Subcommittee reports H.4305 favorably after hearing details on licensing for wellness reimbursement program administrators

The LCI ad hoc subcommittee voted to report H.4305 favorably after staff described the bill's licensing and oversight framework for wellness reimbursement program administrators. The bill was introduced as a measure to regulate existing wellness reimbursement programs (WRPs) sold as ancillary products to health coverage.

Rebecca, a staff presenter, told members that "this bill seeks to define and regulate wellness reimbursement programs and their administrators." She said the measure would define WRPs as self-insured or medically integrated reimbursement plans created under the Internal Revenue Code (sections 105 and 125) to reimburse qualified medical expenses and would define an administrator as "a person who manages the operation of such a program."

Under the bill, administrators would be required to obtain a license from the Department of Insurance before selling or marketing a program, submit an application that includes a $5,000 licensing fee and two years of financial statements, and pay renewal fees set at $500. Administrators would also have to maintain business records subject to inspection every three years, carry a surety bond, and meet competency, trustworthiness and financial-responsibility standards; the director of the Department of Insurance would have discretion to require additional documentation.

The draft would require compliance with federal law, including ERISA where applicable, and allow administrators to seek approval from the U.S. Department of Labor when appropriate. The bill also includes consumer-protection provisions prohibiting false or misleading advertising and requires administrators to defend and indemnify employers and employees against claims arising from program operation.

Enforcement measures in the text include discretionary suspension or revocation of licenses and a penalty structure. Rebecca noted both civil fines and misdemeanor exposure for operating without a license: an individual convicted of running an unlicensed administration could face fines not exceeding $20,000 and up to two years in jail, and other violation provisions reference per-offense fines and potential license revocation.

A subcommittee member moved "for a favorable report," the motion was seconded, and the chairman conducted a voice vote. The chairman announced that H.4305 would be reported out favorably.

The chairman said he had discussed the measure with the bill's author, Representative Herb Kurzmann, and emphasized the bill's intent: "not to authorize" WRPs (which are already permitted under federal tax rules) "but to regulate it and to make sure that bad actors don't enter into that space."

Next steps: the subcommittee did not discuss amendments at length during the session. The committee record indicates H.4305 will be reported favorably to the next legislative stage; further review and any floor amendments would follow the normal legislative process.

Quote: "This bill seeks to define and regulate wellness reimbursement programs and their administrators," Rebecca said during the presentation.

The committee did not take up additional questions after the motion and vote and moved on to a two-hour hearing on S.227 (concurrency authorization).