The COVID-19 pandemic — while more controlled in the US than this time last year — continues to produce unique challenges for planning and managing health, fringe, and leave benefits for 2022. Employers must continue managing their workforces as COVID-19 outbreaks recur, with some employees working remotely, some in hybrid arrangements and some in the workplace. Employers have a renewed focus on diversity and inclusion issues, especially those affecting employees’ mental health and well-being.
Employers also must keep an eye out for policy changes. While the Biden administration has prioritized bringing the pandemic under control, a number of proposed reforms would affect health and leave programs. These proposals come after multiple COVID-19 laws enacted in 2020 and early this year require significant changes to health plans, including major new transparency standards and prohibitions on surprise medical bills. Regulators are racing to provide the extensive guidance employers need to comply with these requirements, many of which take effect beginning in 2022. In addition, states continue to enact laws that affect health and leave benefits. As a result, employers have major work to do in planning for 2022, even as the potential for additional legislative and regulatory changes looms in Washington, DC.
Legislative and regulatory outlook going into 2022
Democratic control of Congress and the White House has brought a flurry of health and paid leave proposals, with significant implications for employer programs. Key proposals include:
- ACA and paid leave reforms. President Biden has made expansion of the Affordable Care Act (ACA) a core tenet of his healthcare agenda, and the American Rescue Plan Act (ARPA) included a two-year increase and expansion of ACA marketplace plan subsidies. Biden and Democrats are looking to make these more generous subsidies permanent as part of a party-line spending bill they hope to pass this year. Other potential ACA changes include fixing the “family glitch” that ties employer plan affordability to self-only coverage, and narrowing the healthcare reforms states can pursue through innovation waivers. Creating a national paid leave program run by the federal government is also on the agenda.
- Public healthcare reforms. Progressive Democrats are championing more ambitious proposals, such as creating a public option plan to compete with private insurers, lowering the eligibility age for Medicare, letting Medicare negotiate drug prices, and expanding Medicare benefits to include dental, vision, and hearing coverage.
The outlook for these and even relatively moderate ACA changes is uncertain. Democrats might be able to pass party-line legislation without Republican support under a special budget reconciliation process. However, they could not afford to lose any votes among their own members in the 50-50 Senate or more than a few Democrats in the narrowly divided House. Hammering out final legislation to the satisfaction of different factions of Democrats will be a major challenge. Still, enactment of a major legislative package later this year is possible, so employers will need to monitor congressional developments.
Regardless of what happens in Congress, the Biden administration continues to pursue its health policy agenda through regulations and executive action. Regulators are issuing guidance on a multitude of new requirements — most recently, a rule implementing prohibitions on surprise medical bills. The Biden administration has not backed away from the 2020 transparency in coverage regulations that take effect beginning in Jan. 1, 2022, and has doubled-down on mental health parity enforcement. Much more guidance is expected over the next several months and into 2022. Employers will need to show good-faith compliance with the new requirements, even though some needed guidance may not come out until next year.
2022 health and leave benefit planning
This list highlights 10 top compliance-related priorities for planning 2022 health, leave, and fringe benefits and recommends general actions for each item. The links below take readers to more detailed information, while an appendix gives resources related to each compliance priority:
COVID-19 issues for health plans.COVID-19 considerations for group health plans will likely to continue into 2022, with the public health emergency, national emergency and related agency guidance still in place for now. When strategizing for 2022, employers should review the continuing coverage mandates, agencies’ various COVID-19 relief, and 2021 communications to plan participants about pandemic-related covered benefits and relief from certain group health plan deadlines. Some employers may want to continue certain benefit enhancements beyond the required coverage period, while others may want to revert to prepandemic terms. In either case, communications with plan participants and plan documentation are essential. Opportunities to expand telehealth, employee assistance programs (EAPs) and on-site clinics may continue into 2022. Congress is working to make some temporary relief for telehealth programs permanent.
Maintaining a safe, healthy workplace.While the pandemic is more controlled than last year in many US states and other parts of the world, outbreaks are still happening in undervaccinated areas. Decide whether to encourage or mandate vaccines for employees returning to an on-site workplace. Consider whether to let workers continue working remotely all of the time or a few days per week or instead fully transition back to prepandemic work sites and schedules. Monitor local conditions, and prepare contingency plans as pandemic and economic conditions fluctuate. Recognize the need to have an operating plan for 2022 that values flexible work and reflects local pandemic conditions, while prioritizing employee safety, health, diversity and inclusion.
Transparency for group health plans, insurers and hospitals.Prepare to comply with final transparency in coverage rules for group health plans, along with several new transparency requirements under the 2021 Consolidated Appropriations Act (CAA), effective for plan years beginning on or after Jan. 1, 2022. Regulators recently issued guidance that delays enforcement for several compliance requirements, and plan to issue additional guidance on the CAA’s transparency requirements. In the interim, plan sponsors must make good-faith efforts to comply with most requirements. Review the price disclosures that hospitals are making public in 2021 to comply with the final hospital transparency regulation.
