Estimated reading time: 6 minutes
There are lots of new compliance rules that employers need to know. We’ve talked recently about employment law postings and noncompete agreements. Did you also know that there are new rules related to employee benefits and transparency?
I recently listened to a HUB International webinar on the “2024 Compliance & Benefits Update: How the New Transparency Rules Will Impact Your Organization”. I would suggest when you have a moment, taking a listen. It talks about the new rules impacting employee benefits compliance.
After listening to the webinar, I asked our friends at HUB if they would chat with me about some of these new rules. Thankfully, they said yes. Dennis Fiszer is chief compliance officer and senior vice president for global insurance brokerage Hub International. His areas of expertise include all aspects of the Affordable Care Act (ACA), including employer reporting, hours tracking, and plan valuations for affordability and minimum essential coverage analysis. His work also centers on the Employee Retirement Income Security Act (ERISA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Family and Medical Act (FMLA), state and local leave laws, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), wellness programs, employment and labor issues, cafeteria plans, and compliance with Internal Revenue Code requirements for favorable tax treatment of benefits. Dennis received a Juris Doctorate from Boston University.
Please remember that Dennis’ comments should not be construed as legal or tax advice. If you have detailed questions, they should be addressed directly with your financial advisor, benefits broker, and/or friendly neighborhood labor and employment attorney.
Dennis, thanks so much for being here. One of the biggest benefits that organizations offer employees is related to healthcare. But the reality is that healthcare benefits are complicated. For example, there are transparency rules. Can you briefly explain the employer’s requirement for transparency when it comes to employee healthcare benefits?
[Fiszer] Transparency-related employer duties for health and welfare plans originated from the Consolidated Appropriations Act (CAA) of 2020. Surprisingly, CAA was a COVID-era relief funding measure, but it contained key provisions for transparency that hadn’t previously been able to move through Congress on their own.
In a nutshell, employers are required to ‘transparently’ report about target zones of their employee healthcare benefits. This means they must disclose information about healthcare services, such as cost-sharing provisions, coverage limitations, prescription drug costs, and out-of-pocket expenses.
From a public policy perspective, the new transparency rules empower employees to make better and more precisely informed decisions about their healthcare. It’s supposed to offer participants a clearer window to understanding the full extent of their benefits. Also, transparency is supposed to cast new light on waste, fraud and systemic inefficiencies that have negatively impact cost so that they can [theoretically] be removed.
Just to confirm, the transparency rules you’ve mentioned are not the same as the Corporate Transparency Act?
[Fiszer] Yes, these laws share similar names but are entirely different. The Consolidated Appropriations Act (CAA) transparency requirements center on healthcare benefits for employees.
By contrast, the Corporate Transparency Act (CTA) addresses an organization’s operational transparency to fight financial crimes. So, among other things, CTA includes provisions to flag possible money laundering, financing of illicit groups, and other criminal activities by requiring affected businesses to disclose heightened details about their structure and ownership.
Getting back to employee benefits transparency, have there been any recent changes to transparency in coverage rules? For example, one of the things I heard in the webinar was about the “no surprises” clause. What is it and why should employers (and employees) know this exists?
[Fiszer] The No Surprises Act is a federal law that’s evolved from similar laws that have been in place at the state level in many parts of the country for pretty much the last decade. Those state laws were only partially effective because they were primarily regional and solely focused on insurance carriers.
The federal law is supposed to more strongly protect consumers from unexpected medical bills resulting from out-of-network healthcare services. It prohibits ‘surprise’ balance billing following situations such as emergency care, where a patient receiving services holds little control over the providers they see. The process is designed to remove the patient from the billing process and shift the dispute to a baseball style arbitration process between plan and provider.
However, even though the law’s framework has been pretty much set, specific provisions of the No Surprises Act, particularly the regulations governing how final pricing would be determined, have been the source of much legal challenge to date. So, I’m guessing that this is an area we’ll see evolving and morphing further for the foreseeable future.
Related to the “no surprises” rule, what’s a “gag clause” as it pertains to transparency in coverage?
[Fiszer] The ‘gag clause’ as part of all these new transparency requirements refers to a rule that blocks healthcare providers and facilities from imposing contractual restrictions about what can be disclosed to plan participants and sponsors. These disclosure restrictions were called ‘gag’ clauses and now the government has introduced an annual reporting requirement that forces affected entities to formally certify through an attestation process that they don’t use contracts which include or impose such gag restrictions. Theattestation process is supposed to ensure a level playing field where plan related details, especially cost details, can be more easily shared.
Last question. It sounds like a critical piece of transparency is being a good corporate fiduciary. Can you name 2-3 things that HR departments should do to not only stay in compliance but be a good fiduciary?
[Fiszer] I agree that much of what the law requires simply comes down to operating as a diligent fiduciary. The fact is that even though we are seeing new reporting and operating rules being formally linked to transparency, I would say that the spirit of those transparency duties have always been woven into the fabric of the original ERISA law. That’s because a fundamental ERISA fiduciary obligation is to operate the benefit plan for the exclusive benefit of plan participants. So that would automatically demand that a plan sponsor not manipulate operations to ‘hide’ costs and program features from participants.
In my view, there are a few key steps a plan sponsor should consider for a reset opportunity to energize compliance:
- Identify responsible internal parties and precisely define roles and duties
- Appoint a dedicated health and welfare committee to oversee plan functions
- Internally assess for possible compliance gaps (e.g., Are annual notices being distributed? Are plan documents in good order?)
- Periodically review vendors and measure performance to assess capabilities so as to ensure that participants are optimally served
- Maintain robust files showcasing compliance efforts
- Actively monitor for compliance developments
I want to extend a huge thanks to Dennis for sharing his knowledge with us. Don’t forget to check out the webinar I mentioned earlier about these new transparency updates. You can also look for more information on the HUB International Insights blog.
Employee benefit programs help organizations attract, engage, and retain the best talent. But for this to happen, benefit programs need to be transparent and easy to use.
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