Apr 04, 2025
Compliance News Week Ending April 4, 2025
In this Article
- Level Funded Plan Surpluses
- Executive Order - Pricing Transparency
- Agency FAQs - Gag Clause Attestations
Level Funded Plan Surpluses
For employers who offered a level-funded plan during 2024, the employer may receive a surplus payment from the carrier.
The safest approach is to handle such payments similarly to an MLR rebate, returning a percentage of the payment to current plan participants in accordance with the percentage of the premiums that were contributed by plan participants.
For example, if plan participants contributed 40% of the plan's annual premium payments (the employer contributed 60%), 40% of the payment should be distributed amongst current plan participants within 90 days of receipt, generally as a premium holiday or as taxable cash.
However, if the level-funded plan document specifically states that any surplus funds belong exclusively to the employer, then the employer can follow the terms of the plan and would be able to keep the entire payment and use it toward any business expenses.
Compliance Tip – Handling Level Funded Plan Surplus Returns
Executive Order – Pricing Transparency
At the end of February, President Trump issued an Executive Order directing several federal agencies to further implement, enforce and possibly expand existing federal transparency regulations. The existing transparency regulations require hospitals and health plans to, amongst other things: (i) publish machine readable files with pricing and reimbursement data; and (ii) provide consumers with price comparison tools.
The hope is that further price transparency will help lower healthcare costs over time, but adoption of, and compliance with, the requirements has been slow. The new executive order doesn’t make any immediate changes, but we’re likely to see further action via regulations and potentially even new legislation, so it’s something to watch.
For the most part, insurance carriers and TPAs handle these requirements on behalf of group health plans, so employers don’t have much responsibility other than to confirm their service vendors are complying.
Agency FAQs – Gag Clause Attestations
The Departments of Labor, Health and Human Services, and the Treasury, along with the Office of Personnel Management jointly issued a set of FAQs addressing, amongst other things, compliance with the gag clause prohibition and associated attestation requirements.
The FAQs clarify that the gag clause prohibition requirements apply beyond a plan’s direct contract with a carrier, TPA or other service provider to any “downstream agreements” that the carrier, TPA or other service providers may enter into to administer the plan’s network.
Plan sponsors will be expected to add clauses to contracts with carriers, TPAs and other service providers prohibiting them from entering into downstream contracts that contain gag clauses.
The FAQs also provide further clarification, including examples, on contract provisions restricting access to de-identified information that are prohibited by the gag clause prohibition.
For future attestations covering group health plan contracts in place as of January 14, 2025 and later, plan sponsors must attest to compliance in accordance with the updated guidance or specify any non-compliance on the attestation form submitted.
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