We don't know about you, friends, but we're glad we've made it to 2021! While we harbor no illusions that all will be right with the world straightway, the New Year is a psychological catalyst for change and the holiday weekend was also a much-needed break. For one thing, it gave us a chance to put down the Consolidated Appropriations Act of 2021 and pick up our new bullet journals. (Please, are you surprised that we are paper planner nerds too?)
Anyway, if you checked out for the year mid-December and are only vaguely aware of what we are talking about, here's the condensed version. After talking about it for ages, Congress finally passed legislation addressing both COVID-19 relief and the problem of surprise balanced billing. They threw in some significant new group health plan and broker-specific transparency requirements just for kicks. It’s all sandwiched in there with funding for most of the federal government, energy and environmental provisions, foreign aid, human rights and education policy changes, and 37 million other things (only a slight exaggeration). For about a week, President Trump had us all wondering if he would sign the 5,593-page behemoth (there is a printer-friendly 2,124 page version too). Then, on December 27, 2020, he picked up his Sharpie and turned the longest bill Congress ever wrote into the law of the land.
The good news, friends, is we've been picking apart that mountain of paper so that you don't have to worry about reading it all by yourselves. The "it depends on how you look at it news" for you is the CAA is full of employee benefit requirements and policy changes. Any one of them will affect our industry for years to come. When you look at all of them en masse, it’s natural to be a bit overwhelmed. But don’t panic! We’ve already started a new newsletter in which we dive deep into specific parts of the law. There’s also going to be a free webinar on January 19, 2021, where you can pepper us with your questions about the broker disclosure section.
For right now, we’ve divided the law into two lists—the stuff that could affect you and your clients right now, and the stuff that you need to be getting ready to deal with in the future. Like every employee benefit publication in America, we've attempted to summarize complicated requirements using the least number of bullet points possible. BUT, because this blog is for our FRIENDS, we've also given you some color commentary about some nuances that might go unmentioned by others.
What You Need to Know Right Now
- FSA Relief: The law lets employers allow employees to carry over unused health or dependent care flexible spending account (FSA) funds or extend their spending grace period for up to 12 months for plan years ending in 2020 or 2021. Businesses can also let employees make prospective changes during the 2021 plan year without a corresponding status change.
Our Take: We've already received questions about how the extended grace period works with HSAs, and so far, the IRS has not explained that little nuance! Also, the FSA relief is optional, and employers need to be intentional about if and how they do it and focus on employee communication. If the employer allows prospective changes, they have to do so by a class of employees or across the board, not just when someone asks. As for plan documents, if an employer allows any of these changes in 2021, then by the end of 2022, they will need to approve a plan amendment.
- Federal Paid Leave: The CAA allows an employer to continue to provide the paid sick leave and expanded family leave for certain qualifying events related to COVID-19 exposure and school and childcare closures through March 31, 2021. Federal tax credits to help make employers whole for the cost of salaries and benefits for employees on leave will also continue through March 31, 2021.
Our Take: Keeping the FFCRA leave going through March 31, 2021, is optional for employers. We did a whole Deep Dive on how it works, which you can find here.
- Payroll Tax: If an employer postponed withholding and paying the employee's share of payroll taxes, the CAA extends the repayment period through December 31, 2021. Also, penalties and interest will not start to accrue until January 1, 2022.
Our Take: Many businesses did not do this, but for those that did, it's essential information to communicate to affected employees.
- PPP: The new law provides $284 billion additional dollars in funding for the Paycheck Protection Program (PPP) and liberalizes the PPP forgiveness rules. The list of expenses that can count towards forgiveness now includes many operating expenses and costs associated with retrofitting the workplace for safety concerns arising due to COVID-19. For new and existing loans under $150,000, the forgiveness process requires no documentation. The new law also gives existing PPP loan recipients with higher losses another funding opportunity. "Second draw" loans of up to the lesser of 2.5 times monthly payroll (3.5 times for hospitality and restaurants) of $2 million will be available. These loans follow substantially the same rules as the original PPP loans. It also makes PPP qualified expenses tax-deductible.
Our Take: If any business struggled to find enough approved expenses to make their loan completely forgivable, the CAA should solve their problem. We also like the change that basically ensures no business will pay tax on their PPP money.
- Retention Tax Credit: The CAA extends the retention tax credit for businesses through June 30, 2021, and improves upon it. Eligible employers can now claim 70% of qualified wages, up from 50%, and the limit on per-employee creditable wages is now $10,000 for each quarter rather than the whole year. The law also lowers the qualification bar and enhances the credit for businesses with 500 or fewer employees.
Our Take: Last spring, the retention credit flew under the radar as a means of assistance for businesses most affected by the pandemic economy, while PPP loans got all of the attention. Employee benefit advisors should take a good look at the new revisions to the credit because more businesses may qualify, and employers can get tax relief for larger amounts of employee wage and benefit costs.
- Unemployment: Qualified people can continue to get federal pandemic unemployment assistance of $300 a week for 11 more weeks, through at least March 14, 2021. It extends the number of total weeks of eligibility from 39 weeks to50 weeks.
