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Fiduciary Friend or Foe? Experts weigh in on the role of third-party assistance in the operation of self-insured health plans.

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TABLE OF CONTENTS

JANUARY 2026 VOL 206

W W W. S I P C O N L I N E . N E T

F E AT U R E S 4

FIDUCIARY FRIEND OR FOE? EXPERTS WEIGH IN ON THE ROLE OF THIRD-PARTY ASSISTANCE IN THE OPERATION OF SELF-INSURED HEALTH PLANS. By Bruce Shutan

DIRECT-TO-CONSUMER DRUG SALES & REBATE CESSATION PROMPTS MARKET SHAKE-UP By Laura Carabello

ARTICLES 32

COMPETING FOR CAPTIVES

REGULATORY LANDSCAPES BECOMING MORE FAVORABLE AS STATES PULL OUT ALL THE STOPS TO LURE IN MORE CAPTIVE INSURANCE COMPANIES

SELF-INSURANCE INDUSTRY PIONEER BILL BENNETT PASSES

MEMBER NEWS

By Bruce Shutan

THE 2025 HEALTH BENEFITS LEGISLATIVE/ REGULATORY ROUNDUP By Alston & Bird Health Benefits Practice

The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC). Postmaster: Send address changes to The Self-Insurer Editorial and Advertising Office, P.O. Box 1237, Simpsonville, SC 29681, (888) 394-5688 PUBLISHING DIRECTOR Bryan Irland, SENIOR WRITER Bruce Shutan, CONTRIBUTING EDITORS Mike Ferguson, Jennifer Ivy, PRESIDENT/CEO Erica M. Massey, CFO Grace Chen

JANUARY 2026

F E AT U R E

Fiduciary Friend or Foe?

Experts weigh in on the role of third-party assistance in the operation of self-insured health plans.

Written By Bruce Shutan

enefit brokers, third-party administrators (TPAs), pharmacy benefit managers (PBMs) and industry carriers have faced mounting pressure in recent years to be better stewards of self-insured health plans. It has intensified since the passage of the Consolidated Appropriations Act of 2021 (CAA) and the filing of several high-profile class-action lawsuits alleging breaches in fiduciary responsibility. But experts caution that these service providers usually are not actually considered fiduciaries unless they have explicitly accepted that status in writing. Most contracts disclaim discretionary authority, limiting their role to routine tasks. Some industry players toss around the word “fiduciary” a bit too loosely to gain a competitive leg up, causing confusion when perception doesn’t square with reality. Just ask Jamie Greenleaf, co-founder of Fiduciary in a Box, who recalls a recent conversation with a PBM executive who claimed they were a fiduciary on behalf of an employer client. 4

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Fiduciary Friend or Foe?

Jamie Greenleaf

Upon further investigation, the contractual language revealed that the PBM merely committed to abiding by fiduciary standards – that it wasn’t an explicitly named fiduciary, which would be the employer or plan sponsor. While service providers can agree in writing to be named a fiduciary, employers still must monitor their performance and ensure that decisions are being made in the best interest of the plan sponsor and participants.

DISCRETION OVER PLAN ASSETS

To be considered a fiduciary, Greenleaf says a service provider needs to have discretion over plan assets. In other words, it’s duty-related, not title-related. “That’s where some of these TPAs are getting into trouble because they’re writing in their contracts that they are not a fiduciary, but their actions are making them a functional fiduciary because they have discretion over those assets,” she explains. That’s what happened when the U.S. Court of Appeals for the Sixth Circuit last year reversed a lower court decision in Tiara Yachts, LLC v. Blue Cross Blue Shield of Michigan, which reinstated ERISA fiduciary breach claims by the plan’s TPA. The decision noted that service providers and administrators can be functional fiduciaries whose actions must be in the best interests of a plan sponsor and participants. “A TPA is without question a fiduciary,” says Stephen Carrabba, co-founder and president of ClaimInformatic. “They have discretion as to how any claim is paid, not paid, adjudicated, not adjudicated, whether it goes through a payment integrity engine or not, etc., when that claim is going to be paid and at what kind of discount.” He has clients whose savings fee is Stephen Carrabba more expensive than doctor or hospital payments. “It’s insane,” he explains. “That is not fee reasonableness; that is a blatant violation of fiduciary responsibility under ERISA. A lot of these ASOs [administrativeservices-only] explicitly state they are not a fiduciary. That, in my opinion, needs to be eliminated.”

He recalls finding about $22 million in overpayments made by a client, Massachusetts Laborers’ Benefit Funds (MLBF), which later sued Blue Cross Blue Shield of Massachusetts for breach of fiduciary obligations. MLBF later learned that it gave the Blues discretion to settle any claims under the terms of its ASO contract but did not prevail in court. One example of how a TPA may be unwittingly exercising discretion over plan assets is in negotiating the cost of out-ofnetwork care, notes Christine Cooper, CEO of aequum and immediate past-chair of SIIA’s Price Transparency Committee. “If I have authority on behalf of a plan to negotiate up to 200% and I settle at 175%, well, that’s me exercising discretion over plan assets,” she says. Greenleaf observes the emergence of a new type of environment for health plan sponsors that she describes as “a rinse-and-repeat of what we saw in the retirement space.” For retirement-savings plans, 3(16), 3(21) and 3(38) under ERISA define fiduciary capacity for administering, advising on and managing benefit plan assets. However, the federal government has not yet codified a fiduciary role for health and welfare benefits. It’s also anyone’s guess as to how federal courts eventually will rule in three high-profile cases expected to JANUARY 2026

Fiduciary Friend or Foe? be re-filed against Fortune 500 companies that stand accused of breaching their fiduciary duties. In the event that a lawsuit is filed, a service provider is always going to take the position that they are not a fiduciary, whereas the plan sponsor is going to argue that they are, in fact, a fiduciary, explains SIIA’s Legals and Policy Counsel Chris Condeluci. Irrespective of those perceptions and what the ERISA statute says, what matters is whether the facts and circumstances support an argument that the service provider exercised discretionary authority over the plan’s assets. What service providers need to do is understand the fiduciary obligations that the plan sponsor has to meet and do everything in their power to help them satisfy those obligations, make prudent decisions and be legally compliant, he suggests. Doing so isn’t just an ERISA duty, he says, it’s also an ethical business duty.

AN UPHILL CLIMB

Jake Velie, chairman and CEO of National Integrative Health, can’t get over just how difficult it still is to price medical procedures and medicines, despite having a large analytics and actuarial practice. He appears to be in good company. Most of the time, he says, even stop-loss carriers that are supposed to be underwriting the risk in a plan don’t know what the plan paid for something. What’s more, he adds that so-called transparent PBMs aren’t really providing the “true” cost and are still operating on rebate guarantees. His firm ends up doing quite a bit of estimating and building rebate databases to get as close as possible to the correct price based on the PBM contract. If there’s a rebate guarantee in place, for example, they’ll factor in those numbers against the ingredient cost. “It’s really just making sure that the contracts don’t have exclusionary language that would keep you from getting rebate information you need and understanding what you actually paid,” he adds. Although PBMs have been the focus of fiduciary lawsuits alleging excessive Rx fees, Greenleaf says it’s important to remember that in most cases, prescription drugs represent only 30% of an employer’s overall healthcare spend. “The reality is that they were led to that PBM by a consultant and didn’t have a fiduciary process in place to determine Christine Cooper if that PBM was appropriate for them,” she explains, noting the need to unpack excessive fees involving medical claims and conflicts of interest with respect to the other 70% of spending. A COMPETITIVE ADVANTAGE

A growing number of partners across the self-insurance community are seeking to exploit this shortcoming. But to gain a true competitive advantage, Cooper says a service provider would have to outline what fiduciary responsibilities they’re taking on and then make sure that their actions match how those commitments are written. Jake Velie

“If the service provider wants to take on fiduciary status, that typically is not done,” Condeluci adds, “but if the service provider is willing to be a fiduciary in the context of spending plan assets or operating and JANUARY 2026

Fiduciary Friend or Foe? are re-filed or others proceed and courts rule that fiduciary breaches occurred, he says. Even as someone with deep knowledge of fiduciary responsibility who also teaches a continuing-education course on the CAA, Velie would need to see more legal precedents before he’s comfortable putting his firm in that position. “We’re already operating with the [fiduciary] mindset, but we won’t officially call ourselves that because with all the gray areas and lack of regulatory guidance, the risk is just too high,” he explains. Chris Condeluci administering the plan on behalf of the plan sponsor, they could do that by taking on that fiduciary status.” In a recent report, Mercer suggested five critical areas where vendor oversight should be strengthened to avoid litigation over breaches in fiduciary responsibilities. They include demanding to know how service providers use AI in claims adjudication, pre-authorization and medical necessity determinations; scrutinizing all fees; eliminating gag clauses; building in audit rights; and documenting all fiduciary actions for at least six years under ERISA. Velie has seen only a few benefits administrators who have been willing to take on the reporting requirements as a paid service and actually sign off, saying that they did the work as the fiduciary, but not directly as the plan sponsor themselves. That could change, however, once the few high-profile class-action lawsuits 8

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He’s starting to see a groundswell among benefits consultants who have a hunger to learn more and are committed to pursuing daily excellence with the fiduciary goal in mind. “One of the reasons why I publish the Daily Industry Report newsletter is because it forces me to read a couple of hours a day about what’s going on in our industry,” he says. About five or six years ago, Carrabba recalls meeting with representatives from Risk Strategies whose mantra was pinned to explicitly accepting fiduciary status in writing. The insurance brokerage and consulting firm charged clients a fixed fee and did not accept commissions from any plan whatsoever. “That’s how they operate, and we are lock, stock and barrel with them,” he says, also citing Justin Leader, CEO of BenefitsDNA, as another adviser who embraces this approach. Jim Wachtel, founder and CEO of FITT Health, lauds the work of Steve Ditto, a healthcare executive, compliance adviser and patient advocate who’s also a board adviser for the Nautilus Health Institute. “He runs a consulting company based solely on the fiduciary responsibilities of a plan,” he says. “I think there’s a lot of runway for brokers who are certified fiduciaries or take the approach of bringing up more of a strategic framework to cost and risk management within a plan and help the employers manage their fiduciary risk.” The key to fiduciary compliance is through payment integrity, observes Carrabba, emphasizing his firm’s prepayment claim editing capability as unique in the self-insurance market. He identifies eight characteristics that every plan fiduciary has an obligation to adopt. They include embracing loyalty and prudence; following a plan document; avoiding conflicts; monitoring service providers; securing reasonable fees; protecting assets and data; and diversifying investments. Each of these steps is interconnected. For example, in order to ensure fees reasonableness, he says employers must monitor their service providers.

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Fiduciary Friend or Foe? The spotlight on fiduciary responsibility is going to compress service-provider margins, cautions Wachtel, citing as examples revenue sharing from PBM rebates and cost savings for claims reduction. He says gaining full access to medical claims data, especially on the pharmacy benefits side, will be a ripe opportunity for employers to cement strategic partnerships with various vendors that serve the self-insurance market. LOOKING AHEAD

Greenleaf predicts that at some point, there’s going to be a payout from all the litigation, “and I would then make sure as a plan

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sponsor that whatever that person got sued for, that I wasn’t doing it. But I think what will happen is that plan sponsors will demand that their providers become fiduciaries on their plan, whether it’s their broker, TPA or PBM that needs to move into a co-fiduciary status. That’s the direction that the market will move in because employers will insist upon it, just like they did in the retirement space.” Given that this issue has become much more front and center, driven largely by lawsuits filed against plan sponsors claiming fiduciary breaches, Condeluci believes service providers are starting to realize they need to be better educated on this topic. “These lawsuits aren’t going to end anytime soon, and no one wants to be sued between now and whenever this may end, which is an unknown at this point," he opines. There are now efforts in Congress among some employer groups to deem certain service providers an ERISA fiduciary, singling out PBMs in particular. For example, there could be legislation that amends ERISA to reflect that PBMs are a fiduciary if they establish a drug formulary, develop a prescription drug provider network, adjudicate claims or negotiate with drug manufacturers the prices of drugs

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Fiduciary Friend or Foe? covered by health plans. Condeluci thinks TPAs would be next in the crosshairs over failing to share health claims data or properly disclose negotiated pricing information, followed by brokers – though it would be a stretch and more difficult to pull them into being an ERISA fiduciary. Cooper predicts that fiduciary responsibilities will be codified on the health and welfare benefits side at some point, as it was years ago for qualified retirement plans. "Essentially, we’re asking for a list of the duties and what the penalties are for not meeting them, and I don’t think that’s unrealistic to expect,” she says. Wachtel believes SIIA is well-positioned to take on a leadership role as the fiduciary issue evolves, noting how nongovernmental entities like FINRA devised a best-interest standard for broker-dealers in the financial services industry. "The writing is clearly on the wall," he observes of the need to step up group health plan stewardship.

Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for nearly 40 years.

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F E AT U R E

Direct-to-Consumer

Drug Sales & Rebate Cessation

Prompts Market Shake-Up

Written By Laura Carabello

weeping changes to prescription drug purchasing may appear too good to be true. While the directto-consumer (DTC) models promise lower costs and greater availability, self-insured employers should be wary. The devil may well be in the details – particularly for the specialty drug spend, which is likely not to fit the new direct-pay model. Amid years of legislative efforts to reform PBM practices and increase transparency, a cascade of initiatives and announcements for direct-pay may have unfolded, prompting many in the industry to respond with their own warning labels. Some have good-naturedly dubbed this trend “pharm-to-table.”

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Market Shake Up

Source: Pharmaceutical Strategies Group (PSG) MOVERS AND SHAKERS

A flurry of discount drug cards and online options emerged in 2025, but one of the first significant market disruptions actually came on the market in January 2022 -- Mark Cuban’s Cost Plus Drug Company. This online pharmacy model aims to provide transparent pricing for generic prescription drugs by cutting out intermediaries like pharmacy benefit managers (PBMs) and applying a fixed markup. The DTC model offers a transparent price that includes the drug's wholesale cost, a 15% markup and a flat $5 labor fee, plus a $5 shipping fee. Cuban has also reached a deal to sell a cheap, biosimilar version of Johnson & Johnson's Stelara, a widely prescribed treatment for chronic inflammatory and autoimmune conditions. Now, the marketplace is readying itself for the 2026 launch of the TrumpRx model that involves a government-run website, TrumpRx.gov. This will allow consumers to buy prescription drugs at discounted rates directly from pharmaceutical companies, bypassing their insurance. A fundamental feature of the cash-pay program is its “most-favored-nation” (MFN) pricing model, which requires drug makers to match or beat the lowest prices paid in comparable wealthy countries -- discounts of up to 80% off list prices. For consumers with existing plans that already have substantial discounts, there may be limited value to this model, while the greatest impact will be on uninsured or out-of-network patients. But there is a dark side to this model, with some sentiment that direct-pay models are simply a way to placate government demands that pharma companies lower U.S. drug prices in line with what other countries pay. Dae Lee and Natalie Oehlers, pharmacy benefits law experts at Buchanan Ingersoll & Rooney, offer a new analysis with excerpts that include:

JANUARY 2026

Market Shake Up Pharmacies: TrumpRx could add to the already brutal pressure on brick-and-mortar pharmacies, with thousands of closures that leave "pharmacy deserts" in many regions. Information: In the direct-pay approach, employers' lack of drug utilization information may hurt their ability to manage formularies or lists of covered drugs. Hassles: Government-advertised discounts will make employees question why their employer-sponsored plan cannot deliver similar pricing. The DTC model has its fair share of critics, as Ali Panjwani, founder and CEO of Merit Medicine, states, “DTC drug models may improve affordability and transparency, but they also risk eroding the pharmacy visibility employers need to design benefits that truly fit their workforce. When Rx purchases occur outside traditional claims channels, utilization data may become incomplete or delayed, leaving employers without a full picture of what conditions are prevalent, which therapies are being used and where costs are trending.” He stresses that the gap can lead to benefit packages that miss real member needs, such as inadequate coverage for chronic conditions or poorly structured specialty drug programs. “Members may also lose deductible and out-of-pocket credit on DTC purchases,” he continues. “Innovation in pricing must come with reliable data sharing, or benefit design and member outcomes are put at risk.” Many other manufacturer-sponsored cash-pay options are materializing or in the queue. Some manufacturers are offering new, branded direct-purchase programs that are more convenient and can save patients time and money with no direct connections to the patients' health plans – no hidden markups or fees and transparent pricing for patients and businesses: 

Eli Lilly, which became the first drugmaker to hit $1 trillion in market value, is partnering with Walmart to expand access to Lilly's weight loss drug Zepbound, offered for pick-up at Walmart pharmacies nationwide by the end of 2025. Lilly has been providing all approved doses of Zepbound to cash-paying customers through its website LillyDirect, launched last year. The drugmaker is rolling out a new model in early 2026 built on three core elements to make it easier for employers to provide access to its GLP-1 drugs for weight management: flexibility around benefit options for obesity care, allowing employers to design the benefits that work best for their unique workforces; a dedicated pharmacy network that makes it easier for employers to understand and track costs; bringing in third-party organizations to support employers in developing holistic weight management solutions. Novo Nordisk and Eli Lilly agreed to lower the prices for Ozempic, Wegovy and Zepbound when purchased through Trump Rx.



Novo Nordisk also unveiled its own DTC NovoCare Pharmacy service and recently cut the cash price of its weight-loss and diabetes drugs Wegovy and Ozempic to $349 a month (down from $499). New cash-paying patients can get the two lowest doses for an introductory price of $199 per month for the first two months of treatment. This offer is available until March 31, 2026.

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PhRMA, a trade group that represents companies in the biopharmaceutical industry, will be launching AmericasMedicines.com in January 2026, a new website to help patients more easily access these programs. This new website will allow manufacturers to list a wide range THE SELF-INSURER

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Market Shake Up of medicines and connect patients directly to available options prescribed by their doctor. Pharmaceutical manufacturers must make their own decisions to offer direct purchase programs, determine how they will work and if they want to participate in the program. 

Roche is considering a DTC for its multiple sclerosis, eye disease and cancer drugs.

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Pfizer and Bristol Myers Squibb are on the DTC pathway to sell their mega blockbuster blood thinner Eliquis, one of the drugs targeted by the U.S. in the first round of its Inflation Reduction Act-mandated price cuts. The companies unveiled a DTC program that allows uninsured or underinsured patients to buy the medicine online at a sharp discount to its current list price. Pfizer also joined TrumpRx, offering select drugs such as Eucrisa and Xeljanz at deep discounts.

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BlinkRx helps drugmakers with a service that promises to set up direct-to-patient sales programs in as little as three weeks.



Amgen followed the DTC route with the launch of its AmgenNow channel, a new direct-to-patient program starting with Repatha® (evolocumab)



Genentech is preparing a flu-season DTC program for Xofluza, showing that even acute categories are now testing patient-direct channels.

 

Bristol Myers Squibb launched its own cash-pay portal with 80% discounts on Sotyktu. AstraZeneca unveiled 70% off Farxiga and Airsupra.



Novartis and Boehringer introduced price-slashing offers on Cosentyx and Spiriva Respimat.

Funding employee cash pay options will take planning. Dea Belazi, CEO of AscellaHealth, projects that employers might fund an HSA to pay for these products. “They could easily put a few thousand dollars in an HSA, and the employee would get a $250-a-month GLP1,” says Belazi. “The HSA would cover the whole year's worth of the weight loss drug, and perhaps the federal government would raise the HSA limits from a few thousand a year to $5,000 or $10,000. I think that's where this could go over the next year or two as we see more of these direct-to-consumer pharma programs. Employers may decide not to cover certain products, like GLP1s, and let these go through the cash model where the patients work it out directly with the doctor.” What he finds interesting is when that does happen, the pharmacy benefit becomes centered on specialty medications. “For AscellaHealth, that's our wheelhouse as an organization that has all the bells and whistles, services and programs to serve all types of payers, including employers, health plans and PBMs," he emphasizes. "It's not GLP1s or diabetes medications. It's ideal for the super high-cost drugs, complex conditions and diseases that require a high-touch service model. These drugs can't be sold DTC; it's too complex and expensive. This is where our focus is valued and what employers really need: the pharmacy benefit evolving to that of high-cost specialty therapies."

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Market Shake Up Bonafide services associated with every prescription, such as care coordination with physicians, member enrollment and administration, will have PBM fees as the system evolves into a more transparent model where the drug costs are closer to the true cost. “I think that’s what is going to happen going forward,” he says. “Our new Group Purchasing Organization and the AscellaOne launch will have all these services so that employers and health plans can pick and choose the programs that best fit their needs.” WOMEN’S HEALTH

One area that is expected to benefit is women’s health, since women continue to face long-standing coverage gaps and stigma. Many workingage women encounter delays or denials when trying to access necessary care, such as menopause support, hormone therapy or treatments for conditions such as endometriosis or migraines.

David Adamson 20

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Dr. David Adamson, MD, founder and CEO, ARC Fertility, observes that many employer-sponsored plans either don’t cover hormone therapy or require step therapy or medical necessity documentation. “ARC has provided direct sales to consumers in the fertility care market for 28 years and will continue that model even as we transition to a much higher proportion of our business being in the employer benefits market,” he says. “However, because of our innovative pricing model that makes family-forming benefits affordable for almost all employers by not having a PEPM and enabling them to choose the subsidy amount they provide to employees, some employees with less subsidy than meets all their needs will still choose to use our business-to-consumer purchasing model. This model brings steeply discounted cash prices to patients and increases the chances they can afford fertility care.” ARC is following TrumpRx closely because the White House has stated it intends to provide high discounts for cash-paying patients through TrumpRx. “We will be very happy if we can help patients receive their medications at a lower price,” he adds. “ARC is very flexible and works with employers to design a family-forming benefit plan that meets their employee, business and financial goals. THE FUTURE OF REBATES

Rebates are also in the crosshairs, following the blockbuster announcement in late October 2025 from Cigna that its Express Scripts pharmacy benefit manager, which is part of Cigna’s Evernorth Health Services business, will become rebate-free for many commercial health plans beginning in 2027. Fall-out from the public statement resulted in a pummeling from the stock market, and the company’s stock plunged more than 15%. More importantly, industry observers began questioning if rebates would disappear altogether – although consensus is that it is not the case. Many project that employers will likely see higher PBM fees if a rebate-less world evolves.

Source: CIVHC

Market Shake Up “In an industry that is typically starved of any significant competition, the demise of rebates creates healthier competition,” says Christine Johnston, general manager, MacroHealth, Pharmacy Marketplace and co-founder of Foundational Pharmacy Strategies. "Employers should consider all their PBM options, but often those moving away from rebates prioritize cost management and clinical outcomes. This creates a healthier long-term payment structure that leads to healthier members and lower costs.”

Just another point-of-sale rebate program? Evernorth’s “rebate-free pharmacy benefit” sounds remarkably like existing point of sale (POS) rebate programs, in which formulary rebates are applied as prescription discounts directly to patients at the pharmacy counter. POS rebates have existed for years, but adoption has been chronically low. Some states —including Arkansas, Indiana, and West Virginia—have even mandated POS rebates for certain insurance plans. How many plan sponsors will actually adopt the rebate-free model? Evernorth’s press release calls the rebate-free model its “standard” offering beginning in 2028 – but it is optional, not mandatory. Here’s the uncomfortable truth: Most commercial plan sponsors use rebates to offset general healthcare costs and reduce premiums, not to directly lower patients’ pharmacy costs for the patients whose prescriptions generated those rebates. The delay to 2028 presumably gives Cigna time to renegotiate contracts and persuade its clients to adopt the new model. Still, Cigna expects that only about half of its commercial book of business will transition by the end of 2028. They also gave no indication that anything will change for Ascent Health Services, which manages rebate negotiations for Express Scripts’ PBM business, Prime Therapeutics, and several smaller PBMs. For those unfamiliar, Ascent is domiciled as an LLC in Delaware but based in Switzerland, which is well known for mechanical watches and…financial transparency.

