Large Employers Must File ACA Forms, Not the Insurers

One mistake more and more employers are making is failing to file the required Affordable Care Act tax-related forms with the IRS.

If you are what’s considered an “applicable large employer” (ALE) under the ACA, you are required to file with the IRS forms 1094 and 1095, often separately and before your annual tax returns are due.

Under the ACA, employers with 50 or more full-time and “full-time equivalent” workers are considered an ALE and are required to provide affordable health insurance to their staff that also covers 10 essential benefits as prescribed by the law. This is what’s known as “the employer mandate.”

Filing these documents is not the responsibility of your health insurer as it’s you that’s arranging the employer-sponsored health insurance for your staff. Be aware that you can face penalties if you:

  • Don’t file the forms in a timely manner,
  • Make mistakes when filing the forms, or
  • Fail to file the forms altogether.

The IRS requires these forms to ensure that ALEs are providing health coverage to their employees and that the employer is complying with the employer mandate portion of the ACA.

The forms

  • Form 1095-C — This is basically the W-2 reporting form for health insurance. The form tells the IRS which employers are providing coverage and which employees are getting coverage through their employers.
  • Form 1094-C — This form provides information about health insurance coverage that the employer provides.

Here are the deadlines you need to be aware of:

  • Jan. 31, 2022 — Individual statements (Form 1094 C) for 2021 must be furnished to employees by this date.
  • Feb. 28, 2022 — If filing paper returns, Forms 1094 C and 1095 C must be filed by this date.
  • March 31, 2022 — If filing electronically, Forms 1094 C and 1095 C must be filed by this date.

Penalties

The general potential late/incorrect ACA reporting penalties are $280 for the late/incorrect Forms 1095-C furnished to employees, and $280 for the late/incorrect Forms 1094-C and copies of the Forms 1095-C filed with the IRS.

That comes to a total potential general ACA reporting penalty of $560 per employee when factoring in both the late/incorrect Form 1095-C furnished to the employee and the late/incorrect copy of that Form 1095-C filed with the IRS.

The maximum penalty for a calendar year will not exceed $3,392,000 for late/incorrect furnishing or filing.

New Issues for 2022 Group Plan Open Enrollment

Employers are entering the second year of open enrollment taking place during the COVID-19 pandemic, which is still having an outsized impact on the process and which has changed the face of health insurance.

There are a number of issues that will have an effect on health plans, including regulations and laws affecting coverage that were born out of the pandemic. Mercer LLC recently published a list of compliance-related priorities that health plan administrators and sponsors have to consider, including:

Legal and regulatory changes

Health plan transparency in coverage rules takes effect on Jan. 1, 2022. Newly introduced regulations require hospitals to publish their standard prices, and for negotiated rates between health plans and providers to be made transparent too.

Employers will need to communicate these changes to their employees, particularly rules that require health plans to provide enrollees with out-of-pocket estimates for upcoming procedures.

Also, the No Surprises Act, which will prohibit surprise bills for certain out-of-network services, takes effect at the start of 2022 for providers and group health plans. Employers need to meet with their plan administrator to make sure that their plans are in compliance with these new regulations.

COVID-19 issues

The pandemic will continue casting its shadow over health insurance and open enrollment.

Legislation passed last year requires health plans to cover additional services such as mental health and telehealth until the end of this year. Whether your plan offerings will keep providing those enhanced benefits or not, you’ll need to communicate that to plan participants and include it in your plan documents.

You should also confirm that your group plans comply with COVID-19 testing and vaccine coverage requirements in the Family First Coronavirus Response Act, the CARES Act and any state laws.

Gender and family planning issues

Employers should review their benefit eligibility rules after the Supreme Court in 2020 ruled that Title VII of the 1965 Civil Rights Act protects LEGBTW employees from discrimination in benefits.

You should ensure that benefits offered to opposite-sex spouses are the same as are offered to same-sex spouses.

