Roundup of selected state health developments, first-quarter 2021 

April 26, 2021

States kicked off 2021 renewing the struggle to curb prescription drug costs using several approaches. Mental health parity issues drew attention after some changes to the federal law late in 2020. In the first quarter, telehealth services further expanded a year into the COVID-19 pandemic and may become a permanent healthcare feature. Efforts to expand health coverage through state and local programs also garnered some attention. San Francisco has postponed its employer healthcare reporting; New York has updated its covered-lives assessment; and Georgia is considering claim-reporting obligations for some self-insured ERISA plans. New insurance laws and regulations focus on patient cost sharing, balance billing and infertility coverage. Paid leave laws received consideration and, in some areas, expanded due to COVID-19. Other benefit-related activity included clarification of common-law marriage laws in two states, added consumer privacy rights in Virginia, and Washington’s long-term care program.

Download the 17-page print-friendly article to read full details about these developments. Here are some highlights of the coverage.

Prescription drugs

State efforts to rein in prescription drug spending take several approaches. In Alabama, a bill pending in the legislature would regulate contract provisions between pharmacy benefit managers (PBMs) and pharmacists, impose certain pricing restrictions, and bar limitations on an insured person’s pharmacy choice. Colorado is moving forward with its plans to import prescription drugs from Canada, despite ongoing litigation that could derail those efforts. Wisconsin’s governor has proposed a budget that would draw on other states’ approaches and impose transparency and disclosure obligations on drug companies, insurers, and PBMs.


Mental health parity

States, including California, are working to align their health insurance laws with the federal Mental Health Parity and Addiction Equity Act (MHPAEA). MHPAEA requires parity between financial and nonquantitative treatment limitations (NQTLs) for mental health and substance use disorder (MH/SUD) and medical/surgical (M/S) benefits. Recent federal legislation, the Consolidated Appropriations Act, 2021, requires all group health plans to prepare a comparative analysis of NQTLs and disclose it to regulating agencies on request. Kentucky and New York have taken steps to implement a similar requirement at the state level.



Use of telehealth has increased during the COVID-19 pandemic, and the Centers for Medicare & Medicaid Services (CMS) last year announced permanent expansion of Medicare coverage for telehealth services. States likewise have begun to broaden the availability of telehealth services, particularly for mental health. Alabama and Kentucky have joined several other states in an interstate compact to provide mental health services, including through telepsychology. A New York proposal would expand incentives for using telehealth. Utah has added insurance coverage requirements for mental health treatment via telehealth.


State healthcare initiatives

Efforts to expand coverage and reduce costs continue to drive state healthcare initiatives. California lawmakers have once again introduced a bill to establish a single-payer healthcare system, but funding details are absent. Virginia will seek an innovation waiver under the Affordable Care Act (ACA) to establish a reinsurance program to bring down premiums in the individual health insurance market. Seattle, WA’s healthcare ordinance for hotel employees withstood an ERISA preemption challenge, but the case may get another hearing.


Employer reporting

Plan sponsors’ state reporting obligations vary by jurisdiction and often add to existing ERISA reporting responsibilities. In San Francisco, the annual deadline to report healthcare expenditures for calendar-year 2020 has been delayed and may be waived. Georgia lawmakers have proposed adding a comprehensive reporting requirement for healthcare payers as a condition of receiving certain state tax credit, but the viability of this measure remains uncertain. New York has posted its 2021 covered-lives assessment rate for healthcare payers that report and pay directly to the state.



Kentucky has added stipulations for certain third-party contributions that may count toward an insured’s cost sharing. New York has clarified the coverage requirements for a surrogate mother’s healthcare costs under its new surrogacy law. New York also has revised insurance coverage guidelines governing infertility treatment for same-sex couples and single and transgender individuals. Ohio joined several other states to enact a “surprise” medical bill law. Washington, DC is the latest jurisdiction to add a monetary cap to an insured individual’s insulin cost. These insurance requirements don’t apply to self-insured ERISA plans.


