Comprehensive Overview of May 2025 Legislative and Regulatory Changes in U.S. Insurance and Healthcare Sectors

Introduction

The landscape of insurance and healthcare regulation continues to evolve rapidly across the United States, with various states enacting critical legislative updates and clarifying regulatory requirements.

These changes influence a broad spectrum of areas such as captive insurance companies, privacy mandates, corporate governance, dental insurance reforms, fraud controls, marketplace regulations, and more.

This article presents a detailed summary of key legislative and regulatory actions taken in May 2025, highlighting their implications for insurers, healthcare providers, policyholders, and other stakeholders.

Captive Insurance Companies

Kansas Advances Protected Cell Captive Insurance Company Framework

In a significant development, Kansas has enacted the Protected Cell Captive Insurance Company Act (HB 2334), which establishes a robust statutory foundation for the creation and operation of protected cell captive insurance companies.

The act mandates distinct accounting segregation for each cell’s assets and liabilities to safeguard financial transparency and solvency.

Both incorporated and unincorporated cells are permitted under this framework, expanding the flexibility for captive insurers.

Crucially, the law requires the Kansas Insurance Commissioner’s explicit approval before the formation of any protected cell, ensuring regulatory oversight and risk management.

This legislation is anticipated to foster growth and innovation within the captive insurance market while protecting policyholder interests.

Confidentiality and Data Privacy

Rhode Island Implements NAIC Model #668 Provisions on Insurance Data Security

Rhode Island has issued Bulletin 2025-1, guiding insurers on compliance with the state’s newly adopted insurance data security law, which incorporates key elements from the National Association of Insurance Commissioners (NAIC) Model.

The bulletin details compliance expectations for both domestic and foreign insurers operating within the state.

Insurers are required to submit annual compliance statements and promptly report cybersecurity incidents.

The scope of required information security programs must be proportionate to the insurer’s size and complexity, demonstrating risk-based approaches.

Additionally, insurers are reminded of their responsibilities for managing third-party service providers’ security practices.

Public disclosure obligations following data breaches are clearly outlined to ensure transparency and consumer protection.

This move underscores Rhode Island’s commitment to strengthening cyber defenses in the insurance sector.

Corporate Governance

Nebraska Tightens Board Qualification Standards for Insurance Corporations

Nebraska has updated its corporate governance standards with LB 325, revising qualifications for insurance corporation boards under section 44-211.

This legislation requires that each board have a minimum of five directors, with at least one director being a Nebraska resident, except in cases where a five-year waiver is granted.

This residency requirement is intended to enhance local accountability and governance oversight, strengthening the alignment of insurance companies with state regulatory expectations and stakeholder interests.

Dental Insurance Reforms

Kentucky Mandates Standardized Assignments of Benefits

Kentucky’s new law (HB 210) obligates dental insurers to honor written assignments of benefits from insured individuals to dental service providers.

These assignments must be executed on a standardized form, signed by both parties.

Importantly, payments are to be made directly to the providers under the same conditions applicable to original providers, thus simplifying reimbursement processes and reducing administrative barriers for dental practitioners.

New Mexico Ensures Timely Credentialing and Reimbursement

New Mexico has passed HB 402, compelling health insurance carriers to load credentialed dentists and dental hygienists into payment systems within 30 days of receiving complete applications.

This statute also requires carriers to reimburse providers for covered services rendered during credentialing delays, with reimbursement structured according to the provider’s employment status.

Licensed and insured providers are further protected under this law, enhancing access and payment fairness in dental care.

North Dakota Restricts Preferred Provider Plan Limitations

North Dakota’s SB 2377 revises the insurance code to prohibit preferred provider arrangements from limiting insured individuals’ ability to obtain additional dental care services denied by their dental plan.

Moreover, unless explicit disclosure is provided, the law forbids charging covered individuals rates higher than those contracted under the preferred provider agreement, protecting consumers from unexpected dental care costs.

Filing Requirements and Procedures

Texas Updates Filing Regulations for Life, Health, and Annuity Products

The state of Texas has modernized its insurance filing requirements (28 TAC s 3.1+) for life insurance, health insurance, annuities, and Health Maintenance Organization (HMO) filings.

These revisions streamline the filing process, incorporating enhanced consumer protection measures.

Additionally, clearer rules are introduced regarding premium payments and third-party involvement, which are expected to increase transparency and regulatory compliance efficiency.

Fraud and Anti-Fraud Measures

Illinois Clarifies Fraud Reporting Expectations

Illinois issued Bulletin 2025-06 to clarify that insurers are not mandated to establish regular fraud reporting programs to either the Department of Insurance or third-party entities.

