Overturning of Roe v. Wade creates challenging legal issues for self-funded health plan sponsors

On Friday, June 24, 2022, the U.S. Supreme Court issued its decision in Dobbs v. Jackson Women’s Health Organization, and overruled Roe v. Wade and Planned Parenthood of Southeastern Pa. v. Casey.  In doing so, the Court held that the U.S. Constitution “does not prohibit the citizens of each State from regulating or prohibiting abortion.”

While abortions remain legal in a number of states (California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin), as many as 26 states are expected to ban or limit access to abortions now or in the future.

Oklahoma, for example, generally makes it a felony for a physician to administer or assist with an abortion.  21 Okla. Stat. § 861.  Oklahoma also recently enacted the Oklahoma Heartbeat Act (“OHA”), which establishes a private civil cause of action as follows:  “Any person, other than the state, its political subdivisions, and any officer or employee of a state or local governmental entity in this state, may bring a civil action against any person who . . . Knowingly engages in conduct that aids or abets the performance or inducement of an abortion including paying for or reimbursing the costs of an abortion through insurance or otherwise . . . . “  63 Okla. Stat. § 1-745.39(A)(2) (emphasis added).

As applied to employers and their self-funded group health plans, laws like the OHA create very difficult questions, including:

  • Can an employer’s self-funded group health plan pay for an employee to get an abortion in another state that permits abortions – or is the employer and/or its plan administrator subject to criminal and/or civil actions by doing so?
  • Can an employer or its self-funded group health plan pay for an employee to travel to another state that permits abortions – or is the employer and/or its plan administrator subject to criminal and/or civil actions by doing so?
  • Should abortion-related travel benefits be provided through an employer’s existing self-funded group health plan, or can they be provided separately?
  • Can abortion-related travel expenses be provided through an employee-assistance program (EAP) without making the EAP a group health plan?
  • If an employer provides travel benefits so that an employee can get an abortion in another state, must the employer also provide travel benefits for non-abortion-related medical procedures or mental health conditions?
  • Are there dollar limits on the amount that an employer can pay for abortion-related travel expenses?

I. Employer Liability Under State Law?

Suppose that an employer with a self-funded group health plan has employees in Oklahoma and California.  Suppose that Oklahoma prohibits the provision of abortion benefits to any plan members.  Also suppose that California mandates that a benefit plan must provide abortion benefits to all of its members.  If the employer’s group health plan provides abortion benefits, it may arguably be violating the laws of Oklahoma.  If it does not provide abortion benefits, it may be violating the laws of California.  If the plan does not permit abortion benefits, but it nevertheless provides them to a California employee, then plan assets are being wasted in violation of the terms of the plan.  If the plan pays for abortion benefits for California employees but not for Oklahoma employees, then plan members are being treated differently, perhaps in violation of federal regulations.  See 29 C.F.R. § 2560.503-1(b)(5) (requiring that “the plan provisions [must be] applied consistently with respect to similarly situated claimants”).

Congress sought to avoid these kinds of problems by eliminating state regulation in this field, and by instead “establishing [federal] standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.”  29 U.S.C. § 1001(b)  This goal is effectuated in various provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

A. ERISA Preemption of State Laws, Generally

ERISA relieves plan fiduciaries from the aforementioned quandaries by generally preempting state law.  29 U.S.C. § 1144.  Federal preemption is a concept rooted in Article VI, Clause 2 of the U.S. Constitution (the Supremacy Clause), which states that “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof [i.e., ERISA] … shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the Contrary notwithstanding.”

In keeping with this, ERISA states that “the provisions of this subchapter and subchapter III [of ERISA] shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan….”  29 U.S.C. § 1144(a).  ERISA defines “The term ‘State law’ [to include] all laws, decisions, rules, regulations, or other State action having the effect of law, of any State.”  ERISA thus preempts not only state statutory law, but also state regulations, executive and administrative action, etc. if the state law “relates to” an ERISA-regulated plan.  The Supreme Court held long ago that ERISA preempts state lawsuits involving plan benefits.  See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 67 (1987) (“Accordingly, this suit, though it purports to raise only state law claims, is necessarily federal in character [under ERISA] by virtue of the clearly manifested intent of Congress. It, therefore, ‘arise[s] under the . . . laws . . . of the United States,’ 28 U.S.C. § 1331, and is removable to federal court by the defendants, 28 U.S.C. § 1441(b), emphasis added); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 57 (1987) (“we conclude that [plaintiff’s] state law suit asserting improper processing of a claim for benefits under an ERISA-regulated plan is not saved by [29 U.S.C. § 1144(b)(2)(A)], and therefore is preempted by [29 U.S.C. § 1144(a)], emphasis added).

States cannot “capture” self-funded ERISA plans and subject them to state regulation.  ERISA states that:

Neither an employee benefit plan described in section 1003(a) of this title …, nor any trust established under such a plan, shall be deemed to be an insurance company or other insurer, … or to be engaged in the business of insurance … for purposes of any law of any State purporting to regulate insurance companies, insurance contracts….

29 U.S.C. § 1144(b)(2)(A).  The Supreme Court explained the impact of this provision (known as the “deemer clause”) as follows:

We read the deemer clause to exempt self-funded ERISA plans from state laws that “regulat[e] insurance” within the meaning of the saving clause. By forbidding States to deem employee benefit plans “to be an insurance company or other insurer . . . or to be engaged in the business of insurance,” the deemer clause relieves plans from state laws “purporting to regulate insurance.” As a result, self-funded ERISA plans are exempt from state regulation insofar as that regulation “relate[s] to” the plans.  State laws directed toward the plans are preempted because they relate to an employee benefit plan but are not “saved” because they do not regulate insurance. State laws that directly regulate insurance are “saved” but do not reach self-funded employee benefit plans because the plans may not be deemed to be insurance companies, other insurers, or engaged in the business of insurance for purposes of such state laws. On the other hand, employee benefit plans that are insured are subject to indirect state insurance regulation. An insurance company that insures a plan remains an insurer for purposes of state laws “purporting to regulate insurance” after application of the deemer clause. The insurance company is therefore not relieved from state insurance regulation. The ERISA plan is consequently bound by state insurance regulations insofar as they apply to the plan’s insurer.

FMC Corp. v. Holliday, 498 U.S. 52, 62 (1990) (emphasis added).