Mental health parity

All health plans have to prepare a comparative analysis of their medical and surgical benefits and mental health and substance abuse treatment benefits to demonstrate that treatment limitations are applied comparably. This job does not fall on the employer, but you should make sure your plan has prepared the analysis or is working on it.

This is part of new laws that require health plans to offer similar benefit coverage for mental health and substance abuse treatment as they do for other medical and surgical procedures and services.

HSA, HRA and FSA revisions

The CARES Act temporarily authorized employers to allow employees with health savings accounts, health reimbursement arrangements and flexible spending accounts to make mid-year changes to how much they deposit in those accounts.

It also authorized them to permit employees to roll over unused amounts in their health and dependent-care flexible spending arrangements from 2020 to 2021 and from 2021 to 2022.

Employers that opted to allow their employees to make these changes and roll over funds, have to communicate to their employees that these changes come to an end on Dec. 31 this year.

There were also some permanent changes made by the CARES Act, including reinstating over-the-counter medical products as eligible expenses for HSAs, certain HRAs and FSAs without a prescription.

These accounts may now allow certain menstrual care products, such as tampons, pads, liners and cups, as eligible medical expenses. These are retroactive benefits to Jan. 1, 2020.

Make sure to notify your staff of these changes. You can tell them that if they have receipts for eligible expenses that date back to then, they can submit them for reimbursement.

Coverage for Virtual Substance Abuse Treatment Grows

Thousands of American families have been affected by the tragedy of someone with a substance abuse problem.

For many, especially during the COVID-19 pandemic, finding available and affordable treatment has been difficult or impossible. Recently, however, virtual treatment options have become available, and some insurance companies are beginning to pay for them.

This is an important development for both the group health insurance arena as well as the individual health insurance market. For employers, this is another lifeline that they can highlight for their staff as so many people have been affected by the stresses of the pandemic. For individual policyholders, they could have access to convenient and timely treatment.

Start-up companies across the country are offering virtual substance abuse treatment, including:

  • Boulder Care, which provides digital opioid-addiction treatment.
  • Pear Therapeutics, which provides software-based disease treatments; its lead product is a treatment for substance abuse disorders approved by the U.S. Food and Drug Administration.
  • Ria Health, which employs 45 clinicians who can prescribe treatments online for alcohol-addicted patients.

These start-ups have attracted the attention of group health insurance companies, some of which are starting to cover their treatments for people insured under their health plans. For example:

  • Ria Health has contracts with at least four insurers covering millions of people.
  • Boulder Care has a partnership with Anthem.
  • Pear Therapeutics has contracts with regional health plans in three states.
  • An opioid-addiction treatment provider in Massachusetts has partnerships with UnitedHealth Group and Kaiser Permanente.

Virtual treatments for addiction are becoming popular for several reasons. Patients may feel a social stigma from receiving in-patient treatment at rehabilitation centers.

Instead, virtual treatment in their homes permits them to keep their conditions private. It also provides flexibility. Ria Health offers its services on demand while enabling patients to customize their goals.

Receiving treatment faster

Demand for substance abuse treatment has grown during the pandemic.

Studies show that a quarter of American adults reported drinking more alcohol during the health emergency, including more than half of parents of elementary school children. As a result, space has been at a premium at in-patient rehabilitation facilities. Some have had lengthy waiting lists.

Virtual treatment gives new options to patients who cannot get admitted to rehab centers.

Because of the pandemic:

  • Some states made new rules for prescribing medicine via telehealth visits less restrictive.
  • The federal government started requiring payment parity for physician visits done via video.

Both of these factors have encouraged the growth of these start-ups.

These solutions are attractive to insurers because they reduce costs. Substance abuse patients who cannot get into rehab centers may overdose and end up in emergency rooms.

ERs are often the most expensive places to obtain care. Planned treatments over periods of time reduce the need for ER visits.

Multiply the savings over hundreds of thousands of patients, and it should be no surprise that insurers are signing seven-figure contracts with these providers.

Employers see these new plan features as an additional way to retain valuable employees. In any large group of employees, there will be some who are suffering from addiction or have family members who are, and they will value this benefit.

