This year’s twin health and economic crises caused by the COVID-19 pandemic continue to produce unprecedented challenges for employers in managing health and leave benefit offerings, contribution strategies, vendor terms, plan operations, future financial outlook, and employee communications. These challenges, along with public health and political uncertainties, make planning for 2021 more complicated than ever. This article summarizes the top 10 compliance developments to address or monitor when planning group health benefits and paid leave programs for the upcoming year.
US policymakers have moved swiftly since the novel coronavirus outbreak began to provide aid that includes a wide range of new health and paid leave policies, and more changes are possible through this year into 2021. The important role of these programs figures prominently in congressional talks on the next recovery package that could pass this summer. Those negotiations, the divided Congress and an election-shortened legislative calendar dim the odds for major changes to the Affordable Care Act (ACA) and other initiatives unrelated to the pandemic and economic crises.
Meanwhile, President Trump and federal agencies are pressing forward with numerous regulatory proposals that predate the pandemic, including initiatives aimed at lowering prescription drug costs and improving the transparency of healthcare cost and quality information. However, legal challenges may stop some initiatives from taking effect before a potential change in administrations next year.
Employers should keep a close eye on the next COVID-19 relief package as negotiations between the Democrat-controlled House and the Republican-controlled Senate intensify over the coming weeks. Although the timing and contents of the package are up in the air, numerous health and paid leave proposals are in the mix, and some could land in a final bill. For example, COVID-19 relief legislation (HR 6800) that passed the House in May would create an array of new requirements extending through 2021, including:
The House bill has no chance of enactment but provides a blueprint for negotiations with Senate Republicans and the White House on a final package. Achieving bipartisan consensus will be difficult, but enacting more relief may become a political imperative for both parties. Other policy priorities that could advance in a relief package include measures to end surprise medical bills, speed generic drugs to market, increase price transparency and enhance employers’ ability to offer telehealth services.
While structural changes to the ACA are not in the cards this year, healthcare is again a major campaign issue that bears watching for potential implications in 2021. Presumptive Democratic presidential nominee Joe Biden and many congressional Democrats are making ACA expansion a core tenet of their healthcare platforms. Biden is also proposing to lower the Medicare eligibility age and create a public option that could compete against private insurance plans. Biden has reached out to progressives and set up task forces that include top advocates of Medicare for All, an idea that has gained public support since the pandemic disrupted or ended coverage for many.
Enacting a public option or expanding Medicare will prove difficult in the next Congress even if Democrats keep control of the House and win the White House and the Senate. Besides intraparty disagreements, other obstacles include intense opposition to a public option by many employer groups and others in the healthcare industry. However, the pandemic’s ongoing effects cloud the outlook and continue to raise difficult questions for many employers trying to maintain coverage and plan ahead for 2021. Close monitoring of health policy developments this year is especially important.
President Trump has yet to lay out a detailed healthcare agenda for the next four years. He has called for repealing the ACA, and his administration recently filed a Supreme Court brief supporting a lawsuit to eliminate the entire law (California v. Texas, 945 F.3d 355 (2019); cert. granted, No. 19-840 (U.S. March 2, 2020)). However, Republicans have not come up with an alternative. The administration so far has pursued regulatory initiatives aimed at unwinding parts of the law, lowering drug prices and requiring more price transparency. A second term could give Trump more time to battle the legal challenges that have beset his agenda and work with congressional Republicans on a broader plan.
COVID-19 relief. Federal agencies have issued various forms of pandemic relief, and employers should monitor what additional relief may be needed or extended for next year. Possibilities include:
Regulatory changes to enhance the availability of telehealth, especially for behavioral healthcare, during the pandemic are expected to continue into 2021, with some made permanent. Guidance addressing return-to-work employer initiatives will evolve as the pandemic continues. COVID-19 legislation imposing the first federal paid leave requirement is scheduled to sunset at the end of this year. However, Congress could extend that mandate into 2021 and/or expand it to include large employers with more than 500 employees. Any extension or expansion will likely trigger more implementation guidance from the Labor Department’s Wage and Hour Division.
Transparency. Agencies will advance key administration priorities like the transparency rules for group health plans and insurers, which probably will get finalized by year-end, with compliance potentially required by the first plan year starting one year after publication of the final rule. Similar transparency rules require hospitals to disclose information like payer-negotiated rates by Jan. 1, 2021, although a legal challenge to that rule is ongoing. Litigation and a potential change in administrations will impact how both transparency rules move forward.
