2022 Health FSA Limits Published

On November 10, 2021, the Internal Revenue Service issued Revenue Procedure 2021-45 that sets forth various 2022 tax-related limits that have been adjusted for inflation. The table below identifies updates to the 2022 health and fringe benefit plan limits addressed in the notice:

Maximum Annual Employee Contribution to a Health Flexible Spending Account (Health FSA)$2,750$2,850
Health FSA Carryover Limit$550$570
Adoption Assistance Programs$14,440$14,890
Maximum Annual Employer Contribution to Qualified Small Employer HRA (QSEHRA)$5,300 (self-only coverage) $10,700 (family coverage)$5,450 (self-only coverage) $11,050 (family coverage)
Maximum Monthly Benefit for Qualified Transit Passes, Van Pool Services, and Qualified Parking$270$280

Update on the Large Employer Vaccine Mandate

As we shared last week, the U.S. Occupational Safety and Health Administration (OSHA) published its long-awaited COVID-19 vaccination and testing emergency temporary standard for large employers. It generally mandates businesses with 100 or more employees to require that their employees be vaccinated against COVID-19 or wear masks and be tested for COVID-19 weekly. Then, this past weekend, the U.S. Court of Appeals for the 5th Circuit put an emergency and temporary halt on the new regulation.  In addition to defending against the Court cases challenging the mandate, the Biden Administration has explicitly advised employers to proceed with their plans for implementing its requirements.

The legal issues surrounding the vaccine mandate will continue to play out in the courts over the coming days.  In fact, many experts predict that the United States Supreme Court will ultimately decide the validity of the mandate.  In the meantime, however, businesses subject to the vaccine mandate should ensure they are in a position to comply, should the mandate become effective.  If the mandate is fully implemented, OSHA can cite and financially penalize employers for general non-compliance with all or specific aspects of this policy or cite employers for violations in particular instances. The penalty for an OSHA violation is $13,653 for each violation, and the penalty for a willful or repeated violation is $136,532 per violation.

If the emergency standard holds, affected employers will need to do the following by December 6, 2021:

  • Establish an official vaccination policy. This policy needs to be in writing and include specified data elements.  OSHA has issued a model policy to aid employers.
  • Determine vaccination status of each employee, obtain acceptable proof of vaccination, and maintain records and a roster of employee vaccination status.
  • Give each employee, in a language and at a literacy level the employee understands:
  • The requirements of the new standard and the specific policies and procedures the company has adopted to implement the federal requirements.
  • The CDC document “Key Things to Know About COVID-19 Vaccines.”
  • Information about protection against retaliation and discrimination.
  • Information about the criminal penalties for knowingly supplying false statements or documentation.
  • Provide employees with four hours of paid leave to get their first and/or second vaccine doses.
  • Require employees to promptly provide notice of positive COVID-19 test or COVID-19 diagnosis to the employer.
  • Remove any employee who received positive COVID-19 test or COVID-19 diagnosis from the physical workplace (employees who test positive may continue to work remotely).
  • Ensure employees who are not fully vaccinated wear face coverings when indoors or when occupying a vehicle with another person for work purposes.
  • Report work-related COVID-19 fatalities to OSHA within 8 hours and work-related COVID-19 in-patient hospitalizations within 24 hours.
  • Make certain vaccination-related records and policies available to employees, their representatives, and OSHA upon request.

Then, by January 4, 2022, employers will need to:

  • Ensure employees who are not fully vaccinated are tested for COVID-19 at least weekly (if in the workplace at least once a week) or within 7 days before returning to work (if away from the workplace for a week or longer).
  • Record each COVID-19 test result that each employee provides and keep the results of tests they have conducted.

Ultimately, every business needs to make its own compliance decisions about how to proceed with both the requirements themselves and implementation, taking into consideration their workforce’s specific needs and dynamics. However, as the emergency standard’s requirements are a floor, not a ceiling, there is nothing preventing an employer from implementing vaccination, testing, and masking requirements for their employees right now. Affected businesses may also choose to adopt more generous policies about giving people paid leave, paying for testing and face coverings, and granting additional sick leave for COVID cases and quarantines. 

In any case, the compliance timelines outlined above are aggressive, and employers subject to the mandate need to be actively working to implement the required provisions in order to avoid being unable to comply with the stated deadlines if the Court upholds them.

Biden Administration Publishes COVID-19 Vaccination or Testing Mandate Emergency Rule for Large Employers

By: Jessica Waltman, Principal, Forward Health Consulting

On November 4, 2021, the U.S. Occupational Safety and Health Administration (OSHA) published its long-awaited emergency temporary standard requiring employers with 100 or more employees to either ensure the members of their workforce are vaccinated against COVID-19 or are tested for the virus at least once a week and wear face coverings.  The Biden Administration also published different vaccination requirements for federal contractors and medical facilities that receive federal funding.

The new requirement for private businesses will go into effect on November 5, 2021.  By December 4, 2021, employers must have their vaccination and testing policies written out and communicated to employees.  Employees must demonstrate vaccination or submit to weekly testing and mask-wearing by January 4, 2022. The Biden Administration estimates the emergency measure will impact up to 84 million American workers.