Leave laws

Paid leave laws remain in flux as states continue to grapple with COVID-19 while working to enact paid leave benefits that will remain in place once the pandemic ends. In the first quarter of 2021, state lawmakers and regulators updated COVID-19 leave mandates, expanded employer-provided paid sick and safe leave obligations and considered establishing state paid family and medical leave (PFML) programs.


As the COVID-19 pandemic and its fallout continued into 2021, several state and local governments updated or expanded related paid sick leave mandates. California has extended its supplemental paid sick leave law through September 2021 and expanded the mandate to cover employers with more than 25 employees. In addition, California’s November 2020 rule requiring an apparently uncapped amount of paid, protected leave for certain employees who must be “excluded” from the workplace will remain in place pending a court appeal. Illinois has outlined how employers should compensate workers for time off to obtain a vaccination. New York guidance explains how and when employers should compensate employees for COVID-19 leave. New York also mandates four hours of paid time off per injection for employees receiving a vaccine.


State and local update

To alleviate some of the economic strain on employees unable to work due to COVID-19, some state and local authorities implemented new paid leave requirements. Other jurisdictions are modifying existing leave laws or benefit programs to accommodate employees’ needs during the pandemic. Many state and local COVID-19 paid leave requirements expired at the end of 2020, but some remain in force and others have been renewed or amended to extend these paid leave obligations into 2021. First-quarter 2021 changes include California’s new COVID-19 supplemental paid leave law and Illinois guidance on compensation and paid leave for COVID-19 vaccines. New York has a new law requiring paid leave for employees to get COVID-19 vaccines and has issued guidance on employers' COVID-related paid leave obligations. Many California cities and counties have expanded or renewed paid leave obligations, while Philadelphia has imposed a new public health emergency leave ordinance. For a comprehensive review of the mandates, see States, cities tackle COVID-19 paid leave.


State programs providing eligible employees with partial wage replacement for leave related to serious health conditions and family needs have grown in the past few years, and more states are considering options to establish similar programs. Maryland and New Mexico have pending PFML legislation. Oregon plans to issue PFML regulations by this fall and begin collecting contributions in 2022. Washington has posted guidance to clarify how telecommuting across state lines affects participation in its program.


Multi-state update and chart

As of January 2021, California, Hawaii, Massachusetts, New Jersey, New York, Rhode Island, Washington, and Washington, DC, mandate paid leave for an employee’s own health condition. This is the first year that benefits are available through the Massachusetts program. Connecticut contributions began this year, and benefits will follow in 2022. Oregon contributions start in 2022, with benefits first available in 2023. Under Colorado’s recent voter-approved program, contributions will begin in 2023, with benefits available in 2024. Except for Hawaii, these jurisdictions also require paid family leave for bonding with a new child, caring for a seriously ill or injured family member, and certain other purposes. The jurisdictions with benefits available this year have announced contribution and benefit calculations for 2021. For details, see 2021 state paid family and medical leave contributions and benefits.

Paid sick leave

Employer-provided paid sick and safe leave mandates have multiplied in the past few years. Though many provisions are similar from state to state, some variations in each raise compliance concerns for employers. New Mexico will soon join the group of states that currently impose this obligation.


Multistate overview and chart

New Mexico is the latest among a growing number of states requiring employers to provide paid sick and other accrued leave. To date, 14 states — Arizona, California, Colorado, Connecticut, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington — and Washington, DC, have enacted paid sick leave mandates. Maine and Nevada have laws requiring accrued paid time off not limited to sick time. For an overview and chart summarizing these laws (excluding New Mexico’s), see Paid sick leave mandates continue to expand at state level.

Other benefit-related activity

Beyond healthcare and leave laws, other state activity may impact employers’ benefit plans. Colorado and Utah have clarified requirements for verifying common-law marriage. Virginia has enacted broad consumer privacy protections that employers may want to review. Washington is moving forward with its state-run, long-term care program that requires employee contributions starting in 2022. The state is also considering a bill that would impose a deadline for employees to opt out of the program.

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