How a New Law Affects Group Health Plans
The newly enacted Consolidated Appropriations Act, 2021 contains a number of provisions that will affect group health plans, with most changes aimed at helping insured workers with flexible spending accounts (FSAs), cost transparency and surprise billing.
Some of the provisions are permanent while others are temporary, slated to run through the anticipated end of the COVID-19 pandemic. Here’s a look at the highlights that will affect employer-sponsored health benefits.
FSA carryover rules loosened
The new law authorizes employers to amend their cafeteria plans and FSAs to either:
- Allow participating staff to carry over unused amounts from the 2020 plan year to the 2021 plan year (and from 2021 to 2022 as well), or
- Provide a 12-month period at the end of the 2020 and 2021 plan years.
Under existing law, employers can only allow employees to carry over $550 from one plan year to the next.
The law also allows employees who stop participating in their FSA because they were terminated to continue receiving reimbursement from unused funds through the end of the year during which they stopped participating.
Finally, under the CAA, employees can change how much they set aside into their FSA mid-year (usually they can only change their contribution levels ahead of a new plan year).
In all of the above cases, employers must approve these changes and update them in their plan documents.
Health plan transparency
The CAA also bars “gag clauses,” which bar health insurers from entering into contracts that restrict a plan from accessing and sharing certain information. This is effective as of Dec. 27, 2020.
The goal of these new rules is to increase transparency in pricing and quality information for health care consumers and plan sponsors.
In addition, there are new requirements for health plan ID cards for enrollees, and they will be required to include the following information starting with the 2022 plan year:
- Deductibles that are applicable to their coverage
- Out-of-pocket maximum limits
- Phone number and website address that enrollees can access for assistance.
The CAA also created the No Surprises Act, which will, starting with the 2022 plan year, cap a plan enrollee’s cost-sharing obligations for out-of-network services to the plan’s applicable in-network cost-sharing level for the following three categories of services:
- Emergency services performed by an out-of-network provider or facility, and post-stabilization care if the patient cannot be moved to an in-network facility;
- Non-emergency services performed by out-of-network providers at in-network facilities, including hospitals, ambulatory surgical centers, labs, radiology facilities and imaging centers; and
- Air ambulance services provided by out-of-network providers.
With so many changes, employers who sponsor group health plans for their workers need to have a plan to make sure they and their health plans comply.
What to do now: If you offer FSAs to your staff and want them to be able to carry over funds from 2020 to 2021, and next year as well, you will need to make those changes to your plan documents.
Employers that sponsor group health plans should review their agreements with their health insurers and ensure that their plan contractors include language indicating that the contract complies with the prohibition on gag clauses.
What to prepare for: Starting with the 2022 plan year, employers should check with us or their insurer to make sure that the transparency changes are reflected in their plan documents and that their employees’ health plan cards also include the changes required by the new law.
Plans should also reflect the new rules created by the No Surprises Act.