"Junk Insurance" Regulations: What's Happening and How Does it Affect Voluntary Benefits?

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Key takeaways

High-quality voluntary benefits that help protect employees from out-of-pocket costs are a valuable component to a benefits package.  

On July 7, 2023, President Biden announced a series of new actions under his “Bidenomics” agenda to lower health care costs for Americans and crack down on “junk insurance” plans. 

The new proposed rules would limit “misleading” insurance products that can discriminate based on pre-existing conditions and leave families surprised by medical expenses when they use health care services. 

What exactly falls under the “junk insurance” label?

WhiteHouse.gov calls out short-term health insurance plans that are designed to fill temporary gaps in coverage. However, some popular voluntary benefit programs would also be covered by the language of the proposed changes, according to Benefits Pro

According to The White House statement, “Income replacement ‘fixed indemnity’ plans cannot mimic comprehensive health insurance…Plans that want to be exempt from the rules for health insurance—because they are designed to replace lost income when people get sick, rather than provide full medical coverage—have to live up to their original purpose and cannot be designed like comprehensive health insurance. This means that plans would need to make clear that people signing up for these plans would get a defined benefit, like $100 per day of illness, instead of thinking that they have comprehensive insurance.” 

What do “junk insurance” regulations mean for you and your voluntary benefits program?

As an employer or worksite broker, you’re probably concerned about what this means for your voluntary benefits programs. 

Benefits Pro reports that the changes could impact employers that offer voluntary benefits to low-income employees or transitory employees who buy voluntary benefits, but decide they can’t afford or don’t want traditional health plans too.

At the moment, it’s a wait-and-see situation. The announcement by President Biden is just the first step in a long process, and the regulations could go through many changes between now and the proposed implementation date of January 1, 2027. 

In the meantime, as someone who offers high-quality voluntary benefits to help protect employees from out-of-pocket costs, you can rest assured that you’re not providing employees with “junk!” 

Offer a benefits package you can be proud of by keeping in mind these four points:

1. COMMUNICATION: Effective communication helps prevent your employees from being “mislead” by the voluntary benefits you provide. Experienced communicators from Optavise help employers communicate clearly and accurately about employee benefits, driving improved understanding of health care and health insurance.

2. EDUCATION: Optavise educators and agents meet with employees one-on-one (in-person, virtually or via phone) and help them through the complexities of healthcare and benefits concepts. They help employees understand how voluntary benefits work and how they can help employees handle the unexpected expenses that come with critical illness or injury. 

3. ADVOCACY: After employees sign up for benefits, year-round advocacy from Optavise helps employees make the most of their coverage. Optavise advocates can help employees find in-network doctors, compare costs for tests and procedures, review bills, appeal denied claims, coordinate care and more. 

4. VALUABLE PROTECTION: Optavise is proud to offer in-house voluntary benefits from Washington National Insurance Company, a top carrier with over 110 years’ experience. Washington National’s quality voluntary benefits help with expenses major medical may not cover—like deductibles, coinsurance, copays and noncovered treatments. Because cash benefits are paid directly to employees, they can also help with living expenses, transportation, caregiver support and income replacement. 

Optavise is a trusted partner, guiding employers and employees through healthcare choices, voluntary benefits, benefits administration and year-round advocacy. Get in touch with us today!