But, the court said, the administration “effectively eliminated stand-alone fixed indemnity plans altogether,” by tacking “additional criteria” onto the 1996 law.

The ruling in the case, Central United Life Insurance v. Burwell, was issued by a panel composed of Judges Janice Rogers Brown, Patricia A. Millett and Douglas H. Ginsburg.

Fixed indemnity insurance differs from major medical coverage in many ways. It does not have to provide the “essential health benefits” required by the Affordable Care Act, nor does it have to pay any specific percentage of medical costs. Some fixed indemnity policies provide coverage only for specified diseases, like cancer. In general, consumers have fewer protections.

Under the rule issued by the Obama administration, fixed indemnity insurance would be allowed only as a supplement to major medical coverage that complied with the 2010 health care law. People buying the more limited coverage would have to attest, in their applications, that they already had “minimum essential coverage.”

The plaintiffs in the case, who sell fixed indemnity insurance, said the federal rule would essentially destroy the market for such products.

“Even after the Affordable Care Act, lower-income consumers may not be able to afford major medical coverage,” said Quin M. Sorenson, a lawyer at Sidley Austin who represented the plaintiffs. In states that have not expanded Medicaid eligibility, he said, three million people fall into a coverage gap: They make too much to qualify for Medicaid, but not enough to qualify for subsidies in the public insurance marketplace, and they cannot afford major medical coverage on their own.

For some of them, he said, fixed indemnity insurance plans may be a valuable option.

Under the Affordable Care Act, people who go without major medical coverage may be subject to tax penalties. In a friend-of-the-court brief, Wisconsin and 10 other states said that some consumers had found they could save money by buying fixed indemnity insurance and paying the tax penalty.