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Impact of the recent J&J lawsuit. Does your business need to CYA?

Impact of the recent J & J lawsuit – Does your business need to CYA!

March 7, 2024

In early February 2024, pharmaceutical giant Johnson & Johnson (J&J) and its benefit plan committee were sued in a putative class action alleging the company breached its fiduciary duty in its selection of its pharmacy benefit manager (PBM), its reliance on a biased consultant in the selection process, as well as failure to negotiate more participant-friendly contract terms in implementing the services. To understand the basis of the lawsuit and more importantly how it potentially could impact your business, it’s important to recount some relevant developments over the last few years:

Decades of Retirement Plan Litigation

Beginning back in 2006, and then continuing to the present time, 401(k) and 403(b) plans have been the subject of assumed class action lawsuits alleging excessive fees. These lawsuits have focused on the employer/plan sponsor’s fiduciary responsibilities with respect to vendor selection, fees and investment performance. Several of these cases have even made it all the way to the US Supreme Court.

Consolidated Appropriations Act,  2021 (CAA) – the New Health & Welfare Plan Transparency Law

During the later part of 2020, Congress passed the CAA, which introduced a series of reporting and disclosure measures intended to bring greater increased transparency to the medical and prescription drug industry. The CAA specifically required health plans to:

  • a. post machine-readable files reporting the rates paid to network and non-network providers for a series of services
  • b. create price estimator tools that allow participants to determine in advance how much a healthcare supply or service will cost
  • c. document the processes used to create limits on access to mental health/substance use disorder services, and
  • d. solicit fee disclosures from healthcare brokers and consultants involved in the plan design upon entering into a contract as well as when renewing a contract.

The CAA also prohibited health plans from entering into contracts with network administrators that would restrict access to price or quality of care information. This is just an initial summary, as according to the Senate Historical Office, The CAA, 2021 (H.R. 133), at 5,593 pages, is one of the longest bills ever passed by Congress.

Why should you care and what does it have to do with your business? We will get to that but if you want to, skip ahead to page 1,576 of the bill where there are provisions in the CAA relating to healthcare, specifically in DIVISION BB-PRIVATE HEALTH INSURANCE AND PUBLIC HEALTH PROVISIONS that affect employers. Here it outlines the established protections for consumers related to surprise billing and transparency in health care and points now to the more visible & ever present obligations addressing employer’s fiduciary duties toward their employer-sponsored health plans.

But like a lot of employers, you may have, for the mere sake of sanity, chose to ignore the news over the last several years regarding this ruling and its subsequent updates. However, it may be time to heed the old adage, “pay now or pay later”, as it is starting to apply to compliance when your business is offering a group health plan.

Shifting Focus to Welfare Plan Fee Litigation

Recently, a number of welfare plans brought suits against their sponsoring employer, insurer, and/or third party administrators (TPAs). These suits alleged that the employer and/or TPAs refused to provide requested information relating to pricing, inflated costs and held conflicts of interest. At the same time, several well known ERISA plaintiffs’ attorneys have indicated they intend to potentially shift focus to health & welfare plan fee litigation. In addition, recently in the later part of 2023, a number of companies also began receiving ERISA document requests seeking six years’ worth of plan documents as well as a link to the plan’s healthcare price estimator tool.

As noted previously, J&J, its fiduciary committee, and individual committee members were sued for an alleged breach of fiduciary duty with respect to their ERISA-governed prescription drug benefit program. This lawsuit, along with other pending litigation, does provide insight into potential existing theories as to how other plans may be targeted in this new wave of fiduciary litigation involving health & welfare plans. Therefore, companies & their C-Suite executives should be checking at least a few boxes now to ensure that they are making a good faith effort as the fiduciary of their health plan to remain compliant.

Conclusion – Some Clarity

First, it is important to note that the J&J lawsuit contains a number of unsubstantiated allegations. Regardless, the mere introduction of these large scale allegations, combined with the CAA’s increased focus on the employer’s fiduciary duties towards their health plan & the continued delivery of unsustainable health premium increases year over year, are all now serving as important catalysts for many C-Suite executives.