Christine Johnston While there is still a place for rebates, she maintains that employers should consider all options, noting, “The diversification of PBM types will lead to a better healthcare experience for all.” An industry report from Drug Channels reveals crucial considerations why the Cigna announcement may be less revolutionary than it first appears, including:

Todd E. Archer, president, Concierge Third Party Administrator, sums it up nicely: “I have for years questioned the love affair the market seemed to have with drug manufacturer rebates. To me, drug rebates are like tax withholding: You pay more than you should, and at some time in the future, some of it gets returned to you, with no interest. Why not just pay what you should pay when the transaction occurs and avoid all the needless machinations associated with the process? Hopefully, the market is coming to its senses and moving away from this wasteful process.” Todd E Archer

JANUARY 2026

Market Shake Up A NEW ERA FOR PBMS

Employers face several challenges with PBM pricing transparency, primarily related to opaque contract language, lack of access to detailed cost data, non-disclosure agreements and hidden fees like "spread pricing," where they charge the employer a higher price for a medication than they reimburse the pharmacy, keeping the difference as profit. These issues make it nearly impossible for employers to understand the true cost of prescription drugs and ensure they are fulfilling their fiduciary duties to plan participants. THE SELF-INSURED EMPLOYER PERSPECTIVE

Belazi emphatically states, “No -- I don't think rebates are going away. What I think is happening is the intermediaries, like PBMs, are going to provide optionality: A new way of doing things with direct-topatient programs or consumer programs vs. the traditional rebates.” He observes that Cigna and Express Scripts will provide the rebates upfront, at the point-of-sale, so that the employer doesn't have to wait for a check in the mail months later. "As I understand it, the up-front discount is lower than traditional, but there is no rebate check 3, 4, 6 months down the road," he continues. My 25 years of experience in this industry tells me that the PBMs aren't necessarily providing more concessions because of this model. It's just moving the numbers around, giving it upfront versus later. And by giving it up front, there's usually a cost of money like interest rates.” As an example, Belazi explains that if the drug costs $100 today, tomorrow it might be $92 with the upfront discount. "In the old model, there would be a $10 rebate," he says. "The product would really cost $90 if they had waited the three to six months for the rebate. But the problem is that the employers want their money now. For the PBMs to take risk on the rebates -- paying before they get it -- they will have to keep some of that to mitigate those risks." Belazi deduces that whether it's the cost of money for interest rates or the drug company not paying for the rebate, the employer probably wouldn't get as much. But they would be getting upfront money faster, although they are going to miss getting those big rebate checks. "That's the optionality," he resumes. "An employer group or a health plan or whatever entity is using the PBM service can now go and say, 'I want this version, or I want that version.' That's why I don't think rebates are going away. I think they're still going to be there because that is still the only mechanism and model to get those manufacturer discounts." 22

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Market Shake Up Optionality and flexibility resonate for employers who seek to avoid the limitations of a rigid system. Lori Daugherty, CEO, Rx Logic, shares, “As an independent claims adjudication technology platform that provides stakeholders across the self-insurance industry with multiple options for implementing a risk management strategy, RxLogic maintains a position of neutrality, being objective but not passive in the ongoing discussion of rebates.” She reflects that while many organizations have expressed intent to phase out rebates, “…the underlying economic structure of negotiated discounts will likely persist. Drug manufacturers will continue to negotiate pricing in exchange for favorable formulary placement, though the transition to alternative models will be gradual and primarily driven by the largest market participants. This shift will not occur uniformly across all health plans and PBMs, and smaller, more transparent PBMs will undoubtedly continue to operate under traditional rebate structures.” Daugherty points to the RxLogic independent role in the marketplace as the technology backbone for diverse segments in the pharmacy benefits landscape, adding, “We understand the significance of this change in how savings are applied rather than an end to rebates or negotiated price cuts. Our platform and client services team will support clients as they integrate their program offerings into an emerging DTC sales model.” The new landscape is also spawning startup companies that say they can help address a critical gap in employer-sponsored health insurance when employers choose not to cover certain treatments. The pitch is that employers can pay less than they would if they covered the drugs through insurance, and, with a subsidy, employees could get the treatments at a lower cost than if they paid the full cash price on their own. RxSaveCard is one that is charging employers a set fee to help them set up this model, and Andel announced that it will launch a platform that will adopt a similar model for GLP-1 treatments and eventually for other branded drugs. THE PHARMA PERSPECTIVE

Drug manufacturers are paying close attention to the ripple effect of the Cigna/ESI/Evernorth phase-out of the traditional prescription drug rebate model and transition to low net-cost pricing. Positive but cautious responses are reflected in the statements from PhRMA, the industry's primary lobbying group, which called the announcement "a step in the right direction," viewing it as a positive step toward transparency and lower patient out-of-pocket costs. “I don't think rebates are going away, but do I think we're moving toward a system of more transparent drug pricing," states Corey Belken, PharmD, principal – National Employer Team, Genentech. "There will still be a need for PBMs and pharmacy benefit consultants who understand the emerging landscape and the impact of these changes on employers and carriers. Their role is validated and embedded in the system with key services that include claims adjudication, Drug Utilization Review and Utilization Management, clinical review and much more.” Belken believes that changes to the complex system of rebates are a key measure to achieving greater price transparency, adding, "The drive towards more transparency is a good thing for employers as well as benefit consultants. It will help to overcome the drawbacks of the current opaque system that often obscures the true cost of medications for plan sponsors and patients." 24 THE SELF-INSURER

Market Shake Up But this transition will not happen overnight, as Belken projects the changes to evolve over time. He also weighs in on the trend toward direct-to-patient drug purchasing, noting, “This new model is very exciting for patients and employers, but the jury is still out on how it will align with specialty medications where total drug costs are beyond the financial reach of plan members." Rob LaHayne, CEO and cofounder, Leap Health, views the vertical integration of these plans will also create friction, adding, “For instance, I'm on a maintenance medication that is covered by my insurer (Aetna/ CVS) at a copay that is higher than what the drug costs if I pay out-of-pocket. If I want to fill it for mail order or a 90-day subscription, they require me to put it through CVS instead of my local pharmacy. Both of those dynamics are wrong.“ He emphasizes that the direct pay model is inappropriate for all drugs, such as specialty or infusion therapies. “As an infusion provider, we commonly deal with drugs that cost $10,000+ per dose - not $10,000 after markups and middlemen,” he explains. "That's the price of the drug. Unless there is an employer-provided HRA program alongside the direct-pay initiative, there is no way your average consumer will be able to afford their specialty infusion medications.”

Other advisory firms emphasize that only certain products are suited for cash-pay programs. In selecting products to make available on these platforms, they advise manufacturers to consider the coverage landscape, patient demand, and product pricing and price elasticity vs. inelasticity. Furthermore, they point out that DTC programs often leverage thirdparty vendors to design front- and back-end program interfaces, disease education, telehealth, product distribution and pharmacy fulfillment. By investing in DTC platforms, they maintain that manufacturers can glean critical insights into patient behavior and adherence, which may otherwise be unavailable in a fragmented supply chain. It is noteworthy that in the context of drug purchasing, many industry stakeholders use the phrase "direct-to-patient" vs. "direct-toconsumer." The latter phrase, they say, refers to TV and other media advertising spend, which skyrocketed in October of 2025. According to Fierce Pharma Marketing by iSpot.TV, the combined outlay for the

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Market Shake Up top 10 pharmaceutical brands in October weighed in at $307.1 million, far outweighing recent months’ totals, which had not crossed the $200 million threshold since June, but it also exceeds the record high of $302.5 million set in January. BOTTOM-LINE: WILL DRUG PRICES COME DOWN?

DTC programs promise to offer plan members a user-friendly interface that allows them to shop around for affordable prices for prescription medications. These platforms typically include telehealth services, prescription management and fulfillment/delivery services, empowering plan members to make their own decisions. While a new analysis from The Ohio State University suggests that DTC pharmacy models could challenge traditional prescription insurance, researchers conclude that for now, they’re more disruptive on paper than at the counter. There is consensus that DTC will likely upend the current chain of drug supply, payment and access. But several health policy and drug pricing experts (STAT; 8/2025) say they are unlikely to bring down drug costs for most people, as they are most beneficial for a small number of patients who lack insurance or have high-deductible plans: “I just don’t want it to be seen as, like, ‘Well, now we’ve solved the problem because customers get to buy out of pocket. For the vast majority of Americans, they just simply do not have the means to do that.”

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Market Shake Up Craig Garthwaite, director of healthcare, Northwestern University’s Kellogg School of Management. “Even if patients have high-deductible plans, they may still be better off paying for drugs at the original, undiscounted prices so that they can meet their deductibles and get closer to their out-of-pocket maximums.” Stacie Dusetzina, health policy professor, Vanderbilt University Medical Center.

Stacie Dusetzina

“I think the drug companies are trying to do things out of the optics of looking good, like they’re trying to make progress on drug prices without actually being willing to tackle some of the fundamental challenges of pricing in the system.”

Ben Rome, assistant professor and researcher on drug pricing, Harvard Medical School. Throughout the marketplace, concerns persist about relying upon voluntary deals and arrangements with manufacturers that are

focused too narrowly on the popular GLP1s, relegating other high-cost treatments – such as oncology medications – to remain unaddressed. It is noteworthy that the ERISA Industry Committee (ERIC), a group for employers with selfinsured benefit plans, says many of its members – large and small -- are questioning how their PBMs are addressing expensive "biologic" drugs like Humira. Humira is a type of biologic medication that is typically administered as a subcutaneous injection and used to treat moderate to severe inflammatory conditions like rheumatoid arthritis, psoriatic arthritis, Crohn's disease and ulcerative colitis. ERIC reports that employers are already forming relationships directly with biosimilar manufacturers. MEMBERS NEED SUPPORT

With direct-pay solutions, members will not be totally on their own as the drug delivery method is agnostic to the need for support, education, monitoring and guidance for optimizing clinical outcomes. Many self-insurance stakeholders 28

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Market Shake Up are calling upon modern pharmaceutical solution partners, including PBMs and consultants, to step up and provide this level of support, building DTC into their approaches without losing sight of clinical care. Employers will require solution vendors to evolve and become partners in care, an integrated component of a broader strategy that lowers costs, improves member satisfaction and simplifies access. With the right partner, DTC can develop into more than a distribution channel -- it becomes a smarter, more connected model of care that turns every prescription into an opportunity to engage, educate and empower. “DTC drug sales are rapidly transforming the pharmaceutical landscape by eliminating the need for traditional intermediaries to sell products,” says Benjamin Takitch, Complete Captive Management Services (PharmD Candidate Class of 2026, University of Pittsburgh School of Pharmacy). "Many manufacturers have been implementing them for years. But current commercially insured pharmaceutical transactions typically include a significant cost based on a start point such as AWP, WAC, ASP, etc, and then great discounts are subsequently returned approximately 2 quarters later in the form of rebates or years later for outcomes-based contracting.”