If you are an employer who offers these plans, you may want to check with your health insurers to see if they’ve changed coverage terms for this type of treatment. If so, you may want to consider spreading the word among your staff.

For some of your employees or their family members, life-saving help may be just a video chat away.

Accident Insurance Can Save Your Workers from Ruin

Even if you are providing your staff with health benefits, they could be left under great financial pressure if one of them has a major accident off the job that leaves them debilitated and unable to work.

Millions of working Americans struggle with managing out-of-pocket costs for non-medical and medical expenses after suffering an unexpected event such as an accident.

If you are already offering your employees health insurance coverage, you can help fill the gap by also offering voluntary accident insurance, which can pay for:

  • Lost wages,
  • Deductibles and other expenses not covered by insurance,
  • Transportation to and from hospitals and doctors, and
  • Home modifications.

Many Americans are ill-prepared financially

According to a survey by Prudential Insurance Co.:

  • Two-thirds of Americans say it would be very or somewhat difficult to meet their current financial obligations if their next paycheck were delayed for just one week.
  • Half of all households say they have less than $10,000 in liquid assets available for use in an emergency.

Why your employees need coverage

  • Health insurance only covers a portion of expenses, and only after the employee has paid their deductible and copay.
  • Employees sometimes have to pay out of pocket for medicines, medical equipment and visits to out-of-network physicians.
  • Employees have to pay out of pocket for travel to appointments, home accommodations, caregiving and housekeeping if they cannot do those things on their own after an accident.
  • Lost wages are a sometimes-overlooked cost of illness or injury. This can be an issue not only for the employees directly impacted by illness or injury, but also for family members who are providing care for them.

The types of accident insurance

Traditional treatment-based plans. These pay benefits based on the occurrence of an accidental injury and the type of treatment or procedure required to treat an injury.

The injured individual will often submit a separate claim for each service they receive related to the accident. For example, if they were in a car accident in which they broke both legs, they would file individual claims for:

  • The costs not covered by health insurance for each service to treat the injury.
  • The cost of paying for transportation to doctors’ visits and physical therapy sessions.
  • Each time a home caregiver visits them to provide care.

Incident-based plans. These pay benefits based upon the incident and type of injury. This can simplify the claims process by reducing the number of claims that must be submitted.

In the case of the car accident victim with broken legs above, they would likely be required to submit evidence only for the fractures and for their hospital stay to be reimbursed.

Benefits to the employer

A more robust benefits package — Offering accident insurance paid for by employees allows you to provide a more robust benefits package that can improve employees’ satisfaction with their jobs.

A smoother transition to high-deductible health plans — Employers replacing traditional medical insurance with an HDHP may find the transition more readily accepted by employees if it is accompanied by an offer of a voluntary accident insurance plan.

Potential for improved productivity — Employees under financial pressure may be less productive than those who are not, and knowing they have accident insurance can put their fears to rest.

Low cost and administrative burden — Most employers offer accident insurance that is paid for by the employee, meaning there is little or no cost to the organization.

PBM Trade Association Sues Over Transparency Rules

As the federal government continues rolling out new laws and regulations aimed at increasing price transparency in the health care industry, one group is fighting back: pharmacy benefit managers.

The Pharmaceutical Care Management Association, a trade association for PBMs, has sued the Department of Health and Human Services, Internal Revenue Service and Department of Labor, all of which were instrumental in rolling out transparency regulations in 2020, which took effect Jan. 1, 2021.

The rules specifically require health plans (including PBMs) and health insurers to disclose on their websites their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs.

PBMs were included in the transparency rules because numerous reports have found that some of them rely on opaque contracts with pharmacies and drug companies, and that they allegedly fail to pass on rebates and lower drug prices they negotiate to their enrollees.

The lawsuit comes as PBMs are feeling the heat over their practices. At least seven states and the District of Columbia are investigating them, mainly focusing on whether they fully disclose the details of their business and whether they receive overpayments under state contracts.