How do employers count to 100 employees?

Employers must include all their employees located in all U.S. locations as of November 5, 2021.  Part-time, hourly, and seasonal employees who are working on that date count in the total. It does not matter if employees are vaccinated or not. They may work at home, or outside, or other locations, or have a reasonable accommodation against getting a vaccine.  Every W-2 employee counts.  If an employer has 100 or more employees on November 5 and later dips under 100 employees, the rule still applies to the business. If a company gains employees and goes over 100, then the rule applies when the workforce increases.  

Do companies with joint ownership, franchises, staffing firms, etc., count their employees together or separately?

Jointly owned companies count their employees together if they utilize common worksite safety policies and enforcement.  Individual franchise owners count their employees separately, and the franchisor counts “home office” employees together.  Staffing firms count all their employees, including those they place in separate locations, together.  Employers that utilize staffing firms do not include the staffing firm employees in their count. However, employers that are required to comply with this rule based on their direct employee count can mandate their staffing firms to have their employees comply.

Do all employees have to follow these rules? 

Businesses with 100 or more employees need to follow these rules or implement a stricter mandatory vaccination policy.  However, of their employees, three types of employees have an exception to the rule.  If any of the following conditions are true, then the employee does not need to comply personally:

  1. The employee does not ever report to a workplace where other individuals are present;
  2. The employee is working from home (the exemption only applies while the person is working from home); or
  3. The employee works exclusively outdoors.

All other employees must either submit proof of vaccination or show proof of COVID-19 testing every seven days and wear a face covering at work.  A “face covering” is defined as consisting of two or more layers of fabric, secured to the head with straps or ties, covering the nose and mouth, and solid with no slits or holes.

How do employers document compliance?

Employers need to develop a written mandatory vaccination policy or vaccination and testing policy by December 4, 2021. The written vaccination policy needs to include many specific data elements, but OSHA provides employers with a compliant template to use.

Businesses also need to determine the vaccination status of each employee, obtain acceptable proof of vaccination from vaccinated employees, maintain records of each employee’s vaccination status, and maintain a roster of each employee’s vaccination status. In addition, employers must record each COVID-19 test result provided by each employee and keep the results of tests they have conducted. The employer must treat all this information as confidential employee medical information and store it securely and separately from other employee personnel records.

Do employers have to follow these rules exactly?

The standards outlined in the emergency standard are a floor, not a ceiling.  What this means is that employers may adopt stricter vaccination, testing, or masking requirements for their employees.  Affected businesses may also adopt more generous policies about giving people paid leave, paying for testing and face coverings, and granting additional sick leave for COVID cases and quarantines.  Affected employers will not remain in compliance with the law if they apply lesser requirements than those the emergency standard requires.

What happens to employers that do not follow the new requirements?

OSHA can cite and financially penalize employers for general non-compliance with all or specific aspects of this policy or cite employers for violations in particular instances.  OSHA can also require employers to take compliance abatement measures.  OSHA will determine whether an employer has intentionally disregarded its obligations or exhibited a plain indifference to employee safety or health, both of which will result in stricter penalties. The penalty for an OSHA violation is $13,653 per violation; however, we will note that the penalty for a willful or repeated violation is $136,532 per violation.

What happens to employees who do not follow the new requirements?

Suppose an employee refuses to comply with workforce vaccination and testing policies. In that case, employers may take disciplinary action, keeping in mind and in compliance with other federal and state employment laws and protections.  If an employee lies about vaccination status or falsifies vaccination records, this is a federal criminal offense.

Is this a permanent requirement?

It is a temporary standard which, as of now, will last for six months.  The Biden Administration could elect to make this standard, or a revised version of it, permanent before May 4, 2022. If they do not, then this emergency standard will expire on May 4, 2022.  OSHA is currently seeking public comment on the standard, including about making it permanent.

What about conflicting state requirements?

The new federal OSHA standard supersedes any State or local requirements that ban or limit an employer’s authority to require vaccination, face covering, or testing. OSHA’s authority to preempt such State and local requirements stems from Section 18 of the OSH Act and general conflict preemption principles. As the Supreme Court has explained, once OSHA implements federal standards addressing an occupational safety and health issue, States may no longer regulate that issue except with OSHA’s approval.  If an employer subject to this rule is concerned about a contradictory state or local-level requirement, they may want to consider mandating weekly testing and face coverings.

What happens in States that implement their own workplace safety rules separate from OSHA (OSHA State Plan jurisdictions)?

The regulation applies to both states where OSHA handles all workplace safety rules and the states with OSHA-approved state-administered programs (OSHA State Plan jurisdictions).  State plan jurisdictions have 30 days to adopt either the requirements in this emergency standard or stricter requirements.  These states need to notify OSHA of their implementation plans within 15 days.

How do employers and employees document vaccinations?

