US Department of Labor Archives - EMPLOYEE BENEFITS BLOG

US Department of Labor

Trump Administration Places DOL’s ESOP Proposals in Regulatory Moratorium

by Ted Becker, Allison Wilkerson, Erin Turley and Myriem Bennani | Feb 25, 2025 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Retirement Plans

On January 16, 2025, the US Department of Labor’s (DOL) Employee Benefits Security Administration released two proposed regulations related to employee stock ownership plans (ESOPs). One regulation aims to clarify the valuation process for non-publicly traded employer stock, while the other would provide a safe harbor for transactions involving newly established ESOPs.

However, on January 20, 2025, the Trump administration froze all pending proposals, including the DOL’s ESOP regulations. If finalized, these regulations would dramatically change the landscape for fiduciaries responsible for valuing stock in privately held corporations during transactions with ESOPs.

Complying With the ‘Relevant Data’ Requirement Under the Final 2024 Mental Health Parity and Addiction Equity Act: A Proposal for a Workable Alternative

by Alden Bianchi | Dec 19, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

The Mental Health Parity and Addiction Equity Act (MHPAEA) generally requires group health plans and health insurance issuers to ensure that financial requirements (such as copays and deductibles), quantitative treatment limitations (such as visit limits), and nonquantitative treatment limitations (such as prior authorization and concurrent review) applicable to mental health or substance use disorder (MH/SUD) benefits are generally no more restrictive than the requirements or limitations applied to medical/surgical (M/S) benefits. The Consolidated Appropriations Act, 2021 imposed further obligations in the case of nonquantitative treatment limitations (NQTLs), which are the subject of final regulations issued in September 2024. (We explained the final regulations here.)

Among many other things, the final regulations establish a two-part test that applies to NQTLs consisting of:

The design and application requirement. This test requires that the processes, strategies, evidentiary standards, or other factors used in designing and applying an NQTL to MH/SUD benefits in each classification must be comparable to and applied no more stringently than those used in designing and applying the limitation with respect to M/S benefits in that same classification. For this purpose, classifications include inpatient, in-network care; inpatient, out-of-network care; outpatient, in-network care; outpatient, out-of-network care; emergency care; and prescription drugs.
The relevant data evaluation requirement. This test requires the plan or issuer to collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL on relevant outcomes related to access to MH/SUD benefits as compared to M/S benefits. Relevant data for this purpose includes the number and percentage of relevant claims denials and network composition data.

The relevant data evaluation requirement has proven especially challenging for self-funded group health plans of every size, as third-party administrators fail, refuse, or are otherwise unable to provide the information necessary to comply. There may be another option, however.

The final regulations do not specify the data set on which compliance with the relevant data requirement is tested. Rather, the regulations, which apply to both plans and issuers, seem to assume that the plans test on the basis of plan data, and issuers test on the basis of the issuer’s corresponding block of business. In their informal remarks at trade and industry conferences, representatives of the US Department of Labor (DOL), expressing their own views and not those of the DOL, have acknowledged that they are aware of and are considering their options related to the proper testing data set.

Some large carriers have shared the NQTL analysis that they previously prepared for their fully insured groups with the self-funded group to whom they provide administrative services. Presumably, this will give their self-funded groups a starting point. Many self-funded groups, particularly smaller groups, are not inclined to modify the standard set of NQTLs offered by their carriers/administrative-service-only (ASO) providers. If these groups were allowed to test based on the carrier’s corresponding book of business, a good deal of the work would be done. This would also have the salutary effect of exerting market pressure [...]

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Shifting Sands: DOL Recent Developments

by Ted Becker and Julian André | Oct 24, 2024 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues

There have been significant developments that will impact the future of US Department of Labor regulations and litigation related to employee stock ownership plans (ESOPs). Ted Becker and Julian André recently presented a webinar for the National Center for Employee Ownership and shared what ESOP fiduciaries, ESOP company directors, and employees involved with ESOPs need to know about these changes.

Watch the recording here.

Webinar Replay: Unpacking the Final Mental Health Parity Regulations

by Alden Bianchi, Jacob Mattinson and Sarah Raaii | Oct 8, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

On September 9, 2024, the Biden administration issued much-anticipated final regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The rules implement a host of complicated new compliance requirements for sponsors and issuers of health plans, instituting new obligations to collect and evaluate plan data, conduct comparative analyses, and act to address material differences in access to mental health and substance abuse benefits as compared to medical and surgical benefits.

During a recent webinar, Alden Bianchi, Jake Mattinson, and Sarah Raaii provided a comprehensive overview of the new rules, including compliance deadlines and key takeaways for employers, plan sponsors, and issuers of group health plans. The speakers also addressed how the new rules might impact any ongoing US Department of Labor investigations.

Access the recording here.