Participation in such programs remains voluntary.

The bulletin encourages reporting of workers’ compensation and consumer fraud via designated units but emphasizes that no general insurance fraud bureau exists within the state.

In criminal cases, insurers should report incidents directly to appropriate law enforcement agencies.

This guidance aims to balance regulatory oversight with insurer operational flexibility.

Health Care Exchange and Marketplace

Massachusetts Enforces Stricter Policy Submission and Network Adequacy Standards

Massachusetts’ Filing Guidance Notice 2025-M directs insurers on requirements for policy form submissions for merged market health and dental plans.

Insurers must ensure inclusion of essential health benefits and adhere to federal actuarial value standards.

Network adequacy must meet updated criteria, reflecting an emphasis on patient access to providers.

Additionally, carriers are required to submit provider data to Quest Analytics by May 15, 2025, enabling comprehensive market analytics and monitoring.

Holding Companies

Illinois Refines Holding Company Transaction Notifications

Illinois updated its insurance regulations, tightening prior notification mandates for intra-holding company transactions.

Directors are given a 30-day window to disapprove transactions after complete notice receipt.

References to the AIC Accounting Practices and Procedures Manual have been revised, and requirements for cost-sharing and management services agreements have been aligned with NAIC model regulations, enhancing governance transparency and operational compliance.

New Mexico Expands Reporting and Examination Timelines

New Mexico’s HB 398 authorizes group capital calculation reports and liquidity stress testing for insurance holding companies.

Additionally, the Health Maintenance Organization (HMO) law has been amended to extend examination intervals from every three years to a minimum of five years, reflecting a recalibrated regulatory oversight approach.

Life Settlements and Stranger-Originated Life Insurance (STOLI)

Idaho Updates Life Settlement Regulations

Idaho has revised its life settlement rules under IDAPA 18.03.02, refining definitions, removing specific registration and disclosure mandates, eliminating mandatory form filings, and repealing annual reporting obligations.

Provisions regarding settlements occurring within two years of policy origination have also been updated.

These changes reduce administrative burdens and simplify compliance for life settlement transactions.

North Dakota Standardizes Producer Licensing Renewals

North Dakota’s SB 2092 standardizes renewal terms for life settlement producer licenses, requiring renewal by April 30 annually for licenses issued after January 1.

The amendment aligns provider license durations with domestic stock life insurance company licenses and broker license terms with insurance producer licenses.

Licenses not renewed by the deadline will expire, reinforcing regulatory consistency.

Long-Term Care Insurance

North Dakota Strengthens Policy Standards and Benefit Protections

New long-term care insurance standards (SB 2172) in North Dakota require explicit definitions of key policy terms.

The law prohibits insurers from delaying or denying benefits to basic care facilities when the insured qualifies.

Furthermore, insurers must provide a copy of the policy to the insured or their representative within 30 days of a request, enhancing transparency and consumer rights in long-term care coverage.

Miscellaneous Legislative Developments

Colorado Legalizes Same-Sex Marriage Statutorily

Colorado repealed its unconstitutional statutory ban on same-sex marriage through SB 14, aligning state law with the 2015 U.S.

Supreme Court ruling in Obergefell v. Hodges.

The statute removing gender-specific marriage definitions was enacted to uphold marriage equality.

Illinois Modernizes Securities Regulations

Illinois’ 14 Ill. Adm. Code 130.200 updates securities regulation definitions, enhances registration and education requirements for Investment Adviser Representatives (IARs), and introduces new continuing education mandates with enforcement penalties for non-compliance, improving investor protections and regulatory alignment with federal standards.

Kansas Renames Insurance Regulatory Agency

The Kansas Insurance Department has been officially renamed the Kansas Department of Insurance under HB 2050, reflecting broader administrative restructuring.

Healthcare and Accident Insurance Innovations

Arkansas Enacts Medical Audit Bill of Rights

Arkansas’ HB 1314 standardizes and safeguards healthcare providers during audits conducted by health insurers.

The law introduces new processes and requirements for insurers, third-party payors, and claims administrators, aiming to enhance fairness and transparency in audit procedures.

Arkansas Expands Prior Authorization Transparency Act

With HB 1301, Arkansas implements a “Gold Card Program,” enabling healthcare providers with high prior authorization approval rates to bypass such requirements.

The law defines program eligibility, duration, rescission, and protects providers from payment denials, incentivizing efficiency and reducing administrative burdens.

