An Unwelcome Proposal

Oct 2, 2023

Life insurers believe that all Americans – no matter their age, job, gender or race – should be able to secure financial certainty for their family. A proven way to protect a family’s finances is through supplemental benefit products.

Americans strongly value these products, which have very high customer satisfaction rates and very few consumer complaints. These benefits serve as a supplement to medical health insurance, not a replacement. They help pay for costly expenses not covered by medical insurance, including high deductibles and co-pays. They also help families refill their coffers after they incur expenses like travel to get specialized treatment, childcare during appointments, household modifications, and many other unanticipated expenses like these that can devastate a family’s hard-earned savings.

It’s no wonder then that so many have expressed alarm and concern with a proposal published last month by the Departments of HHS, Treasury, and Labor. The misguided idea would treat supplemental benefits as taxable income and ultimately would disallow many of the supplemental benefits now available to American families. If adopted, the proposal will hurt consumers nationwide who enjoy the financial protection supplemental products provide.

Many concerned parties wrote letters to the Secretaries of the Departments including a bipartisan group of 11 House members from Georgia, and the New York State Conference of the Teamsters union.

The Georgia House members noted that, “We share the administration’s goal of ensuring consumer understanding and transparency of insurance products available in the market. However, we are concerned the proposed rule’s approach to supplemental benefits such as hospital and other fixed indemnity products is overly broad and not fully aligned with congressional intent.”

The Teamsters “respectfully request that the tax and benefit change provisions in the proposed rule related to fixed indemnity and specified disease benefits be removed from the final rule so we can keep these valuable and hard-won benefits in the hands of our members.”

ACLI also sent letters to the Secretaries where we called for the administration to remove the proposed provisions related to fixed indemnity products and the new tax on all supplemental benefits. If these provisions aren’t removed, consumers across the nation will lose access to these products that provide them with a crucial backstop against severe financial risk. 

Lauryl Jackson

Lauryl Jackson is Vice President, Federal Relations for Financial Income Security and Diversity & Inclusion for the American Council of Life Insurers (ACLI). Prior to joining ACLI in January 2020, she led government affairs strategy for the priorities of the pharmaceutical industry.