Also, attorneys general in four states have sued PBMs, mostly alleging that they misled state-run Medicare programs about pharmacy-related costs.

What the PBMs are saying

The PBMs allege in their lawsuit that the rule will not benefit consumers because their knowing what the contracted drug prices are won’t have an effect on them as there are no actions they can take knowing this information.

The trade association said: “The rule offers consumers no actionable information because net prescription drug prices are not charged to consumers and never appear on a bill.” Instead, the information will likely confuse consumers, it alleges.

The trade body in its court filing said PBMs maintain that their business model hinges on their ability to negotiate confidentially and keep the details of their manufacturer contracts as trade secrets that are not available to other drug manufacturers or otherwise disclosed to the public.

“Confidentiality, in turn, allows PBMs to bargain from a position of strength to reduce drug prices,” it wrote. “Government-enforced information sharing will raise costs by reducing PBMs’ ability to negotiate deeper discounts on drug prices.

“The regulation threatens to drive up the total drug price ultimately borne by health plans, taxpayers and consumers by advantaging drug manufacturers in negotiations over price concessions,” it added.

An Employer Guide to Open Enrollment for the 2022 Policy Year

With the COVID-19 pandemic continuing to throw a wrench into the economy and the workplace, employers are gearing up for another unusual open enrollment for their group health plans for the 2022 policy year.

As a result of the pandemic, your employees’ priorities may have changed and some of them may be looking at enhanced benefits, or to change their plans’ deductibles or out-of-pocket maximums.

The coronavirus is obviously not in the rear-view mirror, so employers need to consider workers’ new priorities when choosing health insurance plans and other employee benefit offerings.

Employees’ new priorities

Here’s what’s become a priority for many workers today:

  • Mental health support
  • Access to telehealth
  • Higher interest in health savings accounts (HSAs).

Employers should consider their staff’s new priorities when designing health and benefit programs. If you decide to make changes to your plans or if your health plans have changed, you’ll need to effectively communicate those changes to your workforce.

More health plans are rolling out more and improved access to mental health support, the demand for which has surged during the pandemic as many people struggled with the sudden changes and isolation spawned by stay-at-home orders.

Additionally, because many people were afraid or because of doctor’s office restrictions, many tried telehealth video-conferencing services for the first time in 2020 or in 2021. Insurers see telehealth as a viable option for reducing the cost of care, and they have invested heavily in the infrastructure to enable health plan enrollees to meet virtually with their doctors.

More health plans are also covering mental health video-conference sessions as well.

Many plans have expanded these services, but you’ll need to check to see if the ones you are offering include these enhancements.

Additionally, the pandemic has resulted in more employees looking for ways to set aside funds during the year to pay for health care and medications. This can be done through HSAs and flexible spending accounts (FSAs). which are funded by the employee using pre-tax dollars. The funds in those accounts can be used to reimburse for a wide variety of qualified medical expenses.

HSAs, however, can only be offered to employees who are enrolled in a high-deductible health plan (HDHP). HSAs can be kept for life and can be transferred from one employer to the next if a worker switches jobs. FSAs are easier to set up, but they are not kept for life and cannot be transferred to another employer when an individual leaves your employ.

There are some changes to these plans that you should know about.

The Coronavirus Aid, Response and Economic Security (CARES) Act, signed into law in March 2020, allowed HSA-qualified HDHPs to cover telehealth services before plan enrollees reached their deductible. This provision expires Dec. 31, 2021.

However, another change brought by the CARES Act is permanent: Employees with HSAs, health reimbursement arrangements or health FSAs are now allowed to use those accounts to reimburse for over-the-counter medications without a prescription, and for certain menstrual care products, such as tampons and pads.

Communications and planning

During your open enrollment meetings and in your communications material, you’ll want to highlight any new services that the health plans you are offering your staff will cover.

Since COVID-19 is still present and is raging in some communities, you may want to consider:

Holding a ‘virtual benefits fair’ — In these virtual fairs, employees and families can go online and check out the offerings of all the plans available to them, so they can learn more about their offerings and provider networks. These events can be done on the employees’ and families’ own time.

