The Consolidated Appropriations Act, 2021 (CAA), which was signed into law on December 27, 2020, includes multiple provisions that impact group health plans. Following is an overview of these changes, including the effective date of each provision.
Additional Temporary Flexibility for FSAs
The CAA provides temporary special rules for employers with health and dependent care flexible spending accounts (FSAs). The rules allow employers to provide employees with additional time to use funds in these accounts, since employees are more likely to have unused funds due to the coronavirus pandemic.
For plan years ending in 2020 and 2021, the CAA allows employers to:
- Permit employees to carry over unused amounts remaining in these FSAs to the next plan year
- Extend the grace period to 12 months after the end of such plan year
- Permit employees who cease plan participation during 2020 or 2021 to continue to receive reimbursements from unused amounts through the end of the plan year in which their participation ended
The CAA also includes a special carry-forward rule for dependent care FSAs where the dependent aged out during the pandemic. For purposes of determining dependent care assistance that may be paid or reimbursed, the maximum age is increased from 13 to 14 years of age.
Change in Election Amounts
Employees are also able to elect to prospectively modify the amount of their FSA contributions for plan years ending in 2021, even if they have not experienced a change in status. However, the applicable dollar limitations will continue to apply.
Employers can retroactively adopt plan amendments incorporating these FSA provisions, if specific requirements are met:
- The plan must be operated consistently with the amendment terms until the amendment is adopted.
- The amendment must be adopted by the last day of the first calendar year following the plan year in which it is effective.
Ban on Surprise Medical Bills
The No Surprises Act is also included in the CAA, which is a ban on surprise medical bills. The provisions of the Act apply to plan or policy years beginning on or after January 1, 2022.
Surprise Medical Bills
Surprise medical bills occur when patients unexpectedly receive care from out-of-network healthcare providers. For example, a patient may go to an in-network hospital for treatment, such as surgery or emergency care, but an out-of-network doctor may be involved in the patient’s care. Patients often cannot determine the network status of these providers during treatment in order to avoid the additional charges and are often not involved in the choice of provider at all.
No Surprises Act
The No Surprises Act applies to surprise bills from doctors, hospitals and air ambulances. It will prohibit these providers from billing patients who have health coverage for unpaid balances. Rather, providers will have to work with the group health plans or health insurance issuers to determine the appropriate amount to be paid by the plan or issuer, under the methodology provided in the Act. The Departments of Health and Human Services (HHS), Labor and the Treasury will work together to issue regulations regarding this methodology and other requirements of the Act. Implementing regulations are required to be issued by July 1, 2021.
Mental Health Parity
The CAA includes provisions that strengthen enforcement of existing mental health parity laws and increase transparency with respect to how health plans are applying these laws. In particular, it requires group health plans and health insurance issuers to conduct comparative analyses of the nonquantitative treatment limitations used for medical and surgical benefits as compared to mental health and substance use disorder benefits. The comparative analyses, and certain other information, must be made available upon request to applicable agencies beginning February 10, 2021.
If, upon review of the analyses, the Secretaries of Labor, HHS and the Treasury find that a plan is out of compliance with mental health parity laws, corrective actions will be specified for the plan to come into compliance, which the plan will have 45 days to implement. If the plan is still not in compliance after those 45 days, the plan must notify all individuals enrolled in the noncompliant plan within seven days.
The law bans gag clauses in contracts between providers and health insurance plans that:
- Prevent enrollees, plan sponsors or referring providers from seeing cost or quality of care information or data on providers
- Prevent plan sponsors from accessing de-identified claims data that could be shared, under Health Insurance Portability and Accountability Act (HIPAA) business associate agreements, with third parties for plan administration and quality improvement purposes
Group health plans or issuers must annually submit an attestation of compliance with these requirements. The ban on gag clauses became effective on the CAA’s enactment date of December 27, 2020.
Reporting on Pharmacy Benefits and Drug Costs
The CAA requires group health plans to report information on plan medical costs and prescription drug spending to the Secretaries of HHS, Labor and the Treasury. Specifically, plans must report the following:
- The beginning and end dates of the plan year
- The number of enrollees
- Each state in which the plan is offered
- The 50 brand prescription drugs most frequently dispensed by pharmacies for claims paid by the plan, and the total number of paid claims for each drug
- The 50 most costly prescription drugs with respect to the plan by total annual spending, and the annual amount spent by the plan for each drug
- The 50 prescription drugs with the greatest increase in plan expenditures over the prior plan year, and for each drug, the change in amounts expended by the plan in each plan year
- Total spending on healthcare services by the group health plan, broken down by the type of costs, the average monthly premium paid by employers (as applicable) and by enrollees, and any impact on premiums by rebates, fees and any other remuneration paid by drug manufacturers to the plan
- Any reduction in premiums and out-of-pocket costs associated with rebates, fees or other remuneration
No confidential information or trade secrets can be included in the report. The reporting requirement is effective December 27, 2021, and no later than June 1 of each year thereafter.
To learn more, watch our recorded webinar, The New COVID Relief Bill: What It Means to Your Health Plan. Additionally, read the House Appropriations Committee’s Summary of Appropriations Provisions.
If you have questions, reach out to your Hylant representative for further information.
The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.