HHS, Labor, and Treasury Finalize Mental Health Parity Rule

by Katie Waldo, Rachel Stauffer, Erica Stocker, Jeffrey Davis, Leigh Feldman, Julia Grabo and Maddie News | Sep 26, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

On September 9, 2024, the US Departments of Health and Human Services , Labor, and the Treasury finalized a rule related to the Mental Health Parity and Addiction Equity Act. This rule introduces significant updates to mental health and substance use disorder benefits, ensuring parity with medical and surgical benefits. Key changes include enhanced protections against restrictive treatment limitations, clarified definitions, and new data evaluation requirements. These updates, effective from January 2025, are crucial for hospitals, health systems, and managed care providers.

Plan Sponsors, Insurers, and the Landmark Mental Health Parity Final Rule

by Alden Bianchi, Jacob Mattinson and Sarah Raaii | Sep 19, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

The US Departments of the Treasury, Labor, and Health and Human Services recently issued much-anticipated final regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The newly issued final regulations update the 2013 final regulations principally to reflect the changes to MHPAEA enacted by the Consolidated Appropriations Act, 2021, which requires plans and issuers to formally analyze and compare nonquantitative treatment limitations as they apply to both mental health and substance use disorder benefits and medical/surgical benefits.

The changes in the final regulations largely take effect in 2025, with the effective date for some provisions delayed until 2026. Although the final regulations may face litigation challenges, considering the recent decision in Loper Bright Enterprises v. Raimondo, health plan sponsors should plan to comply by the quickly approaching deadlines.

White House Launches ‘Time Is Money’ Initiative

by Debra Curtis, Kristen O'Brien, Julia Grabo and Erica Stocker | Sep 17, 2024 | Employee Benefits, Health and Welfare Plans

On August 12, 2024, the Biden administration launched a new “Time Is Money” initiative, seeking to crack down on time-consuming and burdensome business processes.

The initiative includes a requirement for federal employee health plans to provide an online opportunity to submit claims. It also features an accompanying letter to health insurance CEOs from the heads of the US Department of Health and Human Services and US Department of Labor that challenges the CEOS to offer online claim submissions, deny claims only where appropriate, and provide clear steps to appeal decisions.

Anticipating the MHPAEA Final Regulations: A Word About Network Composition

by Alden Bianchi | Aug 6, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

If our trade and industry sources have it right, we could see final regulations implementing the Mental Health Parity and Addiction Equity Act (MHPAEA), as most recently amended by the Consolidated Appropriations Act, 2021 (CAA), any day now. Last week, we offered a wish list of things we would like to see modified or addressed once the rules become final. Our previous MHPAEA commentary is available here.

An August 1, 2024, letter from Viginia Foxx, chairwoman of the US House of Representatives Committee on Education and the Workforce, to the secretaries of the US Department of Health and Human Services (HHS) and the US Department of the Treasury (Treasury) and the acting secretary of the US Department of Labor (DOL) leads us to add one more item to our wish list. It relates to a subject that has been a major item of contention and the cause of considerable frustration in MHPAEA audits: network composition and adequacy.

The CAA added a requirement that plans and issuers perform and document comparative analyses of the design and application of nonquantitative treatment limitations (NQTLs) on mental health and substance use disorder (MH/SUD) benefits and medical and surgical (M/S) benefits. Nothing in the CAA modifies prior law relating to network composition or adequacy, however. MHPAEA generally requires that the application of NQTLs on MH/SUD benefits “in operation” be comparable and no more stringent than on M/S benefits. In the case of an audit, the DOL has analyzed diverse types of outcomes data, such as denial or reimbursement rates.

But – and this is critical – nothing in existing law requires comparability of outcomes. Indeed, the DOL’s self-compliance tool makes clear that disparate outcomes are not determinative of noncompliance, recognizing that the law requires only that the processes and standards used in applying the NQTL be comparable across MH/SUD and M/S benefits. Different outcomes can still be MHPAEA-compliant. An intervening FAQ (No. 7) suggests otherwise, saying that disparate outcomes raise a “red flag.” FAQs lack the force of law, however.

The proposed rules upend current law by making differences in outcomes a strong indicator of noncompliance or, in the case of network composition, a conclusive determination of noncompliance. Chairwoman Foxx criticizes this approach, saying that “This [ ] suggests that approval or denial rates in either a MH/SUD or M/S context are indicative of appropriateness.” This is in her view a flawed assumption. She also claims that the DOL, HHS and Treasury (the Departments) have exceeded their statutory authority in the matter. The DOL is in our experience applying this rule on audit as though the proposed rule is the law.

We express no opinion on whether the proposed rule comports with the statue. This is for the courts to decide. It’s no secret, however, that the Departments now face a higher bar in the wake of the US Supreme Court’s decision in Loper Bright Enterprises v. Raimondo (wherein the Court overruled the [...]