Account-based plans. Transparency rules are just one item coming out of President Trump’s June 2019 executive order on improving price and quality transparency in healthcare. Other guidance has aimed to promote the use of account-based plans and other alternative arrangements to pay for healthcare. Policy changes have eased predeductible coverage under high-deductible health plans (HDHPs) for the chronically ill who have health savings accounts (HSAs), increased health FSA carryovers, and proposed revised tax treatment of direct primary care arrangements and healthcare sharing ministries. Initiatives in 2020 to expand employers’ use of health reimbursement arrangements (HRAs) probably won’t see much takeup in 2021, these alternative HRA designs might garner interest in future years, regardless of 2020 election results.
Data privacy and security. New information technologies (IT) allow quick access to data protected by the Health Insurance Portability and Accountability Act (HIPAA). As a result, health plan sponsors must evaluate each new IT vendor relationship for compliance with evolving guidance. Even if HIPAA doesn’t apply, other federal and state data-protection and privacy laws may have implications for emerging health and wellness applications (apps) and software. While the new data interoperability rules taking effect in 2021 for health IT developers and healthcare payers and providers do not apply to employer group health plans, the resulting changes in how participants access their health data could have indirect effects on plans.
Ongoing ACA compliance. ACA rules will continue to play a large part in compliance activities for employer health plans. Continued enforcement of the employer shared-responsibility (ESR) and related reporting rules, updates to the summary of benefits and coverage (SBC) for 2021, handling of medical loss ratio (MLR) rebates from insurers, and continued payment of the Patient-Centered Outcomes Research Institute (PCORI) fee are just a few ongoing ACA compliance matters to keep in mind for 2021.
Wellness and mental health parity. While these issues are not among the top 10 compliance items for 2021, employers should continue to ensure their health plans meet wellness program requirements and mental health parity obligations, if applicable. Wellness programs will need review once the Equal Employment Opportunity Commission (EEOC) issues revised rules to replace its rescinded regulations on financial incentives in employer-sponsored wellness programs under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA). Enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA) will get ongoing attention, with the Department of Labor (DOL) slated to finalize an updated draft 2020 MHPAEA self-compliance tool recommending that plans have a formal internal compliance program for mental health parity.
Action in the courts also has the potential to reshape benefits and program administration. The US Supreme Court’s recent decision in Bostock v. Clayton County, Ga., should trigger plan sponsors to evaluate how their benefit offerings for LGBTQ employees comply with federal sex discrimination protections under Title VII of the Civil Rights Act of 1964. This decision also has implications for the recently revised final nondiscrimination regulations under ACA Section 1557, which remove the transgender protections outlined in the 2016 final regulations.
The Supreme Court’s decision in Little Sisters of the Poor v. Pennsylvania indicates that employers may be able to assert a religious or moral objection to providing contraceptive coverage as preventive-care benefits. However, ongoing litigation on the 2018 final regulations and the potential for a new administration to amend these rules in 2021 leave some uncertainty about these exemptions.
In the coming months, the justices will hear arguments in the latest challenge to overturn the entire ACA, with a decision likely in 2021 (California v. Texas, 945 F.3d 355 (2019); cert. granted, No. 19-840 (U.S. March 2, 2020)). Other ongoing legal challenges seek changes to specific ACA regulations, such as the association health plan (AHP) rules (New York v. US Dep’t of Labor, No. 18-1747 (D.D.C. March 28, 2019)) and the hospital transparency rules (Am. Hosp. Ass’n v. Azar, No. 1:19-cv-03619 (D.D.C., June 23, 2020), motion for expedited appeal filed (D.C. Cir. July 3, 2020).
COVID-19 and the related public health emergency sidelined states’ agendas and drained their budgets. As 2021 approaches, states may look to health plan assessments as new funding sources for healthcare.
The expected US Supreme Court decision on state regulation of pharmacy benefit managers (PBMs) could have broad implications for plan sponsors that rely on PBMs (Rutledge v. Pharm. Care Mgmt. Assoc., 891 F.3d 1109 (2018); cert. granted, No. 18-540 (U.S. Jan. 10, 2020). Plan sponsors will need to work with PBMs to determine to what extent, if any, a given state’s PBM standards may apply to a self-insured plan.
Although action on ACA Section 1332 innovation waivers has slowed during the pandemic, states will likely renew studying options to broaden health coverage, including individual mandates that require plan sponsor and insurer reporting. Employers will need to provide timely reports in 2021 for the existing individual-coverage mandates in California, Massachusetts, New Jersey, Rhode Island and Washington, DC. (Vermont also has an individual-coverage mandate, but the law currently does not require any employer reporting.)
This list highlights 10 top compliance-related priorities for 2021 health and leave benefit planning and recommends general actions for each item. Download the full 59-page print-friendly PDF for detailed information and resources related to each compliance priority: