Dec 8, 2017
Changes in rebating regulation now in effect
The Department of Banking and Insurance finalized a regulation amending the definition of "inducement" found in N.J.A.C. 11:17A-1.2 late last month. Prior to the amendments, the term "inducement" was defined as "money or any favor, advantage, object, valuable consideration or anything other than money which has a cost of or a redeemable value greater than $25." The amended regulation raises the monetary threshold from $25 to $100.
The DOBI also codified the provisions of Bulletin No. 11-22, which provides guidance on activities construed as prohibited rebates or inducements. The amended regulation states that the prohibition against rebates does not prohibit the provision to a person by an insurance producer of services or other offerings for free or at a discounted price and in a fair and non-discriminatory manner, provided that the service(s) or other offering(s) relate to or enhance the value of the insurance product being purchased. Services and other offerings that would not be prohibited include, but are not limited to:
- discounts on gym memberships or wellness programs in connection with life, accident, health, workers’ compensation or sickness insurance products;
- claims filing assistance, including group health insurance assistance services;
- COBRA, Health Reimbursement Arrangement, Health Savings Account and Flexible Spending Account administration;
- risk-management services, including loss control; and
- product audits to assist policyholders to evaluate their current policies.
However, despite the language that the services listed above can be offered a reduced rate, the DOBI has stated that the language in the new-rule provision in no way alters the prohibition against charging service fees when transacting health insurance business in N.J.A.C. 11:17B-3.2(c). If charging a fee for any of the activities listed would violate the prohibition on service fees related to health insurance, then charging a fee would still be prohibited. The amendment to N.J.A.C. 11:17A-2.3(g) merely allows the services listed to be provided free of charge without the provision of such being considered an inducement or rebate.
The amended regulation goes into effect immediately. To learn more, access Ask PIA 290194 or QS29231 in the PIA QuickSource library or fax a request to PIANJ’s Industry Resource Center at (888) 225-6935.