Legal, tax issues with fixed-indemnity plans, wellness “double-dip” schemes 

August 19, 2026

We’ve updated this GRIST to reflect what’s changed — and what hasn’t — since the Biden administration finalized a 2024 rule related to group fixed-indemnity excepted benefit plans. Plan sponsors can disregard the rule’s consumer notice requirements, which have been invalidated by a federal court. But the IRS hasn’t changed its position with respect to fixed-indemnity, wellness “double-dipping” schemes — that is, programs that impermissibly combine pretax premiums with tax-free benefit payments. This GRIST includes a summary of IRS guidance identifying a variety of fixed-indemnity designs (often paired with a wellness program) as improper double-dipping schemes. Employers evaluating such programs, which continue to emerge in the marketplace, should continue to exercise extreme caution and consult tax counsel. Bottom line — beware of fixed-indemnity programs that promise tax benefits that seem too good to be true. 

Download the 15-page print-friendly PDF to read full details.