Scott, Wilson to DOL: Protect Workers’ Access to Comprehensive Health Benefits

October 7, 2020
Press Release

As originally released by the Committee on Education & Labor

WASHINGTON, DC – Today, Committee on Education and Labor Chairman Robert C. “Bobby” Scott (VA-03) and Subcommittee on Health, Education, Labor, and Pensions (HELP) Chair Frederica S. Wilson (FL-24) sent a letter to Employee Benefits Security Administration (EBSA) Acting Assistant Secretary Jeanne Wilson to express concern regarding the potential misuse of fixed indemnity coverage by employers to evade the requirements of the Affordable Care Act (ACA) and other consumer protection laws.  

Fixed indemnity products provide income replacement for workers during periods of hospitalization or illness.  Because these polices are not designed to serve as health coverage, they are generally exempt from laws that apply to traditional health plans, such as the prohibition on annual and lifetime limits on coverage under the ACA. Guidance issued by the Obama administration established several guardrails to clarify that fixed indemnity products should not be offered to workers in a manner that mimics traditional health coverage and avoids federal requirements. 

In the letter, the Members point to reports that certain employers may be offering this type of coverage to workers as the primary health benefit—insulating the employer from their responsibility to offer comprehensive coverage to their workers and leaving patients and their families with high out-of-pocket costs in a “junk” plan without basic consumer protections.

“As you know, the development of effective regulations and vigorous enforcement of federal law is central to Employee Benefits Security Administration’s (EBSA) mission of assuring the security of health and other workplace benefits.  The Committee on Education and Labor shares this mission and believes that strong action must be taken to ensure that consumers are protected from substandard, noncompliant health coverage,” the Members wrote. “Accordingly, it is our hope that the Department and EBSA will engage with the Committee in a constructive process to ensure that plan participants have meaningful access to quality coverage, consistent with all requirements of federal law.”  

To read the full letter, click here.