs Part 58). Note that the COVID-19 PHE ended on May 11,
2023.
104
Underinsured individuals are defined for this purpose as having a health plan that either does not include COVID-19 vaccine administration as a covered benefit or covers COVID-19
vaccine administration but with cost sharing. See Health Resources and Services Administration. “FAQs for The HRSA COVID-19 Coverage Assistance Fund,” available at: https://www.hrsa.
gov/provider-relief/about/covid-19-coverage-assistance/faq.
105
Palanker, Dania and Kevin Lucia (2021). “Limited Plans with Minimal Coverage Are Being Sold as Primary Coverage, Leaving Consumers at Risk,” Commonwealth Fund, available
at: https://www.commonwealthfund.org/blog/2021/limited-plans-minimal-coverage-are-being-sold-primary-coverage-leaving-consumers-risk. (Noting that fixed indemnity insurance may be
“bundled” with other non-comprehensive insurance products in such a way that “the plans look like comprehensive coverage” while still offering limited benefits). See also Palanker, Dania,
JoAnn Volk, and Maanasa Kona (2019). “Seeing Fraud and Misleading Marketing, States Warn Consumers About Alternative Health Insurance Products,” Commonwealth Fund, available at:
https://www.commonwealthfund.org/blog/2019/seeing-fraud-and-misleading-marketing-states-warn-consumers-about-alternative-health.

May 6, 2024 980 Bulletin No. 2024–19
in covert testing of health insurance sales
representatives found evidence of decep-
tive marketing practices by agents and
brokers who omitted or misrepresented
information about the products they were
selling.
106
For example, during a phone
transaction, a sales representative told
the consumer that they were purchas-
ing a comprehensive health insurance
plan, but instead sold the consumer two
limited benefit insurance plans. During
the exchange, the consumer repeatedly
informed the sales representative that
they had diabetes and had recently been
seeking treatment for the condition. How-
ever, the application filled out by the sales
representative on the consumer’s behalf
stated that consumer had not been treated
for or diagnosed with diabetes for the past
5 years. In another phone transaction, the
sales representative enrolled the consumer
in a benefit association offering a limited
benefit indemnity insurance plan. The
representative would not provide the con-
sumer with documentation describing the
plan prior to enrollment and stated that the
consumer had to purchase the plan on the
day of the call if they wanted to be guar-
anteed the quoted price. The Departments
note that these concerns are not limited to
individual market consumers considering
STLDI or fixed indemnity excepted ben-
efits coverage. Reports that employers are
increasingly offering fixed indemnity cov-
erage alongside a plan that offers only a
very limited set of primary or preventive
care benefits (or in some cases, as the only
form of health coverage) have also raised
concerns with respect to consumers who
obtain this health coverage through their
employers.
107
Consumers who are unaware of the
coverage limitations of these arrange-
ments, or who are employed by employers
who are similarly unaware, can face over-
whelming medical costs if they require
items and services that are not covered by
the very limited group health plan. This
is because the fixed indemnity excepted
benefits coverage generally provides only
fixed cash benefits that may be far lower
than the costs of medical services, rather
than coverage intended to cover most of
the costs of the medical services them-
selves. For example, a Texas consumer
who was enrolled in two forms of health
insurance through his employer received a
$67,000 hospital bill after he experienced
a heart attack. Although he believed he
had comprehensive coverage, he learned
that his coverage was provided through a
group health plan that covered only pre-
ventive services and prescription drugs
and a fixed indemnity excepted benefits
coverage policy that provided a cash bene-
fit of less than $200 per day of hospitaliza-
tion.
108
Additionally, employers may incur
penalties if they erroneously treat fixed
indemnity policies as excepted benefits
when the policies do not meet the require-
ments for excepted benefits (for example,
when they are not offered as independent,
noncoordinated benefits) and fail to com-
ply with applicable group market Federal
consumer protections and requirements
for comprehensive coverage, such as the
requirement to provide participants, ben-
eficiaries, and enrollees with a summary
of benefits and coverage that meets appli-
cable content requirements or the prohibi-
tion on lifetime and annual dollar limits on
essential health benefits.
109
In light of research revealing signifi-
cant disparities in health insurance liter-
acy among certain underserved racial and
ethnic groups and people with incomes
below the FPL,
110
and as further discussed
in sections III.A.1 and V.B.2.g of this
preamble, the Departments are also con-
cerned that underserved populations may
be particularly vulnerable to misleading
or aggressive sales and marketing tactics
that obscure the differences between com-
prehensive coverage and STLDI or fixed
indemnity excepted benefits coverage,
exposing these populations to higher lev-
els of health and financial risks. As noted
in Executive Order 13995, the COVID-19
pandemic has “exposed and exacerbated
severe and pervasive health and social
inequities in America,” highlighting the
urgency with which such inequities must
be addressed.
111
These concerns con-
tinue during the time frame when States
are unwinding from the Medicaid con-
tinuous enrollment condition under the
Families First Coronavirus Response Act
(FFCRA), which expired on March 31,
2023, under amendments made by the
Consolidated Appropriations Act, 2023.
Across the country, State agencies are
currently in the process of resuming reg-
ular eligibility and enrollment operations,
which includes conducting full Medicaid
and CHIP renewals and terminating cov-
erage for individuals who are no longer
eligible.
112
As a result, individuals may
have to transition between coverage pro-
grams, leaving them vulnerable.
113
The
Departments are concerned that those
transitioning out of Medicaid coverage
may be susceptible to aggressive or decep-
tive marketing and sales tactics, and might
therefore mistakenly enroll in STLDI or
fixed indemnity excepted benefits cover-
age in lieu of comprehensive coverage.
C. Impact on Risk Pools
At the time the 2018 final rules were
issued, the Departments acknowledged
that expanding access to STLDI could
106
Government Accountability Office (2020). “Private Health Coverage: Results of Covert Testing for Selected Offerings,” available at: https://www.gao.gov/products/gao-20-634r.
107
Young, Christen Linke and Kathleen Hannick (2020). “Fixed Indemnity Coverage is a Problematic Form of “Junk” Insurance,” USC-Brookings Schaeffer Initiative for Health Policy,
available at: https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2020/08/04/fixed-indemnity-health-coverage-is-a-problematic-form-of-junk-insurance.
108
Avila, Jaie (2019). “Show Me Your Bill Helps Wipe Out $70K in Charges After Heart Attack,” News 4 San Antonio, available at: https://news4sanantonio.com/news/trouble-shooters/
show-me-your-bill-helps-wipe-out-70k-in-charges-after-heart-attack.
109
See 26 CFR 54.9815-2715(e); 29 CFR 2590.715-2715(e); 45 CFR 147.200(e). See also section 2711 of the PHS Act and section 4980D of the Code.
110
Edward, Jean, Amanda Wiggins, Malea Hoepf Young, Mary Kay Rayens (2019). “Significant Disparities Exist in Consumer Health Insurance Literacy: Implications for Health Care
Reform,” Health Literacy Research and Practice, available at: https://pubmed.ncbi.nlm.nih.gov/31768496. See also Villagra, Victor and Bhumika Bhuva (2019). “Health Insurance Lit-
eracy: Disparities by Race, Ethnicity, and Language Preference,” The American Journal of Managed Care, available at: https://www.ajmc.com/view/health-insurance-literacy-dispari-
ties-by-race-ethnicity-and-language-preference.
111
86 FR 7193 (January 26, 2021).
112
See CMS, Center for Medicaid & CHIP Services (January 5, 2023). Key Dates Related to the Medicaid Continuous Enrollment Condition Provisions in the Consolidated Appropriations
Act, 2023, available at: https://www.medicaid.gov/sites/default/files/2023-01/cib010523_1.pdf. As a condition of receiving a temporary Federal Medical Assistance Percentage (FMAP)
increase under section 6008 of the FFCRA, States were required to maintain enrollment of nearly all Medicaid enrollees. This “continuous enrollment condition” expired on March 31, 2023,
under amendments made by the Consolidated Appropriations Act, 2023. States adopted other flexibilities in CHIP and BHP that impacted renewals in those programs during this time.

Bulletin No. 2024–19 981 May 6, 2024
have potential negative effects on the
risk pools for individual health insurance
coverage and on individuals who find
themselves insufficiently protected by the
typically limited benefits of an STLDI
policy.
114
However, the Departments
were of the view that the affordability and
access challenges facing consumers at that
time outweighed those potential negative
effects and necessitated action to increase
access to STLDI to provide an alternative
option for individuals who were unable
or disinclined to purchase comprehensive
coverage.
As discussed earlier in section II.A of
this preamble, access to affordable com-
prehensive coverage has significantly
improved since the 2018 final rules were
published. However, research based on
individual market data for plan year 2020
has substantiated concerns about the nega-
tive impact that the shift of healthier indi-
viduals from comprehensive coverage to
STLDI has on individuals remaining in
the risk pools for individual health insur-
ance coverage.
115
Because healthier indi-
viduals are more likely to enroll in STLDI
than individuals with known medical
needs, the extended contract terms and
renewal periods of STLDI under the cur-
rent Federal regulations result in healthier
consumers leaving (or opting out of) the
risk pools for individual health insurance
coverage for extended periods of time.
This has resulted in increased premiums
for individuals seeking to purchase indi-
vidual health insurance coverage.
116
For
unsubsidized individuals, the costs are
borne directly by the consumer, and for
subsidized individuals, the costs are borne
largely by the Federal Government in the
form of increased per capita PTC spending
associated with increased individual health
insurance coverage premiums. Likewise,
reports of fixed indemnity excepted ben-
efits coverage being marketed and sold as
an alternative to comprehensive coverage,
as discussed in section V.B.2.a of this pre-
amble, raise concerns about the potential
for such practices having a similar impact
on the risk pools for individual health
insurance coverage.
Another study looking at States that
have adopted policies that restrict STLDI
to shorter durations than allowed under
the current Federal regulations found that,
from 2018 to 2020, States that restricted
or prohibited the sale of STLDI saw fewer
consumers enroll in such insurance, were
able to keep more healthy people in the
individual health insurance coverage mar-
ket risk pool, and saw a greater decline
in average medical costs for enrollees in
individual health insurance coverage.
117

The study reported that, as a result, the
risk score – a measurement of the relative
medical costs expected for the populations
covered by comprehensive coverage in
each State, both on- and off-Exchange –
decreased by 40 percent more in States
with more regulation of STLDI than
States with less regulation.
118
In addition to ensuring that consum-
ers can clearly distinguish STLDI from
comprehensive coverage, this new evi-
dence provides an additional basis for the
Departments’ conclusion that it is import-
ant to amend the Federal definition of
STLDI.
D. Need for Rulemaking
For the reasons described in this sec-
tion II of this preamble, the Departments
are of the view that it is necessary and
appropriate to amend the Federal defi-
nition of STLDI to ensure that consum-
ers can clearly distinguish STLDI from
comprehensive coverage, protect the risk
pools and stabilize premiums for individ-
ual health insurance coverage, and pro-
mote access to affordable comprehensive
coverage.
With respect to individual market fixed
indemnity excepted benefits coverage, the
decision in Central United Life Ins. Co.
v. Burwell, which invalidated the require-
ment that an individual must attest to hav-
ing MEC prior to purchasing fixed indem-
nity excepted benefits coverage in the
individual market, and the passage of the
Tax Cuts and Jobs Act, which reduced the
individual shared responsibility payment
to $0 for months beginning after Decem-
ber 31, 2018, increase the likelihood that
individuals would purchase fixed indem-
nity excepted benefits coverage as a sub-
stitute for comprehensive coverage. HHS
is of the view that these changes neces-
sitate rulemaking with respect to indi-
vidual market fixed indemnity excepted
benefits coverage. Further, while the
Departments did not finalize the proposed
amendments to the group market fixed
indemnity excepted benefits coverage
regulations outlined in the 2016 proposed
rules, the Departments noted their inten-
tion to address fixed indemnity excepted
benefits coverage in future rulemaking.
119

The Departments have continued to mon-
itor the impact of these coverage options
and remain concerned about the negative
impacts of fixed indemnity excepted ben-
efits coverage on consumers when such
products are sold as an alternative to com-
prehensive coverage.
In light of the Departments’ ongoing
concerns about the numerous negative
impacts of STLDI and fixed indemnity
113
See CMS, Center for Medicaid & CHIP Services (January 27, 2023). “Letter to State Health Officials from Deputy Administrator and Director Daniel Tsai RE: Medicaid Continuous
Enrollment Condition Changes, Conditions for Receiving the FFCRA Temporary FMAP Increase, Reporting Requirements, and Enforcement Provisions in the Consolidated Appropriations
Act, 2023,” available at: https://www.medicaid.gov/sites/default/files/2023-08/sho23002.pdf.
114
83 FR 38212 at 38218 (August 3, 2018).
115
See Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-term Limited-duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, available at: https://
www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
116
Id. (“Carrier expectations for the impact of [regulatory actions including the expansion of short-term, limited-duration insurance policies and other loosely regulated insurance and the
repeal of the Federal individual shared responsibility payment being reduced to $0] on premiums in the ACA individual market for 2020 are approximately 4 percent in [S]tates that have not
restricted the sale or duration of STLD policies ... Among the [S]tates that have limited the impact of loosely regulated insurance through reinstating an individual mandate or by restricting
STLD expansion, carriers have assumed an average premium impact in 2020 due to regulatory actions that is about 5 percent lower than other [S]tates.”) As noted in section V.B.2.e of this
preamble, this study also found that the few issuers that explicitly included a premium adjustment because of the adoption of the revised Federal definition of STLDI in the 2018 final rules
increased premiums by between 0.5 percent and 2 percent in 2020.
117
See Hall, Mark and Michael McCue (2022). “Short-Term Health Insurance and the ACA Market,” Commonwealth Fund, available at: https://www.commonwealthfund.org/blog/2022/
short-term-health-insurance-and-aca-market.
118
Id.
119
81 FR 75316 at 75317 (October 31, 2016).

May 6, 2024 982 Bulletin No. 2024–19
excepted benefits coverage being offered as
an alternative to comprehensive coverage,
as well as the significant changes in market
conditions and in the legal landscape since
the Departments’ last regulatory actions
addressing these products, and in consid-
eration of the comments on the 2023 pro-
posed rules received by the Departments,
the Departments are finalizing changes to
the Federal regulations governing STLDI
and addressing notice requirements in the
individual and group market regulations
related to fixed indemnity excepted benefits
coverage. HHS is also finalizing the techni-
cal amendments to the individual market
fixed indemnity excepted benefits coverage
regulation to remove the MEC attestation
requirement currently codified at 45 CFR
148.220(b)(4)(i). As further explained in
section III.B of this preamble, the Depart-
ments are not finalizing the proposed pay-
ment standards and noncoordination provi-
sions regarding fixed indemnity excepted
benefits coverage at this time. The Depart-
ments remain concerned about the issues
addressed by these proposals, and intend to
address these issues in future rulemaking,
after additional study and consideration of
the concerns raised in comments.
III. Overview of the Final Regulations
– The Departments of the Treasury,
Labor, and Health and Human
Services
A. Short-Term, Limited-Duration
Insurance
After considering the public comments,
the Departments are finalizing the pro-
posed amendments to the Federal defini-
tion of STLDI with some modifications.
Under the definition in these final rules,
STLDI means health insurance coverage
provided pursuant to a policy, certificate, or
contract of insurance that has an expiration
date specified in the policy, certificate, or
contract of insurance that is no more than
3 months after the original effective date of
the policy, certificate, or contract of insur-
ance, and taking into account any renew-
als or extensions, has a duration no longer
than 4 months in total. For purposes of this
definition, a renewal or extension includes
the term of a new STLDI policy, certificate,
or contract of insurance issued by the same
issuer to the same policyholder within the
12-month period beginning on the original
effective date of the initial policy, certifi-
cate, or contract of insurance. As explained
in section III.A.2 of this preamble, in
response to comments, the Departments
are specifying that for purposes of this defi-
nition, if the issuer is a member of a con-
trolled group, a renewal or extension also
includes the term of a new STLDI policy,
certificate, or contract of insurance issued
by any other issuer that is a member of such
controlled group. As used in this context,
the term “controlled group” means any
group treated as a single employer under
section 52(a), 52(b), 414(m), or 414(o) of
the Code, as amended.
These final rules also retain the require-
ment that STLDI issuers display a notice
on the first page (in either paper or elec-
tronic form, including on a website) of
the policy, certificate, or contract of insur-
ance, and in any marketing, application,
and enrollment materials (including reen-
rollment materials) provided to individu-
als at or before the time an individual has
the opportunity to enroll (or reenroll) in
the coverage, in at least 14-point font. As
finalized in these final rules, STLDI issu-
ers must use the following updated lan-
guage for the STLDI consumer disclosure
notice:
IMPORTANT: This is a short-term, limited-duration policy, NOT comprehensive health coverage
This is a temporary limited policy that has fewer benefits and Federal protections than other types of health insurance options, like
those on HealthCare.gov.
This policyInsurance on HealthCare.gov
Might not cover you due to preexisting health conditions like
diabetes, cancer, stroke, arthritis, heart disease, mental health &
substance use disorders
Can’t deny you coverage due to preexisting health conditions
Might not cover things like prescription drugs, preventive
screenings, maternity care, emergency services, hospitalization,
pediatric care, physical therapy & more
Covers all essential health benefits
Might have no limit on what you pay ut-of-pocket for care
Protects you with limits on what you pay each year out-of-
pocket for essential health benefits
You won’t qualify for Federal financial help to pay premiums
& out-of-pocket costs
Many people qualify for Federal financial help
Doesn’t have to meet Federal standards for comprehensive
health coverage
All plans must meet Federal standards
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”

Bulletin No. 2024–19 983 May 6, 2024
As explained in section III.A.4 of this
preamble, in response to comments, the
notice adopted in these final rules con-
tains additional specificity, including that
STLDI does not have to meet Federal
standards for comprehensive coverage and
information about finding contact infor-
mation for State departments of insurance
on the NAIC website (naic.org).
In response to comments, the Depart-
ments are finalizing modified applicabil-
ity dates. These final rules apply to new
STLDI policies sold or issued on or after
September 1, 2024. The provisions of
the 2018 final rules continue to apply to
STLDI policies sold or issued before Sep-
tember 1, 2024, except that the updated
notice provision adopted in these final
rules applies to such policies for coverage
periods beginning on or after September
1, 2024. As was proposed in the 2023 pro-
posed rules, these final rules are effective
75 days after publication in the Federal
Register.
1. In General
The Departments received comments
generally in support of and generally
opposed to the adoption of the STLDI
proposals in the 2023 proposed rules. The
Departments summarize and respond to
comments about the STLDI proposals in
the 2023 proposed rules later in this sec-
tion of the preamble.
Some commenters stated that the 2023
proposed rules were an overreach of the
Departments’ authority because Congress
did not provide an explicit delegation of
authority to define the terms “short-term”
and “limited-duration.” Some commenters
expressed concern that the 2023 proposed
rules are contrary to congressional intent
because Congress specifically determined
that certain types of insurance would not
be subject to the requirements of the ACA,
including STLDI, which is excepted from
the definition of individual health insur-
ance coverage. Commenters suggested
that the Departments’ interpretation is
unreasonable because it conflicts with and
undermines Congress’s express goals for
consumers to have access to STLDI plans
that are exempt from Federal regulation,
to reduce gaps in health insurance and
the number of uninsured. One commenter
also expressed concern that the Depart-
ments’ interpretation will increase medi-
cal underwriting frequency to every 3 to 4
months leading to more consumers losing
coverage. One commenter stated that the
Departments’ interpretation is unreason-
able because it pressures consumers into
enrolling in comprehensive coverage to
avoid greater financial exposure. Several
commenters stated that there is no statu-
tory basis for the Departments to regulate
consumer behavior and the Departments
have no legal authority to impose bur-
dens or limitations on STLDI, such as a
consumer notice. One commenter argued
that the Departments lack the authority to
implement a shorter maximum allowed
length because the proposals are overly
broad and will unduly harm consumers.
Several commenters stated that the pro-
posed rules are arbitrary, capricious, and
not in accordance with law because the
Departments rely on factors to justify the
new definition that were not relevant to
Congress’s considerations.
The Departments are not persuaded by
these comments. As explained in greater
detail in this section III.A.1 of this pream-
ble, these final rules revise the definition
for the term “short-term, limited-duration
insurance,” and set standards to more
clearly distinguish STLDI from individ-
ual health insurance coverage. These final
rules do not regulate consumer behavior.
Consumers will continue to have access
to STLDI plans that are generally exempt
from the Federal consumer protections
and requirements for comprehensive cov-
erage that apply to individual health insur-
ance coverage.
120
As detailed later in this
section of this preamble, the Departments
have clear authority to promulgate regu-
lations to define STLDI and to pursue the
current amendments. The Departments
also disagree that the definition in the pro-
posed rules, and as finalized in these rules,
is unreasonable, inconsistent with the law,
or arbitrary and capricious.
Other commenters stated that the
Departments have clear statutory author-
ity under the PHS Act to interpret unde-
fined terms in the PHS Act, ERISA, and
the Code,
121
and to promulgate regulations
that interpret (or reinterpret) the meaning
of “short-term, limited-duration,” so long
as their interpretation is reasonable. These
commenters observed that Congress did
not define the term “short-term, limit-
ed-duration insurance,” and primarily only
included a reference to STLDI as an exclu-
sion from individual health insurance cov-
erage.
122
,
123
These commenters explained
that the Departments must give meaning
to the term short-term, limited-duration
insurance to distinguish it from individual
health insurance coverage.
The Departments disagree with the
commenters who questioned the Depart-
ments’ legal authority to promulgate
Federal regulations to define STLDI and
distinguish it from individual health insur-
ance coverage. As explained in the pream-
ble to the 2018 final rules,
124
the Depart-
ments have clear statutory authority under
the Code, ERISA, and the PHS Act to
implement those statutes.
125
To deter-
mine what is and is not individual health
insurance coverage, which is essential to
ensure that the Code, ERISA, and the PHS
Act function as Congress intended, and to
allow enforcement of the rules that apply
to individual health insurance coverage,
120
Neither the proposed rules nor these final rules seek to extend the Federal consumer protections and requirements for comprehensive individual health insurance coverage to STLDI.
121
See section 715 of ERISA and section 9815 of the Code, which incorporate provisions of part A of title XXVII of the PHS Act (generally, sections 2701 through 2728 of the PHS Act) into
ERISA and the Code. See also section 104 of HIPAA. See also sections 505 and 734 of ERISA, sections 2761 and 2792 of the PHS Act, section 1321(a)(1) and (c) of ACA and section 7805
of the Code.
122
See section 2791(b)(5) of the PHS Act (defining “individual health insurance coverage”).
123
While STLDI is generally not subject to the Federal consumer protections and requirements for comprehensive coverage that apply to individual health insurance coverage, the agent and
broker compensation disclosure and reporting requirements in section 2746 of the PHS Act apply to health insurance issuers offering individual health insurance coverage or STLDI.
124
83 FR 38212 at 38215 (August 3, 2018).
125
See section 9815 of the Code and section 715 of ERISA, which incorporate provisions of Part A of title XVIII of the PHS Act (generally, sections 2701 through 2728 of the PHS Act) into
the Code and ERISA. See also section 104 of HIPAA. See also section 7805 of the Code, sections 505 and 734 of ERISA, sections 2761 and 2792 of the PHS Act, and section 1321(a)(1) and
(c) of the ACA. See also Ass’n for Community Affiliated Plans v. U.S. Department of the Treasury, 966 F.3d 782 (D.C. Cir. 2020).

May 6, 2024 984 Bulletin No. 2024–19
the Departments must give meaning to the
term STLDI.
126
The 2023 proposed rules are faithful
to Congress’s intent because Congress
wanted STLDI to be an option but did
not intend STLDI to be a substitute for
comprehensive coverage or to pass as
comprehensive coverage while avoiding
ACA requirements and other Federal
consumer protections applicable to com-
prehensive coverage. Finally, the 2023
proposed rules and these final rules are
not designed to limit access to STLDI
or pressure consumers into enrolling in
comprehensive coverage. Rather, they
are designed to, among other things,
ensure that consumers can distinguish
between STLDI and comprehensive cov-
erage. Congress provided the Secretaries
of the Treasury, Labor, and HHS with
explicit authority to promulgate regu-
lations as may be necessary or appro-
priate to carry out the provisions of the
Code, ERISA, and the PHS Act.
127
This
includes the authority to issue regulations
on STLDI to define it and set standards
to distinguish it from individual health
insurance coverage.
The Departments’ authority to issue
regulations that define STLDI and set
standards to distinguish it from individ-
ual health insurance coverage was also
recently affirmed in the D.C. Circuit.
128
In
2020, the D.C. Circuit explicitly consid-
ered the Departments’ authority to define
STLDI as finalized in the 2018 final rules
and affirmed the Departments’ authority to
promulgate such regulations.
129
The D.C.
Circuit stated:
“Without further guidance from Con-
gress, we will not place amorphous
restrictions on the Departments’ author-
ity to define such an open-ended term.
It suffices to say that the Departments
have the discretion to define STLDI to
include policies shorter than the stan-
dard policy term.”
130
Furthermore, the decision made clear
that Congress gave the Departments “wide
latitude” to define STLDI, which includes
the flexibility to narrow the definition of
STLDI in the future, provided the Depart-
ments provide a reasoned explanation for
the change.
131
Both the 2023 proposed
rules and these final rules provide the
Departments’ reasoned explanations for
the changes to the Federal definition of
STLDI. These final rules adopt a revised
Federal definition of the term STLDI and
set standards to more clearly distinguish
STLDI from individual health insurance
coverage without placing unreasonable
burdens on issuers of STLDI.
The Departments acknowledge that
the final rules may be associated with
some consumers being subject to medical
underwriting more frequently. For exam-
ple, a consumer who prefers STLDI cov-
erage and chooses to reenroll in STLDI
coverage with a different issuer every 4
months may be subject to medical under-
writing each time they enroll or renew
coverage, whereas under the current rules
they could stay in one STLDI policy for a
longer duration. However, in the Depart-
ments’ view, this possibility does not
outweigh other potential benefits to con-
sumers of the revised definition of STLDI,
in part because consumers face a similar
risk under the current rules. Even when
enrolled in STLDI coverage that complies
with the 2018 final rules, a consumer can
be subject to post-claims underwriting and
their STLDI coverage may not cover cer-
tain health conditions that develop unex-
pectedly or over time. Yet because the
STLDI coverage has a longer maximum
duration under current rules, a consumer
who remains in STLDI coverage might
go without necessary benefits for a lon-
ger period of time, forcing the consumer
to choose between necessary medical care
and high out-of-pocket expenses. Con-
sumers may avoid the potential conse-
quences of more frequent medical under-
writing by enrolling in comprehensive
coverage subject to Federal consumer
protections and requirements.
The definition and standards, as pro-
posed and finalized, apply to health insur-
ance issuers that elect to offer STLDI, and
they do not regulate consumer behavior.
Issuers will not be prohibited from sell-
ing STLDI and consumers may continue
to choose to purchase it. The changes to
the Federal definition and standards for
STLDI will help consumers make more
informed purchasing decisions and miti-
gate the risk that consumers will mistak-
enly enroll in STLDI as a substitute for
comprehensive coverage.
The Departments disagree that the
revised Federal definition of STLDI is
unreasonable or arbitrary and capricious.
As explained in the preamble to the 2023
proposed rules
132
and in the introduction
to this section III.A of this preamble, the
Federal definition established in these
final rules clearly distinguishes STLDI
from individual health insurance cover-
age that is subject to the Federal consumer
protections and requirements for com-
prehensive coverage. Further, the stat-
ute does not explicitly denote a required
length for STLDI or to what extent the
definition of STLDI must vary from the
definition of individual health insurance
coverage, so the Departments are inter-
preting and implementing the statute
in a manner that distinguishes between
STLDI and individual health insurance
coverage. Over the last two decades, the
Departments have used this discretion to
both shorten and lengthen the duration of
STLDI as the Departments have deemed
appropriate and necessary given the mar-
ket conditions and legal landscape they
were then facing. Beginning in 1997, the
Departments defined STLDI as coverage
of less than 12 months to accommodate
12-month preexisting condition exclusion
periods imposed by group health plans
and group health insurance issuers when a
126
As discussed in footnote 13, the definition of STLDI also has some relevance with respect to certain provisions that apply to group health plans and group health insurance issuers over
which the Departments of Labor and the Treasury have jurisdiction.
127
See section 9833 of the Code, section 734 of ERISA, and section 2792 of the PHS Act.
128
Ass’n for Community Affiliated Plans v. U.S. Department of the Treasury, 966 F.3d 782 (D.C. Cir. 2020), aff ’d 966 F.3d 782 (D.C. Cir. 2020).
129
Ass’n for Community Affiliated Plans v. U.S. Department of the Treasury, 966 F.3d 782 (D.C. Cir. 2020).
130
Id. at 789.
131
Id. at 789 and 792 (citing to Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125 (2016)).
132
See, for example, 88 FR 44596 at 44610, 44612, 44614-44618 (July 12, 2023) (discussing how the proposed changes to definitions of “short-term” and “limited-duration” and the proposed
modifications to the required consumer notice would allow consumers to better distinguish between STLDI and comprehensive coverage).

Bulletin No. 2024–19 985 May 6, 2024
new hire did not have 12 months of cred-
itable coverage that ended no more than
63 days prior to the enrollment date in
the plan or coverage.
133
Once preexisting
condition exclusions were prohibited and
the Departments implemented a limit on
employee waiting periods of up to 90 days
plus a 1-month reasonable and bona fide
employment-based orientation period (as
defined in section 9801(b)(4) of the Code,
section 701(b)(4) of ERISA, and 2704(b)
(4) of the PHS Act),
134
and comprehen-
sive coverage in the individual market
was guaranteed available to individuals
through or outside of the Exchanges, the
Departments determined that a shorter
duration for STLDI was more appropriate
and revised the definition in the 2016 final
rules.
135
Subsequently, when the Depart-
ments were concerned about the availabil-
ity of affordable health insurance options,
the Departments lengthened the initial
contract term to less than 12 months with a
maximum allowed duration of 36 months
(including renewals and extensions) in the
2018 final rules.
136, 137
The definition of STLDI in the 2023
proposed rules, and that the Departments
are finalizing in these final rules, is con-
sistent with applicable Federal law (for
example, the Code, ERISA, and the PHS
Act). The 2023 proposed rules proposed
a revised Federal definition that set stan-
dards for STLDI that clearly distinguish it
from individual health insurance coverage
that is subject to the Federal consumer pro-
tections and requirements. This proposal
and the definition finalized in these rules
is consistent with Congress maintaining
the exclusion of STLDI from the PHS Act
definition of individual health insurance
coverage. Further, as noted by comment-
ers and discussed in section III.A.2 of this
preamble, the new definition gives reason-
able meaning to the terms “short-term”
and “limited-duration” since they reflect
periods of time that are brief in compari-
son to the length of comprehensive cover-
age sold with an initial term of 12 months,
on a guaranteed renewable basis.
138
The
definition of STLDI in the 2023 proposed
rules and these final rules is consistent
with the original intent of HIPAA, as rein-
forced by the ACA, to provide temporary,
stopgap coverage for individuals transi-
tioning between comprehensive coverage.
Some commenters suggested that the
Departments failed to provide sufficient
justification, or lacked sufficient data or
analysis, to support the proposed changes
to the Federal definition of STLDI, par-
ticularly with respect to the changes to
limit the initial duration of STLDI poli-
cies to 3 months, and the maximum dura-
tion to 4 months including renewals and
extensions. In addition, one commenter
expressed concern that an abrupt change
to the maximum duration of STLDI may
have unintended consequences on over-
all health care coverage and consumer
choices, as occurred when the Depart-
ments increased the maximum dura-
tion of STLDI from less than 3 months
to less than 12 months in the 2018 final
rules. Some commenters suggested that
the 2023 proposed rules would impose a
market-disrupting change in the duration
of STLDI without providing evidence to
support this change.
As the Supreme Court stated in Encino
Motorcars v. Navarro,
139
and the D.C.
Circuit Court repeated in Association
for Community Affiliated Plans v. U.S.
Department of the Treasury,
140
“[a]gen-
cies are free to change their existing pol-
icies as long as they provide a reasoned
explanation for the change.” The Depart-
ments satisfy this requirement; the pro-
posed rules and these final rules provide
a reasoned explanation of the changes
to the Federal definition of STLDI. As
explained in section III.A.2 of this pream-
ble, the Departments determined that it is
necessary and appropriate to amend the
Federal definition of STLDI to ensure that
consumers can clearly distinguish STLDI
from individual health insurance cover-
age, protect the risk pools and stabilize
premiums for individual health insurance
coverage, and promote access to afford-
able comprehensive coverage. While the
Departments acknowledge that they have
limited data on enrollment in STLDI, the
Departments have sufficient information
and evidence to conclude that the changes
to the definition finalized in these rules are
appropriate and justified.
The Departments are of the view that
these final rules are necessary and appro-
priate to combat deceptive marketing
practices, distinguish STLDI from indi-
vidual health insurance coverage, and
address the changes in the legal landscape
and market conditions from 2018 to 2024.
Further, as discussed in section II.A of
this preamble, since the publication of the
2018 final rules, comprehensive cover-
age for individuals has generally become
more accessible and affordable, and while
affordability concerns persist among con-
sumers, STLDI is an inadequate substitute
for comprehensive coverage.
Aggressive, deceptive marketing prac-
tices are an ongoing challenge for consum-
ers shopping for coverage. As discussed
in section II.B and section III.A.3 of this
preamble, recent secret shopper studies
have detailed ongoing practices by sellers
of STLDI that do not inform consumers
of eligibility for less expensive Exchange
plans or that provide misleading informa-
tion about STLDI with limited benefits.
141

133
62 FR 16894 (April 8, 1997). See also 69 FR 78,720 (December 30, 2004) (finalizing the definition of STLDI in the 1997 HIPAA interim final rules).
134
26 CFR 54.9815–2708, 29 CFR 2590.715–2708, and 45 CFR 147.116.
135
81 FR 75316 at 75317, 75318 (October 31, 2016)
136
As noted previously, the Departments’ authority to issue the 2018 final rules was challenged and upheld in Ass’n for Community Affiliated Plans v. U.S. Department of the Treasury, 966
F.3d 782 (D.C. Cir. 2020). See also Ass’n for Community Affiliated Plans v. U.S. Department of the Treasury, 392 F.Supp.3d 22 (D.D.C. 2019).
137
83 FR 38212 at 38218 (August 3, 2018)
138
As the court noted in Ass’n for Community Affiliated Plans v. U.S. Department of the Treasury regarding the STLDI definition adopted in the 2018 final rules, “(u)nder the Departments’
definition, ‘short-term’ refers to the initial contract term, while ‘limited-duration’ refers to the policy’s total length, including renewals. This reasonable reading gives independent meaning to
each term.” 966 F.3d at 789. The Departments are applying the same general framework to establish the new definition adopted in these final rules, with “short-term” referring to the initial
contract term and the term “limited-duration” referring to the policy’s total length, including extensions and r
enewals.
139
136 S. Ct. 2117, 2125 (2016).
140
966 F. 3d at 792.
141
Schwab, R., & Volk, J. (August 28, 2023). “The Perfect Storm: Misleading Marketing of Limited Benefit Products Continues as Millions Losing Medicaid Search for New Cover-
age,” Center on Health Insurance Reforms, available at: https://chirblog.org/the-perfect-storm-misleading-marketing-of-limited-benefit-products-continues-as-millions-losing-medic-
aid-search-for-new-coverage.

May 6, 2024 986 Bulletin No. 2024–19
Deceptive marketing practices can have
devastating financial implications for
consumers that purchased STLDI with-
out fully understanding its limitations and
later encounter unexpected and expensive
medical events that are not covered by
their insurance.
142
In addition, as explained
in section III.A.2 of this preamble and the
preamble to the 2023 proposed rules, the
Federal definition for STLDI in these final
rules is consistent with the group market
rules regarding the 90-day waiting period
provision under the ACA and with STL-
DI’s traditional role of serving as tempo-
rary coverage for individuals transitioning
between other types of comprehensive
coverage. The definition is also similar
to the less-than-3-month maximum term
for STLDI under the 2016 final rules and
under a number of State laws and aligns
with the goal of Executive Order 14009 to
support protections for people with preex-
isting conditions. The Departments have
weighed the potential benefits and costs to
consumers when developing the proposed
rules and these final rules and concluded
the changes will not unduly harm consum-
ers.
143
While the Departments are of the view
that the changes to the Federal defini-
tion of STLDI finalized in these rules
are critical, these final rules take steps to
limit the potential of the rules having an
abrupt, disruptive effect, particularly with
respect to consumers currently enrolled
in STLDI coverage, and to address the
potential reliance interests of both issuers
offering STLDI and consumers enrolled
in STLDI under the 2018 final rules. As
discussed in section III.A.6 of this pream-
ble, with the exception of the notice pro-
vision, these final rules will not be appli-
cable to STLDI policies sold or issued
before September 1, 2024. This will result
in a phased-in approach that limits the
potential for market disrupting impact by
allowing individuals currently enrolled in
STLDI to maintain coverage that meets
the standards in the 2018 final rules
through the duration of their current pol-
icy. In addition, this phased-in approach
does not require issuers who have relied
on the current rules to modify contracts
for STLDI policies that are currently in
place. Further, the proposed changes that
are finalized in these rules will not result
in an abrupt change in the maximum per-
mitted duration of STLDI in many States.
Of the States that currently permit STLDI,
seven States and the District of Columbia
already have a maximum permitted length
of less than 3 months for STLDI while
four additional States prohibit the sale of
STLDI entirely, notwithstanding the lon-
ger duration permitted under the 2018
final rules.
144
Finally, as these final rules
intend to protect against misleading mar-
keting practices that harm consumers, the
benefits of further differentiating STLDI
from comprehensive coverage outweigh
any potential unintended consequences of
changing the maximum allowable dura-
tion of STLDI. As outlined in this section
and elsewhere in these rules, the defini-
tion is well reasoned, is clearly within the
Departments’ authority, and is consistent
with other applicable Federal law, and is
therefore not arbitrary and capricious.
Some commenters expressed concern
that the proposed definition of STLDI
would interfere with the authority of
States to regulate insurance pursuant to
the McCarran-Ferguson Act and PHS Act.
These commenters stated that the McCar-
ran-Ferguson Act reserves the regulation
of insurance to States so that States can
tailor their health insurance policies to the
needs of their residents. They stated that
State regulators are better positioned to
understand the unique characteristics and
requirements of each State’s respective
insurance markets and are more respon-
sive to the needs of their insurance mar-
kets. Another commenter stated that under
the PHS Act, Federal authority to regulate
insurance is secondary to the primary
authority of the States, and any Federal
intrusion on State authority must be based
on information that a State may not be
substantially enforcing PHS Act require-
ments. A commenter noted that States
have demonstrated their willingness and
capacity to regulate STLDI coverage
because half of States have regulations
in place. For example, the commenter
noted that the sale of STLDI is prohibited
in some States
145
and other States have
restricted the maximum allowed term of
STLDI to 3, 6, or 12 months or coverage
that terminates at the end of the calen-
dar year.
146
Other commenters stated that
some States only allow limited renewals
of STLDI. Another State regulates STLDI
by requiring that STLDI policies sold in
the State provide certain consumer pro-
tections, implementing a separate risk
pool, and creating a special enrollment
period for consumers that exhaust the
36-month period of STLDI coverage,
while setting minimum benefit and cov-
erage requirements to meet the needs of
seasonal employees that desire flexibility
and low-cost health care coverage.
147
A
commenter noted that 12 States currently
prohibit health status underwriting for
STLDI, which effectively bans STLDI in
those States. The commenter stated that
the proposed rules fail to balance States’
interest in regulating health insurance
issuers and their health insurance markets
with Congress’s intent to provide protec-
tions to consumers. On the other hand,
a few commenters noted that variation
in State oversight of STLDI has resulted
in a patchwork of consumer protections
across States, and one commenter stated
that consumers would benefit from nation-
al-level STLDI regulation.
142
Deam, Jenny (2021). “He Bought Health Insurance for Emergencies. Then He Fell Into a $33,601 Trap,” ProPublica, available at: https://www.propublica.org/article/junk-insurance.
143
See the Regulatory Impact Analysis in section V of this preamble.
144
See Healthinsurance.org (2023). “Duration and Renewals of 2023 Short-Term Medical Plans by State,” available at: https://www.healthinsurance.org/wp-content/uploads/2023/09/state-by-
state-short-term-health-insurance.pdf; see also Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-term Limited-duration Policy Expansion on Patients and the ACA Individual
Market,” Milliman, available at: https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
145
The commenter noted that STLDI is not for sale in a number of States including California, Colorado, Connecticut, Hawaii, Maine, Massachusetts, New Jersey, New Mexico, New York,
Rhode Island, Vermont, and Washington. See also Healthinsurance.org (2023). “Duration and Renewals of 2023 Short-Term Medical Plans by State,” available at: https://www.healthinsur-
ance.org/wp-content/uploads/2023/09/state-by-state-short-term-health-insurance.pdf (As of September 6, 2023, STLDI is not for sale in 14 States - California, Colorado, Connecticut, Hawaii,
Maine, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Rhode Island, Vermont, and Washington - and the District of Columbia.)
146
The commenter stated that Illinois allows the sale of STLDI that lasts for up to 180 days, and in New Hampshire, STLDI contracts can last for up to 6 months with a renewal or extension
of up to a total of 18 months.
147
The commenter stated that Iowa imposed minimum benefit and coverage requirements on short-term plans above Federal standards.

Bulletin No. 2024–19 987 May 6, 2024
These final rules establish the Federal
definition of STLDI with respect to the
maximum length of the initial contract
term, the maximum allowable duration
(including renewals and extensions),
and a consumer notice. The Departments
acknowledge and respect States’ authority
to regulate the business of insurance. The
Departments generally agree that States
retain the authority to regulate STLDI and
further note that these final rules do not
change or otherwise modify the existing
ERISA or PHS Act preemption standard.
148

As such, States may impose requirements
tailored to the needs of their populations,
and may adopt limitations on stacking, as
well as limitations on sales and market-
ing practices. Relatedly, in section III. B
of this preamble, in these final rules, the
Departments added language to the notice
to alert consumers as to how the coverage
they are purchasing might vary from indi-
vidual health insurance coverage. States
may impose additional language require-
ments for a consumer notice and remain
free to regulate STLDI.
The Departments agree that the
States play an important role in regulat-
ing STLDI and recognize the federalism
implications of the proposed rules and
these final rules.
149
, As noted by com-
menters, the McCarran-Ferguson Act gen-
erally affirms the preeminence of State
regulation, and also explicitly allows for
Federal regulation when an act of Con-
gress specifically relates to the business of
insurance.
150
However, the commenters’
argument that Federal authority to regu-
late insurance is secondary to the primary
authority of the States conflates Federal
authority to regulate insurance under sec-
tion 1012 of the McCarran-Ferguson Act
with HHS’s authority under section 2723
of the PHS Act to enforce requirements in
part A and D of title XXVII of the PHS
Act against issuers.
151
Under section 2723
of the PHS Act, States have authority to
enforce the requirements of part A and D
of title XXVII of the PHS Act, and where
the State fails to substantially enforce
a provision (or provisions) of part A or
D with respect to health insurance issu-
ers in the State, HHS shall enforce such
provision (or provisions) in the State. In
contrast, the McCarran-Ferguson Act bal-
ances State and Federal interests in regu-
lating the business of insurance. Section
1012(a) of the McCarran-Ferguson Act
maintained State regulatory authority
by enabling State preemption of some
Federal law, and section 1012(b) of the
McCarran-Ferguson Act limited Fed-
eral regulatory authority by generally
exempting the “business of insurance”
from Federal law.
152
Although Congress
allowed an exception for State preemption
of Federal law in this way, Congress also
preserved Federal authority to regulate
insurance provided that, to overcome the
State preemption, congressional action
must specifically relate to the business of
insurance.
153
It is without question that
HIPAA, the ACA, and the other Acts of
Congress that added Federal consumer
protections and requirements applicable
to health insurance issuers offering group
and individual health insurance coverage
specifically relate to the business of insur-
ance. In addition, as discussed earlier, the
Departments have clear legal authority to
define STLDI and set standards to distin-
guish it from individual health insurance
coverage. This includes authority to adjust
the interpretations for and implementation
of the terms “short-term” and “limited-du-
ration” that set the length of the initial
contract term and the maximum duration
(including renewals and extensions) for
STLDI, as well as to update the consumer
notice. As outlined previously, Congress
provided the Departments with explicit
authority to promulgate regulations as
may be necessary or appropriate to carry
out the provisions of the Code, ERISA,
and the PHS Act. The Departments are
of the view that the Federal regulatory
definition of STLDI in these final rules is
necessary and appropriate to carry out the
provisions of the Code, ERISA, and the
PHS Act. Further, the Departments must
give meaning to the undefined statutory
term STLDI, and the meaning must distin-
guish it from individual health insurance
coverage. This is because the PHS Act
imposes certain requirements on individ
-
ual health insurance coverage and does
not impose those same requirements on
STLDI. The Departments are also of the
view that it is necessary and appropriate
for consumers considering the purchase of
STLDI, and those purchasing such insur-
ance, to be aware that such coverage is not
subject to the Federal consumer protec-
tions and requirements for comprehensive
coverage. Defining STLDI in a way that
requires a short, standard description of
how the coverage might vary from indi-
vidual health insurance coverage allows
for a clear determination by regulators
that the policy is STLDI, and promotes
ease of understanding by consumers. As
explained previously and detailed in the
2023 proposed rules, the changes to the
Federal definition of STLDI, including the
updates to the consumer disclosure notice,
are reflective and responsive to changes
observed by the Departments in market
conditions and the legal landscape.
These final rules define STLDI for pur-
poses of the Code, ERISA, and the PHS
Act. Insurance coverage that meets the
definition of STLDI in these final rules
148
Section 731 of ERISA and sections 2724 and 2762 of the PHS Act (implemented in 29 CFR 2590.731(a) and 45 CFR 146.143(a) and 148.210(b)).
149
See 88 FR at 44648 - 44649. See also the federalism discussion in section V.H of this preamble.
150
Compare “The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business ...” 15
USC 1012(a), with “No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which
imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, that after June 30, 1948, the Act of July 2, 1890, as amended, known as
the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended [15
U.S.C. 41 et seq.], shall be applicable to the business of insurance to the extent that such business is not regulated by State Law. ...” 15 USC 1012(b).
151
HHS also has authority under section 2761 of the PHS Act to enforce the requirements in part B of title XXVII of the PHS Act against issuers in situations where a State fails to substantially
enforce one or more provisions of part B with respect to health insurance issuers in the State.
152
See Steffen, Peter B. (2000) “After Fabe: Applying the Pireno Definition of Business of Insurance in First-Clause McCarran-Ferguson Act Cases,” University of Chicago Legal Forum:
Vol. 2000, available at: https://chicagounbound.uchicago.edu/uclf/vol2000/iss1/15 (“The first clause enabled [S]tate law to supersede [F]ederal law; the second clause provided a [F]ederal
antitrust exemption for the ‘business of insurance’...The Act gave [S]tates some powers they did not have before, by stating in the first clause that only a [F]ederal law that ‘specifically relates
to the business of insurance’ can preempt a [S]tate law dealing with insurance. Congressional legislation merely affecting insurance would not meet the first-clause test and thus would not,
be exempt from the general prohibition on preemption. Rather, in order to apply, [F]ederal law must specifically relate to the ‘business of insurance’...”).
153
Id., citing Lee R. Russ, 3 Couch on Insurance sec. 2:4 at 2-12 (Clark 1994) (“McCarran-Ferguson turns the traditional rule of [F]ederal preemption of [S]tate law on its head.”).

May 6, 2024 988 Bulletin No. 2024–19
will qualify for the exception to the Fed-
eral definition of individual health insur-
ance coverage and be exempt from the
Federal consumer protections and require-
ments applicable to comprehensive cover-
age.
Nothing in these final rules prevents
regulation of STLDI for purposes of State
law. For example, States may determine
whether to permit the sale of STLDI in
their insurance markets. If a State law per-
mits or requires an action that is inconsis-
tent with the Federal definition of STLDI,
any coverage offered pursuant to that State
law that does not meet the standards set
forth in these final rules would not qual-
ify as STLDI under these final rules and
would be subject to the Federal consumer
protections and requirements applicable to
comprehensive coverage. For example, if
a State were to prohibit policies issued in
that State from including the Federal con-
sumer notice, then coverage in that State
that did not include the Federal consumer
notice language would not qualify for the
exclusion from the PHS Act definition
of individual health insurance coverage
and thus would be subject to the Federal
consumer protections and requirements
applicable to individual health insurance
coverage.
Amending the Federal regulation
defining STLDI protects the distinctively
Federal role and interest in ensuring that
the Federal definition for STLDI clearly
distinguishes STLDI from individual
health insurance coverage for consumers
in every State. As discussed in the pre-
amble to the 2023 proposed rules, many
STLDI policies that are sold through asso-
ciations are sold across numerous States.
Often consumers are purchasing STLDI
policies in a different State from the State
in which the policy is regulated. This can
create challenges for both consumers and
State regulators. The Departments are of
the view that establishing a shorter Fed-
eral maximum duration for STLDI may
reduce the incentives for issuers to offer
STLDI through associations to the extent
that they are using associations as a way
to avoid State limits on duration. This, in
turn, will help minimize consumer confu-
sion related to coverage offered through
associations. In addition, STLDI with
a shorter maximum allowable duration
would decrease the impact of STLDI on
Federal Government spending. As dis-
cussed in section III.A.6 of this preamble,
STLDI that has a maximum allowable
duration of up to 36 months, including
renewals and extensions, has an annual
impact on Federal PTC spending due to
selection-induced effects.
The Departments are of the view that
these final rules appropriately balance
States’ interests in regulating health insur-
ance issuers and their health insurance
markets with Congress’ intent to establish
a general Federal framework for health
insurance coverage, including the provi-
sion of certain key protections to consum-
ers enrolled in comprehensive coverage.
Some commenters expressed general
support for the proposed definition of
STLDI. Commenters in favor of the pro-
posed definition noted that it would return
STLDI to its traditional and intended pur-
pose of providing temporary, stopgap cov-
erage between periods of comprehensive
coverage, and not serve as a long-term
substitute for comprehensive coverage.
Some of these commenters highlighted
that low health literacy rates, a long maxi-
mum allowed term of STLDI that mimics
the duration of comprehensive coverage,
and deceptive marketing practices cause
many consumers to confuse STLDI with
comprehensive coverage. These comment-
ers also stated that STLDI lacks Federal
consumer protections and is inadequate
to serve patients grappling with complex
medical needs such as those that require
maternity care or habilitative care; behav-
ioral health problems; or chronic diseases
such as cancer and cardiovascular dis-
ease. These commenters further stated
that unwary consumers unexpectedly are
underinsured when they enroll in STLDI
and may end up forgoing needed, rou-
tine medical treatment and exacerbat-
ing chronic medical conditions because
of limited benefits or high cost-sharing
responsibilities. Consequently, consum-
ers may then be sicker when they finally
seek care in the emergency room for
untreated medical conditions, which can
increase costs absorbed by providers and
facilities, costing the health care system
more in the long run. Commenters who
supported the STLDI definition in the pro-
posed rules warned that some consumers
who enroll in STLDI as an alternative to
comprehensive coverage can become sub-
ject to unexpected medical debt leading
to unforeseen long-term financial conse-
quences. Other commenters that supported
the revised Federal definition for STLDI
stated that while STLDI is highly profit-
able for health insurance issuers, agents,
and brokers, the impact of STLDI on the
risk pools for individual health insurance
coverage indicates that it is necessary to
clarify the distinctions between STLDI
and comprehensive coverage. Other com-
menters expressed general opposition to
the STLDI definition proposed in the 2023
proposed rules. These commenters stated
that while STLDI is not adequate coverage
for everyone, STLDI provides a useful,
short-term, affordable option, particularly
for consumers who do not have access to
PTC subsidies, and provides access to spe-
cialists that are not in-network with many
comprehensive coverage options.
The Departments acknowledge that the
changes to the Federal definition of STLDI
that are finalized in these rules may result
in individuals who prefer STLDI losing
access to such coverage as a long-term
coverage option. However, as explained
previously and in the 2023 proposed rules,
the Departments have concluded that
these concerns are now outweighed by
the negative financial and health conse-
quences that some individuals who enroll
in STLDI in lieu of comprehensive cov-
erage experience; consumer challenges
in differentiating STLDI from individual
health insurance coverage, particularly
in light of low health literacy rates and
aggressive marketing; and the negative
impact on the risk pools for individual
health insurance coverage when healthier
individuals enroll in STLDI in lieu of indi-
vidual health insurance coverage.
154
As the availability of affordable com-
prehensive coverage options has increased
since the 2018 final rules were finalized,
the Departments are of the view that
STLDI is no longer needed to provide a
year-round coverage option for individu-
als and should be limited to a temporary
coverage option for shorter periods when
an individual experiences gaps between
154
See section V of this preamble for the regulatory impact analysis; see also 88 FR 44596 at 44608 (2023).

