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A Summary of the Employee Benefit Plan Provisions Contained in the Consolidated Appropriations Act of 2021

What Plan Administrators and Benefit Managers Need to Know

Philip Talley, Vice President Insurance Services, Illinois Bankers Association

As the year 2020 came to a close, Congress passed the Consolidated Appropriations Act of 2021, a colossal $2.3 trillion spending bill that combined $900 billion in stimulus relief with a $1.4 trillion omnibus spending bill for the 2021 federal fiscal year. This broad and extensive legislation contained much more that just spending appropriations. The law also contained numerous provisions impacting various areas of concern for U.S. employers. Among these are several new laws that apply to employee benefit plans.

The employee benefit plan provisions contained within this bill can be broken down into four main categories1:

1. “Surprise Billing” Reforms 2. Broker Compensation Disclosure 3. Transparency Requirements 4. Temporary Special Rules for Flexible Spending Accounts (FSAs) and Dependent Care Accounts (DCAs)

“Surprise Billing” refers to the amounts that patients must pay after unknowingly and unintentionally receiving care from an out-of-network provider. This often occurs when emergency services are provided, or when a non-network provider performs services at an in-network facility. A common example of this is when a non-network specialist, such as an anesthesiologist, provides services at an in-network hospital. This has been a longterm problem for many healthcare consumers and is often viewed as a “kick them while they’re down approach” because it most often affects people who are experiencing significant health issues and it penalizes patients for things that were out of their control. Effective January 1, 2022, this law will require that emergency services and “certain non-emergency services from non-network providers” provided in a hospital or free-standing emergency clinic, be billed at the same level for in-network and out-of-network providers with regards to the patient’s out-ofpocket costs. Allowable charges must be equal to the median price allowed for in-network providers for the same procedure in the same geographic region. The law further requires that all out-of-network costs incurred by the patient must count toward the in-network deductible and out-of-pocket limit.2 The law also places new limitations on billing for air ambulance services.

To address the inevitable disputes over surprise billing issues, the law provides for the establishment of Independent Dispute Resolution (IDR) to be administered by “non-affiliated, independent, unbiased entities.” The Secretaries of Health and Human Services, Labor, and Treasury are tasked with establishing the IDR rules that all group health plans and insurers must follow. Rules governing the methodology to determine qualifying payment amounts, the information required to make payment determination, geographic regions, and a process for receipt of complaints, must be determined by July 1, 2021. An audit program must be established by October 1, 2021.

The Act also establishes various billing and cost transparency requirements, designed to minimize the “surprise” aspects of medical billing. These include the following:

• Requiring all health plans and insurers to provide “in clear writing, on any physical or electronic plan or ID card” the following information: • Any deductible applicable to the plan’s coverage • Any out-of-pocket maximum limitation • The telephone number and website address where individuals can obtain consumer assistance.

• Requires advance Explanation of Benefits (EOB) be made available to any requesting health care provider, participant, beneficiary, or enrollee verifying whether the provider is in or out-of-network and the contracted rate for the item or service.

• Telephonic and internet price comparison information must be made available.3

Included with the various transparency requirements contained in this legislation are new laws requiring employee benefit brokers and consultants to disclose their compensation. Effective December 27, 2021, brokers and consultants must disclose any direct or indirect compensation if they enter into a contract or arrangement with a group health plan, or reasonably expect brokerage services or consulting compensation to be $1,000 or more. Other transparency provisions that will also become effective on December 27, 2021 include:

• Removal of gag clauses on price and quality information. This is intended to make information about pricing and quality of care more easily accessible. • Strengthens the parity in mental health and substance use disorder benefits compared to other types of healthcare benefits. • Requires reporting of information about pharmacy benefits and drug costs.

Another important aspect of this legislation that all employee benefits managers need to know are the temporary special rules regarding Flexible Spending Accounts (FSAs) and Dependent Care Accounts (DCAs). Effective for taxable years beginning after December 31, 2020, the Act permits carry over of:

• any unused 2020 contributions to the plan year ending in 2021; and • any unused 2021 contributions to the plan year ending in 2022.4 The rules also allow for the extension of a plan’s grace period to extend 12 months after the end of each plan year. This applies to plan years 2020 and 2021. Employees who cease participation in the plan during calendar years 2020 or 2021 may receive reimbursements through the end of the plan year in which participation ceased.

Plans may also allow an employee to prospectively change contributions to FSAs or DCAs without a change in status if: • the employer creates the required retroactive plan amendment to no later than the first day of the first calendar year in which the amendment is effective; and • Plan options are consistent with terms of the amendment.5 For DCAs, the rules include a “Special Dependent Care Carry Forward” that extends the ability to submit claims for 2021 expenses for a child with an unused balance who attains age 13.

This is just a brief summary of a small portion of this major legislation. Employee benefit managers and plan administrators are encouraged to consult with your bank’s accountants and attorneys to determine all of the various ways that this new law will impact your bank, and the steps you must take to be in compliance with all aspects of this law.

1-5 Annette Bechtold, Consolidated Appropriations Act of 2021, An Employer and Benefits Perspective (Compliance Webinar), National Association of Health Underwriters, NAHU