These motivated C-Suite executives, who ruthlessly manage every other cost in their company, have become frustrated with not being able to reign in these healthcare costs now representing their number two or number three line item on their P&L. It is these same savvy C-Suite executives who have started to engage in a conversation where they are able to take back control of their healthcare budgets to reclaim trapped profits while actually creating healthier, happier employees that are more fulfilled and more productive.

For more understanding

We have the privilege of helping employers understand their employee benefits, and primarily their health plan, as a supply chain issue that can dramatically improve both the health of employees and the bottom line. This approach may not be new, but a reminder is needed that a viable, measurable and fiscally manageable health plan involves diligence in its healthcare supply chain management. This model allows companies to apply the same effective cost-control practices they leverage in other parts of their organization to their healthcare costs. The process eliminates wasted expenses, redirects dollars to produce measurable ROI, and optimizes the employee healthcare experience resulting in a more loyal, productive, and profitable workforce.

For a copy of an overview of important cost containment solutions you can start to positively leverage in this process, click here:

The CEO Survival Guide – How to Make Healthcare A Controllable Cost

If you have any questions on taking back control of your healthcare spend or other benefits-related challenges, please contact us at 714.716.4060 or mike@my-EBP.com, or provide info here .

Final Rule Implements Ban on Surprise Billing Medical Billing

Final Rule Implements Ban on Surprise Medical Billing

August 26, 2022

On Aug. 19, 2022, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) jointly released a final rule implementing the ban on surprise medical billing under the No Surprises Act (NSA), which was enacted as part of the Consolidated Appropriations Act, 2021 (CAA). This rule finalizes two interim final rules released in July 2021 and September 2021, with certain changes related to the independent dispute resolution (IDR) process that has been the subject of ongoing litigation.


The Departments also released FAQs on NSA implementation in conjunction with the final rule that provide more detail on the surprise medical billing ban.

Surprise Medical Bills

Surprise medical bills occur when patients unexpectedly receive care from out-of-network providers (for example, treatment at an in-network hospital involving an out-of-network doctor). Patients often cannot determine the network status of providers during treatment to avoid additional charges and, in many cases, are not involved in the choice of provider at all.

Overview of the Final Rules

The final rule is generally intended to make certain medical claims payment processes more transparent and clarify the process for providers and health insurers to resolve their disputes. It:

  • Implements certain disclosure requirements related to information that group health plans and health insurance issuers offering group or individual health coverage must share about the qualifying payment amount (QPA) (generally, the health plan’s median contract rate for the item or service in the geographic area);
  • Finalizes certain changes related to the federal independent dispute review (IDR) process in light of ongoing litigation; and
  • Requires plans and issuers to disclose additional information in situations where they change a healthcare provider’s billing code to one of lesser value (lowering the payment to the healthcare provider).

Important Dates

July 1, 2021, and Sept. 30, 2021

Interim final rules to implement provisions of the No Surprise Act (NSA) related to surprise billing were released.


Aug. 19, 2022

Rules implementing the ban on surprise billing are finalized.


 Jan. 1, 2022

The No Surprise Act (NSA) generally applies to plan or policy yers beginning on or after Jan. 1, 2022.

The final rules generally require healthcare providers to agree with health plans and issuers on a payment amount instead of billing patients for unpaid balances.

For a copy of this overview, click below:

Final Rule Implements Ban on Surprise Medical Billing


If you have any questions on this or other benefits-related legislation, please contact us at 714.716.4060 or mike@my-EBP.com, or provide info here .

Level-Funded Health Plans help contain costs for employers

4 ways level-funded health plans help contain costs for employers


May 20, 2022



Level-funded plans are designed to offer employers predictability with the potential of upfront savings and a surplus refund


Level-funded plans continue to become a more viable option for employers to contain costs in the health insurance marketplace. Forty-two percent of small firms in 2021 reported that they have a level-funded plan, compared to just 7% two years ago, according to the Kaiser Family Foundation Employer Health Benefits Survey (1).

