Health & Welfare Plans – Things to complete before the holidays overwhelm you!
November 8, 2023Jay Kirschbaum
Several new requirements took effect for health and welfare plans, particularly group medical plans, in 2023. Here is a useful checklist to consider before heading into the holiday season.
Gag Clause Attestation
Health plans and health insurance issuers have a new requirement to attest that their health plans do not contain “gag” clauses prohibited by the transparency rules of the Consolidated Appropriations Act, 2021 (CAA).
The first attestation is required to be submitted by December 31, 2024.
Employers have recently started to receive notices from their health insurance issuers and third-party administrators (TPAs) confirming that their contracts do not contain gag clauses prohibited by the CAA but noting, in general, that they are not going to be responsible for the reporting of the attestation and leaving that to the employer. Employers, naturally, need clarification about the issue.
One requirement of the CAA was to prohibit health plans and insurance issuers from entering into contracts with health care providers, TPAs, or other service providers that would restrict the plan or issuer from providing, accessing, or sharing certain information about provider price and quality and de-identified claims.
A gag clause is a contractual term that directly or indirectly restricts specific data and information that a health plan or issuer can make available to another party. Effective December 27, 2020, the CAA generally prohibits group health plans and issuers offering group health insurance from entering into agreements with health care providers, TPAs, or other service providers that include certain gag clause language. Specifically, these contracts cannot restrict a plan or issuer from:
- Providing provider-specific cost or quality-of-care information or data to referring providers, the plan sponsor, participants, beneficiaries, or enrollees (or individuals eligible to become participants, beneficiaries, or enrollees of the plan or coverage)
- Electronically accessing de-identified claims and encountering information or data for each participant, beneficiary, or enrollee upon request and consistent with privacy rules under the Health Insurance Portability and Accountability Act (HIPAA), the Genetic Information Nondiscrimination Act (GINA), and the Americans with Disabilities Act (ADA)
- Sharing information or data described in (1) and (2) above or directing such information to be shared with a business associate, consistent with applicable privacy rules.
For example, if a contract between a TPA and a health plan proves that the plan sponsor’s access to provider-specific cost and quality-of-care information is only at the discretion of the TPA, that contractual provision would be considered a prohibited gag clause.
Plans and issuers must ensure that their agreements with health care providers, networks, associations of providers, TPAs, or other service providers offering access to a network of providers do not violate the CAA’s prohibition on gag clauses.
While employers with fully insured plans can rely on the issuer to provide that attestation if the carrier will do so, many carriers are unwilling to file the attestations on behalf of the plans. Employers with self-funded plans can have their TPAs file the attestation on their behalf, but the employer is ultimately responsible for a complete filing.
The Departments launched a website through the Centers for Medicare and Medicaid Services for health plans and issuers to submit their gag clause compliance attestations. The Departments have also provided instructions for submitting the attestation, a system user manual, and a reporting entity Excel template for plans and issuers to submit the required attestation; all are available here. The first year of implementation may confuse many. It is a good idea to submit the attestation once the carrier reports its status to the employer.
Prepare to comply with IRC 6055 and 6056 Reporting:
Employers with Self-Insured Health Plans are Required to Notify Covered Individuals and File with the IRS
Employers that offer minimum essential coverage plans (and all applicable large employers (ALE’s) are required to do so under the ACA rules) must notify covered individuals of that status and file information regarding the coverage with the IRS.
For 2023 coverage:
- Plans must furnish Forms 1095 -B/C to covered individuals no later than March 4, 2024.
- Plans must file electronic Forms 1094-B/C with the IRS no later than April 1, 2024.
- Plans must file PAPER Forms 1094-B/C no later than February 28, 2024.
Employers with employees in several states have additional filing obligations:
California, Massachusetts, New Jersey, Rhode Island, Vermont, and Washington, DC, mandate employers with operations in these states have additional reporting so that affected employees can demonstrate compliance with the state requirements.
Catch Up On Passed Filing Dates
Prescription Drug Reporting (RxDC)
The first RxDC reports were due by June 1. If you missed the deadline, filing late will likely be worth the effort. Due diligence in mitigating late filing is generally one way the agencies can waive failure to file penalties (although not explicitly stated, which can be up to $100/day/participant).
Note that this filing is more substantial than just the drug cost reporting, group health plans’ total medical plan spending, and detailed drug cost spending. Most employers rely on their carriers for this reporting, but self-funded plans are ultimately responsible (fully insured plans can depend on the carrier report), so the plan sponsors are advised to obtain confirmation from their vendors that the reporting was completed.
Medicare Part D – Creditable Coverage Notice
Group health plans providing prescription drug coverage to Medicare Part D-eligible individuals must disclose whether the prescription drug coverage is creditable. Medicare Part D creditable coverage disclosure notices must be provided to plan participants, including non-employee beneficiaries, before October 14 each year.
Coverage is creditable if the actuarial value of the coverage equals or exceeds the actuarial value of coverage under Medicare Part D. This disclosure notice helps participants make informed and timely enrollment decisions.
Disclosure notices must be provided to all Part D-eligible individuals who are covered under, or apply for, the plan’s prescription drug coverage, regardless of whether the prescription drug coverage is primary or secondary to Medicare Part D. Because employers may not know whether any specific individual is enrolled in Medicare, most employers will send a creditable coverage notice to all participants.
Many employers will include these notices with open enrollment materials if sent by October 14. The deadline also applies to non-calendar year plans. Model disclosure notices are available on CMS’ website.
If this deadline has been missed, there is no specified penalty, but employers should send the notices as soon as possible.
There are several filing and reporting obligations for employer plans that fall in the fourth quarter or early in 2024. Employers should confirm with their administration firms that the firms are prepared to meet the deadlines.
This Legal Update is not intended to be exhaustive, nor should any discussion or opinion be construed as legal advice. Readers should contact legal counsel for legal advice. All rights reserved.