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Six Wishes for the Forthcoming Final Regulations Under MHPAEA

by Alden Bianchi | Jul 30, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

On July 1, 2024, the US Department of Labor (DOL) submitted final regulations to the Congressional Budget Office (CBO), implementing the Mental Health Parity and Addiction Equity Act (MHPAEA) as most recently amended by the Consolidated Appropriations Act, 2021 (CAA). The CAA added a requirement that plans and issuers perform and document comparative analyses of the design and application of nonquantitative treatment limitations (NQTLs) on mental health and substance use disorder benefits (MH/SUD) and medical and surgical (M/S) benefits. Submission to the CBO is the last step in the process of issuing a binding, final rule. The agency ordinarily acts on these submissions within 90 days, but it is widely anticipated that the final rule will be issued sooner.

The final regulations implement proposed regulations issued in July 2023, which were widely commented on. Our previous content explaining the proposed regulations, including a series of blog posts commenting on the comments, is available here.

To call the proposed rule contentious is an understatement, and the stakes for group health plan sponsors that provide mental health benefits are significant. Many comments on the proposed regulations asked the regulators to withdraw the proposed rule and to reconsider the issue anew. While the chance of that happening was always remote, it is now clear that this is not going to happen. There will shortly be final regulations. Recognizing this to be the case, here are six items in the proposed regulations that we would like to see changed or clarified.

Application of the Quantitative Testing Requirements to NQTLs

MHPAEA generally provides that financial requirements and treatment limitations imposed on MH/SUD benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all M/S benefits in a classification. The 2013 final regulations established the following classifications for this purpose: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. “Treatment limitations” can be either quantitative treatment limitations (QTLs) (e.g., visit limits) or NQTLs (i.e., concurrent review). The rules for the testing of QTLs set out in the 2013 final regulations include detailed numerical standards, which have spawned a cottage industry for testing services.

The proposed regulations would impose quantitative testing requirements on NQTLs. This is at least modestly counterintuitive. It would also make an already complex testing rule materially more complicated. It is our hope that the DOL, US Department of Health and Human Services, and the US Department of the Treasury (the Departments) see fit to back away from this requirement.

Mental Health Carve-Out Vendors

The proposed regulations establish a three-prong test that plans and issuers must pass to impose an NQTL in a classification. To qualify, an NQTL:

Must be no more restrictive when applied to MH/SUD benefits as compared to M/S benefits;
The plan or issuer must meet specified design and application requirements; and
The plan or issuer must collect, evaluate and consider the impact of relevant data on [...]

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It’s the Plan Assets, Stupid: Why Group Medical Stop-Loss Captives and Level-Funded Plans Don’t Mix

by Alden Bianchi | Jun 27, 2024 | Employee Benefits, Health and Welfare Plans

A question in response to last week’s post on self-funding of employer group health plans assumed that stop-loss coverage under a level-funded plan could be provided under a group captive medical captive. However, it cannot (at least not without first obtaining a prohibited transaction exemption from the US Department of Labor (DOL)). While group medical stop-loss coverage can be structured to avoid the Employee Retirement Income Security Act (ERISA) prohibited transaction rules by scrupulously avoiding contact with ERISA plan assets in the plan’s stop-loss layer, it is not possible to prevent such contact in level-funded products.

The early years of group captives saw no shortage of handwringing over fundamental compliance issues. For example: Are group captives multiple employer welfare arrangements (MEWAs) (and should they be regulated as such)? To what extent are states free to constrain or restrain their operation? And which state insurance licensing laws apply?

For the most part, these and other compliance-related questions have been answered, if not completely, then at least substantially so. There is now broad agreement that the group medical stop-loss captive rests on a sound legal and regulatory foundation, which we explained at length in our Special Report. When properly structured, they are not MEWAs; states are free to regulate the stop-loss policy, and the fronting carrier must be licensed in each state in which the captive operates (i.e., where plan participants reside). Critical to their operation, however, is that the group medical stop-loss captive itself does not traffic in plan assets. This means that participant contributions, which are always plan assets, must never be applied to the purchase of stop-loss coverage.

The treatment of stop loss premiums, and their status as plan assets, are set out in two DOL Advisory Opinions:

Advisory Opinion 92-02

A stop-loss insurance policy purchased by an employer sponsoring a self-insured welfare benefit plan to which employees did not contribute is not an asset of the plan if certain conditions are satisfied. These conditions include that the insurance proceeds from the policies are payable only to the plan sponsor, which is the named insured under the policy, and no representations are made that the policy will be used to pay benefits.

Advisory Opinion 2015-02A

Where a stop-loss policy is purchased by a plan that includes participant contributions, the stop-loss policy would not be a plan asset if the facts surrounding the purchase of the stop-loss policy satisfies Advisory Opinion 92-02 and if the employer puts in place an accounting system that ensures that the payment of premiums for the stop-loss policy includes no employee contributions. Also, the stop-loss policy must reimburse the plan sponsor only if the plan sponsor pays claims under the plans from its own assets so that the plan sponsor will never receive any reimbursement from the insurer for claim amounts paid with participant contributions.

In the above-cited Special Report, we provided the following example of how an employer might comply where, as is typically the case, the [...]

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