What’s driven an increased adoption of these plans? As health costs have continued to rise, health insurers have designed level-funded plans to offer the potential savings of self-funded plans, but with reduced risk. They also offer the predictability of fully insured plans, but at a potentially lower cost due to an opportunity for lower premiums upfront and a surplus refund if medical claims are lower than expected.

Employers with a level-funded model are often paying less than they would have paid for a fully insured plan. Also, the prices of level-funded plans are based on risk profiles so that healthier groups do not pay as much as less healthier groups.


“Level-funded plans offer the consistency, flexibility and transparency that many fully insured, small group plans can’t provide. They’re designed to compete with fully insured plans.”



Understanding level-funded plans

While there’s been increased adoption, understanding the value of level-funded plans still requires some education in the healthcare marketplace. At their core, level-funded plans are generally self-funded plans that offer three distinct elements, with certain plan components varying among carriers:

  • stop-loss insurance to mitigate risk
  • opportunity for a surplus refund (2)
  • a third-party claims administration agreement



Level-funded plans also typically include monthly reports with data that employers can use to track health care usage and wellness programs that may increase member engagement and reduce costs. These monthly accessible reports provide valuable claims data and current participant plan engagement that allows level-funded plans to more agile and able to react quicker to changes and the needs of the healthcare marketplace. In addition, as a type of self-funded health plan, our plans are built to provide the pricing stability employers want and need, and provide them an opportunity to capture premium surplus at the end of the contract year.



To take a closer look at how level-funded health plans help contain costs here’s how they compare to self-funded and fully insured plans


1. Level-funded plans offer predictability and mitigate the risks of self-funded plans

Similar to a self-funded plan, level-funded allows employers to assume some of the financial risk of providing health services to employees by directly paying for employee medical claims.

How do these plans mitigate this risk? Employers with level-funded plans pay a fixed monthly fee, which covers the maximum claims liability, administrative fees and stop-loss insurance which protects against large claims and high member utilization.

In a self-funded model, the employer pays more if claims are higher than anticipated and gets money back if claims are lower at the end of th plan year. Level-funded plans, however, cover the cost of individual or aggregate claims that exceed the plan’s maximum, while offering the health plan and its sponsoring employer an opportunity to receive money back if lower-than-expected claims produce a surplus.

Level-funded plans are designed to mitigate risk associated with the self-funded plan model by providing no risk of additional liability outside of the level premiums established at the beginning of the plan year and paid monthly.


2. The health plan may receive a surplus refund with level-funded plans

For a fully insured  plan, the insurance company assumes the financial risk for providing health services to the employer group. For a fixed monthly premium paid by the employer, the insurer pays health care claims and covers administrative costs, sales commissions and taxes. At the end of the plan year, if the actual health care claims are higher than expected, the insurer pays them and if they’re lower, the insurer keeps the difference.

In contrast, an employer with a level-funded plan is insured against higher-than-expected claims while potentially receiving a surplus refund resulting from lower-than-expected claims.

For employers, there’s an incentive to help keep their employee populations healthier to drive for a greater surplus refund. With wellness programs and virtual care included with many level-funded plans, employees are encouraged to develop healthier habits to make this happen.


3. Level-funded plans offer greater insights to help contain costs

Unlike with most fully insured plans, employers with level-funded can receive detailed monthly data reports to help them better understand employee utilization of health services and manage their benefits.

The amount of reporting is determined by the employer, whether it’s receiving only high-level reports or taking more detailed looks at segments of the employee population. Employers don’t have to wait until the next renewal period at the end of the plan year before they can understand how member behavior may be potentially driving up healthcare costs.

