In today’s economy, Americans rely on insurance benefits to provide financial certainty. A proposed Federal regulation, however, threatens to eliminate some negotiated voluntary insurance benefits for many union members, state employees, and others in the American workforce.
More than 80 percent of adults with annual incomes between $50,000 and $100,000 regard supplemental insurance benefits as valuable for financial protection, with even more saying it is important for the federal government to protect access to these vital benefits.
These benefits are crucial to families who rely on the cash provided to policyholders to pay for expenses that are not covered by health insurance plans. The cash payments come from supplemental benefit insurance that many union members receive as part of their negotiated benefit packages, or can purchase voluntarily on the job, including critical illness insurance (e.g. cancer policies) and hospital indemnity insurance.
The proposed regulation from the Biden Administration sweeps these voluntary supplemental benefits into a wider-ranging fight against non-related products being inappropriately sold as a substitute for major medical coverage. Including supplemental benefits in the regulation takes vital financial protection products away from those that need them most.
Supplemental benefits pay cash directly to families when they are diagnosed with a covered illness, are hospitalized, or have an accident. The payments can be used to fill the policyholder’s greatest need, usually to replenish their bank accounts after high deductibles and copays. They also can help defray costs that aren’t covered by medical insurance, like travel to specialty hospitals, household modifications, childcare, and other unforeseen expenses that surface when the unexpected happens.
The proposed regulation would hike taxes on Americans who receive these benefits. The regulation will require employers to treat the benefit payments as wages and withhold money for income tax purposes.
American unions have negotiated with employers in good faith to offer these important financial protection benefits to their members. However, the proposed regulation would force existing policies to be cancelled and reissued with many valuable benefits stripped away.
This proposed regulation will hurt American workers and their families. With costs rising, Americans need the Administration to protect the financial certainty these benefits provide.
Joyce Meyer was Executive Vice President, Government Relations at the American Council of Life Insurers (ACLI). Meyer was responsible for overseeing ACLI’s federal, state, and international advocacy with a special focus on the financial and retirement security ACLI member companies provide to the families they serve.