Each employer must require each vaccinated employee to provide acceptable proof of vaccination status, including whether they are fully or partially vaccinated. The items in the following list constitute acceptable documentation for proof of vaccination:

  1. The record of immunization from a health care provider or pharmacy;
  2. A copy of the U.S. COVID-19 Vaccination Record Card;
  3. A copy of medical records documenting the vaccination;
  4. A copy of immunization records from a public health, state, or tribal immunization information system; or
  5. A copy of any other official documentation that contains the type of vaccine administered, date(s) of administration, and the name of the health care professional(s) or clinic site(s) administering the vaccine(s).

If an employee cannot produce acceptable proof of vaccination as listed above, a signed and dated statement by the employee will be sufficient. The employee’s report must:

  1. Attest to their vaccination status (fully vaccinated or partially vaccinated);
  2. Attest that they have lost or are otherwise unable to produce proof required by this section; and
  3. Include the following language: “I declare (or certify, verify, or state) that this statement about my vaccination status is true and accurate. I understand that knowingly providing false information regarding my vaccination status on this form may subject me to criminal penalties.”

Who pays for the vaccinations?

COVID-19 vaccinations (including booster shots) must be covered by private health insurance policies’ public health coverage programs in the United States. There are other federal mechanisms to provide uninsured individuals with cost-free access to COVID-19 vaccinations.

Do employers have to give employees time off to get a COVID-19 shot?

Employers subject to this standard must provide up to four hours of paid time off, at the employee’s regular pay rate, for vaccination. For this rule’s purpose, the paid leave applies to initial vaccination doses, not booster shots. Any other leave that the employee has accrued, such as sick or vacation leave, cannot offset the four hours of paid time that the employee is entitled to for purposes of receiving a vaccination.

Employers may require employees who have accrued paid sick leave to use that leave when recovering from vaccination side effects. Likewise, employers who do not specify between different types of leave (i.e., employees get one kind of leave) may require employees to use that leave when recovering from vaccination side effects. When an employer provides employees with multiple types of leave, such as sick leave and vacation leave, the employer can only require employees to use their sick leave when recovering from vaccination side effects. However, an employer cannot require an employee to go into the negative for paid sick leave if they do not have accrued paid sick leave when they need to recover from side effects experienced following a primary vaccination dose.

Employers do not have to give retroactive leave to employees who are already vaccinated.

Does this regulation force employees to get vaccinated or quit their jobs?

No.  Employers may adopt stricter mandatory workplace vaccination policies if they want to do so (while complying with other federal laws about reasonable accommodations). Still, this regulation does not require any employee to get a vaccination.  If an employer is following the terms of this standard, then affected employees either need to provide proof of immunization by January 4, 2022 or undergo COVID-19 testing every seven days and wear an acceptable face covering at work.  

If an employer opts to require weekly employee masking and testing, who pays for the tests?  What about the face coverings?

Generally speaking, employers do not need to pay for any costs associated with testing; employees who choose to be regularly tested and wear a face covering in lieu of vaccination will need to bear the corresponding costs. However, employer payment for testing may be required by other laws, regulations, or collective bargaining agreements, or other collectively negotiated agreements.  Of course, employers may also choose to provide tests and pay for all or part of the testing costs.

This standard does not require employers to provide free face coverings or pay for employees’ face coverings.  As with testing, employers may provide appropriate masks or reimburse for their costs if they choose to do so.

Do employees who are not vaccinated need to wear masks all the time?

No.  The rules specify that each employee who is not fully vaccinated wears a face covering when indoors and when occupying a vehicle with another person for work purposes, except:

  1. When an employee is alone in a room with floor to ceiling walls and a closed door.
  2. For a limited time while the employee is eating or drinking at the workplace or for identification purposes in compliance with safety and security requirements.
  3. When an employee is wearing a respirator or facemask.
  4. Where the employer can show that the use of face coverings is infeasible or creates a greater hazard that would excuse compliance with this paragraph (e.g., when it is important to see the employee’s mouth for reasons related to their job duties, when the work requires the use of the employee’s uncovered mouth, or when the use of a face covering presents a risk of serious injury or death to the employee).

What notification do employers need to give to employees about the new requirement?

The employer must give each employee, in a language and at a literacy level the employee understands:

  1. The requirements of the new standard and the company’s specific policies and procedures adopted to implement the federal requirements.
  2. The CDC document “Key Things to Know About COVID-19 Vaccines”
  3. Information about protection against retaliation and discrimination.
  4. Information about the criminal penalties for knowingly supplying false statements or documentation.

Employers may choose any method of informing employees so long as each employee receives the information specified in the standard in a language and at a literacy level they understand. For example, an employer may provide this information to employees through email communications, printed fact sheets, or in discussion at a regularly scheduled team meeting.

Do employers need to provide any information to the federal government to comply with this standard?

Employers need to report work-related COVID-19 fatalities to OSHA within eight hours of learning about them and work-related COVID-19 in-patient hospitalizations within 24 hours of the employer learning about the hospitalization.

While employers do not need to submit their written vaccination and testing plans or their employee vaccination status and employee testing result records to OSHA routinely, they may be requested to do so by federal regulators.  Employers must provide their documentation to OSHA for examination and copying within four business hoursof a request!