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He observes that often, a high percentage of these reimbursements is retained by vendors rather than completely passed through to the actual payers. Other discounts off high price points appear through patient assistance programs and copay maximizer programs, which typically have prerequisites. "DTC programs, including Mark Cuban's Cost Plus and TrumpRx, are intended to Benjamin Takitch bypass these processes," he continues. "By excluding the middleman, DTC sales to pharmacies and to consumers create opportunities to increase transparency and decrease cost, as long as eligibility through step therapy based on treatment guidelines, safety beyond marketing influences and efficacy measurements at defined intervals remain measurable outcomes monitored by pharmacists independent of manufacturers and providers." He quips the 'wait-and-see' will be: "Do we need to consider cost offsets if manufacturers do not extend specialty programs in the commercial space?" NEW OPPORTUNITIES FOR MEMBER ACCESS, AFFORDABILITY AND

DATA COLLECTION

DTP purchasing models emerge as a strategic imperative for a growing number of pharmaceutical brands. But for specialty drugs, which are projected to account for over 50% of employer pharmacy spending by 2026, they are evolving into sophisticated platforms focused on end-to-end patient care, not just a simple financial transaction. Despite making up a small fraction of total prescriptions, their high cost for complex, chronic conditions or rare diseases means they drive a disproportionate amount of the overall drug budget vs. the more common, lower-cost medications. DTP models for specialty drugs are focused more on enhancing the member experience and the treatment journey than on simple cost reduction, as Belazi stresses, "Specialty drugs often require unique handling, such as specific storage temperatures ('cold chain logistics'), which adds complexity to direct shipping that is less relevant for standard medications."

Market Shake Up He explains DTP models for specialty drugs are likely to be more comprehensive, integrating digital services like care navigation, adherence support and communications to strengthen patient engagement. “As the DTP model evolves, there is a growing need for improved access to patient data and behaviors,” says Belazi. “Accurate, timely data should provide actionable insights that can inform future product development and more targeted support programs.”

In this new environment, he emphasizes that stakeholders must maintain transparency and foster trust between the patient, the manufacturer and healthcare professionals. "We can never lose sight of putting patients first," he concludes. "A patient-centric approach to DTP prioritizes individual preferences, values and needs, leading to a more effective and coordinated care plan that respects a person’s physical, emotional and social well-being – regardless of the purchasing mechanism.” Laura Carabello holds a degree in Journalism from the Newhouse School of Communications at Syracuse University, is a recognized expert in medical travel and is a widely published writer on healthcare issues. She is a Principal at CPR Strategic Marketing Communications. www.cpronline.com

Do you aspire to be a published author? We would like to invite you to share your insight and submit an article to The Self-Insurer! SIIA’s official magazine is distributed in a digital and print format to reach 10,000 readers all over the world. The Self-Insurer has been delivering information to top-level executives in the self-insurance industry since 1984. Articles or guidelines inquiries can be submitted to Editor at Editor@sipconline. net The Self-Insurer also has advertising opportunities available. Please contact Shane Byars at sbyars@ sipconline.net for advertising information.

JANUARY 2026

COMPETING FOR CAPTIVES Regulatory landscapes becoming more favorable as states pull out all the stops to lure in more captive insurance companies

Written By Bruce Shutan

s captive insurance has grown through the years, efforts to capture this emerging alternative risk transfer business have intensified across a shifting regulatory landscape. "Every state and every jurisdiction is competing for captive business," notes Mike Teichman, a director at Parkowski, Guerke & Swayze, P.A. "In part, that's to help the local business community and also generate tax revenue. And so, when the domicile grows, those premium tax revenues grow, and that's good for the insurance department and the state." Perhaps no one knows this better than Alex Murray, a partner with Johnson Lambert LLP, which manages more than 450 captive clients across various states. "Domiciles can see what other domiciles are doing and say, 'Hey, that makes sense. Why aren't we doing that?" he says, noting how a hardened commercial insurance market continues to drive interest in captives, especially on the medical stop-loss side as selfinsured employers struggle to rein in health benefit costs. Nuances in licensing, acceptable lines of business and other regulatory framework factors vary among domiciles, explains Lori Gorman, deputy commissioner of the North Carolina Department of Insurance. She says the reputation and experience of captive regulators can also have a significant impact on the size and activity of the domicile. 32

THE SELF-INSURER

fairness as key elements that have kept Montana competitive. Another explanation is the passage of SB 60, which tiered premiums and tax rates and allows for the treatment of increasingly popular protected cells and series structures to be tailored. EMULATING VERMONT

Mike Teichman While most captive insurance statutes are very similar, Teichman says the responsiveness and flexibility of the regulator is how states distinguish themselves. “Delaware has been really good about that, and I think that’s why we were able to grow the way we have,” explains Teichman, who’s also president of the Delaware Captive Insurance Association, Inc. “We have a regulator who is definitely willing to listen and consider the applicant on its merits and without any employment of desk-drawer rules, which is like an unwritten policy or regulation.” When John Huth ran Montana's captive program from 2001 to 2007, he'd always ask each representative why they chose the state just out of curiosity. "And they all said, 'Well, you called us right back.' I guess that kind of surprised me because isn't that my job if you leave a voicemail that I'm supposed to call you back? And they said, ‘That’s not a typical response!’” Now chairman of the Montana Captive Insurance Association, Huth also credits his state’s reputation and commitment to

When Montana developed its captive industry, the objective was to become the western version of Vermont, which has long been known as the captive king. "We've never had a captive bill go down,” Huth reports, noting legislative support on both sides of the political aisle, including the governor and the insurance commissioner. “Vermont obviously has a history of being one of the early adopters, and they have an incredibly strong department, and I think South Carolina does as well,” observes Murray, who’s also president of the South Carolina Captive Insurance Association. The number of U.S. domestic captives increased slightly to 3,466 in 2024 from 3,365 the previous year, according to a recently released report from AM Alex Murray Best, with Vermont leading the pack at 683 and followed by Utah at 462, North Carolina at 293, Delaware with 285, and Hawaii at 272 (see accompanying graphic, which shows other high-ranking states). In SIIA’s fifth annual captive insurance industry survey of nearly 70 industry professionals, a bullish sentiment was reported for the fourth straight year. One critical finding suggests more captives moving from offshore to onshore domiciles. Common sites for the 34 captives that were redomiciled included Tennessee, North Carolina and Vermont, whose regulatory environments respondents describe as increasingly captive-friendly. Onshoring a captive certainly has its advantages over offshoring one. While making an 831(b) plan election for a small captive already invites IRS scrutiny, "forming a captive on an offshore domicile is just one more red flag," Teichman observes.

John Huth

“Whether or not it’s deserved, I think that’s causing managers to use an onshore jurisdiction, which weren’t as competitive with offshore jurisdictions JANUARY 2026

in the past,” he continues. “That’s changed both in terms of the flexibility of the regulator and the flexibility that’s built into the captive statute.” South Carolina allows captives to redomicile from foreign jurisdictions, given the optics involving offshoring in years past. Murray says the state will handle Section 953(d) elections that allow foreign insurance companies to be appropriately treated and taxed as U.S. domestic corporations. SIIA Captives Insurance Committee Chairman George Belokas says the reasons are diminishing as to why someone would want to pursue an offshore jurisdiction unless they want to take a trip to the Caymans every year, though he also doesn’t see a rush to move offshore captives onshore to the U.S. As captive insurance regulators become more knowledgeable and make their rules more favorable, he believes more captives will ultimately decide to form in the U.S. Belokas describes homogeneous group captives as stickier solutions that are more prone to growth, noting that self-insured employers joining an industry group tend to stick with the arrangement for the long haul. “It just seems like you’re more likely to weather storms as opposed

George Belokas to a heterogeneous group captive structure,” says Belokas, whose practice manages more than 3,000 captive insurance and reinsurance companies, including single parent, group and cell captives. Heterogeneous captives provide more opportunity “because they’ll accept almost anyone,” he adds.

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SIIA’s Captives Insurance Committee has sought to improve the level of education for members who aren’t familiar with captives, including creating videos to learn more about these vehicles and different types of structures. SHORING UP CELLS

Another effort involves offering comments for IRS and Treasury regulations involving small captives that were proposed in 2023 and then finalized earlier this year. The aim was to rein in some of the requirements that were considered more onerous than those that were issued in the final version. Increased use of cell structures enables smaller groups to enjoy the same benefits of captive insurance as larger employers. In Arizona, a reduction in the minimum capital requirement for a cell captive has drawn in more smaller and midsize groups to that state. Murray points to some flexibility in the use of cell structures for smaller groups where an irrevocable election is made, and they're able to switch over to another cell rather easily or add another group of employers. Gorman cites lower capitalization requirements, shared operating costs with available service providers, ease of set-up and access to reinsurance markets as among the benefits to forming a cell captive for small and midsize employers that face obstacles to finding affordable coverage in the traditional commercial insurance market. 36

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“The ability to convert to a standalone captive from a cell structure may be especially appealing to those captive owners who wish to start with a small captive insurance program initially and expand to include additional lines of coverage while growing and maturing into a single parent captive over time,” she adds. At the end of 2024, North Carolina Lori Gorman had more than twice the number of approved cells in the state than licensed captive insurers. North Carolina’s modern captive law, enacted in 2013, allows its insurance commissioner a great deal of discretion in regulating captive insurers. This flexibility to meet the needs of the captive industry and philosophy of prudent regulation in a businessfriendly environment has been foundational to the state’s success as a leading captive domicile. North Carolina is ranked as the third-largest U.S. domicile by number of licensed captives. “North Carolina has reasonable capital requirements that take into consideration each captive insurer’s own unique risk profile,” Gorman explains. “The state’s Captive Insurance Act provides the commissioner with much discretion in regulating captives, and

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we boast a business-friendly environment with excellent customer service and timely reviews.” While many captives insure property and casualty lines, she says there’s significant interest in medical stop-loss captives among employers looking for more cost-effective methods to provide health insurance benefits to employees. Noting how employee benefits are evolving to meet the demands of a changing workforce, Gorman explains that some companies are now offering supplemental health and life coverages through their captive insurance companies. "A captive can often provide these benefits at a lower cost and, with its low overhead costs, can pass the savings onto the company's employees," she says. "Captive insurance can be a nimble risk transfer alternative to the traditional markets, and accordingly, we anticipate continued growth in captive space.” ENORMOUS GROWTH

Some states, such as Delaware and Arizona, have experienced eye-popping growth in captive insurance within their respective borders over the years. In Delaware, for instance, there were only seven captives domiciled there 20 years ago when Teichman joined the state captive association’s board because they were regulated like traditional insurance companies.

“So, we rewrote the statute and modernized it a bit,” he says, “but I think the more important thing that we did was convince the insurance department to create a special bureau to regulate captive insurance companies, which has worked out very well.” Delaware is now among the top-ranked states nationally, with many licensed entities involving series captives whose parent can have multiple cells or sub-entities that act as a separate captive insurer. Those efforts dovetailed nicely into the state’s reputation for being a leading destination to incorporate businesses – a theme that regulators leaned into in touting the Delaware advantage. “It’s relatively easy to incorporate in Delaware,” Teichman says, adding that the state’s Court of Chancery is probably the premier forum to resolve business disputes. Arizona was relatively flat from a captive insurance perspective for many years, reports Belokas, who’s also heads up the Arizona Captive Insurance Association and is president of GPW, which operates under the Beyond Risk umbrella. But since Victoria Fimea became the state's chief captive analyst, new captive formations have significantly outpaced dissolving captives, and it's now in the top 10 among states in terms of the number of domiciled captives and a leader in terms of premium volume. "Vicki really is trying to create an environment that makes captives even more favorable," he says. Arizona lawmakers passed HB 2193, which lowers capital requirements for protected cell captives, reduces compliance burdens for dormant captives and streamlines license renewals. Belokas says the legislation also helped clean up some of the language on LLC board structures and changed the timing of license fee payments. These steps allow the state’s insurance department better access to the funds that are generated from license fees to pursue more proactive outreach to captive owners and prospective captive owners in Arizona. Laws and regulations in Arizona that are most favorable to captives include a low annual license fee of $5,500, no premium taxes and the absence of triennial or five-year examinations seen in other domiciles, Belokas reports. The state also introduced branch captive regulations wherein a captive that’s domiciled in another jurisdiction could set up a branch captive in the state of Arizona to operate as an extension of their existing captive. In addition, there’s a requirement that an annual board meeting be held in Arizona, which brings in tourism dollars. “From a statutory perspective, the rules in Arizona are about as favorable as I think they can be while still allowing the government to properly regulate the captive insurance company,” he says. JANUARY 2026

QUALITY OVER QUANTITY

A similar approach has played out in South Carolina, which passed SB 210 to allow for regulatory flexibility and ease compliance requirements designed to support industry growth. "Rather than a one-size-fits-all approach, if you're a pure or singleparent captive, $250,000 is the minimum," Murray explains. "It really is focused on what the exposure of the entity is because at the end of the day, you want to make sure that they have enough capital and they’re liquid enough should claims come – that they do have that surplus handy.” He lauds Andy Noga, the recently appointed director of captives at the South Carolina Department of Insurance, who has “made it very evident through his words and actions about how we can modify what we’ve been doing to help grow the industry.” However, he hastens to add that South Carolina is concerned with quality over quantity when it comes to captive growth. Whatever developments might alter the regulatory landscape for captives in the future, Murray doesn’t expect the formation of captives to slow down anytime soon, noting remarkable growth over the past three or four years. “I’ve always kind of thought that at some point everybody’s going to have a captive,” he adds.