Bulletin No. 2024–19 989 May 6, 2024
comprehensive coverage. The Depart-
ments agree with commenters that the
definition of STLDI under the 2018 final
rules heightened the risk that uninformed
consumers will mistakenly purchase
STLDI as a substitute for comprehensive
coverage, and under current market condi-
tions, unnecessarily expose themselves to
severe financial risks if they have complex
medical needs or conditions.
The Departments agree with comment-
ers that the lack of key Federal consumer
protections and requirements that apply
to benefits offered by STLDI
155
results
in STLDI being an inadequate substitute
for comprehensive coverage, especially
for those with complex medical needs.
Some consumers with complex health
conditions may enroll in STLDI because
a preferred provider may be in-network
with an STLDI policy but out-of-network
with comprehensive coverage plans.
156

However, STLDI plans are typically asso-
ciated with higher overall financial risk
due to high premium increases that may
be imposed upon an individual whose
health condition worsens. For example, a
study that examined the potential impacts
of STLDI and associated State policies on
cancer diagnoses found that individuals in
States that prohibited STLDI were associ-
ated with an increase in early-stage cancer
diagnoses when compared to States that
did not regulate STLDI.
157
In addition,
because issuers of STLDI can engage in
medical underwriting, individuals can
be charged higher premiums based on
health status, gender, age and other fac-
tors.
158
Enrolling in comprehensive cov-
erage instead of STLDI prior to when a
consumer is diagnosed with a complex
medical condition or incurs major medical
expenses will promote access to care and
improve overall health outcomes.
In addition, the Departments share
commenters’ concerns that low health lit-
eracy rates can have a detrimental impact
on health insurance decision-making, put-
ting some consumers at increased risk for
purchasing STLDI when they are looking
to purchase comprehensive coverage. Low
health literacy rates combined with poten-
tially erroneous assumptions about min-
imum standards for coverage makes the
average consumer vulnerable to deceptive
marketing practices and creates barriers to
accessing health care and comprehensive
coverage. As discussed in the preamble to
the 2023 proposed rules, consumers may
not understand that while some STLDI
policies may have lower premiums than
comprehensive coverage, consumers may
incur steep and potentially debt-inducing
health care bills once enrolled in STLDI
due to limited benefits provided by such
coverage, limited Federal consumer pro-
tections, and high-cost sharing require-
ments.
159
A qualitative study cited by
commenters examined consumer compre-
hension of marketing materials for STLDI
and found that not only did participants
have low health insurance literacy rates,
but they struggled to understand the plan’s
limitations because the ACA has shaped
their expectations about what “typical”
health plans cover.
160
As a result, consum-
ers often expect that all health insurance
provides the same benefits and protec-
tions even absent deceptive marketing
practices, increasing the importance of
guardrails to distinguish comprehensive
coverage from STLDI. These concerns are
exacerbated in underserved communities,
given their low rates of health literacy.
161

As discussed in the 2023 proposed rule,
in addition to systemic and social struc-
tures that impact access to health care,
162

health literacy can make it more difficult
for historically underserved and margin-
alized groups to navigate high deduct-
ibles, expanded cost sharing, coverage
exclusions and narrow formularies found
in STLDI.
163
These barriers can lead to
consumers rationing their medicine or not
taking it at all or delaying necessary health
care services, causing devastating conse-
quences to their health.
164
Shortening the
maximum allowable term and duration of
STLDI will serve as a clear indicator to
consumers about the nature of each cov-
erage option and instill more confidence
in their coverage decisions. The Depart-
ments are also concerned about the prev-
alence of deceptive marketing practices,
as noted by commenters who referenced
secret shopper studies and anecdotes
about negative consumer experiences,
including when deceptive marketing prac-
tices were used to encourage consumers
to enroll in STLDI instead of receiving
education about their eligibility for low-
cost comprehensive coverage or to inhibit
consumers from choosing the coverage
they need to access health care and protect
themselves from financial burdens.
Finally, the Departments agree that it
is necessary and appropriate to revisit the
Federal STLDI definition to further dis-
tinguish between these types of coverage
given concerns about the impact on risk
155
See, for example, Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman,
available at: https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
156
In some circumstances, even accounting for the expense of using an out-of-network provider, comprehensive coverage still may be the less expensive choice overall because of lower out-
of-pocket spending a consumer would enjoy when enrolled in comprehensive coverage. In many cases, expenses for premiums and cost sharing for comprehensive coverage enrollees are still
lower than the uncovered costs associated with STLDI, particularly when an individual undergoes costly medical treatment.
157
Barnes, Justin, Anne Kirchhoff, Robin Yabroff, and Fumiko Chino (2023). “State Policies Regulating Short-Term Limited Duration Insurance Plans and Cancer Stage at Diagnosis,” JNCI
Cancer Spectrum, Volume 7, Issue 5, available at: https://doi.org/10.1093/jncics/pkad060.
158
See Pollitz, Karen, Michelle Long, Ashley Semanskee, and Rabah Kamal (2018). “Understanding Short-Term Limited Duration Health Insurance,” KFF, available at: https://www.kff.org/
affordable-care-act/issue-brief/understanding-short-term-limited-duration-health-insurance. See also Lueck, Sarah (2018). “Key Flaws of Short-Term Health Plans Pose Risks to Consumers,”
Center on Budget and Policy Priorities, available at: https://www.cbpp.org/research/health/key-flaws-of-short-term-health-plans-pose-risks-to-consumers.
159
See, for example, 88 FR 44596 at 44608, 44612, 44613, 44615-44617, 44646 (July 12, 2023).
160
Georgians for a Healthy Future (2019). “Report on Testing Consumer Understanding of a Short-Term Health Insurance Plan,” available at: https://healthyfuturega.org/wp-content/
uploads/2019/04/Consumer-Testing-Report_NAIC-Consumer-Reps.pdf.
161
Kutner M, Greenberg E, Jin Y, Paulsen C. The Health Literacy of America’s Adults: Results from the 2003 National Assessment of Adult Literacy (NCES 2006-483). Washington, DC: U.S.
Department of Education, National Center for Education Statistics; 2006.
162
Muvuka, B., et al (2020). “Health Literacy in African-American Communities: Barriers and Strategies,” Health Literacy Research and Practice, available at: https://journals.healio.com/
doi/full/10.3928/24748307-20200617-01.
163
88 FR 44596 at 44608, 44613, 44615 (July 12, 2023).
164
Schumacher, Jessica R. et al. (2013). “Potentially Preventable Use of Emergency Services: The Role of Low Health Literacy,” Medical Care 51(8), August 2013, available at: https://www.
ncbi.nlm.nih.gov/pmc/articles/PMC3756810.

May 6, 2024 990 Bulletin No. 2024–19
pools. As discussed in section II.C of this
preamble, STLDI siphons off healthier
individuals from the risk pools for indi-
vidual health insurance coverage, thereby
raising premiums for such coverage.
Some commenters expressed particular
concern about the impact of deceptive and
aggressive marketing practices for STLDI
given the increase in consumers currently
looking for health coverage options as
States resume Medicaid eligibility rede-
terminations due to the expiration of the
FFCRA Medicaid continuous enroll-
ment condition, as discussed in section
II.B of this preamble. These commenters
explained that many consumers who lose
Medicaid coverage and are seeking new
coverage at a low cost will be vulnerable
to misleading or aggressive sales and mar-
keting tactics that obscure the differences
between comprehensive coverage and
STLDI, and might therefore mistakenly
enroll in STLDI in lieu of comprehensive
coverage. These commenters noted that
underserved populations with low health
literacy and incomes below the FPL may
be particularly vulnerable.
The Departments recognize that more
individuals may be considering new cov-
erage options as a result of an increased
volume of Medicaid eligibility redetermi-
nations, and therefore may be particularly
susceptible to this type of misleading or
aggressive sales and marketing tactics
even though affordable options for com-
prehensive coverage may be available
to them. CMS has made it a priority to
ensure that as many people as possible
maintain continuous comprehensive cov-
erage during this “unwinding period.”
165

CMS has a robust plan in place to reach
people with Medicaid or CHIP coverage,
so that they are aware of the steps they
need to take to maintain their Medicaid
or CHIP coverage, or, if no longer eligi-
ble, to smoothly transition to other forms
of coverage, such as individual health
insurance coverage purchased through an
Exchange.
166
This plan includes new pol-
icy and operational flexibilities, such as a
temporary exceptional circumstances spe-
cial enrollment period available through
HealthCare.gov for qualified individuals
and their families who lose Medicaid or
CHIP coverage following the end of the
continuous enrollment condition; multi-
pronged, large-scale national and local
outreach and stakeholder engagement
efforts; and investments and innovations
in enrollment assistance.
167
State-based
Exchanges have taken similar steps to
update or implement new special enroll-
ment period policies, as well as conduct
outreach and stakeholder engagement,
to support qualified individuals and their
families who lose Medicaid or CHIP cov-
erage following the end of the continu-
ous enrollment condition. Despite these
efforts, current data shows that a substan-
tial number of people have lost coverage
and may want to enroll in coverage.
168
Commenters requested that the Depart-
ments clarify whether any of the existing
special enrollment periods would allow a
consumer to access comprehensive cover-
age if their STLDI coverage ends outside
of an open enrollment period. Some com-
menters recommended that the Depart-
ments create a new special enrollment
period for individuals to enroll in compre-
hensive coverage after their STLDI cov-
erage ends, or that allows an individual to
enroll in coverage through an Exchange
upon the termination of STLDI coverage
specifically for situations where a con-
sumer elected STLDI following a loss of
employment-based coverage due to a job
transition or to provide temporary cover-
age during an employer’s waiting period.
Some commenters expressed concern
about the potential for consumers to expe-
rience gaps in coverage in the absence
of access to a special enrollment period,
explaining that those consumers purchas-
ing a 3-month STLDI plan mid-calendar
year would become financially vulnerable
with no continued coverage options until
the next open enrollment period.
The Departments affirm that individ-
uals who lose eligibility for STLDI cov-
erage, such as when their STLDI policy
ends, are already eligible for a special
enrollment period and have 60 days to
enroll in group health plan coverage,
either insured or self-funded.
169
HHS
did not propose to create a new individ-
ual market special enrollment period for
individuals to enroll in individual health
insurance coverage (on- or off-Exchange)
at the expiration of their STLDI coverage
and declines to do so in these final rules.
Providing consumers with an individual
market special enrollment period to pur-
chase off-Exchange or on-Exchange cov-
erage when they lose eligibility for STLDI
or their STLDI policy ends could confuse
or mislead consumers who are consider-
ing their health coverage options. Con-
sumers may delay enrolling in compre-
hensive coverage when first available, on
the expectation that such coverage would
be available at any time, even if STLDI
coverage does not renew or is otherwise
terminated. Also, as explained previously,
inflating the fraction of low-risk individu-
als who enroll in STLDI rather than indi-
vidual health insurance coverage will have
negative consequences for the risk pools
for individual health insurance coverage.
Furthermore, there are other options
for individuals who anticipate experi-
encing longer gaps between comprehen-
sive coverage. For example, an individ-
ual who loses comprehensive coverage
may be eligible for a special enrollment
period that allows them to enroll in group
coverage sponsored by their employer,
the employer of their parent, spouse or
partner, or individual health insurance
coverage, either directly with the issuer,
or through the Exchanges, where they
165
See Temporary Special Enrollment Period (SEP) for Consumers Losing Medicaid or the Children’s Health Insurance Program (CHIP) Coverage Due to Unwinding of the Medicaid
Continuous Enrollment Condition– Frequently Asked Questions (FAQ) (January 27, 2023), available at: https://www.cms.gov/technical-assistance-resources/temp-sep-unwinding-faq.pdf.
166
See CMS (2023). “Unwinding and Returning to Regular Operations after COVID, Medicaid and CHIP Renewals Outreach and Educational Resources,” available at: https://www.medic-
aid.gov/resources-for-states/coronavirus-disease-2019-covid-19/unwinding-and-returning-regular-operations-after-covid-19/medicaid-and-chip-renewals-outreach-and-educational-resources/
index.html.
167
See CMS (August 26, 2022). “Biden-Harris Administration Makes Largest Investment Ever in Navigators Ahead of HealthCare.gov Open Enrollment Period,” available at: https://www.
cms.gov/newsroom/press-releases/biden-harris-administration-makes-largest-investment-ever-navigators-ahead-healthcaregov-open.
168
See Corallo, Bradley, Jennifer Tolbert, Patrick Drake, Sophia Moreno, and Robin Rudowitz, (2024). “Halfway Through the Medicaid Unwinding: What Do the Data Show?” KFF, available
at: https://www.kff.org/policy-watch/halfway-through-the-medicaid-unwinding-what-do-the-data-show.
169
See 26 CFR 54.9801–6, 29 CFR 2590.701–6, 45 CFR 146.117.

Bulletin No. 2024–19 991 May 6, 2024
may be eligible for APTC.
170,171
In some
circumstances, they may be eligible for
other coverage such as government-based
assistance for qualified individuals under
Medicaid, CHIP, or BHP.
172
In addition,
if a consumer experiences a reduction in
benefits or termination of employment
and is uncertain as to when they will be
eligible for other comprehensive cover-
age, the consumer in many cases has the
option of electing coverage under the Con-
solidated Omnibus Budget Reconciliation
Act (COBRA)
173
(18, 29, or 36 months
depending on the nature of the COBRA
qualifying event) or State mini-COBRA
continuation coverage laws. Also, as dis-
cussed in section III.A.2 of this pream-
ble, an individual who enrolls in STLDI
coverage from one issuer and wishes to
purchase another STLDI policy maintains
the option of enrolling in STLDI coverage
with another issuer that is not a member of
the same controlled group.
One commenter suggested that the
Departments require that certain con-
sumer protection provisions apply to
STLDI. Other commenters urged the
Departments to extend the prohibition on
rescissions to STLDI. One of these com-
menters explained that STLDI issuers
can rescind the patient’s coverage follow-
ing post-claims underwriting,
174
leaving
patients without any financial or medical
protection and at high risk of incurring
medical debt.
The Departments appreciate comment-
ers’ suggestions regarding ways in which
to ensure STLDI provides key Federal
consumer protections. The Departments
agree that STLDI can place a consumer’s
health and financial well-being at risk if
they experience a significant medical
event or have a complex medical condi-
tion. As discussed in this preamble at sec-
tion II.B, consumers may be susceptible
to deceptive marketing and sales practices
that often mask post-claims underwrit-
ing practices by STLDI issuers and the
exclusion of key essential health benefits
and Federal consumer protections under
STLDI plans. Consumers may be unaware
of the limitations of their STLDI coverage
until they need care or have incurred sig-
nificant medical expenses, particularly
those with low health literacy. However,
the Departments did not propose to apply
Federal consumer protections to STLDI
and are not finalizing in these final rules
the extension of any of the individual
health insurance coverage Federal con-
sumer protections and requirements to
STLDI.
175
The Departments further note
it would be inconsistent with the statute to
extend the Federal prohibition on rescis-
sions to STLDI, as Congress limited its
applicability to group health plans and
health insurance issuers offering group or
individual health insurance coverage.
176

In addition, as discussed in section III.A.2
of this preamble, the Departments have
determined that limiting extensions and
renewals of STLDI instead of applying
guaranteed renewability to STLDI appro-
priately distinguishes STLDI from indi-
vidual health insurance coverage.
Other commenters suggested that the
Departments collect data on key elements,
including, for example, compensation
paid by issuers to brokers or agents; plan-
level enrollment/disenrollment and claims
data that is disaggregated by age, income,
race/ethnicity, and geographic locations;
coverage limits; and other data to enable
regulators and stakeholders to assess
whether and how children and families are
being served by STLDI.
The Departments agree with comment-
ers that it would be useful to have access
to more data on STLDI. HHS is commit-
ted to collecting information from issuers
offering STLDI regarding any direct or
indirect compensation provided by the
issuer to an agent or broker associated
with enrolling individuals in STLDI, as
authorized under section 2746 of the PHS
Act.
177
However, beyond this require-
ment, the Departments do not currently
have authority to collect data from issuers
of STLDI. States, in contrast, can survey
and collect data on STLDI under State
authority and the NAIC Market Analysis
and Procedures Working Group annually
collects data from issuers of STLDI.
178

The Departments encourage States that do
not already collect such data to consider
the collection of data from STLDI issuers,
as suggested by commenters, to assist with
Federal and State oversight of STLDI.
2. Definitions of “Short-term” and
“Limited-duration”
The 2023 proposed rules proposed to
amend the Federal definition of “short-
term, limited-duration insurance” in 26
CFR 54.9801–2, 29 CFR 2590.701–2, and
45 CFR 144.103 to reflect a new interpre-
tation of the phrase “short-term” to mean a
policy, certificate, or contract of insurance
with an issuer that has an expiration date
specified in the policy, certificate, or con-
tract of insurance that is no more than 3
months after the original effective date of
the policy, certificate, or contract of insur-
ance.
179
The 2023 proposed rules also pro-
posed to interpret “limited-duration” to
mean a maximum coverage period that is
no longer than 4 months in total, includ-
ing renewals and extensions.
180
For this
170
45 CFR 155.420.
171
45 CFR 147.104(b)(2).
172
Medicaid eligibility requirements vary by State.
173
Pub. L. 99–272, April 7, 1986.
174
Post-claims underwriting refers to the practice of engaging in an underwriting review after a claim is made rather than going through the time and expense of doing such a review to assess
the consumer’s actuarial risk and medical conditions at the time the policy is purchased.
175
While STLDI is generally not subject to the Federal consumer protections and requirements for comprehensive coverage that apply to individual health insurance coverage, the agent and
broker compensation disclosure and reporting requirements in section 2746 of the PHS Act apply to health insurance issuers offering individual health insurance coverage or STLDI. Those
requirements will be addressed by HHS in a separate rulemaking. See Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement; Proposed
Rules, 86 FR 51730 at 51740 – 51744 and 51770 – 51771 (Sept. 16, 2021).
176
See PHS Act section 2712.
177
See Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement; Proposed Rules, 86 FR 51730 at 51740 – 51744 and 51770 – 51771 (Sept.
16, 2021).
178
The NAIC is currently collecting additional data on STLDI as part of its Market Conduct Annual Statement data call for STLDI offered in 2023. See https://content.naic.org/mcas-2023.htm.
179
88 FR 44596 at 44610-44611 (July 12, 2023).
180
Id. at 44611-44614 (July 12, 2023).

May 6, 2024 992 Bulletin No. 2024–19
purpose, the Departments proposed that
a renewal or extension would include the
term of a new STLDI policy, certificate, or
contract of insurance issued by the same
issuer to the same policyholder within the
12-month period, beginning on the origi-
nal effective date of the initial policy, cer-
tificate, or contract of insurance. As pro-
posed, in this context, the phrase “same
issuer” would refer to the entity licensed
to sell the policy, consistent with the defi-
nition of health insurance issuer in 26
CFR 54.9801-2, 29 CFR 2590.701-2, and
45 CFR 144.103. Under this proposal, the
duration of coverage would be calculated
based on the total number of days of cov-
erage (either consecutive or non-consecu-
tive) that a policyholder is enrolled in an
STLDI policy with the same issuer within
the prior 12-month period, regardless of
whether the coverage issued to the policy-
holder is under the same or a new policy,
certificate, or contract of insurance.
The calculation for the duration of cov-
erage, however, would not include days of
coverage under an STLDI policy, certifi-
cate, or contract of insurance sold to the
same policyholder by a different issuer. As
the Departments explained in the preamble
to the 2023 proposed rules, this proposed
distinction would effectively limit stack-
ing of policies sold by the same issuer,
would be easier for issuers to track and
comply with than if applied across differ-
ent issuers, and would allow consumers to
purchase subsequent STLDI policies from
other issuers within a 12-month period.
181
As explained in the preamble to the
2023 proposed rules, the new proposed
definition for STLDI is consistent with the
group market rules regarding the 90-day
waiting period provision under the ACA
and with STLDI’s traditional role of serv-
ing as a temporary coverage for individ-
uals transitioning between other types of
comprehensive coverage. The proposed
definition is also similar to the less-than-
3-month maximum term for STLDI under
the 2016 final rules and under a number
of State laws,
182
and aligns with the goal
of Executive Order 14009 to support pro-
tections for people with preexisting con-
ditions.
The Departments requested comments
on the proposed new interpretations of the
phrases “short-term” and “limited-dura-
tion.” The Departments also requested
comments on whether the interpretation
of “short-term” in the proposed definition
of STLDI should be some other length,
such as no longer than 4 months, and
why, and whether there are circumstances
under which issuers should be allowed
to renew or extend STLDI for periods of
time beyond what would be permitted in
the proposed rules. The Departments also
requested comments on whether there are
additional ways to differentiate STLDI
from comprehensive coverage options,
including information on State approaches
or limits on the sale of STLDI by a differ-
ent issuer, and how the subsequent issuer
would determine whether or not an appli-
cant had previous STLDI with another
issuer. The Departments also solicited
comments on whether to broaden the lim-
its on stacking to include issuers that are
members of the same controlled group.
Given that the majority of comments
addressed the definitions of “short-term”
and “limited-duration” together, the
Departments are addressing comments
related to the maximum allowed length
and the definitions for these two terms
together, along with the comments related
to the practice of stringing together mul-
tiple or consecutive policies, a practice
known as “stacking.”
Commenters suggested various options
for the allowable maximum duration.
Some commenters supported finalizing
the maximum duration as proposed. These
commenters agreed that STLDI serves as
an adequate gap filler for consumers that
need a bridge between comprehensive
forms of coverage, and a 3-month initial
term makes it easier for a consumer to
distinguish between STLDI and compre-
hensive coverage. In addition, some of
these commenters supported a short ini-
tial term to protect consumers from the
inherent risks of enrolling in coverage
that does not provide Federal consumer
protections or comprehensive health ben-
efits, and to curb negative impacts on the
risk pools for individual health insurance
coverage. Some commenters were of the
view that the proposed definitions of the
terms “short-term” and “limited-duration”
better align with the plain language of the
statute than the current definitions. Others
supported shortening the initial maximum
allowable period to a period less than
allowed under the current rules, but lon-
ger than the proposed 3-month period, for
example a period of less than 6 months,
to strike a balance between the draw-
backs of STLDI with consumers’ need for
gap-coverage when coverage is needed
for a short period of time, they have no
other insurance options, or comprehensive
coverage is otherwise unaffordable. Other
commenters stated that STLDI policies
should be permitted to have longer dura-
tions as long as they end by December 31
of the calendar year in which the policy
period commences, at which point indi-
viduals can enroll in comprehensive cov-
erage during the annual individual market
open enrollment period. One commenter,
who supported the proposed maximum
duration, suggested that the Departments
require that all initial contract terms end
by December 31 of the policy year in
which the policy commences (even when
the STLDI policy is purchased late in the
year), to minimize situations where con-
sumers miss the annual individual market
open enrollment period. The commenter
suggested that requiring STLDI policies
to end by December 31 would cause con-
sumers to look for new coverage during
the individual market open enrollment
period and increase the likelihood that they
would enroll in comprehensive coverage.
The commenter further suggested that, for
alignment with the proposed maximum
duration, the Departments could allow
renewal for up to 4 months (past Decem-
ber 31), but only if the full 4-month period
of coverage is not sold at the same time
and that an additional notice is sent to con-
sumers about the annual individual market
open enrollment period.
Other commenters opposed modifying
the initial maximum allowed length of
“short-term” and instead recommended
keeping the 2018 final rule’s maximum
allowed length for an initial contract term
181
Id. at 44612 (July 12, 2023).
182
See, for example, D.C. Code §31-3303.13d; 18 Del. Admin. Code 1320-4.0; Haw. Rev. Stat. § 431:10A-605; Md. Code Ann., Insurance § 15-1301(s); N.M. Stat. § 13.10.3.8; Or. Rev.
Stat. §743B.005; and Ver. Stat. Ann. tit. 8 § 4084a(c). See also Healthinsurance.org (2023). “Duration and Renewals of 2023 Short-Term Medical Plans by State,” available at: https://www.
healthinsurance.org/wp-content/uploads/2023/09/state-by-state-short-term-health-insurance.pdf.

Bulletin No. 2024–19 993 May 6, 2024
of less than 12 months. With respect to
the definition of “limited-duration,” some
commenters suggested the Departments
redefine the standard to allow a longer
maximum length than proposed. One
commenter requested that the Depart-
ments define “limited-duration” as up
to 12 to 18 months. Another commenter
suggested that the Departments define
“limited-duration” as up to 9 months in a
12-month period to allow consumers who
do not have a qualifying event for a special
enrollment period to purchase comprehen-
sive coverage to use STLDI to bridge the
gap between annual open enrollment peri-
ods in the individual market.
Commenters who supported a longer
allowable maximum duration than the
proposed period stated that limiting the
maximum allowed length to no more
than 3 months and a 1-month extension
fails to account for all circumstances for
which a consumer may need access to
STLDI. Commenters gave examples of
consumers who may benefit from being
able to purchase longer-duration STLDI
coverage, such as workers experienc-
ing a change in employment, or unem-
ployment; contract workers who do not
have coverage through their employer;
self-employed individuals or owners
of a small business; college students
who are not on their parent’s insurance;
workers in industries that require fre-
quent travel, such as nurses and truckers;
consumers with varying and unpredict-
able incomes; or consumers eligible for
little or no APTC who would encounter
a substantial premium expense if they
enrolled in comprehensive coverage.
In advocating for a longer maximum
allowed duration, one commenter also
noted that the average length of unem-
ployment is 20.6 weeks, while according
to a group of issuers and marketers of
STLDI the average length of enrollment
in STLDI is only 7 months. Other com-
menters stated that the maximum allow-
able length of STLDI should be left to
the States. Some commenters suggested
the Departments require issuers offering
STLDI with renewals and extensions
of up to 4 months to guarantee that the
renewal or extension be available to the
consumer without additional underwrit-
ing if the consumer chooses to renew or
extend their coverage.
Although the Departments acknowl-
edge that there will be times when con-
sumers may experience gaps in com-
prehensive coverage that exceed the
maximum allowable duration for STLDI
finalized in these rules, the Departments
are not persuaded that a longer maximum
initial contract term or longer maximum
duration, taking into account renewals or
extensions, is appropriate. Maintaining
the definition that permits a longer initial
length of up to 1 year would not allevi-
ate the challenges consumers currently
face in distinguishing STLDI from indi-
vidual health insurance coverage, would
continue to place consumers who enroll
in STLDI at financial risk, and would not
mitigate the impact on the risk pools for
individual health insurance coverage or
those consumers purchasing individual
health insurance coverage. Because of low
health literacy, consumers face the risk of
inadvertently enrolling in STLDI cover-
age that does not sufficiently provide cov-
erage for unexpected or significant medi-
cal events that arise during the coverage
period.
The Departments are not persuaded
by comments that urged the Depart-
ments to align the maximum duration
with a time frame that reflects average
periods of unemployment, such as 6 to 9
months, rather than the proposed limit.
The limit of no-more-than 3 months
with a 1-month extension aligns with
the 90-day waiting period limitation
and 1-month additional reasonable and
bona fide employment-based orienta-
tion period that is permitted under the
ACA. The Departments are of the view
that aligning the maximum duration of
an STLDI policy with the period Fed-
eral law expressly permits as an “ori-
entation” period in employment-based
coverage most appropriately reflects
STLDI’s traditional role to fill tempo-
rary gaps in coverage.
Consumers who purchase STLDI
during a 90-day waiting period have
a predictable end to their gap in cover-
age. Their gap is defined, and generally
temporary, and thus is exactly the type
of gap that STLDI traditionally serves
to fill. In contrast, a loss in coverage
due to a loss of employment is not the
type of gap that STLDI traditionally is
intended to fill because consumers that
experience a loss of employment do not
have certainty regarding how long their
gap in comprehensive coverage will be,
and for some that gap will not be tempo-
rary and may extend beyond the average
length of unemployment. By enrolling
in STLDI in lieu of COBRA continua-
tion coverage or individual health insur-
ance coverage during the 60-day period
for which they are eligible for a special
enrollment period for loss of qualifying
coverage, these consumers may lose
access to comprehensive coverage until
the next individual market open enroll-
ment period. While STLDI may be an
appropriate choice for some individuals
during a period of unemployment, the
Departments concluded that aligning the
maximum duration with the 90-day wait-
ing period limitation and 1-month addi-
tional reasonable and bona fide employ-
ment-based orientation period better
captures the traditional role of STLDI.
In addition, consumers are more likely
to face an unexpected health issue during
a longer coverage period – such as 6, 9,
or 12 months – and may find themselves
insufficiently protected by the typically
limited benefits of an STLDI policy and
potential resulting financial burdens.
By allowing an initial term of no
more than 3 months, the interpretation of
“short-term” for purposes of the revised
Federal definition of STLDI finalized in
these rules provides a clear demarcation
from the 1-year length of a policy year
for individual health insurance coverage.
In addition, as discussed earlier, STLDI’s
traditional role is to provide coverage for
temporary gaps for consumers transition-
ing between comprehensive coverage.
A maximum period of no more than 3
months and 1-month extension (for a total
maximum duration of 4 months, including
renewals or extensions) is more appropri-
ate for coverage intended to fill a tempo-
rary gap in comprehensive coverage. As
explained in the preamble to the 2016 final
rules, for longer gaps in coverage, guaran-
teed availability of coverage and special
enrollment period requirements in the indi-
vidual market under the ACA ensure that
individuals can purchase individual health
insurance coverage through or outside of
the Exchange that is minimum essential
coverage and includes the Federal con-
sumer protections and requirements for

May 6, 2024 994 Bulletin No. 2024–19
comprehensive coverage.
183
Many con-
sumers will also have the opportunity to
enroll in comprehensive coverage offered
by an employer and some may be eligible
for other coverage, such Medicaid, CHIP
or BHP.
The Departments are similarly not
persuaded by the recommendation that
STLDI be permitted to have a longer
maximum duration, provided that cover-
age ends by December 31. Although the
Departments appreciate that this approach
would minimize gaps in coverage between
when an individual’s STLDI ends and
when they can enroll in comprehensive
individual health insurance coverage
during the annual individual market open
enrollment period, the Departments are
concerned that such an approach would
not sufficiently distinguish STLDI from
individual health insurance coverage,
which also ends on December 31. Finally,
as mentioned in the 2023 proposed rules,
the maximum allowable length of no more
than 3 months and a 1-month extension
represents a balance between providing
a flexible standard that captures many of
the circumstances for which an individual
would want to enroll in STLDI, responds
to the significant changes in the legal
landscape and market conditions since the
Departments last addressed STLDI, and
addresses the low value that STLDI pro-
vides to consumers when used as a substi-
tute for comprehensive coverage.
Some commenters requested that the
Departments impose a guaranteed renew-
ability requirement on STLDI to prevent
additional underwriting if a consumer
chooses to renew or extend their cover-
age. The Departments have determined
that limiting extensions and renewals of
STLDI instead of applying guaranteed
renewability to STLDI appropriately dis-
tinguishes STLDI from individual health
insurance coverage. As such, these final
rules do not impose a guaranteed renew-
ability requirement on STLDI. Under-
writing practices, including post-claims
underwriting are outside the scope of
these final rules.
Many commenters supported the new
proposed interpretation of “limited-dura-
tion” and accompanying proposed defi-
nition of renewal or extension to address
stacking of STLDI policies by the same
issuer to the same policyholder within
a 12-month period. These commenters
stated that issuers have exploited this
loophole to sell consumers consecutive
STLDI policies that collectively sidestep
the maximum duration limits, deliberately
misleading consumers about differences
between STLDI and comprehensive cov-
erage. According to some of these com-
menters, addressing the stacking loop-
hole would reduce the risk of consumers
unknowingly enrolling in coverage with
inadequate benefits for an extended period
of time. Commenters further stated stack-
ing practices provide consumers with a
false sense of security that they purchased
a viable long-term substitute for com-
prehensive coverage and make it more
challenging for consumers to distinguish
STLDI from individual health insurance
coverage.
Commenters expressed concern about
the exposure to financial risk that consum-
ers face when purchasing stacked STLDI
policies, explaining that a consumer typ-
ically faces new deductibles, new annual
out-of-pocket limitations, and new preex-
isting condition limitations with each new
STLDI policy term. A commenter noted
that consumers may not understand that
a health event experienced when covered
under one STLDI policy could serve as
the basis to impose a preexisting exclusion
under a subsequent STLDI policy to deny
benefits for the same condition.
Other commenters questioned the basis
for the Departments to adopt this part of
the definition of “limited-duration” to
address stacking of policies sold by the
same issuer, members of the same con-
trolled group, and/or by unrelated issuers,
stating that the Departments do not have
authority to constrain consumer choice.
A commenter argued that preventing
consumers from purchasing subsequent
STLDI policies from an issuer of their
choice is contrary to the statute, which
looks at the issuer’s conduct rather than
the consumer’s conduct, and would run
afoul of the decision in Central United
Life Ins. Co. v. Burwell.
184
The commenter
further stated that Congress unambigu-
ously specified in the ACA and HIPAA the
types of insurance and actors
Congress intended to regulate, and
Congress consistently chose to exempt
STLDI from the definition of individual
health insurance coverage and to regu-
late issuer behavior instead of consumer
behavior. Another commenter encour-
aged the Departments to defer to States
on whether and to what extent an issuer
could sell consecutive or multiple STLDI
policies to consumers within a 12-month
period. Other commenters stated that
addressing the stacking loophole would
leave consumers financially vulnerable, as
some will not understand that their STLDI
coverage cannot be renewed or extended
with the same issuer and will have limited
coverage options outside the annual indi-
vidual market open enrollment period.
185
Some commenters who supported
addressing the stacking loophole encour-
aged the Departments to extend the new
interpretation of “limited-duration” and
the accompanying definition of renewal or
extension to include all issuers that are a
part of the same controlled group. These
commenters stated that issuers with shared
ownership should not be able to exploit
their corporate structure to avoid con-
sumer protections and effectively circum-
vent the otherwise applicable maximum
duration limits for STLDI coverage. Some
commenters suggested that extending the
limitation to include all issuers in the same
controlled group could help address con-
cerns regarding STLDI sold through asso-
ciations,
186
as associations might be posi-
tioned to facilitate the issuance of stacked
STLDI policies from different subsidiaries
of the same controlled group. One com-
menter stated that members of the same
controlled group should have the data and
member-tracking capabilities to know if a
consumer has purchased an STLDI policy
within the 12 months from another issuer
within the same controlled group.
The Departments agree with com-
menters that supported the Departments’
authority to address the stacking loop-
hole as part of the definition of renewal or
183
81 FR 75318 (Oct. 31, 2016).
184
827 F.3d 70, 74 (D.C. Cir. 2016).
185
See section III.A.4 of this preamble.
186
For further discussion on STLDI sold through associations, see section III.A.5 of this preamble.

Bulletin No. 2024–19 995 May 6, 2024
extension for purposes of the new inter-
pretation of “limited-duration.” As stated
in the preamble to the 2023 proposed
rules, the Departments are concerned that
stacking practices lengthen the duration
of STLDI coverage without offering the
benefits of comprehensive coverage that
is subject to Federal consumer protections
and requirements for comprehensive cov-
erage, including limitations on medical
underwriting, the prohibition of preexist-
ing condition exclusions, and the prohi-
bition on coverage rescissions. Using the
stacking loophole, issuers could enroll
consumers in multiple consecutive STLDI
policies that together provide coverage
for 12 months (or longer), in effect cir-
cumventing the rules related to maximum
duration and making it more challenging
for consumers to distinguish STLDI from
comprehensive coverage.
187
As discussed in section III.A.1 of this
preamble, the Departments have clear
authority to interpret and implement the
Code, ERISA, and the PHS Act as they do
here. This includes the authority to issue
regulations on STLDI to define it and set
standards that distinguish it from individ-
ual health insurance coverage. Providing a
definition for what a renewal or extension
means in the context of the new interpre-
tation of “limited-duration” is included
within this authority and is not a constraint
on consumer behavior. Instead, the defini-
tion and standards, as proposed and final-
ized, apply to health insurance issuers that
elect to offer STLDI. Further, consumers
will continue to have access to STLDI
plans that are generally exempt from the
Federal consumer protections and require-
ments for comprehensive coverage.
188

Neither the proposed rules nor these final
rules sought to extend to STLDI or oth-
erwise make changes with respect to the
applicability of those consumer protec-
tions and requirements.
After considering comments, the
Departments are finalizing as proposed
that a renewal or extension, for purposes of
applying the interpretation of “limited-du-
ration” under the new STLDI definition
adopted in these final rules, includes the
term of a new STLDI policy, certificate, or
contract of insurance issued by the same
issuer to the same policyholder within the
12-month period beginning on the original
effective date of the initial policy, certifi-
cate, or contract of insurance. Subsequent
sales to the same policyholder by the same
issuer within the same 12-month period
will be treated comparably to renewals for
purposes of calculating and applying the
limited-duration standard.
The Departments also agree that
extending the definition of renewal or
extension for purposes of applying the
new interpretation of “limited-duration”
to limit stacking of STLDI policies sold
by issuers that are members of the same
controlled group is appropriate and neces-
sary. This prevents issuers from circum-
venting the maximum duration standards
in the revised Federal STLDI definition
adopted in these final rules by marketing
policies of one member of a controlled
group to policyholders enrolled in STLDI
coverage of another member of the con-
trolled group, keeping that policyholder
enrolled in STLDI coverage for more than
the maximum allowed coverage period.
The final rules therefore provide that for
purposes of applying the new interpre-
tation of “limited-duration,” a renewal
or extension includes the term of a new
STLDI policy, certificate, or contract of
insurance offered by either the same issuer
or, if the issuer is a member of a controlled
group, any other issuer that is a member
of the same controlled group. For these
purposes, a “controlled group” means any
group treated as a single employer under
section 52(a), 52(b), 414(m), or 414(o) of
the Code. HHS uses a similar definition
of “controlled group” for purposes of the
guaranteed renewability rules and QHP
issuer standards, and the Departments
anticipate the usage is familiar to health
insurance issuers.
189
The relevant metric to calculate
whether the duration of coverage sold by
the same issuer or any other issuer that is
a member of the same controlled group to
the same policyholder satisfies the revised
Federal interpretation of “limited-dura-
tion” in these final rules is the total number
of days of coverage (either consecutive or
non-consecutive) that the policyholder is
enrolled in an STLDI policy with the same
issuer or any other issuer that is a member
of the same controlled group. That calcu-
lation applies regardless of whether the
coverage is a renewal or extension under
the same policy, certificate, or contract of
insurance, or if it involves the issuance of
a new STLDI policy, certificate, or con-
tract of insurance to the same policyholder
within the 12-month period beginning on
the original effective date of the initial
policy, certificate, or contract of insurance.
Several commenters requested that
the Departments expand the approach
to address the stacking loophole to also
include the sale of STLDI policies by
unaffiliated issuers. These commenters
were concerned that stacking will con-
tinue through policies sold by multiple
issuers. Some commenters questioned
whether focusing only on stacking pol-
icies sold by the same issuer achieves
the goals described in the proposed rules
because consumers could still stack
STLDI purchased from different issuers.
One commenter expressed concern that
the proposed limitation on stacking by
only the same issuer would harm con-
sumers because seeking STLDI policies
from multiple issuers would result in the
coverage offering different networks and
benefits. A commenter that supported
extending the approach to address the
stacking loophole to also apply to STLDI
policies sold by unaffiliated issuers shared
that some States prohibit consumers
from enrolling in STLDI for more than 3
months in a 12-month period, regardless
of issuer. Another commenter, who was
supportive of the general concept of lim-
iting stacking across issuers, cautioned
that it would be exceedingly difficult for
issuers to implement a limit on the sale
of multiple STLDI policies by different
issuers within the same year at this time.
Some commenters who supported the
187
88 FR 44596 at 44612-44613 (July 12, 2023).
188
While STLDI is generally not subject to the Federal consumer protections and requirements for comprehensive coverage that apply to individual health insurance coverage, the agent and
broker compensation disclosure and reporting requirements in section 2746 of the PHS Act apply to health insurance issuers offering individual health insurance coverage or STLDI.
189
See 45 CFR 147.106(d)(3) and (4) (providing an exception to market withdrawal under guaranteed renewability regulations) and 156.20 (defining an “issuer group” for purposes of QHP
issuer standards).

May 6, 2024 996 Bulletin No. 2024–19
extension of the approach to unaffiliated
issuers explained that such an approach
could be implemented by issuers cer-
tifying, by consumer attestation, or by
another similar mechanism, that the pol-
icyholder has not purchased STLDI cov-
erage from any issuer within the previous
12-month period, while others suggested
that the Departments create a safe harbor
for issuers that require consumers to sign
attestations regarding previous STLDI
coverage.
While the Departments appreciate
these comments and recommendations,
the Departments decline to extend the
definition of renewal or extension for pur-
poses of applying the revised interpreta-
tion of “limited-duration” to limit stacking
of policies issued by unaffiliated issuers.
As explained in the proposed rules, the
Departments are cognizant of the admin-
istrative burden for issuers of tracking and
ensuring compliance with such a prohi-
bition.
190
However, States may choose to
further address issuer stacking practices,
such as by prohibiting stacking across
issuers not within the same controlled
group.
One commenter suggested the Depart-
ments limit an issuer’s ability to issue
subsequent STLDI policies to members
of the same household. The Departments
did not propose to limit an issuer’s abil-
ity to sell subsequent STLDI policies
to members of the same household and
decline to adopt such a limitation in these
final rules. Members of the same house-
hold may need temporary, stopgap cov-
erage at different times over a 12-month
period. Limiting the ability of members
of the same household to purchase STLDI
coverage would remove flexibility for
consumers and unnecessarily complicate
their health insurance enrollment process
because issuers would have to determine
whether members of the same household
have enrolled in any STLDI coverage
during the previous 12-month period each
time any member of the household enrolls
in STLDI, which could create an admin-
istrative burden on issuers. Furthermore,
whereas limiting stacking across affiliated
issuers in the same controlled group will
prevent issuers from using their corporate
structure to circumvent the rules related to
maximum duration, it is not apparent to the
Departments that limiting stacking across
unaffiliated issuers or different members
of the same household accomplishes any
similar goal. Finally, the administrative
burden of tracking members of the same
household may outweigh any potential
benefit of restricting the sale of multiple
STLDI policies to individuals who reside
in the same household.
Some commenters requested that
the Departments affirm that consumers
are entitled to renewal guarantees that
might be offered by an STLDI issuer. As
explained in the preamble to the 2018 final
rules, renewal guarantees generally per-
mit a policyholder, when purchasing their
initial insurance contract, to pay an addi-
tional amount in exchange for a guarantee
that the policyholder can elect to purchase,
for periods of time following the expira-
tion of the initial contract, another policy
or policies at some future date, at a spe-
cific premium that would not require any
additional underwriting.
191
The Depart-
ments affirm that the final rules do not
address renewal guarantees. However, the
Departments acknowledge that the revi-
sions to the Federal definition—including
the provision that requires counting the
term of a new STLDI contract issued by
the same issuer or, if the issuer is a mem-
ber of a controlled group, any other issuer
that is a member of the same controlled
group, to the same policyholder within the
12-month period beginning on the original
effective date of the initial policy, contract,
or certificate of insurance toward the total
maximum duration of STLDI—would
limit the guarantees that such instruments
may be able to provide.
192
3. Sales and Marketing Practices
In the 2023 proposed rules, the Depart-
ments expressed concerns about reports of
aggressive and deceptive sales and mar-
keting practices related to STLDI where
STLDI is marketed as a substitute for
comprehensive coverage, despite being
exempt from most of the Federal individual
market consumer protections and require-
ments for comprehensive coverage.
193,194

The Departments solicited comments on
additional ways to help consumers distin-
guish between comprehensive coverage
and STLDI. In particular, the Departments
requested comments on ways to prevent or
otherwise mitigate the potential for direct
competition between comprehensive cov-
erage and STLDI during the open enroll-
ment period for comprehensive individual
health insurance coverage.
195
Many commenters agreed that STLDI
deceptive marketing practices have caused
many consumers to confuse STLDI with
comprehensive coverage. These com-
menters stated that these misleading mar-
keting practices often attract younger,
healthier consumers who may not realize
how limited STLDI coverage is until faced
with out-of-pocket costs. Commenters
observed that studies indicate that STLDI
has been aggressively and deceptively
marketed to consumers especially during
the open enrollment period for com-
prehensive individual health insurance
coverage,
196
which has left consumers at
increased risk of purchasing plans that do
not meet their medical needs. Commenters
also noted that the population of individ-
uals affected by States resuming Medic-
aid eligibility redeterminations due to the
end of the FFCRA’s Medicaid continuous
enrollment condition has been vulnera-
ble to these practices. Commenters high-
lighted evidence of salespeople neglecting
to tell consumers that they may be eligi-
ble for subsidized ACA plans, asserting
that an individual’s health needs would
190
88 FR 44596 at 44646 (July 12, 2023).
191
See 83 FR 38219, 38220 (Aug. 3, 2018).
192
While the Departments may be limited in their ability to take an enforcement action with respect to transactions involving products or instruments that are not health insurance coverage,
the Departments may have the authority to regulate the coverage issued pursuant to such a product or instrument.
193
See 88 FR 44596 at 44613 (July 12, 2023).
194
The agent and broker compensation disclosure and reporting requirements in section 2746 of the PHS Act apply to health insurance issuers offering individual health insurance coverage
or STLDI.
195
See 88 FR 44596 at 44613-44614 (July 12, 2023).
196
Government Accountability Office (2020). “Private Health Coverage: Results of Covert Testing for Selected Offerings,” available at: https://www.gao.gov/products/gao-20-634r.

Bulletin No. 2024–19 997 May 6, 2024
be covered by an STLDI plan despite plan
documents contradicting these assertions,
or misstating an STLDI plan’s coverage of
certain preexisting conditions. Comment-
ers also included examples of deceptive
marketing practices (some of which were
identified during secret shopper studies),
such as marketing materials with images
of activities for which coverage of asso-
ciated injuries are excluded, marketing
materials with logos of well-known issu-
ers that are not affiliated with the STLDI
being sold, or websites selling STLDI
that include the words “Obamacare” or
“ACA.”
One commenter suggested that the
Departments should monitor and limit
marketing of STLDI that is conducted in a
manner that may lead consumers to unwit-
tingly enroll in STLDI. The commenter
stated that multiple States have already
implemented prohibitions against aggres-
sive and deceptive marketing of STLDI
products to protect individuals. The com-
menter stated that a Federal prohibition
on such marketing tactics would ensure
that people are aware of the most afford-
able and comprehensive health coverage
options available to them, are not exposed
to deceptive marketing practices, and are
able to avoid potentially catastrophic gaps
in coverage.
Other commenters expressed concern
regarding the sale of STLDI over the
telephone and Internet. The commenters
cited studies showing an increase in sales
over the telephone and Internet since the
2018 final rules. Commenters stated that
although telephone and Internet sales are
convenient for consumers, the incentives
to provide reliable customer service are
low.
Commenters noted that such sales
methods are prone to abuse and make it
hard for consumers to get concrete, ver-
ifiable answers about the product they
are being sold before they buy it. Other
commenters suggest that sellers of STLDI
be reviewed for compliance with laws
enforced by the Federal Trade Commis-
sion that prohibit deceptive marketing
practices. Some commenters suggested
that marketers of STLDI sold over the
telephone or Internet should be required
to provide a clear warning to consumers
about the true coverage terms prior to the
conclusion of a sale.
Some commenters encouraged the
Departments to collaborate with State
departments of insurance to combat mis-
leading marketing practices. Commenters
noted that the expansion of STLDI fol-
lowing the 2018 final rules has presented
challenges for State regulators attempting
to monitor the applicable State market
and protect potential consumers against
deceptive marketing practices. Com-
menters suggested that the Departments,
in collaboration with the Federal Trade
Commission and the Federal Bureau of
Investigation, should investigate and stop
lead generators and sales agents who use
deceptive marketing techniques through
websites, social media, phone calls, and
other means.
Several commenters urged the Depart-
ments to establish a Federal prohibition
on the sale of STLDI during the annual
open enrollment period for comprehen-
sive individual health insurance coverage.
Commenters cautioned that when STLDI
is marketed and sold during the annual
individual market open enrollment period,
the potential for consumer confusion is
particularly acute. Commenters explained
that sellers take advantage of the annual
open enrollment period when more con-
sumers are shopping for comprehensive
individual health insurance coverage
to push them into products that are not
comprehensive and argued that halting
sales of STLDI during this period would
decrease consumer confusion and facil-
itate access to comprehensive coverage.
Another commenter stated that legitimate
needs for STLDI coverage may arise at
any time of year and recommended that if
the Departments place restrictions on the
sale of STLDI during the annual individ-
ual market open enrollment period, those
restrictions should be limited to the sale of
products with a January 1 effective date.
Another commenter suggested that the
Departments explicitly prohibit Federal
and State Exchanges from linking to or
advertising STLDI. The commenter stated
that HHS should also impose a similar
requirement on agents and brokers to pro-
hibit side-by-side advertising of STLDI
or other non-compliant plans on the same
webpage as individual health insurance
coverage that is subject to the Federal con-
sumer protections and requirements for
comprehensive coverage.
One commenter suggested that the
Departments consider prohibiting the
offering of higher broker commissions for
the sale of STLDI than commissions for
the sale of comprehensive coverage, argu-
ing that this type of prohibition could sig-
nificantly decrease the financial incentive
for agents and brokers to encourage con-
sumers to purchase STLDI over compre-
hensive coverage and help reduce direct
competition between these two types of
products.
Some commenters encouraged the
Departments to invest in and take steps
to increase consumer education and
enrollment assistance activities that could
improve consumer understanding of the
differences between comprehensive cov-
erage and STLDI.
Other commenters suggested placing
requirements on agents and brokers or
the consumer to better ensure consumers
understand the differences between STLDI
and comprehensive coverage. For exam-
ple, one commenter suggested that the
Departments require agents and brokers
to sign an attestation that the information
given to the consumer by the agent or bro-
ker spells out in plain language the terms
of the STLDI coverage and acknowledges
that the consumer understands the limita-
tions. The commenter asserted this would
help ensure that underserved communities
and patients with chronic medical con-
ditions who struggle to find affordable
health insurance options are not targeted
by unscrupulous sales and marketing
tactics. Another commenter urged the
Departments to adopt the same disclosure
and consent requirements applicable to
agents, brokers, and web-brokers assist-
ing consumers in a Federally-facilitated
Exchange or State Exchange using the
Federal platform for agents, brokers, and
web-brokers assisting consumers purchas-
ing STLDI.
197
One commenter suggested
that the Departments require a statement
for consumers to sign acknowledging that
197
See 45 CFR 155.220 for standards applicable to agents and brokers and web-brokers who assist qualified individuals, qualified employers, or qualified employees enrolling in qualified
health plans.

May 6, 2024 998 Bulletin No. 2024–19
the coverage does not meet the minimum
standards required under the ACA and
does not provide equivalent Federal con-
sumer protections.
The Departments appreciate these
comments and suggestions and will take
them into consideration in any future reg-
ulations or guidance defining STLDI. In
addition, the Departments appreciate the
recommendations regarding steps that the
Departments can take outside of rulemak-
ing to educate consumers about their
health coverage options and limit the pos-
sibility that consumers inadvertently pur-
chase STLDI when shopping for compre-
hensive coverage. HHS has already taken
steps separate from these final rules to
limit the potential for individuals to inad-
vertently purchase an STLDI plan when
shopping for a qualified health plan and
will consider additional opportunities to
do so. HealthCare.gov, the platform for the
Federally-facilitated Exchanges and State
Exchanges using the Federal platform,
neither links to nor advertises STLDI.
198

In addition, for the Federally-facilitated
Exchanges and State Exchanges using the
Federal platform, direct enrollment enti-
ties
199
are generally required to use three
different website pages to display and
market coverage – one for qualified health
plans offered through the Exchange, one
for individual health insurance coverage
offered outside the Exchange, and one for
any other products, including STLDI.
200

Direct enrollment entities participating
in the Federally-facilitated Exchanges
and State Exchanges using the Federal
platform must also limit marketing of
non-QHPs, such as STLDI, during the
Exchange eligibility application and QHP
selection process.
201
In its proposed rule
entitled “Patient Protection and Afford-
able Care Act, HHS Notice of Benefit and
Payment Parameters for 2025; Updating
Section 1332 Waiver Public Notice Pro-
cedures; Medicaid; Consumer Operated
and Oriented Plan (CO-OP) Program; and
Basic Health Program,” HHS proposed to
apply these requirements to direct enroll-
ment entities operating in State Exchanges
and to web-brokers that assist with or
facilitate enrollment in coverage in a man-
ner that constitutes enrollment through the
State-based Exchanges.
202
4. Notice
In the preamble to the 2023 proposed
rules, the Departments explained that the
notice is important to help consumers dis-
tinguish between comprehensive cover-
age and STLDI and ensure that consumers
are aware of the limitations of STLDI.
203

The Departments proposed to amend the
existing STLDI notice to further clar-
ify the differences between STLDI and
comprehensive coverage and identify
options for consumers to obtain compre-
hensive coverage in concise, understand-
able language that would be meaningful
to them.
204
The Departments proposed to
apply the amendments to the notice to all
STLDI policies sold or issued on or after
the effective date of the final rules and to
existing STLDI policies for notices pro-
vided upon renewal or extension on or
after the effective date of the final rules.
205
In the 2023 proposed rules, the Depart-
ments proposed that the notice must be
displayed (in either paper or electronic
form) prominently in at least 14-point
font, on the first page of the policy, cer-
tificate, or contract of insurance (includ-
ing for renewals or extensions), in any
marketing and application materials pro-
vided in connection with enrollment in
such coverage, including on websites that
advertise or enroll individuals in STLDI,
and in any enrollment and reenrollment
materials that are provided at or before the
time an individual has the opportunity to
enroll or reenroll in coverage (including
on any website used to facilitate reenroll-
ment in STLDI).
206
In these final rules, the Departments
are finalizing the revised notice with mod-
ifications to implement feedback from
comments and consumer testing, improve
consumer comprehension of the notice,
and further distinguish between STLDI
and comprehensive coverage. As dis-
cussed in section III.A.6 of this preamble,
the revised notice must be provided with
respect to both new and existing STLDI
for coverage periods (including renewals
or extensions) beginning on or after Sep-
tember 1, 2024.
Some commenters were generally
opposed to revisions to the notice standard.
These commenters expressed concern that
the Federal revised notice may not com-
port with notices that State legislatures
and regulators create, often in consultation
with consumer advocates and State insur-
ance experts. A commenter expressed
concern that the information about ACA
198
See section 1311(d)(2) of the ACA, which generally prohibits an Exchange from making available any health plan that is not a qualified health plan. See also CMS, Frequently Asked
Questions on Reuse of Exchange for Ancillary Products (March 29, 2013), available at: https://www.cms.gov/cciio/resources/files/downloads/ancillary-product-faq-03-29-2013.pdf.
199
“Direct enrollment entity” means an entity that an Exchange permits to assist consumers with direct enrollment in qualified health plans offered through the Exchange in a manner consid-
ered to be through the Exchange as authorized by 45 CFR 155.220(c)(3), 45 CFR 155.221, or 45 CFR 156.1230. 45 CFR 155.20.
200
45 CFR 155.221(b)(1).
201
45 CFR 155.221(b)(3).
202
88 FR 82510, 82568 and 82562 (Nov. 24, 2023) (“Consistent with §§ 156.1230(b)(1) and (2), to directly enroll consumers in a manner that is considered to be through the Exchange,
QHP issuer DE entities are required to comply with the applicable requirements in § 155.221 ... In this rulemaking, we propose to extend these FFE requirements to also apply them to QHP
issuer DE entities in State Exchanges. As proposed to be applied in these State Exchanges, QHP issuer DE entities would similarly be required to provide consumers with correct informa-
tion, without omission of material fact, regarding the Exchanges, QHPs offered through the Exchanges, and insurance affordability programs. In addition, QHP issuer DE entities in State
Exchanges would also be required to refrain from marketing or conduct that is misleading (including by having a DE website that the State Exchange determines could mislead a consumer
into believing they are visiting the Exchange’s website), coercive, or discriminates based on race, color, national origin, disability, age, or sex ... Finally, we propose...to extend the current
web-broker FFE standard of conduct established at § 155.220(j)(2)(i) to also apply to web-brokers assisting consumers in State Exchanges, and consequently to these State Exchanges. Section
155.220(j)(2)(i) requires agents, brokers, or web-brokers that assist with or facilitate enrollment of qualified individuals, qualified employers, or qualified employees, in coverage in a manner
that constitutes enrollment through an FFE, or assist individuals in applying for APTCs and CSRs for QHPs sold through an FFE, must provide consumers with correct information, without
omission of material fact, regarding the FFEs, QHPs offered through the FFEs, and insurance affordability programs ... and refrain from marketing or conduct that is misleading (including
by having a DE website that HHS determines could mislead a consumer into believing they are visiting HealthCare.gov ), coercive, or discriminates based on race, color, national origin,
disability, age, or sex.”)
203
88 FR 44596 at 44614 (July 12, 2023).
204
Id. at 44614-44618.
205
Id. at 44618-44619.
206
Id. at 44614-44616.

