H 4305

South Carolina General Assembly
126th Session, 2025-2026
Bill 4305
Indicates Matter Stricken
Indicates New Matter
(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)
Indicates Matter Stricken
Indicates New Matter
Amended
May 6, 2026
H. 4305
Introduced
by Rep. Herbkersman
S. Printed 5/6/26--S.  [SEC
5/7/2026 11:35 AM]
Read the first time May 6, 2025
________
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;
       (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; and
       (d)
the reimbursement funds are not held by a third party administrator.
    "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.
    (D)
Before an employer enrolls in a wellness reimbursement program, and annually
thereafter at each renewal, the wellness reimbursement program administrator
must provide to the employer, and the employer must provide to each
participating employee, a plain language disclosure that:
       (1)
states whether the wellness reimbursement program has received approval from
the Internal Revenue Service or the United States Department of Labor, or
whether the wellness reimbursement program relies on ERISA compliance;
       (2)
advises the employer and employee that federal tax guidance in this area
continues to evolve and that tax treatment of certain wellness reimbursement
payments may depend on the specific design and operation of the program;
       (3)
explains the indemnification obligation of the wellness reimbursement program
administrator pursuant to subsection (C); and
       (4)
recommends that the employer consult with independent tax or legal counsel
regarding the federal tax treatment of the wellness reimbursement program.
    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.
    (C)
The director may promulgate rules and regulations as he deems necessary to
implement this 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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This web page was last updated on May 07, 2026 at 11:36 AM