What Is the Consolidated Appropriations Act of 2021 (CAA) and How Does It Impact Employee Benefits?

If you handle employee benefits, the Consolidated Appropriations Act (CAA) has likely been on your radar since its new healthcare provisions were signed into law in 2021.

In case you’ve been too busy to read the 2,000+ page document, here are the three most relevant employer takeaways:

• First, the CAA provides patients with unprecedented protection against surprise insurance bills. This should go a long way in providing some much needed reassurance to employees as they manage their healthcare needs.

• Second, this legislation gives employers visibility into their relationship with their benefits broker and what their broker brings to the table. Broker commissions, fees, and non-cash compensation are now out in the open, giving employers a deeper understanding into the value their broker brings to their organization (and their motivations behind plan design and vendor decisions).

• Lastly, it may also impact the way employees can hold their employers accountable for providing high-quality, affordable healthcare.
  

The CAA has already had a big impact on the way employers buy and manage their benefits, and this impact will only continue to grow now that the law is officially in effect.

While there's still a lot to learn as these new CAA provisions unfold, these changes to insurance law give employers an opportunity to level up their benefits, save money, and stay competitive.

How does the CAA impact how employers design employee benefits?

With the passage of new CAA provisions, benefits brokers are now legally required to share previously undisclosed information with employers. This information includes:

• Their compensation
• Their services
• Their commissions
• Their kickbacks (dinners, vacations, etc.)

This transparency gives employers an unprecedented view of the value their broker brings to the table and gives them the insights to hold their broker accountable.

For example, let’s imagine your broker has been providing measly services year after year via the same provider. And now through the CAA, you find out that the same provider regularly provides your broker with free perks like steak dinners and golf villa vacations to drive client retention. Well, it may be time to ask yourself whether your broker has your employer’s needs in mind… or their own. With the CAA, you can now use that knowledge to switch to a different plan or provider that better suits your needs, or ultimately choose to switch brokers entirely.

But even though it’s the law, you can imagine that some brokers may not be forthcoming with this information, as it may not paint them in the most positive light. Don’t be afraid to start the conversation and be prepared for whatever it may uncover. You owe it to your employees and your employer to get the best deal possible. In fact, you may have a fiduciary obligation under the law to take action.

What does the CAA mean for healthcare benefits?

At a high level, the CAA is designed to protect Americans from crippling medical debt.

For employers, this starts with increased visibility into what they’re actually paying for when designing and deploying their employee benefits programs. By giving employers full visibility into their broker’s financial incentives, the CAA now reveals their motives during renewal season, as well as requiring providers' transparency with the costs attached to the employee benefits they provide.

Recently, there has been speculation about whether employees can sue their employers for mismanaging employee benefit programs. As most Americans receive healthcare benefits through their employers, they are ultimately responsible for managing these benefits under the new law's terms. The federal law that regulates the people responsible for employee benefit plans, ERISA, imposes high standards on the plans' decision-makers. It's likely that plaintiffs will use ERISA to hold employers liable for providing quality and affordable healthcare benefits.

What should employers do?

Well first, don’t panic about potential lawsuits – you have enough on your plate and there are a number of unknowns.

Second, have your broker on speed dial. Your benefits broker is your lifeline when it comes to protecting your employees from over-the-top fees, and the right benefits broker will go above and beyond to make sure this is your reality. Now that the CAA has taken effect, every employer should do the following:

• Take steps to ensure your benefits are optimized
• Hold your benefits broker accountable for sharing their commissions, services, etc.
• And, if your broker isn’t performing up to expectations, consider finding a new broker

The CAA can help you improve your healthcare strategy. Here's how.

The first step towards quality healthcare benefits is working with a broker who has your (and your employees’) interests in mind. On your next planning call, ask about the CAA and take note of how your broker engages in that conversation. Their response may tell you everything you need to know.

While it may feel like an awkward topic to bring up, it beats losing an employee to a competitor due to the less-than-stellar benefits plan, or worse, a lawsuit as a result of mismanagement. Your broker should be a member of the team, elevating your company and providing employees with the best care possible.

Interested in exploring brokers? Set up a free consultation with one of our experts today.