On October 16, 2025, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) released a set of FAQs¹ known as “FAQs about Affordable Care Act Implementation Part 72” addressing the ways in which fertility benefits would be considered an “excepted benefit” in accordance with regulations previously set forth by the Departments. This guidance was released in response to Executive Order 14216, dated February 18, 2025, which recommends policy protections related to fertility treatment and services, including in vitro fertilization (IVF), and also aims to “aggressively” reduce health plan costs associated with IVF treatment. Although fertility benefits offered under a major medical plan are allowed (and considered compliant) under regulations set forth by the Departments, some employer-sponsored group health plans do not include fertility benefits as a part of their major medical plans and offer such coverage through a stand-alone fertility benefits program. As a result, employers/plan sponsors seek to provide coverage of these fertility benefits through other means, including:

• Health reimbursement arrangements (HRAs) that are integrated with Affordable Care Act (ACA) compliant medical coverage, or
• Coverage of fertility benefits offered by third-party vendors through a stand-alone benefit program.

Previously, it was unclear whether fertility benefits offered under such stand-alone programs were compliant under federal regulations. However, these FAQs provide greater clarity as to how a fertility benefit can remain compliant under the regulations by qualifying as an excepted benefit. As a result, this new FAQ guidance is welcome news for many employer group health plan sponsors hoping to expand access to fertility benefits and reduce the cost of these services for their employees.

Background

Under current regulations issued by the Departments, excepted benefits (e.g., stand-alone dental/vision coverage, fixed indemnity plans, Medicare supplemental plans) are not subject to many of the regulations that govern their non-excepted benefit counterparts (e.g., medical coverage/ minimum value coverage/minimum essential coverage). For instance, excepted benefits are not subject to certain ACA requirements, including:

• The prohibition on applying lifetime/annual dollar maximums to essential health benefits (EHBs) offered under a medical plan, and
• The requirement for plans to provide preventive care to plan participants without any cost sharing (i.e., preventive care must be covered and paid 100% by the plan).

The Departments previously issued regulations and guidance in connection with how certain benefit coverages may be considered excepted benefits. For a benefit plan to qualify as an excepted benefit, it must fall into one of four sub-categories that are prescribed under the federal rules. These four sub-categories are:

i. Non-health related benefits (e.g., automobile insurance, workers’ compensation coverage, or accident/disability income insurance)
ii. Limited excepted benefits (e.g., stand-alone dental/ vision coverage)
iii. Independent, non-coordinated excepted benefits (e.g., fixed/hospital indemnity plans and specified disease/ illness plans)
iv. Supplemental excepted benefit plans (e.g., Medicare supplemental plans)

FAQs on Fertility Benefits Qualifying as Independent, Noncoordinated Excepted Benefits or Limited Excepted Benefits

For ease of understanding and for purposes of brevity, this article will focus on only two sub-categories of benefits that qualify as excepted benefits: 1) independent, noncoordinated excepted benefits; and 2) limited excepted benefits.

The new FAQ guidance confirms that fertility benefits can qualify as an excepted benefit through either of the above two sub-categories in certain circumstances. The following sections provide a detailed description of this guidance.

The Requirements for Fertility Benefits to Qualify as an Independent, Noncoordinated Excepted Benefit

For fertility benefits to be considered an independent, noncoordinated excepted benefit under the regulations, this FAQ guidance confirms the benefits must satisfy all three of the following requirements:

i. The benefits are provided for under a “separate policy certificate or contract of insurance,” meaning it must be a fully insured plan;
ii. There is no coordination of benefits between the fertility benefits and the exclusion of such benefits from the other plans maintained by the same employer plan sponsor²; and
iii. The fertility benefits must be paid by the fertility benefits insurer regardless of whether such benefits are also provided by the group health plan maintained by the same employer plan sponsor.

Employees need not be enrolled in the major medical plan/traditional group health plan in order for the stand-alone fertility benefits to be considered an excepted benefit under the sub-category of an independent, noncoordinated excepted benefit. Further, at this time, the first requirement above means that fertility benefits cannot be provided on a stand-alone self-funded basis (i.e., fertility benefits cannot be offered as a stand-alone self-funded plan) if the employer is seeking to offer fertility benefits that qualify as an excepted benefit under the sub-category of an independent, noncoordinated excepted benefit. The FAQs state that the Departments intend to expand the list of excepted benefit sub-categories to include, in future rulemaking, stand-alone self-funded fertility benefits.