The Supreme Court’s recent decision in Rutledge v. Pharm. Care Mgt. Ass’n explains that laws having a coercive effect on ERISA plans are preempted:

ERISA is therefore primarily concerned with preempting laws that require providers to structure benefit plans in particular ways, such as by requiring payment of specific benefits … or by binding plan administrators to specific rules for determining beneficiary status ….  A state law may also be subject to preemption if “acute, albeit indirect, economic effects of the state law force an ERISA plan to adopt a certain scheme of substantive coverage.”  … As a shorthand for these considerations, this Court asks whether a state law “governs a central matter of plan administration or interferes with nationally uniform plan administration.” Ibid. (internal quotation marks and ellipsis omitted). If it does, it is preempted.

141 S. Ct. 474, 480 (2020) (emphasis added).

B. ERISA Preemption of State Abortion Laws?

ERISA preemption is not without limits.  There are significant and very relevant exceptions.  For example, ERISA does not preempt “any generally applicable criminal law of a State.”  29 U.S.C. § 1144(b)(4).  Thus, any criminal law that does not specifically target benefit plans, but is instead “generally applicable,” is not preempted by ERISA.

As mentioned above, ERISA also does not preempt state laws that “regulate insurance.”  A state might, for example, be able to require an insurance company to include or not include certain provisions in its insurance policies, including group health insurance policies that fund ERISA-regulated plans (so-called “fully-insured plans”).  But a state cannot similarly regulate the terms and content of a self-funded plan.  Self-funded ERISA plans have the broadest possible protection under ERISA preemption.

The problem with the varying state abortion laws (the ones that exist now and the ones that are sure to be enacted in the future) and ERISA preemption is that even if a state law should be preempted by ERISA, it may take years and multiple layers of courts to definitively determine that a law is preempted.  So, the answer to the question at the beginning of this article  — namely, “Can an employer or plan administrator be subject to criminal or civil actions for paying for an abortion or related travel expenses?” – may be yes, at least until a court says otherwise.

Based on what we know about ERISA preemption, if a state has a law making it a crime for anyone to pay for or reimburse the costs of an abortion, it would be very difficult to argue that ERISA preempts said law as applied to self-funded ERISA plans because the law is generally applicable to everyone – and not just ERISA plan administrators.

On the other hand, laws like the OHA – which provide for a civil cause of action against anyone who pays for or reimburses the costs of an abortion – are likely preempted by ERISA as it relates to ERISA self-funded group health plans.  Thus, it is likely permissible for an ERISA self-funded group health plan to (a) pay for an employee to receive an abortion in a state where it is legal; and/or (b) pay for travel-related expenses to said state.  But states and private litigants may disagree, and ERISA plan administrators and fiduciaries might have to spend time and money litigating about these issues.  And courts may ultimately disagree also.  ERISA preemption does not appear to be getting stronger.  Courts and legislative bodies are using Rutledge (holding an Arkansas state PBM law was not preempted) to essentially argue that ERISA does not preempt anything.  All that to say, even if there are good ERISA preemption arguments, it is risky to ignore state laws.

It is important to keep in mind the obvious:  a plan cannot pay for medical care that is not covered by the plan.  So, if you are an ERISA plan administrator or other fiduciary and you want to provide coverage for abortion expenses and/or abortion-related travel expenses, take a look at your plan document to see what it says.  If your plan does not currently provide this coverage, you cannot provide the coverage – unless the settlor of the plan amends the plan document.  If your plan document is silent but you want to make it clear that your plan pays for an abortion (in a state where it is legal) or related travel expenses, then you should have the settlor of the plan amend your plan document.

II. Beyond ERISA Preemption Issues:  Other Compliance Challenges

There are numerous issues and considerations beyond the state law issues described above – far too many for this article.  But here are some quick thoughts regarding other related issues:

  1. Amending existing health plan may be the best option. If an employer wants to provide coverage for (a) abortion expenses in a state where it is legal; and/or (b) abortion-related travel expenses (e.g., transportation) to another state where it is legal, the likely best way to do that will be to amend the employer’s existing self-funded health plan.  Including these benefits in the employer’s existing self-funded plan will give the hopeful protection of ERISA preemption described above, and it will likely prevent the employer from needing to create a separate stand-alone HIPAA policy, COBRA notice packet, etc. – because the existing plan should already have those in place.
  2. Amending existing health plan = only participating employees.  If an employer amends their existing group health plan to provide coverage for abortion-related travel expenses, they cannot provide these benefits for all employees, i.e., only those employees who are eligible and participating in the current plan may receive these benefits.  If an employer pays benefits from the plan for non-participating employees, the employer will violate the exclusive benefit rule and breach their fiduciary duties.
  3. Amending existing health plan = Mental health parity challenges.  You may recall that the Mental Health Parity rules generally require mental health and substance use disorder benefits to have parity with the plan’s medical surgical benefits.  If an employer’s plan provides coverage for abortion-related travel expenses, but does not provide coverage for mental-health-related travel expenses, the employer may accidentally bust the Mental Health Parity rules.  Thus, it may be best to provide a certain level of travel-related expenses for any covered services (e.g., outside of a certain geographic area) without specifying that they are only for abortion-related travel expenses.  This may also minimize the risk of having the travel-expense benefit challenged under state law because it could theoretically be used for any covered benefit. News media outlets are reporting, for example, that Target will have such a broad travel reimbursement policy, which is reported to include travel for mental health, cardiac care, and other services that are not available near employees’ homes.
  4. Creating a stand-alone plan with only travel benefits likely busts multiple ACA rules. If an employer creates a new stand-alone benefit plan to pay travel benefits on a tax-favored basis, separate from their existing health plan, and if it provides nothing other than travel benefits, it would likely be deemed to violate certain provisions of the Affordable Care Act.  For this reason, it is likely better to add these benefits to the existing, robust group health plan. Even if these benefits are provided on an after-tax basis, this likely still creates these issues.
  5. Employers might be able to create an excepted benefit EAP.  Notwithstanding the comments above, it might be possible to create a stand-alone employee assistance plan (EAP) to pay for travel expenses.  This would allow the employer to provide travel expenses to all employees (not just those covered by the existing self-funded plan).  But there are also risks with this approach – namely, whether providing these benefits would provide significant medical care, based on existing DOL guidance, and trigger all of the normal ERISA-plan obligations.  This could depend on whether the employer currently offer an EAP and, if so, what kinds of benefits are currently offered under the EAP.
  6. Talk to the PBM.  An employer should talk to the pharmacy benefit manager (PBM) for their plan and find out what abortion-related drugs participants have access to, especially through mail order – and especially if they have employees in states that make an abortion illegal.
  7. Multi-state employers: state laws.  If an employer has employees in multiple states, the employer should be sure to know and understand the state laws in all of the states in which they have employees.
  8. City and local ordinances.  There are various cities and municipalities that have either already passed local laws regarding abortion (e.g., Lebanon, Ohio) or are considering them.  We understand there are more than 45 cities that currently have such laws.  Employers will need to be mindful of these local laws and will need to think through any preemption issues.
  9. Tax considerations.  There are limits on the amount of travel benefits that can be provided either under an existing group health plan or separately (through one of the structures mentioned above) on a tax-free basis.  An employer will need to be sure to understand those limits and work with their administrator and/or payroll team to ensure compliance.  Certain expenses cannot generally be paid on a tax-free basis, such as meals.

