Insurance, Health, Accident

Plain English Breakdown

The official source material does not provide specific enforcement mechanisms or penalties for non-compliance with the bill's requirements.

Health Insurance and Pharmacy Benefits Act

This bill changes how Tennessee insurers calculate cost-sharing contributions for high-deductible health plans and prohibits certain practices related to prescription drug coverage.

What This Bill Does

• Changes the way insurers in Tennessee calculate an enrollee's contribution to a high-deductible health plan, ensuring that cost-sharing amounts are applied correctly to maintain eligibility for Health Savings Accounts (HSAs).
• Requires insurers to include all cost-sharing amounts when calculating contributions, even if the minimum deductible has not been met, for preventive care services.
• Limits the types of prescription drugs that can be excluded from cost-sharing requirements unless obtained through specific insurer processes.
• Ensures that the annual limit on out-of-pocket costs applies to all healthcare services covered by a health plan in Tennessee.
• Prohibits insurers and pharmacy benefit managers from changing or conditioning health plan coverage based on financial assistance available for prescription drugs.

Who It Names or Affects

• Enrollees of high-deductible health plans who use Health Savings Accounts (HSAs).
• Insurers, pharmacy benefits managers, and third-party administrators in Tennessee.
• Individuals seeking preventive care services under their health plan.

Terms To Know

Health Savings Account (HSA)

A tax-advantaged medical savings account available to individuals enrolled in a high-deductible health plan.

High Deductible Health Plan

A type of health insurance that has higher deductibles and lower premiums compared to traditional plans, designed for use with an HSA.

Limits and Unknowns

• The bill only applies to health plans entered into, amended, extended, or renewed on or after January 1, 2026.
• It is unclear how the new regulations will be enforced and what penalties may apply for non-compliance.

Official Summary Text

CONTRIBUTION CALCULATION

W
hen calculating an enrollee's contribution to an applicable cost
sharing requirement,
present law requires
an insurer
to
include cost sharing amounts paid by the enrollee or on behalf of the enrollee by another person. This bill
adds that, i
f under federal law
the
cost sharing amounts paid would result in health saving
s account ineligibility, then the cost sharing amounts must
,
instead
,
be applied to a health savings account-qualified high deductible health plan, once the enrollee has satisfied the minimum deductible for the high deductible plan.

Under federal law, a
plan will not fail to be treated as a high deductible health plan for failing to meet the deductible for items or services that are preventative care. Therefore, for items that are preventative care, when calculating an enrollee's contribution to an app
l
icable cost sharing requirement for a health savings account-qualified high deductible health plan, an insurer must include cost sharing amounts paid by the enrollee or on behalf of the enrollee by another person and this requirement will apply regardless

of whether the minimum deductible has been met.

Present law clarifies that the above requirement does not apply to a prescription drug for which there is a generic alternative, unless the enrollee has obtained access to the brand name prescription drug t
hrough prior authorization, a step therapy protocol, or the insurer's exceptions and appeals process
.

This bill also requires the annual limitation on cost sharing to apply to all healthcare services covered under a health plan offered or issued by an i
nsurer in this state.

HEALTH PLAN COVERAGE TERMS

This bill prohibits an insurer, pharmacy benefits manager, or third-party administrator from changing or conditioning the terms of health plan coverage based on availability of financial or other produc
t assistance for a prescription drug.

ENTITIES REGULATED

In implementing the requirements of this bill,
this bill requires
th
e
state
to
only regulate an insurer, pharmacy benefits manager, or third-party administrator to the extent permissible under app
licable law.

Current Bill Text

SENATE BILL 420
By Reeves

HOUSE BILL 870
By Rudder

HB0870
001736
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 4;
Title 8; Title 10; Title 53; Title 56; Title 63; Title 68
and Title 71, relative to pharmacy benefits.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 56-7-3201, is amended by adding
the following new subdivisions:
( ) ''Health plan'' means a policy, contract, certification, or agreement offered or
issued by an insurer to provide, deliver, arrange for, pay for, or reimburse any of the
costs of healthcare services;
( ) ''Healthcare service'' means an item or service furnished to an individual for
the purpose of preventing, diagnosing, alleviating, curing, or healing human illness,
injury, or physical disability;
( ) ''Insurer'' means an entity subject to the insurance laws and rules of
insurance in this state or subject to the jurisdiction of the commissioner, that contracts or
offers to contract to provide, deliver, arrange for, pay for, or reimburse the costs of
healthcare services under a health plan in this state;
( ) ''Third-party administrator'' means a third-party administrator as defined in §
56-7-2902.
SECTION 2. Tennessee Code Annotated, Section 56-7-3205, is amended by deleting
the section and substituting:
(a) When calculating an enrollee's contribution to an applicable cost sharing
requirement, an insurer shall include cost sharing amounts paid by the enrollee or on
behalf of the enrollee by another person. If, under federal law, application of this

- 2 - 001736

requirement would result in health savings account ineligibility under § 223 of the federal
internal revenue code (26 U.S.C. § 223), then this requirement applies for health savings
account-qualified high deductible health plans with respect to the deductible of such a
plan after the enrollee has satisfied the minimum deductible under § 223 of the federal
internal revenue code (26 U.S.C. § 223), except for items or services that are preventive
care pursuant to § 223(c)(2)(C) of the federal internal revenue code (26 U.S.C. §
223(c)(2)(C)), in which case the requirements of this subsection (a) apply regardless of
whether such minimum deductible has been satisfied.
(b) Subsection (a) does not apply to a prescription drug for which there is a
generic alternative, unless the enrollee has obtained access to the brand name
prescription drug through prior authorization, a step therapy protocol, the insurer's
exceptions and appeals process, or as specified in § 53-10-204(a).
(c) The annual limitation on cost sharing provided for under 42 U.S.C. §
18022(c)(1) applies to all healthcare services covered under a health plan offered or
issued by an insurer in this state.
(d) An insurer, pharmacy benefits manager, or third-party administrator shall not
directly or indirectly set, alter, implement, or condition the terms of health plan coverage,
including the benefit design, based in part or entirely on information about the availability
or amount of financial or product assistance available for a prescription drug.
(e) In implementing the requirements of this section, the state shall only regulate
an insurer, pharmacy benefits manager, or third-party administrator to the extent
permissible under applicable law.
SECTION 3. This act takes effect upon becoming a law, the public welfare requiring it,
and applies only to health plans entered into, amended, extended, or renewed on or after
January 1, 2026.