Also, notably, the FAQs include a footnote clarifying that hospital indemnity or other fixed indemnity insurance could qualify as an independent, noncoordinated excepted benefit if it pays a fixed dollar amount per period of hospitalization or illness related to infertility (for example, $100/day), regardless of expenses occurred. This is only true if it meets all of the other criteria for qualifying as a noncoordinated excepted benefit detailed earlier in this article.

The Requirements for Fertility Benefits to Qualify as a Limited Excepted Benefit

The FAQs also describe situations where fertility benefits can qualify as an excepted benefit under the category of limited excepted benefits. These methods may include payment for/reimbursement of fertility benefits through an excepted benefit HRA or an Employee Assistance Program (EAP), provided it meets the requirements set forth under the excepted benefits sub-category of limited excepted benefits. These situations are outlined in more detail below.

Excepted Benefit HRA

Another pathway for employees to be reimbursed for fertility-related expenses is through an “excepted benefit HRA,” if the excepted benefit HRA meets the following requirements:

• It is not an integral part of the employer’s group health plan, and the excepted benefit HRA is only offered to employees who are eligible for the employer’s medical coverage.
• The reimbursement for fertility benefits (or any other qualified expenses that an excepted benefit HRA may reimburse) is limited to a certain amount. The inflation-adjusted limit is $2,200 for 2026.
• The excepted benefit HRA cannot reimburse certain health insurance premiums but can reimburse premiums for excepted benefit plans.
• The excepted benefit HRA must be provided to all “similarly situated” individuals, regardless of any health factor.

Employee Assistance Program (EAP)

Specific fertility benefits related to counseling or coaching/navigating services can be provided under an EAP that is considered an excepted benefit. As a general rule, for an EAP to be considered an excepted benefit, it cannot provide any “significant” benefits for medical care (along with other requirements set forth under the regulations). The FAQs underscore that “an EAP will not be considered to provide benefits that are significant in the nature of medical care solely because it offers benefits for coaching and navigator services to help individuals understand their fertility options.”

An EAP that includes fertility benefits and does not provide “significant” medical care must satisfy the following additional requirements to qualify as an excepted benefit (under the sub-category of a limited excepted benefit):

• It must not be coordinated with other benefits under the employer’s/plan sponsor’s group health plan;
• Participants cannot be required to contribute towards the EAP as a condition for participation; and
• Participants cannot have any cost-sharing related to services received under the EAP.

Whether an EAP is considered an excepted benefit should be further discussed with legal counsel.

Excepted Benefits and HSA Eligibility

The Internal Revenue Service (IRS) allows individuals to contribute to a Health Savings Account (HSA) and receive first-dollar coverage (prior to satisfying their minimum applicable IRS deductible) under another non-HDHP plan in very limited circumstances³. The FAQs state that fertility benefits offered as an independent, noncoordinated excepted benefit policy will not jeopardize an employee’s HSA eligibility. As a result, an employee may continue to contribute to an HSA even if they are receiving first-dollar coverage (prior to satisfying their minimum applicable IRS deductible) for fertility benefits under an independent, noncoordinated excepted benefit policy. However, coverage under an excepted benefit HRA typically will make an employee ineligible for HSA contributions.

Other Considerations for Employer Group Health Plan Sponsors Adopting Stand-Alone Fertility Benefit Programs

Employers/plan sponsors seeking to offer fertility benefits to their employees without subjecting those benefits to the numerous restrictions typically applied to major medical plans may find this FAQ guidance to be welcome news. However, for these fertility benefits to be offered as a stand-alone benefit outside of a plan sponsor’s major medical coverage and preserve their status as an excepted benefit, employers/plan sponsors should proceed cautiously when implementing an independent, non-coordinated excepted benefit or a limited excepted benefit for fertility-related services and/or treatment. Although this new FAQ guidance confirms that fertility benefits may be offered as an excepted benefit (as outlined in this new FAQ’s guidance), these benefits are still subject to many other group health plan rules, including ERISA⁴ and COBRA⁵.