For assistance in navigating these complex legal issues, please contact your McAfee & Taft Employee Benefits attorney.

No Surprises Act – Overview of IDR Process

The No Surprises Act (NSA) became effective on January 1, 2022.  It prohibits surprise billing in certain circumstances.  Surprise billing occurs when a patient receives an unexpected bill, often for a large amount, from an out of network (OON) provider without having a prior opportunity to select the provider.  The patient’s health plan typically does not cover the full amount of the OON charges and the provider “balance bills” the patient for the outstanding amount. The NSA targets common circumstances where surprise billing occurs, including charges for emergency services furnished by an OON provider or facility, air ambulance services furnished by an OON provider of air ambulance services, or nonemergency services furnished by an OON provider at an in-network facility.

Under the NSA the patient is effectively cut out of the billing dispute—the patient only pays the in-network cost sharing amounts, and the plan must pay under either an state All-Payer Model Agreement or other specified state law.  If there is no such Model Agreement or state law, which will often be the case, the following process applies:

Step 1. The plan must send an Initial Payment or Notice of Denial of Payment within 30 calendar days of receipt of a clean claim covered by the NSA.

Step 2. An open negotiation period must be initiated within 30 business days beginning on the day the OON provider receives either an initial payment or a notice of denial of payment.  The open notice period begins on the day on which the open negotiation notice is first sent by a party.  Care should be taken to ensure that the notice complies with specified requirements.

Step 3.  The parties must exhaust the open negotiation period.  Upon exhausting the open negotiation period, and if open negotiation is unsuccessful, either party may request resolution under the Federal Independent Dispute Resolution (IDR) process whereby a certified independent dispute resolution entity will review the case and determine the final payment amount.  The Notice of IDR Initiation must be sent to the other party and to the Departments within 4 business days after the close of the open negotiation period.  The notice must be submitted to the Departments through the Federal IDR portal at https://www.nsa-idr.cms.gov.  The Notice must contain specific information including the initiating party’s preferred certified IDR entity. The non-initiating party can accept the initiating party’s preferred certified IDR entity or object and propose another certified IDR entity.

Step 4.  The non-initiating party has 3 business days to object (including conflict of interest concerns) and propose another certified IDR entity.  If the non-initiating party fails to object it will be deemed to have accepted the initiating party’s preferred certified IDR entity.

Step 5.  Within 4 business days after the date of initiation of the Federal IDR Process the initiating party must notify the Departments that the parties have agreed on a certified IDR entity, or that the Departments should randomly select a certified IDR entity. Within this period the non-initiating party must notify the Departments if it contends the Federal IDR Process is not applicable. The Departments will supply this information to the selected certified IDR entity, who must determine whether the Federal IDR Process is applicable.  The IDR timeframes will continue to apply while the applicability issue is under review.  If the selected IDR entity cannot participate the Departments will notify the parties, and they will have 3 business days to select another certified IDR entity, or, if the parties indicated that they cannot agree on a certified IDR entity, the Departments will randomly select another certified IDR entity. The NSA allows for multiple qualified claims to be considered as part of a single IDR determination (batching) when the claims involve the same provider(s), plans, items, and services, and were incurred in the same 30/90-day period.

Step 6.  If necessary, the Departments will make a random selection of a certified IDR entity within 6 business days after IDR initiation. The certified IDR entity may invoice the parties for administrative fees at the time of selection.  These fees are estimated by the Departments to be $400 on average, and within the range of $200-$500, or $268-$670 for batched claims.

Step 7.  Within 3 business days of selection, the certified IDR entity must submit an attestation that it does not have a conflict of interest and a determination that the Federal IDR Process is applicable.

Step 8.  Within 10 business days after selection of the certified IDR entity each party must submit its offer (the amount it contends should be paid to satisfy the claim) and pay the certified IDR entity fee (which will be held in a trust or escrow account by the certified IDR entity), and the administrative fee which is a separate paid to the Departments.  An offer will not be considered received by the certified IDR entity until the certified IDR entity fee and the administrative fee have been paid.  The offer must include both a dollar amount and a percentage of the QPA (which is the median of the contracted rates recognized by the plan for the same or similar item or service that is provided by a provider in the same or similar specialty and provided in the same geographic region).  Different QPAs should be provided if applicable for batched claims. If a party fails to make a timely or complete offer the certified IDR entity will select the other party’s offer as the final payment amount.

Step 9.  Within 30 business days after the date of its selection the certified IDR entity must determine the payment amount (the parties may continue to negotiate up to the time the certified IDR entity makes its determination, in which case the initiating party has 3 business days to notify the entity and the departments of the agreement).  The certified IDR entity must select one of the offers submitted and notify the parties and the Departments of its decision.  The certified IDR entity must consider “credible” information submitted by the parties which relate to the offers, and which are not prohibited (usual and customary rates, billed charges, and Medicare rates).  Additional information (different for air ambulance and non-air ambulance items and services) may be considered such as training, experience, quality of outcomes, market share, acuity of the patient, teaching status, case mix, scope of services, and good faith effort by the provider to enter into network arrangements.

Step 10.  Any amount due from one party to the other party must be paid within 30 calendar days after the determination by the certified IDR entity. The certified IDR entity must refund the prevailing party’s certified IDR entity fee paid within 30 business days after the determination. The certified IDR entity’s decision is binding upon the parties unless there is fraud or evidence of intentional misrepresentation of material facts to the certified IDR entity.

Here are some other general rules related to the IDR process:

Cooling off period.  The party that initiated the Federal IDR Process may not submit a subsequent Notice of IDR Initiation involving the same other party with respect to a claim for the same or similar item or service that was the subject of the initial Notice of IDR Initiation during the 90-calendar-day suspension period following the determination.

Extensions.  May be made for good cause in extenuating circumstances (such as natural disasters).  Payment periods cannot be extended.

Recordkeeping and Reporting.  Certified IDR entities must maintain records of all claims and notices associated with the Federal IDR Process with respect to any payment determination for 6 years. Certified IDR entities must report certain data within 30 business days of the close of each month through the Federal IDR portal.  The reporting must be done to maintain certification.

