Changes happen every day in our industry, and each new administration comes with new regulations and policies. The Consolidated Appropriations Act of 2021 (CAA) is enacting changes that insurance agents need to pay attention to. While one of the major purposes of the CAA is to provide COVID-19 relief, there are also several implications for group benefits, and, therefore, insurance agents who sell employer-sponsored health plans.
What Is the CAA?
The Consolidated Appropriations Act, enacted in December 2020, largely includes funding for COVID-19 relief — including funding for vaccine distribution, testing and tracing, and other relief efforts and aid for individuals, businesses, and schools. However, several other parts of the CAA more directly affect the healthcare industry.
For example, one component stipulates the “No Surprises Act,” which aims to limit patient financial responsibility for surprise medical bills and increase transparency in regard to medical fees.
Another change you can expect to see is less rigidity for Flexible Spending Accounts (FSAs) and Dependent Care Assistance Programs (DCAPs), such as carryover of funds and extended grace periods. Employers are permitted, but not required to allow any of the changes, but those wishing to make changes must amend their plans.
How Does the CAA Impact Insurance Agents?
You may have already started to see the effects of the CAA in regards to the COVID-19 relief aid, but you will notice even more as the amendments impacting group health plans are enacted.
ERISA Disclosures
The most important things for insurance agents to note are the additional requirements that the CAA adds to the Employee Retirement Income Security Act (ERISA).
ERISA already requires that any compensation paid to plan service providers be “reasonable.” Now under the CAA, group health plans will be required to disclose the compensation paid to any broker or consultant that receives $1,000 or more.
This means that the broker or consultant will be required to make certain disclosures to the plan fiduciary, including a description of the services provided and a description of all covered compensation. This bars an ERISA group health plan fiduciary from entering into, renewing, or extending a services contract or arrangements with a consulting service provider unless proper disclosures are made.
Failure to disclose would mean that the contract would not be deemed to be “reasonable” under ERISA.
Who Must Disclose Under CAA?
- Covered service providers (i.e. brokers, agents, consultants) must disclose their commissions/fees to the employer beginning on December 27, 2021.
- This must be disclosed separately from any other contract between the broker and employer.
- The disclosure must list all compensation during the contract year of $1,000 or greater that you are reasonably expected to receive.
Fee disclosures may be provided as part of an engagement letter, a formal contract, or a stand-alone fee disclosure type of document. An updated Fee Disclosure must be provided to the client each time there is a change to a fee.
We believe the current best practice is to document/save evidence that proves the office provided the fee disclosure to the client. This can be done by saving an email within the agency management system currently in place.
Other Group Health Plan Impacts
While making new disclosures is the biggest change that will impact you directly, there are other sections of the CAA that affect group health plans. If you’re an agent selling group insurance, you will also want to pay attention to these CAA sections.
Removal of Gag Clauses on Network Provider Price and Quality Information
Another part of the CAA amends ERISA, the Public Health Service Act, and the Internal Revenue Code to require employer-sponsored health plans to ensure they have access to certain cost and quality of care information. Plans are prohibited from agreeing to restrictions in provider network contracts that prevent the plan from accessing price and quality information and must provide information to participants.
This section, however, permits providers and provider networks to prohibit group health plans and health insurers from publicly disclosing claims data that they receive from the providers and provider networks.
Mental Health Parity and Substance Use Disorder Benefits
The CAA requires group health plans to analyze their compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA), which prohibits group health plans from providing disproportionately worse benefits for mental health and substance use disorders than for medical and surgical care. This includes limits on benefits that are not tied to monetary or visit limits.
Reporting on Pharmacy Benefits and Drug Costs
The CAA also requires group health plans to report certain information related to prescription drugs, including:
- The plan year, the number of enrollees, and each state in which the plan is offered.
- The top 50 brand prescription drugs paid for by the plan, and the total number of paid claims for each such drug.
- The top 50 most expensive prescription drugs paid for by the plan by total annual spending, and the annual amount spent by the plan for each such drug.
- The 50 prescription drugs with the greatest increase in plan expenditures since the prior plan year, and the change in amounts spent for each drug.
- The total spending on health care services by plan, broken down into specific categories, including hospital costs, primary care costs, specialty care costs, and prescription drug costs.
- Average monthly premiums paid by employers and by participants.
- The impact on premiums by rebates and fees paid by drug manufacturers to the plan or its administrators or service providers, including any reduction in premiums and out-of-pocket costs associated with the rebates and fees.
Facing new compliance obligations can be stressful for insurance agents, but AgentLink is here to help. We keep up with the latest news and compliance changes and provide our agents with the tools and resources they need to stay compliant.
Still have questions or concerns about how the CAA impacts your business? Our team has you covered.
