Committee hears bills to clarify supplemental plans are not major medical under Michigan law

House Bill 4207 and House Bill 4208 were presented Wednesday to the Michigan House Insurance Committee as technical updates to the state insurance code that supporters say will codify federal distinctions for supplemental insurance products.

The bills would amend sections of the Michigan insurance code to specify that a "health benefit plan" and "health insurance policy" do not include coverage that is only for HIPAA "accepted benefits," a federal distinction that supplemental carriers use to describe accident-only, cancer, disability and other limited policies.

The bills' sponsor, Chair Harris, said the bills would align state law with federal treatment of supplemental plans so those products are not regulated the same way as comprehensive major medical coverage. Vice Chair Bridal Carter said the bills previously passed the full House last session "not unanimously, but a hundred and 4 votes," calling the earlier vote evidence of bipartisan support.

Carla Johnson Bell, Regional Director for Aflac, testified in favor of the bills. "Supplemental insurance is different from major medical," Bell said, telling the committee these products "pay cash benefits directly to our policyholders" to cover out-of-pocket costs and other expenses not covered by major medical. She asked the committee to incorporate the federal HIPAA citation into Michigan statute so the state code is explicit about the distinction.

Aflac and other supporters said the bills are primarily technical: they would amend the code's section numbers cited by the chair and incorporate the federal language about accepted benefits to remove ambiguity for supplemental insurers. The American Council of Life Insurers submitted a support card but did not testify.

There was no committee vote on either bill during the hearing. Committee members asked few questions and committee staff indicated technical work with the Department of Insurance and Financial Services may follow if the bills advance.

The committee also read one final support card for 4207 and 4208 near adjournment. With no further business, the committee adjourned.