What happens if an employee gets COVID-19?

An employer must immediately have any employee who receives a positive COVID-19 test or is diagnosed with COVID-19 vacate the workplace.  Employers must keep the employee removed until the employee:

  1. Receives a negative result on a COVID-19 nucleic acid amplification test (NAAT) following a positive result on a COVID-19 antigen test if the employee chooses to seek a NAAT test for confirmatory testing;
  2. Meets the return-to-work criteria in CDC’s “Isolation Guidance”; or
  3. Receives a recommendation to return to work from a licensed healthcare provider.

COVID-19 positive employees may continue to work from home.

What resources are available to help employers with compliance?

Along with the emergency standard, OSHA published many resources about the requirement for employers and employees.  They are all available at www.osha.gov/coronavirus.

Clarification on Outbreak Period COBRA Deadlines

By: Jennifer Berman, CEO of MZQ Consulting

On October 6, 2021, the Department of Labor, the Department of Treasury, and the Internal Revenue Service jointly released Notice 2021-58. The Notice further clarifies how the “outbreak period” rules impact certain COBRA-related deadlines.

As previously reported, in response to the COVID-19 pandemic, deadlines related to COBRA elections and premium payments were extended in March 2020. At that time, plans were required to disregard the period for elections and premium payments until 60 days after the end of the National Emergency. February 2021 guidance then clarified that the “extension” created by the “outbreak period” cannot exceed one year.  At the end of the year-long extensions, the original deadlines associated with COBRA would apply.

The emergency relief extended the following COBRA timeframes:

  1. Initial 60-day election period.
  2. Due dates for premium payments.
  3. The time period for notification of qualifying events.
  4. The date for plans/employers to provide COBRA election notices.

Total Available Extension is One Year

Notice 2021-58 clarifies that the year-long extension for electing COBRA and the year-long extension for making premium payments run concurrently in most situations.  This means that a qualified beneficiary could not wait for a full year (plus the 60-day election period) to elect COBRA and then another full year (plus the 45-day payment period) to pay for coverage.  Said differently, the maximum time period between when a qualified beneficiary first becomes eligible to elect COBRA and when payment is due is 1 year plus 105 days.  This is comprised of the year-long extension + 60-day election period + 45-day payment period.

Transition Relief

The agencies note that some qualified beneficiaries may not have previously understood that the multiple extensions of up to one year are unavailable. Therefore, the Notice also provides that any COBRA premium made by November 1, 2021, will be considered timely so long as it is made within one year and 45 days following the date of their COBRA election.


As a reminder, the extension described here does not apply to qualified beneficiaries electing the COBRA subsidy under the American Rescue Plan (ARP) of 2021.  The regular COBRA deadlines apply to the ARP subsidies, which generally expired on September 30, 2021.

Updated Guidance on COVID-19 Vaccines

By: Jennifer BermanCEO of MZQ Consulting

On September 30, 2021 and October 4, 2021, respectively, the Department of Health and Human Services (HHS) and the Department of Labor (DOL) issued updated guidance regarding COVID-19 vaccinations.

The HHS guidance specifically relates to recent questions regarding the HIPAA Privacy Rule. The new FAQs provide that HIPAA does not prohibit businesses or individuals from asking their customers or clients whether they have been vaccinated. This is the case both because HIPAA only applies to covered entities, and because HIPAA does not apply if a covered entity (such as a hospital) asks patients or visitors for their vaccine status. The new HHS FAQs also specify that HIPAA doesn’t apply when an employer asks an employee their vaccination status. This is because the Privacy Rule doesn’t apply to employment records. While it is permissible to ask for this information, employers must keep vaccination status confidential and store that information separately from other employment-related information under the Americans with Disabilities Act.

The DOL FAQs address the requirement that health plans pay for COVID-19 vaccinations in full. Specifically, the FAQs clarify that non-grandfathered health plans must pay for COVID-19 vaccination without any participant cost sharing requirements. This includes any COVID-19 vaccination provided in accordance with an Emergency Use Authorization (EUA) or a Biologics License Application (BLA). This “free” coverage applies to any COVID-19 vaccination permitted under an EUA or BLA, including: the administration of a third dose to certain individuals, the administration of booster doses, and the expansion of the age demographic for which the vaccine is approved.

The DOL FAQs also address the issue of whether health plans can incentivize employees to get vaccinated (or charge more to those who are not). The FAQs provide that any such program would be considered an activity-based health contingent wellness program and would be subject to the HIPAA nondiscrimination rules applicable to such programs. These rules cap the total reward/penalty for all wellness related activities (other than those for tobacco cessation) at 30% of the total cost of coverage. Additionally, if such a program is offered, the plan must provide a “reasonable alternative” method to qualify for the reward/avoid the penalty if getting the vaccine would be “unreasonably difficult due to a medical condition or medically inadvisable.” The example in the guidance of a reasonable alternative is requiring an employee to follow the CDC masking recommendations for unvaccinated people. All plan participants must be notified of the reasonable alternative method. Finally, the FAQs emphasize that any employer with different rates for vaccinated vs. non-vaccinated employees must use the rates for unvaccinated employees when determining if an offer of coverage is affordable for purposes of the ACA’s employer mandate.

