In most cases, insurers and benefits sellers would be wise to charge separate fees for flexible spending account services and other administrative services.
The Texas laws that ban rebating “prohibit an insurance company, insurance agent or agency with respect to the sale of health insurance from providing inducements to the sale that are not provided for in the insurance contract,” Texas Insurance Commissioner Michael Geeslin writes in Texas Commissioner’s Bulletin Number B-0004-08.
“Because many administrative services are not provided for in the insurance contract, they could constitute valuable consideration and an unlawful inducement or rebate in violation of the insurance code, regardless of whether they are provided directly or indirectly by regulated entities,” Geeslin writes.
The same reasoning applies, Geeslin writes, if an insurer, agent or agency hires an outside party to provide administrative services on a “no additional fee” basis.
The department has issued the bulletin and has received questions and complaints in connection to concerns about whether insurers, agents or agencies can provide administrative services for clients without additional charge, Geeslin writes.
In addition to FSA services, the services could include human resource-related administrative services and administration of health benefits that continue after an employee leaves an employer, Geeslin writes.
The Texas department “strongly cautions against direct or indirect provision by an insurance company, insurance agent or agency of such services at no additional fee, to avoid violating” state insurance laws against inducements and rebates, Geeslin writes.
A copy of the Texas bulletin is available