The Fact of the Month
Here’s something to talk about when discussing plan design options and employer contribution strategy with group clients in the New Year.
Premium contributions and deductibles in employer plans took up a growing share of workers’ incomes over the past decade. Those costs together accounted for 11.5 percent of median household income in 2019, up from 9.1 percent a decade earlier. On average, the employee share of premium amounted to 6.8 percent of the median income in 2019. The number is up from 5.8 percent in 2010 but has remained relatively constant since 2015. The average deductible for a middle-income household amounted to 4.7 percent of income in 2019, up from 3.3 percent in 2010. If premiums and deductibles do not fall this year, household income lost during the current economic crisis will increase middle-income families’ cost burdens.
Source: State Trends in Employer Premiums and Deductibles, 2010–2019 The Commonwealth Fund, November 20, 2020
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and clients. Here are this month’s big three!
Consolidated Appropriations Act of 2021 Includes Broker-Specific Reporting Requirements
On December 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021 (CAA). Besides providing all kinds of COVID-19-related funding and relief, and funding the federal government, the new law contains many other requirements directly related to the employee benefits industry. Perhaps the most significant for GPAHU members to be aware of are the law’s extensive broker compensation disclosure provisions.
The new requirements will apply beginning on December 27, 2021, on forward. Brokers and consultants will need to provide every group plan client with a litany of client-specific data about their direct and indirect compensation if they expect to get at least $1000 of direct or indirect payment over the year from the group. The disclosure must be in writing to the plan fiduciary “not later than the date that is reasonably in advance of the contract date.” Each disclosure will need to include descriptions of all services the broker will provide, summaries of all direct and indirect compensation the broker expects to receive, and list all transaction-based payments (this means commissions), among other things. Brokers will also need to be prepared to disclose “any other information relating to the compensation received in connection with the contract or arrangement,” if the plan administrator asks for it. Employer plan sponsors will need to report non-compliant brokers and consultants to the Department of Labor for enforcement purposes.
This section of the law will take effect one year from enactment, so the earliest it could affect GPAHU members would be with group clients that renew on January 1, 2022. However, extensive implementation details are needed to carry out these requirements. The Biden Administration will need to go through a detailed regulatory process over the next few months to develop the reporting mechanism, fully define terms, and establish clear deadlines and expectations. Our parent organization, the National Association of Health Underwriters, will be working on this matter through the regulatory process on our behalf throughout the balance of 2021.
If you are interested in a free webinar to learn more about the requirements, MZQ Consulting, the sponsor of NAHU’s compliance blog, Compliance Now, is hosting one on January 19, 2021 at 2:30pm. Click here to register.
Parts of the New COVID Stimulus Law Have A Direct Impact on Health Insurance Coverage and Employee Benefits
Beyond the broker disclosure provisions, the Consolidated Appropriations Act of 2021 includes many requirements that could immediately impact group employee benefits. These include:
- FSA Relief: Employers can allow employees to carry over unused funds or extend their spending grace period for up to 12 months for plan years ending in 2020 or 2021. Businesses can also allow prospective changes during the 2021 plan year without a corresponding status change, among other forms of optional flexible spending arrangement relief. Group plans that opt for any or all of these changes will need to update their Section 125 plan documents accordingly, but they have until then end of the following plan year.
- Federal Paid Leave: The CAA allows an employer to continue to provide the federal paid COVID-19 paid sick and expanded family medical leave and get the related tax credits through March 31, 2021, if they choose to do so.
- Payroll Tax: If an employer postponed withholding and paying the employee’s share of payroll taxes, the CAA extends the repayment period through December 31, 2021. Also, penalties and interest will not start to accrue until January 1, 2022.
- Paycheck Protection Program (PPP): The new law provides$284 billion in additional PPP funding, liberalizes the PPP forgiveness rules, and gives existing PPP loan recipients another funding opportunity. It also makes PPP qualified expenses tax-deductible.
- Retention Tax Credit: The CAA extends the retention tax credit for businesses through June 30, 2021. Eligible employers can now claim 70% of qualified wages, up from 50%, and the limit on per-employee creditable wages is now $10,000 for each quarter rather than the whole year. The law also lowers the qualification bar and enhances the credit for businesses with 500 or fewer employees.
The CAA also creates several significant new requirements for health insurance carriers and group health plan sponsors that do not take effect right away but will soon impact GPAHU members and clients. These include:
- Surprise Billing: Beginning on December 27, 2021, if an out-of-network provider and a plan cannot agree on payment, they can request a special “baseball-style” arbitration based on median in-network rates or what the provider believes is fair payment. Patient charges will be limited to the in-network cost-sharing amounts in certain circumstances where the patient doesn’t know in advance that they are getting care out-of-network.
- Carrier and Group Plan Requirements: Many new transparency requirements will affect groups with plan years that start on or after January 1, 2022. The things that carriers and group plans will have to do are (1) add cost-sharing to health plan ID cards; (2) make detailed cost information available to plan participants before they incur certain kinds of claims; and (3) annually reporting extensive health plan cost and claim information to the federal government. That reporting will include extensive health plan demographic information, pharmacy costs, and other claims and cost data details. The law ensures that carriers and groups will be able to access any data needed from their vendors to carry out their reporting obligations.
PA Insurance Commissioner Sends Health Policy Recommendations to President-Elect Biden
Pennsylvania Insurance Commissioner Jessica Altman recently joined with Commissioners from ten other states to send a list of detailed health insurance policy recommendations to the incoming Biden Administration for their consideration. The policy ideas outlined in their letter include:
Immediate policy recommendations
- Ensure immediate access to the federal healthcare exchange marketplace through a special enrollment period
- Provide immediate relief from the Affordable Care Act (ACA) subsidy clawbacks created by COVID-19 uncertainty
- Provide clarity on COVID-19 testing coverage requirements, especially regarding tests ordered as part of state-based contact tracing efforts
- Partner with states in actively focusing on programs and practices that address the needs of historically marginalized communities
- Address problematic elements of the recently proposed Notice of Benefit and Payment Parameters (NBPP) for Plan Year 2022
- Allow flexibility for states aiming to pursue progressive policy aims by empowering them to apply for ACA innovation waivers beyond reinsurance
Longer-Term Policy Priorities
- Reverse any policies, such as the weakening of non-discrimination protections and the public charge rule, that undermine the ACA and deny health care coverage to many people
- Encourage both people and small businesses to enroll in ACA programs and stop encouraging enrollment in insurance plans that do not provide the ACA’s most critical consumer protections
- Improve income counting rules to allow consumers greater flexibility
- Extend premium tax credits to Deferred Action for Childhood Arrivals (DACA) recipients so that legally present noncitizens have access to health care coverage
- Modernize Department of Labor oversight of the Employee Retirement Income Security Act to ensure all health insurance coverage is held to similar standards
- Consider a national reinsurance program to stabilize health insurance markets and improve the affordability of health insurance coverage
While the Biden Administration is in no way obligated to act on any of these ideas, their presentation is significant since it provides a window into Commissioner Altman’s perspective on a broad range of private coverage issues.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
Each year America’s Health Insurance Plans releases an infographic and detailed report breaking down a premium dollar to show where the money goes. Interesting on its own, it becomes fascinating when paired with the Kaiser Family Foundation’s interactive health spending explorer tool, which provides timely data on U.S. health spending by source, including federal, state, and local governments, private companies, and individuals.