Bulletin No. 2024–19 999 May 6, 2024
coverage in the proposed notice would
confuse the average person shopping for
health coverage. Another commenter sug-
gested that the Departments defer to the
NAIC and State regulatory experts who
are currently drafting minimum standards
for STLDI products. A commenter sug-
gested that States should have the option
to substitute their own required disclosure
language in place of the Federal mandated
language and that notice provisions should
only be applicable if a State has no compa-
rable notice provisions.
Another commenter shared a study
asserting that the revised notice did not
substantially improve consumer under-
standing of STLDI and that any notice
should be of short length because most
consumers have trouble understanding
lengthy explanations that tend to pres-
ent multiple concepts in the same notice.
Other commenters supported the proposed
revisions to the notice standard and agreed
that the revisions would help educate con-
sumers about the differences between
comprehensive coverage and STLDI
before a decision is finalized about health
coverage in a way that would alleviate
downstream concerns about applicable
benefits and costs.
The Departments agree that it is
important to provide consumers with
concise, accurate information to evaluate
insurance products so that consumers may
make informed decisions about health
insurance coverage. The Departments
sought to address potential confusion
caused by the notice by requesting com-
ments on the proposed notice standard
and conducting consumer testing. Based
on current research highlighting decep-
tive marketing practices and consumer
confusion,
207,208,209
the Departments are
of the view that it is necessary and appro-
priate for issuers of STLDI to disclose
key differences between comprehensive
coverage and STLDI before completing
the sale or renewal so consumers can
make informed decisions. The revised
notice standard under these final rules
will help clarify the differences between
STLDI and comprehensive coverage. As
the Departments agree that the revisions
to the notice standard alone will not pro-
tect consumers from deceptive marketing
practices, revisions to the notice standard
are being finalized in tandem with revi-
sions to the definitions of the terms “short-
term” and “limited-duration.” The Depart-
ments disagree with and decline to adopt
the suggestion that the notice should not
be part of the Federal definition of STLDI.
With respect to concerns about the
lack of State input in the revisions to the
notice standard, the Departments con-
sulted plain language experts, conducted
consumer testing, and considered com-
ments on the 2023 proposed rules from
State regulators, consumer advocates, and
other interested parties. The Departments
therefore disagree that there was a lack of
State input. The Departments concluded
that a uniform Federal notice best furthers
the Departments’ interest in ensuring that
information is communicated to consum-
ers to enable them to identify and distin-
guish STLDI from comprehensive cover-
age. Therefore, the Departments decided
not to specify that the revised notice
would be applicable only if a State has no
comparable notice provision. In addition,
these final rules do not prevent States from
requiring additional language be included
with the notice for purposes of State law
or prohibit issuers from including addi-
tional language in their notices. Policies
that do not include the language in the
revised notice under these final rules will
not be considered STLDI coverage, and
therefore will not qualify for the exception
for STLDI from the definition of individ-
ual health insurance coverage for purposes
of Federal law.
One commenter alleged that the revised
notice standard raised First Amendment
concerns because the notice violates the
First Amendment’s prohibition on com-
pelled speech. The commenter argued that
the revised notice standard constitutes a
content-based restriction and is not justi-
fied because it is not narrowly tailored to
serve a compelling government interest.
The Departments disagree with this
commenter. The rules do not require the
provision of a notice, but instead simply
provide that coverage offered without
such a notice would not qualify as STLDI
and would be subject to the Federal con-
sumer protections and requirements appli-
cable to comprehensive coverage. More-
over, as discussed in section III.B.1 of this
preamble, required disclosures of factual,
uncontroversial information in commer-
cial speech are subject to more deferential
First Amendment scrutiny and have been
upheld where the disclosure requirement
reasonably relates to a government inter-
est, and is not unjustified or unduly bur-
densome.
210
Regardless, the Departments
believe that the revised notice standard
would pass muster under any form of First
Amendment scrutiny.
The Departments have a substantial,
and even compelling, government interest
in combatting deceptive marketing prac-
tices by ensuring consumers are informed
about the key differences between STLDI
and comprehensive coverage, are aware
of their option to purchase comprehensive
coverage, and have access to resources for
additional information about the range of
available health coverage options so con-
sumers can make informed choices. As dis-
cussed in section II.B of this preamble, this
is currently of particular importance due to
significant changes in market conditions
and in the legal landscape and low health
literacy amid widespread deceptive mar-
keting practices that play on consumer con-
fusion about the benefits and limitations of
STLDI. The revised notice communicates
factual information to consumers about the
differences between STLDI and compre-
hensive coverage and explains how con-
207
For one example of deceptive marketing practices, see Federal Trade Commission (2022). “FTC Action Against Benefytt Results in $100 Million in Refunds for Consumers Tricked into
Sham Health Plans and Charged Exorbitant Junk Fees,” available at: https://www.ftc.gov/news-events/news/press-releases/2022/08/ftc-action-against-benefytt-results-100-million-refunds-
consumers-tricked-sham-health-plans-charged.
208
Palanker, Dania and Kevin Lucia (2021). “Limited Plans with Minimal Coverage Are Being Sold as Primary Coverage, Leaving Consumers at Risk,” Commonwealth Fund, available
at: https://www.commonwealthfund.org/blog/2021/limited-plans-minimal-coverage-are-being-sold-primary-coverage-leaving-consumers-risk. (Noting that fixed indemnity insurance may be
“bundled” with other non-comprehensive insurance products in such a way that “the plans look like comprehensive coverage” while still offering limited benefits). See also Palanker, Dania,
JoAnn Volk, and Maanasa Kona (2019). “Seeing Fraud and Misleading Marketing, States Warn Consumers About Alternative Health Insurance Products,” Commonwealth Fund, available at:
https://www.commonwealthfund.org/blog/2019/seeing-fraud-and-misleading-marketing-states-warn-consumers-about-alternative-health.
209
Government Accountability Office (2020). “Private Health Coverage: Results of Covert Testing for Selected Offerings,” available at: https://www.gao.gov/products/gao-20-634r.
210
The U.S. Supreme Court recognized this standard of scrutiny in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) (“Zauderer”) and later confirmed it in National Institute of
Family and Life Advocates v. Becerra, 138 S. Ct. 2361, 2372, 2376 (2018) (‘‘NIFLA’’).

May 6, 2024 1000 Bulletin No. 2024–19
sumers can find resources when consumers
have questions about the different coverage
options. Finally, the revised notice is rea-
sonably related to, and narrowly tailored
to, the government’s interest in informing
consumers about STLDI coverage, and
combating deceptive marketing practices
and potential sources of misinformation,
by directing consumers to appropriate
resources to learn more about the range
of available health coverage options. The
notices do not include irrelevant or super-
fluous information unrelated to these inter-
ests. Accordingly, these final rules serve
substantial government interests.
In addition, the revised notice standard
is not unjustified, unduly burdensome,
or insufficiently tailored to the interests
described previously. As stated in the
preamble to the 2023 proposed rules,
the Departments are concerned about
consumers who are at risk of significant
financial liability if they enroll in STLDI
that exposes consumers to high health care
costs that are not covered by their STLDI
policy. The language on the Federal revised
notice includes factual, uncontroversial
information. The Departments consulted
plain language experts, conducted con-
sumer testing, and considered comments
on the proposed revised notice to ensure
the language was factual, easy to read, and
understandable. Furthermore, the revised
notice standard does not unduly burden
issuer speech because issuers remain free
to communicate with consumers about
their coverage using any methods of com-
munication they choose. As discussed
in section V.B.2.d of this preamble, the
Departments estimate that the cost to issu-
ers of displaying the revised notice will be
relatively low, because the Departments
have adopted static language that issuers
do not have to tailor to the policy or State
of sale. For the reasons discussed previ-
ously, the Departments are of the view
that requiring STLDI issuers to provide
a notice that provides factual information
to consumers prior to when the consumers
purchase coverage is reasonably related to
the government’s stated interests in ensur-
ing consumers can distinguish STLDI and
comprehensive coverage and are informed
of options to purchase comprehensive cov-
erage, should the consumer wish to obtain
such coverage. The information required
to be disclosed is clearly identified and has
a direct nexus to that legitimate govern-
ment interest.
Finally, the revised notice standard
is narrowly tailored to inform consum-
ers about the limitations of STLDI and
to combat deceptive marketing practices
and potential sources of misinformation
by directing consumers to appropriate
resources to learn more about their health
coverage options. The notice does not
include irrelevant or superfluous informa-
tion unrelated to informing and directing
consumers to appropriate resources.
The Departments sought comments on
whether the proposed placement for the
notice substantially improves the likeli-
hood that consumers have a meaningful
opportunity to review the notice and their
health coverage options before applying
for, enrolling in, or reenrolling in STLDI,
as well as any practical or logistical bar-
riers to providing this notice as proposed.
In particular, the Departments sought
comments from members of underserved
communities, and organizations that serve
such communities, on whether the lan-
guage accessibility, formatting, and con-
tent of the notice sufficiently mitigate bar-
riers that exist to ensuring all individuals
can read, understand, and consider the full
range of their health coverage options.
211
Most commenters supported the pro-
posed placement of the notice on the first
page of any policy, certificate, or contract
of insurance (including for renewals and
extensions), website used to facilitate
enrollment (or reenrollment) in STLDI,
and marketing and application materials
provided in connection with enrollment in
STLDI, because the benefits of simplify-
ing access to the notice far outweighs any
associated burden of including the infor-
mation in these locations.
One commenter suggested that issuers
should have the flexibility to put the notice
for renewals on a separate document and
not on the face page of the policy, certifi-
cate, or contract of insurance because some
States require pre-approval of notice pro-
visions. Another commenter supported the
notice being provided in the same format
that sales of STLDI are conducted, since
misleading marketing often occurs when
STLDI is not sold in person and consum
-
ers are given limited time to contemplate
their insurance choices before being pres-
sured to choose a product. For example, if
enrollment occurs over the telephone, the
commenter suggested the seller should be
required to read the notice to the consumer
and record their acknowledgement, or if
the enrollment occurs via the internet, a
prominent notice should be featured during
the accompanying online sign-up process.
Other commenters recommended that
the Departments require audio and video
advertisements to include an audio version
of the notice within the first 10 seconds
of any advertisement of STLDI coverage.
Another commenter suggested that tele-
phone solicitors, brokers or agents making
sales calls, or in-person sales should be
required to inquire as to the consumer’s
preferred language through a qualified lan-
guage translator or language telephone line.
Commenters also suggested that the notice
be provided in multiple common languages
other than English that are spoken in the
United States in a manner that is cultur-
ally appropriate, readable, and clear so that
consumers can make appropriate coverage
decisions. Commenters highlighted the
importance of the notice being accessible
to individuals with disabilities.
The Departments are finalizing the
standard for the notices to be prominently
displayed on the first page of applicable
materials
212
in at least 14-point font, as pro-
posed. Because ensuring that consumers
understand any limitations of what they are
purchasing is of utmost importance, provi-
sion of the notice should not be saved until
the time of enrollment when consumers
may feel pressured to sign up and effec-
tuate coverage instead of restarting their
search for a different insurance product.
The Departments agree with commenters
that the need for consumers to have easy
access to the notice during enrollment and
reenrollment outweighs the burden asso-
ciated with placement of the notice on
the first page of applicable materials. The
211
88 FR 44596 at 44617 (July 12, 2023).
212
The applicable materials on which the STLDI notice must be prominently displayed (in either paper or electronic form) are the first page of the policy, certificate, or contract of insurance
(including for renewals or extensions), any marketing and application materials provided in connection with enrollment in such coverage, including on websites that advertise or enroll indi-
viduals in STLDI, and in any enrollment and reenrollment materials provided at or before the time an individual has the opportunity to enroll or reenroll in coverage (including on any website
used to facilitate reenrollment in STLDI).

Bulletin No. 2024–19 1001 May 6, 2024
Departments further agree with comment-
ers that if the STLDI policy is sold online
or electronically then the notice should be
communicated in the same format as the
sale. Further, consistent with the proposal
in the 2023 proposed rules, the placement
standard under these final rules extends
the notice to websites that advertise or
offer the opportunity to enroll (or reenroll)
in STLDI. Although these final rules pro-
vide that the notice must be prominently
displayed in any marketing materials pro-
vided in connection with enrollment (or
reenrollment) in STLDI, the Departments
decline to require audio and video adver-
tisements include an audio version of the
notice within the first 10 seconds of any
advertisement of STLDI coverage. The
Departments did not include a proposal on
audio and video advertisements in the 2023
proposed rules and therefore decline to
address such other types of communication
formats in these final rules.
The Departments agree that it is
important that the notice be accessible and
understandable to individuals with limited
English proficiency. While the Depart-
ments did not propose and are not final-
izing language access standards specific
to these notices as part of this rulemak-
ing, the Departments remind plans and
issuers that they are required to comply
with other State and Federal laws estab-
lishing accessibility and language access
standards to the extent applicable. For
example, recipients of Federal financial
assistance must comply with Federal civil
rights laws that prohibit discrimination.
These laws may include section 1557 of
the Affordable Care Act,
213
title VI of the
Civil Rights Act of 1964,
214
section 504
of the Rehabilitation Act of 1973,
215
and
the Americans with Disabilities Act of
1990.
216
Section 1557 and title VI require
covered entities to take reasonable steps
to ensure meaningful access to individuals
with limited English proficiency, which
may include provision of language assis-
tance services such as written translation
of written content in paper or electronic
form into languages other than English.
Sections 1557 and 504 require covered
entities to take appropriate steps to ensure
effective communication with individuals
with disabilities, including provision of
appropriate auxiliary aids and services at
no cost to the individual. Auxiliary aids
and services may include interpreters,
large print materials, accessible informa-
tion and communication technology, open
and closed captioning, and other aids or
services for persons who are blind or have
low vision, or who are deaf or hard of
hearing. Additionally, section 508 of the
Rehabilitation Act of 1973 requires that
information provided through information
and communication technology also must
be accessible to individuals with disabili-
ties, unless certain exceptions apply.
In the 2023 proposed rules, the Depart-
ments requested comment on two poten-
tial formats for the revised notice stan-
dard
217
(Notice A and Notice B).
The proposed STLDI notice (Notice A)
was as follows:
213
42 U.S.C. § 18116.
214
42 U.S.C. § 2000d et seq.
215
29 U.S.C. § 794.
216
42 U.S.C. § 12101 et seq.
217
88 FR 44596 at 44616-44617 (July 12, 2023).

May 6, 2024 1002 Bulletin No. 2024–19
An alternative proposed STLDI notice (Notice B) was as follows:
The Departments received comments
in support of both notice formats. Some
commenters supported implementing the
format of Notice A because they found the
bulleted format easier to read and more
understandable than a chart. Other com-
menters supported implementing the for-
mat of Notice B because they were of the
view that the format is easier to follow and
has more concise language. A commenter
stated that consumers understand infor-
mation better that is presented in charts.
Another commenter suggested that the
Departments design a notice format that
would allow issuers to check boxes next
to relevant provisions. Other commenters
recommended that the Departments con-
duct consumer testing of the content and
presentation of the notices through focus
groups or surveys to ensure the notices are
understandable. These commenters stated
that notices should be tested with multiple
audiences, particularly given current dis-
parities in health insurance literacy rates
and concerns for individuals with limited
English proficiency and with disabilities.
HHS consulted plain language experts
and engaged in consumer testing as part
of the consideration of comments on the
revised notice. Based on the testing of
Notice A and Notice B, feedback from
plain-language experts, along with con-
sideration of comments on the revised
notice, the Departments are finalizing the
table format used in Notice B, with content
modifications that are discussed in detail
this section. Consumer testing revealed
that the table format, comparing key fea-
tures of STLDI and insurance offered
through HealthCare.gov, helped consum-
ers best distinguish between STLDI cov-
erage and comprehensive coverage, and
understand the differences between such
coverage types.
After taking into account feedback
from the comments, consulting with
plain-language experts, and conducting
consumer testing, the Departments are
finalizing the following language for the
notice to improve readability and effec-
tiveness of the notice:

Bulletin No. 2024–19 1003 May 6, 2024
IMPORTANT: This is a short-term, limited-duration policy,
NOT comprehensive health coverage
This is a temporary limited policy that has fewer benefits and Federal protections than other types of health insurance options, like
those on HealthCare.gov.
This policyInsurance on HealthCare.gov
Might not cover you due to preexisting health conditions
like diabetes, cancer, stroke, arthritis, heart disease, mental
health & substance use disorders
Can’t deny you coverage due to preexisting health conditions
Might not cover things like prescription drugs, preventive
screenings, maternity care, emergency services, hospitaliza-
tion, pediatric care, physical therapy & more
Covers all essential health benefits
Might have no limit on what you pay
out-of-pocket for care
Protects you with limits on what you pay each year out-of-
pocket for essential health benefits
You won’t qualify for Federal financial help to pay premi-
ums & out-of-pocket costs
Many people qualify for Federal financial help
Doesn’t have to meet Federal standards for comprehensive
health coverage
All plans must meet Federal standards
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
The Departments took into consider-
ation all comments received on the notice.
As mentioned in this section, following
an initial review of the comments, HHS
performed consumer testing to evalu-
ate the effectiveness and readability of
different messages and notice formats,
including messages or changes to the pro-
posed revised notice recommended by
commenters. These final rules revise the
content of the proposed notice to better
inform consumers considering purchas-
ing STLDI about the differences between
STLDI and comprehensive coverage,
support informed coverage purchasing
decisions, and promote readability. The
revised notice balances including infor-
mation about STLDI with readability and
length so that consumers will be more
likely to read and understand the notice.
The Departments sought comments
on whether additional changes to the
notice language would improve readabil-
ity or further help individuals distinguish
STLDI from comprehensive coverage,
and whether there are practical or logis-
tical barriers that would present chal-
lenges to compliance with the new pro-
posed notice standard. The Departments
solicited comments on all aspects of the
proposed revisions to the notice standard,
including whether to add a website link
and telephone number for HealthCare.
gov, and the proposed placement of the
notice in the marketing, application, and
enrollment (or reenrollment) materials,
including the extension of the notice pro-
vision to websites that advertise or offer
the opportunity to enroll (or reenroll) in
STLDI and on the associated administra-
tive burden for issuers, agents, brokers, or
others who will be involved in providing
the notice to consumers.
Many commenters suggested specific
changes to the content of the revised
notice standard. A commenter requested
that the notice be displayed in highly read-
able fonts such as a Sans Serif font in a
14-point font to improve the readability
of the notice. Some commenters sug-
gested that the notice include additional
information to explain what it means that
STLDI is exempt from most Federal con-
sumer protection laws. Some comment-
ers recommended that the notice include
a statement that STLDI coverage com-
monly conducts post-claims underwriting
and may deny claims for chronic health
conditions, surgeries, and other common
services. A commenter recommended that
the Departments add language warning
consumers about the possibility of recis-
sions because STLDI issuers often engage
in post-claims chart review to search for
signs of an undisclosed preexisting con-
dition and thereby rescind coverage. The
commenter recommended that the notice
state: “This insurance may rescind or ret-
roactively cancel your coverage and not
pay claims based on your medical his-
tory.” The Departments are finalizing the
requirement that the notice be in 14-point
font size. While the final rules do not
include a requirement that the notice be
displayed in a specific font, the Depart-
ments would not consider the notice to
be prominently displayed unless the font
used is clear and readable. The revised

May 6, 2024 1004 Bulletin No. 2024–19
notice standard will give issuers the flex-
ibility to use a font that aligns with the
format of their policies. In addition, the
Departments revised the content of the
chart based on comments and consumer
testing. As a result, the chart clarifies that
STLDI is not required to meet the Federal
standards for comprehensive coverage and
might not cover chronic health conditions
like diabetes, cancer, stroke, arthritis, heart
disease, mental health and substance use.
In contrast, the notice does not specifically
caution consumers that STLDI might con-
duct post-claims underwriting, or post-
claims recissions. The Departments had to
balance providing useful information that
clarifies the differences between STLDI
and comprehensive coverage and the
readability, length, and effectiveness of
the notice. The differences highlighted in
the notice were selected primarily because
consumer testing showed they were more
effective at helping consumers distinguish
between STLDI and comprehensive cov-
erage than other options considered.
Some commenters suggested the
notice address the 10 categories of essen-
tial health benefits
218
and state explicitly
which essential benefits are not covered.
Other commenters requested that the
notice address coverage for certain types
of items or services, such as maternity
services, habilitative and rehabilitative
services, and devices, so that consumers
fully understand what coverage could be
missing when purchasing STLDI. While
the Departments agree that it is important
to highlight for consumers that essential
health benefits might not be covered by an
STLDI policy, the notice only highlights a
few categories of essential health benefits,
including prescription drugs, preventive
screenings, maternity care, emergency
services, hospitalization, pediatric care,
and physical therapy. The Departments
had to balance the importance of notify-
ing consumers of the types of benefits that
might not be covered, with the importance
of not overcrowding the notice so that the
notice is easy to read and understand.
Some commenters supported the notice
including information about where con-
sumers can access additional information
about comprehensive coverage options,
including referencing HealthCare.gov
or the State Exchange website where the
consumer resides, including when the
coverage is sold by associations. Some
commenters requested that the notice
explain what subsidies may be available
for consumers that enroll in coverage
on the Exchanges instead of STLDI to
increase transparency of the costs to con-
sumers. Some commenters suggested add-
ing information on the timing of the annual
individual market open enrollment period
to underscore the differences between
STLDI and comprehensive individual
health insurance coverage and help con-
sumers plan their transition to Exchange
coverage. Commenters also suggested
that providing information on special
enrollment periods for those losing Med-
icaid or employer coverage would fur-
ther clarify consumers’ coverage options.
Additionally, given the potential for var-
ied open enrollment or special enrollment
periods across different States, a com-
menter recommended adding language
saying, “Because State Based Exchanges
may have different enrollment timelines,
if you lose coverage always check your
eligibility on Healthcare.gov or your State
Based Exchange for possible enrollment
options.”
The Departments agree with com-
menters that it is important for the notice
to include information about where con-
sumers can access additional information
about comprehensive coverage options,
and are finalizing a notice standard that
includes information about HealthCare.
gov. Through this website, consumers
in States with a Federally-facilitated
Exchange or State Exchange using the
Federal platform can purchase compre-
hensive coverage, and consumers in States
with a State Exchange can get directed to
the State Exchange. In addition, Health-
Care.gov provides additional informa-
tion about comprehensive coverage that
might help consumers further distinguish
STLDI coverage from comprehensive
coverage, and may help consumers better
understand the notice. The Departments
considered including in the revised notice
standard additional details, as suggested
by commenters, about open enrollment,
special enrollment periods, and subsidies.
However, the Departments are concerned
about the length these topics could add to
the notice, and the burden associated with
customizing the notices to include enroll-
ment time frames which can vary slightly
from State to State. After consideration of
the comments, the Departments are final-
izing the revised notice standard without
information on these topics. However, the
Departments note that information on each
of these topics is available on HealthCare.
gov, and the notice directs consumers to
HealthCare.gov for additional information
on health coverage options.
Some commenters suggested addi-
tional or alternative language to focus
consumers’ attention or to convey key
points. A commenter suggested using the
phrase “Important Notice – Please Read
Carefully” as the title to better catch
the attention of consumers and inform
them that this is important information
they should consider prior to purchase.
Another commenter supported the use of
the word “WARNING” in capital letters
as a heading in the notice for clarity. A
commenter suggested adding to the intro-
ductory notice language, “This plan has
fewer protections, provides fewer ben-
efits, and has higher out of pocket costs
than comprehensive insurance options
you can find on HealthCare.gov.” A com-
menter suggested that the Departments
replace the last sentence of the introduc-
tory paragraph with something very close
to the following in bold text, “You may be
able to get much better coverage for less
money (with tax credits) through a health
insurance exchange even outside of open
enrollment.” A commenter suggested that
the Department should change the head-
ing of the second column of the compari-
son table from “Insurance on HealthCare.
gov” to “Comprehensive Insurance on
Healthcare.gov.” One commenter encour-
aged the Departments to remove the state-
ment that STLDI is not comprehensive
coverage because of a study that indicated
that 95 percent of STLDI plans provide
comprehensive coverage. A commenter
suggested that the Departments revise
“You won’t qualify for [F]ederal help to
pay for premiums or out-of-pocket costs,”
218
See section 1302 of the ACA, and 45 CFR 156 subpart B (defining essential health benefits).

Bulletin No. 2024–19 1005 May 6, 2024
to “Most people qualify for tax credits
that will lower out of pocket costs if they
purchase coverage that meets certain [F]
ederal requirements. For more informa-
tion, visit [this website].” In addition, the
Departments could create a website to link
consumers to clear information, the com-
menter stated.
The Departments took into consid-
eration comments that suggested alter-
native language to include in the intro-
ductory paragraph. Based on consumer
testing, the Departments are finalizing the
revised notice standard with the heading,
“IMPORTANT,” instead of “WARN-
ING.” The Departments are of the view
that “IMPORTANT” is sufficient to draw
attention to the notice. In addition, the
Departments revised the introductory
paragraph to clarify that STLDI and insur-
ance options on HealthCare.gov are not the
only insurance options that might provide
comprehensive coverage. While employer
coverage is not included in the table, the
Departments finalized the revised notice
standard with a bullet point reminding
consumers that have access to employer
coverage to contact that employer about
coverage options. The Departments are
of the view that suggested additions to the
introductory paragraph add content that is
already accounted for in the table section
of the notice. The Departments are not
revising the notice heading for the sec-
ond column. The heading, “Insurance on
HealthCare.gov,” effectively communi-
cates that the column applies to insurance
options available on HealthCare.gov.
Some commenters provided recom-
mendations for ways to enhance con-
sumers’ understanding of the notice. One
commenter suggested that the Depart-
ments define key terms used in the notice
and use alternate language to indicate that
the coverage is “comprehensive” because
some consumers believe that it means the
best or most expensive coverage that most
consumers do not need. A commenter
discouraged the use of terms “may” and
“might” because they fall short of con-
veying how STLDI does not meet Federal
standards.
The Departments considered comments
and worked with plain language experts to
ensure that the revised notice standard is
written in plain language that maximizes
readability for the average consumer.
While consumer testing revealed that con-
sumers did not always understand terms
used in the notice (including the term
“comprehensive”), the testing showed that
consumers were still able to distinguish
between STLDI and comprehensive cov-
erage, based on the notice. Therefore, the
Departments are of the view that defining
key terms is not critical to the effective-
ness of the notice and are finalizing the
revised notice standard without defining
key terms. In addition, the Departments
will use the term “might” to preface cer-
tain rows in the table. It is important to
include the term “might” to ensure that the
content in the table accurately describes
all STLDI coverage, as some STLDI
might voluntarily, or under State law, pro-
vide the consumer protections listed in the
notice.
Some commenters were in support of
including the name and State of domicile
of the issuer, name and State of domicile
of the association (if applicable), web-
site, and telephone number for the State
department of insurance tailored to each
STLDI policy in the notices included in
marketing, application, and renewal mate-
rials to help consumers access regulators
and consumer advocacy resources that
can assist consumers regarding questions
or concerns about their policies. Com-
menters stated that STLDI coverage filed
in another State or sold through an out-
of-State association should be required
to include in the notice both the contact
information of the insurance regulator in
the State in which the consumer resides
and the State in which the plan is filed,
to aid in maintaining accountability for
issuers and associations selling these
insurance products. Commenters stated
that access to such information will assist
consumers in receiving accurate infor-
mation about insurance products to make
informed decisions about coverage and
should be made available in the preferred
language of individuals and families.
Commenters argued that State regulators
often have difficulty monitoring and reg-
ulating STLDI sold through out-of-State
associations, the associations may attempt
to operate outside the reach of the State in
which the STLDI is sold, and consumers
may be unaware of what State has regu-
latory authority over the product they are
purchasing.
Other commenters were opposed to
including State-specific information in the
notices because the information would be
of limited benefit to consumers and unnec-
essarily increase the administrative burden
and costs for issuers. Another commenter
suggested that the Departments provide
a link to the directory of State insurance
departments that the NAIC maintains.
In developing the proposed revised
notice language, the Departments sought
to balance the goals of distinguishing
STLDI from comprehensive coverage
and combatting deceptive marketing prac-
tices, as well as reducing misinformation
by directing consumers to appropriate
resources, with the need to provide a con-
cise, understandable notice that would be
meaningful and useful to consumers.
219

The Departments understand comment-
ers’ concerns regarding the burden asso-
ciated with customizing notices to include
State-specific information. However, the
Departments also recognize the value
of including State-specific information,
such as appropriate contact information.
After consideration of comments and the
results of consumer testing, the Depart-
ments are finalizing changes to the notice
to incorporate uniform language as part
of the required content for the revised
notice standard that directs individuals to
an NAIC webpage where they can find
the contact information for the applicable
State regulatory agency. This approach
avoids adding an administrative burden
on issuers to tailor the notice for each
plan depending on the domicile of each
consumer. In the case of STLDI sold by
out-of-State associations, the link to the
NAIC webpage would provide consum-
ers with access to contact information
for State regulators in the State where the
consumer purchased the STLDI coverage
as well as the State where the STLDI is
issued. Although this is a link to a non-
United States Government website, the
Departments are including this link in
the notice because it allows consumers to
access State-specific contact information,
without requiring plans and issuers to cus-
219
See 88 FR 44596 at 44614-44615 (July 12, 2023).

May 6, 2024 1006 Bulletin No. 2024–19
tomize the notice. The Departments can-
not attest to the accuracy of information
provided on the NAIC webpage or any
other linked third-party site. The NAIC
link is provided for reference only and
the inclusion in the notice of a link to a
non-United States Government website
does not constitute an endorsement by the
Departments. Also, the privacy protec-
tions generally provided by United States
Government websites do not apply to
third-party sites.
In addition, as described earlier in this
section, the Departments incorporated
static language as part of the content for
the revised notice standard finalized in
these final rules that direct individuals to
HealthCare.gov where individuals can
navigate to their State’s Exchange or
get information about different types of
health coverage options. This approach
is intended to balance the desire to ensure
individuals can access State-specific infor-
mation with not increasing the burden on
issuers associated with the development
of customized notices that provide State-
specific contact information. Since the
Departments are not including State-spe-
cific or association-specific contact infor-
mation as part of the revised notice stan-
dard, the Departments decline to specify a
certain agency’s contact information that
should be included for products that are
filed in multiple States.
The preamble to the 2023 proposed
rules explained that the Departments
were considering whether to add a state-
ment to the notice describing the maxi-
mum permitted length of STLDI under
the Federal definition, explaining that
coverage cannot be renewed or extended
beyond the maximum allowable duration,
and explaining that the length of STLDI
may be shorter subject to State law. The
Departments sought comments on this
approach, including how best to clearly
and concisely communicate such infor-
mation to consumers, including how to
address the bifurcated applicability dates
with respect to the proposals around the
maximum allowed length; whether such
information is already included elsewhere
in the plan documents; and on the asso-
ciated administrative burden for issuers,
agents, brokers, or others who would be
involved in providing the notice to con-
sumers. The Departments also sought
comments on whether information about
the maximum allowed length of new or
existing STLDI and options regarding
renewal and extensions would be included
in enrollment materials (or reenrollment
materials) provided to enrollees as part of
the normal course of business.
Commenters generally supported add-
ing a statement to the notice describing the
maximum allowed length of STLDI under
Federal and State rules, where applica-
ble. One commenter requested that the
Departments add, “coverage is intended
to last for 3 months, if you enroll in the
plan you may have to wait until the next
open enrollment period to enroll in com-
prehensive coverage.” A commenter sug-
gested adding a sentence to the notice
after the second sentence of the intro-
ductory paragraph that says, “Coverage
cannot last beyond 4 months or even less
depending on the State in which you live.”
This minimally increases the length of the
notice while informing the consumer that
the policy cannot be renewed beyond 4
months or a shorter period depending on
the State in which the consumer resides,
the commenter stated.
While the Departments appreciate that
information on maximum duration may
be useful to consumers, the Departments
remain concerned about how to clearly
and concisely communicate such informa-
tion to consumers using static language,
without creating confusion for consumers
if the duration of their policy differs from
the maximum duration standards in the
notice – for example, because of the bifur-
cated applicability dates,
220
shorter max-
imum durations allowed under State law,
or the specifics of their policy. Given these
concerns and based on consumer testing
and consultation with plain language
experts, the Departments are finalizing
the notice without adding information on
the maximum permitted length of STLDI.
Since States have the flexibility to enact
a different maximum permitted length of
STLDI, including a standardized maxi-
mum permitted length in the revised notice
standard may confuse consumers. The
Departments are also mindful of limiting
the amount of information provided on
the notice for readability and comprehen-
sion and are of the view that the burden on
issuers of requiring issuers to tailor their
notices to each State outweighs the poten-
tial benefits of adding more language to
the notice to capture State-specific infor-
mation on the maximum permitted length
for the STLDI policy. In addition, the
Departments anticipate that information
on the maximum allowed length of the
STLDI coverage is included in the policy,
certificate, or contract of insurance, and
that options for renewal and extensions
are typically included in enrollment mate-
rials (or reenrollment materials) provided
to enrollees as part of the normal course
of business.
The Departments solicited comments
on whether it would be beneficial to con-
sumers to require issuers to include lan-
guage in the notice that clearly informs
consumers that the notice is an officially
required document, such as “This notice is
required by Federal law.” One commenter
suggested that including such a statement
would further validate the importance
of the notice and accentuate the caution
warranted when considering purchasing
STLDI, while another commenter argued
that the statement would add length to the
notice and is not critical for consumers’
understanding of their rights. Consumer
testing revealed that some testers found
the inclusion of that phrase at the bottom
of the notice helpful and reported that it
made the information on the notice seem
more legitimate, other consumers stated
this statement suggested that the STLDI
policy was endorsed by the Federal Gov-
ernment. After consideration of the com-
ments and results from consumer testing,
the Departments are finalizing the notice
without the inclusion of a statement that
the notice is required by Federal law. The
Departments are of the view that any
potential benefit of including the language
is outweighed by the risk that some con-
sumers will interpret the statement as a
Federal endorsement of the policy.
220
See section III.A.6 of this preamble for discussion of the STLDI applicability dates finalized in these final rules.

Bulletin No. 2024–19 1007 May 6, 2024
5. Short-Term, Limited-Duration
Insurance Sold Through Associations
In section III.A.5 of the preamble to
the 2023 proposed rules, the Departments
explained that they understand most sales
of STLDI occur through group trusts or
associations that are not related to employ-
ment (sometimes referred to as individual
membership associations)
221
and solicited
comments on what steps, if any, can be
taken to support State oversight of STLDI
sold to or through associations.
222
Under
these arrangements, out-of-State issuers
file STLDI products for approval in one
State and then sell the same policies in
other States through an association, many
times with few requirements on consum-
ers to participate in the association, other
than payment of association dues. State
regulators have reported that they often
lack the authority to track sales of policies
made through out-of-State associations
and are unable to approve or regulate such
policies when offered for sale by issuers
that are not licensed by their State. Fur-
ther, as explained in section III.A.V of
the preamble to the 2023 proposed rules,
the Departments have received feedback
that many issuers take advantage of the
ambiguity about which State’s jurisdiction
applies to the STLDI they sell to avoid
State regulation.
223
For example, one
study found that in a review of 34 policy
brochures for STLDI, 28 of the brochures
included references to associations.
224

Consumers may not understand that some
STLDI marketed in their States are not
regulated by their State and do not include
State-specific consumer protections.
The Departments received comments
agreeing that association-based STLDI
coverage is often used as a vehicle to avoid
local State regulation, with one commenter
stating that such coverage is increasing in
prevalence for employers with 10 or fewer
employees. Commenters explained that
because these association products are sold
in States in which they are not registered,
States have limited ability to protect their
consumers from hidden fees and limited
benefits. Nevertheless, some commenters
asserted that States are best positioned to
oversee the marketing of association-based
STLDI coverage. Some commenters
encouraged the Departments to work with
States and the NAIC to improve oversight
of products sold through out-of-State asso-
ciations including collecting and shar-
ing data and clarifying State authority to
regulate these arrangements on behalf
of their residents. Another commenter
urged the Departments to consider addi-
tional enforcement mechanisms to ensure
that STLDI issuers are not selling STLDI
products in States in which they are not
approved and ensure that consumers have
recourse to file complaints when necessary.
As with the current regulatory defini-
tion of STLDI, the provisions of these final
rules apply to STLDI sold to or through
associations. As explained in the preamble
to the 2023 proposed rules, coverage that
is provided to or through associations, but
not related to employment, and is sold to
individuals, either as certificate holders
or policyholders, is not group coverage
under section 9832 of the Code, section
733(b)(4) of ERISA, and section 2791(b)
(4) of the PHS Act.
225
If the coverage is
offered to an association member other
than in connection with a group health
plan, the coverage is considered coverage
in the individual market under Federal
law, regardless of whether it is considered
group coverage under State law. Thus,
any health insurance sold to individuals
through a group trust or association, other
than in connection with a group health
plan, or sold to a group trust or associa-
tion to the extent the insurance is intended
to cover association members who are
individuals, must meet the definition of
STLDI at 26 CFR 54.9801-2, 29 CFR
2590.701-2, and 45 CFR 144.103, or else
be considered individual health insurance
coverage that is subject to all the Federal
individual market consumer protections
and requirements for comprehensive cov-
erage.
The Departments are aware that some
group trusts and associations have also
marketed STLDI policies to employers as
a form of employer-sponsored coverage.
As explained in section I.C of this pream-
ble, there is no provision excluding STLDI
from the Federal definition of group health
insurance coverage.
226
Thus, any health
insurance that is sold to or through a group
trust or association in connection with a
group health plan and which purports to
be STLDI would in fact be group health
insurance coverage and must comply with
the Federal consumer protections and
requirements for comprehensive coverage
applicable to the group market. Failure to
meet those requirements could result in
penalties for employers offering such cov-
erage.
227
The Departments did not propose
changes specific to association-based
STLDI coverage and are not finalizing
any such changes in these final rules. The
Departments will continue to work closely
with States, both individually and through
the NAIC, to support State oversight and
enforcement efforts of STLDI offered
through associations.
6. Applicability Dates
In the 2023 proposed rules, the Depart-
ments proposed applicability dates for the
proposed amendments to the Federal defi-
nition of STLDI that distinguish between
new and existing STLDI under 26 CFR
54.9833-1, 29 CFR 2590.736, and 45 CFR
146.125 and 148.102.
The Departments also proposed a tech-
nical amendment to 26 CFR 54.9833-1,
29 CFR 2590.736, and 45 CFR 146.125
(regarding applicability dates) to remove
outdated language. The Departments pro-
posed the technical amendment would
apply to all coverage (that is, both new
and existing STLDI) as of the effective
date of the final rules.
221
See 88 FR 44596 at 44618 (July 12, 2023).
222
Id.
223
Id.
224
Id. (citing Curran, Emily, Dania Palanker, and Sabrina Corlette (2019). “Short-term Plans Sold Through Out-of-State Associations Threaten Consumer Protections,” Commonwealth Fund,
available at: https://www.commonwealthfund.org/blog/2019/short-term-health-plans-sold-through-out-state-associations-threaten-consumer-protections.)
225
88 FR 44596 at 44618 (July 12, 2023) (citing 45 CFR 144.102(c)).
226
See section 2791(b)(5) of the PHS Act, which excludes STLDI from the definition of “individual health insurance coverage”.
227
Section 4980D of the Code.

May 6, 2024 1008 Bulletin No. 2024–19
The Departments did not receive any
comments on the proposed applicability
dates for the technical amendments and
are finalizing them as proposed.
For new STLDI sold or issued on or
after the effective date of the final rules,
the Departments proposed that the amend-
ments to the definition of STLDI would
apply for coverage periods beginning on or
after such date. For STLDI sold or issued
before the effective date of the final rules
(including any subsequent renewal or
extension consistent with applicable law),
the Departments proposed that the current
Federal definition of such coverage would
continue to apply with respect to the maxi-
mum allowable duration. Therefore, under
the proposed rules, existing STLDI could
continue to have an initial contract term
of less than 12 months and a maximum
duration of up to 36 months (taking into
account any renewals or extensions), sub-
ject to any limits under applicable State
law.
The Departments proposed that the
amendments to the notice provision at
paragraph (2) of the proposed definition of
“short-term, limited-duration insurance”
in 26 CFR 54.9801-2, 29 CFR 2590.701-
2, and 45 CFR 144.103 would apply for
coverage periods beginning on or after the
effective date of the final rules, regardless
of whether the coverage was sold or issued
before, on, or after the effective date of the
final rules.
The Departments sought comments
on whether the proposed revised notice
standard should apply only to new STLDI
or should apply to both new STLDI and
existing coverage upon renewal or exten-
sion, and whether the application of the
proposed revised notice standard to exist-
ing STLDI should instead be delayed
until January 1, 2025, or some other
date. The Departments sought comments
on whether all STLDI policies and any
renewals or extensions of such coverage,
including existing coverage sold or issued
prior to the effective date of the final rules,
should instead end upon the effective date
of the final rules or some other date. The
Departments also sought comments on
whether an applicability date that would
provide a longer transition period for con-
sumers with policies, certificates, or con-
tracts of STLDI sold or issued before the
effective date of the final rules could help
alleviate any potential market disruption.
In addition, the Departments sought com-
ments on whether it would be more rea-
sonable for all STLDI policies, and any
renewals or extensions of such coverage
in effect before the date the final rules are
published, to end before January 1, 2025,
or some other date.
Only a few commenters commented
on the applicability date for new STLDI
policies. One commenter stated that it is
critically important for consumers that
the proposed amendments to the Federal
definition of STLDI take effect as soon as
possible for new STLDI policies to better
inform consumers about the differences
between STLDI and comprehensive cov-
erage and protect consumers from decep-
tive marketing practices. A few comment-
ers suggested that the Departments delay
the applicability date for new STLDI
policies, with recommended dates rang-
ing from between 90 days and 12 months
after the effective date of the final rules.
Commenters recommended providing this
additional time because STLDI products
have already been filed and approved for
2024 and issuers need more time to evalu-
ate plan designs, update system processes,
re-file policy forms with State regulators
and complete other administrative tasks.
The Departments agree that an applica-
bility date of 75 days following publication
of these final rules might cause challenges
for some States and issuers as they move
to revise plan designs and file new policy
forms that comply with the Federal defini-
tion of SLTDI under these final rules. The
Departments are mindful of the adminis-
trative obstacles identified by commenters
and are of the view that providing more
time to comply with the revised Federal
definition of STLDI will be beneficial
both to issuers and States. However, the
Departments are also mindful of the cau-
tion from commenters that the potential
for consumer confusion is particularly
acute when STLDI is marketed and sold
during the annual individual market open
enrollment period. Although these final
rules do not prohibit the sale or marketing
of STLDI during the individual market
open enrollment period, the Departments
are of the view that the potential for con-
sumer confusion about whether they are
considering purchasing an STLDI plan
or comprehensive coverage will be sub-
stantially lessened if the final rules go
into effect for new STLDI policies before
the beginning of the next individual mar-
ket open enrollment period.
228
Therefore,
after consideration of comments, these
final rules provide that the new definition
of STLDI will apply to new STLDI poli-
cies, certificates, or contracts of insurance
for coverage periods beginning on or after
September 1, 2024.
229
This applicability
date will provide issuers and States with
more time to come into compliance with
these final rules for new STLDI policies.
It will also allow uninsured consumers
who enroll in a new STLDI policy on or
after September 1, 2024, to bridge the gap
to when new comprehensive coverage
purchased during the next individual mar-
ket open enrollment period would begin.
The Departments decline to extend the
applicability for new STLDI policies fur-
ther to ensure an end to the marketing of
STLDI with a longer maximum allowed
length prior to the beginning of open
enrollment for the 2025 individual market
plan year.
230
The Departments received some com-
ments on the applicability date with respect
to the maximum allowable duration for
existing STLDI (including renewals and
extensions). A few commenters requested
that the revised maximum allowable dura-
tion apply to existing policies as soon as
possible. These commenters stated that
agents and brokers may attempt to steer
as many consumers as possible into poli-
cies that are subject to the 2018 final rules
prior to the applicability date for new pol-
icies, locking consumers into less protec-
tive coverage with a longer duration, and
potentially destabilizing the risk pools for
individual health insurance coverage.
228
The next individual market open enrollment period begins on November 1, 2024. See 45 CFR 155.410(e)(4)(i).
229
For new STLDI policies, the new maximum duration standards and the revised notice established in these final rules will apply for coverage periods beginning on or after September 1, 2024.
230
The individual market open enrollment period for plan year 2025 begins on November 1, 2024. See 45 CFR 155.410(e)(4)(i).

Bulletin No. 2024–19 1009 May 6, 2024
Commenters stated that this is partic-
ularly concerning as more consumers are
shopping for health coverage as States
resume Medicaid eligibility redetermi-
nations due to the end of the FFCRA’s
Medicaid continuous enrollment condi-
tion. Another commenter stated that the
Departments should apply the same appli-
cability date for the maximum duration to
new and existing policies because having
a different applicability date for new and
existing STLDI could create confusion
for consumers and issuers. However, a
different commenter suggested that the
proposed applicability date for the revised
maximum duration to apply to existing
coverage would minimize confusion for
currently enrolled consumers. One com-
menter supported the proposed applicabil-
ity date for the revised maximum duration
to apply to existing STLDI, as the dates
allow issuers to honor their contractual
obligations while avoiding unnecessary
disruptions in coverage. Another com-
menter suggested aligning the applicabil-
ity date for the revised maximum duration
to apply to existing STLDI with the exist-
ing term or the start of the subsequent plan
year for Exchange coverage, whichever
comes first, and providing a 60-day special
enrollment period to consumers whose
coverage ends after the individual market
open enrollment period. Other comment-
ers recommended that the Departments
postpone the applicability date for the
revised maximum duration for STLDI to
apply to existing policies to accommodate
the end of the initial contract term, but
prevent renewals or extensions to strike
a balance between avoiding disruption of
current plans and prolonging the harms of
the maximum permitted duration under
the current Federal definition of STLDI.
These commenters also suggested this
alternative approach would simplify the
application of the revised maximum dura-
tion for STLDI coverage under the final
rules. Other commenters suggested setting
a different fixed applicability date for the
revised maximum duration for SLTDI to
apply to existing policies that aligns with
the start of the individual market open
enrollment period for plan years 2025 or
2026.
231
The Departments appreciate the need
to implement the changes to the revised
maximum duration for STLDI as soon as
practical to mitigate the risk of consum-
ers mistakenly enrolling in STLDI in lieu
of comprehensive coverage. At the same
time, the Departments recognize that
some consumers who are already enrolled
in STLDI purchased such coverage with
the understanding it would continue for a
given period of time, consistent with the
current Federal definition of STLDI and
applicable State law. Such individuals
may also have purchased coverage with
the expectation that they could renew cov-
erage, consistent with the current Federal
definition and applicable State law. While
the Departments want to balance avoiding
prolonging the harms of a longer max-
imum permitted duration, to minimize
disruption and confusion for individu-
als who purchased or were enrolled in
STLDI prior to the effective date of the
final rules, the Departments are finalizing
the proposal to permit such individuals
to remain covered under STLDI for the
maximum initial contract term, as well as
for renewals and extensions, to the extent
permitted under the 2018 final rules, sub-
ject to any limits under applicable State
law. Although the Departments are not
applying the revised maximum duration
for STLDI to renewals or extensions of
existing coverage, consumers can opt not
to renew or extend their coverage prior to
reaching the maximum duration permitted
for such coverage. The Departments are
not persuaded by the concern that having
different applicability dates for the revised
maximum duration for new and existing
coverage will create confusion for con-
sumers and issuers. As noted by one com-
menter, allowing individuals with existing
coverage to continue their coverage for
the maximum duration allowed when they
purchased STLDI may instead minimize
confusion and align with the consumer’s
expectations when they purchased the
coverage. Confusion for consumers who
newly enroll in STLDI coverage on or
after September 1, 2024, is likely to be
minimal since they would not be eligible
to purchase, renew, or extend an STLDI
policy for the longer maximum duration
permitted under the 2018 final rules. The
Departments are of the view that the dif-
ferent applicability dates will also create
minimal confusion and burden for issuers,
which already need to track which STLDI
policies are eligible for renewal or exten-
sion and for how long. The Departments
are finalizing the applicability date for
existing STLDI policies with respect to
the maximum allowable duration for such
coverage as proposed.
As discussed in section III.A.1 of this
preamble, HHS declines to create a spe-
cial enrollment period for individuals to
enroll in individual health insurance cov-
erage at the expiration of their STLDI
coverage. However, nothing in Federal
law would prevent an individual from dis-
continuing their STLDI coverage prior to
its expiration date to align the end of their
STLDI coverage with the start of indi-
vidual health insurance coverage or other
comprehensive coverage.
Some commenters supported applying
the proposed revised notice to new STLDI
sold or issued on or after the effective date
of the final rules and to existing cover-
age upon renewal or extension. Another
commenter recommended that the Depart-
ments apply the proposed amendments
to the notice only to new STLDI sold or
issued on or after the effective date of the
final rules and to existing coverage starting
12 months after the publication of these
final rules. Some commenters expressed
concern that the proposed applicability
dates for the revised STLDI notice did not
provide enough time for implementation
in States that require notices be submitted
to the State department of insurance for
review or approval.
The Departments agree with comment-
ers that the revised notice should promptly
apply to both new and existing (upon
renewal or extension) STLDI coverage
to alert all consumers who are consider-
ing purchasing or renewing STLDI to the
differences between comprehensive cov-
erage and STLDI. The notice is key to
providing consumers with the information
necessary to make an informed decision
about the range of available coverage
options. However, the Departments recog-
nize that it would be burdensome on issu-
231
The individual market open enrollment periods for plan years 2025 and 2026 begins on November 1, 2024, and November 1, 2025, respectively. See 45 CFR 155.410(e)(4)(i).

May 6, 2024 1010 Bulletin No. 2024–19
ers to finalize three separate applicability
dates (that is, for the notice provisions, for
the maximum duration standards applica-
ble to new policies, and for the maximum
duration standards applicable to existing
policies). In addition, the Departments
acknowledge that issuers in some States
may need to engage with their State reg-
ulator prior to implementing the new
notice. After consideration of comments,
the Departments are finalizing a delayed
applicability date for the revised notice
to align with the delayed applicability
date finalized in these final rules for new
STLDI coverage. Specifically, the revised
notice specified in these final rules must
be provided for new STLDI policies sold
or issued on or after September 1, 2024,
and with respect to existing coverage,
upon renewal or extension that occurs on
or after September 1, 2024.
B. Independent, Noncoordinated Excepted
Benefits Coverage
In the group market, for hospital
indemnity or other fixed indemnity insur-
ance to qualify as an excepted benefit,
among other criteria, the insurance must
pay a fixed dollar amount per day (or per
other period) of hospitalization or illness
(for example, $100/day), regardless of the
amount of expenses incurred. In contrast,
under the current individual market regu-
lations, fixed indemnity insurance can pay
on a per-period and/or per-service basis
and be considered an excepted benefit. In
the 2023 proposed rules, HHS proposed
to realign the individual market regula-
tions with the group market regulations,
which would require hospital indemnity
or other fixed indemnity insurance to pay
a fixed dollar amount per day (or per other
period) of hospitalization or illness to be
considered an excepted benefit in the indi-
vidual market, consistent with the group
market rules.
The Departments also proposed addi-
tional payment standards for hospital
indemnity or other fixed indemnity insur-
ance to be considered an excepted benefit
in the group market. HHS proposed paral-
lel payment standards for fixed indemnity
excepted benefits coverage in the indi-
vidual market. Under the 2023 proposed
rules, fixed indemnity excepted benefits
would be required to be paid regardless
of the items or services received, actual
or estimated amount of expenses incurred,
severity of illness or injury experienced,
or any other characteristics particular to a
course of treatment received by a covered
participant, beneficiary, or enrollee.
The preamble to the 2023 proposed
rules also explained that the Depart-
ments are aware that some employers
offer employees a “package” of cover-
age options that include a non-excepted
benefit group health plan that provides
minimal coverage (for example, coverage
of preventive services only) with fixed
indemnity insurance that provides benefits
associated with receiving a broad cate-
gory of other services for which coverage
is excluded from the non-excepted ben-
efit group health plan. The Departments
explained they are concerned that some
employers are attempting to circumvent
the Federal consumer protections and
requirements for comprehensive cover-
age that otherwise apply to group health
plans by offering most benefits associ-
ated with receiving health care services
under fixed indemnity insurance labeled
as an excepted benefit, potentially leaving
employees without crucial Federal con-
sumer protections.
To address this concern and clarify the
Departments’ interpretation of the require-
ment that hospital indemnity and other
fixed indemnity insurance must offer
“noncoordinated” benefits to be consid-
ered an excepted benefit, the Departments
proposed to add a new example to the
group market regulations to reflect that
the prohibition on coordination of bene-
fits is not limited to only those situations
involving a formal coordination-of-bene-
fits arrangement. The proposed example
illustrated a scenario with a fixed indem-
nity insurance policy and a group health
plan maintained by the same plan sponsor
in which a formal coordination-of-benefits
arrangement was not present but there was
nonetheless coordination between the pro-
vision of benefits under the fixed indem-
nity insurance policy and an exclusion
of benefits under the group health plan.
HHS proposed to apply the same inter-
pretation of the noncoordination require-
ment to individual market fixed indemnity
excepted benefits coverage.
232
The Departments proposed a consumer
notice for group market fixed indemnity
benefits coverage. HHS also proposed
amendments to the existing consumer
notice for individual market fixed indem-
nity excepted benefits coverage. These
proposals would ensure that fixed indem-
nity excepted benefits coverage is prop-
erly identified in marketing, application,
and enrollment (or reenrollment) mate-
rials as fixed indemnity excepted bene-
fits coverage, rather than comprehensive
health insurance that is subject to Federal
consumer protections, which would help
a prospective enrollee distinguish between
fixed indemnity excepted benefits cover-
age and comprehensive coverage options.
With these proposals, the Departments
aimed to support informed consumer
choice by promoting consumer aware-
ness of the limitations of fixed indemnity
excepted benefits coverage and to help
prevent consumers from mistakenly pur-
chasing such coverage as an alternative to
or replacement for comprehensive cover-
age.
The Departments received many com-
ments in response to all of these propos-
als. These final rules adopt the new notice
for fixed indemnity excepted benefits
coverage offered in the group market and
update the existing notice for such cov-
erage offered in the individual market.
In response to comments and consumer
testing, the Departments have modified
the content and applicability date of the
notice, as discussed in more detail later
in sections III.B.1 and III.B.3 of this pre-
amble. However, to provide more time to
study the issues and concerns raised in
comments, these final rules do not address
any other provision of the 2023 proposed
rules relating to fixed indemnity excepted
benefits coverage (with the exception of
232
Consistent with the interpretation and application of the statutory requirement that fixed indemnity excepted benefits coverage in the individual market must be offered on a noncoordinated
basis, HHS proposed to modify the requirement at current 45 CFR 148.220(b)(4)(ii) to specify that benefits under fixed indemnity excepted benefits coverage must be paid with respect to
an event without regard to whether benefits are provided with respect to such an event under any other health coverage “maintained by the same issuer.”. HHS is not finalizing this proposed
modification to the individual market noncoordination standard at this time.