The new FAQs can be accessed directly, here.

¹ Generally, FAQs released by the Departments serve as sub-regulatory guidance from the Departments that answer questions from interested stakeholders to help them better understand the law and promote compliance.
² The application of this condition is unclear. If the employer’s group medical plan excludes all benefits for fertility and the employer wishes to provide fertility benefits through a stand-alone insurance policy, there could be a potential concern that the separate fertility insurance policy is coordinating with an exclusion of such benefits under the employer’s medical plan. This issue should be further discussed with legal counsel.
³ https://www.irs.gov/pub/irs-pdf/p969.pdf
⁴ The Employee Retirement Income Security Act of 1974.
⁵ The Consolidated Omnibus Budget Reconciliation Act.

Regulatory and Legislative Strategy Group

Voluntary benefits have the capability to play a critical role in supporting the core plans and bring higher value to the benefit strategy, if desired.

The integration of decision support tools and claims strategies has emerged providing effective levers to further enhance employee engagement and experience. Employers may choose to take a more intentional approach to how voluntary benefit programs are designed, delivered and aligned with broader organizational objectives.

Through our work with employers, we’ve found that starting with clearly defined goals and outcomes ensures every decision—from plan design to ongoing program management is made with purpose and long-term value in mind.

Enrollment and Claims Strategy

Key decisions around enrollment and claims integration can shape the employee experience and program performance:

• Will voluntary benefits be integrated into your core enrollment platform or be offered separately?
• Is integration with medical, disability, or out-of-pocket spend programs appropriate?
• Should claims be auto-paid, or will reminders suffice?
• What are the cost implications of these choices?

Carrier selection should be informed not only by product design and pricing but also by the overall employee experience.

When these factors have been considered, it becomes clear which carriers make the most sense to include in your marketing efforts. Of course, ongoing oversight of the voluntary program provides management of the loss ratios and ensures new plan enhancements are added as they enter the market.

Filing claims on supplemental plans can be a daunting task. There are numerous options available that can provide guidance and assistance, as well as carriers that can automatically pay benefits when the voluntary plans are connected to medical, leave or disability coverages.

Claim Integration Solutions and Landscape

There are several key factors to think about when choosing a claim integration solution. Employee involvement can range from highly engaged to completely absent depending on the method used and the impact on rates may vary from minimal to significant.

Determining what product you wish to connect to the supplemental plans and understanding the implementation requirements is also essential. The process and outcomes can look very different from one carrier and process to another.

Claims integration is a rapidly evolving space with a wide range of solutions:

• AI-Powered Tools: These require no claims data sharing or BAAs and can support employees and all of their family members—even those not on the employer’s medical plan. They offer moderate utilization impact with minimal rate load.
• Third-Party Solutions: These require claims data and BAAs, typically offer medium utilization impact, and are limited to only employees on the employer’s medical plan.
• Carrier-Owned or White-Labeled Solutions: These are provided by supplemental carriers to employees on the employer’s medical plan only. They may include auto-pay or reminders, with medium to high utilization impact and corresponding rate loads. For example, the higher impact expected, the higher the rate load will be.
• Medical/Disability Carrier Solutions: These carriers also offer their supplemental medical plans, most with robust auto-payment features. They do come with a rate load and volatile premiums if utilization is high, which it usually is.

A decision support tool may resonate well with your population and help provide education around the product offering. Ongoing communications that reinforce benefit awareness and encourage wellness behaviors throughout the year could also prove beneficial. These tools can be provided at no cost when offering a particular carrier’s products.

We have robust RFIs in claim integration and employee experience tools including decision support that can help guide your thought process as you look to enhance your voluntary offering.

Susan Elder

Senior Director of Voluntary Benefits

It’s no secret, employee benefits are complicated. We’re here to break things down and help you build a roadmap for your approach to benefits. Together with our expert guests, we’ll explore complex, counterintuitive and compelling topics that give you a better understanding of the “whys” of the industry.