These insights may enable employers to alert their employees that:

  • Low-cost generic drugs can often be substituted for brand name drugs and result in lower out-of-pocket costs for the member while providing the same level of healthcare needed-it’s important to note that a licensed healthcare provider should be consulted before changing any medications.
  • Going to urgent care may be more appropriate, less time-consuming and less costly than going to the emergency room.
  • Seeing their primary care provider or general family doctor virtually rather than in-person can again save both time and money.


The detailed data reports provided by level-funded plans provide a huge advantage, especially for small employers, by giving them insights into their virtual care usage, ER use, pharmacy utilization and network strategy. Being enabled to make informed decisions about healthcare as needed by tracking these things over time helps drive an improved and better quality member experience.


4. Member experience is key within the level-funded model

Many carriers level-funded models include wellness programs and 24/7 virtual care options, which help employees and their families play a more active role in their health care and save on out-of-pocket costs.

Employees are often offered the chance to participate in fitness tracking and health programs designed to reward the members with credits for dollars for completing certain daily fitness goals and/or complete milestone health check-ups.  In some programs, these credits/dollars can be used directly to pay out-of-pocket expenses or health savings account (HSA) dollars. Activities that qualify usually include walking, swimming, cycling elliptical. To offer employees more convenience,24/7 virtual care is often available for a variety of conditions, including general medical care, back and neck care, and behavioral health counseling.

The member experience including virtual, health engagement and plan design options is what distinguishes most level-funded plans. They help to increase employee satisfaction and engagement and for employers, its the opportunity for lower costs and the chance to achieve sharing in the potential surplus refund.


For more clarity and assistance in exploring the advantages of moving your healthcare plan to a level-funded model, contact Mike Young at 714.716.4060, mike@my-EBP.com or provide info here .


(1) 2021 Employer Health Benefits Survey, Kaiser Family Foundation, 2021.
(2) Please consult a licensed tax and/or legal advisor to determine if by receiving this surplus refund, there are any restrictions or obligations. Surplus refund available only where allowed by state law.

Revised No Surprises Act Dispute Resolution Guidance Issued

Revised No Surprises Act Dispute Resolution Guidance Issued


April 22, 2022  


In April 2022, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued revised Federal Independent Dispute Resolution (IDR) Process Guidance for Certified IDR Entities to provide details on the IDR process under the No Surprises Act (NSA), enacted as part of the Consolidated Appropriations Act, 2021 (CAA). The original process guidance was issued in December 2021, but was withdrawn due to a federal court ruling striking down part of the regulation on the IDR process. The Departments also reissued FAQs for providers on the IDR process. Additionally, the federal IDR Portal for payment disputes between providers and health plans is also now live.  



The NSA prohibits “surprise billing,” or instances in which an individual receives an unexpected bill after obtaining items and services from an out-of-network provider or facility when the individual did not have the opportunity to select a facility or provider covered by their network, such as in a medical emergency. The NSA provides for an IDR process to resolve payment disputes after unsuccessful negotiations, where certified IDR entities will review case details and determine final payment amounts.


The Federal IDR Process Guidance

The revised guidance provides information for certified IDR entities on various aspects of the IDR process, including how the parties to a payment dispute may initiate the IDR process and key process requirements. It also contains information on other aspects of the IDR process that certified IDR entities must follow, including confidentiality standards, recordkeeping requirements, the process for revocation of IDR certification and ways parties may request extensions of certain deadlines for extenuating circumstances. The FAQs for providers address additional issues related to the IDR process, including provider and facility requirements, as well as fees.    



For a summary copy of this revised guidance issued, click here: Revised No Surprise Act Dispute Resolution Guidance Issued .

For clarity & assistance with finding out how these changes will affect you and your employees, reach out to Mike Young at MY-Employee Benefits Plus at mike@my-EBP.com or 714.716.4060.