Bulletin No. 2024–19 1011 May 6, 2024
certain technical amendments to the HHS
individual market regulation proposed
in the 2023 proposed rules, as discussed
in more detail later in section III.B.2 of
this preamble). The Departments remain
concerned with practices that appear to
circumvent Federal consumer protections
and requirements and intend to address the
other proposals for hospital indemnity or
other fixed indemnity insurance in future
rulemaking, taking into account com-
ments received on these issues.
No inference should be drawn from the
decision not to finalize the proposed pay-
ment standards or noncoordination exam-
ple as part of these final rules, and plans
and issuers should not assume that current
market practices that are inconsistent with
the 2023 proposed payment standards or
noncoordination example comply with the
existing Federal regulations that apply to
fixed indemnity excepted benefits cover-
age.
To the contrary, many comments
received in response to the 2023 pro-
posed rules underscored the Departments’
concerns that hospital indemnity or other
fixed indemnity insurance is being used
by some issuers, plan sponsors, plans,
agents, and brokers to circumvent the
Federal consumer protections and require-
ments applicable to comprehensive cover-
age, while offering products that blur the
lines between the two types of coverage.
The Departments remain concerned about
the deceptive marketing and sale of hos-
pital indemnity and other fixed indemnity
insurance, including the creation of hos-
pital indemnity or other fixed indemnity
insurance with detailed fee schedules.
These types of fixed indemnity insur-
ance products are not consistent with
the traditional role of hospital or other
fixed indemnity insurance serving as a
form of income or wage replacement that
the statutory exception was intended to
cover. Instead, they mimic comprehen-
sive coverage, without providing the Fed-
eral consumer protections or meeting the
requirements applicable to comprehensive
coverage. This leaves individuals who
mistakenly purchase such coverage in lieu
of comprehensive coverage without criti-
cal consumer protections, exposing them
to significant health and financial risk.
Similarly, the Departments remain
concerned about the practice of offer-
ing a “package” of coverage options that
includes a non-excepted benefit plan
that provides minimal coverage (such as
coverage only for preventive services)
233

plus a fixed indemnity insurance policy
that provides benefits associated with
a broad range of items and services for
which the other coverage maintained by
the employer (or, in the individual market,
maintained by the same issuer) excludes
benefits. The Departments remain con-
cerned that these plan designs are struc-
tured as coordinated arrangements to cir-
cumvent the Federal consumer protections
and requirements for comprehensive cov-
erage that otherwise would apply. This is
particularly concerning if the employers,
employees, or individuals are under the
impression or are misled to believe that
their two coverages, when combined, pro-
vide comprehensive coverage, and they
therefore forgo pursuing other available
options that would provide comprehen-
sive coverage.
The Departments intend to address
these issues in future rulemaking.
The Departments emphasize that, to
be considered fixed indemnity excepted
benefits coverage under the current Fed-
eral group market regulations, the benefits
must be paid only on a per-period basis.
Under this standard, the Departments
expect that fixed indemnity excepted ben-
efit coverage would not be designed with
fee schedules that, in effect, provide ben-
efits for specific items and services, such
as wellness screening exams or prescrip-
tion drugs, rather than wage or income
replacement. The Departments are aware
that some issuers merely affix a “per day”
term to benefits for specific items and ser-
vices, such as $50 per blood test per day.
As stated in the preamble to the 2023 pro-
posed rules, when analyzing whether a
policy, certificate, or contract of insurance
is subject to the Federal consumer protec-
tions and requirements for comprehensive
coverage, the Departments will look past
the label used to examine whether the pol-
icy, certificate, or contract of insurance
qualifies as an excepted benefit or whether
it is comprehensive coverage that is sub-
ject to the Federal consumer protections
and requirements applicable to such cov-
erage. The Departments encourage State
regulators to take a similar approach and
intend to work with States to ensure that
issuers comply with relevant requirements.
1. Notices
To ensure that consumers purchasing
fixed indemnity excepted benefits cov-
erage are aware of the type of coverage
they are purchasing, including the lim-
itations of the coverage, and that it is not
mistakenly purchased as an alternative or
replacement for comprehensive coverage,
the Departments proposed to require a
consumer notice be prominently displayed
when offering fixed indemnity excepted
benefits coverage in the group market, in
alignment with the existing requirement to
provide such a notice when offering fixed
indemnity excepted benefits coverage in
the individual market. The Departments
proposed that if a plan or issuer provides
the required group market notice in accor-
dance with the provisions in the 2023 pro-
posed rules, the obligation to provide the
notice would be satisfied for both the plan
and issuer.
In developing the proposed notice for
the group market and revising the notice
for the individual market, the Departments
sought to balance two goals. One goal was
to combat potential sources of misinfor-
mation by directing consumers to appro-
priate resources to learn more about com-
prehensive coverage and understand how
that coverage differs from fixed indemnity
excepted benefits coverage. The other goal
was to provide a concise, understandable
notice that would be meaningful to, and
actionable by, consumers.
HHS also proposed technical amend-
ments reorganizing the regulatory text to
move the provision regarding the place-
ment and materials on which the notice
must appear for fixed indemnity excepted
benefits coverage in the individual market,
as well as amendments to the content and
233
The Departments note that such an arrangement would not be treated as providing minimum value if it failed to provide substantial coverage of inpatient hospital services and physician
services. 26 CFR 1.36B-6; 45 CFR 156.145.

May 6, 2024 1012 Bulletin No. 2024–19
formatting for the notice itself, to align
with the proposal to adopt a notice for the
group market.
Many commenters supported requir-
ing prominent display of the proposed
consumer notice in both markets to help
consumers distinguish fixed indemnity
excepted benefits coverage from compre-
hensive coverage, make individuals aware
of opportunities to purchase comprehen-
sive coverage, and inform them of pos-
sible eligibility for subsidies to purchase
comprehensive coverage. Commenters
strongly supported disclosures to explain
the limited nature of fixed indemnity
excepted benefits coverage. One com-
menter stated that there is a need for a
model consumer notice that is succinct,
clear, and prominent, especially because
prior efforts have not stopped abusive mar-
keting tactics. One commenter stated that
clear, consistent, and consumer-friendly
disclosures are the best mechanism to
ensure fixed indemnity policies are mar-
keted in a clear and appropriate manner,
particularly if consumers are purchas-
ing coverage online. Another commenter
stated that the proposed notice language
was consistent with current industry stan-
dards and expressed support for even
stronger disclosure language.
The Departments agree with these com-
menters. By requiring a prominent disclo-
sure notice to consumers who are consid-
ering enrolling or reenrolling in individual
or group market fixed indemnity excepted
benefits coverage, the Departments aim to
ensure that consumers are informed about
the type of coverage they are purchasing,
and thereby reduce the potential for con-
sumers to mistakenly enroll in such cov-
erage as their primary source of coverage
and to increase consumer understanding
of the differences between fixed indem-
nity excepted benefits coverage and com-
prehensive coverage.
The Departments also agree with com-
menters that the notices should provide
information to consumers in a clear and
concise manner regarding opportunities to
purchase comprehensive coverage, espe-
cially regarding their possible eligibility
for subsidies. As noted in the preamble
to the 2023 proposed rules and in sec-
tion III.A.1 of this preamble, individuals
belonging to underserved populations
often experience greater health challenges,
as well as greater challenges accessing
and using health care services, compared
to the general population, including worse
health outcomes, higher rates of chronic
conditions, lower access to health care,
and more frequent experiences of discrim-
ination in health care settings.
234
Members
of these populations may be particularly
vulnerable to misinformation or mislead-
ing or aggressive sales tactics. A notice
can help combat misinformation and mis-
leading or aggressive sales practices by
helping consumers distinguish between
comprehensive coverage and fixed indem-
nity excepted benefits coverage.
For these reasons, as well as research
identifying disparities in health insurance
literacy among underserved populations
and people with incomes below the FPL,
235

the Departments proposed, and are finaliz-
ing in these rules, the adoption of a con-
sumer notice that must be provided when
offering fixed indemnity excepted benefits
coverage in the group market. HHS is also
finalizing revisions to the existing con-
sumer notice that must be provided when
offering fixed indemnity excepted bene-
fits coverage in the individual market. In
the Departments’ view, these notices will
help ensure that all consumers, includ-
ing those in underserved communities,
have the necessary information to make
an informed choice after considering and
comparing the full range of health cover-
age options available to them.
Some commenters stated that changes
or additional notices were not necessary
because existing notice provisions are
sufficient. One commenter stated that
although they agree that consumers need
to understand what they are buying, the
proposed notice provisions are not neces-
sary since State-required consumer warn-
ings already exist, and a Federal notice
is not the proper mechanism to promote
consumer education or awareness. Some
commenters suggested that existing fixed
indemnity insurance policies should be
exempt from any notice requirement since
the consumer has already enrolled and
presumably knows what they purchased.
The Departments disagree with com-
menters that stated that existing notice
provisions are sufficient, that the proposed
notice provisions are unnecessary because
State-required notices exist, and that a
Federal notice is not the proper mecha-
nism to promote consumer education or
awareness. The existing Federal notice
provision only applies to the individual
market, leaving consumers in the group
market potentially uninformed about the
limited nature of their fixed indemnity
excepted benefit coverage and unaware
of resources to learn more about other
coverage options. In addition, while some
State-required notices may exist, they are
not mandated nationwide. In the Depart-
ments’ view, a Federal notice provision
is the proper mechanism to promote con-
sumer education or awareness by con-
veying a consistent message at or before
the time a consumer has an opportunity
to enroll in the fixed indemnity excepted
benefit coverage in the individual and
group markets. Without such a notice
consumers may be left unaware or unin-
formed, because notices may not be pro-
vided at all, or would be provided at the
plan’s or issuer’s discretion. Other mech-
anisms, such as public service announce-
ments, would not ensure that information
has been provided to every prospective
consumer.
Additionally, the Departments are of
the view that requiring issuers to provide
the consumer notice contemporaneously
with marketing, application, and enroll-
ment materials that are provided to par-
ticipants at or before the time participants
are given the opportunity to enroll in the
coverage (rather than separately from the
application process or after a product has
already been purchased) will ensure that
consumers are made aware of the type of
coverage they are considering, are made
234
See CMS Office of Minority Health (2022). “The Path Forward: Improving Data to Advance Health Equity Solutions,” available at: https://www.cms.gov/files/document/path-forward-
he-data-paper.pdf.
235
Edward, Jean, Amanda Wiggins, Malea Hoepf Young, and Mary Kay Rayens (2019). “Significant Disparities Exist in Consumer Health Insurance Literacy: Implications for Health
Care Reform,” Health Literacy Research and Practice, available at: https://pubmed.ncbi.nlm.nih.gov/31768496/. See also Villagra, Victor and Bhumika Bhuva (2019). “Health Insurance
Literacy: Disparities by Race, Ethnicity, and Language Preference,” The American Journal of Managed Care, available at: https://www.ajmc.com/view/health-insurance-literacy-dispari-
ties-by-race-ethnicity-and-language-preference.

Bulletin No. 2024–19 1013 May 6, 2024
aware of information resources at their
State Department of Insurance, and are
provided with options for purchasing
comprehensive coverage at the time when
they most need this information to support
their decision-making process.
The Departments also do not agree
that existing policies should be exempt
from the applicable notice. Although a
consumer may have already purchased
fixed indemnity excepted benefit cov-
erage in the past, the consumer may not
have been aware of the limitations of such
coverage or available comprehensive
coverage options and may wish to evalu-
ate all of their options before reenrolling.
Therefore, the Departments are finalizing
the proposal to provide the group market
notice at or before the time participants
are given the opportunity to enroll or reen-
roll in coverage prominently on the first
page (in either paper or electronic form,
including on a website) of any marketing,
application, and enrollment (or reenroll-
ment) materials, and decline to provide
an exemption for existing group market
fixed indemnity excepted benefit cover-
age. HHS is similarly finalizing the indi-
vidual market proposal to prominently
display the notice on the first page of any
marketing, application, and enrollment or
reenrollment materials that are provided
at or before the time an individual has the
opportunity to apply, enroll or reenroll
in coverage, and on the first page of the
policy, certificate, or contract of insur-
ance, and also declines to provide an
exemption for existing individual market
fixed indemnity excepted benefit cover-
age. These changes will ensure that fixed
indemnity excepted benefit coverage is
clearly identified as fixed indemnity cov-
erage and not comprehensive coverage
when marketed and sold in both the group
and individual markets.
Some commenters opposed the adop-
tion of a notice requirement in the group
market and questioned its permissibility
in the individual market. These comment-
ers argued the Departments have no legal
authority to require group health plans and
issuers offering fixed indemnity excepted
benefits coverage in the group market to
provide such a notice. One commenter,
while recognizing that the existing indi-
vidual market notice was not at issue in
Central United Life Ins. Co. v. Burwell,
argued that requiring a notice was akin
to the type of additional criterion that the
D.C. Circuit found impermissible in the
case.
236
The Departments disagree with com-
menters that question the Departments’
legal authority to adopt a consumer notice
for fixed indemnity excepted benefits cov-
erage in the group and individual markets.
Through the enactment of the Federal
excepted benefits statutes,
237
Congress
generally preserved Federal authority
to interpret and implement the statutory
provisions governing these insurance
products. Congress also provided the
Departments with explicit authority to
promulgate regulations as the Secretaries
determine may be necessary or appropri-
ate to carry out the provisions of the Code,
ERISA, and the PHS Act.
238
These stat-
utes collectively provide the Departments
authority to interpret and implement the
requirements for hospital indemnity or
other fixed indemnity insurance to qualify
as excepted benefits coverage under the
Federal framework, and to adopt a con-
sumer disclosure notice in regulation to
ensure that the statutes themselves func-
tion as Congress intended. As explained
in the 2023 proposed rules
239
and in
section I.D. and this section III.B of the
preamble of these final rules, fixed indem-
nity excepted benefits coverage is not an
adequate substitute for comprehensive
coverage, in part because it is not sub-
ject to Federal consumer protections and
requirements that apply to comprehensive
coverage. Consumers who purchase fixed
indemnity excepted benefits coverage
under the mistaken impression that such
coverage is subject to Federal consumer
protections and requirements for compre-
hensive coverage are at significant risk of
financial and health hardships that may
not become clear to the consumer until the
occurrence of a costly health event.
240
Consumers cannot adequately access
Federal consumer protections to which
they are entitled when it is unclear to
which products they apply, and the effects
of these protections are diluted when con-
sumers are unclear what type of product
they are purchasing and how and when
they are protected by Federal law. There-
fore, a consumer notice that clearly identi-
fies a product as fixed indemnity excepted
benefits coverage and distinguishes such
a product from comprehensive coverage,
clarifies and strengthens these protections
for consumers. In addition, the notice pre-
vents plans and issuers from marketing
products that have been approved as an
excepted benefit as comprehensive cov-
erage to which Federal protections apply.
Therefore, the Departments are of the
view that it is necessary and appropriate
for plans and issuers to provide consumers
with a consumer notice that clearly labels
fixed indemnity excepted benefits cover-
age and provides consumers with informa-
tion sufficient to notify the consumer that
such coverage is not subject to the Federal
consumer protections and requirements
for comprehensive coverage.
The Departments also disagree with the
commenter who stated requiring a notice
was akin to the type of additional criterion
that the D.C. Circuit found impermissible
in Central United Life Ins. Co. v. Burwell.
Adoption of the Federal consumer notice
is not an impermissible requirement being
added to the statutory criteria for fixed
indemnity excepted benefits coverage.
To ensure that the Code, ERISA, and the
PHS Act function as intended, the notice
ensures that fixed indemnity excepted
benefits coverage is marketed and labeled
as such, rather than as comprehensive cov-
erage. As discussed in this section III.B.1
of this preamble, the rules do not require
the provision of a notice, but instead sim-
ply provide that insurance offered without
such a notice would not qualify as fixed
236
827 F.3d 70 (D.C. Cir. 2016).
237
See section 9831 of the Code, section 732 of ERISA, and sections 2722(b)-(c), 2763, and 2791(c) of the PHS Act.
238
See section 9833 of the Code, section 734 of ERISA, and section 2792 of the PHS Act.
239
See, for example, 88 FR 44596 at 44619, 44620, 44645-44646 (July 12, 2023)
240
See id. at 44605, 44606 (citing Appleby, Julie (2017). “Brokers Tout Mix-And-Match Coverage To Avoid High-Cost ACA Plans,” KFF, available at: https://kffhealthnews.org/news/bro-
kers-tout-mix-and-match-coverage-to-avoid-high-cost-aca-plans), 44608
(citing Avila, Jaie (2019). “Show Me Your Bill Helps Wipe Out $70K in Charges After Heart Attack,” News 4 San
Antonio, available at: https://news4sanantonio.com/news/trouble-shooters/show-me-your-bill-helps-wipe-out-70k-in-charges-after-heart-attack) (July 12, 2023).

May 6, 2024 1014 Bulletin No. 2024–19
indemnity excepted benefits coverage and
would be subject to the Federal consumer
protections and requirements applicable to
comprehensive coverage. Plans and issu-
ers will not be prohibited from selling hos-
pital indemnity and other fixed indemnity
insurance, and consumers may continue to
choose to purchase it, but unless the cov-
erage includes the requisite notice iden-
tifying it as coverage not subject to the
Federal consumer protections and require-
ments subject to comprehensive coverage,
it would be subject to such protections
and requirements. Additionally, the notice
is being adopted to further the Depart-
ments’ interest in ensuring that consumers
are fully aware that they are purchasing
fixed indemnity excepted benefits cover-
age rather than comprehensive coverage,
are aware of their options to purchase
comprehensive coverage, and have access
to information resources that support
informed consumer decision-making with
regard to health coverage.
Further, the changes to the individual
market consumer notice and the adoption
of a notice in the group market are reflec-
tive and responsive to changes observed
by the Departments in market conditions
and the legal landscape. As discussed in
section II.A of this preamble, market con-
ditions have changed and increased the
availability of affordable options for com-
prehensive coverage. As discussed in sec-
tion II.D of this preamble, the legal land-
scape has also changed. The decision in
Central United Life Ins. Co. v. Burwell and
the passage of the Tax Cuts and Jobs Act
increase the likelihood that individuals
would purchase fixed indemnity excepted
benefits coverage as a substitute for com-
prehensive coverage. As a result of those
changes, the Departments are of the view
that notices will help combat deceptive
marketing practices and potential sources
of misinformation by clearly identifying
fixed indemnity excepted benefits cover-
age and distinguishing such coverage from
comprehensive coverage, directing con-
sumers to appropriate resources to learn
more about comprehensive coverage, and
identifying key differences between that
coverage and fixed indemnity excepted
benefits coverage.
Many commenters stated that the
proposals regarding notices in the 2023
proposed rules usurp States’ authority.
Several commenters pointed to the McCa-
rran-Ferguson Act, stating that only Con-
gress may infringe on the States’ exercise
of their authority to regulate insurance.
Several commenters stated that Fed-
eral regulatory changes are not necessary
because States and the NAIC have been
working on the NAIC Models 40, 170,
171 and 880 that address these coverage
options,
241
and when those are adopted
by States, they will adequately address
the Departments’ concerns. Several com-
menters stated that amendments to the
Federal regulations are not necessary
because States have enforcement author-
ity to discipline agents, discipline issuers,
limit marketing practices, and limit prod-
uct features if there are instances of fixed
indemnity excepted benefits coverage
being sold as a replacement for compre-
hensive coverage.
The Departments agree that the States
play an important role in regulating fixed
indemnity excepted benefits coverage
and acknowledge the federalism implica-
tions of the proposed rules and these final
rules.
242
As noted by commenters, the
McCarran-Ferguson Act generally affirms
the preeminence of State regulation, and
also explicitly allows for Federal regula-
tion when an act of Congress specifically
relates to the business of insurance. As
discussed in section III.A.1 of this pream-
ble, the McCarran-Ferguson Act balances
State and Federal interests in regulating
the business of insurance. Section 1012(a)
of the McCarran-Ferguson Act maintained
State regulatory authority by enabling
State preemption of some Federal law, and
section 1012(b) of the McCarran-Fergu-
son Act limited Federal regulatory author-
ity by generally exempting the “business
of insurance” from Federal law. Although
Congress allowed for State preemption
of Federal law in this way, Congress also
preserved Federal authority to regulate
insurance provided that, to overcome the
State preemption, congressional action
must specifically relate to the business of
insurance. As previously noted, HIPAA,
the ACA, and the other Acts of Congress
specifically relate to the business of insur-
ance. Given that Congress defined and set
forth criteria for fixed indemnity excepted
benefits coverage to be exempt from the
Federal consumer protections and require-
ments for comprehensive coverage,
243

there is clear congressional action specifi-
cally addressing the business of insurance,
thereby preserving Federal regulatory
authority to interpret and implement the
Federal statutory provisions governing
these insurance products.
In addition, as previously noted, Con-
gress also provided the Secretaries of the
Treasury, Labor, and HHS with explicit
authority to promulgate regulations as
may be necessary or appropriate to carry
out the provisions of the Code, ERISA,
and the PHS Act.
244
This includes the
authority for the Departments to interpret
and implement the requirements for hos-
pital indemnity or other fixed indemnity
insurance to qualify as excepted benefits
coverage under Federal law, and also pro-
vides the authority to adopt a consumer
notice. The Code, ERISA, and the PHS
Act impose certain requirements on com-
prehensive coverage and do not impose
those same requirements on fixed indem-
nity excepted benefits coverage. The
Departments believe it is necessary and
appropriate that plans and issuers provide
consumers considering the purchase (or
renewal) of fixed indemnity excepted ben-
efits coverage, and those actually purchas-
ing such insurance, a notice that clearly
identifies the insurance as fixed indem-
nity excepted benefits coverage and is
sufficient to put consumers on notice that
such coverage is not subject to the Federal
consumer protections and requirements
for comprehensive coverage. The notices
also direct consumers to resources where
they can learn about the range of avail-
able coverage options, and the notices are
designed to help combat the misinforma-
tion and deceptive tactics that can lead to
consumers mistakenly enrolling in fixed
indemnity excepted benefits coverage in
lieu of comprehensive coverage. This will
241
NAIC model laws are available at: https://content.naic.org/model-laws.
242
For further discussion of the Federalism implications of these final rules, see section V.H of this preamble.
243
See sections 9831 and 9832 of the Code, sections 732 and 733 of ERISA, and sections 2722, 2763, and 2791 of the PHS Act.
244
See section 9833 of the Code, section 734 of ERISA, and section 2792 of the PHS Act.

Bulletin No. 2024–19 1015 May 6, 2024
help ensure that consumers who purchase
fixed indemnity excepted benefits cov-
erage are doing so based on an informed
decision and not in error.
The notice provisions being finalized
in these final rules do not infringe on
States’ authority to regulate insurance.
States retain authority to regulate fixed
indemnity excepted benefits coverage.
States may impose standards or require-
ments on hospital indemnity or other fixed
indemnity insurance for purposes of State
law, such as a requirement to provide a
State-specific notice in relation to fixed
indemnity excepted benefits coverage
offered by issuers in their State, including
any notice developed as part of an NAIC
Model Act or Regulation.
However, hospital indemnity or other
fixed indemnity insurance that does not
include the language in the revised notice
under these final rules would not be con-
sidered fixed indemnity excepted benefits
coverage for purposes of Federal law and
thus would be subject to the Federal con-
sumer protections and requirements appli-
cable to comprehensive coverage.
The Departments are of the view that
these final rules appropriately balance
States’ interests in regulating health insur-
ance issuers and their health insurance
markets with Congress’ intent to establish
a general Federal framework for health
insurance coverage, including the pro-
vision of certain key protections to con-
sumers enrolled in comprehensive cover-
age and the creation of an exemption for
insurance products that meet the require-
ments to be considered excepted benefits
coverage. The Departments recognize that
States have been working with the NAIC
to revise several model acts and regula-
tions related to marketing and sales prac-
tices and those models might address some
of the Departments’ concerns. However,
those models establish minimum stan-
dards and States’ adoption of any NAIC
model is optional. States may choose to
codify some or none of the standards set
forth in the NAIC models, which have
yet to be finalized. The Departments will
engage with States and the NAIC as they
revise several NAIC Model Acts and reg-
ulations to update the minimum standards
for non-comprehensive coverage prod-
ucts, including fixed indemnity excepted
benefits coverage. The Departments look
forward to reviewing the information and
data collected on such products from the
NAIC data call that is currently underway.
A few commenters stated that the
notice provisions in the individual and
group markets raised First Amendment
concerns, alleging that the Departments
did not articulate a compelling govern-
mental interest because the 2023 pro-
posed rules failed to provide any substan-
tial evidence that consumer confusion is
widespread. Those commenters further
asserted that the notice provisions for the
group and individual markets are not nar-
rowly tailored, and that requiring display
on the first page of marketing and enroll-
ment materials (in addition to application
materials) is not justified.
The Departments disagree that the pro-
posed notice provisions for fixed indem-
nity excepted benefits coverage raise
First Amendment concerns. The rules
do not require the provision of a notice,
but instead simply provide that hospital
indemnity or other fixed indemnity insur-
ance offered without such a notice would
not qualify as fixed indemnity excepted
benefits coverage and would be subject
to the Federal consumer protections and
requirements applicable to comprehensive
coverage. Moreover, as the United States
Supreme Court recognized in Zauderer v.
Office of Disciplinary Counsel,
245
and later
reiterated in National Institute of Family
and Life Advocates v. Becerra,
246
required
disclosures of factual, uncontroversial
information in commercial speech are sub-
ject to more deferential First Amendment
scrutiny. Under the approach articulated
in Zauderer, courts have upheld required
disclosures of factual information in the
realm of commercial speech where the
disclosure reasonably relates to a substan-
tial government interest and is not unjus-
tified or unduly burdensome such that it
would chill protected speech. Regardless,
the Departments believe that the revised
notice standard would pass muster under
any form of First Amendment scrutiny.
247
The language on the Federal notices
for fixed indemnity excepted benefits
coverage includes factual, uncontrover-
sial information, reasonably relates to a
government interest, and is not unjus-
tified or unduly burdensome. In addi-
tion, the Departments have reviewed and
responded to public comments that raised
concerns about proposed text. For exam-
ple, certain language that appeared in the
proposed rules that commenters deemed
controversial, such as “Warning,” are
not being finalized. HHS conducted con-
sumer testing to ensure the language in the
required notice was not misinterpreted to
deliver any untrue messages.
The Departments have a substantial,
and even compelling, government inter-
est in ensuring consumers are aware of
the type of product they are considering
purchasing, are informed about key differ-
ences between fixed indemnity excepted
benefits coverage and comprehensive
coverage, are aware of their option to pur-
chase comprehensive coverage, and have
access to resources for additional infor-
mation about the range of available health
coverage options so consumers can make
informed choices. As discussed in section
II.B of this preamble, this is of particular
importance at present due to the changing
legal landscape and low health literacy, as
well as the increased reports of deceptive
marketing practices that play on consumer
confusion about the benefits and limita-
tions of fixed indemnity excepted benefits
coverage. The notices clearly label prod-
ucts as fixed indemnity excepted benefits
coverage and communicate factual infor-
mation to consumers about the differences
between fixed indemnity excepted bene-
fits coverage and comprehensive cover-
age and explain how consumers can find
resources when they have questions about
the different coverage options. As stated
in the preamble to the 2023 proposed
rules, the Departments are concerned
about consumers who mistakenly enroll in
fixed indemnity excepted benefits cover-
age in lieu of comprehensive coverage and
are therefore at risk of significant financial
liability because their health care costs
may greatly exceed the fixed cash benefit
245
471 U.S. 626 (1985).
246
585 U.S. 755 (2018).
247
See also Pharmaceutical Care Management Association v. Rowe, 429 F.3d 294, 316 (1st Cir. 2005)

May 6, 2024 1016 Bulletin No. 2024–19
to which they may be entitled—if benefits
are even provided for their health-related
event.
248
Accordingly, the notices adopted
in these final rules serve a legitimate gov-
ernment interest, are justified, and are
reasonably related to these government
interests.
Furthermore, these notices do not
unduly burden plan or issuer speech
because nothing in the final rules would
“drown out” a plan’s or issuer’s own mes-
sage or “effectively rule out” any mode
of communication.
249
Plans and issuers
remain free to communicate with consum-
ers using methods and media they have
always used or may choose to use in the
future. The burden associated with dis-
playing the applicable notice should be
low since the Departments have adopted
static language, meaning that the plan or
issuer does not have to tailor or modify the
Federal notice. For the reasons discussed
previously, the Departments are of the
view that informing consumers prior to
purchase or reenrollment of fixed indem-
nity excepted benefits coverage and direct-
ing them to resources to learn more about
the range of available coverage options is
highly related to the government’s afore-
mentioned interest in ensuring that con-
sumers make informed decisions.
The Departments are aware of some
complex fixed indemnity policies in the
individual market that pay benefits based
on extensive variable schedules and other
policies that promote a certain network of
providers. Such plan designs mimic com-
prehensive coverage and can skew a con-
sumer’s understanding of the nature and
extent of the fixed indemnity excepted
benefits coverage. The Departments pro-
vided examples of consumer confusion
regarding the limitations and exclusions
associated with fixed indemnity excepted
benefits coverage in the preamble to the
2023 proposed rules
250
and received addi-
tional examples from commenters. Some
commenters provided examples of benefit
designs that are modeled after comprehen-
sive coverage and may cause confusion,
including products requiring that enrollees
meet a deductible before benefits are paid,
making payments directly to providers, or
using provider networks that purport to
give the member a reduced or discounted
medical bill for using an in-network pro-
vider. The preamble to the 2023 proposed
rules also described certain arrangements
in the group market that the Departments
are concerned can mislead enrollees into
believing they have comprehensive cover-
age when that is not the case.
Both the draft notice that was pro-
posed for the group and individual mar-
kets in the 2023 proposed rules and the
version being finalized in these rules are
reasonably related and narrowly tailored
to the government’s interest in informing
consumers about the limitations of fixed
indemnity excepted benefits coverage, and
combating deceptive marketing practices
and potential sources of misinformation,
by directing consumers to appropriate
resources to learn more about the range
of available health coverage options.
251

The notices do not include irrelevant or
superfluous information unrelated to these
interests.
As the Departments explained in the
preamble to the 2023 proposed rules,
requiring plans and issuers to display
a notice on the first page of marketing,
application, and enrollment materials in
both markets plus on the first page of the
policy, certificate, or contract of insur-
ance in the individual market is justified
to ensure that the notice is provided on
documents that consumers are most likely
to have the opportunity to review before
application, enrollment, or reenrollment.
In the Departments’ view, requiring the
notice only on the first page of the applica-
tion is insufficient, as evidenced by ongo-
ing consumer confusion.
The Departments proposed to require
that plans and issuers prominently dis-
play the notice (in either paper or elec-
tronic form, including on a website) in
at least 14-point font on the first page of
any marketing, application, and enroll-
ment materials that are provided to par-
ticipants at or before the time participants
are given the opportunity to enroll in the
group market fixed indemnity excepted
benefit coverage. In addition, if partici-
pants are required to reenroll (in either
paper or electronic form) for purposes
of renewal or reissuance of group mar-
ket fixed indemnity excepted benefits
coverage, the Departments proposed that
the notice must be displayed in all reen-
rollment materials that are provided to
participants at or before the time partici-
pants are given the opportunity to reenroll
in coverage. The Departments explained
that they consider marketing materials to
include any documents or website pages
that advertise the benefits or offer an
opportunity to enroll (or reenroll) in group
market fixed indemnity excepted benefits
coverage. The Departments are finalizing
the proposed requirements related to the
placement of the group market consumer
notice as proposed.
HHS proposed slightly different place-
ment standards for the individual market
consumer notice. The requirements reflect
the differences between the types of doc-
uments that consumers typically receive
when considering enrolling or reenrolling
in fixed indemnity excepted benefits cov-
erage in the individual market compared
to participants in the group market. With
respect to individual market fixed indem-
nity excepted benefits coverage, HHS
proposed that issuers must also promi-
nently display the notice (in either paper
or electronic form) in at least 14-point
font on the first page of the policy, certif-
icate, or contract of insurance, including
renewals or extensions, because individ-
ual market consumers are likely to receive
those documents upon enrollment. This is
in addition to prominently displaying the
notice on the first page (in either paper or
electronic form) of any marketing, appli-
cation, and enrollment (or reenrollment)
materials for individual market fixed
indemnity excepted benefit coverage, and
prominently displaying the notice on web-
sites that advertise or offer an opportunity
to enroll (or reenroll) in such coverage.
HHS proposed the additional locations for
248
88 FR 44596 at 44606 (July 12, 2023).
249
See NIFLA, 138 S. Ct. at 2378.
250
88 FR 44596 at 44621-22 (July 12, 2023).
251
88 FR 44625 “[T]he Departments aim to reduce the potential for consumers to mistakenly enroll in hospital indemnity or other fixed indemnity insurance as their primary source of coverage
and increase consumer understanding of the differences between fixed indemnity excepted benefits coverage and comprehensive coverage.”

Bulletin No. 2024–19 1017 May 6, 2024
display, rather than just application mate-
rials as required in the 2014 final rule, due
to concern of ongoing consumer confu-
sion.
These proposals related to notice
placement were intended to ensure that
the notice is provided on documents that
consumers are most likely to have the
opportunity to review before application,
enrollment, or reenrollment, based on
the Departments’ understanding of how
consumers receive information related to
group market versus individual market
fixed indemnity excepted benefits cov-
erage. HHS is finalizing the proposed
requirements related to placement of the
individual market consumer notice as pro-
posed.
Many commenters supported the pro-
posed placement of the notices in market-
ing, application, and enrollment and reen-
rollment materials, including websites
and materials shared electronically. Some
commenters also generally stated that the
notices should be provided early and often
so that consumers are not confronted with
notice or warning language only after
selecting a plan for purchase.
Some commenters expressed opposi-
tion to including the applicable notice with
all marketing, application, and enrollment
materials, suggesting such requirements
are excessive and may reduce the impact
of the notice. These commenters recom-
mended the notice be provided in only the
enrollment materials or using the exist-
ing individual market standard, which
requires placement in the application
materials only.
The Departments are finalizing the pro-
posed standards regarding the placement
and applicable materials on which the
group market notice must appear without
modification. HHS is similarly finaliz-
ing the proposed standards regarding the
placement and applicable materials on
which the revised individual market notice
must appear without modification. The
Departments disagree with the comment-
ers who stated that including the notice
on all of these materials is excessive and
may reduce the impact of the notice itself.
Including the notice on the first page (in
either paper or electronic form, including
on a website) of any marketing, applica-
tion, and enrollment (or reenrollment)
materials (as well as, in the individual
market, the policy, certificate, or contract
of insurance) is intended to ensure that
the notice is provided on documents that
consumers are most likely to have the
opportunity to review before application,
enrollment or reenrollment. To achieve
this, as some commenters pointed out, it is
important that the notice be available both
early in the enrollment (or reenrollment)
process and often.
Therefore, it is the Departments’ view
that requiring the notice in several loca-
tions – rather than just the enrollment
materials or only in the application – is
not excessive due to the goal of maxi-
mizing consumers’ opportunity to review
the notice throughout their decision-mak-
ing process, which is likely to increase
the impact of the notice. The repetition
will also help mitigate the potential for
consumers to mistakenly enroll in fixed
indemnity excepted benefits coverage
as a substitute for comprehensive cover-
age and will help combat deceptive mar-
keting practices and potential sources of
misinformation by directing consumers to
appropriate resources to learn more about
the range of available health coverage
options.
The Departments recognize that pro-
viding notices imposes costs on plans
and issuers and identified other scenarios
where the benefits to consumers would
be minimal and do not justify the admin-
istrative burden on plans and issuers to
provide the notice. Specifically, these final
rules do not require plans and issuers to
provide the notice to beneficiaries, as well
as participants, in the group market. In the
Departments’ view, requiring plans and
issuers offering fixed indemnity excepted
benefits coverage in the group market to
provide notice to participants (rather than
to both participants and any beneficia-
ries) appropriately balances the need to
ensure that participants who are consider-
ing whether to enroll themselves and their
beneficiaries in such coverage are suffi-
ciently informed of their health coverage
options with the administrative burden on
plans and issuers to provide the notice.
In addition, because the group policy,
certificate, or contract of insurance in the
group market is often provided to the plan
sponsor or the group health plan adminis-
trator, these final rules do not require that
plans and issuers include the consumer
notice in those documents for group mar-
ket fixed indemnity excepted benefits
coverage because doing so would not sup-
port the goal of ensuring that the consum-
ers themselves receive the information
so they can make an informed decision
before enrolling (or reenrolling) in cov-
erage. Similarly, in the individual market,
HHS did not propose and is not finalizing
a requirement for the notice to be provided
to dependents of the individual enrolling
in coverage. Instead, the individual market
notice must be provided only to the poli-
cyholder.
The Departments proposed and are
finalizing that the group market notice
must be prominently displayed in at least
14-point font on the first page of any appli-
cable marketing, application or enroll-
ment materials.
252
Consistent with the
approach outlined in the 2023 proposed
rules, under these final rules, the Depart-
ments consider a notice to be prominently
displayed if it is easily noticeable to a typ-
ical consumer within the context of the
page (either paper or electronic) on which
it is displayed (for example, using a font
color that contrasts with the background
of the document; ensuring the notice is not
obscured by any other written or graphic
content on the page; and, when displayed
on a website, ensuring the notice is visible
without requiring the viewer to click on a
252
As previously discussed in this section III.B.1 of this preamble, the Departments are finalizing the proposed requirements regarding the placement and materials on which the group market
notice must appear without modification. As such, the group market notice must be prominently displayed on all marketing, application, and enrollment (or reenrollment) materials. The notice
must also be prominently displayed on websites that advertise or offer an opportunity to enroll (or reenroll) in group market fixed indemnity excepted benefits coverage.
253
As previously discussed in this section III.B.1 of this preamble, HHS is finalizing the proposed requirements regarding the placement and materials on which the individual market notice
must appear without modification. As such, the revised individual market notice must be prominently displayed on the first page of the policy, certificate, or contract of insurance, as well as on
all marketing, application, and enrollment (or reenrollment) materials. The notice must also be prominently displayed on websites that advertise or offer an opportunity to enroll (or reenroll)
in individual market fixed indemnity excepted benefits coverage.

May 6, 2024 1018 Bulletin No. 2024–19
link to view the notice). HHS proposed,
and is finalizing, the same prominent dis-
play requirements for the individual mar-
ket notices that must appear on the first
page of any applicable materials.
253
Some commenters supported the pro-
posal that the notices be prominently
displayed on the first page of applicable
materials in at least 14-point font. Another
commenter suggested that instead of the
14-point font standard, the Departments
should require that the notices are “easily
noticeable to a typical consumer within
the context of the page.” One commenter
recommended that when fixed indemnity
excepted benefits coverage is sold as part
of a bundled package, the applicable notice
should be displayed on the front page of
the bundled package, not just on the first
page of fixed indemnity material, to help
consumers see the notice instead of hav-
ing it be embedded among many pages of
material. One commenter stated that State
regulators will often require pre-approval
of any materials if the issuer adds any lan-
guage to a previously approved insurance
document, and that commenter requested
that issuers have the flexibility to provide
the required consumer notice on a sepa-
rate document rather than the first page of
the marketing, application, or enrollment
(or reenrollment) materials.
The Departments agree with comment-
ers who supported the prominent display
of the notice on the first page of applica-
ble materials in at least 14-point font. The
Departments are of the view that this will
help ensure that the notice is displayed in
a location and font size that consumers are
likely to see and will do so more effec-
tively than a less subjective standard like
an “easily noticeable” standard. The indi-
vidual market regulations have required
the prominent display of the notice in at
least 14-point font and the Departments
maintain that standard for simplicity and
consistency.
The Departments appreciate the
suggestion that when fixed indemnity
excepted benefits coverage is sold as part
of a bundled package, the notice should
be displayed on the front page of the bun-
dled package, not just on the first page of
fixed indemnity material, to help consum-
ers see the notice instead of having it be
embedded among many pages of mate-
rial. However, in some cases, placing the
notice on the front of such a bundle may
lead to increased consumer confusion if,
for example, the consumer is unclear as to
which insurance sold as part of the bundle
is described in the notice. Therefore, the
Departments decline to adopt a standard
that requires the notice be displayed on the
front page of a bundled package.
Likewise, the Departments decline to
specify the manner in which materials
must be presented to States for review and
approval including approval of new lan-
guage in a previously approved document.
Issuers should work with States to deter-
mine which pages that include the notice
must be submitted to the State for review
and approval, the manner of submission,
and how to verify that the submission is
the first page of the material.
The Departments are finalizing the pro-
posal that the group market notice must be
prominently displayed in at least 14-point
font on the first page of the applicable
materials, and HHS is finalizing the par-
allel proposal for prominent display of the
individual market notice on the first page
of the applicable materials.
The existing notice requirement, which
currently applies only in the individual
market, requires that the following lan-
guage be provided in application materials
in at least 14-point type:
THIS IS A SUPPLEMENT TO
HEALTH INSURANCE AND IS NOT
A SUBSTITUTE FOR MAJOR MEDI-
CAL COVERAGE. LACK OF MAJOR
MEDICAL COVERAGE (OR OTHER
MINIMUM ESSENTIAL COVERAGE)
MAY RESULT IN AN ADDITIONAL
PAYMENT WITH YOUR TAXES.
To align the notice with the changes
made by the Tax Cuts and Jobs Act to
section 5000A of the Code (reducing the
individual shared responsibility payment
to $0), and to clarify the message to con-
sumers, the 2023 proposed rule proposed
revisions to the individual market notice
and solicited comments on two options
for the notice. As previously discussed,
the Departments also proposed to adopt a
new notice provision for the group market
and solicited comments on the same two
options for the group market notice.
The first option (Format A) was as fol-
lows:
Notice to Consumers About Fixed Indemnity Insurance
IMPORTANT: This is fixed indemnity insurance. This isn’t comprehensive health insurance and doesn’t have to include
most Federal consumer protections for health insurance.
Visit HealthCare.gov online or call 1-800-318-2596 (TTY: 1-855-889-4325) to review your options for comprehensive health
insurance. If you’re eligible for coverage through your employer or a family member’s employer, contact the employer for
more information. Contact your State department of insurance if you have questions or complaints about this policy.
The second option (Format B) was as follows:
WARNING
This is not comprehensive health insurance. This is fixed indemnity insurance.
This may provide a cash benefit when you are sick or hospitalized. It is not intended to cover the cost of your care.
Contact your State department of insurance if you have questions or complaints about this policy.
For info on comprehensive health insurance coverage options:
• Visit HealthCare.gov online or call 1-800-318-2596 (TTY: 1-855-889-4325)
• Contact your employer or family member’s employer

Bulletin No. 2024–19 1019 May 6, 2024
One commenter stated that the gen-
eral promise of a cash benefit on Format
B could be read too broadly by a con-
sumer with low health insurance liter-
acy. Another commenter suggested that
the phrase “Important Notice – Please
Read Carefully” should appear at the top
of the notice because that phrase would
better catch the attention of consumers
and inform them that this is important
information that they should consider
prior to making a decision. Another
commenter suggested the notice should
include the words “by law” before the
phrase “does not have to include” most
Federal consumer protections on Format
A to make it clear that this coverage, by
law, is not subject to the ACA or other
Federal health coverage mandates. Sev-
eral commenters indicated that informa-
tion on the notice should be provided in a
bulleted format to ensure that all factors
are clearly listed. Some commenters rec-
ommended adopting Format B for greater
accessibility and stated that version is
written more concisely and in plain lan-
guage. One commenter suggested For-
mat B provides clarity to the reader about
the nature of the insurance product by
using the term “WARNING” instead of
“IMPORTANT.”
Other commenters opposed the use of
Format B, stating that this option was mis-
leading, confusing, and inaccurate. Sev-
eral commenters suggested that the use
of the term “WARNING” inappropriately
implies that the coverage is inherently
dangerous, noting that in other Federal
labeling requirements, the use of the term
“WARNING” is limited to extreme situa-
tions where the product itself is inherently
unsafe. These commenters stated that hos-
pital indemnity or other fixed indemnity
insurance is not inherently hazardous or
harmful, and the term “IMPORTANT”
would be more appropriate and accurate.
Some commenters stated that Format B
included language regarding covering the
cost of care, which is not entirely accurate,
and that the language suggests the policy
is subject to, but avoiding, Federal cover-
age mandates. Those commenters stated
that Format B may therefore exacerbate
consumer confusion.
In response to the comments on the
proposed content for the notices and the
different formats outlined in the 2023
proposed rules, HHS performed con-
sumer testing to evaluate commenters’
suggestions and better understand how
the different formats for the notice could
be interpreted by consumers. This con-
sumer testing found that some consum-
ers were unclear on the meaning of the
phrase “cash benefit” within the context
of the notice in Format B. Consumers also
reported they were confused by the phrase
“it is not intended to cover the cost of your
care” in Format B of the proposed notice;
some consumers noted that phrase only
referred to their out-of-pocket costs that
may be associated with the policy, such
as a deductible or copay. The consumer
testing also revealed that consumers pre-
fer “IMPORTANT” and viewed “WARN-
ING” as too strong. They stated that
“IMPORTANT” was sufficient to draw
their attention to the notice, and that add-
ing the words “by law” before the phrase
regarding Federal consumer protections
was superfluous and not necessary.
In response to comments stating that
Format B was written more concisely and
in plain language, as well as the results of
the consumer testing and feedback from
plain language experts, the Departments
are finalizing a modified version of For-
mat B. The modified version provides
information using a bulleted format to
ensure all information is clearly listed, as
commenters recommended.
The Departments modified Format B
to address comments that claimed that
format was misleading, confusing, and
inaccurate. The finalized notice does not
include the phrase “cash benefit” or “by
law” or the word “Warning.” HHS is sim-
ilarly not including these same phrases in
the individual market notice that is final-
ized in these final rules. The Departments
also decline to add “Important Notice
– Please Read Carefully” because con-
sumer testing revealed that including the
word “IMPORTANT” in all uppercase
was sufficient to identify the applicable
notice as a document that should be read.
The Departments have revised the group
market notice language to include “You’re
still responsible for paying the cost of your
care” because consumers who were tested
understood that terminology better than
the proposed phrase “It is not intended
to cover the cost of your care” included
in Format B of the proposed notice. In
addition to that phrase, the Departments
are also adding the statement “The pay-
ment you get isn’t based on the size of
your medical bill” to highlight that the
fixed indemnity excepted benefit is a fixed
payment amount and not related to the
billed amount. For the same reason, the
Departments have also revised the group
market notice language to state “Since this
policy isn’t health insurance, it doesn’t
have to include most [F]ederal consumer
protections that apply to health insur-
ance,” rather than the proposed statement
in Format B of the proposed notice that
the policy “doesn’t have to include most
Federal consumer protections for health
insurance.” The revised phrasing avoids
suggesting that the policy is subject to,
but avoiding, the Federal consumer pro-
tections and requirements applicable to
comprehensive coverage. HHS is adopt-
ing the same revisions to the language in
the revised individual market consumer
notice.
The Departments welcomed comments
on any benefits or burdens that would
be associated with including informa-
tion to direct consumers to State-specific
resources as part of the notice, including
identifying the applicable State Exchange
if the fixed indemnity excepted benefits
coverage is filed in a State that does not
use HealthCare.gov. The Departments
also welcomed comments on any bur-
dens that would be created by providing
State-specific contact information for the
State agency responsible for regulating
fixed indemnity excepted benefits cov-
erage in the State where the coverage is
filed, rather than a generic reference to
the consumer’s State department of insur-
ance, as proposed in both Format A and
Format B. For products that are filed in
multiple States, the Departments solicited
comments on whether the notice should
include the name and phone number for
the State department of insurance of the
State in which the individual to whom the
fixed indemnity excepted benefits cover-
age is sold or marketed resides, unless the
product is not filed in that State. Under this
approach, if the product is not filed in the
State in which the individual to whom the
fixed indemnity excepted benefits cover-
age is sold or marketed resides, the notice
would need to include the name and phone
number for the department of insurance

May 6, 2024 1020 Bulletin No. 2024–19
of the State in which the fixed indemnity
excepted benefits coverage policy is filed.
Several commenters supported includ-
ing State-specific details in the notice,
including contact information for the
State’s Exchange and department of insur-
ance. One commenter strongly supported
including State-specific contact informa-
tion in the notice, to ensure that consum-
ers have access to the resources they need
to understand their hospital indemnity and
other fixed indemnity insurance policy.
Other commenters opposed customiza-
tion of the notice to include State-specific
resources, stating customization would
increase administrative burden and cost
and potentially create consumer confusion.
One commenter noted that some companies
that make fixed indemnity excepted ben-
efits products available in multiple States
often use universally applicable brochures
for those products, and those issuers would
be required to stop longstanding, efficient
marketing and enrollment processes with
little benefit to consumers, who can easily
obtain State-specific contact information
elsewhere.
One commenter did not support the
inclusion of contact information for each
State department of insurance but rec-
ommended that the Departments con-
sider directing consumers to the NAIC’s
online directory, available at naic.org. The
Departments did not receive comments
regarding which State agency’s contact
information should be included for prod-
ucts that are filed in multiple States.
In developing the notice language, the
Departments sought to balance the goals
of distinguishing fixed indemnity excepted
benefits coverage from comprehensive
coverage, combatting deceptive marketing
practices, and reducing misinformation by
directing consumers to appropriate resources
to learn about the range of available cover-
age options, with the need to provide a con-
cise, understandable notice that would be
meaningful and useful to consumers. The
Departments understand commenters’ con-
cerns regarding the burden associated with
customizing notices to include State-spe-
cific information. However, the Depart-
ments also recognize the value of including
State-specific information, such as appropri-
ate contact information if the consumer has
questions or wants more information about
available coverage options.
After consideration of comments and
the results of consumer testing, the Depart-
ments are finalizing changes to the notice
to incorporate uniform language as part of
the required content for the Federal notices
that directs individuals to an NAIC web-
page where they can find the contact infor-
mation for the applicable State regulatory
agency. As discussed in section III.A.4
of this preamble, the inclusion of the
NAIC link in the notice does not consti-
tute an endorsement by the Departments.
Since the Departments are not requiring
State-specific contact information on the
Federal notice, the Departments decline to
specify a certain agency’s contact informa-
tion that should be included for products
that are filed in multiple States.
The Departments are also incorporating
static language as part of the content for
the group market notice in these final rules
that direct individuals to HealthCare.gov,
where individuals can navigate to their
State’s Exchange, whether a Federally-fa-
cilitated Exchange, State Exchange on the
Federal platform or a State Exchange. HHS
is adopting similar static language for the
individual market notice. This approach
is intended to balance the desire to ensure
individuals can access State-specific infor-
mation with not increasing the burden
on plans and issuers associated with the
development of customized notices that
provide State-specific information.
The Departments also solicited com-
ments on whether it would be beneficial
to consumers to require plans and issu-
ers to include language on the notice that
clearly informs consumers that the notice
is an officially required document, such as
“This notice is required by Federal law.”
The Departments did not receive comments
regarding inclusion of that phrase on the
required notice for fixed indemnity excepted
benefits coverage but performed consumer
testing on notices that included the phrase.
Consumer testing revealed that some con-
sumers stated that including that phrase at
the bottom of the notice was helpful and
that it made the information on the notice
seem more legitimate, while other consum-
ers stated the phrase meant the fixed indem-
nity excepted benefits policy itself was
endorsed by the Federal Government. Given
the potential for consumer confusion, the
Departments are not including a statement
that the notice is required by Federal law.
In response to comments and after
consideration of the results from the con-
sumer testing, to enhance readability, the
Departments made several changes to
incorporate a combination of the language
from both Format A and Format B in the
2023 proposed rules and are finalizing the
following content for the group market
notice:
IMPORTANT: This is a fixed indemnity policy, NOT health insurance
This fixed indemnity policy may pay you a limited dollar amount if you’re sick or hospitalized. You’re still responsible for paying the
cost of your care.
• The payment you get isn’t based on the size of your medical bill.
• There might be a limit on how much this policy will pay each year.
• This policy isn’t a substitute for comprehensive health insurance.
• Since this policy isn’t health insurance, it doesn’t have to include most Federal consumer protections that apply to health insurance.
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
• If you have this policy through your job, or a family member’s job, contact the employer.

Bulletin No. 2024–19 1021 May 6, 2024
HHS is finalizing the same content for
the revised individual market notice for
fixed indemnity excepted benefits cover-
age.
Some commenters recommended
requiring that the formatting of the notice
be accessible to people with a range of
disabilities and that it be made available
in the most commonly spoken languages
in each State. The Departments agree that
it is important that the notices are accessi-
ble and understandable to individuals with
disabilities, as well as to individuals with
limited English proficiency. The Depart-
ments are mindful of the challenges faced
by individuals with physical, sensory, or
cognitive disabilities, including but not
limited to individuals who use screen
readers and other assistive technology.
While the Departments did not pro-
pose and are not finalizing accessibility
or language access standards specific to
these notices as part of this rulemaking,
the Departments remind plans and issuers
that they are required to comply with other
State and Federal laws establishing acces-
sibility and language access standards to
the extent applicable. For example, recip-
ients of Federal financial assistance must
comply with Federal civil rights laws that
prohibit discrimination. These laws may
include section 1557 of the Affordable
Care Act,
254
title VI of the Civil Rights
Act of 1964,
255
section 504 of the Rehabil-
itation Act of 1973,
256
and the Americans
with Disabilities Act of 1990.
257
Section
1557 and title VI require covered entities
to take reasonable steps to ensure mean-
ingful access to individuals with limited
English proficiency, which may include
provision of language assistance services
such as written translation of written con-
tent, in paper or electronic form into lan-
guages other than English. Sections 1557
and 504 require covered entities to take
appropriate steps to ensure effective com-
munication with individuals with disabil-
ities, including provision of appropriate
auxiliary aids and services at no cost to
the individual. Auxiliary aids and services
may include interpreters, large print mate-
rials, accessible information and com-
munication technology, open and closed
captioning, and other aids or services for
persons who are blind or have low vision,
or who are deaf or hard of hearing. Addi-
tionally, section 508 of the Rehabilitation
Act of 1973 requires that information pro-
vided through information and communi-
cation technology also must be accessible
to individuals with disabilities unless cer-
tain exceptions apply.
2. Technical Amendment
HHS proposed a technical amendment
to the individual market excepted benefits
rules to remove the existing requirement at
45 CFR 148.220(b)(4)(i) that fixed indem-
nity excepted benefits coverage must be
provided only to individuals who attest,
in their fixed indemnity insurance applica-
tion, that they have other health coverage
that is MEC, or that they are treated as hav-
ing MEC due to their status as a bona fide
resident of any possession of the United
States pursuant to section 5000A(f)(4)(B)
of the Code. This proposal would strike
from the regulatory text the provision that
was vacated in Central United Life Ins.
Co. v. Burwell.
258
HHS did not receive
any comments regarding this proposed
technical amendment and is finalizing as
proposed. HHS is also finalizing the pro-
posed conforming amendments to 45 CFR
148.220 to redesignate paragraphs (b)(4)
(ii) through (iv) as paragraphs (b)(4)(i)
through (iii).
259
3. Applicability Dates
The Departments proposed that the
new group market notice provisions would
apply to both new and existing group mar-
ket fixed indemnity excepted benefits cov-
erage for plan years beginning on or after
the effective date of the final rules. HHS
proposed a similar applicability date for
the revised individual market fixed indem-
nity excepted benefits coverage notice.
After consideration of comments, the
Departments are finalizing delayed appli-
cability dates for the notices, such that
plans and issuers will be required to com-
ply with the notice provisions finalized in
these rules for plan years (in the individ-
ual market, coverage periods) (including
renewals) beginning on or after January
1, 2025. To streamline the regulatory text,
the Departments are finalizing the applica-
bility date for the notice provision for fixed
indemnity excepted benefits coverage in
the group market at 26 CFR 54.9831-1(c)
(4)(ii)(D), 29 CFR 2590.732(c)(4)(ii)(D),
and 45 CFR 146.145(b)(4)(ii)(D) rather
than at 26 CFR 54.9831-1(c)(4)(iv), 29
CFR 2590.732(c)(4)(iv), and 146.145(b)
(4)(iv), as proposed. HHS is finalizing
the applicability date for the notice provi-
sions for fixed indemnity excepted benefit
coverage in the individual market at 45
CFR 148.220(b)(4)(iii),
260
rather than at
148.220(b)(4)(iv).
Several commenters supported issuing
updated notices to existing policyholders
by applying the notice provisions finalized
in these rules to coverage periods (includ-
ing renewals) beginning on or after Janu-
ary 1, 2025. Other commenters stated the
notice provisions should not apply before
January 1, 2027, for all individual and
group coverage, regardless of when the
coverage is issued or sold. Some com-
menters urged the Departments to apply
the notice provisions only to new cov-
erage sold after the effective date of the
final rules, alleging that the application to
existing coverage would be impermissi-
bly retroactive. Those commenters stated
that applying the notice to existing poli-
cies would inappropriately interfere with
a covered individual’s current contract
and their choice to continue the policy.
Some commenters asserted that imposing
254
42 U.S.C. 18116.
255
42 U.S.C. 2000d et seq.
256
29 U.S.C. 794.
257
42 U.S.C. 12101 et seq.
258
827 F.3d 70 (D.C. Cir. 2016).
259
These provisions are being redesignated without any changes to the regulatory text.
260
Under 45 CFR 148.220(b)(4)(iii)(B) of these final rules, the notice in § 148.220(b)(4)(iv) contained in 45 CFR part 148, revised as of October 1, 2023, continues to apply to individual
market fixed indemnity excepted benefits coverage for coverage periods beginning before January 1, 2025. However, HHS will not consider insurance to fail to be fixed indemnity excepted
benefits coverage in the individual market under the Federal framework if an issuer adopts the revised notice in these final rules for coverage periods beginning before January 1, 2025. HHS
encourages States to adopt a similar approach if their issuers elect to adopt the revised notice for coverage periods that begin before January 1, 2025.

