Trustmark Mutual Holding Co.
04/25/2024 | News release | Distributed by Public on 04/25/2024 12:11
Tri-Agency Rule finalized - what you need to know
The Tri-Agency Rule has been on the collective radar of the supplemental benefits industry for some time. On March 28, 2024, the much-anticipated finalized rule was released. Whether you're intimately familiar with the proposal or have been on the outskirts of the conversation, it's important to understand where the Tri-Agency Rule came from and what the finalized rule means for you and your business.
The origins of the Tri-Agency Rule
The Tri-Agency rule was drafted by three federal government agencies - the Department of Labor, Department of Health and Human Services, and the Treasury Department. The rule was initially proposed in an effort to crack down on "junk insurance", preventing the sale of mainly fixed indemnity insurance products to consumers as a replacement for comprehensive health coverage.
As a federal rule, the initial draft of the Tri-Agency Rule would have dramatically modified the design of short-term limited-duration insurance (STLDI), hospital and other fixed indemnity insurance products and changed the tax treatment of supplemental health products that are funded on a pre-tax basis.
As a result of these potential changes, our industry could have seen a shrinking hospital indemnity and pre-tax market with more taxable benefits and less employer-paid supplemental health insurance.
Where are we today?
On March 28, 2024, the final Tri-Agency Rule was published. The final rule did not include any changes to the taxation of benefits at this time. The primary impact of the final rule is focused on short-term limited duration insurance but included new disclosure requirements for hospital indemnity plans:
Short-term limited-duration insurance (not sold by Trustmark):
- Effective September 1, 2024
- Must be limited duration, up to 3 months
- 1 month renewal/extension limit, total duration of 4 months
- Policies issued before rule effective date can have a maximum duration of 36 months, subject to state limitations
- New, "not minimal essential coverage" disclosure required on all marketing materials, websites, advertisements, application, enrollment and re-enrollment materials, policies, certificates, and insurance contracts
- Effective for policies with coverage periods beginning on or after January 1, 2025
- Individual and group plan products will require new disclosure language on all marketing, application and enrollment materials.
- Individual plan products will also now require the new disclosure on the first page of all policies, certificates, and contracts.
- Disclosure requirements do not apply to accident and specified disease (critical illness) products
If new updates become available, Trustmark will communicate any significant implications to our products.