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Group Health Plan Service Contracts Trigger Compensation Disclosures

Among the new requirements that are, or soon will be, imposed on employer-sponsored group health plans subject to ERISA (?Ç£GHPs?Ç¥) by the Consolidated Appropriations Act of 2021 (the ?Ç£CAA?Ç¥) are compensation disclosure requirements which apply to GHPs and certain of their third-party service providers. Background ERISA contains prohibitions on certain transactions between an employee benefit plan, including a GHP and a party-in-interest, such as a third-party service provider.?á Section 408(b)(2) of ERISA provides an exemption from the prohibited transaction rules for reasonable contracts entered into by a plan and a service provider for necessary plan-related services (?Ç£Contract?Ç¥), provided that no more than reasonable compensation is paid for such services (the ?Ç£Prohibited Transaction Exemption?Ç¥). The relevant fiduciary of the plan under ERISA (the ?Ç£Fiduciary?Ç¥) is responsible for determining whether compensation to be paid under the Contract is reasonable in order to comply with the Prohibited Transaction Exemption. Disclosure Requirement under the… Continue Reading

Updates on Employee Benefits Regulations Impacted by the Biden Administration?ÇÖs Regulatory Freeze

On January 20, 2021, the Biden Administration issued a memorandum (the ?Ç£Memo?Ç¥) calling for a 60-day freeze on regulations that had not taken effect as of the date of the Memo, which included certain regulations related to employee benefits (see our prior blog post regarding the Memo here). The Memo also authorized additional postponement of such regulations following the 60-day period where deemed necessary for further review. Listed below are some of the previously discussed proposed and final regulations related to employee benefits that were impacted by the Memo and updates to their effective dates: Independent Contractor Status Under the Fair Labor Standards Act. Final Rule. Effective date is delayed until May 7, 2021. There is also a proposed withdrawal of this rule with comments due by April 12, 2021. Medicare Program; Secure Electronic Prior Authorization for Medicare Part D. Final Rule. Effective date was delayed until March 30, 2021.… Continue Reading

Regulations Provide for More Cost Transparency in Health Coverage

The federal Departments of Health and Human Services, Labor, and the Treasury (collectively, the ?Ç£Departments?Ç¥) have jointly issued final regulations that are intended to provide for more transparency in health coverage (the ?Ç£Regulations?Ç¥). The Regulations have important implications for employer sponsors of certain group health plans (?Ç£Plans?Ç¥) and health insurers. The Regulations do not apply to health plans that are grandfathered under the Affordable Care Act, health reimbursement arrangements, certain other account-based group health plans, or short-term limited duration insurance. The Regulations require two key forms of disclosures (collectively, the ?Ç£Disclosures?Ç¥) in order to provide for this improved transparency: Self-Service Disclosure. First, the Regulations require Plans and insurers in the individual and group markets to disclose certain cost-sharing information upon request to a participant, beneficiary, or enrollee (or his or her authorized representative), including (a) an estimate of the individual?ÇÖs cost-sharing liability for covered items or services furnished by a… Continue Reading

Court Finds ERISA Requires Disclosure of ?Ç£Reasonable and Customary?Ç¥ Methodology

A federal district court in Michigan, in Zack v. McLaren Health Advantage, Inc., recently considered whether the claims regulations under ERISA require an employer-sponsored group health plan to disclose its methodology for determining the ?Ç£reasonable and customary?Ç¥ amount related to a benefit claim for services rendered to a plan participant by an out-of-network medical service provider, regardless of whether the participant requested such information. Summary of the Case The claimant, Zack, who was a participant in the group health plan sponsored by her husband?ÇÖs employer, obtained medical services from an out-of-network provider and filed a benefits claim under the plan. The plan stated that out-of-network benefits would be paid at 60 percent of a ?Ç£reasonable and customary amount?Ç¥, but did not define what that term meant or how it would be calculated. In practice, the ?Ç£reasonable and customary amount?Ç¥ under the plan (?Ç£R&C Amount?Ç¥) was determined by calculating an average… Continue Reading

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