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Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for more than 35 years.

TOP 10 STATES FOR CAPTIVES Rank Domicile 1 2 3 4 5 6 7 8 9 10

Vermont Utah North Carolina Delaware Hawaii South Carolina Arizona Tennessee District of Columbia Montana

Number of captives 683 462 293 285 272 231 201 175 132 93

Note: Figures reflect the number of captive licenses at the end of 2024 and are based on a survey by Business Insurance as aggregated by other sources.

THE 2025 HEALTH BENEFITS LEGISLATIVE/ REGULATORY ROUNDUP

Written By Alston & Bird Health Benefits Practice

his past year that just ended kicked off with a new administration heralding big policy changes in areas that affect employee health & welfare benefits. This roundup is packed with the latest legislative and regulatory developments that matter most to health benefit plan sponsors and service providers. From significant consumer-directed health legislative changes in telehealth and health savings accounts to pivotal court decisions impacting mental health parity, reproductive health privacy, and wellness program benefits, we break down what’s new, what’s paused, and what’s next for employer health plans. LEGISLATIVE SPOTLIGHT

Big bill, big changes: The OBBBA’s impact on your benefit plans The One Big Beautiful Bill Act (OBBBA) made headlines with its ambitious consumer-directed health proposals, but only a few provisions made it into law. Agencies are feverishly working on additional guidance for those provisions. •

HDHP/HSA Exception for Telehealth and “Remote Care.” The Senate’s version made permanent the exception for pre-deductible telehealth coverage and extended the exception to “other remote care,” which means telehealth or “other remote care” coverage before satisfaction of the high-deductible health plan’s (HDHP) deductible will not disqualify participants from health savings account (HSA) eligibility for plan years beginning after December 31, 2024. This retroactive effective date bridges the gap that would have otherwise followed the sunset date of the last telehealth extension at the end of 2024. THE SELF-INSURER

Consider: When is care telehealth or remote care? For example, there are some who hope that the exception may apply beyond services to durable medical equipment or prescription drugs obtained through telehealth providers. Agency guidance may address this issue. •

Bronze and Catastrophic Exchange Plans / HSA Compatibility. Beginning in 2026, bronze and catastrophic Exchange plans will qualify as HSA-compatible HDHPs.

Consider: Exchange plans cannot be pre-tax funded under a cafeteria plan, but the premiums can be reimbursed through an individual coverage health reimbursement arrangement (ICHRA). •

Direct Primary Care Arrangements. Direct primary care (DPC) arrangements that meet certain requirements will also be HSA compatible. The fee for a compatible DPC will also qualify as an eligible expenditure for HSA purposes (up to $150/month for individuals, $300/month for families).

Consider: The OBBBA failed to answer a few critical questions. Can annual payments be prorated? Can the DPC be funded on a pre-tax basis by the employer or employee (through a cafeteria plan)? What is the scope of allowable DPC “primary care” services? Can a DPC be integrated with an employer’s HDHP coverage? Agency guidance is welcomed on these points. Many House-proposed health benefit reforms, such as expanded HSA eligibility and ICHRA codification, were not included in the final law. But perhaps we may see further activity on some of these provisions in the future. The OBBBA also included changes for other types of employee benefits: •

Dependent Care Assistance Program. Dependent care assistant program (DCAP) limits have increased to $7,500 – or $3,750 for married individuals filing separately in 2026. Be aware that increasing pre-tax salary reduction limits can adversely impact the DCAP 55% average benefits nondiscrimination test.

•

Student Loan Benefits. The student loan repayment assistance benefit is now permanent, with annual limits adjusted for inflation after 2026.

•

Commuter Benefits. The bicycle commuter benefit, which was frozen January 1, 2017, through December 31, 2025, is now permanently eliminated after December 31, 2025.

•

Trump Accounts. This investment vehicle is similar to an individual retirement account for parents to set up for their minor children. Beginning in 2026, parents can contribute up to $5,000 per child, and employers can contribute up to $2,500 annually, indexed and tax-free. Employer contributions must be made under the terms of a written plan document that complies with rules similar to those for DCAPs.

REGULATORY UPDATE

2024 MHPAEA Rule: Agency enforcement paused, comparative analysis still required Federal agencies have paused enforcement of the 2024 final rule under the Mental Health Parity and Addiction Equity Act (MHPAEA) due to ongoing litigation (ERISA Industry Committee (ERIC) v. HHS) and a presidential Executive Order directing regulatory review.

JANUARY 2026

What’s Next. The departments will not enforce the 2024 final rule or otherwise pursue enforcement actions if a plan fails to comply before a final decision in the litigation, plus an additional 18 months. The departments are considering whether to issue a notice of proposed rulemaking rescinding or modifying the regulation through notice and comment rulemaking. What Plan Sponsors Need to Know. Plan sponsors must still comply with the 2013 final rule and the Consolidated Appropriations Act of 2021, including maintaining written comparative analyses for nonquantitative treatment limitations. Private litigation under the MHPAEA from plan participants remains a risk for all MHPAEA requirements. Federal court vacates HIPAA reproductive health privacy protections A federal district court in Texas in Purl v. HHS vacated most provisions of the HIPAA Reproductive Health Privacy Rule. Covered entities are no longer required to comply with the new federal privacy requirements for reproductive health information, such as the prohibition on certain uses and disclosures and the attestation requirement for law enforcement requests. What’s Next. The Department of Health and Human Services (HHS) has not appealed the decision and attempts by other states to intervene and appeal the decision were unsuccessful. WHAT PLAN SPONSORS NEED TO KNOW.

•

Plans that took compliance action before the rule was vacated should consult with legal counsel on next steps.

•

The court’s decision does not affect new HIPAA Notice of Privacy Practices (NPP) requirements for substance use disorder records under 42 C.F.R. Part 2. Plan sponsors must still update NPPs to address these changes by February 16, 2026. NPPs must still be updated for HIPAA Part 2. Model language had been promised, but none has been issued.

•

Monitor state activity for any applicable non-preempted state laws that may provide additional privacy protections for reproductive health information.

Court vacates interpretation of “sex” as “gender identity” under Section 1557 In October, a federal court in Mississippi vacated the expanded definition of sex discrimination to include gender identity under the 2024 final rule for the Affordable Care Act (ACA) Section 1557, holding that HHS exceeded its statutory authority. The opinion listed the specific provisions that were vacated. (State of Tennessee v. HHS) What’s Next. The outcome of the Mississippi order aligns with the first Trump Administration’s version of gender identity under the final rule under Section 1557, making an appeal less likely. Section 1557 litigation is still pending in other jurisdictions. What Plan Sponsors Need to Know. This outcome could have broad implications for other Section 1557 cases. See the Litigation Update section for more information on gender identity litigation and benefits. ACA CONTRACEPTIVE RELIGIOUS AND MORAL EXEMPTION VACATED

A Pennsylvania district court in Pennsylvania v. Trump vacated two federal regulations—the Religious Exemption Rule and the Moral Exemption Rule—that had allowed a broad range of employers, including for-profit entities, to opt out of providing contraceptive coverage under the ACA based on religious or 42

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moral objections. The court found these rules to be “arbitrary and capricious” under the Administrative Procedure Act.

offer the full range of contraceptive coverage required under the ACA should consult legal counsel.

What’s Next. The Trump Administration appealed, though the briefing has been delayed due to the government shutdown. Unless stayed on appeal, the Religious and Moral Exemption Rules are vacated, reverting the contraceptive coverage framework to the pre-2017 accommodation regime.

Supreme Court upholds ACA preventive services mandate

What Plan Sponsors Need to Know. Plan sponsors already covering all ACA-mandated preventive services are not affected by this ruling. However, employer health plans that were relying on either exemption to not

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PREVENTIVE SERVICES AND FERTILITY BENEFITS

In June 2025, the U.S. Supreme Court issued its decision in Kennedy v. Braidwood Management Inc., affirming the constitutionality of the U.S. Preventive Services Task Force (USPSTF) appointment process and upholding the ACA’s requirement that employer-sponsored group health plans cover preventive services receiving an A or B recommendation from the USPSTF without cost-sharing. These services include screenings for breast, cervical, and colorectal cancers, as well as screenings for sexually transmitted diseases and PrEP for HIV prevention. What’s Next. The case now returns to the lower courts to consider challenges to the authority of two other advisory bodies, the Health Resources and Services Administration (HRSA) and the Advisory Committee on Immunization Practices (ACIP). The HRSA makes recommendations on contraceptive coverage for women and other types of preventive services for women and children. The ACIP is the advisory committee that recommends vaccines, including the schedule for childhood vaccines.

STOP LOSS INSURANCE

WE’LL HELP MANAGE THE RISK. YOU’LL KEEP YOUR PROMISES. Prudential’s Stop Loss insurance helps reduce unpredictable risks from self-funded medical plans. This way you can focus on giving your employees the coverage they deserve, while helping to reduce your worries about the increased frequency of catastrophic claims. Get Stop Loss insurance from a partner you can rely on: • A highly rated, experienced carrier recognized for over 150 years for strength, stability, and innovation • Efficient, responsive service with streamlined processes across quoting, onboarding, and reimbursements • A dedicated distribution team that works hand-in-hand with your existing relationships • Flexible policy options so we can build a coverage plan that meets the unique needs of your organization Did you know, medical and prescription drug costs are expected to rise 9% annually?1 See how Prudential can help you manage the risk from your self-funded medical plan. For more information, contact us at stoploss@prudential.com or visit our website: www.prudential.com/stoploss

1Aon 2025 Medical and Prescription Drug Underwriting Trend Guidance Prudential Stop Loss is not available in all states and policy options may vary by state. Contact your Prudential representative for more information. Group Insurance coverage is issued by The Prudential Insurance Company of America, a Prudential Financial company, Newark, NJ. © 2025 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc., and its related entities, registered in many jurisdictions worldwide.