Generally, this recent guidance affirms the MZQ Consulting team’s preexisting interpretation regarding these issues. It is nevertheless helpful to hear directly from the agencies on these pressing and timely issues.

Surprise Bills No More—So What Will Docs Get Paid?

By: Jennifer Berman, CEO of MZQ Consulting

As we have previously shared, effective for plan years beginning on or after January 1, 2022, “surprise billing” is prohibited. This means that plan participants can only be billed in-network rates even when they go to out-of-network providers for “protected services.” These protected services include emergency services, services provided at an in-network facility by an out-of-network provider, and air ambulance services. 

This creates a gap between what the plan participant pays and what the provider charges that needs to be filled. Consider the following example, in which a participant has an emergency visit to an out-of-network hospital:

Total Amount Charged by Hospital:$2,500  
Plan In-Network Negotiated Rate for Same Services:  $1,000  
Participant Coinsurance:20%  
Paid by Participant:$200  
Amount Plan Would Pay In-Network:$800  
Balance “Due” to Hospital:$1,500

The Dispute Resolution Process

The participant can no longer be billed this $1,500 “balance”—so, the question becomes, what does the provider get paid? The payor in this scenario is the plan, but the plan hasn’t agreed to pay the provider what they are billing, and the provider hasn’t agreed to accept less. Guidance recently issued by the Departments of Labor, Treasury, and Health and Human Services sets out the framework for how this disconnect will be resolved. This new procedure, which generally applies if there is not an otherwise applicable process at the state-level, is described below:

Step 1Plan issues initial payment or denial of payment to provider.The payment or denial must include a statement informing the provider: That they may initiate a negotiation within 30 business days; That if that negotiation is unsuccessful, an independent dispute resolution process is available; and how to contact the plan to initiate the open negotiation period, including a phone number and e-mail address.
Step 2Provider accepts payment as total payment or issues a “Open Negotiation Notice” within 30 business days.The open negotiation notice must include: Information sufficient to identify the items or services at issue, including the date provided and service code; The initial payment amount or denial of payment; An offer of an amount the provider will accept; and contact information for negotiating the claim.
Step 3The parties agree to a payment amount within 30 business days, or 30 business days elapse and the open negotiation period ends.   After the open negotiation period ends, both parties have 4 business days to request an independent review through the independent dispute resolution (IDR) process. The IDR process is initiated using a new web portal the Federal government is creating for this purpose.   A Notice of IDR Initiation can be filed on the portal. The notice must include: Information sufficient to identify the items or services at issue; The names and contact information of the parties involved; That state where the items or services were provided; The commencement date of the open negotiation period; The preferred IDR Entity (i.e., the third-party entity that will review the case);An attestation that the items or services at issue are covered by the No Surprises Act; The qualified payment amount; and General information describing the Federal IDR process for the non-initiating party.
Step 4The parties agree to an IDR Entity, or one is assigned by the Federal government.   If the non-initiating party does not object to the IDR Entity requested within 3 business days, that IDR Entity is assigned.   If the non-initiating party objects, the parties have 3 business days to agree to an IDR Entity.   If the parties do not agree, an IDR Entity will be randomly assigned.The IDR Entity is the third-party responsible for determining the amount the plan will ultimately pay the provider.   Strict conflict of interest rules apply to ensure that the IDR Entity does not have any material, familial, or professional relationship with either party.
Step 5Within 10 business days after the selection of the IDR Entity, each party submits an “offer” to the IDR Entity.This offer must be expressed as both a dollar amount and a percentage of the qualified payment amount (QPA).   The QPA is generally the median in-network contracted rate that the plan pays for the items or services at issue. If a plan does not have sufficient information to determine their median contracted rate, they can use a database free from conflicts of interest to determine the QPA.
Step 6Within 30 business days after being chosen, the IDR Entity must select one of the offers presentedThe IDR Entity must select the offer that is closest to the QPA unless creditable evidence submitted by the parties clearly demonstrates that the QPA is materially different from an appropriate out-of-network rate.   For these purposes, the IDR Entity may not take into account: Usual and customary charges; Any amount that would have been billed to a plan or insurance carrier; or reimbursement rates payable by any public payor (such as Medicare).
Step 7IDR Entity issues written decision.The written decision is provided to the parties and the Federal government. It must include the rationale for the IDR Entity’s decision. If that decision was not the closest offer to the QPA it must also include: A detailed explanation of the additional considerations relied on; whether the information about those considerations submitted by the parties was credible; and the basis upon which they determined that the QPA was materially different from the appropriate out-of-network rate.
Step 8The plan pays the provider any balance due within 30 calendar days from the date the IDR Entity issues its written decision.The IDR Entity’s decision is binding on all parties.  Following the issuance of a decision, the same parties may not enter into the IDR process again regarding the same items or services for 90 calendar days. This “cooling off” process is designed to encourage entities to mutually agree to pricing moving forward. The IDR’s fees are ultimately paid by the losing party.

