Year-End Appropriations Legislation Includes Many Changes Impacting Group Health Benefit Plans
At the end of 2020, Congress passed, and the former President signed a Consolidated Appropriations Act (CAA) that included many provisions impacting employer-sponsored group health plans within its 5,000+pages. The highlights include:ards Act (FLSA).
- Health FSA and DCAP Relief: Adding to the relief granted by the IRS last year in Notice 2020-29, plan sponsors have the option to make the following changes to their health FSAs or DCAPs allowing: (1) carryovers of unused amounts from a plan year ending in 2020 or 2021 to be used until the end of the next following plan year; (2) extensions of grace periods for plan years ending in 2020 or 2021 for 12 months after the end of the plan year; (3) prospective election changes modifying contribution amounts without a change in status for plan years ending in 2021; (4) continued reimbursements of any unused benefits or contributions by employees who ceased participation during the 2020 or 2021 calendar year through the end of the plan year in which their participation ceased (including any grace period); and (5) unused DCAP amounts for children until they turn age 14 (instead of age 13) through the end of the 2021 plan year. Plan sponsors wanting to adopt any of the foregoing changes must amend their cafeteria plan document by the end of the first calendar year beginning after the end of the plan year in which the change took effect.
- ERISA Group Health Plan Broker and Consultant Transparency: As part of compliance with certain ERISA prohibited transactions rules, group health plan sponsors must obtain a significant number of new disclosures related to compensation arrangements with most brokers and consultants providing services to the plan, effective December 26, 2021. These disclosures include: (1) description of the services to be provided to the plan; (2) whether the service provider will be acting as a plan fiduciary; (3) description of the direct compensation to be received by the service provider; (4) description of the indirect compensation to be received by the service provider including certain vendor incentive payments; (5) description of any compensation arrangements (e.g., commissions, finder’s fees) that may exist between a service provider and affiliate or subcontractor; (6) description of any compensation the service provider reasonably expects to receive in connection with termination of the contract or arrangement; and (7) description of the manner in which any direct of indirect compensation will be received by the service provider. ERISA group health plan sponsors and their service providers should watch for guidance from the Department of Labor (DOL) related the implementation of these new transparency requirements.
- Protections Against Surprise Medical Billing: The CAA includes the No Surprises Act, which requires both fully insured and self-insured group health plans to include protections for plan participants related to out-of-network balance billing for emergency and certain non-emergency services. These protections include, among others, cost sharing restrictions, changes regarding what services count towards the in-network deductible and out-of-pocket maximum, specific timeframes for when plans must make initial payments or issue denial notices to providers, and an independent dispute resolution (IDR) process for settling out-of-network claims between plans and providers. The Act also requires group health plans to provide new disclosures to plan participants, including identifying in-network and out-of-network deductible and out-of-pocket maximum amounts on ID cards, providing an advance Explanation of Benefits (EOB) for scheduled services, offering an online consumer price transparency tool, and publishing current directories of the plan’s in-network providers. These new requirements generally apply to plan years beginning on or after January 1, 2022. We anticipate that the Departments of Labor, Treasury, and Health & Human Services will issue additional guidance regarding these new requirements, which both fully insured and self-insured group health plan sponsors should monitor.
- Mental Health Parity Expansion: The CAA expands upon the Mental Health Parity and Addiction Equity Act (MHPAEA) by requiring fully insured and self-insured group health plans to perform and document a comparative analysis of any nonquantitative treatment limitations (NQTLs) imposed on mental health and substance use disorder benefits. Beginning 45 days after the CAA’s enactment, these plans must provide this comparative analysis, which includes plan provisions related to NQTLs and evidentiary standards relied upon to design and apply NQTLs, to the applicable state or federal agency upon request. If the plan is determined to be out of compliance with parity requirements after review of this analysis, the plan must specify the corrective actions it will take. Further, if the agency determines that the plan continues to be out of compliance after the corrective action period, the agency must notify plan participants. The DOL is also directed to provide guidance and regulations related to these new requirements, including a process for filing mental health parity complaints. In the interim, group health plan sponsors can rely upon the DOL’s MHPAEA Self-Compliance Tool to assess their compliance.