Employers Can Demonstrate Commitment to CAA Compliance Following J&J Lawsuit
LAKEWOOD, CO (January 30, 2025) – Employers now face increased scrutiny around their fiduciary responsibility when managing the health benefits of their employees. This heightened focus can be attributed to a lawsuit in Feb. 2024 that claimed Johnson & Johnson, the multinational pharmaceutical company, failed to properly manage its self-insured health plan, costing J&J’s employees millions of dollars in higher healthcare costs.
Conducting a spouse re-review every 18-24 months to ensure only eligible dependents are enrolled in health plans is one way employers can demonstrate their commitment to fiduciary responsibility. The average cost to have a spouse on a health plan totals about $7,000, but many employers spend significant dollars to cover spouses no longer eligible due to divorce because 9-11% of divorces are not reported by employees to HR. For example, in a scenario of 1,000 spouses being enrolled in a plan, with 10% being ineligible due to divorce, a company could save as much as $700,000.
While the J&J lawsuit served as the catalyst for the recent focus on employers’ fiduciary responsibility, additional lawsuits have followed such as Wells Fargo, Kraft Heinz, and others. The Consolidated Appropriations Act (CAA) of 2021 originally opened the door to such scrutiny when it enacted significant healthcare transparency measures to protect patients from unexpected medical costs. Originating during the COVID-19 pandemic, the CAA was one of the largest economic rescue packages in U.S. history. In addition to including funding for COVID-19 relief and many other areas ranging from military operations to education, it also included significant healthcare transparency measures that require employer-sponsored health plans to provide easy-to-understand cost-sharing and price information to consumers. Conducting a re-review verification process is a clear step employers can take to demonstrate their commitment to transparency and fiduciary responsibility following the CAA.
While many employers downplayed the potential penalties of fiduciary non-compliance in the first three years of the CAA, the J&J lawsuit proved that employers can no longer afford inaction. They must uphold their fiduciary responsibility of evaluating and managing employee health benefits to ensure costs are optimized. Conducting a spouse re-verification with a trusted company that has proven results, such as Consova, demonstrates that commitment and helps control unnecessary expenses.
For more information on Consova’s cost containment solutions, visit Consova or contact the Consova Sales Team. We look forward to helping you discover significant healthcare savings.