The Court of Appeals for the District of Columbia affirmed the District Court’s decision in Central United Life v. Burwell on July 1, 2016. This decision is very significant for those assessing the future strength of, and compliance framework for, the fixed indemnity market.

Central United Life v. Burwell enjoined the U.S. Department of Health and Human Services (HHS) from enforcing that portion of a new rule that limited the sale of fixed indemnity health insurance policies to only those consumers who have certified through a written “attestation” that they have other health insurance coverage that qualifies as minimum essential coverage under the Affordable Care Act (ACA).

Under the Public Health Service Act (PHSA), certain insurance plans qualify as “excepted benefits” and are thus exempted from many of the PHSAs requirements. When the ACA was passed in 2010, it effectively incorporated the PHSAs exemption for “excepted benefits” and applied that exemption to the ACAs “minimum essential coverage” and certain other market reform requirements. The definition of “excepted benefits” expressly includes fixed indemnity plans, which provide limited and fixed medical benefits, and thus are not designed or intended to provide comprehensive medical coverage and do not satisfy the individual mandate contained in the ACA. For that reason, some federal and state regulators have tried to regulate and limit the sale of such products — ostensibly to prevent consumers from confusing the coverage provided under a fixed indemnity policy with comprehensive medical coverage.

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