Considerations for group health plans in 2021

2 stamps with rules and regulations written on them

While the focus for employers since March of this year has been on COVID-19 related issues, it is important for plan sponsors of group health plans to do a mid-year review of their plans for other regulatory issues and to prepare for 2021. The following are some of the regulatory updates that may affect benefit plan design next year.

COVID-19

On April 28, 2020, the Department of Labor (DOL) and the Internal Revenue Service (IRS) issued 2019 novel coronavirus (COVID-19)-related regulations that extend certain timeframes under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) for group health plans, disability and other welfare plans, and pension plans. In addition, on May 14, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a bulletin that extends this relief to non-federal governmental group health plans.

The intent of these regulations is to provide relief for plan participants, allowing additional time for many actions that plan participants must do, such as electing continuation of health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA); paying for COBRA; electing special enrollment under the Health Insurance Portability and Accountability Act (HIPAA); and filing claims.

The regulations provide these extensions retroactively, to March 1, 2020. The relief will last until the announced end of the national emergency plus 60 additional days (defined as the "outbreak period").

Out-of-pocket limits

ACA out-of-pocket limit for non-grandfathered plans: The out-of-pocket limit amounts for 2021 are $8,550 for self-only coverage and $17,100 for other than self-only coverage. Note that the self-only coverage amount is also the individual limitation on the out-of-pocket maximum amount for each individual in a family plan, in accordance with the Affordable Care Act's (ACA's) rules for non-grandfathered plans.

For HSA-compatible HDHPs: The out-of-pocket limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2021 are $7,000 for self-only coverage and $14,000 for family coverage.

New (or modified) preventive care recommendations for non-grandfathered plans

The following are new or modified preventive care recommendations that become effective in 2020 and 2021:

Perinatal depression prevention (Date Issued: February 2019)
HIV prevention pill for health people at risk (Date Issued: June 2019)
Updated recommendation for prevention of BRCA 1 and 2-Related Cancer (Date Issued: August 2019)
Updated recommendation for Breast Cancer: Medication Use to Reduce Risk (Date Issued: September 2019)
Updated recommendation for Hepatitis C Screening (Date Issued: March 2020)
Updated recommendation for Screening for Unhealthy Drug Use in Adults (Date Issued: June 2020)

Flexible spending accounts

The Internal Revenue Service (IRS) issued Notice 2020-33, which increases the carryover of unused amounts remaining as of the end of a plan year in a health flexible spending account (FSA) that may be carried over to pay or reimburse a participant for medical care expenses incurred during the following plan year. The notice increases the maximum $500 carryover amount for 2020 or later years to an amount equal to 20% of the maximum health FSA salary reduction contribution for that plan year. Thus, the health FSA maximum carryover from a plan year starting in calendar year 2020 to a new plan year starting in calendar year 2021 is $550.

In addition, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows employers, at their option, to remove the prescription requirement for over-the-counter (OTC) drug reimbursements that previously applied to health flexible spending accounts (FSAs), health reimbursement accounts (HRAs), and other accident and health plans, as well as to health savings accounts (HSAs). Menstrual care products will now qualify as medical care for purposes of reimbursement or tax-free distribution. These changes generally apply to expenses incurred after December 31, 2019; in the case of HSAs, they apply to amounts paid after that date.

Summary of benefits and coverage (SBC)

The Centers for Medicare & Medicaid Services (CMS) released new Summary of Benefits and Coverage (SBC) materials and supporting documents to be used for plan years that begin on or after January 1, 2021. The new materials and instructions can be found on the CMS website, under the "Summary of Benefits and Coverage and Uniform Glossary" section.

The CMS FAQs confirm that the 2021 version of the SBC template and related materials must be used beginning with the first day of the first open enrollment period for any plan year beginning on or after January 1, 2021, with respect to coverage beginning on or after that date.

Employers and TPAs should keep in mind that changes to benefits need to be reflected in the plan document and summary plan description and thus will create the need for amendments to these documents and the creation of revised SBCs. Even though the DOL has provided a grace period for updating plan documents for COVID-19 benefits, there are stop-loss carrier considerations as well. In general, stop-loss carriers are requiring amendments to the plan documents and have provided defined deadlines to plan sponsors to complete this. In addition, plans should be conscious of notice requirements under both ERISA and the ACA.

For plans and TPAs, being well-informed on regulatory developments is always of the upmost importance, even if the focus right now for employers is on keeping their businesses afloat while trying to support the well-being of their employees during this pandemic.

Corrie Cripps is a plan drafter/compliance consultant with The Phia Group. She specializes in plan document drafting and review, as well as a myriad of compliance matters, notably including those related to the Affordable Care Act.

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