1081937-00002-00 NOT11_AD_GI47_01

HRSA EXPANDS WOMEN’S PREVENTIVE SERVICES

Finalized Updates for 2026. In December 2024, the HRSA approved recommendations to add additional imaging (such as MRI, ultrasound, and mammography) and pathology after initial screening to the HRSA-supported Women’s Preventive Services Guidelines. Plans are required to cover these updates for plan years beginning in 2026. Proposed Updates. In late September 2025, the HRSA proposed additional updates to screening for cervical cancer. These proposed changes include updates to screening recommendations for women ages 30 to 65, the option of patient-collected hrHPV testing for the same age group, and coverage of additional testing (such as cytology, biopsy colposcopy, extended genotyping, and dual stain) and pathologic evaluation, if indicated, for women of all screening ages. Plan coverage for these proposed updates for cervical cancer screening, if finalized, would become effective for plan years beginning on or after one year after the recommendation or guideline is officially issued. INFERTILITY COVERAGE GETS FEDERAL SPOTLIGHT—TAX RULES STILL TRICKY

The new administration is committed to increasing access and reducing costs for infertility treatment (see Executive Order 14216 and Fact Sheet). In October, the Departments of Labor, Health and Human Services, and the Treasury published guidance for stand-alone benefit packages to employees interested in coverage for treatment of infertility, including IVF (see ACA FAQs Part 72). Although this guidance did not alter current rules, it explained that employer plan sponsors have two main pathways to offer fertility benefits as “excepted benefits” under federal law: •

Noncoordinated excepted benefit. First, fertility coverage can be provided as an independent, noncoordinated excepted benefit—for example, through a specified disease or illness policy (such as infertility-only insurance) or hospital indemnity coverage. To qualify, these benefits must be offered under a separate insurance policy, certificate, or contract, with no coordination between the excepted benefit and any group health plan maintained by the same sponsor. Importantly, these policies cannot be self-funded; they must be fully insured. Employees do not need to enroll in the employer’s traditional group health plan to access these benefits, and enrollment in such coverage does not disqualify participants from contributing to an HSA if they otherwise meet HSA eligibility requirements.

•

EBHRAs and EAPs. Second, employers may offer fertility benefits as a limited excepted benefit— most commonly through an excepted benefit health reimbursement arrangement (EBHRA) or certain employee assistance programs (EAPs). EBHRAs must be offered alongside a traditional group health plan, must have annual limits ($2,150 for 2025), and cannot reimburse premiums for major medical coverage. EAPs may provide coaching or navigator services related to fertility but cannot offer significant medical care or be coordinated with other group health plans.

What’s Next. The departments are considering future rulemaking to expand options for fertility benefits and may adjust the value limits for supplemental coverage. What Plan Sponsors Need to Know. Although not discussed in the FAQs, certain fertility treatments or services may not meet the current definition of “medical care” under U.S.C. § 213(d) for purposes of tax-favored treatment. Employers need to remain mindful of the IRS guidance limit on infertility treatments. The table below summarizes some of the treatments and services that have been addressed in sources other than formal rulemaking:

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Expense Type IVF for taxpayer/ spouse Egg/sperm donor fees Surrogacy expenses Storage of eggs/ sperm Legal fees

Deductible?

IRS Guidance/Letter Rulings

Yes

Must be necessary to overcome inability to have children

Sometimes No Yes (temporary) Sometimes

If preparatory to procedure for employee/spouse/ dependent Surrogate is not a dependent; reimbursement and benefits are only permitted for employees and their tax dependents Must be for imminent use and necessary due to a medical condition If directly related to the provision of medical care

LITIGATION UPDATES

Legal landscape shifts for gender-affirming coverage Recent federal court decisions have reshaped the legal landscape for gender-affirming care, with significant implications for employer health plan sponsors. In United States v. Skrmetti, the Supreme Court upheld Tennessee’s ban on gender-affirming medical care for minors, holding that such laws do not trigger heightened scrutiny under the Equal Protection Clause because they classify based on age and medical use, not sex or transgender status. The court declined to extend the Title VII reasoning of Bostock v. Clayton County to constitutional claims, emphasizing that state bans on gender-affirming care for minors are subject only to rational basis review. This decision is now binding nationwide and signals a restrictive approach to constitutional challenges against similar state laws. A mix of circuit courts and district courts has also addressed federal nondiscrimination protections this year. In Lange v. Houston County, the Eleventh Circuit, sitting en banc, reversed a district court and held that employer health plan exclusions for “sex change” services are not facially discriminatory under Title VII, echoing the Supreme Court’s logic in Skrmetti. Meanwhile, in September, a federal district court in Washington in L.B. v. Premera Blue Cross found that a categorical exclusion of gender-affirming chest surgery for minors violated Section 1557 of the ACA but acknowledged that the Supreme Court’s recent decisions could affect the outcome if appealed. However, in October, the regulatory efforts to expand gender-identity protections under Section 1557 faced setbacks when the Southern District of Mississippi in State of Tennessee v. HHS vacated specific regulatory provisions that expand the definition of sex discrimination to include gender identity, holding that HHS exceeded its statutory authority. Then, in mid-November, the Ninth Circuit in C.P. v. BCBSIL vacated a lower court’s ruling for summary judgment that favored the transgender plaintiffs who sued a third-party administrator (TPA) of a self-insured plan for denying coverage for gender dysphoria, remanding the case back to the lower court to reconsider the analysis of sex discrimination under Section 1557 in light of Skrmetti. In its analysis, the Ninth Circuit invoked Loper Bright to set aside a set of 2020 regulations that would have excluded the TPA from Section 1557. What’s Next. •

On September 15, 2025, Premera filed an appeal to the Ninth Circuit. It is unclear if the ruling in the Mississippi district court will have any impact in the Ninth Circuit.

JANUARY 2026

•

The Western District of Washington will revisit its Section 1557 sex discrimination analysis under Skrmetti to determine whether a TPA impermissibly applied an exclusion for gender-affirming care.

•

The Eleventh Circuit remanded Lange v. Houston County back to the district court for claims turning on the intent of the exclusion for sex-change procedures.

TOBACCO SURCHARGE LITIGATION HEATS UP

A new wave of litigation is targeting tobacco wellness programs, but they are not one-size-fits-all. For example, some offer only prospective removal of the surcharge upon completion of a tobacco cessation program, while others impose time restrictions on when a participant can qualify for retroactive reimbursement while offering prospective removal. In short, the crux of the plaintiffs’ claims is that employer health plans must offer full retroactive reimbursement of all tobacco surcharge payments any time a participant completes a tobacco cessation program and that certain plan disclosures do not contain specific information they allege is required. Courts are divided on whether plaintiffs state a plausible violation of the law by alleging an employer health plan fails to retroactively reimburse tobacco surcharges. For example, in Williams v. Bally’s Management Group LLC, the plaintiff alleged that Bally’s violated the law by offering only prospective removal of the tobacco surcharge upon completion of a tobacco cessation program. The Rhode Island federal court declined to read a retroactive reimbursement requirement into the law and found that Bally’s was not required to provide retroactive reimbursement of the tobacco surcharge. Other courts, however, have found the opposite.

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What Plan Sponsors Need to Know. The case law for tobacco wellness programs is evolving rapidly. There are numerous unresolved legal issues in these cases, and with over 40 cases filed in the last couple of years, we are sure to see further development. Programs that offer retroactive reimbursement after completion of a tobacco cessation program have fared better on motions to dismiss. We recommend consulting with counsel experienced in the nuances of this litigation and the law and monitoring the law in your jurisdiction. PBM LITIGATION

In 2025, two pivotal lawsuits targeted the use of pharmacy benefit managers (PBMs) under ERISA. The plaintiffs alleged that employers failed to properly select and monitor PBMs, resulting in excessive drug costs and higher participant expenses, but federal courts dismissed these claims due to lack of standing, finding the alleged injuries too speculative or not directly linked to employer actions. In one of the cases, the court noted that the employer retained sole discretion in the plan document to set participants’ contributions, which also factored into the court’s view that the connection between PBM fees and drug pricing and participant cost was speculative. What’s Next. The courts permitted the plaintiffs to file amended complaints that are subject to renewed motions to dismiss. TCPA LAWSUITS SPIKE—HIPAA COMPLIANCE ISN’T ENOUGH

HIPAA compliance does not shield plans from Telephone Consumer Protection Act (TCPA) liability, which carries steep statutory damages for each violation—up to $500–$1,500 per violation—making it a source of litigation risk for health plans. Litigation under the TCPA surged in 2025, especially after the Supreme Court clarified that courts are not bound by the Federal Communications Commission’s interpretations in McLaughlin Chiropractic Associates Inc. v. McKesson Corp. Health plans and TPAs face risk for automated calls/texts without proper consent and for failing to honor opt-outs. Plan sponsors will want to be mindful of the following: •

Have outbound communications (calls, texts, faxes) been evaluated for TCPA compliance, not just HIPAA?

•

Have proper consents been obtained for all automated or prerecorded messages? Which party is responsible for obtaining them?

•

Are opt-out mechanisms clear, easy to use, and honored promptly?

•

What does the TPA or vendor agreement say about TCPA compliance? Which party obtains any required consent and indemnification for TCPA failures?

NO SURPRISES ACT: ONGOING LEGAL BATTLES AND NEW FAQS

Litigation over the federal independent dispute resolution (IDR) process under the No Surprises Act remains unsettled, with key cases shaping the landscape for employer plan sponsors and TPAs. In Guardian Flight v. Health Care Service Corp., the Fifth Circuit held that providers cannot enforce IDR awards in federal court but must rely on administrative enforcement through HHS. This aligns with district court decisions in New York and Florida, while a District of Connecticut decision reached a different conclusion, creating a divide that may require Supreme Court review.

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Ongoing litigation in the Fifth Circuit led by the Texas Medical Association (TMA) also challenges the use of the qualifying payment amount (QPA) in arbitration. The departments issued two FAQs this year to address some of these issues: •

FAQ Part 69 (Jan 2025) introduced a new extension policy for providers that miss IDR deadlines due to delayed or missing QPA disclosures. Providers can now request deadline relief from the Centers for Medicare & Medicaid Services (CMS) with supporting documentation.

•

FAQ Part 71 (July 2025) extended enforcement discretion for QPA calculations through February 1, 2026, and clarified that plans must still certify that QPAs were calculated in compliance with applicable rules.

What’s Next. •

A petition for certiorari was filed in October for the Guardian Flight case.

•

The full Fifth Circuit heard arguments in the TMA case in September, but no opinion has been issued.

•

CMS and the Employee Benefits Security Administration both listed federal IDR operations on their semi-annual regulatory agendas published in September, and a new final rule is anticipated.

ACA 4980H penalties: Court says IRS can’t act without HHS certification In Faulk Company Inc. v. HHS, the Northern District of Texas addressed whether the IRS properly assessed the employer shared responsibility payment (ESRP) penalty under IRC § 4980H for failing to offer minimum essential coverage required by the ACA. The court found that under the statutory framework, only HHS—not the IRS—has authority to provide the required certification to employers before the IRS can assess the ESRP. The IRS’s practice of sending Letter 226-J as certification was deemed improper because it did not originate from HHS and did not provide adequate notice of liability or appeal rights as required by ACA Section 1411. The court ordered the IRS to refund the over $200,000 penalty paid by Faulk and set aside the regulation (45 C.F.R. § 155.310(i)) that allowed the IRS to issue certifications. What’s Next. HHS has not appealed. What Plan Sponsors Need to Know.

•

ESRP penalty assessment must be preceded by proper certification and notice from HHS.

•

An IRS Letter 226-J alone does not meet the HHS certification requirement.

•

Employers that have been assessed a Section 4980H penalty under the ACA or have already paid a penalty should consult with legal counsel. Refund requests are typically required within two years of paying the penalty. Those assessed a penalty in the future may have a defense if HHS certification hasn’t been received for employees identified as triggering a penalty.

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YEAR-END REMINDERS

Cost of living updates Provisions

2025

2026

HSA contribution max for self/ family

$4,300/$8,550

$4,400/$8,750

HSA additional catch-up contri- $1,000 butions

$1,000

HDHP annual deductible minimum self/family

$1,650/$3,300

$1,700/$3,400

Limit on HDHP OOP max self/ family

$8,300/$16,600

$8,500/$17,000

ACA limit on OOP expenses self/family

$9,200/$18,400

$10,600/$21,200

Health FSA salary reduction max

$3,300

$3,400

Health FSA carryover max

$660 (carried into 2026)

$680 (carried into 2027)

Dependent care salary reduction max

$5,000 ($2,500 married filing separately)

$7,500 ($3,750 married filing separately)

Excepted benefit HRAs

$2,150

$2,200

Qualified small employer HRAs (QSEHRAs) self/family

$6,350/$12,800

$6,450/$13,100

Adoption assistance •

Max tax credit

$17,280

$17,670

•

Phase-out begins

$259,190

$265,080

•

Phase-out ends

$299,190

$305,080

Transit and parking benefits

$325/mo.