Confidentiality.  Certified IDR entities must maintain confidentiality and security regarding individually identifiable health information (IIHI) and must report any breaches of confidentiality.

Revocation of Certification.  The Departments may revoke the certification of a certified IDR entity if the entity demonstrates incompetence or failure to comply with the Federal IDR Process.

Resources (including links to model notices and forms).

Additional DOL Guidance on Free Over-the-Counter COVID Tests

This is a supplement to our January 16, 2022 post on the new requirements related to health plans providing free over-the-counter COVID tests.

Last Friday (February 4), the DOL issued additional guidance on this topic, which confirms that a direct to consumer shipping program is required (if a health plan wants to be able to limit reimbursement for OON to $12, as we described in our January 16 post) and also provides a few new wrinkles:

  • At Least One Direct to Consumer Shipping Mechanism Generally Required.  “Q1: Do plans and issuers have flexibility in how they establish a direct-to-consumer shipping program and direct coverage through an in-person network in order to qualify for the safe harbor established in FAQs Part 51, Q2?  Yes. In response to questions raised by stakeholders, the Departments are revising the requirements of the safe harbor established in FAQs Part 51, Q2 to ensure that plans and issuers have significant flexibility in how they provide access to OTC COVID-19 tests under those requirements. In order to meet the requirements of the safe harbor, plans and issuers must provide direct coverage by ensuring participants, beneficiaries, and enrollees have adequate access to OTC COVID-19 tests with no upfront out-of-pocket expenditure. For this purpose, whether a plan or issuer provides adequate access through its direct coverage program will depend on the facts and circumstances, but will generally require that OTC COVID-19 tests are made available through at least one direct-to-consumer shipping mechanism and at least one in-person mechanism. [The Departments recognize that there may be some limited circumstances in which a direct coverage program could provide adequate access, and therefore satisfy the requirements of the safe harbor, without establishing both a direct-to-consumer shipping mechanism and an in-person mechanism. For example, if a small employer’s plan covers only employees who live and work in a localized area, it could be possible that distribution at a nearby location constitutes adequate access to OTC COVID-19 tests without establishing a direct-to-consumer shipping mechanism.]  “Direct coverage” may be provided through a number of mechanisms, including, but not limited to, a direct-to-consumer shipping program that allows for orders to be placed online or by telephone; the plan’s or issuer’s pharmacy network; other non-pharmacy retailers (including through distribution of coupons for enrollees to receive tests from certain retailers without cost-sharing); and alternative OTC COVID-19 test distribution sites established by, or on behalf of, the plan or issuer (such as a standalone drive-through or walk-up distribution site, including a site that operates independently of a pharmacy or other retailer).”

M&T Commentary:  To the extent that clients are not yet able to provide the direct to consumer shipping program, the bracketed language above – and the “number of mechanisms” language – is what we are going to rely on – on a very temporary basis – to say that we are complying with the safe harbor until the direct to consumer shipping program is up and running.  It is not crystal clear that this works but many other employers and PBMs are working hard to get the direct to consumer shipping program up and running since this guidance was issued so recently.  The example provided above for a “limited circumstance” involving a “small employer” whose employees “live and work in a localized area” without a consumer shipping mechanism available, cannot be used by larger employers to somehow try to bypass the direct to consumer shipping requirement.

  • Plan Participants Must Be Made Aware of Key Information.  In order to facilitate consumer access and provide for a seamless experience in obtaining OTC COVID-19 tests with no upfront out-of-pocket expenditure, plans and issuers should ensure that participants, beneficiaries, and enrollees are aware of key information needed to access OTC COVID-19 testing, such as which tests are available under the direct coverage program, and if the plan or issuer offers different mechanisms for obtaining tests under its direct coverage program, which tests are available under each mechanism.
  • Direct to Consumer Shipping Mechanism Can Take Different Shapes As Long As Individual Can Order and Get at Home.  This FAQ clarifies that a direct-to-consumer shipping mechanism is any program that provides direct coverage of OTC COVID-19 tests for participants, beneficiaries, or enrollees without requiring the individual to obtain the test at an in-person location. A direct-to-consumer shipping mechanism can include online or telephone ordering and may be provided through a pharmacy or other retailer, the plan or issuer directly, or any other entity on behalf of the plan or issuer. A direct-to-consumer shipping program does not have to provide exclusive access through one entity, as long as it allows a participant, beneficiary, or enrollee to place an order for OTC COVID-19 tests to be shipped to them directly. For example, if a plan or issuer has opted to provide direct in-person coverage of OTC COVID-19 tests through specified retailers, and those retailers maintain online platforms where individuals can also order tests to be delivered to them, the Departments will consider the plan or issuer to have provided a direct-to-consumer shipping mechanism.
  • Plan Must Pay Shipping Costs.  When providing OTC COVID-19 tests through a direct-to-consumer shipping program, plans and issuers must cover reasonable shipping costs related to covered OTC COVID-19 tests in a manner consistent with other items or products provided by the plan or issuer via mail order.
  • In Person Mechanism Must Provide Adequate Number of Locations.  When implementing an in-person mechanism, a plan or issuer must ensure that participants, beneficiaries, or enrollees have access to OTC COVID-19 tests through an adequate number of locations (which could include pharmacies and other retailers, or independent distribution sites set up by, or on behalf of, a plan or issuer). As the Departments noted in FAQs Part 51, Q2, whether there is adequate access should be determined based on all relevant facts and circumstances, such as the locality of participants, beneficiaries, or enrollees under the plan or coverage; current utilization of the plan’s or issuer’s pharmacy network by its participants, beneficiaries, or enrollees, when making such coverage available through a pharmacy network; and how the plan or issuer notifies participants, beneficiaries, or enrollees of the retail locations, distribution sites, or other mechanisms for distributing tests, as well as which tests are available under the direct coverage program.
  • Tests Must Be Used and Processed Without Involvement of a Lab or Other Health Care Provider.  To the extent a COVID-19 test is not approved or authorized to be self-administered and self-read without the involvement of a health care provider (such as a test where a consumer collects a specimen at home and sends the specimen to be processed in a laboratory), the safe harbor guidance is not applicable.
  • Temporary Supply Shortage Will Not Destroy Ability to Rely on the Safe Harbor (i.e., the $12 OON cap).  The Departments will not consider a plan or issuer to be out of compliance with the safe harbor in FAQ Part 51, Q2 if it has established a direct coverage program that meets the requirements of that safe harbor as revised by Q1 of these FAQs Part 52 but is temporarily unable to provide adequate access through the program due to a supply shortage. In that circumstance, a plan or issuer that otherwise meets the requirements of the safe harbor may continue to limit reimbursement to $12 per test (or the full cost of the test, whichever is lower) for OTC COVID-19 tests purchased outside of the direct coverage program.
  • Plan May Disallow Reimbursement for Tests Obtained from a Private Individual.  In order to further discourage problematic behaviors that could limit access to consumers, a plan or issuer may establish a policy that limits coverage of OTC COVID-19 tests purchased without the involvement of a health care provider to tests purchased from established retailers that would typically be expected to sell OTC COVID-19 tests. Specifically, plans and issuers may disallow reimbursement for tests that are purchased by a participant, beneficiary, or enrollee from a private individual via an in-person or online person-to-person sale, or from a seller that uses an online auction or resale marketplace. Such a policy could include requiring reasonable documentation of proof of purchase that clearly identifies the product and seller, such as a UPC code or other serial number, original receipt from the seller of the test, or other documentation for the OTC COVID-19 test to verify that the item qualifies for coverage under section 6001 of FFCRA, or a requirement that the participant, beneficiary, or enrollee attest that the test has not been (and will not be) reimbursed by another source (including through resale). If a plan or issuer implements a policy that disallows reimbursement for OTC COVID-19 tests from certain resellers, the plan or issuer should provide information to participants, beneficiaries, or enrollees regarding the retailers from which purchased tests are generally covered by the plan or issuer and general information about the types of resellers for which participants, beneficiaries, and enrollees are not eligible for reimbursement of purchased tests under the plan or coverage. This does not modify the requirement of FAQs Part 51, Q4 that prohibits a plan or issuer from requiring individuals to submit multiple documents or implementing numerous steps that unduly delay a participant’s, beneficiary’s, or enrollee’s access to, or reimbursement for, OTC COVID-19 tests.

