This Advisory provides a summary of recent developments impacting Affordable Care Act (“ACA”) requirements applicable to employers, as well as other recent changes impacting employer-sponsored health plans.
ACA Affordability Threshold Decrease
Employer-sponsored health plans will satisfy the ACA affordability requirement in 2022 only if the lowest-cost, self-only coverage option offered under the plan does not exceed 9.61% of an employee’s household income, down from 9.83% in 2021. This means that a plan that was affordable in 2021 may not be in 2022, even without any increase in premiums. Employers should confirm that their health plans will remain affordable for the 2022 plan year under the new lower threshold.
Advanced Explanation of Benefits (EOBs)
Effective for plan years beginning on or after January 1, 2022, plans and insurers, within one business day after receiving a provider’s good faith estimate of the expected charge to the plan or insurer for an item or service (as required under the No Surprises Act), must provide participants and beneficiaries with a notice containing various pieces of information, including the following:
- For in-network providers or facilities, the plan’s contracted rate for the item or service, based on the billing and diagnostic codes furnished by the provider or facility;
- For out-of-network providers or facilities, a description of how the participant or beneficiary can obtain information about the plan’s in-network providers or facilities (if any); and
- A good faith estimate of the amount of cost-sharing for which the participant or beneficiary would be responsible concerning the item or service.
The Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) have announced that they will not issue regulations addressing these advanced EOB requirements before the effective date of January 1, 2022 and will defer enforcement until they have done so. However, plans should prepare to meet these requirements as soon as possible, as doing so may require substantial effort, including the engagement of third-party administrators (TPAs) to provide disclosures.