May 6, 2024 1022 Bulletin No. 2024–19
the notice provision on existing policies
would be confusing and impractical.
Another commenter recommended the
applicability date for the notice provi-
sion for new coverage should be at least
24 months after publication of the final
rules, to allow issuers time to update and
refile products and marketing materials to
reflect the necessary changes and provide
State regulators with the time necessary to
review and approve products and updated
marketing materials. The commenters
stated that it would be extremely difficult
or impossible for issuers of group market
coverage to make the required changes for
notices to all marketing and enrollment
materials for hospital indemnity and other
fixed indemnity products before the effec-
tive date of these final rules. One com-
menter stated that it would be impossible
for issuers of individual market coverage
to comply with the proposed applicability
dates because of the length of time nec-
essary to obtain State-level approval for
revised individual insurance contracts.
The Departments decline to extend the
applicability date to January 1, 2027, as
suggested by some commenters. In the
Departments’ view the benefits of provid-
ing the notice to consumers at an earlier
time outweighs the burden on plans and
issuers to incorporate the notice by the
delayed applicability date for plan years
(in the individual market, coverage peri-
ods) (including renewals) beginning on
or after January 1, 2025. To minimize the
burden, the Departments are finalizing
notices that cannot be modified or custom-
ized; therefore, plans and issuers will not
have to spend time or resources to develop
their own notices to comply with the Fed-
eral notice standard. Plans and issuers
may need to modify their website or other
marketing materials to comply with the
Federal notice standard and may need to
submit materials for State review, but the
Departments do not agree with comment-
ers that those modifications require 24
months or more.
The Departments also disagree with
commenters who stated that applying the
notice to existing policies would inappro-
priately interfere with a covered individ-
ual’s current contract. The notice does
not change the terms of the contract to
which the issuer and policyholder agreed.
The notice will be provided to a currently
covered individual at the time of renewal;
therefore, there is no interference with a
current contract, and the notice does not
prevent an individual from renewing or
reenrolling in fixed indemnity excepted
benefits coverage. The Departments there-
fore disagree that the application of the
notice provisions to existing enrollees
at the time of renewal or reenrollment
is impermissibly retroactive because it
applies to future coverage periods and
does not take away or impair vested
rights or create new obligations or duties
with respect to past transactions. The
Departments also disagree that applying
the notice provisions to existing policies
would be confusing and impractical. The
Departments are of the view that consum-
ers should have information about the
range of available coverage options and
have an opportunity to reconsider their
coverage options. The notice standard
under these final rules allows consumer
to make an informed decision whether to
maintain their existing fixed indemnity
excepted benefits coverage and whether
to also pursue or maintain comprehensive
coverage.
The Departments are not persuaded
by comments suggesting it would be
extremely difficult or impossible for plans
and issuers to make changes to incorpo-
rate the applicable notice in all applica-
ble materials for hospital indemnity and
other fixed indemnity products before
the proposed applicability date, which
was the effective date of these final rules.
Nevertheless, after consideration of the
comments requesting additional time
to modify marketing materials and plan
documents, the Departments are finaliz-
ing an applicability date for the notices
adopted under these final rules to apply in
the group and individual markets of plan
years (in the individual market, coverage
periods) (including renewals) beginning
on or after January 1, 2025.
261
The Departments proposed that the
severability provisions described in sec-
tion IV of this preamble would apply
to both new and existing group market
fixed indemnity excepted benefits cov-
erage beginning on the effective date of
these final rules. HHS proposed that the
technical amendment described in sec-
tion III.B.2 of this preamble and the sev-
erability provisions described in section
IV of this preamble would apply to both
new and existing individual market fixed
indemnity excepted benefits coverage on
the effective date of these final rules. HHS
is only finalizing the technical amendment
to remove the language in existing 45
CFR 148.220(b)(4)(i) and make conform-
ing amendments to redesignate paragraphs
(b)(4)(ii) through (iv) as paragraphs (b)(4)
(i) through (iii).
HHS did not receive comments related
to the applicability date for the technical
amendments it is finalizing in these final
rules or severability provision in the indi-
vidual market regulations and is finalizing
them as proposed. The Departments are
also finalizing as proposed the applicabil-
ity date for the group market severability
provisions.
IV. Severability
The Departments are finalizing
amendments to the Federal definition of
“short-term, limited-duration insurance”
and certain regulatory provisions regard-
ing the requirements for hospital indem-
nity and other fixed indemnity insurance
to qualify as an excepted benefit in the
group or individual market, for the pur-
pose of distinguishing STLDI and fixed
indemnity excepted benefits coverage
from comprehensive coverage. The
Departments’ authority to finalize and
adopt these amendments is well-estab-
lished in law and practice and should be
upheld in any legal challenge. However,
in the event that any portion of these final
rules is declared invalid, the Departments
intend that the other provisions, which
could still function sensibly, would be
severable.
261
HHS reminds issuers that the existing individual market notice for fixed indemnity excepted benefits coverage, codified in 45 CFR 148.220(b)(4)(iv), revised as of October 1, 2023, con-
tinues to apply for coverage periods beginning before January 1, 2025. However, HHS will not consider insurance to fail to be fixed indemnity excepted benefits coverage in the individual
market under the Federal framework if an issuer adopts the revised notice in these final rules for coverage periods beginning before January 1, 2025. HHS encourages States to adopt a similar
approach if their issuers elect to adopt the revised notice for coverage periods that begin before January 1, 2025.

Bulletin No. 2024–19 1023 May 6, 2024
Specifically, if any provision final-
ized in these final rules related to STLDI
is held to be invalid or unenforceable by
its terms, or as applied to any person or
circumstance, or stayed pending further
agency action, it shall be considered sev-
erable from its section and other sections
of these rules; and it shall not affect the
remainder thereof or the application of the
provision to other entities not similarly
situated or to dissimilar conditions. Thus,
if a court were to find the portion of the
STLDI definition that limits stacking, the
portion of the STLDI definition that estab-
lishes a Federal consumer notice, or any
other aspect of the revised Federal STLDI
definition to be unlawful, the Departments
intend the remaining aspects of these final
rules related to STLDI to stand.
Similarly, if any finalized provision in
this rulemaking related to group or indi-
vidual market fixed indemnity excepted
benefits coverage is held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, or stayed
pending further agency action, it shall be
considered severable from its section and
other sections of these rules; and such
invalidation shall not affect the remainder
thereof or the application of the provision
to other entities not similarly situated or to
dissimilar conditions.
The Departments also intend for the
STLDI amendments in this rulemaking
to be severable from the fixed indemnity
excepted benefits coverage amendments,
and vice versa.
The Departments did not receive any
comments on the proposed group market
severability provisions and are finalizing
the proposed severability provisions as
proposed. HHS also did not receive any
comments on the proposed individual
market severability provision and is final-
izing that provision as proposed.
V. Regulatory Impact Analysis
A. Summary – Departments of Health and
Human Services and Labor
These final rules revise the Federal
definition of STLDI for new policies, cer-
tificates, or contracts of insurance sold or
issued on or after September 1, 2024, to
provide that the coverage must have an
expiration date specified in the policy,
certificate, or contract of insurance that is
no more than 3 months after the original
effective date. These final rules also revise
the Federal definition of STLDI so that the
maximum total coverage duration, taking
into account any renewals or extensions,
is no longer than 4 months. For purposes
of this definition, a renewal or extension
includes the term of a new STLDI policy,
certificate, or contract of insurance issued
by the same issuer or, if the issuer is a
member of a controlled group, any other
issuer that is a member of such controlled
group, to the same policyholder within the
12-month period beginning on the origi-
nal effective date of the initial policy, cer-
tificate, or contract of insurance.
For new STLDI – meaning policies,
certificates, or contracts of STLDI sold or
issued on or after September 1, 2024 – the
amendments to the definition of STLDI
addressing maximum term and duration
in these final rules apply for coverage
periods beginning on or after September
1, 2024. Under these final rules, existing
STLDI – meaning policies, certificates, or
contracts of STLDI sold or issued before
September 1, 2024 (including any subse-
quent renewals or extensions consistent
with applicable law) – may continue to
have an initial contract term of less than
12 months and a maximum duration of
up to 36 months (taking into account any
renewals or extensions), subject to any
limits under applicable State law.
These final rules further revise the Fed-
eral definition of STLDI to provide that a
revised notice must be prominently dis-
played (in either paper or electronic form)
in at least 14-point font on the first page
of the policy, certificate, or contract of
insurance and in any marketing, applica-
tion, and enrollment materials, including
for renewals or extensions (including on
websites that advertise or enroll individ-
uals in STLDI). These notice provisions
apply for both new and existing STLDI
for coverage periods beginning on or after
September 1, 2024.
Additionally, these final rules amend
the regulations regarding fixed indemnity
excepted benefits coverage in the indi-
vidual market to provide that a revised
notice must be prominently displayed
(in either paper or electronic form) on
the first page of the policy, certificate, or
contract of insurance, and any market-
ing, application, and enrollment (or reen-
rollment) materials that are provided at
or before the time an individual has the
opportunity to apply, enroll, or reenroll
in coverage. These final rules also amend
the regulations regarding fixed indemnity
excepted benefits coverage in the group
market to provide that a notice must be
prominently displayed (in either paper or
electronic form) on the first page of any
marketing, application, and enrollment
(or reenrollment) materials that are pro-
vided to participants at or before the time
participants are given the opportunity to
enroll (or reenroll) in the coverage. These
notice provisions for group and individ-
ual market fixed indemnity excepted ben-
efits coverage are applicable to both new
and existing coverage with respect to plan
years (in the individual market, coverage
periods) beginning on or after January 1,
2025.
The Departments are finalizing the
proposed severability provisions and HHS
is also finalizing technical and conform-
ing amendments to the individual mar-
ket regulation regarding fixed indemnity
excepted benefits coverage, which are not
expected to have a material impact.
The Departments have examined the
effects of these final rules as required
by Executive Order 12866 on Regula-
tory Planning and Review (September
30, 1993),
262
Executive Order 13563 on
Improving Regulation and Regulatory
Review (January 18, 2011),
263
Executive
Order 14094 (April 6, 2023),
264
the Reg-
ulatory Flexibility Act (RFA) (Septem-
ber 19, 1980, Pub. L. 96– 354), section
1102(b) of the Social Security Act, section
202 of the Unfunded Mandates Reform
Act of 1995 (March 22, 1995, Pub. L.
104–4), Executive Order 13132 on Fed-
eralism (August 4, 1999),
265
and the Con-
gressional Review Act (5 U.S.C. 804(2)).
262
Executive Order 12866 of September 30, 1993, 58 FR 51735 (October 4, 1993).
263
Executive Order 13563 of January 18, 2011, 76 FR 3821 (January 21, 2011).
264
Executive Order 14094 of April 6, 2023, 88 FR 21879 (April 11, 2023).
265
Executive Order 13132 of August 4, 1999, 64 FR 43255 (August 10, 1999).

May 6, 2024 1024 Bulletin No. 2024–19
B. Executive Orders 12866, 13563, and
14094 – Departments of Health and
Human Services and Labor
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory alterna-
tives and, if regulation is necessary, to
select regulatory approaches that maxi-
mize net benefits (including potential eco-
nomic, environmental, public health and
safety effects, distributive impacts, and
equity). The Executive Order 14094 enti-
tled “Modernizing Regulatory Review”
amends section 3(f)(1) of Executive Order
12866 (Regulatory Planning and Review).
The amended section 3(f) of Executive
Order 12866 defines a “significant regu-
latory action” as an action that is likely to
result in a rule: (1) having an annual effect
on the economy of $200 million or more
in any 1 year (adjusted every 3 years by
the Administrator of the Office of Infor-
mation and Regulatory Affairs (OIRA)
of the Office of Management and Bud-
get (OMB) for changes in gross domes-
tic product), or adversely affecting in a
material way the economy, a sector of the
economy, productivity, competition, jobs,
the environment, public health or safety,
or State, local, Territorial, or Tribal gov-
ernments or communities; (2) creating a
serious inconsistency or otherwise inter-
fering with an action taken or planned by
another agency; (3) materially altering the
budgetary impacts of entitlement grants,
user fees, or loan programs or the rights
and obligations of recipients thereof;
or (4) raising legal or policy issues for
which centralized review would mean-
ingfully further the President’s priorities
or the principles set forth in Executive
Order 12866, as specifically authorized in
a timely manner by the Administrator of
OIRA in each case.
266
A regulatory impact analysis (RIA)
must be prepared for significant rules.
Based on the Departments’ estimates,
OMB’s OIRA has determined this
rulemaking is significant under section
3(f)(1) as measured by the $200 million
threshold in any 1 year. Therefore, OMB
has reviewed these rules, and the Depart-
ments have provided the following assess-
ment of their impact. With respect to Sub-
title E of the Small Business Regulatory
Enforcement Fairness Act of 1996, also
known as the Congressional Review Act,
OMB’s OIRA has also determined that
these rules fall within the definition pro-
vided by 5 U.S.C. 804(2).
1. Need for Regulatory Action
The 2018 final rules permit enrollment
in an STLDI policy with a total duration
that could extend up to 36 months (includ-
ing renewals or extensions). This insur-
ance might therefore be viewed as (and,
in some cases, has been deceptively mar-
keted as) a substitute for comprehensive
coverage, rather than as a way to bridge
a temporary gap in comprehensive cover-
age.
267
Evidence shows that the number
of consumers buying STLDI increased
following the effective date of the 2018
final rules. Data from the NAIC indicate
that the number of individuals covered
by STLDI in the individual market more
than doubled between 2018 and 2019,
from approximately 87,000 to 188,000,
and further increased to approximately
238,000 in 2020, before declining to
approximately 173,000 in 2021 following
the expansion of PTC subsidies provided
through the ARP.
268
The number of indi-
viduals covered by STLDI sold to individ-
uals (not enrolled as members of an asso-
ciation) rose once again in 2022, however,
to approximately 236,000.
269
While these
figures do not capture the total number of
individuals covered by STLDI throughout
each year (rather, only at the end of the
calendar year), and do not include individ-
uals covered by STLDI sold to or through
associations, they do show the trend of
increased enrollment in STLDI follow-
ing the implementation of the 2018 final
rules. Projections by the Congressional
Budget Office (CBO) and the Joint Com-
mittee on Taxation (JCT) suggest that 1.5
million people could currently be enrolled
in STLDI,
270
and CMS previously esti-
mated that 1.9 million individuals would
enroll in STLDI by 2023.
271
However, as
noted in section V.B.2.b of this preamble,
these projections were developed prior to
the expansion of PTC subsidies provided
through the ARP and the IRA.
Given that STLDI generally is not
subject to the Federal consumer protec-
tions and requirements for comprehensive
coverage applicable to individual health
insurance coverage, STLDI policies tend
to offer limited benefit coverage and have
relatively low actuarial values.
272
These
plans therefore expose enrollees to the
risk of high out-of-pocket health expenses
and medical debt.
273
In recent years, fixed indemnity insur-
ance is increasingly being designed to
resemble comprehensive coverage, and
consumers might therefore mistakenly
view it as a substitute for comprehensive
coverage rather than as an insurance pol-
icy that provides independent, noncoordi-
266
Executive Order 14094 of April 6, 2023, 88 FR 21879 at 21879 (April 11, 2023).
267
For one example of deceptive marketing practices, see Federal Trade Commission (2022). “FTC Action Against Benefytt Results in $100 Million in Refunds for Consumers Tricked into
Sham Health Plans and Charged Exorbitant Junk Fees,” available at: https://www.ftc.gov/news-events/news/press-releases/2022/08/ftc-action-against-benefytt-results-100-million-refunds-
consumers-tricked-sham-health-plans-charged.
268
National Association of Insurance Commissioners (2022). Accident and Health Policy Experience Reports for 2018-2021, available at: https://naic.soutronglobal.net/portal/Public/en-US/
Search/SimpleSearch.
269
National Association of Insurance Commissioners (2023). “2022 Accident and Health Policy Experience Report,” available at: https://content.naic.org/sites/default/files/publica-
tion-ahp-lr-accident-health-report.pdf. 270 Congressional Budget Office (2020). “CBO’s Estimates of Enrollment in Short-Term, Limited-Duration Insurance,” available at: https://www.cbo.
gov/publication/56622. CBO and JCT projected that enrollment in STLDI would reach 1.6 million by 2028. See Congressional Budget Office (2019). “How CBO and JCT Analyzed Coverage
Effects of New Rules for Association Health Plans and Short-Term Plans,” available at: https://www.cbo.gov/publication/54915.
271
CMS Office of the Actuary (2018). “Estimated Financial Effects of the Short-Term, Limited-Duration Policy Proposed Rule,” available at: https://www.cms.gov/Research-Statistics-Da-
ta-and-Systems/Research/ActuarialStudies/Downloads/STLD20180406.pdf.
272
See, for example, Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman,
available at: https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
273
See, for example, Deam, Jenny (2021). “He Bought Health Insurance for Emergencies. Then He Fell Into a $33,601 Trap,” ProPublica, available at: https://www.propublica.org/article/
junk-insurance.

Bulletin No. 2024–19 1025 May 6, 2024
nated income replacement benefits that is
distinct from comprehensive coverage.
274
In addition, because STLDI and fixed
indemnity insurance are sold outside of
the Exchanges and are generally not sub-
ject to the Federal consumer protections
and requirements for comprehensive
coverage, consumers may have limited
information about the limitations, value,
and quality of the coverage being sold.
275

Recent evidence of consumer confu-
sion and improper marketing regarding
STLDI
276
and fixed indemnity insurance
277

support the need to improve consumer
understanding of these types of insurance
(and their coverage limitations) compared
to comprehensive coverage. The provi-
sions finalized in these final rules will help
ensure that consumers can better under-
stand and properly distinguish STLDI and
fixed indemnity excepted benefits cover-
age from comprehensive coverage, and
access resources to learn more about their
health coverage options.
These final rules will encourage
enrollment in comprehensive coverage
and lower the risk that STLDI and fixed
indemnity excepted benefits coverage are
viewed or marketed as a substitute for
comprehensive coverage.
278
2. Summary of Impacts
The expected benefits, costs, and trans-
fers associated with these final rules are
summarized in Table 1 and discussed in
detail later in this section V.B.2 of this pre-
amble.
274
See, for example, Young, Christen Linke and Kathleen Hannick (2020). “Fixed Indemnity Health Coverage Is a Problematic Form of ‘Junk Insurance,’” USC-Brookings Schaeffer Initiative
for Health Policy, available at: https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2020/08/04/fixed-indemnity-health-coverage-is-a-problematic-form-of-junk-insur-
ance.
275
See Williams, Jackson (2022). “Addressing Low-Value Insurance Products With Improved Consumer Information: The Case of Ancillary Health Products,” National Association of Insur-
ance Commissioners, Journal of Insurance Regulation, available at: https://content.naic.org/sites/default/files/cipr-jir-2022-9.pdf.
276
See, for example, Deam, Jenny (2021). “He Bought Health Insurance for Emergencies. Then He Fell Into a $33,601 Trap,” ProPublica, available at: https://www.propublica.org/article/
junk-insurance. See also Palanker, Dania and Kevin Lucia (2021). “Limited Plans with Minimal Coverage Are Being Sold as Primary Coverage, Leaving Consumers at Risk,” Commonwealth
Fund, available at: https://www.commonwealthfund.org/blog/2021/limited-plans-minimal-coverage-are-being-sold-primary-coverage-leaving-consumers-risk. See also Schwab, Rachel and
Maanasa Kona (2018). “State Insurance Department Consumer Alerts on Short-Term Plans Come Up Short,” Center on Health Insurance Reforms, available at: https://chirblog.org/state-in-
surance-department-consumer-alerts-short-term-plans-come-short/. See also Corlette, Sabrina, Kevin Lucia, Dania Palanker, and Olivia Hoppe (2019). “The Marketing of Short-Term Health
Plans: An Assessment of Industry Practices and State Regulatory Responses,” Urban Institute, available at: https://www.urban.org/research/publication/marketing-short-term-health-plans-as-
sessment-industry-practices-and-state-regulatory-responses.
277
See, for example, Young, Christen Linke and Kathleen Hannick (2020). “Fixed Indemnity Health Coverage Is a Problematic Form of “Junk Insurance,” USC-Brookings Schaeffer Initiative
for Health Policy, available at: https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2020/08/04/fixed-indemnity-health-coverage-is-a-problematic-form-of-junk-insur-
ance. See also Government Accountability Office (2020). “Private Health Coverage: Results of Covert Testing for Selected Offerings,” available at: https://www.gao.gov/products/gao-20-634r.
278
As discussed in section I.B of this preamble, these final rules build on Executive Order 14009, “Strengthening Medicaid and the Affordable Care Act,” and Executive Order 14070, “Con-
tinuing to Strengthen Americans’ Access to Affordable, Quality Health Coverage,” by encouraging enrollment in high-quality, comprehensive coverage. The Departments also note that the
affordability of comprehensive coverage offered in the individual market has increased for many consumers in recent years, due in part to the expanded PTC subsidies provided through the
ARP and the IRA, as discussed in section II of this preamble. Further, as discussed in section II of this preamble, the COVID-19 PHE has highlighted the importance of encouraging enroll-
ment in comprehensive coverage.

May 6, 2024 1026 Bulletin No. 2024–19
TABLE 1: Accounting Table
Benefits:
Non-Quantified:
• Reductions in information asymmetries in health insurance markets through increased consumer understanding of STLDI and
fixed indemnity excepted benefits coverage in relation to comprehensive coverage.
• Increased enrollment in comprehensive coverage, with an estimated increase in enrollment in individual health insurance
coverage purchased on an Exchange by approximately 60,000 people in 2026, 2027 and 2028 associated with the provisions
regarding STLDI.
• Improvement in market stability and market risk pools for comprehensive coverage.
• Reduction in the risk of high out-of-pocket health expenses, lower incidence of medical debt, improved health outcomes, and
increased health equity, for individuals who switch from STLDI or fixed indemnity excepted benefits coverage (when used as
a substitute for comprehensive coverage) to comprehensive coverage.
• Potential reduction in the overall number of STLDI coverage rescissions or claims denials, if enrollment in STLDI declines.
• Potential reduction in deceptive or aggressive marketing practices and harm from such practices involving the sale of STLDI
and fixed indemnity excepted benefits coverage.
Costs:EstimateYear DollarDiscount RatePeriod Covered
Annualized Monetized ($/year)$111,14020247 percent2024-2028
$103,36720243 percent2024-2028
Quantified:
• One-time regulatory review costs of approximately $358,578 for issuers of STLDI, issuers of fixed indemnity excepted bene-
fits coverage, and other interested parties.
• One-time costs of approximately $129,015 for issuers of STLDI and fixed indemnity excepted benefit coverage associated
with complying with the notice provisions.
Non-Quantified:
• Potential increase in premium costs for individuals who switch from STLDI or fixed indemnity excepted benefit coverage
(when used as a substitute for comprehensive coverage) to comprehensive coverage and who are not eligible for the PTC.
• Potential increase in the number of uninsured individuals or the number of individuals experiencing a coverage gap, if some
individuals with STLDI coverage purchased after the applicability date are no longer able to renew or extend their current pol-
icy, choose not to purchase a new policy from another issuer of STLDI, and can only obtain comprehensive coverage during
open enrollment, or choose not to purchase comprehensive coverage.
• Potential decrease in compensation for agents and brokers if there is a reduction in sales of STLDI and fixed indemnity
excepted benefits coverage.
• Potential increase in health care spending, if individuals switch from STLDI or fixed indemnity excepted benefits coverage
(when used as a substitute for comprehensive coverage) to comprehensive coverage and increase their use of health care as a
result.
• Potential costs to States, if States enact or implement new legislation in response to these final rules.
• Potential costs to State departments of insurance associated with reviewing amended marketing materials and plan documents
filed by issuers of STLDI and fixed indemnity excepted benefits coverage in response to these final rules.
Transfers:EstimateYear DollarDiscount RatePeriod Covered
Annualized Monetized ($/year)–$67.1 million20247 percent2024-2028
–$69.9 million20243 percent2024-2028
Quantified:
• Reduction in gross premiums for individuals enrolled in individual health insurance coverage purchased on an Exchange by
approximately 0.5 percent in 2026, 2027, and 2028.
• Decrease in Federal PTC spending of approximately $120 million in 2026, 2027, and 2028.
Non-Quantified:
• Potential transfer from issuers to consumers if consumers switch from STLDI or fixed indemnity excepted benefits coverage
(when used as a substitute for comprehensive coverage) to comprehensive coverage and experience a reduction in out-of-
pocket costs.

Bulletin No. 2024–19 1027 May 6, 2024
Table 2 presents the estimated effects
of the provisions regarding STLDI on
enrollment in and gross premiums for
individual health insurance coverage
purchased on an Exchange, and on Fed-
eral spending on the PTC (by calendar
year), as discussed further in sections
V.B.2.c and V.B.2.e of this preamble.
The Departments estimate that, starting
in 2026, total enrollment in individual
health insurance coverage purchased on
an Exchange will be higher by 60,000
individuals each year, premiums for
this coverage will be lower by 0.5 per-
cent each year, and Federal spending on
the PTC will be lower by $120 million
each year, relative to the current status
quo. The cumulative reduction in Fed-
eral spending on the PTC will be (an
undiscounted) $360 million from 2026
to 2028.
TABLE 2: Estimated Effects of the Provisions Regarding STLDI on Enrollment in and Gross Premiums for Individual
Health Insurance Coverage Purchased on an Exchange and on Federal Spending on the PTC
Calendar Year20242025202620272028
Change in Enrollment in Individual Health Insurance Coverage
Purchased on an Exchange
0060,00060,00060,000
Percentage Change in Gross Premiums for Individual Health
Insurance Coverage Purchased on an Exchange
00-0.5-0.5-0.5
Change in Federal Spending on the PTC (in millions)$0$0-$120-$120-$120
a. Background
STLDI and fixed indemnity excepted
benefits coverage generally are not subject
to the Federal consumer protections and
requirements for comprehensive cover-
age, as discussed in more detail in section
I.A of this preamble. When used as a long-
term substitute for comprehensive cover-
age, STLDI and fixed indemnity insurance
expose enrollees to financial and health
risks, as discussed in this section and sec-
tion II.B of this preamble.
STLDI and fixed indemnity insurance
typically do not cover all essential health
benefits (including, for example, pre-
scription drugs, maternity services, and
mental health and substance use disorder
services), and typically do not cover pre-
existing conditions.
279
STLDI may offer
fewer benefits overall.
280
Fixed indemnity
insurance is designed to provide a source
of income replacement or financial sup-
port following a qualifying health-related
event, and benefits are often far below a
covered individual’s incurred costs related
to a medical event.
281
STLDI and fixed
indemnity insurance typically have lower
loss ratios or actuarial values than cover-
age subject to the Federal consumer pro-
tections and requirements for comprehen-
sive coverage. In one study of the medical
claims of approximately 47 million enroll-
ees in commercial plans in 2016, for
example, the implied actuarial value of
the STLDI coverage in the study was 49
percent, compared to an implied actuar-
ial value of approximately 74 percent for
off-Exchange comprehensive coverage
plans and an implied actuarial value of 87
percent for on-Exchange plans.
282
Addi-
tionally, according to an NAIC report,
across 28 issuers of STLDI in the individ-
ual market in 2021, the nationwide loss
ratio was approximately 70 percent.
283

The same report stated that across 95 issu-
ers of “other medical (non-comprehen-
sive)” coverage in the individual market,
which includes fixed indemnity insurance,
the nationwide loss ratio was approxi-
mately 40 percent in 2021.
284
By con-
trast, according to data from medical loss
ratio (MLR) annual reports for the 2021
MLR reporting year, the average MLR in
the individual market for comprehensive
coverage was approximately 87 percent in
2021.
285
A few commenters also noted that
STLDI and fixed indemnity insurance
have low average loss ratios as com-
279
See, for example, Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman,
available at: https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market. See also Pollitz, Karen, Michelle
Long, Ashley Semanskee, and Rabah Kamal (2018). “Understanding Short-Term Limited Duration Health Insurance,” KFF, available at: https://www.kff.org/health-reform/issue-brief/
understanding-short-term-limited-duration-health-insurance/. See also Sanger-Katz, Margot (2018). “What to Know Before You Buy Short-Term Health Insurance,” The New York Times,
available at: https://www.nytimes.com/2018/08/01/upshot/buying-short-term-health-insurance-what-to-know.html. See also
Partnership to Protect Coverage (2021). “Under-Covered: How
‘Insurance-Like’ Products are Leaving Patients Exposed,” available at: https://www.nami.org/NAMI/media/NAMI-Media/Public%20Policy/Undercovered_Report_03252021.pdf. See also
Young, Christen Linke and Kathleen Hannick (2020). “Fixed Indemnity Health Coverage Is a Problematic Form of “Junk Insurance” USC-Brookings Schaeffer Initiative for Health Policy,
available at: https://www.brookings.edu/blog/usc-brookings-schaeffer-on-health-policy/2020/08/04/fixed-indemnity-health-coverage-is-a-problematic-form-of-junk-insurance.
280
See, for example, Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman,
available at: https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
281
See Williams, Jackson (2022). “Addressing Low-Value Insurance Products With Improved Consumer Information: The Case of Ancillary Health Products,” National Association of Insur-
ance Commissioners, Journal of Insurance Regulation, available at: https://content.naic.org/sites/default/files/cipr-jir-2022-9.pdf.
282
Pelech, Daria and Karen Stockley (2022). “How Price and Quantity Factors Drive Spending in Nongroup and Employer Health Plans,” Health Services Research, available at: https://
onlinelibrary.wiley.com/doi/10.1111/1475-6773.13962.
283
The loss ratio is calculated as ((Incurred Claims Amount + Change in Contract Reserves) / Premiums Earned). Data regarding issuers of STLDI and “other non-comprehensive coverage”
are only available for the individual market. See National Association of Insurance Commissioners (2022). “2021 Accident and Health Policy Experience Report,” available at: https://naic.
soutronglobal.net/portal/Public/en-US/Search/AdvancedSearch.
284
National Association of Insurance Commissioners (2022). “2021 Accident and Health Policy Experience Report,” available at: https://naic.soutronglobal.net/portal/Public/en-US/Search/
AdvancedSearch. Data regarding issuers of non-comprehensive coverage are only available for the individual market.
285
Based on internal calculations. Source: CMS, Medical Loss Ratio Data and System Resources, available at: https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.

May 6, 2024 1028 Bulletin No. 2024–19
pared to comprehensive coverage. These
comments and the previously-mentioned
statistics suggest that relative to issuers
of comprehensive coverage, issuers of
STLDI tend to spend a lower percentage
of premium dollars on health care items
and services, and issuers of fixed indem-
nity insurance tend to spend a lower per-
centage of premium dollars on payment
of benefits. STLDI and fixed indemnity
insurance can therefore be highly profit-
able for issuers,
286
depending on the extent
to which issuers incur costs related to mar-
keting (including agent/broker compen-
sation
287
), policy underwriting, and over-
head.
Low average loss ratios for STLDI
and fixed indemnity insurance, along
with relatively high commission rates
for agents and brokers of those policies,
reduce the value of STLDI and fixed
indemnity insurance for consumers.
Agents and brokers act as intermediaries
between consumers and issuers. Their
income is primarily derived from com-
missions, which tend to be a percentage
of premiums paid by the consumer to the
issuer. The commissions are incorpo-
rated into the cost of an insurance plan,
and therefore indirectly affect the total
price paid by the consumer for the cov-
erage purchased. There is limited data
available on commission rates paid by
issuers to agents and brokers. Agent and
broker commission rates tend to vary sig-
nificantly between health insurance cov-
erage options, though issuers of STLDI
and fixed indemnity insurance tend to
pay higher commissions.
288
The Depart-
ments received several comments indi-
cating that agents and brokers receive a
higher percentage of the plan’s premium
as a commission for selling STLDI or
fixed indemnity insurance as compared
to individual health insurance coverage.
This was also confirmed in the Depart-
ments’ review of some broker compen-
sation disclosures.
289
The Departments
acknowledge that lower cost alterna-
tives to comprehensive coverage may
not result in higher total compensation
for agents and brokers, since the premi-
ums for comprehensive coverage might
be higher than the premiums for STLDI
and fixed indemnity insurance. However,
higher commission rates for agents and
brokers from sales of STLDI and fixed
indemnity insurance can incentivize
aggressive and/or deceptive marketing
tactics that may mislead customers into
enrolling in STLDI or fixed indemnity
insurance instead of comprehensive cov-
erage.
290,291,292
One study suggests that
commissions for STLDI are up to 10 times
higher than those obtained for enrollment
in individual health insurance coverage
(averaging approximately 23 percent of
premiums for STLDI, compared to 2 per-
cent of premiums for individual health
insurance coverage).
293
Another source
corroborates this finding by noting that
issuers of STLDI pay commissions close
to 20 percent of premiums.
294
In the 2023 proposed rules, the
Departments stated that the limited cov-
erage provided through most STLDI
and fixed indemnity excepted benefits
coverage exposes individuals enrolled
in these policies to health and financial
risks, including the risk of high medical
bills and high out-of-pocket expenses.
The Departments further noted that these
high out-of-pocket expenses, in turn,
could contribute to an increased risk of
medical debt and bankruptcy, which is
particularly problematic given the extent
of medical debt already present in the
United States.
295
As discussed in section
II.B of this preamble, commenters pro-
vided the Departments with examples
of how enrollment in fixed indemnity
insurance, when used as a substitute for
comprehensive coverage, could expose
individuals to financial risk. However,
many commenters also noted that fixed
indemnity insurance can reduce financial
risk for individuals, given that it provides
payments for unexpected expenses asso
-
ciated with a health-related event. The
Departments acknowledge that fixed
indemnity insurance can reduce finan-
cial risk when used as a supplement to
comprehensive coverage but remain con-
cerned about the financial risk for indi-
viduals when it is used as a substitute for
comprehensive coverage.
Misleading marketing of STLDI and
fixed indemnity insurance is reported to
have taken place during annual individ-
ual market open enrollment and special
enrollment periods (including during
the 2021 COVID-19 special enrollment
period, when Exchanges using the Fed-
eral platform made available a 6-month
special enrollment period on HealthCare.
gov to allow qualified individuals to
enroll in individual health insurance cov-
286
See Appleby, Julie (2018). “Short-Term Health Plans Boost Profits For Brokers And Insurers,” NPR, available at: https://www.npr.org/sections/health-shots/2018/12/21/678605152/short-
term-health-plans-boost-profits-for-brokers-and-insurers. See also Pear, Robert (2018). “‘Short Term’ Health Insurance? Up to 3 Years Under New Trump Policy,” The New York Times,
available at: https://www.nytimes.com/2018/08/01/us/politics/trump-short-term-health-insurance.html.
287
Compensation includes commissions, fees, or other incentives (for example, rewards or bonuses) as established in the relevant contract between an issuer and the agent or broker.
288
See Lucia, Kevin, Sabrina Corlette, Dania Palanker, and Olivia Hoppe (2018). “Views From the Market: Insurance Brokers’ Perspectives on Changes to Individual Health Insurance,”
Urban Institute, available at: https://www.urban.org/research/publication/views-market-insurance-brokers-perspectives-changes-individual-health-insurance.
289
The Departments reviewed information detailing broker compensation from an agent/broker, two large issuers, and a health insurance agency.
290
See, for example., Appleby, Julie (2018). “Short-Term Health Plans Boost Profits For Brokers And Insurers,” NPR, available at: https://www.npr.org/sections/health-
shots/2018/12/21/678605152/short-term-health-plans-boost-profits-for-brokers-and-insurers.
291
Government Accountability Office (2020). “Private Health Coverage: Results of Covert Testing for Selected Offerings,” available at: https://www.gao.gov/products/gao-20-634r.
292
However, even as some issuers offer higher compensation for STLDI, many brokers continue to refuse to sell products they view as overly risky for consumers, like STLDI. See, for exam-
ple, Corlette, Sabrina, Erik Wengle, Ian Hill, and Olivia Hoppe (2020). “Perspective from Brokers: The Individual Market Stabilizes While Short-Term and Other Alternative Products Pose
Risks,” Urban Institute, available at: https://www.urban.org/research/publication/perspective-brokers-individual-market-stabilizes-while-short-term-and-other-alternative-products-pose-risks.
293
U.S. House of Representatives Committee on Energy and Commerce (2020). “Shortchanged: How the Trump Administration’s Expansion of Junk Short-Term Health Insurance Plans is
Putting Americans at Risk,” available at: https://democrats-energycommerce.house.gov/newsroom/press-releases/ec-investigation-finds-millions-of-americans-enrolled-in-junk-health.
294
Sanger-Katz, Margot (2018). “What to Know Before You Buy Short-Term Health Insurance,” The New York Times, available at: https://www.nytimes.com/2018/08/01/upshot/buying-short-
term-health-insurance-what-to-know.html.
295
See, for example, Consumer Financial Protection Bureau (2022). “Medical Debt Burden in the United States,” available at: https://files.consumerfinance.gov/f/documents/cfpb_medical-
debt-burden-in-the-united-states_report_2022-03.pdf.

Bulletin No. 2024–19 1029 May 6, 2024
erage during the COVID-19 PHE).
296
For
example, one study showed that enroll-
ment in STLDI policies through brokers
increased by approximately 60 percent
in December 2018 and by more than
120 percent in January 2019, suggesting
that overall enrollment in STLDI spiked
during the annual individual market open
enrollment period.
297
One survey suggests
that lead-generating websites direct con-
sumers to insurance brokers selling both
STLDI and other types of non-compre-
hensive coverage, including fixed indem-
nity insurance, and that these types of
coverage are often marketed to resemble
comprehensive coverage.
298
A number of States and the District of
Columbia enacted legislation or issued
regulations regarding STLDI after the
2018 final rules were published. State
regulatory actions regarding STLDI
have been wide-ranging. For example,
according to one report, as of Septem-
ber 2023, four States prohibited STLDI,
seven States and the District of Columbia
limited the total duration of enrollment
in STLDI (including renewals or exten-
sions) to less than 3 months, and eight
States have limited the initial contract
terms for enrollment in STLDI to less
than 6 months.
299
Other State regulatory
actions on STLDI have included banning
coverage rescissions (except in cases of
fraud on the part of the enrollee), adding
preexisting condition protections, and
requiring a certain MLR, among other
restrictions.
300
Lastly, some States have
largely aligned their regulations regard-
ing STLDI with the 2018 final rules.
301
In
some States that allow sales of STLDI,
but have additional consumer protections
in place (for example, prohibitions on
renewals of STLDI coverage), issuers do
not offer STLDI.
302
Recent analysis has found that States
that allow the initial contract term of
STLDI to last up to 364 days have seen
a 27 percent reduction in enrollment, on
average, in non-Exchange plans that are
subject to the Federal consumer protec-
tions and requirements for comprehensive
coverage from 2018 to 2020, compared
with a 4 percent reduction in enrollment,
on average, in those plans in States that
banned STLDI or limited its duration to 6
months or less.
303
This analysis also found
that market-wide risk scores (a measure
of relative expected health care costs for
a population) declined more in States that
banned or limited STLDI (-11.8 percent)
than in States with less restrictions on
STLDI (-8.3 percent), suggesting that the
less restrictive States saw more healthier
individuals enroll in STLDI policies in
lieu of comprehensive coverage, which
put upward pressure on the average
expected health care costs among those
with comprehensive coverage.
b. Number of Affected Entities
The provisions in these final rules will
affect consumers enrolled in STLDI or
fixed indemnity excepted benefits cov-
erage, issuers of STLDI, issuers offering
fixed indemnity excepted benefits cover-
age, and agents and brokers selling STLDI
or fixed indemnity excepted benefits cov-
erage. The provisions in these rules will
also affect States if they enact or imple-
ment new legislation in response to these
final rules. State departments of insurance
will also be impacted to the extent they
need to review amended marketing mate-
rials and plan documents filed by issuers.
With respect to consumers, individuals
who are currently enrolled in STLDI or
who may consider purchasing or choose
to purchase STLDI in the future will be
impacted by these final rules. Data from
the NAIC indicate that 235,775 individu-
als were covered by STLDI sold to indi-
viduals at the end of 2022.
304
As noted in
section V.B.1 of this preamble, this figure
does not capture the total number of indi-
viduals covered by STLDI throughout the
year and does not include individuals cov-
ered by STLDI sold to or through associa-
tions, through which most policies appear
to be sold.
305
As noted in section V.B.1 of
this preamble, projections by CBO and
JCT suggest that 1.5 million people could
currently be enrolled in STLDI,
306
and
296
See Palanker, Dania and JoAnn Volk. (2021). “Misleading Marketing of Non-ACA Health Plans Continued During COVID-19 Special Enrollment Period,” Center on Health Insurance
Reforms, available at: https://georgetown.app.box.com/s/mn7kgnhibn4kapb46tqmv6i7putry9gt. See also Corlette, Sabrina, Kevin Lucia, Dania Palanker, and Olivia Hoppe (2019). “The
Marketing of Short-Term Health Plans: An Assessment of Industry Practices and State Regulatory Responses,” Urban Institute, available at: https://www.urban.org/research/publication/
marketing-short-term-health-plans-assessment-industry-practices-and-state-regulatory-responses. Regarding the establishment of the COVID-19 special enrollment period, see E.O. 14009;
see also CMS (2021). “2021 Special Enrollment Period in Response to the COVID-19 Emergency,” available at: https://www.cms.gov/newsroom/fact-sheets/2021-special-enrollment-peri-
od-response-covid-19-emergency. Regarding the extension of the COVID-19 special enrollment period (to the 6-month period between February 15, 2021, and August 15, 2021), see CMS
(2021). “Extended Access Opportunity to Enroll in More Affordable Coverage Through HealthCare.gov,” available at: https://www.cms.gov/newsroom/fact-sheets/extended-access-opportu-
nity-enroll-more-affordable-coverage-through-healthcaregov.
297
U.S. House of Representatives Committee on Energy and Commerce (2020). “Shortchanged: How the Trump Administration’s Expansion of Junk Short-Term Health Insurance Plans Is
Putting Americans at Risk,” available at: https://democrats-energycommerce.house.gov/newsroom/press-releases/ec-investigation-finds-millions-of-americans-enrolled-in-junk-health.
298
Corlette, Sabrina, Kevin Lucia, Dania Palanker, and Olivia Hoppe (2019). “The Marketing of Short-Term Health Plans: An Assessment of Industry Practices and State Regulatory
Responses,” Urban Institute, available at: https://www.urban.org/research/publication/marketing-short-term-health-plans-assessment-industry-practices-and-state-regulatory-responses.
299
See Healthinsurance.org (2023). “Duration and Renewals of 2023 Short-Term Medical Plans by State,” available at: https://www.healthinsurance.org/wp-content/uploads/2023/09/state-
by-state-short-term-health-insurance.pdf.
300
Palanker, Dania, Maanasa Kona, and Emily Curran (2019). “States Step Up to Protect Insurance Markets and Consumers from Short-Term Health Plans,” Commonwealth Fund, available
at: https://www.commonwealthfund.org/publications/issue-briefs/2019/may/states-step-up-protect-markets-consumers-short-term-plans.
301
See Healthinsurance.org (2023). “Duration and Renewals of 2023 Short-Term Medical Plans by State,” available at: https://www.healthinsurance.org/wp-content/uploads/2023/09/state-
by-state-short-term-health-insurance.pdf.
302
See Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, available at:
https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
303
See Hall, Mark and Michael McCue (2022). “Short-Term Health Insurance and the ACA Market,” Commonwealth Fund, available at: https://www.commonwealthfund.org/blog/2022/
short-term-health-insurance-and-aca-market.
304
National Association of Insurance Commissioners (2023). “2022 Accident and Health Policy Experience Report,” available at: https://content.naic.org/sites/default/files/publica-
tion-ahp-lr-accident-health-report.pdf.
305
Pollitz, Karen, Michelle Long, Ashley Semanskee, and Rabah Kamal (2018). “Understanding Short-Term Limited Duration Health Insurance,” KFF, available at: https://www.kff.org/
health-reform/issue-brief/understanding-short-term-limited-duration-health-insurance/.
306
Congressional Budget Office (2020). “CBO’s Estimates of Enrollment in Short-Term, Limited-Duration Insurance,” available at: https://www.cbo.gov/publication/56622. CBO and JCT
projected that enrollment in STLDI would reach 1.6 million by 2028. See Congressional Budget Office (2019). “How CBO and JCT Analyzed Coverage Effects of New Rules for Association
Health Plans and Short-Term Plans,” available at: https://www.cbo.gov/publication/54915.

May 6, 2024 1030 Bulletin No. 2024–19
CMS previously estimated that 1.9 mil-
lion individuals would enroll in STLDI by
2023.
307
However, the CBO and JCT and
CMS estimates were developed prior to
the expansion of PTC subsidies provided
through the ARP and the IRA, which
likely supported increased enrollment in
individual health insurance coverage pur-
chased on an Exchange in lieu of STLDI
and other forms of health insurance not
subject to the Federal consumer protec-
tions and requirements for comprehen-
sive coverage, if only temporarily.
308
,
309

The number of enrollees in STLDI also
might have been affected by changes in
State law or regulation that have occurred
since the 2018 final rules were issued. The
Departments received a comment that also
noted that the NAIC figure was likely an
underestimate given that not all issuers
report complete data to the NAIC. Another
commenter— a State department of insur-
ance—provided information about the
number of individuals who had enrolled in
STLDI in their State as of mid-2023. The
Departments acknowledge that the NAIC
figure likely underestimates the number of
enrollees in STLDI, yet commenters did
not offer additional data or information on
the total number of consumers enrolled in
STLDI across the country, and the Depart-
ments are not aware of another available
source for these data.
Additionally, individuals who are
currently enrolled in fixed indemnity
excepted benefits coverage or who may
choose to purchase or consider purchasing
such coverage in the future will be affected
by these final rules. Although the Depart-
ments are unaware of a definitive source
for the number of fixed indemnity policies
sold nationwide, the NAIC reports the
total number of “other non-comprehen-
sive coverage” policies
310
sold in the indi-
vidual market. These nearly 2.6 million
policies or certificates, covering approx-
imately 4 million individuals, include
fixed indemnity products along with other
insurance products, and provide a poten-
tial estimate of the number of potential
fixed indemnity policies or certificates and
number of covered lives in the individual
market. The Departments sought com-
ments on the number of consumers who
would be affected by the fixed indemnity
excepted benefits coverage provisions in
the proposed rules. Some commenters
referenced a survey of 39 issuers of fixed
indemnity or specified disease products.
The survey indicated that approximately
3.4 million individuals are currently cov-
ered by fixed indemnity products in the
individual market and approximately 4.7
million individuals are currently covered
by fixed indemnity products in the group
market.
311
Several issuers that commented
on the proposed rules also provided
information on the number of consumers
currently enrolled in their fixed indem-
nity or other supplemental insurance
products, with one issuer indicating that
47,900 of its customers were enrolled in
fixed indemnity insurance without being
enrolled in comprehensive coverage. One
association commenting on the rules esti-
mated that the number of supplemental
policies in force for school employees “is
in the multi-millions.”
Based on the NAIC and industry esti-
mates, the number of individuals with indi-
vidual market fixed indemnity excepted
benefits coverage who could be affected
by these final rules could be up to 4 mil-
lion, and the number of individuals with
group market fixed indemnity excepted
benefits coverage who could be affected
by these final rules could be up to 4.7 mil-
lion. However, because it is not clear what
percentages of the NAIC and industry
estimates are specific to fixed indemnity
excepted benefits coverage rather than
fixed indemnity insurance in general, the
number of individuals affected by the pro-
visions for fixed indemnity excepted ben-
efits coverage in these final rules is likely
to be lower than these estimates.
These final rules may also indirectly
impact consumers enrolled in compre-
hensive coverage because of the potential
impact of increased enrollment in com-
prehensive coverage on individual and
group market risk pools, premiums, plan
offerings, or issuer participation. While
the Departments are unable to estimate
whether or how these final rules will impact
plan offerings or issuer participation in the
individual and group markets for compre-
hensive coverage, in sections V.B.2.c and
V.B.2.e of this preamble, the Departments
discuss the estimated effects of the provi-
sions regarding STLDI included in these
final rules on enrollment in and premiums
for individual health insurance coverage
purchased on an Exchange.
Issuers of STLDI and fixed indem-
nity excepted benefits coverage will be
directly impacted by these final rules. The
NAIC reported that there were at least 28
issuers of STLDI in the individual market
across the U.S. in 2022 and at least 93
issuers of “other non-comprehensive cov-
erage” (including fixed indemnity insur-
ance) in the individual market across the
U.S. in 2022.
312
Data regarding issuers of
STLDI and “other medical (non-compre-
hensive)” coverage are only available for
the individual market. The Departments
anticipate that many of these issuers also
offer coverage in the group market. The
Departments sought comments on the
number of entities that would be affected
by the proposed rules, including the num-
307
CMS Office of the Actuary (2018). “Estimated Financial Effects of the Short-Term, Limited-Duration Policy Proposed Rule,” available at: https://www.cms.gov/Research-Statistics-Da-
ta-and-Systems/Research/ActuarialStudies/Downloads/STLD20180406.pdf.
308
See, for example, Ortaliza, Jared, Krutika Amin, and Cynthia Cox (2022). “As ACA Marketplace Enrollment Reaches Record High, Fewer Are Buying Individual Market Coverage Else-
where,” KFF, available at: https://www.kff.org/policy-watch/as-aca-marketplace-enrollment-reaches-record-high-fewer-are-buying-individual-market-coverage-elsewhere/.
309
Based on data from the NAIC, the number of individuals covered by STLDI rose from around 173,000 in 2021 to 236,000 in 2022, reversing the downward trend from 2020 to 2021. See
National Association of Insurance Commissioners (2023). “2022 Accident and Health Policy Experience Report,” available at: https://content.naic.org/sites/default/files/publication-ahp-lr-ac-
cident-health-report.pdf.
310
See National Association of Insurance Commissioners (2023). “2022 Accident and Health Policy Experience Report,” available at: https://content.naic.org/sites/default/files/publica-
tion-ahp-lr-accident-health-report.pdf (“Other medical (non-comprehensive) coverage” includes “policies such as hospital only, hospital confinement, surgical, outpatient indemnity, intensive
care, mental health/substance abuse, and organ and tissue transplant (including scheduled type policies), etc.” It is further noted that “expense reimbursement and indemnity plans should be
included” in this definition, but that “this category does not include TRICARE/CHAMPUS Supplement, Medicare Supplement, or FEHB Program coverage.” Data from the NAIC regarding
issuers of “other non-comprehensive coverage” are only available for the individual market.
311
See AHIP-ACLI-BCBSA 2023 Survey: Fixed Indemnity and Specified Disease Plans, September 7, 2023, available at: https://www.ahip.org/resources/ahip-acli-bcbsa-2023-survey.
312
National Association of Insurance Commissioners (2023). “2022 Accident and Health Policy Experience Report,” available at: https://content.naic.org/sites/default/files/publica-
tion-ahp-lr-accident-health-report.pdf.

Bulletin No. 2024–19 1031 May 6, 2024
ber of issuers and associations offering
STLDI and fixed indemnity excepted
benefits coverage, but did not receive any
data from commenters on the number of
issuers in the STLDI or fixed indemnity
excepted benefits coverage market that
would be affected. Based on the NAIC
data, and assuming some overlap between
issuers in the individual and group market,
the Departments anticipate that at least 28
issuers of STLDI and at least 93 issuers
of fixed indemnity excepted benefits cov-
erage could be affected by the provisions
being finalized in these final rules.
However, the Departments note that
this might overestimate the number of
issuers of fixed indemnity excepted ben-
efits coverage, given that the NAIC fig-
ure captures issuers of other forms of
non-comprehensive medical coverage in
addition to fixed indemnity insurance, and
that even for those issuers of fixed indem-
nity insurance that are included in this fig-
ure, it is not clear what percentage of those
issuers offer fixed indemnity excepted
benefits coverage in particular.
Agents and brokers selling STLDI or
fixed indemnity excepted benefits cover-
age will be impacted by these final rules.
The Bureau of Labor Statistics estimates
that there are 445,540 insurance agents
nationwide, which includes agents and
brokers that sell health insurance prod-
ucts in addition to other types of insur-
ance (for example, life and property).
313

One professional association, which is
estimated to represent one-third of active
health insurance agents and brokers,
314

has approximately 100,000 members.
315

However, the Departments lack data about
the number of agents and brokers that cur-
rently enroll individuals in STLDI or fixed
indemnity excepted benefits coverage and
did not receive any additional data from
commenters.
c. Benefits
Increase in consumer awareness. These
final rules are expected to reduce the harm
caused to consumers who are misled into
enrolling in STLDI or fixed indemnity
excepted benefits coverage as an alterna-
tive to or replacement for comprehensive
coverage. The notice provisions being
finalized in these final rules will improve
consumer understanding of STLDI and
fixed indemnity excepted benefits cov-
erage in relation to comprehensive cov-
erage. The Departments received some
comments noting that STLDI policies
are often marketed as a more affordable
alternative to comprehensive coverage,
and received many comments stating that
STLDI policies exclude critically import-
ant health care services, as discussed in
section III.A.1 of this preamble. Many
commenters stated that the 2023 proposed
rules would help consumers differenti-
ate STLDI and fixed indemnity excepted
benefits coverage from comprehensive
coverage when shopping for health insur-
ance. Some commenters also stated that
the notice provisions for STLDI and fixed
indemnity excepted benefits coverage
would help combat deceptive marketing
practices and would improve consumer
understanding of the different options
available when shopping for insurance.
One commenter stated that enrollees in
STLDI policies are functionally uninsured
due to the narrow benefits and design
limitations that are often poorly under-
stood by consumers. Although several
commenters expressed concern about the
improper marketing of fixed indemnity
insurance, some commenters suggested
that such improper marketing practices are
limited to a few “bad actors” in the mar-
ket. One commenter stated that concerns
over widespread consumer confusion are
unsupported, and that consumer confusion
could be addressed by policy alternatives
like increased enforcement of deceptive
marketing laws or enhanced consumer
awareness campaigns, rather than the pro-
visions proposed in the 2023 proposed
rules. The Departments agree that the
notice provisions will help ensure individ-
uals are made aware that STLDI and fixed
indemnity excepted benefits policies are
not comprehensive coverage. The Depart-
ments are of the view that the provisions
finalized in these final rules will reduce
the level of deceptive marketing of STLDI
and fixed indemnity excepted benefits pol-
icies, reduce the harm from such decep-
tive marketing practices, and increase the
overall awareness of coverage options
that include the full range of Federal con-
sumer protections. These provisions will
also help consumers more easily distin-
guish between STLDI or fixed indemnity
excepted benefits coverage and individual
health insurance coverage, thereby miti-
gating the risk that they mistakenly enroll
in STLDI or fixed indemnity excepted
benefits coverage in lieu of comprehen-
sive coverage. The Departments appre-
ciate the suggestions related to increased
enforcement of deceptive marketing
laws, and enhanced consumer aware-
ness campaigns, but are of the view that
these actions alone would not sufficiently
address consumer confusion related to
the current structure of STLDI and fixed
indemnity excepted benefit coverage.
Better health outcomes. Consumers
who switch from STLDI or fixed indem-
nity excepted benefits coverage (when
used as a substitute for comprehensive
coverage) to comprehensive coverage are
expected to have better access to health
care, better consumer protections, and
more robust benefits, and are therefore
expected to experience better health out-
comes. Several commenters stated that
STLDI policies can limit access to health
care and lead to negative health outcomes
given the insufficient coverage of STLDI
policies. Commenters stated that the inad-
equate coverage, particularly for individ-
uals with chronic conditions, could lead
to the use of high-cost services, such as
emergency department visits or hospital-
izations that could have been prevented
if adequate care were accessible through
their STLDI coverage. On the other hand,
some commenters stated that enrollees in
STLDI and fixed indemnity excepted ben-
efits policies can benefit from receiving
services provided by any provider and are
not limited by provider networks estab-
313
Bureau of Labor Statistics (2022). “National Occupational Employment and Wage Estimates,” available at: https://www.bls.gov/oes/current/oes413021.htm.
314
Karaca-Mandic, Pinar, Feldman, Roger, and Peter Graven (2016). “The Role of Agents and Brokers in the Market for Health Insurance,” Journal of Risk and Insurance, available at: https://
onlinelibrary.wiley.com/doi/full/10.1111/jori.12139.
315
National Association of Benefits and Insurance Professionals (2023). “Who We Are,” available at: https://nabip.org/who-we-are.