Navigating Cost Pressures & Finding Creative Solutions 

Vanessa, Jared and Adam discuss the challenges and innovations shaping employee benefits during open enrollment season. With healthcare costs rising at record rates—often 10% or more—employers are exploring new funding models, direct-to-consumer pharmacy options and Centers of Excellence (COEs) to improve outcomes and control spend.  

The team highlights the importance of ongoing communication, data-driven decisions and leveraging technology to help employees make informed choices. Real-world examples show how COEs and alternative care models can deliver significant savings and better experiences. Employers are encouraged to audit their plans, build year-round engagement strategies and stay open to new ideas to thrive in a rapidly changing benefits landscape. 

This podcast is also available to stream on Spotify, Apple Podcasts, Amazon Music and more.

Vanessa Longnecker

Jared Bowcutt

Adam Compton

While European banks have long integrated credit insurance into their credit risk and capital optimization strategies, U.S. banks have historically underutilized it. Several structural and regulatory reasons explain this divergence. First, European banks have a more favorable regulatory framework that has long recognized credit insurance as an eligible and effective credit risk mitigant. As such, European banks routinely use credit insurance to achieve capital relief and to credit enhance potential borrowers. In contrast, U.S. banks operate under a more restrictive regulatory environment that does not similarly incentivize the use of credit insurance as a credit risk or capital mitigant. U.S. banks often rely more on loan covenants, internal credit scoring and securitization for risk transfer.

Additionally, the U.S. insurance market has fewer participants in the structured credit insurance space, and standardized trade credit insurance policies are less prevalent. Many U.S. lenders view credit insurance as complex or too narrow in coverage. There’s also a cultural divide—European credit managers treat insurance as a routine component of credit operations. Meanwhile, many U.S. lenders still see it as optional, reactive and an additional expense imposed on the client.

However, the recent bankruptcies of Tricolor Holdings and First Brands Group, along with the heightened regulatory attention on bank exposure to non depository financial institutions (NDFIs), illustrate the potential benefits of incorporating credit insurance into bank credit risk frameworks.

Background: Tricolor and First Brands Bankruptcies

Tricolor Holdings, a Dallas-based subprime auto lender and dealership, filed for Chapter 7 liquidation in September 2025. The company specialized in buy here/pay-here car sales and in-house financing to underbanked customers.¹ Tricolor securitized the auto loans and financed its operations through large warehouse credit facilities with banks such as Fifth Third and JPMorgan.

As the business deteriorated, Tricolor allegedly double-pledged collateral, submitted incomplete or manipulated loan files and misrepresented performance data.² Lenders faced material losses with little recourse due to the nature of the fraud and lack of transparency.

First Brands Group, owner of auto parts brands like FRAM and Autolite, filed for Chapter 11 shortly thereafter. The company relied heavily on factoring and supply chain finance arrangements, effectively monetizing receivables off-balance sheet. However, competing claims arose over who held titles to key receivables. In several cases, banks discovered that invoices had been sold multiple times or pledged ambiguously, resulting in unsecured exposure. U.S. bankruptcy officials and creditors both have called for an independent investigation into First Brands citing opaque financial practices.³

How Credit Insurance Could Have Helped

Credit insurance provides protection against the non-payment of financial obligations due to default, insolvency or protracted non-payment. For banks, it is a valuable credit risk transfer mechanism that can mitigate direct lending risk or exposure to receivables, particularly in asset-based finance and trade finance.

There are two primary types:

• Trade Credit Insurance: Covers receivables owed to suppliers or their banks, usually on a portfolio basis.
• Non-Payment/Credit Insurance for Lenders: Tailored for financial institutions, covering loans, invoice finance and structured credit exposures.

In Tricolor’s Example: Banks providing warehouse lines or participating in securitizations could have required singleobligor or portfolio-level credit insurance to cover defaults in the underlying contracts. If Tricolor defaulted or the underlying borrowers became uncollectible, carriers would cover losses up to agreed limits. Carriers typically conduct independent audits and credit scoring of the collateral pool before underwriting such policies—potentially flagging discrepancies earlier. Moreover, the scheduling of limits and reporting functions on some credit insurance policies may have allowed the lenders to catch the double-counting of collateral earlier.

