Group Health Plan Transparency Rules Published

AT A GLANCE

• The IRS, DOL, and HHS have jointly issued final regulations addressing group health plan cost sharing and pricing transparency.
• Most group health plans and insurers will be required to make certain cost-sharing disclosures to participants, beneficiaries, enrollees, and the public for plan years starting on or after January 1, 2023.
• Additionally, most group health plans and insurers will be required to make extensive price transparency disclosures to the public via machine-readable files for plan years beginning on or after January 1, 2022.
• The final transparency rules do not apply to account-based plans like health FSAs or HRAs, including ICHRAs, EBHRAs and QSEHRAs.

Background

On November 12, 2020, the IRS, DOL and HHS jointly issued final regulations that will require non-grandfathered group health plans and insurers to disclose cost-sharing information to plan participants and publicly disclose negotiated rates for in-network providers and allowed amounts for out-of-network providers. Grandfathered health plans, excepted benefit plans, and account-based plans like HRAs, ICHRAs, QSEHRAs, and health FSAs are not subject to the new transparency requirements.  

Under the rules, employers will be responsible for compliance and are permitted to contract with their insurers or third-party claims administrators (TPAs) to provide the required information to enrollees. For insured plans, if the insurer agrees to provide the disclosures via a written agreement, the employer will not be responsible if the disclosures are not made. However, this shift in liability is not available for self-insured/funded plans.

Disclosure of Provider Rates

Effective January 1, 2022, non-grandfathered health plans and insurers must publish and update monthly the following sets of information to the public on machine-readable files:

• In-network negotiated rates for all covered items and services between the plan/issuer and providers
• Out-of-network allowed charges and billed amounts during a recent 90-day period
• In-network prescription drug negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level.

Disclosure of Cost-Sharing Information

Effective January 1, 2023, non-grandfathered health plans and insurers must make cost-sharing information available to participants through a self-service tool on an internet website that provides real-time responses based on up-to-date cost-sharing information, and in paper form upon a participant’s request. Disclosures are required for an initial list of 500 items and services for plan years that begin on or after January 1, 2023, with all items and services to be disclosed for plan years that begin on or after January 1, 2024.

Next Steps

Plan sponsors should consult with their benefits advisors to determine how their plan’s compliance will be addressed. 

Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.