Workplace Benefits: Using The Past to Stay Ahead

MarketFacts Home

Authors

Mary Trecek, Ed.D.
Associate Research Director, Workplace Benefits
LIMRA and LOMA

Megan Nadzan, Ph.D.
Senior Research Analyst, Workplace Benefits Research
LIMRA and LOMA

March 2026

Employers strive to offer benefits packages that enhance retention and employee well-being. However, the insurance market operates within a complex regulatory environment. The courts are playing a significant role in shaping the benefits landscape. Understanding disputes and allegations is about more than just compliance; it is also about building resilient strategies for products, processes and partnerships. Everyone in the benefits landscape — carriers, brokers, technology firms and employers — must work together to mitigate risks and identify opportunities.

Headlines and Trends

Medical benefits dominate both headlines and employee wallet share. From questioning third-party administrators (TPAs) to identifying potential violations of the False Claims Act (FCA) and using artificial intelligence (AI) to determine claims, these issues receive the most attention in both legislation and litigation.

Recent legislation, such as the 2020 Transparency in Coverage rule and the Consolidated Appropriations Act (CAA) of 2021, is now being tested in court. In cases like Huntsman International vs. Aetna, plaintiffs claim the insurer uses less rigorous claims adjudication for self-funded employers than it uses for fully funded clients. While the case was filed in 2024, courts are still interpreting the Employee Retirement Income Security Act (ERISA) rules to determine if Aetna broke with fiduciary duty in acting as a TPA for the self-funded plan. Other suits in a similar vein have been dropped as the parties moved into arbitration instead, but Huntsman, Aramark, and others remain in the system.

Employers are not the only ones paying attention to carriers and brokers. In May 2025, the Department of Justice filed a complaint against three health insurance companies and three brokerages. Using the FCA, the United States alleges that these insurers paid “hundreds of millions of dollars in illegal kickbacks” to the broker companies over a five-year period. In exchange for the alleged kickbacks, the brokers would process enrollments into the insurers’ Medicare Advantage plans. This complaint also alleges discriminatory practices, attempting to keep out “less profitable” beneficiaries, like those with disabilities. While a motion to dismiss was filed in late 2025, the case remains active in the system.

In the last example, we see consumers’ reactions to the industry’s adoption of new technology. Several class action suits have been filed against health insurers in response to claims decisions driven by AI. These cases allege at least two ERISA violations: breaching fiduciary duties to beneficiaries and violating plan terms requiring proper review. These suits assert that claims were denied without proper review and with high error rates, including up to a 90% error rate on appeal with the nH Predict tool — a proprietary tool that is AI-driven and analyzes medical records to predict the type and length of care.

Lessons Learned

While most of the recent cases are firmly in the medical space, carriers working outside those products cannot ignore their importance in evaluating products, processes and partnerships, particularly since lawsuits can erode trust across the industry. These examples illustrate how evolving regulations and court interpretations are shaping best practices across the benefits ecosystem.

While medical benefits have dominated recent litigation, insurers offering supplemental health products and other self-funded coverages should also pay close attention. Recent ERISA fiduciary lawsuits signal that voluntary benefit plans are under closer regulatory and judicial review, making proactive compliance essential.

The long-term shift of group carriers into the supplemental health space has introduced new challenges, particularly around commission models. Recent cases highlight scrutiny of commission structures, premium levels and loss ratios — areas carriers and brokers must monitor closely.

Historically, individual insurance carriers favored heaped commissions, which align better with individual products, while group carriers typically offered level commissions. However, brokers accustomed to heaped commissions for supplemental health products have looked to carriers to adopt similar structures. This dynamic underscores the importance of clear governance and compliance frameworks to mitigate risk and maintain trust. If voluntary, low-cost options are an opportunity for employers to offer value to employees, these products need to be evaluated to ensure they can be properly supported by the employers and carrier; otherwise, they will remain a pain point for the industry under ERISA scrutiny.

As carriers adopt AI for everyday use and efficiency, they should exercise the same caution when launching AI agents and bots to help consumers navigate the appeals process. An IBM “Insurance in the AI era” report predicts that “77% of agentic AI use cases are expected to be in claims over the next year,” a process update that insurers need to vet thoroughly if they want to avoid lawsuits similar to the ones noted above.

If, as stated in the same report, insurers are leveraging AI to reduce costs, they should proceed with transparent communication to all stakeholders, from their distribution partners to consumers. Carriers should consider the “4Ps,” as outlined by the LIMRA and LOMA AI Governance Group, for any AI or automated implementation: policies, protocols, procedures and processes.

LIMRA research also indicates an opportunity to strengthen communication with consumers. After all, the BEAT study shows, year over year, that just over half of employees understand their benefits. Couple this lack of understanding with the cost of benefits exceeding what employees are willing to spend, and insurers run the risk of losing in the court of public opinion, even if they do not lose in the court of law.

This gap in employee understanding not only presents an opportunity for insurers but also for their partners in the workplace benefits ecosystem. Brokers and employers can do their due diligence when recommending and purchasing workplace benefits products and explaining what consumers can expect. This not only sets employee expectations, but it also ensures that brokers and employers feel they have protected consumers and themselves.

The Next Headline?

Certain programs that tie wellness activity participation to insurance options and wallet share can be seen as an invasion of privacy and coercion, as claimed in a 2019 case filed against Yale University’s wellness program. These concerns could influence employers’ decision making and employees’ willingness to opt in. While current wellness offerings attempt to connect employee well-being to a benefits package, employers must vet these offerings and communicate their value to employees clearly.

As noted in LIMRA’s 2025 Workers and Wellness report, wellness is a complex concept that is hard to define, particularly within workplace benefits. Employers need to be prepared to define for their employees what these programs are (like financial seminars), what separate products are (like employee assistance programs (EAPs)), and how participation will connect to other benefits. If, as findings from that report show, stress is increasingly affecting workers’ job performance and quality of life, these programs and products need to help, not cause further anxiety. If that gap of understanding continues, lawsuits regarding wellness programs and products could be on the horizon.

Conclusion

A final consideration is the list of issues awaiting regulatory direction. Now is the time for carriers to assess internal gaps in product design, process implementation and ecosystem partnerships. While many high-profile cases focus on medical benefits, companies should evaluate all product lines for vulnerabilities. Applying lessons learned broadly will strengthen risk management today and support a more resilient industry in the future.

0123-2026_MF_Mar_Cover Images_480x270.png