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December 23, 2020
The COVID-19 relief bill recently passed by Congress contains several important employee benefit-related provisions, including restrictions on “surprise medical bills,” new plan and health cost reporting rules, and additional flexibility for participants of health flexible spending accounts (HFSAs) and dependent care assistance programs (DCAPs).
The legislation puts new rules in place to attempt to limit surprise out-of-network medical bills, which have become more common. The rules require payers (i.e., insurance companies and health plans) to agree to an out-of-network payment (the “qualifying payment amount”) for certain kinds of medical services.
If the parties cannot agree on the payment amount, the dispute will go to a pre-defined arbitration arrangement. Importantly, the plan will be required to cover services subject to the rules on an in-network cost-sharing level and participants will be protected from balance billing.
Previous legislation and regulatory guidance had provided significant flexibility regarding reimbursements and election changes in Section 125 Cafeteria plans, HFSAs and Section 129 DCAPs. The latest COVID-19 legislation gives employers the option to offer even more flexibility to HFSA and DCAP participants.
Employers have the option to implement some or all of the flexibility provided or could chose not to change their plans at all. Plans may be amended retroactively to implement any of all of these provisions. The plan amendment must be made no later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. For example, for changes made to a plan with the plan year ending 12/31/2020, the amendment must be made by 12/31/2021.
We will have additional details on Section 125 and 129 reimbursement and election changes in our next Benefit Alert.
The legislation also includes significant new health plan reporting requirements regarding prescription and other health plan cost information. These requirements go into effect beginning in 2022. Plans will be required to report the following information:
Employer plan sponsors will be responsible to ensure that required reporting is completed for their plans, but again, much of the information required will need to be provided by carriers and plan administration vendors. We expect significant regulatory guidance on this reporting requirement to be released during 2021, which will help employers better understand exactly what needs to be reported.
The Section 125 and 129 flexibility will be welcome by participants but will pose some administrative communication challenges for employers. The restrictions on surprise health care billing will also be seen as a positive step in the right direction by employers and their employees. However, the devil is in the details. How well these new rules will be able to reduce surprise billing remains to be seen, and there could be a cost impact on plans that will need to be monitored. Finally, the new plan reporting requirements are likely to create additional administrative work for employee benefit managers, even if much of the information will be provide by carriers and administrators. We will keep you informed as additional details become available and regulatory guidance is issued.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.