Unanimous Supreme Court Holds Retirement Plan Fiduciaries Must Monitor and Remove All Imprudent Investment Options

Last week, on January 24, the United States Supreme Court issued its much-anticipated decision in Hughes v. Northwestern University (“Hughes”), unanimously holding that retirement plan fiduciaries have a duty to continuously monitor retirement plan investment options and to remove all imprudent ones.  In its opinion, the Supreme Court made it clear that if there are imprudent investment options in a retirement plan (such as a 401(k) plan), plan fiduciaries cannot ignore them just because there are other prudent investment options.

Northwestern University offers two defined contribution retirement plans for its eligible employees.  Like many other similar plans, the plans’ fiduciaries select the investment options from which participating employees can choose to invest their retirement plan savings.  The plaintiffs in Hughes allege that the Northwestern University plan fiduciaries breached their duty of prudence under the Employee Retirement Income Security Act of 1974 (“ERISA”) by: (1) failing to monitor and control the fees paid by the plans for recordkeeping, resulting in unreasonably high costs to plan participants; (2) offering a number of mutual funds and annuities in the form of “retail” share classes that carried higher fees than those charged by identical “institutional” share classes; and (3) offering too many investment options (over 400) and thereby causing participants to be confused and make poor investment decisions.

The lower court (U.S. Court of Appeals for the Seventh Circuit) had dismissed the plaintiffs’ allegations because the court determined that the Northwestern University fiduciaries had provided an adequate array of choices, including the types of low-cost funds the plaintiffs wanted.  In the lower court’s view, the fact that participants could have chosen lower-cost funds destroyed any claim that the defendants had breached their fiduciary duty by leaving imprudent options in the plans.  In effect, the lower court determined that it did not matter that there were “bad” investment options in the plans’ investment menu – because there were also “good” ones that participants could have chosen during the relevant time.

In its decision, the Supreme Court unanimously rejected this participant-choice rationale – and made it crystal clear that ERISA requires plan fiduciaries to continuously monitor all plan investments and to remove any imprudent ones.

While the Supreme Court’s decision in Hughes is important, the Court did not address the arguably more-important issue that many in the employee benefits community had been hoping the Court would address:  What does a plaintiff in an ERISA excessive fee case have to plead in their complaint to survive a motion to dismiss?  In the past week, since the Hughes decision was issued, commentators are all over the place guessing about what the Court’s decision means for this important question.  Some commentators think the Hughes decision will make it more difficult for plaintiffs to bring these types of lawsuits.  Other commentators think the opposite.  Unfortunately, the opportunity has passed, for now, for the Court to resolve this question and lower courts will continue to struggle with it.

Free Over-the-Counter COVID Tests (if you can find them)

The Families First Coronavirus Response Act (FFCRA) was enacted on March 18, 2020, and generally requires group health plans to provide benefits for certain items and services related to COVID-19 testing when those items or services are furnished on or after March 18, 2020 and during the applicable emergency period.  Plans must provide this coverage without imposing any cost-sharing requirements (including deductibles, copayments, and coinsurance), prior authorization, or medical management requirements.

Less than 10 days later, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended the FFCRA to include a broader range of diagnostic items and services that plans must cover without any cost-sharing requirements, prior authorizations, or other medical management requirements.

Then, in June 2020, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) issued guidance stating that plans are required to cover COVID-19 tests intended for at-home testing, when the testing is ordered by an attending health care provider who has determined that the test is medically appropriate.  The Departments noted, at that time, that the Food and Drug Administration (FDA) had not yet authorized any COVID-19 diagnostic tests to be completely used and processed at home.  Since that time, however, the FDA has authorized additional diagnostic tests for COVID-19, including tests that can be self-administered and self-read at home.  These COVID-19 tests are now available over-the-counter (if you can find them) through pharmacies, retail stores, and online retailers (OTC Tests).

Last week, on January 10, 2022, the Departments issued updated guidance stating that the requirement for health plans to cover free OTC Tests is no longer limited to situations in which the individual has an order from a health care provider.  This updated guidance provides the following details:

  1. Free OTC Tests must be provided on or after January 15, 2022 through the end of the public health emergency.
  2. Plans are still not required to provide coverage for COVID-19 tests (including OTC Tests) that are for employment purposes (e.g., testing required under an employer return-to-work policy), as opposed to tests for diagnosis or treatment of COVID-19. Please note, however, that the employer may nonetheless be required to pay for such testing under applicable state law.
  3. A plan cannot limit coverage to OTC Tests that are provided through preferred pharmacies. A plan may, however, arrange for direct coverage of OTC Tests through its pharmacy network and a direct-to-consumer shipping program, and then otherwise limit reimbursement outside of the plan’s arrangement to $12 per test.  This reference to a “direct” arrangement means the participant (which, for this article, includes beneficiaries and other enrollees) is not required to seek post-purchase reimbursement, i.e., the plan must pay the pharmacy or retailer directly with no up-front cost to the participant.  While many plans are looking to set up such an arrangement and direct employees to get their OTC Tests through a preferred network provider (after negotiating a discounted rate from the provider), there is some concern among employers that such an arrangement will result in increased volume and thus increased costs.
  4. If a plan sets up the direct arrangement described above and then only pays $12 for OTC Tests that are obtained outside of the direct arrangement, the $12 per test must be calculated based on the number of tests in a package.
  5. If a plan sets up the direct arrangement described above, plans cannot impose any prior authorization or other medical management requirements on participants, and must take reasonable steps to ensure that participants have adequate access to OTC Tests through an adequate number of retail locations (including both in-person and online).
  6. If a plan sets up the direct arrangement described above, plans must ensure that participants are aware of key information needed to access OTC Tests, such as dates of availability of the direct coverage program and participating retailers or other locations.
  7. Plans can limit the number of OTC Tests covered for each participant, beneficiary, or enrollee to 8 tests per 30-day period or per-calendar month. Please note for example, that if a family has six members covered by the plan, this means the plan must pay for 48 OTC Tests per month.  For employers with a significant workforce, the financial projections – even assuming some actuarial reductions for likely usage – are staggering.
  8. A plan can require an attestation, such as a signature on a brief attestation document, that the OTC Test (a) was purchased by the participant for personal use, not for employment purposes; (b) has not been (and will not be) reimbursed by another source; and (c) is not for resale.

New Health Plan Disclosure Requirements Should Bring More Transparency

Ten years ago, the United States Department of Labor (“DOL”) published a final regulation under the Employee Retirement Income Security Act of 1974 (“ERISA”), which required retirement plan service providers to disclose information about the service provider’s compensation and potential conflicts of interest. Under that regulation, covered service providers to retirement plans are required to disclose: (a) the services they provide to the retirement plan; (b) all “direct compensation” (i.e., directly from the plan) the service provider, its affiliate or a subcontractor reasonably expects to receive in connection with their services; (c) all “indirect” compensation (generally, compensation from some source other than the plan or the plan sponsor) the service provider, its affiliate, or a subcontractor reasonably expects to receive; (d) any related-parties compensation that will be paid among the service provider, an affiliate, or a subcontractor that is set on a commissions, soft-dollar, finder’s-fee, or other similar basis; and (e) certain other information.

Largely as a result of this regulation, retirement plan fiduciaries know (or should know) exactly who is getting paid, how much, and why for services provided to their retirement plans. There are (or should be) no secrets. This allows retirement plan fiduciaries to have a very clear understanding of any potential conflicts of interest.

Unfortunately, because of the absence of similar rules, this has not always been the case for health plan fiduciaries. On the health plan side, the rules have not required the same level of disclosure and thus health plan fiduciaries have not always had the same level of insight into every type and amount of compensation that their service providers may be receiving. For example, some brokers or consultants might have previously received undisclosed “book of business” or “5500” bonuses, based on the overall volume of business that they have placed with a certain provider – without any clear requirement to disclose such compensation to their employer clients.  Thus, many health plan fiduciaries have not able to assess all potential conflicts of interest.

Because of new rules that became effective December 27, 2021, the health plan side of the business is changing. The Consolidated Appropriations Act, 2021 (the CAA), amended ERISA effective December 27, 2021 to require certain service providers to group health plans to disclose specified information to a responsible plan fiduciary about the direct – and indirect – compensation that the service provider expects to receive in connection with services to the plan. The new disclosure requirements apply to persons who provide “brokerage services” or “consulting” to ERISA-covered group health plans who expect to receive $1,000 or more in direct or indirect compensation. The disclosures are intended to provide plan fiduciaries with sufficient information to assess the reasonableness of the compensation to be received (before it is received) and any potential conflicts of interest.

About 10 days ago, the DOL issued Field Assistance Bulletin 2021-03 (“New FAB”) to clarify some important aspects of the new CAA requirement:

  1. Look to Retirement Plan Rules. The disclosure requirements for health plans are not identical to the requirements for retirement plans, but the New FAB provides that health plan fiduciaries can look to the retirement plan regulation and its requirements when evaluating what kind of information to expect and request from their health plan brokers and consultants.  Thus, health plan fiduciaries should ask their service providers to disclose the same level of detailed information that is required of retirement plan service providers.
  2. Insured and Self-Funded. The new health plan disclosure requirements apply to fully-insured and self-funded group health plans.
  3. Applies to Limited Scope Dental and Vision. The new disclosure requirements apply to limited scope dental and vision plans – not just group health plans.
  4. Not Just Licensed “Brokers” or “Consultants.” The new disclosure requirements apply to providers of “brokerage services” and “consulting” services. The FAB makes it clear that just because a service provider does not call itself a “consultant” or charge a “consulting” fee does not determine whether they have to comply with the new disclosure requirements. The DOL expects reasonable and good faith efforts. Service providers who reasonably expect to receive indirect compensation from third parties in connection with advice, recommendations, or referrals for any of the listed services, should comply with the new disclosure requirements and not try to label themselves as something other than a broker or consultant merely to avoid the rules.
  5. December 27, 2021. The new requirements apply to contracts entered into, renewed, or extended on or after December 27, 2021.

These new disclosure requirements should bring more transparency to the health plan side of employee benefits and allow plan fiduciaries to know and understand all the ways, direct and indirect, that everyone is getting paid. This will allow fiduciaries to identify and assess conflicts of interest.

Permanent Extension of Form 1095-C Reporting Deadline

The Internal Revenue Service recently released a host of changes to Form 1095-C reporting required under the Affordable Care Act. This is welcome relief for large employers who struggle to deliver these forms to employees by the old January 31 deadline. 

A. Deadline Extension 

The IRS issued proposed regulations to permanently delay the deadline to deliver Form 1095-C to employees by 30 days from January 31 to March 2 (except in a leap year). If the due date falls on a weekend or holiday, the form is due the next business day. Although these are proposed regulations, they may be relied on by taxpayers. 

As a refresher, Form 1095-C is used by Applicable Large Employers to report to employees and the IRS information such as whether the employer made an offer of coverage to its full-time employees, the amount of the employee contribution for health coverage, and the use of affordability safe harbors. Form 1094-C is used by Applicable Large Employers to transmit all Form 1095-Cs to the IRS. Both forms are used by the IRS to determine whether a sufficient number of full-time employees received an offer of coverage under the health plan and whether that offer is affordable. Both of those factors determine whether an employer shared responsibility payment (ESRP) is assessed. 