Expansion of External Review Rules

The No Surprises Act also amends the external review rules created by the Affordable Care Act (ACA) by adding to the types of determinations that may be subject to external review. Notably, these new categories are subject to external review for ACA grandfathered plans—thereby creating the first external review requirements for those plans. 

The new determinations that are subject to external review include:

  • Services constituting “Emergency Services” under the No Surprises Act definition;
  • The claimant is asserting the plan did not apply the No Surprises Act appropriately relative to out-of-network services provided at an in-network facility;
  • The issue relates to whether the participant consented to treatment from an out-of-network provider; and
  • There is question as to whether a service that may be subject to protection under the No Surprises Act was coded correctly.


Many of the requirements of the No Surprises Act will be handled by insurance carriers and claims administrators, including those outlined above. Plan sponsors are, however, generally responsible for ensuring that the new participant notice regarding their rights under the No Surprises Act are distributed. These notices should be distributed with the other legal notices generally provided during open enrollment for the first plan year beginning on or after January 1, 2022. We will continue to monitor developments and bring any additional information to you as it becomes available.

Medicare Part D Coverage Notice Due Date Approaching

By: Lee Susan Spiegel and Megan Diehl

The deadline for plan sponsors that offer prescription drug coverage to provide notices of creditable or non-creditable coverage to Medicare-eligible individuals is coming up very soon. These notices need to be provided before October 15, 2021. Creditable coverage means that the plan is expected to cover, on average, as much as the standard Medicare Part D prescription drug plan.

Plan sponsors are required to provide such notices to the following individuals before the October 15 deadline:

  • Retirees and their dependents
  • Active employees who qualify for Medicare and their dependents
  • COBRA participants who qualify for Medicare and their dependents

The Medicare Part D annual enrollment period begins October 15 and runs through December 7 for coverage that begins on January 1, 2022. Prior to the enrollment period, plan sponsors must specify whether an individual’s prescription drug coverage is creditable or non-creditable. The annual deadline to provide coverage notices applies to all plans that offer prescription drug coverage, regardless of plan size, employer size, or grandfathered status. Plan sponsors can provide the required notice along with annual enrollment materials as long as the notice is “prominent and conspicuous.” This can be as a separate mailing, or electronically, if the participants have daily access to the plan sponsor’s electronic information system as part of their work duties.

If the notices are mailed to participants, a single notice can be provided to a covered Medicare individual and their dependents, unless it is known that a spouse or dependent resides at a different address than the participant. Model notices can be found on CMS.gov; plan sponsors should carefully review and customize these notices to ensure they accurately reflect plan provisions. In addition to providing Medicare-eligible individuals with annual notices of prescription drug coverage status, all plan sponsors are responsible for disclosing whether such plan is creditable or non-creditable to the Centers for Medicare and Medicaid Services (CMS). The plan sponsor has 60 days after the beginning of each plan year to complete the Creditable Coverage Disclosure Form on the CMS Creditable Coverage website.

Please note that MZQ Consulting automatically provides the required Medicare D notices to all clients using their Compass or Compass Plus products.

Biden Announces Vaccine Mandate and Guidance Issued on Air Ambulance Reporting Requirements and Individual Market Compensation Disclosure

By: Jessica Waltman – Principal, Forward Health Consulting

On Thursday, September 9, the Biden Administration released a new COVID-19 Action Plan. The plan states that the Occupational Safety and Health Administration will be issuing a rule requiring all private businesses with 100 or more employees to ensure their employees are fully vaccinated or produce a negative COVID-19 test weekly. The plan also indicates that any health care organization receiving funding from CMS and all federal contractors will be required to ensure their employees are fully vaccinated to retain their federal funding. However, the Administration still needs to issue the actual rules effectuating the changes.

We are carefully monitoring the situation and will provide you with additional information when it becomes available.

In other news…

On Friday, September 10, the Departments of Health and Human Services, Labor, and Treasury issued proposed rules laying out their plans for implementing specific provisions of the No Surprises Act. This Act, which is part of the Consolidated Appropriations Act of 2021, includes the national prohibition on surprise billing, new transparency requirements for health plans, a mandate that health plans analyze how they comply with the Mental Health Parity and Addiction Equity Act, and more.

Last Friday’s guidance concerns two less-known reporting requirements: (1) related to air ambulances and (2) related to broker compensation in the individual health insurance market.

Air Ambulance Reporting

The No Surprises Act’s prohibition on balance billing does not extend to air ambulance expenses. Instead, the Act seeks additional information on air ambulance usages, cost, etc., to facilitate a report from HHS (with the help of the Department of Transportation) to Congress on the widespread concerns surrounding air ambulances expenses. Under the Act, health plans (including employer-sponsored self-funded and fully insured plans) must report to the Administration on air ambulance claims.