$340/mo.

1095-C reporting to individuals •

Automatic distribution of ACA statements (Forms 1095-B and 1095-C) is no longer required under the Paperwork Burden Reduction Act. Plan sponsors must instead provide a clear and accessible notice informing individuals they can request a copy of their statement. If requested, the statement must be furnished by January 31 of the following year or within 30 days of the request, whichever is later.

•

Filing requirements with the IRS remain unchanged—plan sponsors must still submit all required ACA returns.

•

Employers that have been assessed a Section 4980H penalty under the ACA should consult with legal counsel to determine if proper HHS certification was provided. Employers that have already paid this penalty should consult with legal counsel to determine if they may be entitled to a refund.

JANUARY 2026

Gag clause attestation •

Due December 31, 2025

•

Submit via CMS HIOS portal

•

Review contracts for prohibited data restrictions

•

Self-insured plans: sponsor is responsible for reporting (but can delegate to a TPA)

HRSA preventive services update •

New guidelines for breast/cervical cancer screening and patient navigation

•

Effective for new plan years beginning in 2026

HIPAA Part 2 notice of privacy practices •

Update required by February 16, 2026

•

Must include new protections for substance use disorder records

Attorneys John Hickman, Ashley Gillihan, Amy Heppner, and Laurie Kirkwood provide the answers in this column. John is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte, Dallas and Washington, D.C. law firm. Ashley is a partner in the practice, and Amy and Laurie are senior members in the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to John at john.hickman@alston.com.

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SELF-INSURANCE INDUSTRY PIONEER BILL BENNETT PASSES

Bill Bennett, one of the early leaders in the self-insurance industry, has passed away. He was 82. Bill was very active in the Self-Insurance Institute of America (SIIA), including serving as board chairman. Other professional organization affiliations included: Society of Professional Benefit Administrators, National Association of Health Underwriters, Self-Insurance Educational Foundation and the International Foundation of Employee Benefits. Over his long career, he was affiliated with multiple companies that have helped shape today's self-insurance industry, including: •

WORKsiteRx (acquired by CareATC)

•

Healthcare Solutions Group, Inc

•

AU Resource Group

•

Alliance Underwriters

•

Vasa Brougher

•

First Southwest Risk Management

•

Reliance Standard Life

•

Hartford Life Insurance Company

•

Continental National American

William Bennett May 5, 1943 - November 26, 2025

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WHAT SOME OF HIS INDUSTRY PEERS HAD TO SAY ABOUT BILL

"Bill had a unique leadership style and his ability to weave humor into any serious discussion and used his one-liners to turn any negative into a positive," said Jim Kinder, Co-founder and former CEO of The SelfInsurance Institute of America (SIIA). "He was a master at making his point using humor but never losing sight of his real message. This style enabled Bill to control discussions and ultimately win for the industry he so dearly loved and supported." "Bill was involved in the early promotion of the self-insurance concept for employee healthcare benefit plans," said Steve Stucky, founder of S.P. Stucky, a pioneering stop-loss MGU. "He started a TPA and successfully serviced many clients. He was always known as a 'Class Act' and served with integrity. It was my privilege to have him as a friend and colleague." "When I was a newly minted stop-loss underwriter, I called on Bill and his wife, Yvonne, at First Southwest Risk Management, a TPA he founded based in Tampa, Florida," said Ernie Clevenger, Editor of MyHealthGuide Newsletter. "Bill instantly made me feel at home, but he pushed me through the hoops to justify using our stop-loss program at American Progressive Benefits with his self-funded clients. Slowly, I won his confidence, and we were friends for over 40 years." "Later, Bill and I worked together at CareATC, an on-site clinic manager founded by Ron Woods, also founder of the TPA, Health Cost Solutions, and past Chairman of SIIA. "After CareATC, Bill founded WORKsiteRx, and I founded CareHere (both were on-site clinic managers). CareATC later acquired WORKsiteRx," added Clevenger.

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NEWS

NEWS FROM SIIA MEMBERS JANUARY 2026 MEMBER NEWS SIIA boasts a very active and dynamic membership. Here are some of the latest developments from member companies and individuals powering the selfinsurance industry. The Phia Grouo Secures Major Equity Investment from InTandem Capital Partners InTandem Capital Partners, a healthcare services-focused private equity firm, announced that it has completed an equity investment in The Phia Group. Adam V. Russo, Co-Founder and CEO of The Phia Group, stated, “I am incredibly proud of not only our team’s tremendous success over the past twenty-five years, but also our unwavering commitment to our family-centric culture that prioritizes employees’ well-being. I look forward to working alongside InTandem during the next stage of our evolution. InTandem’s approach perfectly aligns with our values. Their JANUARY 2026

NEWS experience in employer-sponsored healthcare will allow us to continue expanding in exciting new ways, while remaining true to our core values and way of doing business. Building and improving upon what our clients know and love about us – that’s the name of the game.” "In a healthcare ecosystem where cost containment is a critical area of focus, in particular for small and medium-sized employer groups, to combat the rising healthcare costs, best-in-class solutions are required to position self-funded employers and plan sponsors for success," stated Brad Coppens, Senior Partner at InTandem. "Outsourcing cost containment and payment integrity functions is not nearly enough to deliver meaningful savings, and The Phia Group is uniquely positioned with a leading advisory business to support clients beyond recovery opportunities. We're thrilled to partner with Adam Russo and The Phia Group team to further the company's leadership position in delivering performance excellence in healthcare cost containment." “Our partnership with Adam and The Phia Group over the past several years has not only been a highly successful investment for WestView, but has enabled Phia’s success in delivering incredible value for its employer and plan sponsor clients, and the significant advancement of its mission to lower healthcare costs and improve access to care,” stated Matt Carroll, Managing Partner at WestView Capital Partners. “We are pleased to be able to remain as a significant investor in the business alongside InTandem and the Phia team.”

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NEWS InTandem is joined in its investment by strategic co-investments from HarbourVest Partners and Partners Capital, each among the largest and most well-respected institutional investors in the global alternative investment market. Intellivo Recognized for Fast Growth Intellivo announced it ranked 438 on the Deloitte Technology Fast 500™, a ranking of the 500 fastestgrowing technology, media, telecommunications, life sciences, fintech, and energy tech companies in North America, now in its 31st year. Intellivo grew 154% during this period. As healthcare inflation accelerates, health plans are under mounting pressure to find non-abrasive, member-friendly ways to manage rising costs. Intellivo meets this challenge by recovering reimbursements on medical expenses that should be paid by alternative insurance sources, such as motor vehicle accident (MVA) or workers’ compensation policies, rather than by the health plan itself. Intellivo’s Chief Executive Officer, Laura Hescock, credits the company’s revenue growth to its proprietary process for obtaining accident-related and alternative policy information without ever contacting the plan member. “It’s a win-win for both the health plan and the member,” Hescock said. “Health plans recover more of what they’re owed while members experience a seamless, friction-free process that never disrupts their care.”

JANUARY 2026

NEWS Consociates Names New President Consociate Health, a leading Third-Party Administrator delivering innovative healthcare solutions, announced Darren Ashby as its new President, joining CEO and Chairman Darren Reynolds to lead the company’s next phase of growth. Ashby brings 35 years of experience in third-party administration, with extensive expertise in healthcare and benefits leadership. Throughout his career, he has held multiple leadership roles within the industry, building long-standing relationships and a deep understanding of the evolving needs of employers, advisors, and plan members. Darren Ashby Consociate Health

“I lead by example,” said Ashby. “What drew me to Consociate is the company’s commitment to family, community, and making a meaningful impact on people’s lives.”

Reynolds added, “We’re very excited to have Darren join us. He’s a strong leader who shares our culture and values. This is good for our company, our clients, and our employees. Having Darren as our president ensures we continue to grow and innovate while maintaining the culture that makes Consociate special.”

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NEWS

Under Ashby’s leadership, Consociate aims to leverage technology and actionable analytics to enhance service delivery and employee benefits programs, while keeping the human element at the center of their work. “Technology will play a major role in the future,” Ashby said, “but in service, you can’t remove the human element.” Jared Ionin to Lead Technology Strategy at Crum & Forster Crum & Forster’s (C&F) Accident & Health Division announces that Jared Ionin has joined as Chief Digital Officer. In this role, Ionin will oversee the Division’s technology strategy and operations, strengthening its digital infrastructure and establishing a roadmap for continued innovation and scalability. “Jared’s deep expertise in insurance technology and track Jared Ionin record of leading successful transformation initiatives make Crum & Forster him an outstanding addition to our A&H leadership team,” said David Butterfield, Chief of Staff, Accident & Health Division at Crum & Forster. “As we advance toward our ambitious growth objectives, investing in technology and exceptional talent is a priority. With Jared’s leadership, we’re further enhancing our digital capabilities to empower our teams, improve efficiencies, and deliver even greater value to our partners and policyholders.” Ionin brings more than 24 years of experience, including 19 years in the specialty insurance industry, where he transformed IT organizations and drove business process optimization. He joins C&F from The Hartford, where he led technology teams and oversaw modernization initiatives that improved operational performance and accelerated digital enablement. He previously held senior leadership roles where he led large-scale system integrations, software development, and automation efforts. “I’m honored to join Crum & Forster and contribute to the Accident & Health Division’s continued growth,” said Ionin. “C&F has built a strong foundation of innovation, collaboration, and excellence. I look forward to partnering with our talented teams to strengthen the technology ecosystem, embrace emerging tools, and create scalable digital solutions that support our business and partners well into the future.” HM Insurance Group Expands Regional Responsibilities of Key Stop-Loss Sales Executive Evan Stratton HM Insurance Group (HM) Stop Loss Sales division

Evan Stratton’s role within the HM Insurance Group (HM) Stop Loss Sales division has expanded, according to a company JANUARY 2026

NEWS announcement. He now serves as director, Phoenix Regional Sales, in addition to his position as director, Denver Regional Sales. In this dual capacity, Stratton is responsible for growing and maintaining the HM Stop Loss book of business across the company’s Phoenix territory, which serves Arizona, Nevada, and Southern California, while continuing to manage the Stop Loss book of business in the Denver territory, which includes Colorado, Utah, and New Mexico. He looks forward to working with producers in the Phoenix market, while continuing to collaborate with those in the Denver region as well. Greg Arms Joins IS Benefits Board Integrated Solutions for Benefits and Insurance Services (IS Benefits), a provider of stop-loss underwriting, specialty drug management, and claims auditing for self-funded employers, announced the appointment of Greg Arms as a member of the Company's Board of Directors. Greg brings more than four decades of global experience in the insurance and employee benefits industry. Over his career, he has held senior roles with leading carriers and brokers, including Chubb Group of Insurance Companies (as Global Head of Accident & Health / COO, A&H), Marsh & McLennan (Global Co-Leader, Mercer Marsh Benefits), Willis Group (Chairman & CEO, Global Employee Benefits Practice), UnitedHealth Group (Chief Marketing Officer, International) and AIG (President / Worldwide Director, Group Management Division).