In First Brands’ Example: Banks financing trade receivables—either directly or indirectly through factoring, forfaiting or supply chain finance—could have used trade credit insurance to cover receivables owed by First Brands’ downstream customers (e.g., auto retailers or distributors). In the event of First Brands’ insolvency, carriers would cover the non-payment. Some structured trade credit insurance policies also allow for coverage of disputed invoices, within defined parameters.

Technical Considerations and Limitations

Credit insurance is not a panacea, and in these cases, the allegations of fraud would complicate recoveries under any credit insurance that may have been in place. Most (if not all) credit insurance policies exclude losses arising from fraud or misrepresentations made by the insured. Some policies draw a distinction between “fraud committed by the insured” and “fraud by the debtor.” While “fraud by the insured” tends to be an absolute bar, “fraud by the debtor” could be covered depending on policy wording. Notwithstanding, if the coverage had been structured to include “non-performance due to fraud” riders or if carriers had been involved earlier, some losses could have been mitigated. Further, banks have access to more information and thus more recourse if they are the direct purchaser of the credit insurance policy rather than relying on the loss payee status afforded on a credit insurance policy purchased by their borrower or further downstream.

Focus on NDFIs

Tricolor’s credit intermediation activities and First Brands’ abuse of private credit also draw attention to the recently increased regulatory scrutiny and call reporting requirements of bank exposure to NDFIs such as leasing companies, fintech lenders, factoring companies or other non-bank lenders. By transferring a portion of the credit risk associated with NDFI lending to a highly rated carrier, banks can help reduce potential loss severity and improve the credit quality of their portfolios. Furthermore, in the context of enhanced disclosure requirements, credit insurance provides a clear and quantifiable risk management measure that banks can report to demonstrate proactive oversight of concentrated exposures. As regulators demand more granular data on NDFI lending, the strategic use of credit insurance can bolster both regulatory compliance and credit risk management.

Conclusion

The Tricolor and First Brands collapses highlight how opaque financing structures, weak collateral controls and lack of independent verification can leave banks vulnerable. Had credit insurance been embedded in these lending arrangements, especially in receivables financing and warehouse lines, some losses might have been prevented (through additional carrier due diligence and underwriting) or potentially absorbed by carriers instead of the banks, depending on the applicability of any fraud exclusions. As the credit markets grow more complex and regulatory rules play catch-up, it may be time for U.S. banks to revisit the strategic value of credit insurance—not just as a protective tool, but as a key component of prudent credit risk management.

1. Tricolor bankruptcy causes lenders to reassess risks
2. Lessons from First Brands and Tricolor | Neuberger Berman
3. US bankruptcy watchdog wants independent probe of First Brands

 Kevin Humphrey

Managing Director, Head of Trade Credit and Political Risk U.S.

Richard Bishop

Director of Structured Credit and Political Risks U.K.

Joel Sulkes

Senior Managing Director, Financial Institutions

Historically, cyberattacks have targeted data and information systems, but the threat landscape is shifting. Cyber incidents are increasingly impacting critical infrastructure, machinery and equipment, leading to physical damage such as fires, explosions and machinery breakdowns.

These events can compromise:

1. Process controls in industrial environments
2. Communication systems in water treatment facilities and pipeline operations
3. Safety functions in building automation
4. Navigation systems in autonomous vehicles

The consequences range from operational disruptions to serious safety risks.

Coverage Gaps in Traditional Insurance

Cyber insurance policies typically exclude physical and property damage, while property insurers have introduced cyber exclusions to limit liability for such events. This evolving risk profile is creating coverage gaps challenging traditional insurance frameworks.

The Rise of Cyber Incidents with Physical Consequences¹

The 2017 NotPetya and WannaCry ransomware attacks triggered lawsuits against property insurers, who argued these losses fell outside traditional property coverage. In response, insurers conducted portfolio audits and introduced diverse cyber exclusions across property and other lines.