The proposed rules require these reports on a calendar year basis (even for non-calendar year plans) for 2022 and 2023. They will need to include the following data elements for each air ambulance claim received or paid for during the applicable year:

  • Information identifying the plan, plan sponsor, and carrier or reporting entity, as applicable;
  • The plan’s market category (i.e., small group, large group, self-funded, etc.);
  • Date of service;
  • National Provider Identification information for the billing entity;
  • The CPT Code or HCPCS Code;
  • Transport information (including aircraft type, loaded miles, pick-up, and drop-off, whether transportation was emergent, etc.)
  • Whether the plan had a contract with the air ambulance provider;
  • Claims adjudication information (including if denied, the reason for such a denial); and
  • Claims payment information (including submitted charges, amounts paid, and cost-sharing amount, if applicable).

Presumably, claims payors will handle much of this reporting rather than employers. However, plan sponsors do have responsibilities related to these requirements.

  • For fully insured plans: The health insurance issuer can assume responsibility for this reporting (as they also have an independent obligation to complete the reporting). However, to avoid liability if an insurer fails to do so, the plan sponsor should ensure that their carrier contract expressly addresses how the insurer will assume responsibility for this requirement.
  • For selffunded plans: The plan sponsor can contract with a TPA to provide this reporting. However, if the TPA fails to meet its contractual obligations, the group plan will be in violation of the reporting requirement.

Compensation Disclosure in the Individual Health Insurance Market

The proposed rules also provide additional details about the requirement that individual market health insurance carriers give their policyholders information about compensation paid to insurance agents and brokers. These rules apply to both major medical policies and short-term limited-duration policies, and carriers will need to report both direct and indirect compensation paid to brokers and agents. The insurance carrier must disclose this information before the point of purchase and annually at renewal (either in renewal paperwork or, if none, as part of the first bill for the new policy year). This requirement will apply to new contracts (or revisions to material terms to existing contracts) with brokers or agents entered into on or after December 27, 2021.

Notably, the proposed regulations do not address the similar but more extensive compensation disclosure requirements for brokers and other consultants who serve group health plans.  These requirements are scheduled to go into effect for contracts between advisors and plans entered into or renewed on or after December 27, 2021. The No Surprises Act does not require the development of regulations on the group plan disclosure requirements. It is unclear if the Biden Administration will publish any implementation rules or sub-regulatory guidance this fall.

ACA Affordability Percentage Decreased for 2022

Jessica Waltman – Principal, Forward Health Consulting

Megan Diehl – Manager, Compliance Consulting, MZQ Consulting

The Affordable Care Act (ACA) considers the affordability of employer-sponsored health plans for the purposes of the shared responsibility rules and the premium tax credit (PTC). Affordability depends on a certain percentage of the employee’s household income for the tax year, which is typically adjusted annually for inflation. Recent guidance from the Internal Revenue Service (IRS) decreases the affordability percentage from 9.83 percent in 2021 to 9.61 percent in 2022.

Beginning January 1, 2022, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage under the most affordable medical plan they are eligible for does not exceed 9.61 percent of the employee’s household income for the year. No matter what type of coverage an employee actually elects, the single premium rate is always the basis for calculating affordability.

The new affordability percentage is essential for applicable large employers (ALEs) to know because the ACA requires them to offer affordable, minimum value health coverage to their full-time employees or pay an employer mandate penalty. The affordability percentage decrease for 2022 means that employers may need to increase the amount that they contribute towards employee coverage in order for their employee benefits to remain affordable.

The IRS has created three safe harbors for group health plans to establish and report on benefits affordability: the federal poverty line safe harbor, the rate of pay safe harbor, and the W-2 safe harbor (which is based on Box 1 of the W-2). The rate-of-pay and the W-2 safe harbors are calculated on an employee-by-employee basis, while the federal poverty line safe harbor is a dollar constant. A monthly employee contribution of $103.14 or less will satisfy the federal poverty line safe harbor in 2022, as the federal poverty line for a single individual is $12,880 in everywhere but Alaska and Hawaii.

It is important for employers to keep in mind that the ACA health insurance exchange marketplaces also consider affordability when determining an employee’s eligibility for a premium tax credit. If an ALE’s full-time employee purchases exchange-based individual coverage and receives a PTC because their lowest-cost, employee-only monthly contribution exceeds 9.61% of their household income for the 2022 plan year, that credit will trigger a shared responsibility penalty for the employer.

Biden Administration Delays Enforcement of New Plan Transparency and Disclosure Requirements

Jessica Waltman – Principal, Forward Health Consulting

All health insurance carriers and employers that offer group health coverage to their employees have a wide range of pending compliance responsibilities related to the “No Surprises Act” section of the Consolidated Appropriations Act of 2021 (CAA) and the final health plan transparency rules. However, the Biden Administration just gave these entities a bit of a break by delaying quite a few of the upcoming transparency and disclosure requirements via FAQ guidance issued on August 20, 2021.

The original compliance deadlines were generally December 27, 2021, for plan or policy years starting on or after January 1, 2022. Now, certain enforcement deadlines have been extended by months and others by up to a year. In still more instances, a good faith compliance standard applies until implementation regulations are finalized. 

The new requirements apply to all types and sizes of employer group health plans, including those employer plans with grandfathered status. Businesses that offer fully insured coverage share liability for compliance with their carrier. Companies that self-fund their group coverage have sole responsibility for making sure the provisions of both the CAA and the transparency regulation are carried out.

