2025-2026 Bill 4305 Text of Previous Version (May. 05, 2025)

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A bill

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING ARTICLE 25 TO CHAPTER 71, TITLE 38 ENTITLED "WELLNESS REIMBURSEMENT PROGRAMS" SO AS TO DEFINE TERMS, PROHIBIT CERTAIN ACTS BY WELLNESS REIMBURSEMENT PROGRAMS, REQUIRE REGISTRATION INCLUDING AN APPLICATION AND FEES WITH THE SECRETARY OF STATE, EXEMPT BROKERS FROM REGISTERING, AND TO PROVIDE FINES FOR FAILING TO REGISTER WHEN REQUIRED.

Amend Title To Conform

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Title 38 of the S.C. Code is amended by adding:

CHAPTER 105

Wellness Reimbursement Programs

Section 38-105-10. As used in this chapter:

(1) "Broker" means an independent health insurance agent licensed in this State.

(2) "Director" means the director of the Department of Insurance or his designee.

(3) "Person" means a natural person, corporation, mutual company, unincorporated association, partnership, joint venture, limited liability company, trust, estate, foundation, not-for-profit corporation, unincorporated organization, government, or governmental subdivision or agency.

(4) "Wellness reimbursement program" means a self-insured medical reimbursement plan or a wellness integrated medical plan expense reimbursement plan:

(a) that is created pursuant to 26 C.F.R. 1.105-11 and Sections 105 and 125 of the Internal Revenue Code;

(b) that has issued a contract to provide services and pay claims pertaining to reimbursements of qualified medical expenses relating to Section 213(d) of the Internal Revenue Code; and

(c) that is intended, created, marketed, and sold as an ancillary product to an individual or group health insurance coverage or self-insured group health plan.

"Wellness reimbursement program" does not include any underlying individual or group health insurance coverage or a self-insured group health plan.

(5) "Wellness reimbursement program administrator" means any person who manages the operation of a wellness reimbursement program.

Section 38-105-20. (A) No wellness reimbursement program administrator may sell, offer, market, promote, or operate a wellness reimbursement program without first being licensed by the director.

(B) Application for a license must be on forms prescribed by the director and must be accompanied by an initial license fee of five thousand dollars, annual financial statements or reports for the two preceding calendar years, and any other documents that the director may require to ensure that the wellness reimbursement program administrator meets the requirements for licensure set forth in this chapter. Thereafter, an application fee for a renewal offering must be five hundred dollars. These fees must be retained by the director to offset the costs of processing and maintaining the registration of wellness reimbursement programs required by the chapter.

(C) In addition to the documents required under subsection (B), a wellness reimbursement program administrator must comply with Federal ERISA requirements, or submit a letter or document from the Internal Revenue Service or the U.S. Department of Labor approving of the specific wellness reimbursement program in question.

(D) A wellness reimbursement program administrator must make and keep a full and correct record of its business and affairs, and the director shall inspect these records at least every three years. The information from these records must be furnished to the director on demand, and the original books or records must be open to examination by the director when demanded. The cost of the examination must be borne by the wellness reimbursement program administrator.

(E) A wellness reimbursement program administrator must file and maintain with the director a surety bond in favor of the State executed by a surety company authorized to transact business in this State. The director may set the requirements of such surety bond as necessary.

(F) Before granting any license, the director or his designee must be satisfied that the wellness reimbursement program administrator is competent, trustworthy, financially responsible, has a good personal and business reputation, has not had an insurance license revoked, suspended, or denied in any jurisdiction within the preceding five years, and has not been convicted of a crime involving fraud, dishonesty, or moral turpitude in any jurisdiction. For purposes of this section, "convicted" includes a plea of guilty or a plea of nolo contendere.

(G) The director may revoke or suspend any license issued to a wellness reimbursement program administrator when he finds that any condition exists which would have prohibited issuance of the original license, that the wellness reimbursement program administrator has violated any provision of this chapter, or that the wellness reimbursement program administrator has deceived or dealt unjustly with the citizens of this State. In lieu of revocation or suspension of license, the director may impose an administrative monetary penalty not to exceed one thousand dollars for each offense.

(H) Any wellness reimbursement program administrator who fails to obtain a license is guilty of a misdemeanor and, upon conviction, must be fined not more than twenty thousand dollars or imprisoned for not more than two years, or both, and is subject to revocation of any licenses issued by the director. Any fine revenue received may be retained by the director to offset the expenses of enforcing this chapter.

Section 38-105-30. (A) A wellness reimbursement program administrator must attest to the director and to the employer or employee that the wellness reimbursement program complies with all federal and state laws.

(B) A wellness reimbursement program administrator must not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading.

(C) In the event the wellness reimbursement program results in a taxable event for either the employer or the employee associated with the wellness reimbursement program, the wellness reimbursement program administrator must defend the employer and its employees against any and all claims or suits that arise out of or by virtue of the wellness reimbursement program and must indemnify the employer and its employees for a loss or judgment incurred by them as a result of the claim or suit.

Section 38-105-40. (A) A broker is not required to register as a wellness reimbursement program administrator to acquire commissions paid by such company.

(B) A broker is not an employee of the wellness reimbursement program administrator and is only necessary to facilitate the partnership of the wellness reimbursement program administrator and the respective employee group enrolling in the wellness reimbursement program being that the services of the wellness reimbursement program are not straight-to-market services.

(C) Notwithstanding subsections (A) and (B), a broker must not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading.

(D) A broker must exercise good faith and fair dealing to a person when offering, selling, marketing, or promoting a wellness reimbursement program.

Section 38-105-50. (A) The director shall enforce this chapter.

(B) A person who violates any part of this chapter must be fined not more than twenty thousand dollars or imprisoned for not more than two years, or both, for each violation, and is subject to revocation of any license issued by the director. Any fine revenue received may be retained by the director to offset the expenses of enforcing this chapter.

chapter.

Section 38-105-60. Nothing in this chapter applies to any health or wellness programs or activities offered by an individual or group health coverage or self-insured group health plan to its enrollees.

SECTION 2. Every three years after the effective date of this act, the Department of Insurance shall prepare a report to be filed with the House Labor, Commerce, and Industry Committee, the Senate Banking and Insurance Committee, and the General Assembly, addressing the implementation of Section 38-105-10, et. Seq., as it relates to the requirements for the programs outlined in this chapter, and any other information requested by the General Assembly to be included within the report.

SECTION 3. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

SECTION 4. This act takes effect upon approval by the Governor.

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