The European Commission has given Ireland two months to respond to it on issues raised by a ruling on the VHI by the European Court of Justice last year.
In September, the court found that Ireland was in breach of its EU obligations by exempting VHI Healthcare from being regulated by the Central Bank.
The Commission has now sent the Government a letter of formal notice on the case.
The Department of Health said the letter had been expected, and that it had been in "regular contact" with the Commission about the case.
"The department will continue to work with the Commission to progress a range of issues relating to the legal status of the VHI. It is making good progress in relation to these and will press ahead with them as planned," it said.
After September's ruling, the Government agreed to engage with the Commission to address the ruling, work with the VHI and Central Bank on an application for authorisation by the bank, as well as examine options for the future status of the VHI.