Conducting virtual open enrollment meetings — Consider holding teleconference open enrollment meetings to go over the employees’ health plan choices, and the deductibles, copays, premium amounts and what the maximum out-of-pocket is for each choice.

Sending out more frequent and targeted communications — Targeted communications can be sent to various cohorts of your employees, such as information on plans that would be of most interest to people in their 20s and 30s. What you send them in terms of recommended options would be different than what you send older employees, who have other priorities.

Using technology for enrollment — Some health plans offer apps through which employees can choose and sign up for the plan of their choice. Talk to us about what’s available to you.

Schedule it

The Society for Human Resources Management recommends that you do the following in the two months prior to open enrollment (September through October). This is the time to get the word out about the upcoming open enrollment. Consider:

  • Distributing a pre-enrollment flier (printed and online) in September.
  • Holding a virtual benefits fair in mid-to-late September.
  • Distributing the enrollment packet at the end of October (printed and online).

COBRA Subsidies Ending and Employers Must Send Out Notices

The 100% COBRA health insurance subsidies for workers who lost their jobs during the COVID-19 pandemic are about to expire on Sept. 30, and that means employers who have former staff receiving those subsidies must notify them of their expiration.

If you have former employees who are still on COBRA benefits and receiving the subsidy that was required by the American Rescue Plan Act, you will need to send them a timely notice that the 100% subsidy will end at the end of September and that they will have to start paying premiums if they wish to continue coverage after it has ended.

The expiration notice must be sent out 15 to 45 days before the expiration of the subsidy or before COBRA benefits expire (laid-off employees are only eligible to purchase COBRA health insurance continuation coverage for 18 months after they are laid off or quit).

In other words, employers have to send out expiration notices to some former employees who have been receiving COBRA coverage that their 18 months is up.

Some employers should already have sent out expiration notices.

Employers or plan administrators must notify employees receiving COBRA subsidies no more than 45 days before Sept. 30 and no less than 15 days before they will lose the subsidy. Sept. 15 is the absolute last day to send the notices.

Who should you send notices to?

If you have any former employees who are receiving COBRA premium assistance you must send them an expiration notice, even if they have reached their maximum coverage period of 18 months.

There were three ways a former employee could qualify for the subsidy:

  • Eligible individuals who had a COBRA election in place as of April 1, 2021.
  • Eligible individuals who did not have a COBRA election in place (but were previously offered COBRA under federal law) could start to receive the subsidy on April 1.
  • Eligible individuals who experience a COBRA qualifying event between April 1 and Sept. 30.

What should the notice say?

The IRS has created a model expiration notice, which you can find here.

While it is not mandatory that you use the model notice, it’s a good idea, because using it demonstrates “good faith” compliance with the law.

Here are the details you’ll need to include in the notice:

  • Date of the notice.
  • Names or status of the beneficiary.
  • Name of the group health plan or insurance policy.
  • Whether the beneficiary is receiving the notice because their maximum COBRA continuation period is ending (18 months) or because the subsidy is expiring.
  • Date on which the maximum period of continuation coverage will end, or the date of the end of the COBRA subsidy. Depending on their premium period, their subsidized COBRA coverage can last beyond Sept. 30, according to the IRS.
    Under the rules, the subsidy continues until the end of the last “period of coverage” beginning on or before Sept. 30. In other words, if premiums are usually assessed on a monthly period basis, including the period from Sept. 26 to Oct. 26, the subsidy would cover the entire period ending on Oct. 26.
  • Monthly premium cost that the beneficiary must pay to keep their continuation coverage going after the subsidy expires. It must also include other coverage options.

Employers Mull Higher Health Plan Cost-Sharing for Unvaccinated Staff

Some employers are considering a new incentive for their workers to get vaccinated against COVID-19: Charging them higher health insurance premiums if they don’t.

