How COVID-19 Will Impact 2021: Employer Help

It’s to no surprise the impacts of COVID-19 will carry into 2021 (and even the years following). Employers need to be prepared for significant workplace changes and procedures as we near the end of 2020.

For example, an increase in demand for delayed procedures and continuing care related to COVID-19 is likely to drive health care costs higher next year. “Most employers are experiencing short-term gains in their health plans,” said Kelly Conlin, a principal with benefits consulting firm Buck in Philadelphia. That’s because some individuals’ decisions to defer or cancel elective care lowered spending in 2020, more than offsetting added health care expenses for COVID-19 testing and treatment. However, employers cannot afford to be complacent about health care costs going into 2021.

Top 2021 Compliance Issues (according to Mercer)

Paid leave: Evaluate processes for integrating COVID-19 paid leave requirements under the FFCRA and state paid leave mandates with existing benefit plans, then revise plans as needed to comply. Watch closely for state legislation for new or expanded leave mandates and programs that may stretch into 2021.

Prescription drug costs: Review new payment model and plan designs aimed at lowering plan costs for specialty medications to ensure compliance.

Watch for a Supreme Court case in the fall that will review whether ERISA pre-empts a state law regulating how pharmacy benefit managers set rates for certain generic prescriptions. Also, track FDA activities and states’ efforts to import certain medications from Canada that meet its standards.

Transparency rules: Review the final transparency rule for hospitals: They must publicly display negotiated charges on their websites as of Jan. 1, 2020. Explore new opportunities to directly contract rates with individual hospitals. Also, prepare to comply with the transparency rule for group health plans that will probably take effect sometime in 2022. Ask your provider if it will supply the disclosure.

HIPAA issues: Assess how healthcare changes due to the pandemic will change privacy concerns for group health plans. Wellness and transparency tools and mobile apps may implicate HIPAA and other laws. With expanded use of telehealth, expect updated HIPAA rules in 2021.

HSA, HRA and FSA plans: For 2021, ensure administrative practices comply with optional or required COVID-19 relief rules. The CARES Act now allows additional nonprescription items to be purchased with HSA, HRA and FSA funds.

Monitor pending COVID-19 relief legislation that could enhance HSAs or provide greater FSA flexibility for 2021.

Preventive services: Confirm non-grandfathered health plans cover ACA-required in-network preventive services without any deductible or copay. Also, monitor development of COVID-19 preventive services or vaccines, which non-grandfathered health plans must cover without cost sharing. Plans must cover these preventive items within 15 days after they’re recommended by the CDC.

ACA concerns: While the ACA is being challenged in court, employers need to monitor developments, as the outcome will likely have implications for group health plans. Self-funded employers will need to continue to calculate and pay the PCORI fee, which remains in effect until 2029.

Potential Changes (according to 

  • Expanding virtual or telehealth programs (32 percent).
  • Enhancing mental health support, such as employee assistance programs or additional services (25 percent).
  • Increasing cost-sharing for plan expenses such as deductibles, premiums or co-payments (20 percent).
  • Adding or expanding voluntary benefits (16.5 percent).
  • Augmenting services for managing high-cost claims, including specialty pharmacy claims (13.5 percent).

“Separately, employers may need to reduce their retirement plan contributions for 2021, both matching and discretionary amounts, depending on how the economy performs through the rest of this year. As plan sponsors and fiduciaries, employers should always explain to employees what’s changing and why these actions are necessary to keep the business afloat.”

“With the pandemic’s ongoing threat to individuals’ long-term health and financial well-being, employers need to engage employees in benefits decision making as much as possible, because the decisions employees make for the 2021 benefits plan year could be more critical than ever.” – Society for Human Resource Management