FSA Relief and Significant New Health Plan Requirements Included in Consolidated Appropriations Act of 2021

The Consolidated Appropriations Act of 2021 (Act), enacted on December 27, 2020, contains a number of provisions that may impact the design and administration of employer-sponsored group health plans and flexible spending account (FSA) benefits. Below, we summarize the primary provisions. In the days and weeks ahead, Spotlight on Benefits will provide a series of blog posts that will address the provisions in more detail. We encourage health and FSA plan sponsors to review the blog posts and consider the preparations needed to comply with applicable changes in the law, including coordinating with insurers and third-party administrators, the various effective dates, and whether plan sponsors will have to amend their health plans or FSA plans to implement any applicable changes.

Health and Dependent Care Flexible Spending Account Relief

Effective as of the date the plan operates consistent with the permitted change(s), provided a plan amendment is adopted by the last day of the calendar year beginning after the plan year in which the amendment is effective (e.g., December 31, 2021, for changes effective in 2020)

Permits FSA plan sponsors to make various temporary changes in 2020 and 2021 plan years that would allow FSA participants more flexibility to utilize FSA contributions made in 2020 and 2021. These temporary changes may include:

  • Expanding carryovers for health FSAs and permitting carryovers for dependent care FSAs.
  • Extending FSA grace periods to 12 months.
  • Allowing post-termination reimbursements from health FSAs.
  • Extending the age limit for eligible dependent children under dependent care FSAs to 14 for FSA participants who satisfy certain conditions.
  • Allowing mid-year prospective election changes for FSAs without regard to whether a change in status event has occurred.

Mental Health Parity Nonquantitative Treatment Limit Comparative Assessment

Effective February 10, 2021

Requires group health plans and group health insurance issuers (collectively, “group health plans”) that provide medical and surgical benefits, that also provide mental health or substance use disorder benefits, and that impose nonquantitative treatment limitations on mental health or substance use disorder benefits to perform a comparative analysis intended to demonstrate compliance with certain mental health parity requirements. The analysis compares the design and application of nonquantitative treatment limitations to medical and surgical benefits and to mental health and substance use disorder benefits. A group health plan must make the comparative analysis available to the state authority, the Secretary of Labor, or the Secretary of Health and Human Services, as applicable, upon request, and for further compliance-related activities.

Surprise Medical Billing Prevention

Effective for plan years beginning on or after January 1, 2022

  • Creates new requirements for group health plans to eliminate surprise billing for out-of-network emergency services, nonemergency services performed by out-of-network providers at certain participating facilities, and out-of-network air ambulance services.
  • Requires group health plans to make certain disclosures of deductibles and out-of-pocket cost-sharing limits on insurance cards.
  • Requires group health plans to transmit a health provider’s good-faith estimate of the cost of services and other plan coverage information, to the affected participant.
  • With respect to a group health plan’s network providers, implements continuity-of-care requirements when a provider ceases to participate in a network and requires a verification process for network provider directories.
  • Requires group health plans to offer price comparison guidance by telephone and through the group health plans’ or insurers’ websites for enrolled participants to obtain cost-sharing comparisons among available providers.

 Health Plan Transparency – New Disclosures and Prohibitions on Gag Clauses Related to Cost and Quality Information

Effective as described below

  • Effective January 1, 2022, prohibits group health plans from entering into network agreements that restrict the plan or issuer from (i) disclosing provider-specific cost or quality-of-care information to referring providers, plan sponsors, enrollees or eligible individuals; or (ii) electronically accessing de-identified claims and encounter information or data for plan participants and from sharing such information with business associates. Group health plans will be required to submit an annual attestation of compliance to the Secretaries of Health and Human Services, the Treasury, and the Department of Labor.
  • Extends required disclosures under Section 408(b)(2) of ERISA to group health plans and requires “covered service providers” (generally, insurance brokerages and consultants) to make certain disclosures to group health plan fiduciaries related to the covered service provider’s services and compensation (with respect to contracts and contract renewals on and after December 27, 2021).
  • By December 27, 2021, requires group health plans to disclose certain information about pharmacy benefits and prices to the Secretaries of Health and Human Services, the Treasury, and the Department of Labor.