In August 2024, the American Association of Ancillary Benefits filed a lawsuit against the federal government alleging that the short-term limited duration insurance ("STLDI") and fixed indemnity final regulation violates the nondelegation doctrine and the Administrative Procedure Act.  The case has been stayed since February “to allow new agency leadership sufficient time to evaluate the government’s position in this case and determine how best to proceed.”  

The defendants previously informed the court that “they intend to revisit the rule challenged here in a new rulemaking to be conducted as soon as practicable.”  In June 2025, the court ordered the defendants to “provide further information regarding the substance and timeline of the proposed rulemaking,” including “an estimated timeline for the completion of their intended rulemaking and how they intend to proceed in this case moving forward.” On August 28, 2025, the defendants filed a motion to extend the stay and informed the court that they expect to publish proposed regulations no later than the summer of 2026 and to issue a final rule later in 2026.  The proposed rulemaking will concern the regulatory definition of STLDI.  

As a reminder, on August 7, 2025, the Departments of Treasury, Labor, and Health and Human Services issued non-enforcement relief for STLDI.

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