Anti-assignment of Health Plan Benefits Clause
(Summary Plan Description)

Summary

Use this Anti-assignment of Health Plan Benefits Clause in an employer health plan's summary plan description (SPD) to inform participants and beneficiaries that the plan prohibits them from assigning their rights under the plan to a third party, such as a healthcare provider. This clause includes practical guidance and drafting notes. Health plan sponsors and insurers have increasingly added anti-assignment clauses in their health plans in large part to help avert lawsuits by out-of-network healthcare providers who dispute a coverage decision, or the reimbursement rate offered by the plan or insurer for services rendered to a covered individual. When a patient seeks care from a provider that is not in the plan's network, there is no contractual relationship between the payor (plan or insurer) and the payee (doctor, hospital, or other provider). Consequently, if the provider's charged rate exceeds the amount the payor is willing to pay, the options for the provider may include simply accepting the lower rate; charging the balance to the covered individual receiving the care where legally permissible (known as balance billing); or seeking a higher reimbursement from the payor via negotiation or—if they believe the plan's terms, properly construed, demand a higher reimbursement—filing a legal claim against the payor. In the last case, however, a provider needs legal standing to make a legal claim for rights granted under the plan. Typically, this has been achieved by having the plan participant or beneficiary assign their rights to the provider, particularly for plans subject to the Employee Retirement Income Security Act (ERISA) due to ERISA's exclusive civil enforcement remedial scheme under ERISA § 502(a) (29 U.S.C. § 1132(a)). Anti-assignment clauses are basically designed to prevent that assignment from occurring, largely leaving decisions to pursue a nonpayment or underpayment claim to the participant or beneficiary, who, in the absence of balance billing, may not be adversely affected. Note that, while the No Surprises Act (Div. BB, Title I of the Consolidated Appropriations Act, 2021 (Pub. L. No. 116-260)) directly addresses these situations by establishing a mandatory dispute resolution process between payors and non-network providers for reimbursement rate disagreements and prohibiting balance billing, the Act does not cover all healthcare services. These new consumer protections apply only to three categories of services: emergency services, services provided by non-network providers at in-network facilities, and air ambulance services. For more information, see Balance Billing and Other No Surprises Act Rules. Over the past few decades, some lawsuits have challenged the appropriateness of anti-assignment clauses in ERISA health plans, arguing that they are inconsistent with important purposes of the statute. However, all circuit courts opining on the question have held that they are enforceable—so long as they are clear, unambiguous, and effectively communicated. Am. Orthopedic & Sports Med. v. Independence Blue Cross Blue Shield, 890 F.3d 445 (3rd Cir. 2018) (collecting cases from the First, Second, Fifth, Ninth, Tenth, and Eleventh Circuits). Further, under ERISA's preemption doctrine, state laws that prohibit anti-assignment clauses in health insurance are inapplicable to self-funded ERISA plans. E.g., Dialysis Newco, Inc. v. Cmty. Health Sys. Grp. Health Plan, 938 F.3d 246 (5th Cir. 2019). Note that there are other ways for providers to pursue such claims by working with the plan participant. For example, participants have a right to name an authorized representative to pursue the participant's benefit claims under an ERISA plan on their behalf. 29 C.F.R. § 2560.503-1(b)(4). In addition, courts have suggested that a duly executed power of attorney executed by a participant authorizing the provider to act on their behalf may be sufficient to make a claim under the plan. American Orthopedic, 890 F.3d at 454-55. For links to other SPD template clauses for both retirement plans and health and welfare plans, see the Summary Plan Description Resource Kit.