Broad Cyber Exclusions

Lloyd’s led the market by implementing broad exclusions in property and casualty policies.² These often include:

• Full exclusions with writebacks for resulting fire, explosion or mechanical breakdown
• Split exclusions distinguishing between:
  • Malicious cyber acts (typically excluded)
  • Non-malicious incidents (sometimes covered)

Even when coverage is available, it’s often limited to direct physical loss, excluding consequential losses like business interruption. Some exclusions are absolute, removing all coverage regardless of cause or intent. In layered property programs, these exclusions can vary by insurer, creating inconsistent coverage gaps.

Emerging Insurance Solutions

To address these gaps, insurers are offering blended coverage solutions that integrate Cyber, Property and Casualty protection. Key options include:

• Cyber insurance with Property Damage DIC (Difference in Conditions) dropdowns
• Custom Cyber Property Damage policies with traditional cyber options
• Cyber insurance with added physical and non-physical coverage

Coverage limits can reach $500M+, available as standalone programs or integrated with traditional cyber policies.

Information Required for an Indication

Buyers can obtain a non-binding indication with:

1. Their cyber submission
2. Annual revenue
3. Business interruption values
4. Property policy

Additional documentation, such as an Operational Technology Cyber Property Damage application or an underwriting call, may be needed to bind coverage.

The Brown & Brown Approach

As automation, robotics, cloud computing and AI become embedded in business operations, it’s critical to scenariotest exclusions to avoid unintentionally restricting coverage.

Cyber-physical impacts vary by:

• Industry
• Business model
• Technology use
• IT controls
• Ownership of physical assets

Brown & Brown offers tailored risk assessments and cyber risk modeling to identify exposures and insurance gaps. Our team is actively tracking market developments and can provide strategic guidance.

Contact your Brown & Brown representative to explore how we can support your cyber-physical risk strategy.

1. 2025 OT Cyber Threat Report – Waterfall & ICS Strive https://waterfall-security.com/wp-content/uploads/2025/03/2025-OTCyber-Security-Threat-Report.pdf?mc_cid=53c324e382&mc_eid=0069fc2d69

2. Examples can be found at https://lmalloyds.com/wp-content/uploads/2025/06/CyberClauses-update-9-December-2024-1.pdf

Property & Casualty Team

PharmaLogic® Spotlight communications explore evolving pharmacy dynamics and emerging trends that influence drug utilization and cost, supporting informed benefits decision-making.

Inside this PharmaLogic® Spotlight:

• New Drugs Influencing Benefits
• Federal Regulatory Activity Impacting Drug Costs
• Vaccine Confusion
• State Legislation Altering Pharmacy Benefits
• New and Expanding Use of GLP-1s
• Anti-inflammatory Biosimilar Use
• Shifting Mix of Injectable Drugs

New Drugs Influencing Benefits

Clinical research continues to produce new drug innovations and uncover new uses for existing medications. The Food and Drug Administration (FDA) has approved 41 new drugs and 2 new gene/cell therapies so far in 2025. Significant advancements in the treatment of rare diseases are offering new hope to patients, while also posing financial challenges for plans as they manage expenses. In 2024, specialty medications accounted for approximately 70% of all new drug approvals, with over half of newly approved drugs in 2025 falling into this category. Notably, one-third of these approvals target various forms of cancer. Additional applications for new drugs are still pending FDA decisions, signaling that this trend is likely to continue.

Recent approvals include:

• Inluriyo, Hernexeos® and Modeyso for cancer
• Andembry® and Dawnzera to prevent and Ekterly® to treat hereditary angioedema (HAE) attacks
• A new indication for Wegovy® to treat MASH (metabolic dysfunction-associated steatohepatitis), a form of fatty liver disease
• Brinsupri for bronchiectasis, a chronic lung disease

Approvals pending FDA review:

• New oncology drug options for ovarian and other cancers
• Additional cardiovascular medications to treat obstructive hypertrophic cardiomyopathy and inhibit platelets
• Tolebrutinib for Multiple Sclerosis
• A once-a-week insulin for diabetes patients
• New gene therapies for melanoma and rare diseases

Federal Regulatory Activity Impacting Drug Costs

Drug costs continue to be a prominent concern garnering a tremendous amount of attention from the White House and federal legislators.