Surprise billing.A federal law prohibiting surprise bills for certain services takes effect for providers (including air ambulances) and facilities on Jan. 1, 2022, and for group health plan years and individual or group health insurance policies beginning on or after that date. The No Surprises Act, adopted as part of the 2021 CAA, builds on parts of the ACA by creating comprehensive patient protections against surprise medical bills. A recently released interim final rule (Part I) provides employers and plan sponsors some compliance guidance, although additional regulations are expected later this year and in 2022. Employers should review the new law and rules and confer with third-party administrators (TPAs) and carriers to prepare plans for compliance. Plan administrators will need to adapt claims administration processes to comply with tight time frames, apply new cost sharing and provider-payment procedures, and provide new disclosures in plan documents and explanations of benefits (EOBs), among other requirements.
Gender and family planning issues in benefits.Consider whether the Supreme Court’s decision in Bostock v. Clayton County, Ga. (40 S. Ct. 1731 (2020)), ACA Section 1557, the Mental Health Parity and Addiction Equity Act (MHPAEA), or state laws necessitate benefit changes for LGBTQ employees and their family members. For many employers, mere compliance with the law is no longer sufficient to meet diversity, equity and inclusion (DEI) goals. Improved family planning benefits can be an important part of DEI efforts, but employers should consider relevant compliance issues. Federal tax rules, ACA mandates and state laws pose compliance complications to consider when designing and administering fertility, adoption and surrogacy benefit programs.
Mental health parity.Ensure the plan has prepared the comparative analysis of nonquantitative treatment limitations (NQTLs) required by the 2021 CAA. Employers sponsoring fully insured plans should be able to rely on their insurers for this analysis. If a self-insured plan sponsor is not already in full compliance, consider strategic interim steps while working toward full compliance. Prepare a response plan to react immediately to a request from federal agencies for an NQTL comparative analysis. Include assistance with NQTL comparative analyses in any future requests for proposals (RFPs) and vendor contracts. Watch for additional guidance and litigation in 2022.
HSA, HRA and FSA developments.For 2022, prepare to discontinue changes made by temporary COVID-19 relief, unless future legislation or agency guidance extends or makes the relief permanent. Determine whether to continue (or adopt) the permanent enhancements to account-based plans made by the Coronavirus Aid, Relief and Economic Stimulus (CARES) Act and IRS guidance. Adopt Section 125 plan amendments for changes reflecting COVID-19 relief; the first amendments are due by Dec. 31, 2021. Update high-deductible health plans (HDHPs) and account-based plans for indexed dollar limits. Identify pre- or no-deductible health benefits, programs or point solutions that could jeopardize an individual’s eligibility to make or receive health savings account (HSA) contributions, and confirm strategy. Consider whether pending IRS regulations on individual-coverage health reimbursement arrangements (HRAs) or direct primary care arrangements (DCPAs) will affect benefit strategies and compliance efforts. Review future IRS guidance on medical expenses or the definition of tax dependent for any impact on account-based plans.
State activity.Review state laws raising concerns for group health and benefit plans. For insured plans, expect activity on benefit mandates for health insurers. State initiatives that could affect employers include an uptick in paid family and medical leave (PFML) and paid sick leave mandates, increased pharmacy benefit manager (PBM) regulations, and expanded telehealth laws. Prepare for 2022 reporting obligations. Monitor the ERISA preemption challenge to Seattle’s hotel employee healthcare ordinance.
Preventive services.Confirm that nongrandfathered group health plans cover ACA-required in-network preventive services without any deductible, copay or other cost sharing. Modify preventive benefits for the 2022 plan year to reflect new or revised recommendations from the US Preventive Services Task Force (USPSTF), the Health Resources and Services Administration (HRSA), the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC), and ACA guidance. Monitor the development of new COVID-19 preventive services or vaccines, which nongrandfathered health plans must cover without cost sharing on an expedited time frame. Under final rules upheld in 2020 by the Supreme Court, nongovernmental employers with sincerely held religious or moral objections to contraceptives may exclude ACA-mandated coverage of some or all women’s contraceptives approved by the Food and Drug Administration (FDA). Monitor ongoing litigation that seeks to invalidate no-cost-sharing coverage of all ACA-mandated preventive services. Update plan documents, summary plan descriptions (SPDs), summaries of benefits and coverage (SBCs), and other materials as needed.
Other ongoing ACA concerns.Review 2022 group health plan coverage and eligibility terms in light of employer shared-responsibility (ESR) strategy, ESR and minimum essential coverage (MEC) reporting duties, and ACA benefit mandates. Determine whether changes made by the final grandfathered health plan rule published in December 2020 can help preserve grandfathered status (if applicable). Continue to calculate and pay the Patient-Centered Outcomes Research Institute (PCORI) fee for self-funded health plans, and manage medical loss ratio (MLR) rebates. Monitor ongoing litigation challenging various ACA provisions, including the obligation for nongrandfathered group health plans to cover ACA-required in-network preventive services without participant cost sharing.