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NEWS "At IS Benefits, we are poised for growth, both in scale and capability," said Nancy Young, Founder of IS Benefits. "Greg's industry insight, sales and marketing experience, and leadership in employee benefits will greatly accelerate our ability to serve selffunded employers with innovative stop-loss and specialty drug solutions. We are thrilled to welcome him to our Board." "I'm excited to join IS Benefits at such a dynamic point in the company's journey," said Greg Arms. "The team has built a strong foundation of experience and client trust. I look forward to helping expand our impact by leveraging innovation, analytics, and strategic partnerships to support meaningful value to self-funded employers and their employees." Alliant Expands Self-Insured Health Plan Expertise with New Hire Greg Arms Integrated Solutions for Benefits and Insurance Services

Michael Kniery has joined Alliant Insurance Services as First Vice President within its Employee Benefits Group. The Nashville, Tennessee-based Kniery will serve a broad national client base, delivering innovative, data-driven strategies that help employers enhance performance, manage costs, and improve employee engagement.

“Mike brings a powerful combination of technical skill, analytics, and creative problem-solving to every client relationship,” said Kevin Overbey, President, Alliant Employee Benefits. “His deep experience across both carrier and consulting environments gives him a unique ability to design self-funded programs that align with organizational goals and deliver measurable value.” Kniery is a 20-year veteran of the employee benefits industry, with extensive experience in both the health insurance carrier and consulting and brokerage arenas. He partners with large, multi-site self-funded employers across diverse industries, including financial services, law, healthcare, hospitality, and manufacturing. His consulting capabilities span self-funded program ecosystem optimization, value-based care and direct-toemployer initiatives, mergers and acquisitions diligence, multiple employer trust programs, and employer reinsurance. Known for his use of analytics to develop customized, results-oriented strategies, Kniery helps employers achieve greater efficiency, cost savings, and employee engagement. Michael Kniery Alliant Insurance Services

JANUARY 2026

NEWS Strategic Risk Solutions Launches SRS Titanium Strategic Risk Solutions (SRS), the world's largest independent insurance company manager, has announced the launch of SRS Titanium - a specialized initiative delivering innovative captive insurance solutions for large and complex organizations. According to a company statement, SRS Titanium will set a new benchmark for captive management and consulting support that combines our team’s extensive experience and broad subject matter expertise, which will better address the needs of larger, more sophisticated clients. “We are thrilled to launch SRS Titanium, which reflects our commitment to innovation and excellence in captive management,” said Founder and SRS CEO, Brady Young. “Our dedicated team brings unmatched expertise and passion, ensuring that large and unique clients receive the highest level of service and strategic value. SRS Titanium is poised to redefine what's possible for Fortune 500 and global organizations.”

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Trust Sun Life to improve health access and risk management for your workforce For over 40 years, Sun Life has been a trusted partner in risk management for self-funded employers. Now, we’re furthering our commitment, focusing on improving the health and wellbeing for your employees and creating better access for members to the care they need most.

Enhancing Clinical 360 For select clients, Clinical 360+ combines the data-driven approach of identifying opportunities for care optimization and cost savings of Clinical 360, the program you know and love today included in all Sun Life Stop Loss policies, with the coordination and deployment of targeted health capabilities, preventative therapies, and care navigation – giving members access to the support they need, when they need it. It’s time to reconsider what you expect from your stop-loss partner. Let Sun Life support your business with innovative health solutions that prioritize access to quality care.* Ask your Sun Life Stop-Loss Specialist about what is new at Sun Life. *Hinge Health will be provided to eligible members at Sun Life’s expense through the first policy year. Sun Life is not responsible or liable for the care, services, or advice provided by Somatus, OptiMed Health Partners, or Hinge Health, and reserves the right to discontinue this service at any time. Sun Life will collaborate with your TPA on eligibility and applicability of programs. Health Navigator is provided by PinnacleCare. PinnacleCare is a member of the Sun Life Financial Inc. (“Sun Life”) family of companies. PinnacleCare and its employees do not diagnose medical conditions, recommend treatment options or provide medical care, and any information or services provided should not be considered medical advice. Any medical decisions should be made only after consultation with and at the direction of the member’s medical provider. Any person or entity who provides health care services following a referral or other service provided does so independently and not as an agent or representative of PinnacleCare. Group stop-loss insurance policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states, except New York, under Policy Form Series 07-SL REV 7-12 and 22-SL. In New York, Group stop-loss insurance policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Lansing, MI) under Policy Form Series 07-NYSL REV 7-12 and 22-NYSL. Policy offerings may not be available in all states and may vary due to state laws and regulations. Not approved for use in New Mexico. © 2024 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. The Sun Life name and logo are registered trademarks of Sun Life Assurance Company of Canada. Visit us at www.sunlife.com/us. BRAD-6503-ab #1293927791 11/24 (exp. 11/26)

NEWS Robert Gagliardi to Lead SRS Titanium Strategic Risk Solutions (SRS) announced the appointment of Robert Gagliardi as Chief Executive Officer of SRS Titanium, a specialized initiative delivering innovative captive insurance solutions for Fortune 500 and other global and complex organizations. Based in Burlington, Vermont, Mr. Gagliardi brings with him a level of excellence well known throughout the global captive industry. Highly recognized for his influence in the captive industry over the past 25 years, Mr. Gagliardi has been named to the Captive Review Magazine Power 50 List and is greatly respected for his insight into industry trends and work with large global clients. “We are very excited to have Bob join the SRS team in this leadership capacity,” said Founder and SRS CEO, Brady Young. "I have had great respect for Bob over the years and am confident he will be able to lead this new initiative to deliver exceptional value to SRS clients and drive growth for SRS."

Robert Gagliardi SRS Titanium

Formerly the Head of Global Captive Management at AIG, Mr. Gagliardi's experience in the formation, design and management of captive insurance companies on a global scale is exactly what SRS is looking for when it comes to spearheading the SRS Titanium initiative. Watch out for additional updates from SRS as we unveil other leadership for this exciting new initiative. Gregg Lambert Joins ELMCRx/Caribou Systems

ELMCRx Solutions, Inc., a premier clinical services company, together with Caribou Systems, a leading pharmacy claims audit solutions provider within the ELMCRx family of companies, announced the appointment of Gregg Lambert as Senior Vice President of Sales and Marketing. This strategic addition

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Advancing Business In The Self-Insurance Marketplace.

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NEWS reflects both companies' continued growth trajectory and commitment to delivering innovative, high-quality PBM program services and driving better health outcomes. Gregg Lambert will now lead sales and marketing initiatives for both organizations, bringing more than 30 years of experience in employee benefits, sales strategy, and client relationship management. "I'm honored to join this family of companies at such an exciting stage in their evolution and growth," said Gregg Lambert. "Both ELMCRx and Caribou have built an impressive reputation for delivering clinical excellence and meaningful cost savings to plan sponsors. I look forward to partnering with the team to expand our market presence and help more organizations experience those results." "We are excited to welcome Gregg to our leadership team at this pivotal time in our organization's growth," said Richard J. Fleder, Chief Executive Officer. "His expertise in market development will be instrumental as we continue to expand. This appointment underscores our commitment to building a world-class team that can drive innovation and excellence for our clients and partners." MDI NetworX Announces Strategic Acquisition MDI NetworX, a leading provider of technology-enabled business process solutions for the healthcare industry, announced the acquisition of Cobalt MedPlans (Clarity Performance Solutions) from Cobalt

a Leading National TPA

Making your new year resolutions a reality In-house client support from implementation through renewal Tailored point solutions and a la carte programs The latest in navigation tools and concierge services Member advocacy solutions

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Cheers to 2026! HPI is excited to celebrate another year of empowering clients with tailored solutions that anticipate changing needs and provide clarity into benefits, letting you focus on what matters most. Sending our self-insured community warm wishes and good health in the new year!

NEWS Health Solutions, a wholly owned subsidiary of Blue Cross and Blue Shield of Kansas City (Blue KC). This strategic acquisition significantly expands MDI's U.S. operational footprint and strengthens its ability to deliver a full range of payer services — including claims processing, enrollment, and member and provider call center services — directly from U.S. delivery centers. As part of the acquisition, approximately 250 U.S.-based employees from Cobalt MedPlans will join the MDI family, bringing MDI's total global workforce to more than 7,500. The transaction also adds two new Kansas locations — in Overland Park and Fort Scott — to MDI's existing U.S. operations centers. With a total of four domestic service delivery sites, complemented by its international centers, MDI is further strengthening its onshore delivery capabilities and enhancing support for payer clients across the country. Recuro Health Recognized by TIME Magazine Recuro Health, a leader in providing digital health solutions, has recently been awarded three prestigious awards in the healthcare landscape. Chiefly, the company was named in TIME Magazine’s World Top Digital Health Companies for innovation, growth, and measurable impact in virtual-first care. The company was also named among the Top 25 Digital Health Companies of 2025 by Healthcare Technology Report and recognized as a leading company in virtual care by Becker’s Hospital Review. “I’m glad these recent recognitions have brought additional awareness to our capabilities here at Recuro Health,” said COO Michael Brombach. “We’re making great strides in the digital health landscape, specifically around cost savings and patient outcomes, and I’m looking forward to building upon these awards as we continue on our important mission of Making Advanced Healthcare Accessible™.”

JANUARY 2026

SIIA NEW MEMBERS

CORPORATE MEMBERS – 1A

Tonya Crawford VP, Captive Solutions Crumdale Specialty Lawrence, KS Jason Hines CEO & Co-founder Gigasheet Leesburg, VA Abdulhamid Mohamed Ali Chairman/CEO Infrastructure Insurance CO Milwaukee, WI Jillian Palmer Director of Operations & Strategic Partnerships C2 Solutions Grand Rapids, MI Terence McCurren Director, National Accounts Neurotech Pharmaceuticals Jefferson City, MO

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2026 SELF-INSURANCE INSTITUTE OF AMERICA BOARD OF DIRECTORS

CHAIRMAN OF THE BOARD*

DIRECTOR

Matt Kirk President The Benecon Group

Matthew Smith Managing Director Risk Strategies

CHAIRPERSON ELECT,

DIRECTOR

TREASURER AND CORPORATE SECRETARY*

Amy Gasbarro President ELMCRx Solutions DIRECTOR

Mark Combs CEO/President Self-Insured Reporting DIRECTOR

Orlo “Spike” Dietrich Operating Partner Ansley Capital Group DIRECTOR

Jeffrey L. Fitzgerald Managing Director, SRS Benefit Partners Strategic Risk Solutions, Inc. DIRECTOR

Mark Lawrence President HM Insurance Group

Beth Turbitt Managing Director Aon Re, Inc.

VOLUNTEER COMMITTEE CHAIRS

Captive Insurance Committee George M. Belokas, FCAS, MAAA President Beyond Risk Future Leaders Committee Erin Duffy Director of Business Development Imagine360 Price Transparency Committee Christine Cooper CEO aequum LLC Cell and Gene Task Force Ashley Hume President Emerging Therapy Solutions®

* Also serves as Director

2025 BOARD OF DIRECTORS

SIEF Chairman Emeritus

Directors

Nigel Wallbank President New Horizons Insurance Solutions

Les Boughner Chairman Advantage Insurance Management (USA) LLC

SIEF President

Jonathan Socko Senior Vice President East Coast Underwriters, LLC

Dani Kimlinger, PhD, MHA, SPHR, SHRM-SCP Chief Executive Officer MINES & Associates, Inc

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Matt Hayward Office President Ryan Specialty Benefits Elizabeth Midtlien

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Life is not without risk. Catastrophic claims can arise unexpectedly. Cystic fibrosis treatments can cost up to $1 million, including expensive medications and, in severe cases, a lung transplant.* When the self-funded employer has the right Stop Loss protection in place, focus can remain on achieving business goals and supporting Meg through her recovery. When you work with the experts at HM Insurance Group, you can be confident that eligible claims will be paid. We process 99% of Stop Loss claims within six business days, with more than 99% technical and financial accuracy. Find more at hmig.com.

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Underwritten or reinsured by HM Life Insurance Company, Pittsburgh, PA; HM Life Insurance Company of New York, New York, NY; or Bridge City Insurance Company, Pittsburgh, PA.