A recent brief from consulting firm Mercer reported that employers are looking at surcharging the health insurance premiums for employees who refuse vaccination for reasons other than disability or sincere religious belief. Many employers apply similar surcharges for employees who use tobacco.

The news comes as the Delta variant of the coronavirus that causes COVID-19 has sent infection rates soaring, with reports indicating that most new cases are occurring in people who have not been inoculated.

Employers may choose this option for a simple reason: The large costs of hospital stays and treatments for COVID-19 patients. When health plans incur large claim costs, they must either accept lower profits or make up the difference by spreading the costs among plan participants. Charging higher premiums penalizes vaccinated and unvaccinated employees alike.

The U.S. Equal Employment Opportunity Commission has said that it is permissible for employers to require workers to be vaccinated. However, many employers have been hesitant to take that step, fearing negative employee reactions, waves of resignations and bad publicity.

Freedom of choice

Surcharging insurance premiums for unvaccinated workers may be an appealing alternative for some employers. Rather than ordering employees to get vaccinated, they would leave them free to choose.

Those who would rather bear higher costs as a consequence of refusing a vaccine would be free to make that choice. In turn, vaccinated employees would not have to subsidize the health care costs of colleagues who make riskier decisions.

A Mercer spokesperson has estimated that any surcharges would be in the range of $500 to $1,300 per year.

Extra costs like that might induce reluctant workers to get the shots. If unvaccinated employees decide to get vaccinated in order to avoid a surcharge, the workplace should be safer and more productive. Absenteeism due to illness can negatively impact productivity.

The takeaway

Employers need to consider the following before implementing surcharges:

  • The EEOC has provided guidelines for employers wishing to offer vaccine incentives. Employers should stay within those guidelines.
  • Are the incentives necessary? They might not be in areas or workplaces where vaccination rates are already high.
  • The line between “encouraging” and “coercing” employees to get vaccinated is not well-defined. Employers should avoid imposing surcharges that could be viewed as coercive.
  • Some employees have pre-existing health conditions that make the vaccinations unsafe. Others seriously practice religions that forbid their use. Federal law requires employers to accommodate these workers.

Deductibles Shift Drives Interest in Critical Illness Cover

If you want to provide your employees with the one voluntary benefit that can give them peace of mind should tragedy strike, critical illness coverage is the answer.

Demand has grown for critical illness insurance over the last year thanks to the pandemic and as a result of employees taking on more of the cost burden in their employer-sponsored health plans.

According to the Kaiser Family Foundation’s “20120 Employer Health Benefits Survey,” the average deductible for self-only plans of all types was $1,644 in 2020, up from $917 a decade earlier.  And many employees have deductibles upwards of $6,000 if they are in certain high-deductible health plans, which have become increasingly common.

As a result, many employers have begun enhancing their voluntary benefits offerings to include critical illness or cancer coverage to help offset the risk for employees and increase satisfaction and retention.

Interest grows

In part, employee interest in critical illness insurance stems from the chain of events that may have cut back their benefits and caused their deductibles to skyrocket. They are looking for peace of mind should they be stricken by a serious illness.

In addition, advances in medicine and technology that have prolonged life also make critical illness coverage more attractive. 

Finally, the COVID-19 pandemic put into sharp focus just how quickly someone can be sidelined by a sudden and serious illness.

Consider that out-of-pocket costs for treating a critical illness can start at around $15,000 and climb from there, and that lost income can be as much as $60,600, according to a 2020 MetLife study.

In other words, battling a critical illness could be just the tip of the iceberg. If someone’s lucky enough to survive a critical illness, they may still suffer major financial damage due to high medical bills and restricted income. 

To stave off debt, some people dip into, or deplete, their retirement savings and end up paying extra due to resulting taxes, fees and reduced health insurance subsidies. 

However, other adults don’t even have enough, or near enough, of a nest egg saved to cover all the costs.

Enter critical illness coverage

Critical illness coverage provides a lump-sum payment that a policyholder can use for any expense if they’ve been diagnosed with a serious illness. 