• Most Favored Nation (MFN) executive order: The Trump administration challenged pharmaceutical manufacturers to present plans to align prices for brand drugs in the US with the lowest prices (MFN price) paid by other developed countries. The first agreement with Pfizer was recently announced. It will provide MFN prices to state Medicaid programs and discounts to patients buying drugs directly from Pfizer.
• TrumpRx online: President Trump introduced a plan last month to launch an online platform directing Americans to lower-priced drugs available by way of most favored nation efforts. Senior administration officials provided a target of early 2026 to introduce the site.
• Tariffs on imported pharmaceutical products: Tariffs are intended to persuade pharmaceutical manufacturers to move more manufacturing to the U.S. and lower prices. A 100% tariff on branded drug products from certain countries, set to be imposed on October 1, has been put on hold. If enacted, the 100% tariffs will impact drugs from the UK, Canada, Mexico, Switzerland and other countries. Products from the European Union and Japan are subject to a 15% tariff based on a trade agreement completed earlier this year.
• Direct-to-consumer drug advertising: A recent federal directive was issued calling on the FDA to take action to ensure direct to consumer drug advertising presents balanced and complete information.
• Patents: Legislative efforts are underway to reform drug product patents and limit anti-competitive patent practices that prevent or delay the release of generics or biosimilars.
• The Inflation Reduction Act (IRA): Signed into law in August 2022, this sweeping federal law includes key healthcare provisions allowing Medicare to negotiate prices for certain high-cost drugs, capping out-of-pocket costs for Medicare Part D beneficiaries and limiting insulin costs to $35 per month for Medicare enrollees.

Vaccine Confusion

Recent decisions made by the FDA, Centers for Disease Control and Prevention (CDC) and the CDC’s Advisory Committee on Immunization Practices (ACIP) are creating uncertainty and confusion about vaccines. In the past there was consensus about vaccine recommendations and schedules between federal agencies, federal and state regulations and specialized medical guidance. Following recent FDA decisions related to COVID-19 vaccines, changes to the ACIP panel membership, hiring and firing decisions at leadership levels of the CDC and decisions made at a recent ACIP meeting there is now discord.

Department of Health and Human Services (HHS) Secretary Kennedy appointed new members to the Centers for Disease Control and Prevention (CDC) Advisory Committee on Immunization Practices (ACIP), replacing all seventeen members previously holding committee positions. The changes to ACIP membership prompted strong reactions from infectious disease and vaccine specialists in the medical community.

COVID-19 Vaccines

• In late August, the FDA issued new guidance related to COVID-19 vaccines supporting boosters only for people ages 65 and over and patients 6 months and older with conditions that put them at high risk for severe outcomes from COVID-19.
• During its September meeting, ACIP voted to change the pediatric and adult immunization schedules for the COVID-19 vaccine to state that for anyone six months and older the decision to vaccinate should be based on shared clinical decision making between the patient and provider after discussing the risks vs. the benefits. On October 6, 2025 the CDC announced that the ACIP recommendations have been adopted.
• The disconnected and fragmented information released by federal agencies, as well as input from several medical associations, has resulted in confusion among patients, pharmacies and caregivers.

State Legislation Altering Pharmacy Benefits

Common state legislative targets include formulary and utilization management restrictions, pharmacy reimbursement mandates and restrictions to pharmacy steerage, regulation of group purchasing organizations (GPOs) and rebate aggregators and not permitting pharmacy ownership by PBMs or insurers. These actions can limit a plan’s flexibility to administer a benefit and restrict use of plan design features that encourage the use of lower-cost options. These new legislative rules can raise prescription benefit and healthcare costs, limit member choice and require that national and regional plans deal with an array of state-specific benefit administration regulations. Most recently, new legislation and laws in AR, AL, CA, CO, IA, IL, IN, KY, LA, NJ, TN, TX are impacting plans.

