Following the success of our webinar, Telescope Health and the CAA, which delved into the implications of the Consolidated Appropriations Act (CAA) for employers, it became evident that attendees departed with a host of questions. In response, this article is dedicated to addressing those inquiries, to help foster a deeper understanding of the intersections of healthcare, telemedicine, and legislative frameworks.
Q: Can you specify what applies to all group plans versus self funded, for example small vs large tech, etc?
A: The CAA applies to self funded health insurance plans, regardless of size.
Q: What about non ERISA groups? Does the CAA still apply?
A: The plan rules imposed by the CAA do not apply to plans that are exempt from ERISA.
Q: Is the CAA under the Department of Labor?
A: The CAA was issued jointly by the Department of Labor, Department of the Treasury, and Health and Human Services. The Departments may jointly or separately issue guidance going forward on the CAA. Any of the Departments have authority to audit a Plan for various reasons.
Q: How does the presence of a telemedicine benefit mitigate CAA liability when much of the data that’s demanded by the CAA involves specific cost and claims cost numbers and contribution amounts?
A: The CAA has many requirements, with cost transparency being one of those requirements. Having a Telehealth benefit which assists with price transparency will help mitigate some of those requirements. Additional plan benefits may be necessary in order to fully meet all CAA requirements.
Q: Does the CAA relate to just the lowest costs available? Does it relate to reputation or quality factors?
A: Under the CAA, the fiduciary must provide employees the ability to compare pricing information on health services. At this time the transparency rule does not require a reputational or quality component to be provided to employees. However, reputational and quality factors should be taken into consideration by a plan fiduciary when selecting group health plan carriers when determining if a plan and its costs are reasonable.
Q: How does the CAA affect COBRA?
A: The CAA does not change federal COBRA regulations or requirements
Q: What fines are associated with non-compliance of the CAA?
A: Penalties for failure to comply with the requirements of the CAA could include the Plan Fiduciary(ies) being held liable for any losses to the plan that result from a prohibited transaction or imprudent service arrangement, with those penalties at this time not being capped. While the CAA itself does not list specific fines which could be assessed, and current litigation is pending, we can use historical litigation data from 401(k) litigation as a marker. When similar regulations were passed around 401(k)s, the settlements which followed for non-compliance of those regulations typically asked for the return of any excessive or unreasonable fees and commission, interest, damages, and attorneys’ fees. Many of those settlements were in the millions. These financial penalties could be awarded if an employee, or a group of employees, were to sue under the CAA. These financial penalties could also be assessed by the Departments, if the Departments were to audit a Plan under the CAA and find unreasonable or excessive fees, and likely additional non-monetary penalties would be enforced such as a remediation plan and further government audit for some length of time after the initial finding. Damages could also include the removal of a Plan Fiduciar(y/ies) and removal of service providers. It is worth noting that a Plan Fiduciary can be held personal liable under the CAA. All of this combined could result in reputational damage too.
*This FAQ is not intended to be exhaustive nor should any discussion or opinion expressed here be construed as legal advice.
Want to learn more about the CAA and what it means for employers? Watch our CAA overview video and read our CAA article for employers.