IRS Issues Proposed Rules to Fix the Affordability “Family Glitch”

IRS Issues Proposed Rules to Fix the Affordability “Family Glitch”


April 15, 2022  


The IRS has issued proposed rules that would change the way employer-sponsored coverage would be treated when determining if a family is eligible for premium tax credits (PTC) when purchasing individual health insurance through a public Marketplace. The proposed rules would fix the so-called “family glitch” that currently requires employer plan affordability to be based on the employee-only cost for coverage, while not taking into consideration the cost for the employee’s family to participate. The change would allow more spouses and dependents to qualify for premium tax credits toward the cost of individual health insurance coverage purchased through a public exchange.  



An individual is eligible for a premium tax credit (or tax subsidy) to help pay the monthly premiums for individual coverage purchased on a public exchange if all of the following are true:

  • Individual is not eligible  for Medicaid, CHIP or Medicare;
  • Individual is not enrolled in other minimum essential coverage; and
  • Individual is not eligible for employer-sponsored group health plan coverage that provides minimum value and is affordable.


Individuals who are offered (or eligible for) minimum value, affordable coverage under an employer-sponsored group health plan are not eligible for a tax subsidy when purchasing individual health insurance through a public exchange. In general, a plan provides “minimum value” if the actuarial value of the benefits is at least 60%. Coverage is “affordable” if the employee contribution for employee-only (single) coverage does not exceed a set percentage, 9.61% in 2022, of the employee’s household income. If the employee-only coverage is deemed “affordable” by this standard, the coverage is considered affordable for spouses and dependents as well, regardless of how much additional the required employee contribution amount is for family coverage.  


In January 2021, President Biden issued an Executive Order directing the Secretary of the Treasury to review all existing regulations to determine whether any are inconsistent with the policy to protect and strengthen the ACA (Affordable Care Act). The Secretary of the Treasury was also directed to examine policies and practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents. While performing this review, it was tentatively determined that the rules around affordability for family coverage under an employer-sponsored group health plan are inconsistent  with the overall purpose of the ACA to expand access to affordable healthcare coverage. Therefore, the IRS has proposed making changes to what coverage is considered to provide minimum value and what coverage is affordable for purposes of determining eligibility for premium tax credits for coverage purchased through a public exchange.  


Affordability – Proposed Changes

The proposed rules would allow for the affordability of coverage provided under an employer-sponsored plan to be determined for the employees’ spouses and dependents by the employees’ required contribution for family coverage, not employee-only coverage cost. The coverage for these related individuals would be affordable only if the employees’ costs for enrolling the employee and family members does not exceed 9.61%, in 2022, of an employee’s household income. An individual with offers of coverage from multiple employers, either as an employee or a related individual, has an offer of affordable coverage if at least one of the offers is affordable. The proposed regulations include several examples to illustrate how the change would impact affordability.   NOTE: It is possible that a spouse or dependent of an employee may have an offer of employer coverage that is unaffordable even though the employee has an affordable offer of employee-only or self-only coverage.  


Minimum Value – Proposed Changes

In addition to providing 60% or better actuarial value, previous guidance indicated that plan benefits must also include substantial coverage of inpatient hospital and physician services. This was previously set forth in proposed rules by the IRS, but not finalized. The IRS is proposing the same requirements here and hoping to formalize them once these rules are finalized.  


Section 4980H Employer Shared Responsibility Rules and Employer Penalties

Employers are not required to offer affordable coverage to spouses and dependents. The proposed changes will not affect current rules that determine if an employer is offering affordable coverage to their employees for purposes of employer penalties under Section 4980H employer shared responsibility rules (commonly referred to as the “employer mandate”). Employers will continue to use the employee’s cost for single coverage to determine “affordable” employer contribution rates and for use with the IRS employer affordability safe harbors.  



The proposed changes would significantly increase the number of people eligible for subsidized individual coverage. It would principally impact spouse and dependents of employees who are eligible for affordable employer sponsored single coverage, but where the family contribution is deemed unaffordable under the new rules. The changes are not effective until finalized and published in the federal register. Until that time, affordability will continue to be determined based on the employee’s cost of self-only coverage, but it appears the rules would go into effect in time for the 2023 tax year.  


