Transparency, COBRA & Cafeteria Changes

Posted On: May 7, 2021 | By: Axion RMS
This presentation addresses the following compliance issues facing group health plans as a result of a wave of federal legislation and regulatory guidance issued in the last several months. • Obligations related to the new COBRA subsidies • The effect of price transparency disclosures on your business • Addressing mental health parity discrepancies in your health plan • Changes for Section 125 cafeteria plans

ARPA

In most cases, a subsidy-eligible individual will only be able to choose the plans they were in immediately prior to their involuntary termination or reduction in hours.  Alternatively, employer has the option to allow individuals to elect among the employer’s various plans.  If offered, the employer has to meet additional notice requirements and ensure that the premiums charged is the same or lower than for the coverage the individual had at the time of the qualifying event.  This may create additional administrative burdens on employers.

  • Coordinate notice distribution efforts with your COBRA administrator and payroll vendor
  • Identify involuntary terminations and reductions in hours going back to October 2019
  • When determining whether someone was involuntarily terminated, consider erroring on the side of eligibility and confer with legal counsel
  • Consider the impact on any separation agreements
  • Be mindful of prior guidance extending COBRA election deadlines

Transparency

This next topic could very well have the largest impact on health plans since the Affordable Care Act. 

The general purpose of these new Transparency Disclosures is to inform plan participants and patients about the costs of the services they receive and to limit surprise billings.  However, the impact on health plan administrators and insurers is far reaching. 

The second disclosure requirement related to the 2019 Executive Order requires health plans to publicly disclose, free of charge:

  • Negotiated rates for in-network providers including whether any alternative payment arrangement exists
  • The historical allowed amounts for OON providers
  • Prices for prescription drugs (Rx drugs) 

This information must be machine-readable and readily accessible.  As you can see, health insurers and plan administrators have a lot to consider between now and 2022.

Next Steps

  • Develop a compliance plan with an implementation timeline
  • Communicate with relevant service providers and insurers to ensure compliance
  • Update contracts to reflect delegated responsibilities

2021 Appropriations Act and No Surprises Act

Next steps:

  • Implementing regulations due in July 2021
  • These rules apply to both grandfathered and non-grandfathered health plans. Retiree-only plans and “excepted benefits” (such as stand-alone vision and dental plans and specified disease polices) are not subject to these new requirements.
  • Coordinate responsibilities with service providers and third-party administrators
    • Liability will fall on the plan sponsor and applicable plan fiduciary for any self-insured plan and the insurer for an insured plan
  • Penalties equal to $100 per person per day per violation