New and Expanding Use of GLP-1s

Use of and expenditures for GLP-1* medications have dominated recent trends for many plans, especially those covering both diabetes and weight-loss GLP-1 drugs. PharmaLogic® data for year-to-date 2025 reveals that 10% of total Rx benefit gross costs are attributed to diabetes GLP-1 medications. For plans that cover GLP-1 drugs for weight loss, the percentage of gross cost is even higher. Plan costs will vary based on factors such as population demographics, diabetes prevalence and other utilization drivers. New uses for GLP-1 drugs continue to be a major focus in clinical trials. As additional therapeutic uses for these drugs are approved, use and costs may continue to increase.

Brown & Brown can assist you in discussions with PBMs and disease management providers to refine your benefit approach to weight loss and other uses for GLP-1 drugs.

• Evaluate disease and nutritional management programs to support meaningful clinical and financial outcomes
• Ensure updates are made to PBM prior authorization criteria to incorporate new FDA approved indications
• Review direct-to-consumer options for weight loss GLP-1 drugs

Anti-Inflammatory Biosimilar Use

Anti-inflammatory drugs continue to be the top category of drugs for many plans based on cost. Most of these medications are specialty biologic drugs such as Humira®, Stelara®, Skyrizi®, Dupixent®, Enbrel® and Rinvoq®. When patents for brand biologic drugs expire, lower cost biosimilar options often become available. Several biosimilars are now available in this class of drugs presenting savings opportunities.

Brand patent litigation or supply chain shortages can impact biosimilar availability. Drug formularies may continue to prefer the original, reference brands along with biosimilars for certain drugs until the market stabilizes.

Consider plan design options that encourage use of biosimilar options, such as:

• Formulary strategies to prefer biosimilars and exclude coverage of the reference/ originator brands in certain situations to encourage use of lowest net cost options
• Press PBM partners to demonstrate savings net of rebates to help monitor and ensure success with biosimilar strategies

Shifting Mix of Injectable Drugs

The mix or blend of drugs changes over time in a prescription benefit as new drugs are introduced, prescribers prefer specific therapies and new patients enter a benefit plan. The increasing use of GLP-1s is an example of changing drug mix that has had a significant impact on many benefit plans.

Injectables are routinely covered in pharmacy benefits, especially those that are self-injectable. As additional injectables are introduced, some replace, or supplement, intravenous medications administered in outpatient hospital clinics and other professional settings. When this happens, a shift in cost from medical to pharmacy benefits is possible.

Recently, four injectable products were introduced to the market and may contribute cost to pharmacy benefits and shift spending from the medical benefit.

Explore injectable drug use:

• Consider discussions with medical carriers and pharmacy benefit managers to review use of injectables
• This type of investigation may elicit opportunities for more efficient care delivery and possible savings for the overall health benefit

Pharmacy Team

The Affordable Care Act’s Employer Mandate (i.e., Employer Shared Responsibility requirement) affects all Applicable Large Employers (ALEs). An ALE is generally defined as an employer that employed at least 50 full-time and full-time equivalent employees on average in the previous calendar year. To help avoid potential penalties, many employers have implemented tracking systems within their payroll and/or HRIS systems that assist them in identifying full-time employees (defined as employees that average 30 or more hours of service a week or 130 or more hours of service a month) and determining whether they may be subject to penalties for failing to offer those full-time employees medical coverage during the calendar year. 

ALEs are required to provide information reporting under the Employer Shared Responsibility rules to individuals and the Internal Revenue Service (IRS). Since ALEs must comply with the reporting obligation for the 2025 calendar year in the first quarter of 2026, now is a good time for employers to reacquaint themselves with the ins and outs of the rules under the Employer Shared Responsibility provisions. 

Join us as we discuss common questions including: 

• What criteria determines whether an employer may be considered an ALE and subject to the Employer Mandate and reporting requirement(s)? 
• What changes if an employer increases or decreases its number of employees during the year? 
• Are there special considerations for seasonal employees, interns and temporary employees? 
• What measurement methods are available for identifying full-time employees under the ACA? 
• What are the differences between an initial measurement period and a standard measurement period and how do they intertwine? 
• What are some considerations when handling position changes between part-time and full-time? 
• How can a leave of absence impact full-time status under the look-back measurement method? 
• What are some potential pitfalls when administering the look-back measurement method? 

Regulatory and Legislative Strategy Group