Over the last two years, a compliance tidal wave has loomed over employers and their benefit advisors. The crest of this massive wave has begun to touch down upon fiduciaries of employer groups, most notably in the recent class action lawsuit against Johnson & Johnson. But what Rules and Acts led to this surge of compliance obligations, and how can benefit advisors stay dry?

2020: The year the compliance wave took shape

Four key dates have shaped the employer-sponsored health insurance (ESHI) space over the last 80 years. First was ESHI's introduction in 1943, when the IRS issued a private ruling holding that employer-provided health insurance benefits were not subject to federal income taxation. Second, in 1974, the Employee Retirement Income Security Act (ERISA) was passed, which provided necessary protection for plan participants. Fast forward to 2010, the enactment of the Affordable Care Act and the pursuit to provide health insurance access for all. Finally, in 2020, when the Transparency in Coverage Rule and Consolidated Appropriations Act of 2021 were published and passed, two main factors contributed to the current compliance tidal wave's growth and reach. 

These two executive and legislative efforts could have an even greater impact on employers and benefit advisors than the ACA. The Consolidated Appropriations Act of 2021 includes key provisions like the No Surprises Act, the prohibition of gag clauses between employers and health plans, and the required disclosure of direct and indirect compensation to benefit advisors. Each element of the Act requires active engagement from employer fiduciaries responsible for overseeing health care spending. Notably, the CAA of 2021 also includes a requirement that employees have access to a cost-comparison shopping tool. 

The Transparency in Coverage Rule, published during the same year, further intensified the compliance obligations of employers and their benefit advisors. It requires employers to provide employees with a web-based cost-comparison shopping tool highlighting personalized out-of-pocket costs and the total negotiated cost of care. This means the tool must consider an employee's health plan design, upstream network arrangements, deductibles, and a wide variety of consumption accumulators, including whether the employee has already consumed allocated preventive care services like their annual check-up or colonoscopy, when applicable. Detailed information concerning the total negotiated costs likely to be incurred must also be displayed so that employees can understand the total cost of their care, including the employer-paid portions. This level of personalized out-of-pocket cost display and total price transparency had previously been unseen for employer-sponsored health insurance members, but is now a requirement for both fully insured and self-funded groups. Plan sponsors who fail to comply with the Rule could face fines of up to $100 per affected member per day. For a group of 1,000 employees, that's over $250,000 a day. 

2022-2023: What wave?

Throughout 2022 and 2023, media coverage of compliance requirements centered on the No Surprises Act. This can be attributed to the gross pricing exploitation consumers face with out-of-network billing, especially those "surprise out-of-network bills" covered by the NSA (out-of-network air ambulance service, out-of-network emergency facilities furnishing emergency services, and out-of-network providers of supplemental care, like anesthesiology performed at an in-network facility). Other components of the Consolidated Appropriations Act of 2021, particularly compensation disclosures and the prohibition of gag clauses, haven't been widely explained to employers, and the consequences of those components have yet to be fully understood or felt.