May 6, 2024 1032 Bulletin No. 2024–19
lished by issuers offering comprehensive
coverage.
316
Some commenters suggested
that the STLDI provisions could restrict
patients’ access to certain providers or
reduce access to care in general. Other
commenters suggested that the STLDI
provisions could influence the composi-
tion of health care utilization and spend-
ing—because of the limited benefits or
high cost-sharing requirements of most
STLDI policies, enrollees in STLDI pol-
icies may underutilize preventive care and
overutilize higher-cost care.
The Departments acknowledge that
there may be individuals whose provider
may not be in-network with an issuer
offering comprehensive coverage, and
that individuals may experience changes
in access to certain providers if they
switch from STLDI or fixed indemnity
excepted benefits coverage (when used as
a substitute for comprehensive coverage)
to comprehensive coverage. However,
given the limited benefits, limited con-
sumer protections, and financial exposure
associated with most STLDI and fixed
indemnity excepted benefits coverage
(when used as a substitute for compre-
hensive coverage), the Departments are
of the view that individuals’ overall finan-
cial risk would decrease and their overall
access to health care would increase if
they enrolled in comprehensive cover-
age. Furthermore, the Departments are
of the view that overall health outcomes
will improve for individuals who enroll in
comprehensive coverage in lieu of STLDI
or fixed indemnity excepted benefits cov-
erage (when used as a substitute for com-
prehensive coverage). For example, stud-
ies
317
that examined the potential impacts
of State policies regulating STLDI found
that individuals in States that prohibited or
restricted the sale of STLDI policies had
more favorable cancer diagnoses when
compared to individuals in States that did
not prohibit or restrict STLDI policies. In
summary, if individuals enroll in com-
prehensive coverage instead of STLDI or
fixed indemnity excepted benefits cover-
age, the Departments expect that they will
have increased access to care, decreased
exposure to major medical expenses, and
improved health outcomes.
Potential increase in enrollment in
comprehensive coverage. The Depart-
ments anticipate that these final rules will
lead to an increase in enrollment in com-
prehensive coverage. The Departments
expect that individuals will be less likely
to wait until they have incurred major
medical expenses or developed a medi-
cal condition to look for opportunities to
switch from STLDI or fixed indemnity
excepted benefits coverage (when used as
a substitute for comprehensive coverage)
to comprehensive coverage. Increased
enrollment in comprehensive coverage
in lieu of enrollment in STLDI is also
expected to reduce the number of cover-
age rescissions, claims denials, and cov-
erage exclusions associated with STLDI.
However, as noted earlier in this section
V.B.b of this preamble, the expanded
PTC subsidies provided through the ARP
and the IRA have likely already resulted
in increased enrollment in individual
health insurance coverage purchased on
an Exchange in lieu of STLDI or fixed
indemnity excepted benefits coverage
(when used as a substitute for comprehen-
sive coverage), so the immediate overall
effects of these final rules on enrollment
in, market stability of, and risk pools for
comprehensive coverage are expected to
be limited in 2024 and 2025.
318
The CMS
Office of the Actuary (OACT) estimates
that, relative to current law, the provisions
regarding STLDI being
Barnes, Anne C. Kirchhoff, Fumiko
Chino, Robin Yabroff, and Xuesong Han
(2023). “Association of Federal and State
Policies Regulating Short-term Limited
Duration Insurance (STLD) Plans and
Later Cancer Stage at Diagnosis.” JCO
Oncology Practice, Volume 19, Issue
11, available at: https://ascopubs.org/doi/
abs/10.1200/OP.2023.19.11_suppl.197.
finalized in these final rules will not affect
enrollment in individual health insurance
coverage purchased on an Exchange in
2024 and 2025, but will increase enroll-
ment by approximately 60,000 people in
2026, 2027, and 2028.
319
Many comment-
ers indicated that the STLDI provisions
are likely to reduce premiums for individ-
ual health insurance coverage. Many com-
menters also pointed to the potential shift
in enrollment from STLDI to individual
health insurance coverage as having a
potential impact on the risk pools for indi-
vidual health insurance coverage.
320
The
Departments agree with these comments
and are of the view that the provisions for
STLDI and fixed indemnity excepted ben-
efits coverage being finalized in these final
rules will lead to more stable markets and
improved market risk pools for compre-
hensive coverage.
Reduction in financial risk for con-
sumers. To the extent that these final rules
lead to an increase in enrollment in indi-
vidual health insurance coverage subject
316
Issuers of STLDI and fixed indemnity excepted benefits coverage may also have provider networks, and one commenter (an issuer of STLDI) noted that their provider network has 1.5
million physicians and other health care professionals and approximately 7,000 hospitals and other facilities.
317
See Barnes, Justin, Anne Kirchhoff, Robin Yabroff, and Fumiko Chino (2023). “State Policies Regulating Short-Term Limited Duration Insurance Plans and Cancer Stage at Diagnosis,”
JNCI Cancer Spectrum, Volume 7, Issue 5, available at: https://doi.org/10.1093/jncics/pkad060. See also Yang, Nuo Nova Nova, Jingxuan Zhao, Justin Michael
318
See, for example, Ortaliza, Jared, Krutika Amin, and Cynthia Cox (2022). “As ACA Marketplace Enrollment Reaches Record High, Fewer Are Buying Individual Market Coverage Else-
where,” KFF, available at: https://www.kff.org/policy-watch/as-aca-marketplace-enrollment-reaches-record-high-fewer-are-buying-individual-market-coverage-elsewhere/. See also Ortaliza,
Jared, Krutika Amin, and Cynthia Cox (2024). “Another Year of Record ACA Marketplace Signups, Driven in Part by Medicaid Unwinding and Enhanced Subsidies,” KFF, available at:
https://www.kff.org/policy-watch/another-year-of-record-aca-marketplace-signups-driven-in-part-by-medicaid-unwinding-and-enhanced-subsidies/.
319
In developing these estimates, OACT assumed that STLDI would be significantly less expensive than individual health insurance coverage purchased on an Exchange (where available)
and would be an attractive option for individuals and families with relatively low health care costs and little to no subsidies. Using their health reform model, OACT estimated that, under
current law, about 60,000 people would move from individual health insurance coverage purchased on an Exchange to STLDI in 2026, when the additional PTC subsidies available through
2025 through the IRA expire. In addition, since those switching to STLDI are assumed to be healthier than average, the average premium for individual health insurance coverage purchased
on an Exchange would increase by roughly 0.5 percent. Changing the maximum duration of an STLDI policy, certificate, or contract of insurance to no more than 4 months is expected to
negate these effects.
320
The Departments received an analysis from a commenter that estimated the potential impact of the STLDI provisions on enrollment and premiums in the individual market for compre-
hensive coverage. The analysis found that the STLDI provisions are likely to increase enrollment and lower premiums in the individual market for comprehensive coverage. The analysis
utilized upper bound estimates of existing STLDI enrollment and analyzed varying scenarios of transition from STLDI coverage to individual health insurance coverage to estimate that such
transitions could result in a 0.5 to 2 percent reduction in premiums. The commenter acknowledged that these impacts would vary by State given the different levels of STLDI regulations in
States. Overall, the analysis notes that the net result is positive for consumers should there be a significant transition from STLDI coverage to individual health insurance coverage.

Bulletin No. 2024–19 1033 May 6, 2024
to the Federal consumer protections and
requirements for comprehensive cover-
age in lieu of STLDI or fixed indemnity
excepted benefits coverage (when used
as a substitute for comprehensive cover-
age), the Departments are of the view that
these final rules will result in a reduction
in out-of-pocket expenses, medical debt,
and risk of medical bankruptcy for con-
sumers switching to comprehensive cov-
erage. These final rules could also lead
to a reduction in potentially devastating
surprise bills from out-of-network pro-
viders in emergency and certain other
circumstances to the extent the rules lead
to an increase in enrollment in individual
health insurance coverage, which is sub-
ject to the surprise billing protections for
consumers under the No Surprises Act.
Many commenters agreed that the pro-
posals being finalized in these final rules
will support consumer protections. Many
commenters also indicated that these final
rules are critical to ensuring consumers’
financial well-being and reducing their
financial risk. Several commenters agreed
that the proposed STLDI notice would
ensure that consumers understand the type
of coverage that they would be enrolling
in and its limitations. Many commenters
stated that STLDI policies expose enroll-
ees to the risk of high out-of-pocket costs
when an illness or injury occurs, and some
commenters stated that this could lead to
increased medical debt. One commenter
indicated that families without compre-
hensive care are at risk of delaying care or
going into debt. One commenter indicated
that consumers may not realize how lim-
ited their STLDI coverage is until they are
faced with high out-of-pocket costs for ser-
vices commonly covered under compre-
hensive coverage. Commenters pointed to
rehabilitation services, prescription drug
costs, and cancer treatments as resulting
in significantly higher out-of-pocket costs
for consumers enrolled in STLDI when
compared to comprehensive coverage.
For example, the Departments reviewed
a scenario study
321
that assessed the cost
implications of a hypothetical consumer
who enrolls in a typical STLDI policy
and is later diagnosed with breast cancer.
The study found that this hypothetical
consumer would incur between $40,000
to $63,000 in out-of-pocket expenses,
compared to less than $8,000 in a com-
prehensive coverage plan. While many
commenters argued that fixed indemnity
excepted benefits coverage reduces finan-
cial risk, other commenters argued that
fixed indemnity excepted benefits cover-
age exposes individuals to financial risk
when it is used as a substitute for compre-
hensive coverage. Lastly, some comment-
ers specifically noted that the provisions
regarding stacking of STLDI policies
would benefit consumers by limiting cir-
cumvention of the provisions related to
maximum duration, as discussed in sec-
tion III.A.2 of this preamble. The Depart-
ments agree with these comments and are
of the view that to the extent that consum-
ers obtain comprehensive coverage in lieu
of STLDI or fixed indemnity excepted
benefits coverage, they are likely to expe-
rience lower out-of-pocket costs for their
care. As noted in section V.B.2.a of this
preamble, the Departments acknowledge
that fixed indemnity excepted benefits
coverage can reduce financial risk when
used as a supplement to comprehensive
coverage but remain concerned about
the financial risk for individuals when it
is used as a substitute for comprehensive
coverage.
d. Costs
Increase in premiums. The Depart-
ments recognize that some individuals
with STLDI or fixed indemnity excepted
benefits coverage who switch to individ-
ual health insurance coverage might incur
higher premium costs depending on their
choice of available Exchange and off-
Exchange plans, their PTC eligibility (if
applicable), and the amount of APTC they
receive (if any).
322
Several commenters
noted that the STLDI provisions could
lead to higher premium costs for indi-
viduals if they switch to comprehensive
coverage, and several commenters noted
the low monthly premiums for STLDI
relative to comprehensive coverage. One
commenter acknowledged that STLDI has
lower premiums because the Federal con-
sumer protections and requirements for
comprehensive coverage do not apply to
this form of coverage. Some commenters
stated that STLDI policies cover the select
benefits certain consumers want. The
Departments acknowledge that premiums
for comprehensive coverage are generally
higher than premiums for STLDI, but note
that this is largely because comprehensive
coverage offers more benefits with lower
out-of-pocket costs. Further, as noted in
section II.A of this preamble, comprehen-
sive coverage for individuals has generally
become more accessible and affordable in
recent years, due in part to the expansion
of PTC subsidies under the ARP and the
IRA, and the provisions for STLDI final-
ized in these final rules are expected to put
further downward pressure on gross pre-
miums for individuals enrolled in individ-
ual health insurance coverage purchased
on an Exchange. The Departments are
of the view that any increase in costs is
outweighed by the meaningful increase
in benefits and consumer protections
afforded to individuals enrolled in com-
prehensive coverage.
Loss of coverage. These final rules
might also lead to an increase in the num-
ber of individuals without some form
of health insurance coverage, if some
individuals with STLDI purchased after
the applicability date are no longer able
to renew or extend their current policy,
choose not to purchase a new policy from
another issuer of STLDI, and can only
obtain comprehensive coverage during an
annual individual market open enrollment
period, or choose not to purchase com-
prehensive coverage. Many commenters
agreed with the Departments’ analysis and
noted that the provisions regarding STLDI
coverage may reduce consumers’ cover-
321
American Cancer Society Cancer Action Network (2019). “Inadequate Coverage: An ACS CAN Examination of Short-Term Health Plans,” available at: https://www.fightcancer.org/sites/
default/files/ACS%20CAN%20Short%20Term%20Paper%20FINAL.pdf.
322
This might occur if premiums for STLDI are lower than premiums for individual health insurance coverage. One study, for example, showed that by screening out individuals with pre-ex-
isting conditions and providing fewer comprehensive benefits, issuers may be able to offer STLDI at rates 54 percent below those for (unsubsidized) comprehensive coverage. See Levitt,
Larry, Rachel Fehr, Gary Claxton, Cynthia Cox, and Karen Pollitz (2018). “Why do Short-Term Health Insurance Plans Have Lower Premiums than Plans that Comply with the ACA?” KFF,
available at: https://files.kff.org/attachment/Issue-Brief-Why-Do-Short-Term-Health-Insurance-Plans-Have-Lower-Premiums-Than-Plans-That-Comply-with-the-ACA.

May 6, 2024 1034 Bulletin No. 2024–19
age options or lead to a loss of coverage or
a coverage gap. Many commenters argued
that restricting access to STLDI would
not be appropriate for certain populations
given their coverage needs (for seasonal
employees working in another State, for
example). These commenters noted that
specific groups who benefit from STLDI
policies are most likely to go without
insurance as a result of the STLDI provi-
sions, such as gig-economy workers, con-
tract workers, college students, commer-
cial truck drivers, and travel nurses. Some
commenters suggested that the STLDI
provisions could lead consumers to seek
alternative forms of non-comprehensive
coverage, including coverage offered
in unregulated markets (for example,
through health care sharing ministries).
The Departments acknowledge that some
individuals who purchase STLDI policies
after the applicability date may lose cov-
erage and must wait until the next annual
individual market open enrollment period
to purchase comprehensive coverage (for
example, if an individual with STLDI pur-
chased after the applicability date exhausts
their renewal or extension options or is
unable to enroll in STLDI offered by a
different issuer outside of an open enroll-
ment period) or may choose to become
uninsured. Some individuals might also
seek coverage in unregulated markets.
Those individuals who become uninsured
or obtain coverage in unregulated mar-
kets could face an increased risk of higher
out-of-pocket expenses and medical
debt, reduced access to health care, and
potentially worse health outcomes. The
Departments are of the view, however,
that the overall risk that some individuals
may become uninsured or lose coverage
because of the above circumstances is
outweighed by the fact that a substantial
number of individuals will likely benefit
as a result of the final rules’ STLDI provi-
sions. Overall, the Departments are of the
view that STLDI serves better as a bridge
between different sources of comprehen-
sive coverage than as an alternative to
comprehensive coverage.
Increase in health care spending. To
the extent that these final rules lead to
an increase in enrollment in comprehen-
sive coverage, they might result in an
increase in overall health care utilization
and spending, given that comprehensive
coverage tends to have higher loss ratios
and actuarial values and generally offers
lower cost-sharing requirements and more
generous benefits.
323
Impact on States. The Departments
solicited comments on the magnitude of
the costs that States might incur associ-
ated with enacting new legislation, imple-
menting new laws, and updating existing
regulations regarding STLDI and fixed
indemnity excepted benefits coverage.
However, the Departments received lit-
tle information about the potential costs
to States associated with the provisions
being finalized in these final rules. One
commenter generally stated that the
STLDI provisions would cause economic
harm to States, but the commenter did not
quantify or otherwise specify the type or
extent of the economic impact on States.
While no State is required to enact new
legislation or change its regulations under
the provisions being finalized in these
final rules, the Departments anticipate that
some States could incur a one-time cost
if they do enact new legislation or update
their regulations.
Many commenters also stated that the
2023 proposed rules would generate costs
for States associated with evaluating and
approving redesigned products and pol-
icy forms. The Departments acknowledge
that some State departments of insurance
may incur costs to the extent they need to
review amended marketing materials and
plan documents filed by issuers.
Costs to agents and brokers. The
Departments sought information on the
number of agents and brokers who sell
STLDI, fixed indemnity excepted bene-
fits coverage, and individual health insur-
ance coverage, respectively, and how their
compensation might be affected by the
provisions proposed in the 2023 proposed
rules. Many commenters anticipated that
the financial impacts of the proposals on
agents and brokers would be significant,
particularly given the relatively low com-
mission rates that agents and brokers
receive from the sale of Exchange plans
as compared to STLDI and fixed indem-
nity insurance. Another commenter stated
that the Departments’ analysis lacked suf-
ficient data to account for the potential
impacts on agents and brokers. However,
commenters did not provide information
on the number of agents and brokers that
sell STLDI or fixed indemnity excepted
benefits coverage or data that would assist
in quantifying the impact of the provi-
sions proposed in the 2023 proposed rules
on agents and brokers. Nevertheless, the
Departments acknowledge that the provi-
sions being finalized in these final rules
may affect agents and brokers if there is an
impact on enrollment in STLDI or fixed
indemnity excepted benefits products.
There is the potential for agent and broker
compensation associated with the sale of
STLDI or fixed indemnity excepted ben-
efits coverage to be negatively affected
if there is a reduction in the sale of these
types of coverage. There is also the poten-
tial for agent and broker compensation
associated with the sale of individual
health insurance coverage to be positively
affected if there is an increase in sales of
that coverage.
Costs to issuers. In the 2023 proposed
rules, the Departments explained they
expected that issuers would incur mini-
mal costs associated with the notice pro-
visions. The Departments also expected
that since issuers change their policy doc-
uments routinely, the costs to issuers to
make changes in response to these final
rules would be part of issuers’ usual busi-
ness costs. However, many commenters
stated that issuers would incur operational
costs associated with the provisions for
fixed indemnity excepted benefits cover-
age proposed in the 2023 proposed rules
(to make necessary updates to systems
and processes, and other administrative
tasks, for example). Many commenters
noted the costs to refile documents with
323
As noted earlier in this RIA, many STLDI and fixed indemnity excepted benefits policies offer limited benefits coverage and have relatively low actuarial values. Many STLDI and fixed
indemnity excepted benefit coverage issuers spend a relatively high percentage of premium dollars on administration and overhead See National Association of Insurance Commissioners
(2022). “Accident and Health Policy Experience Report for 2021,” available at: https://naic.soutronglobal.net/portal/Public/en-US/Search/AdvancedSearch. Regarding the differences in
cost-sharing requirements and out-of-pocket expenses between STLDI and individual health insurance coverage, see, for example, Dieguez, Gabriela and Dane Hansen (2020). “The Impact
of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, available at: https://www.milliman.com/en/insight/the-impact-of-short-term-limit-
ed-duration-policy-expansion-on-patients-and-the-aca-individual-market.

Bulletin No. 2024–19 1035 May 6, 2024
State departments of insurance, obtain
State approvals, and ensure compliance,
and the costs associated with new pol-
icy issuance, marketing, enrollment, and
administration. While one commenter
provided an estimate of the overall costs
of implementing all of the provisions for
fixed indemnity excepted benefits cover-
age proposed in the 2023 proposed rules,
no commenter provided estimates of the
costs associated with the provisions for
STLDI or estimates specific to the notice
provisions for STLDI and fixed indemnity
excepted benefits coverage proposed in
the 2023 proposed rules.
The Departments acknowledge these
comments and anticipate that issuers
will incur one-time costs to modify their
products and plan documents to comply
with the provisions for STLDI and fixed
indemnity excepted benefits coverage that
are being finalized in these final rules,
with issuers also incurring costs related to
filing amended marketing materials and
plan documents with State departments
of insurance. These costs are expected to
vary by issuer depending on the number
of States in which they offer products,
State law requirements for STLDI or fixed
indemnity excepted benefits coverage, the
number of products they offer, and the
overall scale of their operations.
324
These
costs will include the costs associated
with the notice provisions. Using wage
information from the Bureau of Labor
Statistics to account for median labor
costs (including a 100 percent increase for
the cost of fringe benefits and other indi-
rect costs),
325
the Departments estimate
that, on average for each issuer, a business
operations specialist will need 4 hours (at
an hourly labor cost of $73.06), an admin-
istrative assistant will need 4 hours (at an
hourly labor cost of $42.38), and a web
developer will need 8 hours (at an hourly
labor cost of $75.56) to revise or place
the notice that must be displayed in their
marketing, application, and enrollment
materials (including on websites) and in
the individual market also to place the
notice in the policy, certificate, or contract
of insurance, to come into compliance
with these final rules. The average cost
per issuer to comply with the notice pro-
visions is estimated to be approximately
$1,066.
326
As noted earlier in this RIA, the
NAIC estimates that there are currently 28
issuers of STLDI in the individual market
and 93 issuers of “other medical (non-
comprehensive)” coverage in the individ-
ual market, which include fixed indemnity
insurance.
Therefore, using the NAIC estimates,
the total one-time cost to issuers of STLDI
and fixed indemnity coverage to comply
with the notice provisions will be at least
approximately $129,015.
327
e. Transfers
Transfers associated with transitions
to comprehensive coverage. Individu-
als currently enrolled in STLDI may be
healthier—on average—than individu-
als enrolled in comprehensive coverage,
because comprehensive coverage is sub-
ject to Federal consumer protections and
requirements for comprehensive coverage
that prohibit those plans from excluding
individuals or charging higher premiums
on the basis of health status, gender, and
other factors, whereas STLDI policies do
not have to comply with these require-
ments and are typically subject to med-
ical underwriting. These final rules are
expected to cause some individuals with
relatively low health care costs to enroll
in individual health insurance cover-
age in lieu of STLDI, which is expected
to improve the risk pools for individual
health insurance coverage and lead to
lower overall average premiums for indi-
vidual health insurance coverage.
CMS previously estimated that gross
premiums for individual health insurance
coverage purchased on an Exchange in
2022 would be 6 percent higher under the
2018 proposed rules than they would have
been in the absence of those rules.
328
CBO
and JCT previously estimated that the
2018 final rules for STLDI, in conjunc-
tion with changes made through the 2018
Department of Labor rule entitled “Defi-
nition of ‘Employer’ Under Section 3(5)
of ERISA—Association Health Plans,”
329

would increase premiums in the individual
and small group health insurance coverage
markets by around 3 percent.
330
An anal-
ysis of individual health insurance cov-
erage rate filing materials for 2020 also
found that the few issuers that explicitly
included a premium adjustment because
of the 2018 final rules increased premiums
by between 0.5 percent and 2 percent in
2020.
331
These analyses suggest that these
final rules should have an effect in the
opposite direction, reducing gross premi-
ums for individual health insurance cov-
erage. OACT estimates that the provisions
regarding STLDI will not affect gross
premiums for individuals with individual
health insurance coverage purchased on
an Exchange in 2024 and 2025, given the
expanded PTC subsidies provided through
the IRA, but will reduce gross premiums
by approximately 0.5 percent in 2026,
2027, and 2028, after the expanded PTC
subsidies have ended.
332
Many commenters agreed with the
Departments that enrollment in STLDI
adversely affects the risk pools for indi-
vidual health insurance coverage, lead-
ing to higher premiums for individual
health insurance coverage. Specifically,
one commenter stated that this adverse
324
The Departments do not have enough data or information to quantify these costs.
325
See Bureau of Labor Statistics (2022). “National Occupational Employment and Wage Estimates,” available at: https://www.bls.gov/oes/current/oes_nat.htm.
326
(4 business operation specialist hours * $73.06) + (4 administrative assistant hours * $42.38) + (8 web developer hours * $75.56) = $1,066.24.
327
(28 STLDI issuers + 93 issuers of other medical (non-comprehensive) coverage) * [(4 business operation specialist hours * $73.06) + (4 administrative assistant hours * $42.38) + (8 web
developer hours * $75.56)] =$129,015.04.
328
CMS Office of the Actuary (2018). “Estimated Financial Effects of the Short-Term, Limited-Duration Policy Proposed Rule,” available at: https://www.cms.gov/Research-Statistics-Da-
ta-and-Systems/Research/ActuarialStudies/Downloads/STLD20180406.pdf.
329
83 FR 28912 (June 21, 2018). This rule was vacated by the District Court of D.C. in State of New York, et al. v. United States Department of Labor, et al., 363 F.Supp.3d 109 (D.D.C. 2019).
330
Congressional Budget Office (2019). “How CBO and JCT Analyzed Coverage Effects of New Rules for Association Health Plans and Short-Term Plans,” available at: https://www.cbo.
gov/publication/54915.
331
Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, available at: https://
www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
332
See section V.B.2.c of this preamble for a discussion of the enrollment effects that drive these premium changes.

May 6, 2024 1036 Bulletin No. 2024–19
selection and its effects would particularly
disadvantage individuals with preexisting
conditions. Furthermore, one study sug-
gests that the 2018 final rules had a nega-
tive effect on the risk pools for individual
health insurance coverage.
333
As such, the
Departments continue to be of the view
that access to STLDI has negative effects
on the risk pools for individual health
insurance coverage.
Some commenters also noted that
enrollment in STLDI in lieu of compre-
hensive coverage could lead to fewer issu-
ers in the Exchanges or otherwise distort or
destabilize the markets for comprehensive
coverage, while one commenter stated
that the impact of enrollment in STLDI on
the markets for comprehensive coverage
would be rather limited (as indicated by
OACT’s impact estimates). A few com-
menters suggested that the STLDI provi-
sions could potentially harm the market
for individual health insurance coverage
due to a reduction in competition, for
example, with one commenter suggesting
that the 2018 final rules promoted issuer
competition in the overall market.
334
The
Departments disagree with these com-
menters and note that STLDI and indi-
vidual health insurance coverage are two
very different products that are generally
subject to different laws and regulations,
and issuers of individual health insurance
coverage are unlikely to have changed
their product offerings to compete with
STLDI.
Some commenters stated that enroll-
ment in fixed indemnity excepted ben-
efits coverage can adversely affect the
risk pools for comprehensive coverage. A
few commenters stated that the impact of
fixed indemnity excepted benefits cover-
age on the risk pools for individual health
insurance coverage purchased on an
Exchange is limited or nonexistent. While
the Departments expect that the notice
provisions being finalized in these final
rules will encourage some individuals to
enroll in comprehensive coverage instead
of fixed indemnity excepted benefits cov-
erage, the Departments do not expect such
increased enrollment to have a significant
impact on market risk pools and therefore
expect a limited impact on premiums for
comprehensive coverage, if any.
Transfers from the Federal Gov-
ernment to individuals. The provisions
regarding STLDI are expected to reduce
Federal PTC spending after the end of
the expanded PTC subsidies provided
through the IRA. Specifically, these pro-
visions are expected to reduce gross pre-
miums for individual health insurance
coverage purchased on an Exchange and
therefore lower per capita PTC spending.
This effect is expected to be partly offset
by an increase in the number of individ-
uals enrolling in Exchange coverage that
would be eligible to receive the PTC (by
approximately 20,000 in 2026, 2027, and
2028). On net, OACT estimates that these
provisions will have no impact on Federal
spending on PTC in 2024 and 2025 given
the expanded PTC subsidies provided
through the IRA, but will reduce Federal
spending on the PTC by approximately
$120 million in 2026, 2027, and 2028.
335

This reduction in Federal spending on
the PTC is viewed as a reduction in the
amount of the transfer from the Federal
Government to individuals.
Transfers among issuers, consumers,
and providers. These final rules could
lead to a transfer in the form of reduced
out-of-pocket expenses from issuers to
consumers who switch from STLDI or
fixed indemnity excepted benefits cover-
age (when used as a substitute for com-
prehensive coverage) to comprehensive
coverage, since more health care services
would be covered under comprehensive
coverage and the out-of-pocket expenses
(such as cost-sharing requirements) for
comprehensive coverage might be lower
than out-of-pocket expenses for STLDI or
fixed indemnity excepted benefits cover-
age.
336
Some commenters suggested that
the STLDI provisions could lead to an
increase in uncompensated care pro-
vided by providers and facilities, to the
extent they lead to an increase in the
number of individuals without any form
of health insurance coverage who are
unable to pay providers and facilities on
an out-of-pocket basis, which would be
a transfer from providers and facilities to
uninsured individuals. However, a few
commenters suggested that the STLDI
provisions could lead to a decrease in
uncompensated care provided by pro-
viders and facilities, to the extent that
individuals with STLDI enroll in com-
prehensive coverage (which would gen-
erally offer more benefits and lower
cost-sharing requirements, and increased
access to health care) in lieu of STLDI;
this would be a transfer from issuers of
comprehensive coverage to providers
and facilities. One commenter also sug-
gested that the fixed indemnity excepted
benefits coverage proposals in the 2023
proposed rules could generate costs for
providers regarding receipt of payments
from patients, which would be a transfer
from providers to these individuals. The
Departments lack data that would allow
for a quantification of these effects but
acknowledge that there may be a poten-
tial increase in uncompensated care pro-
vided by providers and facilities given
the previously-mentioned impact of
these final rules on out-of-pocket expen-
ditures discussed in section V.B.2.d of
this preamble.
333
See Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, available at:
https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
334
The commenter cited a study that compared the trends in Exchange enrollment, premiums, and issuer participation in States that had additional restrictions on or prohibited STLDI and in
States that fully permitted STLDI (in accordance with the 2018 final rules). The study concluded that States that fully permitted STLDI “...have lost fewer enrollees in the individual market,
have had far more insurers offer coverage in the market, and have had larger premium reductions since the [2018 final rules] took effect,” further noting that “the only States where individual
market premiums have increased since 2018 are the five [S]tates that effectively prohibit short-term plans.” See Blase, Brian (2021). “Individual Health Insurance Markets Improving in States
that Fully Permit Short-Term Plans,” Galen Institute, available at: https://galen.org/assets/Individual-Health-Insurance-Markets-Improving-in-States-that-Fully-Permit-Short-Term-Plans.pdf.
335
In fiscal year terms, this would be a reduction in Federal spending of $90 million in 2026, $120 million in 2027, and $120 million in 2028.
336
As noted in the Costs subsection of this RIA, regarding the differences in cost-sharing requirements and out-of-pocket expenses between STLDI and individual health insurance coverage,
see, for example, Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, avail-
able at: https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.

Bulletin No. 2024–19 1037 May 6, 2024
f. Uncertainty
As noted throughout this preamble, due
to a lack of data and information, there
are several areas of uncertainty regarding
the potential impacts of these final rules.
The Departments are unable to forecast
how all of the provisions of these final
rules will affect enrollment in STLDI and
fixed indemnity excepted benefits cover-
age, as the Departments are uncertain how
many individuals are currently enrolled
in STLDI or fixed indemnity excepted
benefits coverage, how many of those
individuals will switch to comprehensive
coverage, how many individuals will try
to find another issuer of STLDI once their
current policy ends, how many individu-
als will choose to remain enrolled in fixed
indemnity excepted benefits coverage, or
how many individuals will choose not to
purchase any form of coverage.
337
As a
result, there is also some uncertainty about
the impacts on market risk pools, premi-
ums, Federal expenditures on PTC, and
on compensation for agents and brokers
selling STLDI, fixed indemnity excepted
benefits coverage, and individual health
insurance coverage. One commenter
noted that the uncertainty in the estimates
pertaining to the number of affected enti-
ties undermines the Departments’ analysis
of impacts.
The Departments sought comments on
all of these areas of uncertainty regarding
the impacts of the 2023 proposed rules
and where possible incorporated data and
information received during the comment
period in estimating the impacts of these
final rules. Despite the uncertainty dis-
cussed in this section and throughout this
preamble, the Departments have enough
data to be confident that the benefits of
these final rules outweigh the costs, and
that these final rules will help ensure that
consumers can clearly distinguish STLDI
and fixed indemnity excepted benefits
from comprehensive coverage, protect
market risk pools and stabilize premiums
for comprehensive coverage, and promote
access to affordable comprehensive cov-
erage.
g. Health Equity Impact
The Departments stated in section II.B
of the preamble to the 2023 proposed rules
that due to the typical underwriting prac-
tices and plan eligibility requirements in
the market for STLDI, individuals might
face higher premiums or might not be
able to purchase STLDI because of pre-
existing health conditions, gender, or
other factors.
338
STLDI and fixed indem-
nity excepted benefits coverage policies
typically do not cover certain essential
health benefits including prescription
drugs, mental health and substance use
disorder services, or maternity services,
339

which could contribute to disparities in
access to health care and health outcomes
(regarding mental health, maternal health,
or infant health, for instance).
340
Many
commenters stated that issuers of STLDI
policies are able to discriminate against
individuals on the basis of health status or
preexisting conditions, age, or gender.
Consumers with low health literacy,
which disproportionately includes con-
sumers with low incomes,
341
might also
be misled into purchasing STLDI or
fixed indemnity excepted benefits cover-
age under the mistaken impression that
it would lower their out-of-pocket costs
while providing comprehensive cover-
age with lower premiums. Consumers
with low income or who are members of
underserved racial and ethnic groups are
more likely to be uninsured and face bar-
riers in accessing care.
342
Individuals in
these populations arguably face the great-
est health and financial consequences if
STLDI or fixed indemnity excepted ben-
efits coverage (when used as a substitute
for comprehensive coverage) proves inad-
equate. These individuals are also poten-
tially most vulnerable to practices like
post-claims underwriting and rescission
that are common in the STLDI market,
which could leave them without any cov-
erage in a health crisis. Some commenters
shared the Departments’ concern over the
disproportionate impact that non-com-
prehensive products may have on con-
sumers with low incomes and consumers
of underserved racial and ethnic groups.
Some commenters indicated that indi-
viduals with low health literacy are dis-
proportionately impacted by misleading
and deceptive marketing practices, as dis-
cussed in section III.A of this preamble.
337
Previous studies have estimated the impact of the STLDI definition adopted in the 2018 final rules on enrollment in individual health insurance coverage, but in conjunction with the impact
of elimination of the individual shared responsibility payment. See Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients
and the ACA Individual Market,” Milliman, available at: https://www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individu-
al-market.
338
See, for example, Barnes, Justin and Fumiko Chino (2022). “Short-term Health Insurance Plans Come Up Short for Patients with Cancer,” JAMA Oncology, Volume 8, Issue 8, available at:
https://jamanetwork.com/journals/jamaoncology/article-abstract/2793127.
339
Dieguez, Gabriela and Dane Hansen (2020). “The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market,” Milliman, available at: https://
www.milliman.com/en/insight/the-impact-of-short-term-limited-duration-policy-expansion-on-patients-and-the-aca-individual-market.
340
See, for example, Hill, Latoya, Samantha Artiga, and Usha Ranji (2022). “Racial Disparities in Maternal and Infant Health: Current Status and Efforts to Address Them,” KFF, available at:
https://www.kff.org/racial-equity-and-health-policy/issue-brief/racial-disparities-in-maternal-and-infant-health-current-status-and-efforts-to-address-them/.
341
See, for example, Hill, Latoya, Samantha Artiga, and Usha Ranji (2022). “Racial Disparities in Maternal and Infant Health: Current Status and Efforts to Address Them,” KFF, available at:
https://www.kff.org/racial-equity-and-health-policy/issue-brief/racial-disparities-in-maternal-and-infant-health-current-status-and-efforts-to-address-them/.
341
See, for example, Rikard, RV, Maxine Thompson, Julie McKinney, and Alison Beauchamp (2016). “Examining Health Literacy Disparities in the United States: A Third Look at the
National Assessment of Adult Literacy,” BMC Public Health, Volume 16, Issue 1, available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5022195/. See also Davis, Stacy, Jonathan
Wischhusen, Steven Sutton, Shannon Christy, Emmanuel Chavarria, Megan Sutter, Siddhartha Roy, Cathy Meade, and Clement Gwede (2020). “Demographic and Psychosocial Factors
Associated with Limited Health Literacy in a Community-based Sample of Older Black Americans,” Patient Education and Counseling, Volume 103, Issue 2, available at: https://doi.
org/10.1016/j.pec.2019.08.026.
342
See Tolbert, Jennifer, Kendal Orgera, and Anthony Damico (2020). “Key Facts about the Uninsured Population,” KFF, available at: https://www.kff.org/uninsured/issue-brief/
key-facts-about-the-uninsured-population/. See also Artiga, Samantha, Latoya Hill, Kendal Orgera, and Anthony Damico (2021). “Health Coverage by Race and Ethnicity, 2010-2019,”
KFF, available at: https://www.kff.org/racial-equity-and-health-policy/issue-brief/health-coverage-by-race-and-ethnicity/. See also KFF (2021). “Adults Who Report Not Having a Personal
Doctor/Health Care Provider by Race/Ethnicity,” available at: https://www.kff.org/other/state-indicator/percent-of-adults-reporting-not-having-a-personal-doctor-by-raceethnicity/. See also
KFF (2021). “Adults Who Report Not Seeing a Doctor in the Past 12 Months Because of Cost by Race/Ethnicity,” available at: https://www.kff.org/other/state-indicator/percent-of-adults-
reporting-not-seeing-a-doctor-in-the-past-12-months-because-of-cost-by-raceethnicity/.

May 6, 2024 1038 Bulletin No. 2024–19
These final rules are expected to help
address these health inequities by ensur-
ing that consumers can more easily dis-
tinguish STLDI and fixed indemnity
excepted benefits coverage from compre-
hensive coverage and thereby encouraging
enrollment in comprehensive coverage.
h. Regulatory Review Cost Estimation
If regulations impose administrative
costs on entities (for example, the time
needed to read and interpret rules), regu-
latory agencies should estimate the total
cost associated with regulatory review.
343

In the 2023 proposed rules, the Depart-
ments assumed that approximately 250
entities would review the 2023 proposed
rules. The Departments acknowledged
that the number of entities reviewing the
2023 proposed rules could be higher or
lower than anticipated. The Departments
ultimately received 571 unique comments
on the 2023 proposed rules that pertained
to the proposals for STLDI and fixed
indemnity excepted benefits coverage, of
which 247 commenters were identified as
entities (for example, issuers, State insur-
ance departments, industry associations,
and advocacy organizations). Based on
the comments received, the Departments
now estimate that the 571 unique com-
menters that commented on the 2023
proposed rules, along with at least one
additional individual from each of the 247
entities commenting on the 2023 proposed
rules, will review these final rules. That is,
the Departments estimate that at least 818
individuals will read and interpret these
final rules.
Using wage information from the
Bureau of Labor Statistics, for Business
Operations Specialists (All Other), to
account for median labor costs (includ-
ing a 100 percent increase for the cost of
fringe benefits and other indirect costs),
the Departments estimate that the cost of
reviewing these final rules will be $73.06
per hour.
344
The Departments estimate
that it will take each reviewing individ-
ual approximately 6 hours on average to
review these final rules, with an associ-
ated cost of $438.36 (6 hours x $73.06).
Therefore, the Departments estimate that
the (one-time) total cost of reviewing
these final rules will be approximately
$358,578 (818 x $438.36). The Depart-
ments sought comments on this approach
to estimating the total burden and cost for
interested parties to read and interpret the
rules, and received one comment arguing
that reading and understanding the rules
would take far longer than the 4 hours
estimated in the 2023 proposed rules. The
Departments agree that it might take some
reviewers longer than the previously esti-
mated 4 hours, or the currently estimated
6 hours, to read and interpret the rules, but
that an average estimate is reasonable.
C. Regulatory Alternatives –
Departments of Health and Human
Services and Labor
In developing the proposed rules, the
Departments considered various alterna-
tive approaches. The Departments con-
sidered leaving in place the duration stan-
dards for STLDI established in the 2018
final rules but concluded that the 2018
final rules’ duration standards were too
lengthy for the reasons described in sec-
tion III.A.2 of this preamble. The Depart-
ments also considered proposing to limit
the maximum duration of STLDI policies
to a less-than-6-month period to minimize
disruption for consumers in some (but
not all) States that have implemented a
less than-6-month period, to a less than-
3-month period as implemented in the
2016 final rules, or otherwise shortening
the maximum duration to a time period
shorter than allowed under current regu-
lations. However, as further discussed in
in section III.A.2 of this preamble, the
Departments ultimately decided to pro
-
pose and finalize a maximum duration of
no more than 4 months to align with the
rules regarding the 90-day waiting period
limitation and the 1-month reasonable and
bona fide employment-based orientation
period that is permitted under the ACA.
The Departments considered propos-
ing to limit stacking of STLDI policies,
whether sold by the same or different
issuer. However, after considering the
potential challenges issuers and State
regulators would face in attempting to
determine whether an individual had
previously enrolled in an STLDI policy
with a different issuer, the Departments
decided to propose to limit stacking only
where STLDI is sold to an individual by
the same issuer and sought comments on
whether to extend the limit on stacking
to STLDI sold to an individual by issuers
that are members of the same controlled
group. Some commenters suggested lim-
iting stacking of multiple or consecutive
STLDI policies sold by issuers that are
members of the same controlled group or
sold to members of the same household.
Other commenters supported the Depart-
ments preventing stacking of STLDI
policies sold by unaffiliated issuers. The
Departments decided that limiting the sale
of STLDI policies offered by issuers that
are members of the same controlled group
would prevent issuers from using their
corporate structure to circumvent the rules
related to maximum duration, but it is not
apparent to the Departments that limiting
stacking across unaffiliated issuers or dif-
ferent members of the same household
accomplishes any similar goal.
For new STLDI sold or issued on or
after the effective date of the final rules,
the Departments proposed an applicabil-
ity date for the amendments to the Fed-
eral definition of STLDI that would apply
for coverage periods beginning on or
after the effective date of the final rules.
Some commenters expressed concern that
issuers of STLDI would need more time
to complete a number of administrative
tasks – such as evaluating plan designs,
updating system processes, and re-filing
policy forms with State regulators – and
suggested the Departments finalize an
applicability date between 90 days and
12 months after the effective date of the
final rules. Other commenters were con-
cerned about the potential for consumer
confusion when STLDI is marketed and
sold during the annual individual market
open enrollment period. To provide more
343
See Office of the Assistant Secretary for Planning and Evaluation (2017). “Guidelines for Regulatory Impact Analysis,” available at: https://aspe.hhs.gov/reports/guidelines-regulatory-im-
pact-analysis.
344
See Bureau of Labor Statistics (2022). “National Occupational Employment and Wage Estimates,” available at: https://www.bls.gov/oes/current/oes_nat.htm.

Bulletin No. 2024–19 1039 May 6, 2024
time for issuers to come into compliance
with these final rules for new STLDI pol-
icies and ensure that STLDI with a lon-
ger maximum duration is not marketed
during the next annual individual market
open enrollment period, the Departments
decided that for new STLDI sold or issued
on or after September 1, 2024, the revised
Federal definition of STLDI under these
final rules will apply for coverage periods
beginning on or after September 1, 2024.
This will allow consumers who enroll in
a new STLDI policy on or after Septem-
ber 1, 2024, to avoid a gap between the
STLDI policy and when comprehensive
coverage purchased during the next indi-
vidual market open enrollment period will
begin.
The Departments considered propos-
ing a limit on the marketing or sale of
STLDI during the annual individual mar-
ket open enrollment period. The Depart-
ments are concerned that aggressive and
deceptive marketing practices by some
issuers have lured consumers, looking for
comprehensive coverage, into enrolling in
STLDI, exposing them to financial risk.
The Departments appreciated the com-
ments received regarding how the Depart-
ments can support State efforts to limit the
marketing and/or sale of STLDI during
the open enrollment period and will take
these comments into consideration as the
Departments consider potential actions
they can take to address the marketing and
sale of STLDI during the individual mar-
ket open enrollment period.
With respect to the proposed amend-
ments to the notices provided to consum-
ers considering enrolling in or purchas-
ing STLDI, the Departments considered
including a complete list of Federal pro-
tections that apply to consumers enrolled
in comprehensive coverage versus STLDI.
This approach would more fully distin-
guish STLDI from comprehensive cov-
erage and highlight in greater detail the
risks to consumers of enrolling in STLDI
instead of comprehensive coverage. How-
ever, after a review of the comments, con-
sulting with plain language experts and
conducting consumer testing, the Depart-
ments are of the view that providing a
complete comparison of protections that
a consumer would forgo by enrolling in
STLDI rather than comprehensive cov-
erage would result in a lengthy, complex
notice that could be difficult for the typical
consumer to understand. Increasing the
length and complexity of the notice would
also increase burden for issuers to pro-
vide the notice on policy documents and
marketing and application materials as
required by these final rules. The Depart-
ments solicited comments on all aspects
of the revised notice, including whether
a different format or presentation would
result in a more useful, consumer-friendly
notice. For a more detailed discussion of
the notices considered, please reference
section III.A.4 of this preamble.
The Departments considered several
options when finalizing the notice require-
ments for fixed indemnity excepted ben-
efits coverage in the group market. HHS
considered the same options when revis-
ing the content and standards for the con-
sumer notice in the individual market. As
discussed in section III.B.1 of this pream-
ble, consideration was given to changes
to the wording, appearance and timing
related to the notice provisions. The
Departments considered different appli-
cability dates for these notices, including
applying the notice to plan years (or in
the individual market, coverage periods)
(including renewals) beginning on or after
the effective date of these final rules (as
proposed), September 1, 2024 (which
would align with the applicability date
finalized in these rules for the STLDI
notice provision), January 1, 2025, and
later dates such as January 1, 2027. The
Departments concluded that applying the
notice to plan years (or in the individ-
ual market, coverage periods) (including
renewals) beginning on or after January
1, 2025, strikes an appropriate balance
between providing plans and issuers
offering fixed indemnity excepted bene-
fits coverage with additional time to add
or update the notice and ensuring that the
notices are present for new enrollments
and renewals offered on a calendar year
basis. The Departments are of view that
a large proportion of group market fixed
indemnity excepted benefits coverage, for
which the notice will be new, are likely to
be offered on a calendar year basis, as part
of an employer’s open enrollment period
for their employees. In addition, one com-
menter suggested that the Departments
should require an attestation from whom-
ever sells fixed indemnity excepted ben-
efits coverage, confirming that the risks
and limitations were explained during
the sale. The Departments are of the view
that it would be more effective and effi-
cient to provide all prospective enrollees
with consistent messaging on all market-
ing, application, and enrollment materials
(and, in the individual market, also on the
first page of the policy, certificate, or con-
tract of insurance). The Departments also
declined to impose an attestation require-
ment based on the associated cost and
administrative burden to plans, issuers,
plan sponsors, agents, and brokers.
One commenter suggested that the
Departments should explore additional
consumer protection measures, such as
requiring plans and issuers to provide
prospective consumers with a complete
and easily searchable schedule of bene-
fits prior to purchase, as well as a longer
free-look period in which an enrollee can
cancel the plan for any reason at no cost.
The Departments agree that these features
would be beneficial and encourage plans
and issuers to offer them to the extent fea-
sible.
D. Paperwork Reduction Act
These final rules revise the Federal
definition of STLDI to provide that a
revised notice must be prominently dis-
played (in either paper or electronic form)
in at least 14-point font on the first page of
the policy, certificate, or contract of insur-
ance and in any marketing, application,
and enrollment materials, including for
renewals or extensions (including on web-
sites that advertise or enroll in STLDI).
These notice provisions apply for both
new and existing STLDI for coverage
periods beginning on or after September
1, 2024.
These final rules also amend the
regulations regarding fixed indemnity
excepted benefits coverage in the individ-
ual market to provide that a revised notice
must be prominently displayed (in either
paper or electronic form) on the first page
of the policy, certificate, or contract of
insurance, and in any marketing, appli-
cation, and enrollment (or reenrollment)
materials. These final rules also amend
the regulations regarding fixed indemnity
excepted benefits coverage in the group
market to provide that a notice must be

May 6, 2024 1040 Bulletin No. 2024–19
prominently displayed (in either paper or
electronic form) on the first page of any
marketing, application, and enrollment (or
reenrollment) materials. These notice pro-
visions for group and individual market
fixed indemnity excepted benefits cover-
age are applicable to both new and exist-
ing coverage with respect to plan years (in
the individual market, coverage periods)
beginning on or after January 1, 2025.
The Departments are providing the
exact text for the STLDI and fixed indem-
nity excepted benefits coverage notices in
these final rules, and the language will not
need to be customized. The burden asso-
ciated with these notices is therefore not
subject to the Paperwork Reduction Act of
1995 in accordance with 5 CFR 1320.3(c)
(2) because these notices do not contain
a “collection of information” as defined
in 44 U.S.C. 3502(3). Consequently, this
document need not be reviewed by OMB
under the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et
seq.).
The Departments solicited comments
on the potential burden on issuers if the
final rules were to include required notices
with language that would need to be cus-
tomized with State-specific information,
as discussed in this preamble at section
III.A.4 for STLDI and section III.B.1.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
(5 U.S.C. 601, et seq.) requires agencies
to analyze options for regulatory relief of
small entities and to prepare a regulatory
flexibility analysis to describe the impact
of a rule on small entities, unless the head
of the agency can certify that the rule will
not have a significant economic impact on
a substantial number of small entities. The
RFA generally defines a “small entity”
as (1) a proprietary firm meeting the size
standards of the Small Business Adminis-
tration (SBA), (2) a not-for-profit organi-
zation that is not dominant in its field, or
(3) a small government jurisdiction with a
population of less than 50,000. States and
individuals are not included in the defini-
tion of “small entity.” The data and con-
clusions presented in this section amount
to the Departments’ final regulatory flexi-
bility analysis under the RFA.
1. Need for Regulatory Action,
Objectives, and Legal Basis
This rulemaking is authorized by sec-
tion 9833 of the Code, section 734 of
ERISA, and section 2792 of the PHS Act,
which authorize the Secretaries of the
Treasury, Labor, and HHS to issue such
regulations as may be necessary or appro-
priate to carry out the provisions of chap-
ter 100 of the Code, part 7 of subtitle B of
title I of ERISA, and title XXVII of the
PHS Act.
These final rules address specific issues
that are critical to ensuring that consumers
can clearly distinguish STLDI and fixed
indemnity excepted benefits coverage
from comprehensive coverage and make
better informed decisions about the cover-
age they chose to purchase. As discussed
earlier in this RIA, STLDI and fixed
indemnity insurance tend to offer limited
benefits and have relatively low actuarial
values when compared to comprehen-
sive coverage. Because STLDI and fixed
indemnity insurance are sold outside of
the Exchanges and are generally not sub-
ject to the Federal consumer protections
and requirements for comprehensive cov-
erage, consumers may have limited infor-
mation about the limitations, value, and
quality of the coverage being sold, and it
might be mistakenly viewed as a substi-
tute for comprehensive coverage.
Generally, these final rules revise the
Federal definition of STLDI for new pol-
icies, certificates, or contracts of insurance
to limit their term to 3 months and maxi-
mum duration, within a 12-month period,
to 4 months. Additionally, these final rules
further revise the Federal definition of
STLDI and amend the regulations regard-
ing fixed indemnity excepted benefits
coverage to provide that a notice for both
new and existing STLDI and fixed indem-
nity excepted benefits coverage must be
prominently displayed (in either paper or
electronic form) on the first page of any
marketing, application, and enrollment (or
reenrollment) materials, as described in this
preamble at sections III.A.5 and III.B.1.
These final rules will support the goals
of the ACA by increasing access to afford-
able and comprehensive health coverage,
strengthening health insurance markets,
and promote better consumer understand-
ing of coverage options.
2. Number of Affected Small Entities as
Defined by the Regulatory Flexibility Act
The provisions in these final rules will
affect issuers of STLDI, issuers of fixed
indemnity excepted benefits coverage,
and agents and brokers selling STLDI and
fixed indemnity excepted benefits cover-
age. For purposes of analysis under the
RFA, the Departments consider issuers
of STLDI and issuers of fixed indemnity
excepted benefits coverage that have aver-
age annual receipts of $47 million or less
as small entities. Health insurance issuers
are generally classified under the North
American Industry Classification System
(NAICS) code 524114 (Direct Health and
Medical Insurance Carriers). According
to SBA size standards,
345
entities with
average annual receipts of $47 million or
less are considered small entities for this
NAICS code. The Departments expect
that few, if any, insurance companies
underwriting health insurance policies fall
below these size thresholds. Based on data
from MLR annual report submissions for
the 2021 MLR reporting year, approx-
imately 87 out of 483 issuers of health
insurance coverage nationwide had total
premium revenue of $47 million or less.
346

However, it should be noted that over 77
percent of these small companies belong
to larger holding groups, and many, if not
all, of these small companies are likely
to have non-health lines of business that
will result in their revenues exceeding $47
million. The Departments expect this to
be the case for issuers of STLDI and fixed
indemnity excepted benefits coverage. As
noted earlier in this RIA, the Departments
are unable to precisely determine how
many small issuers of STLDI and fixed
indemnity excepted benefits coverage will
be affected by these final rules. Neverthe-
less, the Departments note that the NAIC
reported that there were at least 28 issuers
of STLDI in the individual market across
345
Small Business Administration (2023). “Table of Size Standards (last updated March 2023),” available at: https://www.sba.gov/document/support-table-size-standards.
346
Based on internal calculations. Source: CMS, Medical Loss Ratio Data and System Resources, available at: https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.