Step Therapy Restrictions for Ventilators

Arkansas’ HB 1321 prohibits healthcare insurers from mandating step therapy or fail-first protocols for noninvasive ventilators when medically indicated.

Medicaid managed care organizations must reimburse these devices at or above 100% of the Arkansas Medicaid fee schedule, ensuring timely access for patients.

Life and Annuity Insurance Protections

Tennessee Shields Life Insurance and Annuity Proceeds from Creditors

Tennessee’s amendment (HB 1045) clarifies that life insurance and annuity proceeds payable to spouses, children, or dependent relatives are entirely exempt from creditor claims.

This protection applies even after proceeds are disbursed, safeguarding family financial security against garnishment or seizure.

Notice to Insureds

Illinois Updates Consumer Complaint Notification Procedures

Illinois has amended notification protocols to reflect the digital shift in consumer complaint filing.

Insurers must now notify policyholders at policy renewal about complaint filing options, including Department of Insurance (DOI) office locations.

Updated forms clarify DOI contact details and remove certain insurance exemptions, improving consumer access to dispute resolution.

Pharmacy Benefit Manager (PBM) Regulations

Alabama Enforces Pharmacy Benefit Manager Licensure and Reimbursement Rules

Alabama’s SB 252 amends the PBM Licensure and Regulation Act to establish civil penalties and legal remedies for harmed parties, mandate minimum reimbursements for independent pharmacies, and require full rebate pass-through to health plan clients.

This strengthens transparency and fairness in pharmacy benefit management.

Arkansas Prohibits PBM Discrimination

Arkansas enacted the Pharmacy Nondiscrimination Act (SB 103), ensuring willing pharmacies or pharmacists can join PBM networks on equitable terms.

Violations may result in fines up to $100,000, license suspensions, or bans on PBM services sales, promoting competition and access.

Regulatory Reporting Requirements

Mississippi Requires Annual Prior Authorization Reports

Mississippi’s Bulletin 2025-2 mandates all health insurance issuers (except ERISA and Workers’ Compensation plans) to submit annual Prior Authorization Reports starting June 1, 2025.

Reports must include aggregated, de-identified data on prior authorization requests, denials, appeals, and outcomes, increasing transparency and regulatory insight.

North Dakota Standardizes Insurance Statement Publication

North Dakota’s HB 1398 modernizes insurance law by removing the requirement for the commissioner to designate a single newspaper for annual statement abstracts.

Instead, companies must use standardized forms and publish abstracts in all newspapers within their judicial districts, enhancing accessibility.

Trade Practices

Nebraska Expands Unfair Trade Practices Act to Cover Health Insurance Lead Generators

Nebraska’s LB 326 amends the Unfair Trade Practices Act to regulate health insurance lead generators.

These entities use devices or means to publicize insurance products without direct selling licenses, identify potential customers, or sell/transmit customer information for sales follow-up.

The legislation enhances consumer protection against misleading or unauthorized marketing practices.

Unclaimed Property Laws

Montana Updates Uniform Unclaimed Property Act

Montana’s HB 164 modernizes definitions and abandonment rules under its Uniform Unclaimed Property Act. Payroll cards are now recognized as property types, with updated presumed abandonment timelines.

Notices to apparent owners may be sent via email if consented, improving notification efficiency.

North Dakota Recognizes Virtual Currency as Unclaimed Property

North Dakota’s HB 1149 updates its Revised Uniform Unclaimed Property Act to include virtual currencies as presumed abandoned after three years.

Notice procedures for examinations are revised, limitation periods clarified, and claims on held property may offset state civil judgments, reflecting evolving asset landscapes.

Utilization Review and Health Care Prior Authorization

Arkansas Strengthens Prior Authorization Transparency and Compliance

Arkansas has updated its Prior Authorization Transparency Act to broaden definitions, require stronger disclosures, exempt certain services from prior authorization, and enforce timely insurer responses.

The amendments mandate claim payment responsibilities, define authorization durations, and impose penalties for non-compliance.

These updates aim to streamline patient access and reduce administrative delays in health care services.

Conclusion

The regulatory environment in May 2025 demonstrates a continued commitment across multiple states to enhancing consumer protections, modernizing insurance practices, and addressing emerging challenges such as cybersecurity, pharmacy benefit management, and unclaimed property.

Insurers, healthcare providers, and policyholders must stay informed and prepared to navigate these evolving requirements.

Proactive compliance and adaptation will be essential to maximize operational efficiency and safeguard stakeholder interests in the dynamic insurance and health sectors.