From dealing with a pandemic to murder hornets, 2020 is a year many of us are anxious to forget. But, before closing the door on this past year, it’s wise to pause and take a quick look back at the notable changes you might have missed in the flurry of activity at the end of the year. Those changes include:
Additional Flexibility for Section 125 Plans Under Recent COVID Relief Bill. As we shared in our previous post, President Trump signed the Consolidated Appropriations Act, 2021, shortly after Christmas. This bill permits employers to provide additional flexibility to Section 125 participants, including the option to carry over unspent account balances up to the full contribution amount from 2020 into the 2021 plan year (or from 2021 into 2022).
Surprise Medical Billing. Another provision of the Consolidated Appropriations Act relates to rules set to begin in 2022, whereby individuals receiving emergency care or seeking services at in-network hospitals and treated by out-of-network providers, without prior knowledge, can no longer be “balanced billed” for these surprise services without consent. Providers will have limited ability to charge for excess costs in these instances because the Act contains a dispute resolution procedure that requires binding arbitration to resolve conflicts between health plans and out-of-network providers that use median in-network rates as a guideline for payment. This portion of the law also includes new cost estimate and price transparency provisions. More guidance on this will be forthcoming over the course of the year.
Required Coverage of COVID Vaccines at 100%. COVID vaccines began rolling out in December so as a reminder, under the interim final rule issued this fall, non-grandfathered health plans must cover the vaccines at no cost, regardless of whether they are administered by in-network providers.
Transparency Rule. The final rule released this fall includes two types of disclosure requirements to help individuals estimate the cost for health care prior to receiving treatment. The first disclosure requirement (public disclosures) applies to plan years beginning on or after January 1, 2022 and involves having three “machine-readable files” posted on an internet website and updated on a monthly basis. The three files must provide: 1) information on negotiated rates for all in-network covered items and services; 2) information regarding charges from, and payments to, out-of-network providers; and 3) information regarding in-network prescription drug pricing. Guidance to help plans ensure their files will be in compliance is pending.
The second type (individual disclosures), involves disclosing specific information regarding a covered item or service and must be available to participants, beneficiaries, and enrollees. For plan years beginning on or after January 1, 2023, an initial list of 500 specified items and services must be available. Information regarding all other specified items and services must be disclosed for plan years beginning on or after January 1, 2024. Finalized model language is pending.
These disclosure requirements apply to most non-grandfathered group health plans (self-funded and fully-insured) and health insurance issuers. For more information, the CMS fact sheet regarding this final rule can be viewed here.
Greater Flexibility for Grandfathered Health Plans. Proposed rules providing grandfathered health plans greater flexibility under the Affordable Care Act were finalized in December with no substantive changes. Specifically, the final rules allow grandfathered plans to make two new permitted changes without losing their grandfathered status. First, a grandfathered high deductible health plan (HDHP) can change fixed-amount cost-sharing requirements so long as the changes are necessary to comply with HDHP requirements under the Internal Revenue Code. Second, the rules amend the definition of “maximum percentage increase” to provide an additional method for determining permitted increases in fixed cost-sharing amounts. Under the expanded definition, a plan may use the current standard (i.e., the “medical inflation” amount published by the DOL) or an alternative standard (i.e., the “premium adjustment percentage” published annually by HHS) if it yields a higher-dollar value. The final rules apply to grandfathered group health plans and grandfathered group health insurance coverage beginning on June 15, 2021.
HSA and FSA Annual Contribution Limits for 2021. For calendar year 2021, the health flexible spending account (FSA) contribution limit remains at $2,750 (no increase from 2020). The dependent care FSA limits also remain unchanged at $5,000 and $2,500, for individuals or married couples filing jointly, and married individuals filing separately, respectively.
The 2021 contribution limits for health savings accounts (HSAs) are $3,600 for self-only coverage under an HDHP (increase from $3,550 for 2020), and $7,200 for family coverage under an HDHP (increase from $7,100 for 2020). The HSA catch-up contribution limit for individuals aged 55 or older remains unchanged at $1,000.
2021 Indexed PCORI Fee Amount. Insurers and sponsors of self-funded health plans are required to report and pay fees on an annual basis to fund the federal Patient-Centered Outcomes Research Institute (PCORI) trust fund. Early last month, the IRS released Notice 2020-84 which provides the adjusted PCORI fee for plan years that end between October 1, 2020 and October 1, 2021. The new fee required to be reported and paid on IRS Form 720 is $2.66 per covered life (an increase from $2.54 for 2020).
Now that you’re largely up to date on current benefits issues, you can feel confident moving forward in 2021! For questions or additional information, please contact your HORAN account representative.
The information contained in this document is informational only and is not intended as, nor should it be construed as, legal or accounting advice. Neither HORAN nor its consultants provide legal, tax nor accounting advice of any kind. We make no legal representation, nor do we take legal responsibility of any kind regarding regulatory compliance. Please consult your counsel for a definitive interpretation of current statute and regulation, and their impact on you and your organization.