Bulletin No. 2024–19 1041 May 6, 2024
the U.S. in 2022 and at least 93 issuers
of “other non-comprehensive coverage”
(including fixed indemnity insurance) in
the individual market across the U.S. in
2022.
347
Data regarding issuers of STLDI
and “other medical (non-comprehensive)”
coverage are only available for the individ-
ual market. The Departments have identi-
fied 2 issuers of STLDI and 3 issuers of
fixed indemnity insurance that fall below
the $47 million threshold and could poten-
tially be impacted by these final rules.
348

These issuers will incur costs associated
with the notice provisions and could
also incur one-time costs to modify their
products to comply with the provisions
for STLDI and fixed indemnity excepted
benefits coverage that are being finalized
in these final rules and to file amended
marketing materials and plan documents
with State departments of insurance, as
discussed further in section V.E.3 of this
preamble. The Departments solicited
comments on the number of small issuers
of STLDI and the number of small issuers
of fixed indemnity excepted benefits cov-
erage but did not receive any additional
information to inform the analysis.
For purposes of analysis under the
RFA, the Departments consider agents
and brokers that have average annual
receipts of $15 million or less as small
entities. Agents and brokers are classified
under NAICS code 524210 (Insurance
Agencies and Brokerages), with a size
standard of $15 million or less. These
rules may affect agents and brokers if
there is an impact on enrollment in STLDI
or fixed indemnity excepted benefits prod-
ucts. There is the potential for the agent
and broker compensation
349
associated
with the sale of STLDI and fixed indem-
nity excepted benefits coverage to be neg-
atively affected if there is a reduction in
sales of that coverage. There is also the
potential for agent and broker compensa-
tion associated with the sale of individual
health insurance coverage to be positively
affected if there is an increase in sales
of that coverage. However, due to a lack
of data, the Departments were unable to
precisely estimate how many agents and
brokers might be affected by the 2023
proposed rules and the magnitudes of the
potential changes in compensation.
350
The
Departments solicited comments on the
number of agents and brokers who sell
STLDI, fixed indemnity excepted bene-
fits coverage, and individual health insur-
ance coverage, respectively, and how their
compensation might be affected by the
2023 proposed rules. Many commenters
stated that the financial impacts of the pro-
posed Federal definitions for STLDI and
fixed indemnity excepted benefits cover-
age on agents and brokers would be signif-
icant, particularly given the relatively low
commission rates that agents and brokers
receive from the sale of Exchange plans as
compared to STLDI and fixed indemnity
insurance. Another commenter stated that
the regulatory flexibility analysis lacked
sufficient data to account for the potential
impacts on agents and brokers. Comment-
ers did not provide additional information
on the number of agents and brokers that
sell STLDI and fixed indemnity insurance
or data that would assist in quantifying the
impact of these final rules on agents and
brokers. As noted throughout this pream-
ble, and discussed in section V.B.2.f of
this preamble, due to a lack of data and
information, there are several areas of
uncertainty regarding the potential market
impacts of these final rules. As a result,
there is also some uncertainty about the
potential impact on the compensation of
agents and brokers.
To summarize, there is some uncer-
tainty about the impacts of these rules
on the revenue of issuers of STLDI and
fixed indemnity excepted benefits cover-
age and the compensation of agents and
brokers selling STLDI and fixed indem-
nity insurance. Nevertheless, the Depart-
ments acknowledge that to comply with
these final rules, issuers of STLDI fixed
indemnity excepted benefits coverage will
incur a cost and that agents and brokers
may be impacted by these final rules due
to the potential impacts on enrollment in
STLDI or fixed indemnity excepted ben-
efits products. A brief discussion of the
regulatory alternatives is found in section
V.E.4 of this preamble and a more detailed
discussion of the regulatory alternatives
considered is found in section V.C of this
preamble.
3. Compliance Requirements and Costs
As discussed in section V.B.2.h of this
preamble, the Departments estimate the
one-time cost to review these final rules
will be approximately $438 per entity
(6 hours x $73.06). As noted in section
V.B.2.d of this preamble, the Depart-
ments acknowledge that issuers will
also incur one-time costs to modify their
products to comply with the provisions
for STLDI and fixed indemnity excepted
benefits coverage that are being finalized
in these rules and filing amended market-
ing materials and plan documents with
State departments of insurance. These
costs are expected to vary by issuer
depending on the number of States in
which they offer products, the number of
products they offer, and the overall scale
of their operations.
351
Issuers of STLDI
and fixed indemnity excepted benefits
coverage will incur costs associated with
the notice provisions in these final rules,
which the Departments estimate to be
approximately $1,066 per issuer,
352
as
described in section V.B.2.d of this pre-
amble.
4. Duplication, Overlap, and Conflict
with Other Rules and Regulations
The Departments do not anticipate any
duplication, overlap, or conflict with other
rules and regulations associated with these
rules. These rules revise current regula-
tions to ensure that consumers can clearly
distinguish STLDI and fixed indemnity
347
Id.
348
This was informed by a review of issuers’ financial records ranging from 2018-2022.
349
Compensation includes commissions, fees, or other incentives (for example, rewards or bonuses) as established in the relevant contract between an issuer and the agent or broker.
350
Previously, in 86 FR 51730, 51756, the Departments noted that a total of 55,541 agents and brokers work with issuers. Many of these agents and brokers are likely to be employed by small
entities.
351
The Departments do not have enough data or information to quantify these costs.
352
(4 business operation specialist hours * $73.06) + (4 administrative assistant hours * $42.38) + (8 web developer hours * $75.96) = $1,066.24.

May 6, 2024 1042 Bulletin No. 2024–19
excepted benefits coverage from compre-
hensive coverage.
5. Significant Alternatives
The regulatory alternatives considered
in developing these rules are discussed in
section V.C of this preamble. The Depart-
ments are of the view that none of these
alternatives would both achieve the policy
objectives and goals of these final rules as
previously stated and be less burdensome
to small entities. The Departments did
receive comments on alternative timelines
for issuers to comply with the require-
ments (including small entities). The
Departments decided to delay the appli-
cability dates for certain provisions to
provide more time for issuers (including
small entities) to modify their products
and implement the required changes while
still achieving the objectives of these final
rules. For a more detailed discussion of the
regulatory alternatives considered, please
refer to section V.C of this preamble.
6. Impact on Small Rural Hospitals
In addition, section 1102(b) of the
Social Security Act requires agencies to
prepare a regulatory impact analysis if
a rule may have a significant economic
impact on the operations of a substantial
number of small rural hospitals. This anal-
ysis must conform to the provisions of
section 604 of the RFA. The Departments
welcomed comments on this and did not
receive any comments specifically regard-
ing the impact of the provisions proposed
in the 2023 proposed rules on small rural
hospitals. Many commenters did note that
the provisions proposed in the 2023 pro-
posed rules could increase the potential
number of uninsured individuals and a
few commenters indicated that hospitals
may find themselves treating more unin-
sured patients that are unable to pay for
the services rendered. While these final
rules are not subject to section 1102 of
the Social Security Act, the Departments
are of the view that these final rules will
not have a significant impact on the oper-
ations of a substantial number of small
rural hospitals.
F. Special Analyses – Department of the
Treasury
Pursuant to the Memorandum of
Agreement, Review of Treasury Regula-
tions under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required. Pursuant to
section 7805(f) of the Code, these regu-
lations have been submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on their
impact on small business.
G. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires that
agencies assess anticipated costs and ben-
efits and take certain other actions before
issuing a rule that includes any Federal
mandate that may result in expenditures in
any 1 year by State, local, or Tribal gov-
ernments, in the aggregate, or by the pri-
vate sector, of $100 million in 1995 dol-
lars, updated annually for inflation. That
threshold is approximately $183 million
in 2024. As detailed in section V.B.2.d of
this preamble, the combined impact on
State, local, or Tribal governments and the
private sector is not expected to be above
the $183 million threshold.
H. Federalism
Executive Order 13132 establishes
certain requirements that Federal agen-
cies must meet when they issue rules that
impose substantial direct costs on State
and local governments, preempt State law,
or otherwise have federalism implications.
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have federalism implications or limit the
policy-making discretion of the States, the
Departments have engaged in efforts to
consult with and work cooperatively with
affected States, including participating in
conference calls with and attending con-
ferences of the NAIC.
In the Departments’ view, these final
rules have Federalism implications
because they may have direct effects on
the States, the relationship between the
National Government and the States,
or on the distribution of power and
responsibilities among various levels of
government. Health insurance issuers
offering STLDI and plans and issuers
offering fixed indemnity excepted ben
-
efits coverage must meet the minimum
Federal standards for such coverage not
to be subject to the Federal consumer
protections and requirements for com-
prehensive coverage. States with State
requirements for STLDI or fixed indem-
nity excepted benefits coverage that do
not follow the minimum Federal stan-
dards for such coverage, as amended by
these final rules, may therefore choose to
update their laws and regulations regard-
ing STLDI or fixed indemnity excepted
benefits coverage to align with the min-
imum Federal standards so that such
coverage issued in the State is treated as
exempt from the Federal consumer pro-
tections and requirements for compre-
hensive coverage.
In general, through section 514, ERISA
supersedes State laws to the extent that
they relate to any covered employee ben-
efit plan, and preserves State laws that
regulate insurance, banking, or securi-
ties. While ERISA prohibits States from
regulating an employee benefit plan as
an insurance or investment company or
bank, the preemption provisions of sec-
tion 731 of ERISA and sections 2724 and
2762 of the PHS Act (implemented in 29
CFR 2590.731(a) and 45 CFR 146.143(a)
and 148.210(b)) apply so that the Federal
consumer protections and requirements
for comprehensive coverage are not to be
construed to supersede any provision of
State law which establishes, implements,
or continues in effect any standard or
requirement solely relating to health insur-
ance issuers in connection with individual
or group health insurance coverage except
to the extent that such standard or require-
ment prevents the application of a Federal
requirement.
353
The conference report
accompanying HIPAA, when this Federal
preemption standard was first established
353
A similar preemption provision was established for the Exchange and other Federal health insurance requirements that are codified outside of title XXVII of the PHS Act. See sections
1311(k) and 1321(d) of the ACA.

Bulletin No. 2024–19 1043 May 6, 2024
for the requirements in title XXVII of the
PHS Act, indicates that this is intended to
be the “narrowest” preemption of State
laws.
354
These final rules define STLDI for pur-
poses of the Code, ERISA, and the PHS
Act. Insurance coverage that meets the
definition of STLDI in these final rules
will qualify for the exception to the Fed-
eral definition of individual health insur-
ance coverage and be exempt from the
Federal consumer protections and require-
ments applicable to comprehensive cover-
age.
Nothing in these final rules prevents
regulation of STLDI for purposes of State
law. For example, States may determine
whether to permit the sale of STLDI in
their insurance markets. If a State law per-
mits or requires an action that is inconsis-
tent with the Federal definition of STLDI,
any coverage offered pursuant to that State
law that does not meet the standards set
forth in these final rules would not qualify
as STLDI under Federal law and would
be subject to the Federal consumer pro-
tections and requirements applicable to
comprehensive coverage. For example, if
a State were to prohibit policies issued in
that State from including the Federal con-
sumer notice, then coverage in that State
that did not include the Federal consumer
notice language would not qualify for the
exclusion from the PHS Act definition
of individual health insurance coverage
and thus would be subject to the Federal
consumer protections and requirements
applicable to individual health insurance
coverage.
Similarly, if a State law were to require
the removal of language from the Fed-
eral consumer notice for fixed indem-
nity excepted benefits coverage finalized
in these final rules, any policy issued in
the State that did not include the Federal
notice would not be considered fixed
indemnity excepted benefits coverage for
purposes of Federal law and thus would
be subject to the Federal consumer protec-
tions and requirements applicable to com-
prehensive coverage.
Many commenters on the 2023 pro-
posed rules discussed the federalism
implications of the proposed provisions
for STLDI and fixed indemnity excepted
benefits coverage, as discussed in sections
III.A.1 and III.B.1, respectively of this
preamble.
The Departments continue to be of the
view that there is a need for action regard-
ing STLDI and fixed indemnity excepted
benefits coverage at the Federal level
given, among other factors, the need to
promote consumer understanding of cov-
erage options and ensure consumers do
not mistakenly enroll in STLDI and fixed
indemnity excepted benefits coverage as
a substitute for comprehensive coverage,
the prevalence of aggressive and decep-
tive sales and marketing practices, reports
of increased enrollment in STLDI through
out-of-State associations, and the potential
inability of States to regulate and collect
information about these associations.
355
While developing these final rules,
the Departments have attempted to bal-
ance States’ interests in regulating health
insurance issuers and their health insur-
ance markets with Congress’ intent to
establish a general Federal framework for
health insurance coverage, including the
provision of certain key, uniform mini-
mum protections to consumers enrolled in
comprehensive coverage in every State. It
is the Departments’ view that by doing so
they have complied with the requirements
of Executive Order 13132.
I. Congressional Review Act
Pursuant to Subtitle E of the Small
Business Regulatory Enforcement Fair-
ness Act of 1996 (also known as the
Congressional Review Act, 5 U.S.C
801 et seq.), OIRA has determined that
this rule meets the criteria set forth in 5
U.S.C. 804(2). Accordingly, this rule has
been transmitted to the Congress and the
Comptroller General for review.
Heather C. Maloy,
Acting Deputy Commissioner for
Ser-
vices and Enforcement, Internal Revenue
Service.
Aviva Aron-Dine,
Acting Assistant Secretary (Tax Policy),
Department of the Treasury.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits
Security Administration, Department of
Labor.
Xavier Becerra,
Secretary, Department of Health and
Human Services.
354
See House Conf. Rep. No. 104–736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018 and available at: https://www.congress.gov/congressional-report/104th-congress/
house-report/736/1.
355
Keith, Katie (2020). “New Congressional Investigation of Short-Term Plans,” Health Affairs, available at: https://www.healthaffairs.org/do/10.1377/forefront.20200626.227261/full/. See
also Curran, Emily, Dania Palanker, and Sabrina Corlette (2019). “Short-Term Health Plans Sold Through Out-of-State Associations Threaten Consumer Protections,” Commonwealth Fund,
available at: https://www.commonwealthfund.org/blog/2019/short-term-health-plans-sold-through-out-state-associations-threaten-consumer-protections.

May 6, 2024 1044 Bulletin No. 2024–19
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Pensions,
Reporting and recordkeeping require-
ments.
29 CFR Part 2590
Child support, Employee benefit plans,
Health care, Health insurance, Infants and
children, Maternal and child health, Pen-
alties, Pensions, Privacy, Reporting and
recordkeeping requirements.
45 CFR Parts 144 and 146
Health care, Health insurance, Report-
ing and recordkeeping requirements.
45 CFR Part 148
Administrative practice and procedure,
Health care, Health insurance, Insurance
companies, Penalties, Reporting and
recordkeeping requirements.
DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR
Part 54
For the reasons stated in the preamble,
the Department of the Treasury and the IRS
amend 26 CFR part 54 as set forth below:
PART 54—PENSION AND EXCISE
TAX
1. The general authority citation for part
54 continues to read as follows: Authority:
26 U.S.C. 7805, unless otherwise noted.
* * * * *
2. Section 54.9801-2 is amended by
revising the definition of “Short-term, lim-
ited-duration insurance” to read as follows:
§ 54.9801-2 Definitions.
* * * * *
Short-term, limited-duration insurance
means health insurance coverage provided
pursuant to a policy, certificate, or contract
of insurance with an issuer that meets the
conditions of paragraph (1) of this defini-
tion.
(1) Short-term, limited-duration insur-
ance means health insurance coverage
provided pursuant to a policy, certificate,
or contract of insurance with an issuer
that:
(i) Has an expiration date specified
in the policy, certificate, or contract of
insurance that is no more than 3 months
after the original effective date of the pol-
icy, certificate, or contract of insurance,
and taking into account any renewals or
extensions, has a duration no longer than
4 months in total. For purposes of this
paragraph (1)(i), a renewal or extension
includes the term of a new short-term,
limited-duration insurance policy, certifi-
cate, or contract of insurance issued by the
same issuer, or if the issuer is a member of
a controlled group, any other issuer that is
a member of such controlled group, to the
same policyholder within the 12-month
period beginning on the original effective
date of the initial policy, certificate, or
contract of insurance; and
(ii) Displays prominently on the first
page (in either paper or electronic form,
including on a website) of the policy, cer-
tificate, or contract of insurance, and in any
marketing, application, and enrollment
materials (including reenrollment mate-
rials) provided to individuals at or before
the time an individual has the opportunity
to enroll (or reenroll) in the coverage, in
at least 14-point font, the language in the
following notice:
IMPORTANT: This is a short-term, limited-duration policy, NOT comprehensive health coverage
This is a temporary limited policy that has fewer benefits and Federal protections than other types of health insurance options, like
those on HealthCare.gov.
This policyInsurance on HealthCare.gov
Might not cover you due to preexisting health conditions like
diabetes, cancer, stroke, arthritis, heart disease, mental health &
substance use disorders
Can’t deny you coverage due to preexisting health conditions
Might not cover things like prescription drugs, preventive
screenings, maternity care, emergency services, hospitalization,
pediatric care, physical therapy & more
Covers all essential health benefits
Might have no limit on what you pay
out-of-pocket for care
Protects you with limits on what you pay each year out-of-
pocket for essential health benefits
You won’t qualify for Federal financial help to pay premiums
& out-of-pocket costs
Many people qualify for Federal financial help
Doesn’t have to meet Federal standards for comprehensive
health coverage
All plans must meet Federal standards

Bulletin No. 2024–19 1045 May 6, 2024
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
(2) For purposes of paragraph (1)(i)
of this definition, the term “controlled
group” means any group treated as a sin-
gle employer under section 52(a), 52(b),
414(m), or 414(o) of the Code.
(3) If any provision of this definition
is held to be invalid or unenforceable by
its terms, or as applied to any entity or
circumstance, or stayed pending further
agency action, the provision shall be con-
strued so as to continue to give the maxi-
mum effect to the provision permitted by
law, along with other provisions not found
invalid or unenforceable, including as
applied to entities not similarly situated or
to dissimilar circumstances, unless such
holding is that the provision is invalid
and unenforceable in all circumstances, in
which event the provision shall be sever-
able from the remainder of the definition
and shall not affect the remainder thereof.
* * * * *
3. Section 54.9831-1 is amended by
adding paragraphs (c)(4)(ii)(D) and (c)(4)
(iv) to read as follows:
§ 54.9831-1 Special rules relating to
group health plans.
* * * * *
(c) * * *
(4) * * *
(ii) * * *
(D) For plan years beginning on or
after January 1, 2025, with respect to hos-
pital indemnity or other fixed indemnity
insurance:
(1) The plan or issuer displays promi-
nently on the first page (in either paper or
electronic form, including on a website)
of any marketing, application, and enroll-
ment materials that are provided to par-
ticipants at or before the time participants
are given the opportunity to enroll in the
coverage, in at least 14-point font, the lan-
guage in the following notice:
IMPORTANT: This is a fixed indemnity policy,
NOT health insurance
This fixed indemnity policy may pay you a limited dollar amount if you’re sick or hospitalized. You’re still responsible for paying the
cost of your care.
• The payment you get isn’t based on the size of your medical bill.
• There might be a limit on how much this policy will pay each year.
• This policy isn’t a substitute for comprehensive health insurance.
• Since this policy isn’t health insurance, it doesn’t have to include most Federal consumer protections that apply to health insur-
ance.
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
• If you have this policy through your job, or a family member’s job, contact the employer.
(2) If participants are required to reen-
roll (in either paper or electronic form) for
purposes of renewal or reissuance of the
insurance, the notice described in para-
graph (c)(4)(ii)(D)(1) of this section is
prominently displayed in any marketing
and reenrollment materials provided at or
before the time participants are given the
opportunity to reenroll in coverage.
(3) If a plan or issuer provides a notice
satisfying the requirements in paragraphs
(c)(4)(ii)(D)(1) and (2) of this section to
a participant, the obligation to provide the
notice is considered to be satisfied for both
the plan and issuer.
* * * * *
(iv) Severability. If any provision of
this paragraph (c)(4) is held to be invalid
or unenforceable by its terms, or as applied
to any entity or circumstance, or stayed
pending further agency action, the provi-
sion shall be construed so as to continue
to give the maximum effect to the provi-
sion permitted by law, along with other
provisions not found invalid or unenforce-
able, including as applied to entities not
similarly situated or to dissimilar circum-
stances, unless such holding is that the
provision is invalid and unenforceable in
all circumstances, in which event the pro-
vision shall be severable from the remain-
der of this paragraph (c)(4) and shall not
affect the remainder thereof.

May 6, 2024 1046 Bulletin No. 2024–19
* * * * *
4. Section 54.9833-1 is revised to read
as follows:
§ 54.9833-1 Applicability dates.
Sections 54.9801-1 through 54.9801-
6, and 54.9831-1 and this section are
applicable for plan years beginning on or
after July 1, 2005. Notwithstanding the
previous sentence, for short-term, limit-
ed-duration insurance sold or issued on or
after September 1, 2024, the definition of
short-term, limited-duration insurance in
§ 54.9801-2 applies for coverage periods
beginning on or after September 1, 2024.
For short-term, limited-duration insurance
sold or issued before September 1, 2024
(including any subsequent renewal or
extension consistent with applicable law),
the definition of short-term, limited-du-
ration insurance in 26 CFR 54.9801-2,
revised as of April 1, 2023, continues to
apply, except that paragraph (2) of the
definition of short-term, limited-duration
insurance in § 54.9801-2 applies for cov-
erage periods beginning on or after Sep-
tember 1, 2024.
DEPARTMENT OF LABOR
Employee Benefits Security
Administration 29 CFR Chapter XXV
For the reasons stated in the preamble,
the Department of Labor amends 29 CFR
part 2590 as set forth below:
PART 2590—RULES AND
REGULATIONS FOR GROUP
HEALTH PLANS
5. The authority citation for part 2590
continues to read as follows:
Authority: 29 U.S.C. 1027, 1059,
1135, 1161-1168, 1169, 1181-1183, 1181
note, 1185, 1185a, 1185b, 1191, 1191a,
1191b, and 1191c; sec. 101(g), Pub. L.
104-191, 110 Stat. 1936; sec. 401(b), Pub.
L. 105-200, 112 Stat. 645 (42 U.S.C. 651
note); sec. 512(d), Pub. L. 110-343, 122
Stat. 3881; sec. 1001, 1201, and 1562(e),
Pub. L. 111-148, 124 Stat. 119, as amended
by Pub. L. 111-152, 124 Stat. 1029; Divi-
sion M, Pub. L. 113-235, 128 Stat. 2130;
Secretary of Labor’s Order 1-2011, 77 FR
1088 (Jan. 9, 2012).
6. Section 2590.701-2 is amended by
revising the definition of “Short-term,
limited-duration insurance” to read as fol-
lows:
§ 2590.701-2 Definitions.
* * * * *
Short-term, limited-duration insurance
means health insurance coverage provided
pursuant to a policy, certificate, or contract
of insurance with an issuer that meets the
conditions of paragraph (1) of this defini-
tion.
(1) Short-term, limited-duration insur-
ance means health insurance coverage
provided pursuant to a policy, certificate,
or contract of insurance with an issuer
that:
(i) Has an expiration date specified
in the policy, certificate, or contract of
insurance that is no more than 3 months
after the original effective date of the pol-
icy, certificate, or contract of insurance,
and taking into account any renewals or
extensions, has a duration no longer than
4 months in total. For purposes of this
paragraph (1)(i), a renewal or extension
includes the term of a new short-term,
limited-duration insurance policy, certifi-
cate, or contract of insurance issued by the
same issuer, or if the issuer is a member of
a controlled group, any other issuer that is
a member of such controlled group, to the
same policyholder within the 12-month
period beginning on the original effective
date of the initial policy, certificate, or
contract of insurance; and
(ii) Displays prominently on the first
page (in either paper or electronic form,
including on a website) of the policy, cer-
tificate, or contract of insurance, and in any
marketing, application, and enrollment
materials (including reenrollment mate-
rials) provided to individuals at or before
the time an individual has the opportunity
to enroll (or reenroll) in the coverage, in
at least 14-point font, the language in the
following notice:
IMPORTANT: This is a short-term, limited-duration policy, NOT comprehensive health coverage
This is a temporary limited policy that has fewer benefits and Federal protections than other types of health insurance options, like
those on HealthCare.gov.
This policyInsurance on HealthCare.gov
Might not cover you due to preexisting health conditions like
diabetes, cancer, stroke, arthritis, heart disease, mental health &
substance use disorders
Can’t deny you coverage due to preexisting health conditions
Might not cover things like prescription drugs, preventive
screenings, maternity care, emergency services, hospitalization,
pediatric care, physical therapy & more
Covers all essential health benefits
Might have no limit on what you pay
out-of-pocket for care
Protects you with limits on what you pay each year out-of-
pocket for essential health benefits
You won’t qualify for Federal financial help to pay premiums
& out-of-pocket costs
Many people qualify for Federal financial help
Doesn’t have to meet Federal standards for comprehensive
health coverage
All plans must meet Federal standards

Bulletin No. 2024–19 1047 May 6, 2024
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
(2) For purposes of paragraph (1)(i)
of this definition, the term “controlled
group” means any group treated as a sin-
gle employer under section 52(a), 52(b),
414(m), or 414(o) of the Internal Revenue
Code of 1986, as amended.
(3) If any provision of this definition
is held to be invalid or unenforceable by
its terms, or as applied to any entity or
circumstance, or stayed pending further
agency action, the provision shall be con-
strued so as to continue to give the maxi-
mum effect to the provision permitted by
law, along with other provisions not found
invalid or unenforceable, including as
applied to entities not similarly situated or
to dissimilar circumstances, unless such
holding is that the provision is invalid
and unenforceable in all circumstances, in
which event the provision shall be sever-
able from the remainder of the definition
and shall not affect the remainder thereof.
* * * * *
7. Section 2590.732 is amended by
adding paragraphs (c)(4)(ii)(D) and (c)(4)
(iv) to read as follows:
§ 2590.732 Special rules relating to
group health plans.
* * * * *
(c) * * *
(4) * * *
(ii) * * *
(D) For plan years beginning on or
after January 1, 2025, with respect to hos-
pital indemnity or other fixed indemnity
insurance:
(1) The plan or issuer displays promi-
nently on the first page (in either paper or
electronic form, including on a website)
of any marketing, application, and enroll-
ment materials that are provided to par-
ticipants at or before the time participants
are given the opportunity to enroll in the
coverage, in at least 14-point font, the lan-
guage in the following notice:
IMPORTANT: This is a fixed indemnity policy, NOT health insurance
This fixed indemnity policy may pay you a limited dollar amount if you’re sick or hospitalized. You’re still responsible for paying the
cost of your care.
• The payment you get isn’t based on the size of your medical bill.
• There might be a limit on how much this policy will pay each year.
• This policy isn’t a substitute for comprehensive health insurance.
• Since this policy isn’t health insurance, it doesn’t have to include most Federal consumer protections that apply to health insur-
ance.
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
• If you have this policy through your job, or a family member’s job, contact the employer.
(2) If participants are required to reen-
roll (in either paper or electronic form)
for purposes of renewal or reissuance
of the insurance, the notice described in
paragraph (c)(4)(ii)(D)(1) of this section
is prominently displayed in any market-
ing and reenrollment materials provided
at or before the time participants are
given the opportunity to reenroll in cov-
erage.
(3) If a plan or issuer provides a notice
satisfying the requirements in paragraphs
(c)(4)(ii)(D)(1) and (2) of this section to
a participant, the obligation to provide the
notice is considered to be satisfied for both
the plan and issuer.
* * * * *
(iv) Severability. If any provision of
this paragraph (c)(4) is held to be invalid
or unenforceable by its terms, or as applied
to any entity or circumstance, or stayed
pending further agency action, the provi-
sion shall be construed so as to continue
to give the maximum effect to the provi-
sion permitted by law, along with other
provisions not found invalid or unenforce-
able, including as applied to entities not
similarly situated or to dissimilar circum-
stances, unless such holding is that the
provision is invalid and unenforceable in
all circumstances, in which event the pro-
vision shall be severable from the remain-
der of this paragraph (c)(4) and shall not
affect the remainder thereof.
* * * * *
8. Section 2590.736 is revised to read
as follows:
§ 2590.736 Applicability dates.
Sections 2590.701–1 through
2590.701–8 and 2590.731 through

May 6, 2024 1048 Bulletin No. 2024–19
2590.736 are applicable for plan years
beginning on or after July 1, 2005. Not-
withstanding the previous sentence, for
short-term, limited-duration insurance
sold or issued on or after September 1,
2024, the definition of short-term, limit-
ed-duration insurance in § 2590.701–2
applies for coverage periods beginning
on or after September 1, 2024. For short-
term, limited-duration insurance sold or
issued before September 1, 2024 (includ-
ing any subsequent renewal or extension
consistent with applicable law), the defini-
tion of short-term, limited-duration insur-
ance in 29 CFR 2590.701–2, revised as of
July 1, 2023, continues to apply, except
that paragraph (1)(ii) of the definition of
short-term, limited-duration insurance in
§ 2590.701–2 applies for coverage periods
beginning on or after September 1, 2024.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Subtitle A
For the reasons stated in the preamble,
the Department of Health and Human Ser-
vices amends 45 CFR parts 144, 146, and
148 as set forth below:
PART 144—REQUIREMENTS
RELATING TO HEALTH
INSURANCE COVERAGE
9. The authority citation for part 144
continues to read as follows:
Authority: 42 U.S.C. 300gg through
300gg–63, 300gg–91, 300gg–92, and 300gg–
111 through 300gg–139, as amended.
10. Section 144.103 is amended by
revising the definition of “Short-term,
limited-duration insurance” to read as fol-
lows:
§ 144.103 Definitions.
* * * * *
Short-term, limited-duration insurance
means health insurance coverage provided
pursuant to a policy, certificate, or contract
of insurance with an issuer that meets the
conditions of paragraph (1) of this defini-
tion.
(1) Short-term, limited-duration insur-
ance means health insurance coverage
provided pursuant to a policy, certificate,
or contract of insurance with an issuer
that:
(i) Has an expiration date specified
in the policy, certificate, or contract of
insurance that is no more than 3 months
after the original effective date of the pol-
icy, certificate, or contract of insurance,
and taking into account any renewals or
extensions, has a duration no longer than
4 months in total. For purposes of this
paragraph (1)(i), a renewal or extension
includes the term of a new short-term,
limited-duration insurance policy, certifi-
cate, or contract of insurance issued by the
same issuer, or if the issuer is a member of
a controlled group, any other issuer that is
a member of such controlled group, to the
same policyholder within the 12-month
period beginning on the original effective
date of the initial policy, certificate, or
contract of insurance; and
(ii) Displays prominently on the first
page (in either paper or electronic form,
including on a website) of the policy, cer-
tificate, or contract of insurance, and in any
marketing, application, and enrollment
materials (including reenrollment mate-
rials) provided to individuals at or before
the time an individual has the opportunity
to enroll (or reenroll) in the coverage, in
at least 14-point font, the language in the
following notice:
IMPORTANT: This is a short-term, limited-duration policy, NOT comprehensive health coverage
This is a temporary limited policy that has fewer benefits and Federal protections than other types of health insurance options, like
those on HealthCare.gov.
This policyInsurance on HealthCare.gov
Might not cover you due to preexisting health conditions like
diabetes, cancer, stroke, arthritis, heart disease, mental health &
substance use disorders
Can’t deny you coverage due to preexisting health conditions
Might not cover things like prescription drugs, preventive
screenings, maternity care, emergency services, hospitalization,
pediatric care, physical therapy & more
Covers all essential health benefits
Might have no limit on what you pay out-of-pocket for care
Protects you with limits on what you pay each year out-of-
pocket for essential health benefits
You won’t qualify for Federal financial help to pay premiums
& out-of-pocket costs
Many people qualify for Federal financial help
Doesn’t have to meet Federal standards for comprehensive
health coverage
All plans must meet Federal standards
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”

Bulletin No. 2024–19 1049 May 6, 2024
(2) For purposes of paragraph (1)(i)
of this definition, the term “controlled
group” means any group treated as a sin-
gle employer under section 52(a), 52(b),
414(m), or 414(o) of the Internal Revenue
Code of 1986, as amended.
(3) If any provision of this definition
is held to be invalid or unenforceable by
its terms, or as applied to any entity or
circumstance, or stayed pending further
agency action, the provision shall be con-
strued so as to continue to give the maxi-
mum effect to the provision permitted by
law, along with other provisions not found
invalid or unenforceable, including as
applied to entities not similarly situated or
to dissimilar circumstances, unless such
holding is that the provision is invalid
and unenforceable in all circumstances, in
which event the provision shall be sever-
able from the remainder of the definition
and shall not affect the remainder thereof.
* * * * *
PART 146—REQUIREMENTS FOR
THE GROUP HEALTH INSURANCE
MARKET
11. The authority citation for part 146
continues to read as follows:
Authority: 42 U.S.C. 300gg–1 through
300gg–5, 300gg–11 through 300gg–23,
300gg– 91, and 300gg–92.
12. Section 146.125 is revised to read
as follows:
§ 146.125 Applicability dates.
Section 144.103 of this subchapter and
§§ 146.111 through 146.119, 146.143,
and 146.145 are applicable for plan years
beginning on or after July 1, 2005. Not-
withstanding the previous sentence, for
short-term, limited-duration insurance
sold or issued on or after September 1,
2024, the definition of short-term, limit-
ed-duration insurance in § 144.103 of this
subchapter applies for coverage periods
beginning on or after September 1, 2024.
For short-term, limited-duration insurance
sold or issued before September 1, 2024
(including any subsequent renewal or
extension consistent with applicable law),
the definition of short-term, limited-dura-
tion insurance in 45 CFR 144.103, revised
as of October 1, 2023, continues to apply,
except that paragraph (1)(ii) of the defini-
tion of short-term, limited-duration insur-
ance in § 144.103 applies for coverage
periods beginning on or after September
1, 2024.
13. Section 146.145 is amended by
adding paragraphs (b)(4)(ii)(D) and (b)(4)
(iv) to read as follows:
§ 146.145 Special rules relating to
group health plans.
* * * * *
(b) * * *
(4) * * *
(ii) * * *
(D) For plan years beginning on or
after January 1, 2025, with respect to hos-
pital indemnity or other fixed indemnity
insurance:
(1) The plan or issuer displays promi-
nently on the first page (in either paper or
electronic form, including on a website)
of any marketing, application, and enroll-
ment materials that are provided to par-
ticipants at or before the time participants
are given the opportunity to enroll in the
coverage, in at least 14-point font, the lan-
guage in the following notice:
IMPORTANT: This is a fixed indemnity policy, NOT health insurance
This fixed indemnity policy may pay you a limited dollar amount if you’re sick or hospitalized. You’re still responsible for paying the
cost of your care.
• The payment you get isn’t based on the size of your medical bill.
• There might be a limit on how much this policy will pay each year.
• This policy isn’t a substitute for comprehensive health insurance.
• Since this policy isn’t health insurance, it doesn’t have to include most Federal consumer protections that apply to health insur-
ance.
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
• If you have this policy through your job, or a family member’s job, contact the employer.
(2) If participants are required to reen-
roll (in either paper or electronic form)
for purposes of renewal or reissuance
of the insurance, the notice described in
paragraph (b)(4)(ii)(D)(1) of this section
is prominently displayed in any market-
ing and reenrollment materials provided
at or before the time participants are
given the opportunity to reenroll in cov-
erage.
(3) If a plan or issuer provides a notice
satisfying the requirements in paragraphs
(b)(4)(ii)(D)(1) and (2) of this section to
a participant, the obligation to provide the
notice is considered to be satisfied for both
the plan and issuer.
* * * * *

(iv) Severability. If any provision of
this paragraph (b)(4) is held to be invalid
or unenforceable by its terms, or as applied
to any entity or circumstance, or stayed
pending further agency action, the provi-
sion shall be construed so as to continue
to give the maximum effect to the provi-
sion permitted by law, along with other
provisions not found invalid or unenforce-

May 6, 2024 1050 Bulletin No. 2024–19
able, including as applied to entities not
similarly situated or to dissimilar circum-
stances, unless such holding is that the
provision is invalid and unenforceable in
all circumstances, in which event the pro-
vision shall be severable from the remain-
der of this paragraph (b)(4) and shall not
affect the remainder thereof.
* * * * *
PART 148—REQUIREMENTS
FOR THE INDIVIDUAL HEALTH
INSURANCE MARKET
14. The authority citation for part 148
continues to read as follows:
Authority: 42 U.S.C. 300gg through
300gg–63, 300gg–11 300gg–91, and 300–
gg92, as amended.
15. Section 148.102 is amended by
revising paragraph (b) to read as follows:
§ 148.102 Scope and applicability
dates.
* * * * *
(b) Applicability dates. Except as pro-
vided in §§ 148.124, 148.170, and 148.180,
the requirements of this part apply to health
insurance coverage offered, sold, issued,
renewed, in effect, or operated in the indi-
vidual market after June 30, 1997. Not-
withstanding the previous sentence, for
short-term, limited-duration insurance sold
or issued on or after September 1, 2024, the
definition of short-term, limited-duration
insurance in § 144.103 of this subchapter
applies for coverage periods beginning on
or after September 1, 2024. For short-term,
limited-duration insurance sold or issued
before September 1, 2024 (including any
subsequent renewal or extension consis-
tent with applicable law), the definition of
short-term, limited-duration insurance in
45 CFR 144.103, revised as of October 1,
2023, continues to apply, except that para-
graph (1)(ii) of the definition of short-term,
limited-duration insurance in § 144.103
applies for coverage periods beginning on
or after September 1, 2024.
16. Section 148.220 is amended by
revising paragraph (b)(4) to read as fol-
lows:
§ 148.220 Excepted benefits.
* * * * *
(b) * * *
(4) Hospital indemnity or other fixed
indemnity insurance only if—
(i) There is no coordination between
the provision of benefits and an exclusion
of benefits under any other health cover-
age;
(ii) The benefits are paid in a fixed dol-
lar amount per period of hospitalization
or illness and/or per service (for example,
$100/day or $50/visit) regardless of the
amount of expenses incurred and without
regard to the amount of benefits provided
with respect to the event or service under
any other health coverage; and
(iii)(A) For coverage periods begin-
ning on or after January 1, 2025, the issuer
displays prominently on the first page (in
either paper or electronic form, including
on a website) of any marketing, applica-
tion, and enrollment or reenrollment mate-
rials that are provided at or before the time
an individual has the opportunity to apply,
enroll or reenroll in coverage, and on the
first page of the policy, certificate, or con-
tract of insurance, in at least 14-point font,
the language in the following notice:
IMPORTANT: This is a fixed indemnity policy, NOT health insurance
This fixed indemnity policy may pay you a limited dollar amount if you’re sick or hospitalized. You’re still responsible for paying the
cost of your care.
• The payment you get isn’t based on the size of your medical bill.
• There might be a limit on how much this policy will pay each year.
• This policy isn’t a substitute for comprehensive health insurance.
• Since this policy isn’t health insurance, it doesn’t have to include most Federal consumer protections that apply to health insur-
ance.
Looking for comprehensive health insurance?
• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.
Questions about this policy?
• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National
Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
• If you have this policy through your job, or a family member’s job, contact the employer.
(B) For coverage periods beginning on
or after January 1, 2015, and prior to Janu-
ary 1, 2025, the issuer continues to follow
the notice provision in 45 CFR 148.220(b)
(4)(iv), revised as of October 1, 2023.
(iv) If any provision of this paragraph
(b)(4) is held to be invalid or unenforce-
able by its terms, or as applied to any
entity or circumstance, or stayed pending
further agency action, the provision shall
be construed so as to continue to give the
maximum effect to the provision permit-
ted by law, along with other provisions not
found invalid or unenforceable, including
as applied to entities not similarly situated
or to dissimilar circumstances, unless such
holding is that the provision is invalid and
unenforceable in all circumstances, in
which event the provision shall be sever-
able from the remainder of this paragraph
(b)(4) and shall not affect the remainder
thereof.
* * * * *
(Filed by the Office of the Federal Register March
28, 2024, 8:45 a.m., and published in the issue of the
Federal Register for April 03, 2024, 89 FR 23338)

Bulletin No. 2024–19 1051 May 6, 2024
Part III
Certain Required Minimum
Distributions for 2024
Notice 2024-35
I. PURPOSE
This notice provides guidance relating
to certain specified required minimum dis-
tributions (RMDs) for 2024. In addition,
this notice announces that the final regula-
tions that the Department of the Treasury
(Treasury Department) and the Internal
Revenue Service (IRS) intend to issue
related to RMDs will apply for purposes
of determining RMDs for calendar years
beginning on or after January 1, 2025.
II. BACKGROUND
A. Section 401(a)(9)
Section 401(a)(9) of the Code requires
a stock bonus, pension, or profit-sharing
plan described in § 401(a) (or an annuity
contract described in § 403(a)) to make
minimum distributions starting by the
required beginning date (as well as min-
imum distributions to beneficiaries if the
employee dies before the required begin-
ning date). Individual retirement accounts
and individual retirement annuities (IRAs)
described in § 408(a) and (b), annuity con-
tracts, custodial accounts, and retirement
income accounts described in § 403(b)
(§ 403(b) plans), and eligible deferred
compensation plans under § 457(b) are
also subject to the rules of § 401(a)(9) pur-
suant to §§ 408(a)(6) and (b)(3), 403(b)
(10), and 457(d)(2), respectively, and the
regulations under those sections.
B. RMD Distribution Period
Section 401(a)(9) provides rules for
RMDs from a qualified plan during the
life of the employee in § 401(a)(9)(A) and
after the death of the employee in § 401(a)
(9)(B). In addition to setting forth a
required beginning date for distributions,
these rules identify the period over which
the employee’s entire interest must be dis-
tributed.
Specifically, § 401(a)(9)(A)(ii) pro-
vides that the entire interest of an
employee in a qualified plan must be
distributed, beginning not later than the
employee’s required beginning date, in
accordance with regulations, over the life
of the employee or over the lives of the
employee and a designated beneficiary
(or over a period not extending beyond
the life expectancy of the employee and a
designated beneficiary).
Section 401(a)(9)(B)(i) provides that,
if the employee dies after distributions
have begun, the employee’s remaining
interest must be distributed at least as
rapidly as under the method of distribu-
tions being used by the employee under
section 401(a)(9)(A)(ii) as of the date
of the employee’s death. Section 401(a)
(9)(B)(ii) and (iii) provides that, if the
employee dies before RMDs have begun,
the employee’s interest must either be: (1)
distributed within 5 years after the death
of the employee (5-year rule), or (2) dis-
tributed (in accordance with regulations)
over the life or life expectancy of the des-
ignated beneficiary with the distributions
beginning no later than 1 year after the
date of the employee’s death (subject to
an exception in § 401(a)(9)(B)(iv) if the
designated beneficiary is the employee’s
surviving spouse).
The rules of § 401(a)(9) are incorpo-
rated by reference in § 408(a)(6) and (b)
(3) for IRAs, § 403(b)(10) for § 403(b)
plans, and § 457(d) for eligible deferred
compensation plans.
C. Section 401(a)(9)(H) as added by the
SECURE Act
1. Ten-year rule
Section 401(a)(9) of the Code was
amended by § 401(a)(1) of the Setting
Every Community Up for Retirement
Enhancement Act of 2019 (SECURE
Act), enacted on December 20, 2019, as
Division O of the Further Consolidated
Appropriations Act, 2020, Pub. L. 116-
94, 133 Stat. 2534 (2019), to add § 401(a)
(9)(H) to the Code. Generally, pursuant
to § 401(a)(9)(H)(i), if an employee in
a defined contribution plan has a desig-
nated beneficiary, the 5-year period under
the 5-year rule is lengthened to 10 years
(10-year rule) and the 10-year rule applies
regardless of whether the employee dies
before the required beginning date. In
addition, pursuant to § 401(a)(9)(H)(ii),
the § 401(a)(9)(B)(iii) exception to the
10-year rule (under which the 10-year rule
is treated as satisfied if distributions are
paid over the designated beneficiary’s life-
time or life expectancy) applies only if the
designated beneficiary is an eligible desig-
nated beneficiary, as that term is defined in
§ 401(a)(9)(E)(ii).
Section 401(a)(9)(H)(iii) provides that
when an eligible designated beneficiary
dies before that individual’s portion of the
employee’s interest in the plan has been
entirely distributed, the beneficiary of the
eligible designated beneficiary will be
subject to a requirement that the remainder
of that individual’s portion be distributed
within 10 years of the eligible designated
beneficiary’s death. In addition, § 401(a)
(9)(E)(iii) provides that when an eligible
designated beneficiary who is a minor
child of the employee reaches the age of
majority, that child will no longer be con-
sidered an eligible designated beneficiary
and the remainder of that child’s portion
of the employee’s interest in the plan must
be distributed within 10 years of that date.
2. Section 401(a)(9)(H) effective date
Section 401(b)(1) of the SECURE Act
provides that, generally, the amendments
made to § 401(a)(9)(H) of the Code apply
to distributions with respect to employees
who die after December 31, 2019. Pursu-
ant to § 401(b)(2) and (3) of the SECURE
Act, later effective dates apply for certain
collectively bargained plans and govern-
mental plans (as defined in § 414(d) of the
Code).
Section 401(b)(4) of the SECURE Act
provides that § 401(a)(9)(H) of the Code
does not apply to payments under certain
annuity contracts under which payment
commenced (or the manner of payments
was fixed) before December 20, 2019.
Section 401(b)(5) of the SECURE Act
provides that if an employee who partici-
pated in a plan died before § 401(a)(9)(H)

May 6, 2024 1052 Bulletin No. 2024–19
of the Code became effective with respect
to the plan, and the employee’s designated
beneficiary died after that effective date,
then that designated beneficiary is treated
as an eligible designated beneficiary and
§ 401(a)(9)(H) applies to any beneficiary
of that designated beneficiary.
D. Excise tax under § 4974(a)
Section 4974(a) provides that if the
amount distributed during a year to a
payee under any qualified retirement plan
(as defined in § 4974(c)) or any eligible
deferred compensation plan (as defined
in § 457(b)) is less than that year’s min-
imum required distribution (as defined in
§ 4974(b)), then an excise tax is imposed
on the payee. Pursuant to § 302 of the
SECURE 2.0 Act of 2022, enacted on
December 29, 2022, as Division T of the
Consolidated Appropriations Act, 2023,
Pub. L. 117-328, 136 Stat. 4459 (2022),
for taxable years beginning after Decem-
ber 29, 2022, this excise tax is equal to
25 percent of the amount by which the
minimum required distribution for a year
exceeds the amount actually distributed in
that year. If a failure to take a minimum
required distribution is corrected by the
end of the correction window (generally,
the end of the second year that begins after
the year of the missed minimum required
distribution), the excise tax is reduced
from 25 percent to 10 percent.
E. Section 401(a)(9) proposed regulations
The Treasury Department and the IRS
published proposed regulations regarding
RMDs under § 401(a)(9) of the Code and
related provisions in the Federal Regis-
ter on February 24, 2022 (87 FR 10504),
which provided that the regulations,
when finalized, would apply beginning
with the 2022 calendar year. Along with
other matters, the proposed regulations
address issues relating to the 10-year rule
in § 401(a)(9)(H). Specifically, Prop. Reg.
§ 1.401(a)(9)-5(d)(1)(i) requires that, in
the case of an employee who dies on or
after the employee’s required beginning
date, distributions to the employee’s ben-
eficiaries for calendar years after the cal-
endar year of the employee’s death must
satisfy § 401(a)(9)(B)(i). In addition, dis-
tributions to the employee’s beneficiaries
must also satisfy § 401(a)(9)(B)(ii) (or
if applicable, § 401(a)(9)(B)(iii)), taking
into account § 401(a)(9)(E)(iii), (H)(ii),
and (H)(iii).
In order to satisfy § 401(a)(9)(B)(i),
the beneficiary of an employee who died
after the employee’s required beginning
date must take an annual RMD beginning
in the first calendar year after the calen-
dar year of the employee’s death. In order
to satisfy § 401(a)(9)(B)(ii) (applied by
substituting “10 years” for “5 years”),
the remaining account balance must be
distributed by the 10
th
calendar year after
the calendar year of the employee’s death
(subject to an exception under § 401(a)
(9)(B)(iii), if applicable). In order to sat-
isfy both of those requirements, the pro-
posed regulations generally provide that,
in the case of an employee who dies after
the employee’s required beginning date
with a designated beneficiary who is not
an eligible designated beneficiary (and
for whom the § 401(a)(9)(B)(iii) alterna-
tive to the 10-year rule is not applicable),
annual RMDs must continue to be taken
after the death of the employee, with a full
distribution required by the end of the 10
th

calendar year following the calendar year
of the employee’s death.
In the case of a designated beneficiary
who is an eligible designated beneficiary,
the proposed regulations include an alter-
native to the 10-year rule under which
annual lifetime or life expectancy pay-
ments would be made to the beneficiary
beginning in the year following the year
of the employee’s death, in accordance
with § 401(a)(9)(B)(iii). Under the pro-
posed regulations, if an eligible desig-
nated beneficiary of an employee is using
the lifetime or life expectancy payment
alternative to the 10-year rule, then the
eligible designated beneficiary (and, after
the death of the eligible designated benefi-
ciary, the beneficiary of the eligible desig-
nated beneficiary) would need to continue
to take annual RMDs after the death of
the employee (with the employee’s entire
interest distributed by no later than the 10
th

year after the year of the eligible desig-
nated beneficiary’s death). The proposed
regulations provide for similar treatment
(that is, continued annual RMDs with a
requirement that the employee’s entire
interest be distributed no later than the 10
th

year after a specified event) in the case of
a designated beneficiary who is a minor
child of the employee (with the specified
event being the child reaching the age of
majority).
F. Comments received by the Treasury
Department and the IRS
The Treasury Department and the
IRS provided a 90-day comment period
for the proposed regulations. Some indi-
viduals who are owners of inherited
IRAs or are beneficiaries under defined
contribution plans submitted comments
indicating that they thought the new
10-year rule would apply differently than
it would under the proposed regulations.
Specifically, these commenters expected
that, regardless of when an employee
died, the 10-year rule would operate like
the 5-year rule, such that there would not
be any RMD due for a calendar year until
the last year of the 5- or 10-year period
following the specified event (the death
of the employee, the death of the eligible
designated beneficiary, or the attainment
of the age of majority for the employ-
ee’s child who is an eligible designated
beneficiary). Commenters who are heirs
or beneficiaries of individuals who died
in 2020 explained that they did not take
an RMD in 2021 and were unsure of
whether they would be required to take
an RMD in 2022. Commenters asserted
that, if final regulations adopt the inter-
pretation of the 10-year rule set forth in
the proposed regulations, the Treasury
Department and the IRS should provide
transition relief for failure to take dis-
tributions that are RMDs due in 2021 or
2022 pursuant to § 401(a)(9)(H) in the
case of the death of an employee (or des-
ignated beneficiary) in 2020 or 2021.
In response to the comments received
on the proposed regulations, the Treasury
Department and the IRS issued Notice
2022-53, 2022-45 IRB 437. Notice 2022-
53 announced that the final regulations
will apply no earlier than the 2023 distri-
bution calendar year and provided guid-
ance regarding certain amounts that were
not paid in 2021 or 2022. Specifically,
Notice 2022-53 provided that a defined
contribution plan will not fail to be qual-
ified for failing to make a specified RMD
(as defined in section IV.C of that notice)
in 2021 or 2022 and the taxpayer who

Bulletin No. 2024–19 1053 May 6, 2024
did not take a specified RMD will not be •
subject to the excise tax under § 4974 for
failing to take the specified RMD. Subse-
quently, the Treasury Department and the
IRS issued Notice 2023-54, 2023-31 IRB
382, which extended the relief in Notice
2022-53 to specified RMDs for 2023, and
announced that the final regulations will
apply no earlier than the 2024 distribution
calendar year.
III. APPLICABILITY DATE OF FINAL
REGULATIONS
Final regulations regarding RMDs
under § 401(a)(9) and related provisions
are anticipated to apply for determining
RMDs for calendar years beginning on or
after January 1, 2025.
IV. GUIDANCE FOR SPECIFIED
RMDs FOR 2024
A. Guidance for defined contribution
plans that did not make a specified RMD.
A defined contribution plan that failed to
make a specified RMD (as defined in sec-
tion IV.C of this notice) will not be treated
as having failed to satisfy § 401(a)(9)
merely because it did not make that dis-
tribution.
B. Guidance for certain taxpayers who
did not take a specified RMD. To the extent
a taxpayer did not take a specified RMD
(as defined in section IV.C of this notice),
the IRS will not assert that an excise tax is
due under § 4974.
C. Definition of specified RMD. For
purposes of this notice, a specified RMD
is any distribution that, under the inter-
pretation included in the proposed reg-
ulations, would be required to be made
pursuant to § 401(a)(9) in 2024 under a
defined contribution plan or IRA that is
subject to the rules of § 401(a)(9)(H) for
the year in which the employee (or des-
ignated beneficiary) died if that payment
would be required to be made to:
• a designated beneficiary of an employee
under the plan (or IRA owner) if: (1)
the employee (or IRA owner) died in
2020, 2021, 2022, or 2023, and on or
after the employee’s (or IRA owner’s)
required beginning date, and (2) the
designated beneficiary is not using the
lifetime or life expectancy payments
exception under § 401(a)(9)(B)(iii); or

a beneficiary of an eligible designated
beneficiary (including a designated
beneficiary who is treated as an eligi-
ble designated beneficiary pursuant to
§ 401(b)(5) of the SECURE Act) if: (1)
the eligible designated beneficiary died
in 2020, 2021, 2022, or 2023, and (2)
that eligible designated beneficiary was
using the lifetime or life expectancy
payments exception under § 401(a)(9)
(B)(iii) of the Code.
V. DRAFTING INFORMATION
The principal author of this notice is
Jessica Weinberger of the Office of Asso-
ciate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). For further information regarding
this notice, contact Jessica Weinberger at
(202) 317-6349 (not a toll-free number).
26 CFR 601.105: Examination of returns and claims
for refund; credit or abatement; determination of tax
liability (Also: 842(b))
Rev. Proc. 2024-20
SECTION 1. PURPOSE
This revenue procedure provides the
domestic asset/liability percentages and
domestic investment yields needed by
foreign life insurance companies and for-
eign property and liability insurance com-
panies to compute their minimum effec-
tively connected net investment income
under section 842(b) of the Internal Rev-
enue Code for taxable years beginning
after December 31, 2022. Instructions are
provided for computing foreign insurance
companies’ liabilities for the estimated tax
and installment payments of estimated tax
for taxable years beginning after Decem-
ber 31, 2022. For more specific guidance
regarding the computation of the amount
of net investment income to be included
by a foreign insurance company on its
U.S. income tax return, see Notice 89-96,
1989-2 C.B. 417. For the domestic asset/
liability percentage and domestic invest-
ment yield, as well as instructions for
computing foreign insurance companies’
liabilities for estimated tax and install-
ment payments of estimated tax for tax-
able years beginning after December 31,

2021, see Rev. Proc. 2023-21, 2023-19
I.R.B. 837.
SECTION 2. PERCENTAGES AND
YIELDS
.01 DOMESTIC ASSET/LIABILITY
PERCENTAGES FOR 2023. The Secre-
tary determines the domestic asset/liabil-
ity percentage separately for life insur-
ance companies and property and liability
insurance companies. For the first taxable
year beginning after December 31, 2022,
the relevant domestic asset/liability per-
centages are:
123.2 percent for foreign life insurance
companies, and
207.3 percent for foreign property and
liability insurance companies.
.02 DOMESTIC INVESTMENT
YIELDS FOR 2023. The Secretary is
required to prescribe separate domestic
investment yields for foreign life insur-
ance companies and for foreign property
and liability insurance companies. For the
first taxable year beginning after Decem-
ber 31, 2022, the relevant domestic invest-
ment yields are:
2.3 percent for foreign life insurance
companies, and
2.7 percent for foreign property and
liability insurance companies.
.03 SOURCE OF DATA FOR 2023.
The section 842(b) percentages to be used
for the 2023 taxable year are based on tax
return data from the 2021 taxable year.
SECTION 3. ESTIMATED TAXES
To compute estimated tax and the
installment payments of estimated tax
due for taxable years beginning after
December 31, 2022, a foreign insurance
company must compute its estimated tax
payments by adding to its income other
than net investment income the greater
of (i) its net investment income as deter-
mined under section 842(b)(5) that is
actually effectively connected with the
conduct of a trade or business within the
United States for the relevant period, or
(ii) the minimum effectively connected
net investment income under section
842(b) that would result from using the
most recently available domestic asset/lia-
bility percentage and domestic investment
yield. Thus, for installment payments due

May 6, 2024 1054 Bulletin No. 2024–19
after the publication of this revenue proce-
dure, the domestic asset/liability percent-
ages and the domestic investment yields
provided in this revenue procedure must
be used to compute the minimum effec-
tively connected net investment income.
However, if the due date of an installment
is less than 20 days after the date this rev-
enue procedure is published in the Internal
Revenue Bulletin, the asset/liability per-
centages and domestic investment yields
provided in Rev. Proc. 2023-21 may be
used to compute the minimum effectively
connected net investment income for such
installment. For further guidance in com-
puting estimated tax, see Notice 89-96.
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective for
taxable years beginning after December
31, 2022.
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Sheila Ramaswamy of the
Office of Associate Chief Counsel (Inter-
national). For further information regard-
ing this revenue procedure contact Sheila
Ramaswamy at (202) 317-6938 (not a
toll-free number).
26 CFR 601.601: Rules and Regulations
(Also Part 1, §§ 25, 143, 6a.103A-1(b)(4), 6a.103A-
2(f)(5).)
Rev. Proc. 2024-21
SECTION 1. PURPOSE
This revenue procedure provides
issuers of qualified mortgage bonds, as
defined in § 143(a) of the Internal Reve-
nue Code (Code), and issuers of mortgage
credit certificates, as defined in § 25(c),
with (1) the nationwide average purchase
price for residences located in the United
States, and (2) average area purchase price
safe harbors for residences located in sta-
tistical areas in each state, the District of
Columbia, Puerto Rico, the Northern Mar-
iana Islands, American Samoa, the Virgin
Islands, and Guam. Section 7 of this rev-
enue procedure requests comments on the
available data and method used for calcu-
lating the average area purchase price safe
harbors.
SECTION 2. BACKGROUND
.01 Section 103(a) provides that,
except as provided in § 103(b), gross
income does not include interest on any
State or local bond. Section 103(b)(1) pro-
vides that § 103(a) shall not apply to any
private activity bond that is not a “quali-
fied bond” within the meaning of § 141.
Section 141(e) provides, in part, that the
term “qualified bond” means any private
activity bond if such bond (1) is a quali-
fied mortgage bond under § 143, (2) meets
the volume cap requirements under § 146,
and (3) meets the applicable requirements
under § 147.
.02 Section 143(a)(1) provides that the
term “qualified mortgage bond” means a
bond that is issued as part of a qualified
mortgage issue. Section 143(a)(2)(A) pro-
vides that the term “qualified mortgage
issue” means an issue of one or more
bonds by a State or political subdivi-
sion thereof, but only if: (i) all proceeds
of the issue (exclusive of issuance costs
and a reasonably required reserve) are to
be used to finance owner-occupied res-
idences; (ii) the issue meets the require-
ments of subsections (c), (d), (e), (f), (g),
(h), (i), and (m)(7) of § 143; (iii) the issue
does not meet the private business tests
of paragraphs (1) and (2) of § 141(b);
and (iv) with respect to amounts received
more than 10 years after the date of issu-
ance, repayments of $250,000 or more of
principal on mortgage financing provided
by the issue are used by the close of the
first semiannual period beginning after the
date the prepayment (or complete repay-
ment) is received to redeem bonds that are
part of the issue.
Average Area Purchase Price
.03 Section 143(e)(1) provides that an
issue of bonds meets the purchase price
requirements of § 143(e) if the acquisi-
tion cost of each residence financed by
the issue does not exceed 90 percent of
the average area purchase price applicable
to such residence. Section 143(e)(5) pro-
vides that, in the case of a targeted area
residence (as defined in § 143(j)), § 143(e)
(1) shall be applied by substituting 110
percent for 90 percent.
.04 Section 143(e)(2) provides that the
term “average area purchase price” means,
with respect to any residence, the average
purchase price of single-family residences
(in the statistical area in which the res-
idence is located) that were purchased
during the most recent 12-month period
for which sufficient statistical informa-
tion is available. Under §§ 143(e)(3) and
(4), respectively, separate determinations
of average area purchase price are to be
made for new and existing residences,
and for two-, three-, and four-family res-
idences.
.05 Section 143(e)(2) also provides that
the determination of the average area pur-
chase price shall be made as of the date
on which the commitment to provide the
financing is made or, if earlier, the date of
the purchase of the residence.
.06 Section 143(k)(2)(A) provides
that the term “statistical area” means (i) a
metropolitan statistical area (MSA), and
(ii) any county (or the portion thereof)
that is not within an MSA. Section
143(k)(2)(C) further provides that if suf-
ficient recent statistical information with
respect to a county (or portion thereof)
is unavailable, the Secretary may substi-
tute another area for which there is suf-
ficient recent statistical information for
such county (or portion thereof). In the
case of any portion of a State which is not
within a county, § 143(k)(2)(D) provides
that the Secretary may designate an area
that is the equivalent of a county. Section
6a.103A-1(b)(4)(i) of the Income Tax
Regulations (issued under § 103A of the
Internal Revenue Code of 1954, the pre-
decessor of § 143 of the Code) provides
that the term “State” includes a posses-
sion of the United States and the District
of Columbia.
.07 Section 6a.103A-2(f)(5)(i) provides
that an issuer may rely upon the average
area purchase price safe harbors published
by the Department of the Treasury (Trea-
sury Department) for the statistical area
in which a residence is located. Section
6a.103A-2(f)(5)(i) further provides that
an issuer may use an average area pur-
chase price limitation different from the
published safe harbor if the issuer has
more accurate and comprehensive data for
the statistical area.
Qualified Mortgage Credit Certificate
Program

Bulletin No. 2024–19 1055 May 6, 2024
.08 Section 25(c) permits a State or
political subdivision thereof to establish
a qualified mortgage credit certificate
program. In general, a qualified mortgage
credit certificate program is a program
under which the issuing authority elects
not to issue an amount of private activity
bonds that it may otherwise issue during
the calendar year under § 146, and in its
place, issues mortgage credit certificates
to taxpayers in connection with the acqui-
sition of their principal residences. Sec-
tion 25(a)(1) provides, in general, that the
holder of a mortgage credit certificate may
claim a federal income tax credit equal to
the product of the credit rate specified
in the certificate and the interest paid or
accrued during the tax year on the remain-
ing principal of the indebtedness incurred
to acquire the residence. Section 25(c)(2)
(A)(iii)(III) generally provides that res-
idences acquired in connection with the
issuance of mortgage credit certificates
must meet the purchase price require-
ments of § 143(e).
Income Limitations for Qualified Mort-
gage Bonds and Mortgage Credit Certif-
icates
.09 Section 143(f) imposes limitations
on the income of mortgagors for whom
financing may be provided by qualified
mortgage bonds. In addition, § 25(c)
(2)(A)(iii)(IV) provides that holders of
mortgage credit certificates must meet
the income requirement of § 143(f).
Generally, under §§ 143(f)(1) and 25(c)
(2)(A)(iii)(IV), the income requirement
is met only if all owner-financing under
a qualified mortgage bond and all mort-
gage credit certificates issued under a
qualified mortgage credit certificate pro-
gram are provided to mortgagors whose
family income is 115 percent or less of
the applicable median family income.
Section 143(f)(5), however, generally
provides for an upward adjustment to
the percentage limitation in high hous-
ing cost areas. High housing cost areas
are defined in § 143(f)(5)(C) as any sta-
tistical area for which the housing cost/
income ratio is greater than 1.2.
.10 Under § 143(f)(5)(D), the hous-
ing cost/income ratio with respect to any
statistical area is determined by dividing
(a) the applicable housing price ratio for
such area by (b) the ratio that the area
median gross income for such area bears
to the median gross income for the United
States. The applicable housing price ratio
is the new housing price ratio (new hous-
ing average area purchase price divided
by the new housing average purchase
price for the United States) or the exist-
ing housing price ratio (existing housing
average area purchase price divided by the
existing housing average purchase price
for the United States), whichever results
in the housing cost/income ratio being
closer to 1.
Average Area and Nationwide Pur-
chase Price Limitations
.11 Average area purchase price safe
harbors for each state, the District of
Columbia, Puerto Rico, the Northern Mar-
iana Islands, American Samoa, the Virgin
Islands, and Guam were last published in
Rev. Proc. 2023-22, 2023-19 I.R.B. 838.
.12 The nationwide average purchase
price was last published in section 4.02 of
Rev. Proc. 2023-22. Guidance with respect
to the United States and area median gross
income figures that are used in computing
the housing cost/income ratio described in
§ 143(f)(5) was published in Rev. Proc.
2021-19, 2021-15 I.R.B. 1008.
.13 This revenue procedure uses Fed-
eral Housing Administration (FHA) loan
limits for a given statistical area to calcu-
late the average area purchase price safe
harbor for that area. FHA sets limits on the
dollar value of loans it will insure based on
median home prices and conforming loan
limits established by the Federal Home
Loan Mortgage Corporation. In particular,
FHA sets an area’s loan limit at 95 per-
cent of the median home sales price for
the area, subject to certain floors and caps
measured against conforming loan limits.
.14 To calculate the average area pur-
chase price safe harbors in this reve-
nue procedure, the FHA loan limits are
adjusted to take into account the differ-
ences between average and median pur-
chase prices. Because FHA loan limits do
not differentiate between new and existing
residences, this revenue procedure con-
tains a single average area purchase price
safe harbor for both new and existing res-
idences in a statistical area.
.15 The average area purchase price
safe harbors listed in section 4.01 of this
revenue procedure are based on FHA
loan limits released November 28, 2023.
FHA loan limits are available for statis-
tical areas in each state, the District of
Columbia, Puerto Rico, the Northern Mar-
iana Islands, American Samoa, the Virgin
Islands, and Guam. See section 3.03 of
this revenue procedure with respect to
FHA loan limits revised after November
28, 2023.
.16 OMB Bulletin No. 03-04, dated
and effective June 6, 2003, revised the
definitions of the nation’s metropolitan
areas and recognized 49 new metropoli-
tan statistical areas. The OMB bulletin no
longer includes primary metropolitan sta-
tistical areas.
SECTION 3. APPLICATION
Average Area Purchase Price Safe
Harbors
.01 Average area purchase price safe
harbors for statistical areas in each state,
the District of Columbia, Puerto Rico,
the Northern Mariana Islands, American
Samoa, the Virgin Islands, and Guam are
set forth in section 4.01 of this revenue
procedure. Average area purchase price
safe harbors are provided for single-fam-
ily and two to four-family residences. For
each type of residence, section 4.01 of this
revenue procedure contains a single safe
harbor that may be used for both new and
existing residences. Issuers of qualified
mortgage bonds and issuers of mortgage
credit certificates may rely on these safe
harbors to satisfy the requirements of §§
143(e) and (f). Section 4.01 of this reve-
nue procedure provides safe harbors for
MSAs and for certain counties and county
equivalents. If no purchase price safe har-
bor is available for a statistical area, the
safe harbor for “ALL OTHER AREAS”
may be used for that statistical area.
.02 If a residence is in an MSA, the safe
harbor applicable to it is the limitation of
that MSA. If an MSA falls in more than
one state, the MSA is listed in section 4.01
of this revenue procedure under each state.
.03 If the FHA revises the FHA loan
limit for any statistical area after Novem-
ber 28, 2023, an issuer of qualified mort-
gage bonds or mortgage credit certificates
may use the revised FHA loan limit for that
statistical area to compute (as provided in
the next sentence) a revised average area
purchase price safe harbor for the statisti-
cal area provided that the issuer maintains
records evidencing the revised FHA loan

May 6, 2024 1056 Bulletin No. 2024–19
limit. The revised average area purchase
price safe harbor for that statistical area
is computed by dividing the revised FHA
loan limit by 0.878.
.04 If, pursuant to § 6a.103A-2(f)
(5)(i), an issuer uses more accurate and
comprehensive data to determine the
average area purchase price for a statis-
tical area, the issuer must make separate
average area purchase price determina-
tions for new and existing residences.
Moreover, when computing the average
area purchase price for a statistical area
that is an MSA, as defined in OMB Bul-
letin No. 23-01, the issuer must make
the computation for the entire applicable
MSA. When computing the average area
purchase price for a statistical area that
is not an MSA, the issuer must make the
computation for the entire statistical area
and may not combine statistical areas.
Thus, for example, the issuer may not
combine two or more counties.
.05 If an issuer receives a ruling per-
mitting it to rely on an average area pur-
chase price limitation that is higher than
the applicable safe harbor in this revenue
procedure, the issuer may rely on that
higher limitation for the purpose of satis-
fying the requirements of §§ 143(e) and
(f) for bonds sold, and mortgage credit
certificates issued, not more than 30
months following the termination date of
the 12-month period used by the issuer to
compute the limitation.
Nationwide Average Purchase Price
.06 Section 4.02 of this revenue pro-
cedure sets forth a single nationwide
average purchase price for purposes of
computing the housing cost/income ratio
under § 143(f)(5).
.07 Issuers must use the nationwide
average purchase price set forth in sec-
tion 4.02 of this revenue procedure when
computing the housing cost/income ratio
under § 143(f)(5) regardless of whether
they are relying on the average area pur-
chase price safe harbors contained in this
revenue procedure or using more accu-
rate and comprehensive data to determine
average area purchase prices for new and
existing residences for a statistical area
that are different from the published safe
harbors in this revenue procedure.
.08 If, pursuant to section 6.02 of this
revenue procedure, an issuer relies on the
average area purchase price safe harbors
contained in Rev. Proc. 2023-22, the issuer
must use the nationwide average purchase
price set forth in section 4.02 of Rev. Proc.
2023-22 in computing the housing cost/
income ratio under § 143(f)(5). Likewise,
if, pursuant to section 6.04 of this revenue
procedure, an issuer relies on the nation-
wide average purchase price published in
Rev. Proc. 2023-22, the issuer must use
the average area purchase price safe har-
bors set forth in section 4.01 of Rev. Proc.
2023-22 in computing the housing cost/
income ratio under § 143(f)(5).
SECTION 4. AVERAGE AREA
AND NATIONWIDE AVERAGE
PURCHASE PRICES
.01 Average area purchase prices for
single-family and two to four-family res-
idences in MSAs, and for certain coun-
ties and county equivalents are set forth
below. The safe harbor for “ALL OTHER
AREAS” (found at the end of the table
below) may be used for a statistical area
that is not listed below.
2024 Average Area Purchase Prices for Mortgage Revenue Bonds
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
ALEUTIANS WESTAK$621,082$795,068$961,077$1,194,424
HOONAH-ANGOON CAK$597,497$764,874$924,559$1,149,020
JUNEAU CITY ANDAK$630,255$806,860$975,262$1,212,028
KODIAK ISLAND BAK$589,635$754,847$912,425$1,133,923
SITKA CITY ANDAK$668,253$855,455$1,034,055$1,285,120
SKAGWAY MUNICIPAK$597,497$764,874$924,559$1,149,020
COCONINOAZ$598,807$766,583$926,610$1,151,583
MARICOPAAZ$604,049$773,305$934,700$1,161,667
PINALAZ$604,049$773,305$934,700$1,161,667
ALAMEDACA$1,310,101$1,677,470$2,027,576$2,519,879
ALPINECA$573,912$734,680$888,099$1,103,672
CONTRA COSTACA$1,310,101$1,677,470$2,027,576$2,519,879
EL DORADOCA$870,040$1,113,812$1,346,362$1,673,197
INYOCA$579,153$741,402$896,189$1,113,756
LOS ANGELESCA$1,310,101$1,677,470$2,027,576$2,519,879
MARINCA$1,310,101$1,677,470$2,027,576$2,519,879

Bulletin No. 2024–19 1057 May 6, 2024
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
MENDOCINOCA$622,393$796,777$963,128$1,196,931
MONOCA$790,111$1,011,495$1,222,681$1,519,493
MONTEREYCA$1,048,240$1,341,919$1,622,095$2,015,869
NAPACA$1,159,616$1,484,514$1,794,428$2,230,075
NEVADACA$733,768$939,372$1,135,461$1,411,137
ORANGECA$1,310,101$1,677,470$2,027,576$2,519,879
PLACERCA$870,040$1,113,812$1,346,362$1,673,197
RIVERSIDECA$733,768$939,372$1,135,461$1,411,137
SACRAMENTOCA$870,040$1,113,812$1,346,362$1,673,197
SAN BENITOCA$1,310,101$1,677,470$2,027,576$2,519,879
SAN BERNARDINOCA$733,768$939,372$1,135,461$1,411,137
SAN DIEGOCA$1,146,513$1,467,765$1,774,204$2,204,894
SAN FRANCISCOCA$1,310,101$1,677,470$2,027,576$2,519,879
SAN JOAQUINCA$748,182$957,830$1,157,793$1,438,824
SAN LUIS OBISPOCA$1,058,723$1,355,364$1,638,331$2,036,036
SAN MATEOCA$1,310,101$1,677,470$2,027,576$2,519,879
SANTA BARBARACA$955,209$1,222,852$1,478,133$1,836,984
SANTA CLARACA$1,310,101$1,677,470$2,027,576$2,519,879
SANTA CRUZCA$1,310,101$1,677,470$2,027,576$2,519,879
SOLANOCA$780,939$999,759$1,208,439$1,501,832
SONOMACA$999,759$1,279,879$1,547,066$1,922,667
STANISLAUSCA$589,635$754,847$912,425$1,133,923
VENTURACA$1,087,550$1,392,280$1,682,939$2,091,468
YOLOCA$870,040$1,113,812$1,346,362$1,673,197
ADAMSCO$930,313$1,190,949$1,439,622$1,789,073
ARAPAHOECO$930,313$1,190,949$1,439,622$1,789,073
BOULDERCO$976,174$1,249,685$1,510,606$1,877,319
BROOMFIELDCO$930,313$1,190,949$1,439,622$1,789,073
CHAFFEECO$720,665$922,566$1,115,180$1,385,899
CLEAR CREEKCO$930,313$1,190,949$1,439,622$1,789,073
DENVERCO$930,313$1,190,949$1,439,622$1,789,073
DOUGLASCO$930,313$1,190,949$1,439,622$1,789,073
EAGLECO$1,310,101$1,677,470$2,027,576$2,519,879
EL PASOCO$589,635$754,847$912,425$1,133,923
ELBERTCO$930,313$1,190,949$1,439,622$1,789,073
GARFIELDCO$1,310,101$1,677,470$2,027,576$2,519,879
GILPINCO$930,313$1,190,949$1,439,622$1,789,073
GRANDCO$851,695$1,090,341$1,317,935$1,637,876
GUNNISONCO$721,976$924,275$1,117,231$1,388,406
JEFFERSONCO$930,313$1,190,949$1,439,622$1,789,073
LA PLATACO$746,871$956,121$1,155,742$1,436,317
LARIMERCO$720,665$922,566$1,115,180$1,385,899
MONTROSECO$639,427$818,596$989,448$1,229,689

May 6, 2024 1058 Bulletin No. 2024–19
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
OURAYCO$639,427$818,596$989,448$1,229,689
PARKCO$930,313$1,190,949$1,439,622$1,789,073
PITKINCO$1,310,101$1,677,470$2,027,576$2,519,879
ROUTTCO$1,153,065$1,476,139$1,784,345$2,217,484
SAN JUANCO$589,635$754,847$912,425$1,133,923
SAN MIGUELCO$1,191,063$1,524,791$1,843,137$2,290,576
SUMMITCO$1,146,513$1,467,765$1,774,204$2,204,894
TELLERCO$589,635$754,847$912,425$1,133,923
WELDCO$638,116$816,887$987,454$1,227,182
FAIRFIELDCT$818,938$1,048,411$1,267,289$1,574,924
DISTRICT OF COLDC$1,310,101$1,677,470$2,027,576$2,519,879
NEW CASTLEDE$635,496$813,526$983,409$1,222,112
BAKERFL$643,358$823,609$995,544$1,237,266
BROWARDFL$707,562$905,816$1,094,899$1,360,719
CLAYFL$643,358$823,609$995,544$1,237,266
COLLIERFL$832,041$1,065,160$1,287,513$1,600,105
DUVALFL$643,358$823,609$995,544$1,237,266
MANATEEFL$623,703$798,429$965,122$1,199,438
MARTINFL$622,393$796,777$963,128$1,196,931
MIAMI-DADEFL$707,562$905,816$1,094,899$1,360,719
MONROEFL$1,058,723$1,355,364$1,638,331$2,036,036
NASSAUFL$643,358$823,609$995,544$1,237,266
OKALOOSAFL$687,908$880,636$1,064,477$1,322,891
PALM BEACHFL$707,562$905,816$1,094,899$1,360,719
SARASOTAFL$623,703$798,429$965,122$1,199,438
ST. JOHNSFL$643,358$823,609$995,544$1,237,266
ST. LUCIEFL$622,393$796,777$963,128$1,196,931
WALTONFL$687,908$880,636$1,064,477$1,322,891
BARROWGA$740,320$947,746$1,145,602$1,423,727
BARTOWGA$740,320$947,746$1,145,602$1,423,727
BUTTSGA$740,320$947,746$1,145,602$1,423,727
CARROLLGA$740,320$947,746$1,145,602$1,423,727
CHEROKEEGA$740,320$947,746$1,145,602$1,423,727
CLARKEGA$622,393$796,777$963,128$1,196,931
CLAYTONGA$740,320$947,746$1,145,602$1,423,727
COBBGA$740,320$947,746$1,145,602$1,423,727
COWETAGA$740,320$947,746$1,145,602$1,423,727
DAWSONGA$740,320$947,746$1,145,602$1,423,727
DEKALBGA$740,320$947,746$1,145,602$1,423,727

Bulletin No. 2024–19 1059 May 6, 2024
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
DOUGLASGA$740,320$947,746$1,145,602$1,423,727
FAYETTEGA$740,320$947,746$1,145,602$1,423,727
FORSYTHGA$740,320$947,746$1,145,602$1,423,727
FULTONGA$740,320$947,746$1,145,602$1,423,727
GREENEGA$602,738$771,596$932,706$1,159,103
GWINNETTGA$740,320$947,746$1,145,602$1,423,727
HARALSONGA$740,320$947,746$1,145,602$1,423,727
HEARDGA$740,320$947,746$1,145,602$1,423,727
HENRYGA$740,320$947,746$1,145,602$1,423,727
JASPERGA$740,320$947,746$1,145,602$1,423,727
LAMARGA$740,320$947,746$1,145,602$1,423,727
MADISONGA$622,393$796,777$963,128$1,196,931
MERIWETHERGA$740,320$947,746$1,145,602$1,423,727
MORGANGA$740,320$947,746$1,145,602$1,423,727
NEWTONGA$740,320$947,746$1,145,602$1,423,727
OCONEEGA$622,393$796,777$963,128$1,196,931
OGLETHORPEGA$622,393$796,777$963,128$1,196,931
PAULDINGGA$740,320$947,746$1,145,602$1,423,727
PICKENSGA$740,320$947,746$1,145,602$1,423,727
PIKEGA$740,320$947,746$1,145,602$1,423,727
ROCKDALEGA$740,320$947,746$1,145,602$1,423,727
SPALDINGGA$740,320$947,746$1,145,602$1,423,727
WALTONGA$740,320$947,746$1,145,602$1,423,727
HAWAIIHI$589,635$754,847$912,425$1,133,923
HONOLULUHI$888,384$1,137,284$1,374,733$1,708,461
KALAWAOHI$1,139,962$1,459,390$1,764,063$2,192,304
KAUAIHI$1,172,719$1,501,320$1,814,709$2,255,255
MAUIHI$1,139,962$1,459,390$1,764,063$2,192,304
ADAID$668,253$855,455$1,034,055$1,285,120
BLAINEID$864,798$1,107,090$1,338,216$1,663,113
BOISEID$668,253$855,455$1,034,055$1,285,120
BONNERID$596,187$763,222$922,566$1,146,513
CAMASID$864,798$1,107,090$1,338,216$1,663,113
CANYONID$668,253$855,455$1,034,055$1,285,120
GEMID$668,253$855,455$1,034,055$1,285,120
KOOTENAIID$652,530$835,345$1,009,729$1,254,869
OWYHEEID$668,253$855,455$1,034,055$1,285,120
TETONID$1,310,101$1,677,470$2,027,576$2,519,879
VALLEYID$653,840$837,054$1,011,780$1,257,376
BARNSTABLEMA$851,695$1,090,341$1,317,935$1,637,876
BRISTOLMA$838,592$1,073,535$1,297,653$1,612,695

May 6, 2024 1060 Bulletin No. 2024–19
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
DUKESMA$1,310,101$1,677,470$2,027,576$2,519,879
ESSEXMA$982,725$1,258,059$1,520,746$1,889,909
MIDDLESEXMA$982,725$1,258,059$1,520,746$1,889,909
NANTUCKETMA$1,310,101$1,677,470$2,027,576$2,519,879
NORFOLKMA$982,725$1,258,059$1,520,746$1,889,909
PLYMOUTHMA$982,725$1,258,059$1,520,746$1,889,909
SUFFOLKMA$982,725$1,258,059$1,520,746$1,889,909
ANNE ARUNDELMD$759,974$972,927$1,176,023$1,461,498
BALTIMOREMD$759,974$972,927$1,176,023$1,461,498
BALTIMORE CITYMD$759,974$972,927$1,176,023$1,461,498
CALVERTMD$1,310,101$1,677,470$2,027,576$2,519,879
CARROLLMD$759,974$972,927$1,176,023$1,461,498
CECILMD$635,496$813,526$983,409$1,222,112
CHARLESMD$1,310,101$1,677,470$2,027,576$2,519,879
FREDERICKMD$1,310,101$1,677,470$2,027,576$2,519,879
HARFORDMD$759,974$972,927$1,176,023$1,461,498
HOWARDMD$759,974$972,927$1,176,023$1,461,498
MONTGOMERYMD$1,310,101$1,677,470$2,027,576$2,519,879
PRINCE GEORGE'SMD$1,310,101$1,677,470$2,027,576$2,519,879
QUEEN ANNE'SMD$759,974$972,927$1,176,023$1,461,498
CUMBERLANDME$622,393$796,777$963,128$1,196,931
SAGADAHOCME$622,393$796,777$963,128$1,196,931
YORKME$622,393$796,777$963,128$1,196,931
ANOKAMN$587,015$751,486$908,380$1,128,909
CARVERMN$587,015$751,486$908,380$1,128,909
CHISAGOMN$587,015$751,486$908,380$1,128,909
DAKOTAMN$587,015$751,486$908,380$1,128,909
HENNEPINMN$587,015$751,486$908,380$1,128,909
ISANTIMN$587,015$751,486$908,380$1,128,909
LE SUEURMN$587,015$751,486$908,380$1,128,909
MILLE LACSMN$587,015$751,486$908,380$1,128,909
RAMSEYMN$587,015$751,486$908,380$1,128,909
SCOTTMN$587,015$751,486$908,380$1,128,909
SHERBURNEMN$587,015$751,486$908,380$1,128,909
WASHINGTONMN$587,015$751,486$908,380$1,128,909
WRIGHTMN$587,015$751,486$908,380$1,128,909
BROADWATERMT$568,670$728,014$879,952$1,093,588
CARBONMT$859,557$1,100,368$1,330,126$1,653,030
FLATHEADMT$636,806$815,235$985,403$1,224,618
GALLATINMT$818,938$1,048,411$1,267,289$1,574,924

Bulletin No. 2024–19 1061 May 6, 2024
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
MISSOULAMT$622,393$796,777$963,128$1,196,931
PARKMT$642,047$821,957$993,550$1,234,702
RAVALLIMT$575,222$736,389$890,093$1,106,179
STILLWATERMT$859,557$1,100,368$1,330,126$1,653,030
YELLOWSTONEMT$859,557$1,100,368$1,330,126$1,653,030
CAMDENNC$786,180$1,006,425$1,216,586$1,511,916
CHATHAMNC$686,598$878,984$1,062,483$1,320,384
CURRITUCKNC$786,180$1,006,425$1,216,586$1,511,916
DARENC$703,631$900,746$1,088,803$1,353,142
DURHAMNC$686,598$878,984$1,062,483$1,320,384
FRANKLINNC$602,738$771,596$932,706$1,159,103
GATESNC$786,180$1,006,425$1,216,586$1,511,916
GRANVILLENC$686,598$878,984$1,062,483$1,320,384
JOHNSTONNC$602,738$771,596$932,706$1,159,103
ORANGENC$686,598$878,984$1,062,483$1,320,384
PASQUOTANKNC$917,210$1,174,200$1,419,340$1,763,892
PERQUIMANSNC$917,210$1,174,200$1,419,340$1,763,892
PERSONNC$686,598$878,984$1,062,483$1,320,384
WAKENC$602,738$771,596$932,706$1,159,103
BILLINGSND$579,153$741,402$896,189$1,113,756
STARKND$579,153$741,402$896,189$1,113,756
DAWSONNE$687,908$880,636$1,064,477$1,322,891
GOSPERNE$687,908$880,636$1,064,477$1,322,891
ROCKINGHAMNH$982,725$1,258,059$1,520,746$1,889,909
STRAFFORDNH$982,725$1,258,059$1,520,746$1,889,909
BERGENNJ$1,310,101$1,677,470$2,027,576$2,519,879
BURLINGTONNJ$635,496$813,526$983,409$1,222,112
CAMDENNJ$635,496$813,526$983,409$1,222,112
CAPE MAYNJ$635,496$813,526$983,409$1,222,112
ESSEXNJ$1,310,101$1,677,470$2,027,576$2,519,879
GLOUCESTERNJ$635,496$813,526$983,409$1,222,112
HUDSONNJ$1,310,101$1,677,470$2,027,576$2,519,879
HUNTERDONNJ$1,310,101$1,677,470$2,027,576$2,519,879
MIDDLESEXNJ$1,310,101$1,677,470$2,027,576$2,519,879
MONMOUTHNJ$1,310,101$1,677,470$2,027,576$2,519,879
MORRISNJ$1,310,101$1,677,470$2,027,576$2,519,879
OCEANNJ$1,310,101$1,677,470$2,027,576$2,519,879
PASSAICNJ$1,310,101$1,677,470$2,027,576$2,519,879
SALEMNJ$635,496$813,526$983,409$1,222,112

May 6, 2024 1062 Bulletin No. 2024–19
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
SOMERSETNJ$1,310,101$1,677,470$2,027,576$2,519,879
SUSSEXNJ$1,310,101$1,677,470$2,027,576$2,519,879
UNIONNJ$1,310,101$1,677,470$2,027,576$2,519,879
LOS ALAMOSNM$712,804$912,539$1,103,045$1,370,802
SANTA FENM$617,152$790,054$954,981$1,186,848
CARSON CITYNV$581,773$744,763$900,233$1,118,826
DOUGLASNV$749,492$959,482$1,159,787$1,441,331
STOREYNV$707,562$905,816$1,094,899$1,360,719
WASHOENV$707,562$905,816$1,094,899$1,360,719
BRONXNY$1,310,101$1,677,470$2,027,576$2,519,879
KINGSNY$1,310,101$1,677,470$2,027,576$2,519,879
NASSAUNY$1,310,101$1,677,470$2,027,576$2,519,879
NEW YORKNY$1,310,101$1,677,470$2,027,576$2,519,879
PUTNAMNY$1,310,101$1,677,470$2,027,576$2,519,879
QUEENSNY$1,310,101$1,677,470$2,027,576$2,519,879
RICHMONDNY$1,310,101$1,677,470$2,027,576$2,519,879
ROCKLANDNY$1,310,101$1,677,470$2,027,576$2,519,879
SUFFOLKNY$1,310,101$1,677,470$2,027,576$2,519,879
WESTCHESTERNY$1,310,101$1,677,470$2,027,576$2,519,879
DELAWAREOH$622,393$796,777$963,128$1,196,931
FAIRFIELDOH$622,393$796,777$963,128$1,196,931
FRANKLINOH$622,393$796,777$963,128$1,196,931
HOCKINGOH$622,393$796,777$963,128$1,196,931
LICKINGOH$622,393$796,777$963,128$1,196,931
MADISONOH$622,393$796,777$963,128$1,196,931
MORROWOH$622,393$796,777$963,128$1,196,931
PERRYOH$622,393$796,777$963,128$1,196,931
PICKAWAYOH$622,393$796,777$963,128$1,196,931
UNIONOH$622,393$796,777$963,128$1,196,931
BENTONOR$681,356$872,261$1,054,336$1,310,301
CLACKAMASOR$774,388$991,328$1,198,298$1,489,242
CLATSOPOR$602,738$771,596$932,706$1,159,103
COLUMBIAOR$774,388$991,328$1,198,298$1,489,242
DESCHUTESOR$786,180$1,006,425$1,216,586$1,511,916
HOOD RIVEROR$825,489$1,056,786$1,277,429$1,587,515
MULTNOMAHOR$774,388$991,328$1,198,298$1,489,242
WASHINGTONOR$774,388$991,328$1,198,298$1,489,242
YAMHILLOR$774,388$991,328$1,198,298$1,489,242

Bulletin No. 2024–19 1063 May 6, 2024
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
BUCKSPA$635,496$813,526$983,409$1,222,112
CHESTERPA$635,496$813,526$983,409$1,222,112
DELAWAREPA$635,496$813,526$983,409$1,222,112
MONTGOMERYPA$635,496$813,526$983,409$1,222,112
PHILADELPHIAPA$635,496$813,526$983,409$1,222,112
PIKEPA$1,310,101$1,677,470$2,027,576$2,519,879
BRISTOLRI$838,592$1,073,535$1,297,653$1,612,695
KENTRI$838,592$1,073,535$1,297,653$1,612,695
NEWPORTRI$838,592$1,073,535$1,297,653$1,612,695
PROVIDENCERI$838,592$1,073,535$1,297,653$1,612,695
WASHINGTONRI$838,592$1,073,535$1,297,653$1,612,695
BEAUFORTSC$622,393$796,777$963,128$1,196,931
BERKELEYSC$668,253$855,455$1,034,055$1,285,120
CHARLESTONSC$668,253$855,455$1,034,055$1,285,120
DORCHESTERSC$668,253$855,455$1,034,055$1,285,120
JASPERSC$622,393$796,777$963,128$1,196,931
LAWRENCESD$617,152$790,054$954,981$1,186,848
CANNONTN$1,074,447$1,375,474$1,662,658$2,066,287
CHEATHAMTN$1,074,447$1,375,474$1,662,658$2,066,287
DAVIDSONTN$1,074,447$1,375,474$1,662,658$2,066,287
DICKSONTN$1,074,447$1,375,474$1,662,658$2,066,287
MACONTN$1,074,447$1,375,474$1,662,658$2,066,287
MAURYTN$1,074,447$1,375,474$1,662,658$2,066,287
ROBERTSONTN$1,074,447$1,375,474$1,662,658$2,066,287
RUTHERFORDTN$1,074,447$1,375,474$1,662,658$2,066,287
SMITHTN$1,074,447$1,375,474$1,662,658$2,066,287
SUMNERTN$1,074,447$1,375,474$1,662,658$2,066,287
TROUSDALETN$1,074,447$1,375,474$1,662,658$2,066,287
WILLIAMSONTN$1,074,447$1,375,474$1,662,658$2,066,287
WILSONTN$1,074,447$1,375,474$1,662,658$2,066,287
ATASCOSATX$635,496$813,526$983,409$1,222,112
BANDERATX$635,496$813,526$983,409$1,222,112
BASTROPTX$651,219$833,693$1,007,735$1,252,363
BEXARTX$635,496$813,526$983,409$1,222,112
CALDWELLTX$651,219$833,693$1,007,735$1,252,363
COLLINTX$642,047$821,957$993,550$1,234,702
COMALTX$635,496$813,526$983,409$1,222,112
DALLASTX$642,047$821,957$993,550$1,234,702
DENTONTX$642,047$821,957$993,550$1,234,702

May 6, 2024 1064 Bulletin No. 2024–19
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
ELLISTX$642,047$821,957$993,550$1,234,702
GUADALUPETX$635,496$813,526$983,409$1,222,112
HAYSTX$651,219$833,693$1,007,735$1,252,363
HUNTTX$642,047$821,957$993,550$1,234,702
JOHNSONTX$642,047$821,957$993,550$1,234,702
KAUFMANTX$642,047$821,957$993,550$1,234,702
KENDALLTX$635,496$813,526$983,409$1,222,112
MEDINATX$635,496$813,526$983,409$1,222,112
PARKERTX$642,047$821,957$993,550$1,234,702
ROCKWALLTX$642,047$821,957$993,550$1,234,702
TARRANTTX$642,047$821,957$993,550$1,234,702
TRAVISTX$651,219$833,693$1,007,735$1,252,363
WILLIAMSONTX$651,219$833,693$1,007,735$1,252,363
WILSONTX$635,496$813,526$983,409$1,222,112
WISETX$642,047$821,957$993,550$1,234,702
BOX ELDERUT$847,764$1,085,271$1,311,896$1,630,356
DAVISUT$847,764$1,085,271$1,311,896$1,630,356
GRANDUT$691,839$885,649$1,070,573$1,330,468
JUABUT$685,287$877,275$1,060,432$1,317,878
MORGANUT$847,764$1,085,271$1,311,896$1,630,356
RICHUT$660,392$845,429$1,021,921$1,270,023
SALT LAKEUT$706,252$904,107$1,092,905$1,358,212
SUMMITUT$1,310,101$1,677,470$2,027,576$2,519,879
TOOELEUT$706,252$904,107$1,092,905$1,358,212
UTAHUT$685,287$877,275$1,060,432$1,317,878
WASATCHUT$1,310,101$1,677,470$2,027,576$2,519,879
WASHINGTONUT$676,115$865,539$1,046,247$1,300,217
WAYNEUT$1,136,031$1,454,320$1,757,968$2,184,727
WEBERUT$847,764$1,085,271$1,311,896$1,630,356
ALBEMARLEVA$621,082$795,068$961,077$1,194,424
ALEXANDRIA CITYVA$1,310,101$1,677,470$2,027,576$2,519,879
AMELIAVA$719,355$920,913$1,113,186$1,383,393
ARLINGTONVA$1,310,101$1,677,470$2,027,576$2,519,879
CHARLES CITYVA$719,355$920,913$1,113,186$1,383,393
CHARLOTTESVILLEVA$621,082$795,068$961,077$1,194,424
CHESAPEAKE CITYVA$786,180$1,006,425$1,216,586$1,511,916
CHESTERFIELDVA$719,355$920,913$1,113,186$1,383,393
CLARKEVA$1,310,101$1,677,470$2,027,576$2,519,879
COLONIAL HEIGHTVA$719,355$920,913$1,113,186$1,383,393
CULPEPERVA$1,310,101$1,677,470$2,027,576$2,519,879
DINWIDDIEVA$719,355$920,913$1,113,186$1,383,393
FAIRFAXVA$1,310,101$1,677,470$2,027,576$2,519,879

Bulletin No. 2024–19 1065 May 6, 2024
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
FAIRFAX CITYVA$1,310,101$1,677,470$2,027,576$2,519,879
FALLS CHURCH CIVA$1,310,101$1,677,470$2,027,576$2,519,879
FAUQUIERVA$1,310,101$1,677,470$2,027,576$2,519,879
FLUVANNAVA$621,082$795,068$961,077$1,194,424
FRANKLIN CITYVA$786,180$1,006,425$1,216,586$1,511,916
FREDERICKSBURGVA$1,310,101$1,677,470$2,027,576$2,519,879
GLOUCESTERVA$786,180$1,006,425$1,216,586$1,511,916
GOOCHLANDVA$719,355$920,913$1,113,186$1,383,393
GREENEVA$621,082$795,068$961,077$1,194,424
HAMPTON CITYVA$786,180$1,006,425$1,216,586$1,511,916
HANOVERVA$719,355$920,913$1,113,186$1,383,393
HENRICOVA$719,355$920,913$1,113,186$1,383,393
HOPEWELL CITYVA$719,355$920,913$1,113,186$1,383,393
ISLE OF WIGHTVA$786,180$1,006,425$1,216,586$1,511,916
JAMES CITYVA$786,180$1,006,425$1,216,586$1,511,916
KING AND QUEENVA$719,355$920,913$1,113,186$1,383,393
KING WILLIAMVA$719,355$920,913$1,113,186$1,383,393
LOUDOUNVA$1,310,101$1,677,470$2,027,576$2,519,879
MADISONVA$1,310,101$1,677,470$2,027,576$2,519,879
MANASSAS CITYVA$1,310,101$1,677,470$2,027,576$2,519,879
MANASSAS PARK CVA$1,310,101$1,677,470$2,027,576$2,519,879
MATHEWSVA$786,180$1,006,425$1,216,586$1,511,916
NELSONVA$621,082$795,068$961,077$1,194,424
NEW KENTVA$719,355$920,913$1,113,186$1,383,393
NEWPORT NEWS CIVA$786,180$1,006,425$1,216,586$1,511,916
NORFOLK CITYVA$786,180$1,006,425$1,216,586$1,511,916
PETERSBURG CITYVA$719,355$920,913$1,113,186$1,383,393
POQUOSON CITYVA$786,180$1,006,425$1,216,586$1,511,916
PORTSMOUTH CITYVA$786,180$1,006,425$1,216,586$1,511,916
POWHATANVA$719,355$920,913$1,113,186$1,383,393
PRINCE GEORGEVA$719,355$920,913$1,113,186$1,383,393
PRINCE WILLIAMVA$1,310,101$1,677,470$2,027,576$2,519,879
RAPPAHANNOCKVA$1,310,101$1,677,470$2,027,576$2,519,879
RICHMOND CITYVA$719,355$920,913$1,113,186$1,383,393
SOUTHAMPTONVA$786,180$1,006,425$1,216,586$1,511,916
SPOTSYLVANIAVA$1,310,101$1,677,470$2,027,576$2,519,879
STAFFORDVA$1,310,101$1,677,470$2,027,576$2,519,879
SUFFOLK CITYVA$786,180$1,006,425$1,216,586$1,511,916
SUSSEXVA$719,355$920,913$1,113,186$1,383,393
VIRGINIA BEACHVA$786,180$1,006,425$1,216,586$1,511,916
WARRENVA$1,310,101$1,677,470$2,027,576$2,519,879
WILLIAMSBURG CIVA$786,180$1,006,425$1,216,586$1,511,916
YORKVA$786,180$1,006,425$1,216,586$1,511,916

May 6, 2024 1066 Bulletin No. 2024–19
County NameState
One-Unit
Limit
Two-Unit
Limit
Three-Unit
Limit
Four-Unit
Limit
CHITTENDENVT$589,635$754,847$912,425$1,133,923
FRANKLINVT$589,635$754,847$912,425$1,133,923
GRAND ISLEVT$589,635$754,847$912,425$1,133,923
CHELANWA$576,532$738,041$892,144$1,108,742
CLARKWA$774,388$991,328$1,198,298$1,489,242
DOUGLASWA$576,532$738,041$892,144$1,108,742
ISLANDWA$655,150$838,706$1,013,831$1,259,939
JEFFERSONWA$589,635$754,847$912,425$1,133,923
KINGWA$1,113,756$1,425,835$1,723,501$2,141,886
KITSAPWA$642,047$821,957$993,550$1,234,702
PIERCEWA$1,113,756$1,425,835$1,723,501$2,141,886
SKAGITWA$621,082$795,068$961,077$1,194,424
SKAMANIAWA$774,388$991,328$1,198,298$1,489,242
SNOHOMISHWA$1,113,756$1,425,835$1,723,501$2,141,886
THURSTONWA$622,393$796,777$963,128$1,196,931
WHATCOMWA$687,908$880,636$1,064,477$1,322,891
WHITMANWA$602,738$771,596$932,706$1,159,103
PIERCEWI$587,015$751,486$908,380$1,128,909
ST. CROIXWI$587,015$751,486$908,380$1,128,909
JEFFERSONWV$1,310,101$1,677,470$2,027,576$2,519,879
TETONWY$1,310,101$1,677,470$2,027,576$2,519,879
GUAMGU
$642,047$821,957$993,550$1,234,702
NORTHERN ISLANDMP$597,497$764,874$924,559$1,149,020
SAIPANMP$602,738$771,596$932,706$1,159,103
TINIANMP$606,669$776,666$938,802$1,166,680
CULEBRAPR$606,669$776,666$938,802$1,166,680
ST. JOHN ISLANDVI$1,206,787$1,544,901$1,867,463$2,320,770
ST. THOMAS ISLAVI$728,527$932,649$1,127,371$1,401,053
All other areas - 2826 counties (floor): $567,710$726,875$878,614$1,091,936

Bulletin No. 2024–19 1067 May 6, 2024
.02 The nationwide average purchase
price (for use in the housing cost/income
ratio for new and existing residences) is
$510,100.
SECTION 5. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2023-22 is obsolete except
as provided in section 6 of this revenue
procedure.
SECTION 6. EFFECTIVE DATES
.01 Issuers may rely on this revenue
procedure to determine average area pur-
chase price safe harbors for commitments
to provide financing or issue mortgage
credit certificates that are made, or (if
the purchase precedes the commitment)
for residences that are purchased, in the
period that begins on April 16, 2024, and
ends on the date as of which the safe har-
bors contained in section 4.01 of this rev-
enue procedure are rendered obsolete by a
new revenue procedure.
.02 Notwithstanding section 5 of this
revenue procedure, issuers may continue
to rely on the average area purchase price
safe harbors contained in Rev. Proc. 2023-
22, with respect to bonds sold, or for mort-
gage credit certificates issued with respect
to bond authority exchanged, before May
16, 2024, if the commitments to provide
financing or issue mortgage credit certifi-
cates are made on or before June 15, 2024.
.03 Except as provided in section 6.04,
issuers must use the nationwide average
purchase price limitation contained in this
revenue procedure for commitments to
provide financing or issue mortgage credit
certificates that are made, or (if the pur-
chase precedes the commitment) for res-
idences that are purchased, in the period
that begins on April 16, 2024, and ends on
the date when the nationwide average pur-
chase price limitation is rendered obsolete
by a new revenue procedure.
.04 Notwithstanding sections 5 and
6.03 of this revenue procedure, issuers
may continue to rely on the nationwide
average purchase price set forth in Rev.
Proc. 2023-22 with respect to bonds sold,
or for mortgage credit certificates issued
with respect to bond authority exchanged,
before May 16, 2024, if the commitments
to provide financing or issue mortgage
credit certificates are made on or before
June 15, 2024.
SECTION 7. REQUEST FOR
COMMENTS
.01 Comments Regarding Guidance
in this Revenue Procedure. The Treasury
Department and the IRS are reviewing the
available data sources and method used
to determine the average area purchase
price safe harbors listed in section 4.01 of
this revenue procedure and are consider-
ing possible changes in the data used to
determine these safe harbors beginning in
2025.
The relationship between safe harbor
values calculated under the current meth-
odology and actual area purchase prices
has been growing weaker over the past
decade. The current methodology relies
on the FHA single family forward mort-
gage limits, which are subject to both a
floor and ceiling. Because 87 percent of
counties are subject to the FHA mortgage
limit floor and 2 percent of counties are
subject to the FHA ceiling in 2024, most
counties have a safe harbor value that does
not closely relate to their average area
purchase price under the current method-
ology.
The Treasury Department and the IRS
are considering a shift away from using
FHA mortgage limits as the basis for
calculating average purchase prices and
using median purchase prices as reported
by the Department of Housing and Urban
Development (HUD) as the basis to make
such calculations. The Treasury and IRS
solicit public comments on the use of this
data and any alternative data sources that
would generate average area purchase
price safe harbors that more closely track
area purchase prices.
Implementing such a change using
HUD data would lead to large changes in
safe harbors if done in a single year. One
approach to implementing this change
would be to phase in the new safe harbor
amounts over five years, using the current
2024 values as a baseline and shifting
towards the HUD values over time. The
first year would maintain 80 percent of the
2024 values and 20 percent of values cal-
culated using 2025 HUD data. The second
year would be 60 percent of the 2024 val-
ues and 40 percent of the values calculated
using 2026 HUD data. The third, fourth,
and fifth years would follow, such that the
fifth year would feature 100 percent of
actual 2029 price data.
A second approach would instead
freeze values at the 2024 levels until such
time when an area’s average purchase
price based on HUD data surpasses the
frozen value, after which the safe harbor
would follow the HUD data.
The Treasury and IRS also seek
comments on these implementation
approaches, as well as any other potential
implementation approaches.
.02 Procedures for Submitting
Comments.
(1) Deadline. Written comments should
be submitted by June 15, 2024.
(2) Form and manner. The subject line
for the comments should include a refer-
ence to Revenue Procedure 2024-21. All
commenters are strongly encouraged to
submit comments electronically. How-
ever, comments may be submitted in one
of two ways:
(a) Electronically via the Federal
eRulemaking Portal at www.regulations.
gov (type IRS-2024-0019 in the search
field on the regulations.gov homepage to
find this notice and submit comments); or
(b) By mail to: Internal Revenue Ser-
vice, CC:PA:01:PR (Revenue Procedure
2024-21), Room 5203, P.O. Box 7604,
Ben Franklin Station, Washington, DC
20044.
(3) Publication of comments. The Trea-
sury Department and the IRS will publish
for public availability any comment sub-
mitted electronically or on paper to its
public docket on regulations.gov.
SECTION 8. PAPERWORK
REDUCTION ACT
The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507) under control number 1545-
1877.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the

May 6, 2024 1068 Bulletin No. 2024–19
collection of information displays a valid
OMB control number.
This revenue procedure contains a col-
lection of information requirement in sec-
tion 3.03. The purpose of the collection
of information is to verify the applicable
FHA loan limit that issuers of qualified
mortgage bonds and qualified mortgage
certificates have used to calculate the
average area purchase price for a given
metropolitan statistical area for purposes
of §§ 143(e) and 25(c). The collection of
information is required to obtain the ben-
efit of using revisions to FHA loan limits
to determine average area purchase prices.
The likely respondents are state and local
governments.
The estimated total annual reporting
and/or recordkeeping burden is: 15 hours.
The estimated annual burden per
respondent and/or recordkeeper: 15 min-
utes.
The estimated number of respondents
and/or recordkeepers: 60.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
SECTION 9. DRAFTING
INFORMATION
The principal authors of this revenue
procedure are Zoran Stojanovic and David
White of the Office of Associate Chief
Counsel (Financial Institutions & Prod-
ucts). For further information regarding
this revenue procedure contact Mr. White
at (202) 317-4562 (not a toll-free number).

Bulletin No. 2024–19 1069 May 6, 2024
Part IV
Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code
Announcement 2024-20
Table of Contents
The Internal Revenue Service has
revoked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the IRS will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section 170(c)
(2) if the organization has not timely filed
a suit for declaratory judgment under sec-
tion 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declar-
atory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under section
7428(c) would begin on May 6, 2024 and
would end on the date the court first deter-
mines the organization is not described in
section 170(c)(2) as more particularly set
for in section 7428(c)(1). For individual
contributors, the maximum deduction pro-
tected is $1,000, with a husband and wife
treated as one contributor. This benefit is
not extended to any individual, in whole
or in part, for the acts or omissions of the
organization that were the basis for revo-
cation.
Name Of OrganizationEffective Date of RevocationLocation
The Beard Foundation1/1/2020West Memphis, AR
Base Foundation1/1/2020
Troy, MO
New Irvine Yan Charity Organization 1/1/2020 Irvine, CA

Bulletin No. 2024–19 i May 6, 2024
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

May 6, 2024 ii Bulletin No. 2024–19
Numerical Finding List
1
Bulletin 2024–19
Announcements:
2024-1, 2024-02 I.R.B. 363
2024-3, 2024-02 I.R.B. 364
2024-5, 2024-05 I.R.B. 635
2024-6, 2024-05 I.R.B. 635
2024-4, 2024-06 I.R.B. 665
2024-7, 2024-07 I.R.B. 673
2024-8, 2024-07 I.R.B. 674
2024-9, 2024-07 I.R.B. 675
2024-12, 2024-08 I.R.B. 676
2024-11, 2024-08 I.R.B. 683
2024-13, 2024-10 I.R.B. 710
2024-10, 2024-11 I.R.B. 711
2024-14, 2024-12 I.R.B. 719
2024-15, 2024-15 I.R.B. 876
2024-16, 2024-16 I.R.B. 909
2024-17, 2024-16 I.R.B. 932
2024-19, 2024-17 I.R.B. 950
2024-20, 2024-19 I.R.B. 1069
Notices:
2024-1, 2024-02 I.R.B. 314
2024-2, 2024-02 I.R.B. 316
2024-3, 2024-02 I.R.B. 338
2024-4, 2024-02 I.R.B. 343
2024-5, 2024-02 I.R.B. 347
2024-6, 2024-02 I.R.B. 348
2024-7, 2024-02 I.R.B. 355
2024-8, 2024-02 I.R.B. 356
2024-9, 2024-02 I.R.B. 358
2024-11, 2024-02 I.R.B. 360
2024-10, 2024-03 I.R.B. 406
2024-12, 2024-05 I.R.B. 616
2024-13, 2024-05 I.R.B. 618
2024-16, 2024-05 I.R.B. 622
2024-18, 2024-05 I.R.B. 625
2024-19, 2024-05 I.R.B. 627
2024-21, 2024-06 I.R.B. 659
2024-22, 2024-06 I.R.B. 662
2024-20, 2024-07 I.R.B. 668
2024-23, 2024-07 I.R.B. 672
2024-24, 2024-10 I.R.B. 707
2024-25, 2024-12 I.R.B. 712
2024-26, 2024-12 I.R.B. 713
2024-27, 2024-12 I.R.B. 715
2024-28, 2024-13 I.R.B. 720
2024-29, 2024-14 I.R.B. 751
2024-31, 2024-15 I.R.B. 869
2024-30, 2024-16 I.R.B. 878
2024-32, 2024-16 I.R.B. 897
2024-33, 2024-18 I.R.B. 959
2024-34, 2024-18 I.R.B. 960
2024-35, 2024-19 I.R.B. 1051
Proposed Regulations:
REG-118492-23, 2024-02 I.R.B. 366
REG-107423-23, 2024-03 I.R.B. 411
REG-121010-17, 2024-05 I.R.B. 636
REG-101552-24, 2024-13 I.R.B. 741
REG-117631-23, 2024-14 I.R.B. 754
REG-108761-22, 2024-16 I.R.B. 933
REG-117542-22, 2024-16 I.R.B. 942
REG-123379-22, 2024-16 I.R.B. 952
Revenue Procedures:
2024-1, 2024-01 I.R.B. 1
2024-2, 2024-01 I.R.B. 119
2024-3, 2024-01 I.R.B. 143
2024-4, 2024-01 I.R.B. 160
2024-5, 2024-01 I.R.B. 262
2024-7, 2024-01 I.R.B. 303
2024-8, 2024-04 I.R.B. 479
2024-9, 2024-05 I.R.B. 628
2024-12, 2024-09 I.R.B. 677
2024-13, 2024-09 I.R.B. 678
2024-14, 2024-09 I.R.B. 682
2024-15, 2024-12 I.R.B. 717
2024-11, 2024-13 I.R.B. 721
2024-17, 2024-15 I.R.B. 873
2024-18, 2024-15 I.R.B. 874
2024-19, 2024-16 I.R.B. 899
2024-20, 2024-19 I.R.B. 1053
2024-21, 2024-19 I.R.B. 1054
Revenue Rulings:
2024-1, 2024-02 I.R.B. 307
2024-2, 2024-02 I.R.B. 311
2024-3, 2024-06 I.R.B. 646
2024-5, 2024-07 I.R.B. 666
2024-4, 2024-10 I.R.B. 686
2024-6, 2024-10 I.R.B. 688
2024-7, 2024-14 I.R.B. 749
2024-8, 2024-16 I.R.B. 877
2024-9, 2024-19 I.R.B. 964
Treasury Decisions:
9984, 2024-03 I.R.B. 386
9985, 2024-05 I.R.B. 573
9986, 2024-05 I.R.B. 610
9987, 2024-06 I.R.B. 648
9988, 2024-15 I.R.B. 794
9989, 2024-15 I.R.B. 850
9990, 2024-19 I.R.B. 966
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 26, 2023.

Bulletin No. 2024–19 iii May 6, 2024
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2024–19
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 26, 2023.

Internal Revenue Service
Washington, DC 20224
Official Business
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INTERNAL REVENUE BULLETIN
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