Prior to the relief, Form 1095-C was required to be delivered to participants no later than January 31. However, for every year the reporting requirement has been in effect (since 2015), the IRS has extended the deadline, usually by 30 days. This guidance makes that extension permanent. Because the January 31 deadline coincides with other reporting deadlines, such as Form W-2, it created extensive administrative burdens for employers to timely deliver the form to employees. The extended deadline is welcome relief. 

Note that the deadline for reporting Form 1094-C (along with all the Form 1095-Cs) to the IRS has not changed. That deadline remains February 28 for paper filings or March 31 if filed electronically. However, employers can still request a 30-day extension for the IRS filings. 

B. Alternative Method for Furnishing Individual Notice

For plans that are fully insured, the IRS also made permanent reporting relief for Form 1095-B. This form is used to report coverage information for purposes of the individual mandate. But because the individual mandate penalty has been reduced to zero, the IRS no longer needs the information on this form. Therefore, insurers are not required to furnish Form 1095-B as long as the individual mandate remains at zero. Insurers are, however, required to send the form to employees upon request, and employees must be conspicuously notified of this right. 

Note that this relief does not apply to Form 1095-C for full-time employees. This form must still be furnished to individuals and the IRS because it contains additional information regarding full-time status of employees, which the IRS needs for purposes of the employer mandate. However, employers are no longer required to send Form 1095-C to individuals who are not full-time employees, such as part-time employees, retired employees, or COBRA qualified beneficiaries. Instead, a clear and conspicuous notice must be provided on the employer’s website informing these individuals that they may receive the notice upon request. The notice must include certain contact information for the employer. 

C. No More “Good Faith” Reporting Relief

The IRS has historically provided penalty relief for failure to accurately complete these forms provided that employers made a good faith effort at compliance. However, consistent with prior guidance, the IRS has announced that relief for inaccuracies will not be granted in future years. The good faith reporting relief was intended to just be transitional to allow time for employers to get used to accurate reporting.

COVID Vaccines: When is an Employee’s Vaccination Status HIPAA-Protected?

Whether an employee’s vaccination status is protected by HIPAA has been (or should be) on the minds of all human resources personnel as of late. This is especially true in the wake of the Department of Labor’s Occupational Safety and Health Administration (“OSHA”) impending rule that will likely require employers with 100+ employees to ensure their workforce is either vaccinated or regularly tested. While waiting for the OSHA rule to be finalized and released, employers should ensure they are familiar with the Privacy Rule’s application to vaccination status by asking questions like:

  1. Does the HIPAA Privacy Rule prohibit businesses or individuals from asking their customers whether they have been vaccinated? 
  2. Does the HIPAA Privacy Rule prohibit an employer from requiring a workforce member to disclose whether they have received a COVID-19 vaccine to the employer, clients, or other parties?

Fortunately, the Department of Health and Human Services (“HHS”) recently addressed these and other frequently asked questions in new guidance. Below is a quick refresher on the HIPAA privacy rule, as well as the HHS response to these common questions. 


The HIPAA Privacy Rule generally applies to information categorized as protected health information (“PHI”). PHI includes almost all health information that identifies an individual – generally, information that relates to the past, present, or future physical or mental health condition of an individual, the provision of healthcare to an individual, or payments for healthcare. PHI can include not only traditional healthcare information, but even names, addresses, ages, etc. when connected to healthcare information.

However, not all healthcare information constitutes PHI. PHI generally only encompasses health information that is created, received, maintained, or transmitted by a covered entity or a business associate. So that begs the question – what entities are covered entities? Health plans are generally covered entities. HIPAA defines this broadly to include any individual or group plan that pays for the cost of medical care. So, when in the hands of a covered entity, an individual’s vaccination status will likely constitute PHI and be protected under the Privacy Rule. 

Importantly, HIPAA specifically excludes from PHI information held by the employer in its employment records. An employer who sponsors a group health plan generally wears two separate hats – it has different responsibilities when acting as an employer and when acting as a covered entity, i.e. the health plan. 

Even if certain information may not be PHI and protected by HIPAA, employers should also consider whether state law provides a stricter rule. While state laws may not be less restrictive than HIPAA requirements, they can provide additional restrictions. 


Given those basic rules, HHS answered these common questions for employers:

1. Does the HIPAA Privacy Rule prohibit businesses or individuals from asking their customers whether they have been vaccinated? 

No. HHS clarified that the Privacy Rule does not prohibit anyone from simply asking another whether he or she is vaccinated. When a business asks customers whether they are vaccinated, the business is likely not acting as a covered entity, i.e. the health plan. When the employer is not acting as the health plan, the Privacy Rule generally does not apply. 

Additionally, the Privacy Rule does not prohibit covered entities from simply requesting health information. Instead, the Privacy Rule is concerned with the manner in which covered entities use and disclose PHI in their possession. HHS gave some examples. The Privacy Rule does not apply when an individual:

  • is asked about their vaccination status by a school, employer, store, restaurant, entertainment venue, or another individual;
  • asks another individual, their doctor, or a service provider whether they are vaccinated;
  • asks a company, such as a home health agency, whether its workforce members are vaccinated.

The Privacy Rules also does not prohibit a person from disclosing his or her own vaccination status. HIPAA of course permits a person to disclose his own health status as he or she wishes. When an individual is discussing his own health information, he is most likely not acting as a covered entity or a business associate. 

2. Does the HIPAA Privacy Rule prohibit an employer from requiring a workforce member to disclose whether they have received a COVID-19 vaccine to the employer, clients, or other parties?

No. Remember that the Privacy Rule does not apply to information held by the employer in its employment records – in contrast to information held by the health plan. The Privacy Rule does not prohibit an employer from requesting an employee’s vaccination status as part of the terms and conditions of employment. HHS also gave some examples here. The Privacy Rule does not prohibit a covered entity or business associate from requiring or requesting each workforce member to:

  • provide documentation of their COVID-19 or flu vaccination to their current or prospective employer;
  • sign a HIPAA authorization for a covered health care provider to disclose the workforce member’s COVID-19 or varicella vaccination record to their employer;
  • wear a mask – while in the employer’s facility, on the employer’s property, or in the normal course of performing their duties at another location;
  • disclose whether they have received a COVID-19 vaccine in response to queries from current or prospective patients.

Although these examples are generally permitted under the Privacy Rule, employers should be aware that other federal or state laws may also come into play when requiring employees to obtain vaccinations as a condition of employment and how employers must handle that information. For example, documentation on an employee’s vaccination status must be kept confidential and stored separately from the employee’s other personnel files pursuant to the Americans with Disabilities Act.

