Most employers are unknowingly out of compliance. Here’s what the Consolidated Appropriations Act requires and what you need to do about it.

Most employers have never heard of the CAA

That’s a compliance problem, and it’s more common than you think.

If you sponsor a group health plan for your employees, there’s a piece of federal legislation that directly affects you. We’re finding that most employers have never heard of it by name. The Consolidated Appropriations Act, more commonly known as the CAA, is one of the most significant pieces of health plan legislation since the Affordable Care Act. It imposes real obligations on plan sponsors, carries real penalties for non-compliance, and continues to evolve. In fact, the latest version, the CAA 2026, was signed into law in February 2026, adding even more requirements to the list.

The good news: understanding what the CAA requires is not as complicated as it sounds. And having the right benefits broker in your corner makes staying compliant far more manageable.

What Is the CAA, Exactly?

The Consolidated Appropriations Act of 2021 (CAA 2021) was signed into law on December 27, 2020. While it included COVID-19 relief funding, it also contained sweeping new rules for group health plans that applied to virtually every employer offering employer-sponsored coverage.

Then on February 3, 2026, the Consolidated Appropriations Act of 2026 (CAA 2026) was signed, building on those earlier requirements with significant new rules around pharmacy benefit manager (PBM) transparency, expanded fee disclosures, and fiduciary accountability. Together, these two pieces of legislation represent the most comprehensive overhaul of group health plan compliance since the ACA.

The Most Important CAA Requirements Every Employer Should Know

1. Surprise Billing Protections (No Surprises Act) Employers must ensure their plans comply with protections against unexpected out-of-network bills. Employees cannot be billed more than in-network cost-sharing amounts for emergency services or certain non-emergency care at in-network facilities.

2. Mental Health Parity (MHPAEA) Plans must perform and document a Nonquantitative Treatment Limitation (NQTL) comparative analysis showing that mental health and substance use disorder benefits are not more restrictive than medical/surgical benefits. This analysis must be available to the DOL upon request.

3. Prescription Drug Reporting (RxDC) Employers must submit annual prescription drug data reports to the federal government covering the top 50 costliest drugs, most frequently dispensed drugs, and certain rebate information. This is an ongoing annual filing obligation.

4. Broker & Vendor Compensation Disclosure Any broker or consultant earning $1,000 or more serving your group plan must disclose all direct and indirect compensation to you as the plan fiduciary. CAA 2026 expands this to include TPAs, PBMs, stop-loss carriers, and most other plan service providers.

5. Transparency in Coverage (Gag Clause Prohibition) Plans cannot enter into contracts that prevent employees from seeing cost or quality-of-care information. An annual gag clause compliance attestation must be submitted to the federal government by each plan sponsor.

6. PBM Reform (CAA 2026 **New) Effective for plan years beginning January 2029, PBMs must pass through 100% of all rebates to plan sponsors, provide detailed drug-level reports at least semi-annually, and submit to annual audits. Penalties for disclosure violations reach $10,000 per day.

Why Most Employers Are Behind And Don’t Know It

Here’s the uncomfortable reality: compliance with the CAA is the legal responsibility of the plan sponsor, meaning the employer, not the insurance carrier or third-party administrator. While carriers and TPAs may assist with certain filings, the obligation and liability ultimately rest with you.

Studies and employer surveys consistently show that a significant portion of plan sponsors are not fully aware of their CAA obligations, particularly around mental health parity comparative analyses and the gag clause attestation. Many employers believe their carrier is handling everything. In many cases, they are not.

What CAA Compliance Actually Looks Like Day-to-Day

For most small to mid-size employers, CAA compliance isn’t about overhauling your plan, it’s about documentation, processes, and working with the right partners. Here’s a practical breakdown of what staying compliant involves:

What you (the employer) are responsible for:

•  Requesting and reviewing broker compensation disclosures

•  Ensuring your plan’s mental health parity analysis is current and documented

•  Submitting or confirming annual RxDC prescription drug report filings

•  Attesting annually to gag clause compliance

•  Understanding what your TPA and PBM are being paid •  Reviewing plan documents for No Surprises Act compliance

Where your broker should be helping:

•  Proactively disclosing all compensation (required by law)

•  Walking you through your fiduciary obligations each year

•  Confirming RxDC and attestation filing status on your behalf

•  Keeping you informed as CAA requirements evolve

•  Flagging mental health parity gaps in your plan design •  Reviewing vendor contracts for prohibited gag clauses

The CAA Is Still Evolving

One thing that makes the CAA uniquely challenging for employers is that it isn’t a one-time compliance event. Each new Consolidated Appropriations Act can add or modify requirements. The 2026 version is a significant example.

The CAA 2026, signed on February 3, 2026, expanded fee disclosure requirements from brokers and consultants to virtually all group health plan service providers, including TPAs, stop-loss carriers, disease management vendors, and PBMs. It also introduced mandatory PBM rebate pass-through requirements and new drug-level reporting obligations. Most of the PBM provisions take effect for plan years beginning January 2029, but the expanded service provider disclosure rules are already in effect for newly entered or renewed contracts.

A Simple Compliance Checklist for Employers

✓  Have you received a written compensation disclosure from your broker or consultant?

✓  Has your plan completed and documented a mental health parity (NQTL) comparative analysis?

✓  Has your annual gag clause compliance attestation been submitted to the federal government?

✓  Has your plan’s prescription drug data (RxDC) been reported to the Tri-Agencies for the most recent plan year?

✓  Do your plan documents comply with the No Surprises Act’s cost-sharing requirements?

✓  Have all plan service providers (TPA, PBM, stop-loss carrier) provided required compensation disclosures under CAA 2026?

✓  Is your plan’s Summary of Benefits and Coverage (SBC) current and distributed on time?

The Bottom Line

The CAA isn’t a technicality, it’s a framework designed to make employer-sponsored health plans more transparent, equitable, and accountable. When plan sponsors understand their obligations, employees get better protections, pricing becomes more visible, and the entire benefits ecosystem works more fairly.

The employers who get into trouble aren’t usually trying to cut corners. They simply don’t know what they’re responsible for. That’s exactly where having a knowledgeable, proactive benefits broker makes all the difference. At TC Benefits Group, we help employers understand not just what coverage to offer, but what the law requires of you as a plan sponsor, year after year.