The following charts explain how deadlines have changed for employers, carriers, and, when applicable, health care providers.   

RequirementApplicabilityEnforcement ChangeOther Important Notes
Publish machine-readable files on a public website of in-network reimbursement rates and out-of-network allowed amounts and billed charges.Carriers and Group Health Plan SponsorsDelayed for plan or policy years beginning on or after January 1, 2022, until July 1, 2022.For 2022 plan years and policy years beginning after July 1, 2022, plans and issuers should thus post the machine-readable files in the month in which the plan or policy year begins.
Publish machine-readable files on a public website of prescription drug costs and pricing data.Carriers and Group Health Plan SponsorsDelayed until further notice.The Administration plans to use the rulemaking and public comment process to determine whether the requirement remains appropriate.

Consolidated Appropriations Act of 2021 – No Surprises Act Requirements

RequirementApplicabilityEnforcement ChangeOther Important Notes
Publish an Internet-based price comparison tool online for all enrollees and plan participants.Carriers and Group Health Plan SponsorsEnforcement deadline changed from plan years starting on or after January 1, 2022, to plan years starting on or after January 1, 2023.Since the requirement is largely duplicative of the internet-based self-service price disclosure requirement in the health plan transparency rule, the Administration intends to determine if they can combine compliance for both through the rulemaking and comment process. Leading up to January 1, 2023, the Administration will focus on compliance assistance.  
Disclose very detailed plan or policy pharmacy and claims cost data to the federal government on December 27, 2021, and every June 1 thereafter.Carriers and Group Health Plan SponsorsEnforcement of the December 27, 2021, and June 1, 2022, reporting deadlines is delayed pending the issuance of regulations or further guidance.Employer plans and issuers are strongly encouraged to be ready to begin reporting the required information with respect to 2020 and 2021 data by December 27, 2022.  
Provide enrollees with “advance EOBs” before they incur a claim and following the receipt of a good faith estimate of charges from the insured’s provider. Carriers and Group Health Plan SponsorsEnforcement of the plan years starting on or after January 1, 2022, compliance date is delayed until the finalization of implementation regulations.The Biden Administration plans to investigate whether an interim solution to provide enrollees with advance cost and issuer payment information is feasible.
Provide insured individuals with a good faith estimate of expected charges when they schedule treatment. The requirement applies to both the scheduled item or service and any items or services reasonably expected to be provided in conjunction with those items and services, including those provided by another provider or facility.ProvidersEnforcement of the January 1, 2022, compliance deadline is delayed until the finalization of implementation regulations with a prospective applicability date.   The Administration will release implementation guidance on providing estimates to uninsured people before January 1, 2022, so providers will need to provide estimates to those individuals on time.
Surprise balance billing requirements.Providers, Carriers, and Group Health Plan SponsorsCompliance responsibility with the surprise billing requirements beginning with plan years starting on or after January 1, 2022, is not delayed.  However, plans and issuers are expected to implement these requirements using a good faith, reasonable interpretation of the statute until all related implementation rules are final. Group health plans have a disclosure requirement to follow starting with the 2022 plan year.  The Biden Administration published a model disclosure form and directions in July of 2021.  If group plan sponsors use it, they will be considered compliant.
Prohibition of “gag clauses” in provider contract with group health plans and health insurance carriers.Providers, Carriers, and Group Health Plan SponsorsThe December 27, 2021, enforcement deadline is delayed until the finalization of implementation rules. A good faith compliance standard applies until then.  The Biden Administration will issue sub-regulatory guidance to explain how plans and issuers should submit attestations of compliance. The Administration instructs plans and issuers to anticipate collecting those attestations starting in 2022.
Verification of the accuracy of in-network provider directories.Carriers and Group Health Plan SponsorsEnforcement of the plan years starting on or after January 1, 2022, compliance date is delayed until the finalization of implementation regulations.Until rules are final, if there is a network directory error and someone uses an out-of-network provider that they believed to be in-network due to the mistake, then the plan or issuer cannot require participants to pay any more than in-network cost sharing to be considered compliant. Also, the plan or issuer needs to count those cost-sharing amounts toward any deductible or out-of-pocket maximum.
Include clear information on printed and electronic health plan ID cards about all applicable deductibles and out-of-pocket maximum limitations. Cards must also include a telephone number and website address for individuals to seek consumer assistance. Carriers and Group Health Plan SponsorsEnforcement of the plan years starting on or after January 1, 2022, compliance date is delayed until the finalization of implementation regulations.Until rules are finalized, plans and issuers are expected to implement the ID card requirements using a good faith, reasonable interpretation of the law.  
Establish continuity of care protections to protect enrollees in instances when terminations of certain contractual relationships result in changes in provider or facility network status.Carriers and Group Health Plan SponsorsEnforcement of the plan years starting on or after January 1, 2022, compliance date is delayed until the finalization of implementation regulations.  Until rules are finalized, plans and issuers are expected to implement continuity of care protections using a good faith, reasonable interpretation of the law.  
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