Our Take: Since the law extends total weeks of eligibility, hold the March 14th date softly. Depending on the person, they might be able to continue to claim benefits through April 5, 2021.
- Stimulus Payments: Qualified taxpayers will get direct payments of $600 per individual and eligible child dependents in the next few weeks. The economic relief is means-tested based on 2019 incomes. The cut-off is an annual income level of more than $87,000 for single filers/$174,000 for those married filing jointly with no qualifying dependents.
Our Take: Important to keep in mind in case anyone asks a question. Many people already got their payment via direct deposit!
What’s Going Rock Your World
- Mental Health Parity Compliance: Group health plans will need to annually perform compliance tests regarding any non-quantitative treatment limits that may apply to their mental health and substance use disorder coverage. Self-funded groups and health insurers must be prepared to provide documentation of their analyses to either state authorities or the federal Departments of Health and Human Services and Labor upon request.
Our Take: Technically, the DOL and HHS could start asking group health plans for this documentation by February 10, 2021. However, this section of the law also clarifies that more rules and guidance are to follow. Since most self-funded employer plans we know of do not do any formal NQTL testing currently, and it is pretty tricky stuff, we suggest talking about compliance strategies pretty soon. If you need any help from a friend to get by on this one, you know who to call!
- Surprise Billing: The law attempts to solve surprise billing beginning with plan years on or after January 1, 2021. A surprise bill happens when an individual goes out-of-network to receive care, their provider and health plan cannot agree on payment, and the patient gets a "surprise" bill for the balance not paid by their health plan. These surprise bills are now prohibited in certain circumstances. Instead, the amount that can be charged to patients is limited to the in-network cost-sharing amounts in certain circumstance where the patient doesn’t know in advance that they are getting care out-of-network. If an out-of-network provider and a plan cannot agree on payment, they can request a special "baseball-style" arbitration based on median in-network rates or what the provider believes is fair payment. The arbiter will pick one or the other based on a review of the evidence, and the loser pays the arbitration costs.
Our Take: There will be many rules issued over the next year to implement this section of the law and answer most people's burning questions. (We define “most people” as “a preponderance of people who read this blog.”) For example, no one knows what will happen in a "no network" reference-based price situation—the law defines a participating provider as one with a "contractual relationship," and more details are needed to sort it all out. Anyone who claims to have all of the answers today could also be called Pinocchio. However, as soon as our federal regulators make up their minds about these pesky details, we'll make sure to brief you about them.
- Carrier and Group Plan Requirements: Beginning with plan years on or after January 1, 2022, health insurance carriers and employer group plans will have to start disclosing a boatload of information to plan participants and the federal government. One of the easiest (relatively speaking) new requirements is that plans will have to start printing cost-sharing details on health plan ID cards. Much trickier will be making detailed cost information available to plan participants before they incur certain kinds of claims. A more tedious new task will be annually reporting extensive health plan demographic information, pharmacy costs, and other claims and cost data details to the federal government.
Our Take: You know how we’ve been obsessed with the new health plan transparency regulation and how much it will require of employer group health plans over the next few years? Well, this section of the CAA is, in some ways, just as complicated. It layers on top of the regulatory requirements, plus the consumer disclosure deadline is SOONER than what’s required by the rule, and the annual federal disclosure requirements targeting pharmacy costs are going to be a big deal. Between the two of us, we call it the 5500 reporting on steroids section. We should probably stop because this reporting requirement is MUCH, MUCH more complicated than Form 5500—plus, Form 5500 on steroids is probably a more apt description for the new compensation disclosure rule discussed below. The plan disclosure requirements apply to ALL group health plans subject to ERISA, even groups of just two employees. Employer plans will need to start tracking and reporting all of their enrollee information, their plan's geographic reach, and detailed pharmacy cost, claim, and rebate data. Other health claim spending and cost data for all services and premium information will need to be disclosed, too, beginning with the 2022 plan year. So, no one tell our husbands and kids, but we know what will be keeping us busy for the next few years!
- Broker and Consultant Requirements: All brokers and consultants will need to provide almost every group client with extensive compensation disclosures every year, beginning with plan years that start on or after January 1, 2022. If the broker expects to get at least $1000 of direct or indirect payments related to a group for a broad range of broker and consulting services, the requirement applies. Every client must get their own, specific, written disclosure that includes a description of services and information about all direct and indirect compensation the broker expects to receive, among other things. Group health plans will need to report non-compliant brokers and consultants to the Department of Labor for enforcement purposes.
Our Take: Since we know many of our dear friends and readers and health insurance brokers and employee benefit plan consultants, we saved the most challenging news for the end. Please do not shoot the messengers. We're hosting a free webinar about this on January 19, 2021, at 2:30 pm. Please pass on the registration link to any brokers you know who could use some details or who want to engage in some strategic thinking about tackling this one!
Friends, we know this was a lot, but the law is enormous. If you’ve read this far, just know we’ve got your backs. If you need any help digesting it all, need to have a "can you believe this?" kind of chat, or just want to send us a Bitmoji of yourself freaking out, please do not hesitate to call, text, comment, email, or bat signal.