Health Care

Scott signs law regulating health benefits administrators

Mike Pieciak

Mike Pieciak is the commissioner of the Vermont Department of Financial Regulation. File photo by Mike Dougherty/VTDigger

Vermont will now start regulating companies that administer tax-advantaged health accounts people use to save for medical expenses, especially on high-deductible plans.

Gov. Phil Scott signed S.41 into law on Monday. The measure, which passed both the House and Senate unanimously, directs the Department of Financial Regulation to adopt rules to license and regulate such entities by September 2020. Companies that manage health reimbursement, health savings, and flexible spending accounts in the state will need to apply to DFR for a license to operate in Vermont and pay a $600 fee.

The Vermont-NEA, the state’s largest teachers union, lobbied for the legislation after Future Planning Associates, a Williston-based company that at one point handled accounts for about 80% of all districts in the state, abruptly canceled its contracts with schools. The ensuing debacle left thousands of teachers in the lurch, and hundreds complaining that bungled claims had landed them in hot water with debt collectors.

DFR Commissioner Michael Pieciak said that the department supported the legislation, in large part because the state had been unable to intervene when teachers came to them with complaints last year.

“We were really frustrated that we didn’t have any authority to act. We didn’t have any regulatory oversight,” he said.

Pieciak said several other states regulate third-party administrators in some form, but usually when companies are administering a wider set of benefits than HRAs, HSAs and FSAs. Vermont, he said, may be one of the few – if not the only – state imposing licensing requirements specifically on companies that administer such accounts.

The department will spend the next few months getting a handle on the scope of the industry in Vermont, Pieciak said. It doesn’t know, at this point, how many such entities are operating in the state. Third-party administrators act as middlemen in the insurance industry, administering benefits for employers and employees and processing claims for insurers.

The department will also need to work out the interplay between the federal Employee Retirement Income Security Act and the state’s authority to regulate, he said. Under ERISA, the federal Department of Labor regulates third-party administrators that administer benefit plans for private employers.

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“Where we think we have the clearest ability to regulate is among those entities that are providing services to municipalities and school districts,” Pieciak said.

Darren Allen, a spokesperson for the Vermont NEA, said Friday that “hundreds of teachers” were still dealing with problems with their accounts and that the NEA was happy to see the measure become law.

“In Vermont, banks are regulated, insurance companies are regulated, hospitals are regulated. It’s about time that these firms that handle millions of dollars of Vermonters’ health care money be regulated as well,” he said.

The NEA has also sued Future Planning for breach of contract and consumer fraud. The company has denied any wrongdoing. A judge last week ruled against a motion by Future Planning seeking to dismiss the case.

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Lola Duffort

About Lola

Lola Duffort is VTDigger's education reporter. Prior to Digger, Lola covered schools for the Concord Monitor in New Hampshire and the Rutland Herald. She has also freelanced for the Miami Herald in Florida, where she grew up. She is a graduate of McGill University in Canada.

Email: [email protected]

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