Employee Benefits Compliance

Proposed (NOW FINAL) 2021 Benefit and Payment Parameters Increases Cost-Sharing Max; Includes EBHRA Notice—UPDATED

UPDATED – May 14, 2020

On May 14, 2020, the Department of Health and Human Services (HHS) finalized the proposed rules discussed below, with little change. HHS clarified, did not finalize and, indeed, finalized other provisions in the proposed 2021 parameters related to the Exchange and market stability; not discussed here, as they are not applicable to most employer sponsored health plans.

Employers should ensure they:

  • Use the EHBRA notice if offering an excepted benefit HRA.
  • Comply with the new cost-sharing limits beginning their next plan year.
  • See the Fact Sheet below for full details.

Fact Sheet »

2021 Final Notice »


The below information was originally published February 6, 2020

The Department of Health and Human Services (HHS) released today proposed regulations HHS Notice of Benefit and Payment Parameters for 2021; Notice Requirement for Non-Federal Governmental Plans and corresponding Fact Sheet. Highlights of those proposed requirements effective for 2021 plan years are below. Keep in mind these are only proposed -although in most cases reflect what will become final regulations, typically released in the fall.

Annual Cost-sharing Maximums

Up 4.9%, the proposed maximum annual limitation on cost-sharing is represented below.

20202021 Proposed
Other than Self-only$16,300$17,100

Drug Manufacturer Coupons

The proposed changes to the policy regarding how drug manufacturer coupons accrue towards the annual limitation on cost-sharing are in response to stakeholder feedback indicating confusion about the current regulatory requirement.

  • Issuers would be permitted, but not required, to count toward the annual limitation on cost-sharing amounts paid toward reducing out-of-pocket costs using any form of direct support offered by drug manufacturers to enrollees for specific prescription drugs.
    • Regardless of whether generic equivalent is available.
  • We propose to interpret the definition of cost- sharing to exclude expenditures covered by drug manufacturer coupons.

Excepted Benefit Health Reimbursement Arrangement (EBHRA)

HHS proposes to require non-Federal governmental plan sponsors (i.e., County, City and State municipalities) to provide participants notice that includes ERISA Summary Plan Description (SPD) information, including eligibility terms for the EBHRA and limits. ERISA does not typically apply to governmental plans. This would extend similar notice requirements to those entities. For information on EBHRA, see the Leavitt Group article.

Medical Loss Ratio Issuer Calculations (MLR)

HHS proposes to amend current MLR regulations to require issuers to deduct from incurred claims
the prescription drug rebates and other price concessions attributable to the issuer’s enrollees and received and retained by an entity providing pharmacy benefit management services to the

  • Issuers must report expenses for services outsourced to or provided by other entities in the same manner as issuers’ expenses for non-outsourced services – Intended to help lower premiums by helping ensure that consumers’ premiums reflect the full benefit of prescription drug rebates and are not artificially inflated by outsourcing expenses.
  • Expenditures related to certain wellness incentives in the individual market qualify as quality improvement activity expenses in the MLR calculation.

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