On July 12, 2023, the Departments of the Treasury, Labor, and Health and Human Services released a package of proposed regulations addressing a range of health benefit products that are exempt from the Affordable Care Act's usual health insurance standards, including short-term, limited-duration insurance; independent, non-coordinated excepted benefits coverage; and level-funded plan arrangements. A key piece of the rule, from the Treasury Department and the Internal Revenue Service, addresses the tax treatment of fixed indemnity insurance and similar products. The proposal restates and clarifies long-standing rules under section 105 of the Internal Revenue Code to address reports of non-compliance involving these plans. 

This comment letter, co-authored with the Tax Law Center at NYU Law, provides a detailed legal analysis of the proposals based on the relevant statutory and regulatory law and past practice. The authors conclude that the rules as clarified are the clearest reading of the statute and are consistent with long-standing regulations, and that previous enforcement practices do not limit future enforcement in this area.