Mostly, this insurance only pays out for one occurrence of a listed condition. And once that payment is made, the policy is terminated.

But insurers have started offering policies that cover a wider variety of conditions and allow beneficiaries to receive multiple payouts if they suffer from a reoccurrence or another condition entirely.

As a result, more employers are offering voluntary critical illness coverage. According to Mercer’s “2020 National Survey of Employer-Sponsored Health Plans,” more organizations are offering this insurance in a direct response to the COVID-19 pandemic.

And Willis Towers Watson’s “2021 Emerging Trends in Health Care Survey” found that 57% of employers polled were offering critical illness coverage to their staff in 2021, and that 75% were planning to offer it by 2022 or beyond. That’s an increase of nearly one-third. 

Often offering this coverage costs the employer nothing or very little. Call us for more information on this valuable benefit that more workers are demanding.

Group Health Insurers Not Factoring In COVID-19 Effects in 2022 Pricing: Study

In a glimpse of what we may expect in terms of premiums, a new study by the Kaiser Family Foundation has found that most insurers are not factoring in added costs or savings related to COVID-19 for their 2022 health coverage rates for personal health plans in 13 states and the District of Columbia.

The insurers expect health care utilization to return to pre-pandemic levels by 2022, according to the analysis by KFF.

While the analysis focused on the individual market, KFF found that insurers were making similar assumptions about how COVID-19 would affect their group market costs and pricing.

Despite them not expecting significant effects from COVID-19, there are other issues that are on health insurers’ radars that are likely to increase rates, including the costs of treatment that was delayed in 2020, the continued use of telehealth services and new federal regulations in response to the pandemic. A recent survey by PricewaterhouseCoopers found that employers are expecting an average rate increase of 6.5% for group health coverage.

It’s clear that most insurers are viewing the COVID-19 pandemic as a one-time event, with limited, if any, impact on their 2022 claims costs. KFF referred to the pandemic’s effect on rates as “negligible.”

The foundation looked at rate filings of 75 insurers and only 13 of them stated that the pandemic would increase their costs in 2022, but even then, most of them predicted an effect of 1%. The reasons those 13 insurers cited for the expected higher costs include:

  • Costs related to ongoing COVID-19 testing, treatment and vaccinations.
  • Anticipated vaccination boosters.

Delayed treatment, policy changes

While most insurers don’t expect to be paying out excessive amounts for treatments and medications related to COVID-19 infections, they are concerned about the increased flow of patients seeking treatment for procedures they postponed last year.

Those postponements have led to pent-up demand, driving higher utilization in 2021, which some health plans expect will spill over into 2022.

As a result, some insurance companies have filed rates that include a “COVID-19 rebound adjustment” to account for the services that were deferred in 2020.

Other carriers have filed for rate increases based on predictions that those delayed services will lead to an exacerbation of chronic conditions. Some are also predicting that COVID-19 “long-haulers” could push claims costs higher.

On top of all that, insurers this year have had to make decisions about benefits, network design and premium pricing in the face of the pandemic and federal policy changes that could dramatically expand coverage under the Affordable Care Act.

Other concerns

Some insurers are concerned about the costs associated with the explosive growth of telehealth services during the pandemic. These tele-visits boomed as people were avoiding doctors’ offices due to stay-at-home and social distancing orders and to reduce the chances of COVID-19 transmission.

Kaiser Permanente in one of its filings wrote: “We anticipate the high utilization of telehealth services to persist beyond the lifespan of the outbreak into the foreseeable future.”

Another insurer, MVP in Vermont, said that while it has seen costs associated with in-person ambulatory services increase this year and a return to in-person visits, it has not seen a reduction in use of telehealth services.

Finally, Blue Cross Blue Shield of Vermont in its filing predicted that the increased expenditures for mental health services (demand for which spiked in 2020 as people wrestled with isolation and depression aggravated by the pandemic) would continue in 2022 and beyond.

The insurer predicted that claims for mental health and substance abuse treatment would climb 20% from 2020 to 2022.