New Health Plan Guidance Regarding Transparency Regulations and Last Year’s Budget Act

Late last Friday afternoon, the Departments of Labor, Health and Human Services, and the Treasury, issued some new frequently asked questions (FAQs) regarding implementation of the transparency in coverage (TIC) regulations and the Consolidated Appropriations Act of 2021 (CAA).

You might recall that the TIC regulations require group health plans to publish three machine-readable files for plan years beginning on or after January 1, 2022.  The TIC regulations also require an online shopping tool in plan years beginning on or after January 1, 2023.  Please see this blog article for a quick reminder of the TIC regulations:  https://erisalinc.com/more-details-on-transparency-rules-that-apply-in-2022-and-beyond/.

You might also recall that the CAA imposes significant requirements on group health plans, including the No Surprises Act (NSA).  The NSA applies for plan years beginning on or after January 1, 2022.  Please see this blog article for a quick reminder of the CAA:  https://erisalinc.com/last-weeks-government-funding-bill-significant-new-benefit-plan-rules/.

Last Friday’s FAQs provide important guidance regarding the TIC regulations and the CAA.  Here is a quick summary of some of the major points:

  1. Enforcement of Machine-Readable File Requirements.  The government intends to enforce the requirement that plans publish the three machine-readable files for plan years beginning on or after January 1, 2022 – subject to two exceptions:
    1. No Enforcement of Machine-Readable File Requirement Related to Prescription Drugs.  The third machine-readable file that must be disclosed under the TIC regulations requires disclosure of information related to prescription drugs.  The FAQs indicate that the government recognizes the overlapping requirements (issued after the TIC regulations) contained in the CAA – and intends to evaluate whether the prescription drug machine-readable file requirement remains appropriate.
    2. July 1, 2022 Delayed Enforcement Date for Machine-Readable File #1 and File #2.  The TIC regulations require disclosure of machine-readable files for in-network rates and out-of-network allowed amounts and billed charges, for plan years beginning on or after January 1, 2022.  The government is basically delaying enforcement of this rule until July 1, 2022.  For plans that have a plan year in 2022 that begins after July 1, 2022, this is not helpful.
  2. Self-Service Price Comparison Requirements.  The government recognizes that the TIC regulations require an online shopping tool for plan years beginning on or after January 1, 2023 – and the CAA also has similar-but-separate  requirements.  The government believes these requirements are duplicative except the CAA imposes an additional requirement that pricing information be available by telephone also, upon request.  The government intends to propose rulemaking requiring the same pricing information that is available online and in paper form (under the TIC regulations) will also be required by telephone.  Additionally, the government will not enforce the CAA price comparison requirements until the plan year beginning on or after January 1, 2023 – to align the compliance date of the TIC regulations with the compliance date of the CAA.
  3. ID Card Requirements Applicable to Plan Years On or After January 1, 2022.  The CAA requires plans to include on any physical or electronic ID card issued to participants and beneficiaries any applicable deductibles, any applicable out-of-pocket maximums, and a telephone number and a website address for individuals to seek consumer assistance.  These requirements apply for plan years on or after January 1, 2022.  The FAQs provide:
    1. No Regulations Coming.  The government does not intend to issue regulations addressing the ID card requirements prior to the effective date.
    2. Good Faith Is the Standard.  Until such guidance is ultimately issued, the government expects a good-faith, reasonable interpretation of the law.  This means:
      1. The information on ID cards must be reasonably designed and implemented to provide the required information to all participants, beneficiaries, and enrollees.
      2. The government will consider each of the specific data elements included on relevant ID cards; whether any data element required, but not included on the face of an ID card, is made available through information that is provided on the ID card, as well as the mode by which any information absent from the card is made available; and the date by which a plan makes required information available on ID cards.  As an example, the government would deem a plan to be in good-faith compliance where the plan includes on any physical or electronic ID card the following:
        1. the applicable major medical deductibles and out-of-pocket maximum;
        2. telephone number;
        3. website address for individuals to seek consumer assistance and access additional applicable deductibles and maximum out-of-pocket limits (additional limits could also be provided on a website accessed through a Quick Response code on the ID card or through a hyperlink in the case of a digital ID card).
  4. Advanced EOBs Effective Date Delayed.  The CAA requires an advanced EOB in certain circumstances for plan years on or after January 1, 2022.
    1. No Regulations Coming.  The government does not intend to issue regulations addressed the advanced EOB requirement prior to the effective date.
    2. But No Enforcement.  Because the government understands the complexity involved in the advanced EOB and related requirements, the government will not enforce this rule – so plans do not need to provide an advanced EOB for plan years beginning on or after January 1, 2022.
  5. No Gag Clauses.  As to the CAA requirements that generally prohibit plans from entering into an agreement that restricts the plan from disclosing cost and quality of care information, which were effective December 27, 2020, the government does not intend to issue regulations anytime soon – but does expect compliance.
  6. Provider Directory Requirements.  The CAA requires plans to establish a process to update and verify the accuracy of provider directory information, among other things.  These provisions apply for plan years beginning on or after January 1, 2022.  The government does not intend to issue regulations on these requirements any time soon.  Plans are expected to implement these provisions using a good faith, reasonable interpretation of the requirements, but this appears to require plans to financially stand behind any incorrect information given to plan participants.
  7. Deferred Disclosure Deadline for Pharmacy and Other Information.  The CAA requires plans to report certain prescription drug expense and other information to the government (e.g., 50 most frequently dispensed drugs; total number of paid claims for each drug; etc.) by December 27, 2021 – and then annually by June 1 (beginning June 1, 2022).  The government is not going to enforce the first deadline of December 27, 2021 or the second of June 1, 2022.  The government encourages plans to be working towards compliance by December 27, 2022 (for 2020 and 2021 data).

Nevertheless, the Affordable Care Act Persisted

On June 17, 2021, the U.S. Supreme Court issued its ruling in California v. Texas on a challenge to the constitutionality of the Affordable Care Act (“ACA”). This was the third major challenge to the ACA since it was enacted in 2010.

In this case several states and two individual plaintiffs alleged that the individual mandate penalty, which was reduced to zero dollars under the Tax Cuts and Jobs Act of 2017, was unconstitutional, and, as a result, the entire ACA should fall. By a vote of 7-2, the justices held that the plaintiffs did not have legal standing to challenge the individual mandate because they did not show a past or future injury that would be traceable to any allegedly unlawful Government conduct in enforcing the individual mandate.

Because the case was dismissed for a lack of standing, the U.S. Supreme Court did not review or decide whether the penalty-less individual mandate or the rest of the ACA is constitutional.  Accordingly, the ACA remains in full effect, and this decision has no practical impact on individuals, plan sponsors, insurers, the health care system and beyond.