For a summary copy of this upcoming IRS proposed change, click here: IRS Proposes Change to Family Coverage Affordability Rules .

For clarity & assistance with finding out how these changes will affect you and your employees, reach out to Mike Young at MY-Employee Benefits Plus at mike@my-EBP.com or 714.716.4060.

The Impact of Biden’s Competition Executive Order on the Health Care Industry

The Impact of Biden’s Competition Executive Order on the Health Care Industry

The American economy is finally recovering after more than a year of stagnation due to the COVID-19 pandemic. President Joe Biden’s administration wants to continue this momentum and further stimulate the economy. To help in that effort, President Biden recently signed an executive order aimed at increasing competition among businesses.

According to the White House, the order was designed to “promote competition in the American economy, which will lower prices for families, increase wages for workers, and promote innovation and even faster economic growth.”

The Biden administration notes that corporate consolidation has been accelerating for many years, leaving the majority of industries in the hands of only a few entities. The administration points to this trend as the main reason for slow wage growth and rising consumer prices. This latest executive order intends to reverse these effects.

All in all, the executive order includes 72 initiatives by more than a dozen federal agencies to help address competition inequality. This article briefly outlines how the order affects the health care industry.

Health Care Impact

The executive order addresses competition in health care in four main areas:

  1. Prescription drugs
  2. Hearing aids
  3. Hospitals
  4. Health insurance

Prescription Drugs

Right now, large drug manufacturers enjoy incredible profits year over year. The White House alleges that this is due to lack of competition and “pay for delay” tactics, where name-brand drug manufacturers pay generic manufacturers to stay out of the market. Such strategies result in Americans paying 2.5 times more for the same medications as peer countries.

The executive order directs the Food and Drug Administration to work with states and tribes to safely import prescription drugs from Canada, where drugs are less expensive. It also directs the Health and Human Services (HHS) Administration to increase support for generic and biosimilar drugs. Additionally, the order encourages the FTC to ban “pay for delay” and similar agreements.

Hearing Aids

Currently, the White House points out, only 14% of Americans with hearing loss use hearing aids. The administration says it’s due to high prices, costing more than $5,000 per pair (typically not covered by insurance). Additionally, hearing aids can only be obtained after a medical analysis by a doctor or specialist—an unnecessary requirement, according to the Biden administration.

The executive order directs the HHS to consider issuing proposed rules within 120 days for allowing hearing aids to be sold over the counter.


Hospitals have been consolidating through mergers for years, resulting in higher prices and fewer rural locations. The White House notes that consolidated hospitals charge far higher prices than hospitals in markets with more competition.

The executive order directs the FTC to review and revise its merger guidelines to ensure hospital mergers do not harm patients. Additionally, the order directs the HHS to support existing hospital price transparency rules and finish implementing bipartisan federal legislation to address surprise hospital billing.

Health Insurance

Consolidation is also an issue in the health insurance sector, according to the Biden administration. Fewer insurance companies mean fewer options for consumers. Even when there are more options, comparing plans continues to be a struggle for many individuals.

The executive order directs the HHS to standardize plan options in the National Health Insurance Marketplace so people can comparison shop more easily.


The executive order broadly addresses competition inequalities across market sectors, with a significant focus on health care. These proposed initiatives have the potential to help individuals and small businesses alike. However, it remains to be seen how all of these initiatives will play out, as executive orders are essentially a directive to federal agencies to revise their regulations.

In other words, some of the proposals may never come to fruition, and those that do may take months to implement. At the very least, this executive order and its initiatives indicate the position of the Biden administration—signaling that it may pursue these agenda items through alternative means, if necessary.

Employers should continue to monitor exactly how the executive order plays out.

For a copy of this news brief, click here: The Impact of Biden’s Competition Executive Order on the Health Care Industry .