U.S. medical debt is now $220 billion, with $88 billion appearing on consumer credit reports1. One major reason for the recent increase in healthcare debt is surprise medical bills.
When an individual gets medical care from an out-of-network provider, they may receive a surprise bill. A Commonwealth Fund study found that nearly half of those surveyed got a surprise bill in the past year for a healthcare service they thought their insurance covered2. To reduce the chances of this happening, Congress passed the No Surprises Act in 2020.
This blog explains everything you need to know about the federal No Surprises Act and how it makes the cost of healthcare more predictable for millions of U.S. consumers.
In this blog post, you’ll learn:
- How the No Surprises Act protects patients from unexpected medical bills, especially for out-of-network care and ancillary services.
- Key components of the law including balance billing protections and Good Faith Estimates.
- How employers can support employees with rising healthcare costs with a health reimbursement arrangement (HRA).
The No Surprises Act created billing standards and federal protections from surprise medical billing for consumers covered by group and individual health plans under certain circumstances. The federal government passed the No Surprises Act in December 2020 as part of the Consolidated Appropriations Act of 2021, and the law took effect in 2022.
The specific circumstances covered under the No Surprises Act include:
The Act mandates that patients seeking care for these circumstances are only liable for care at in-network cost-sharing amounts. This means that certain non-emergency out-of-network ancillary services can’t bill patients more than their in-network cost-sharing amount. This is the case even if they received notice or consented to the service.
The Act applies to medical services and items like:
Other key features of the Act include requiring healthcare providers and insurers to negotiate reimbursements without involving the patient. There are also provisions for processing independent dispute resolutions through “baseball arbitration.”
Baseball arbitration is when a provider and a health insurance company present an arbitrator with the amount they believe the plan should pay the provider. The arbitrator then selects one proposal or the other. The decision made during arbitration is binding and isn’t subject to review by a court.
The No Surprises Act requires health plans to charge surprise out-of-network services at the patient’s in-network rate. To this end, the Act affects employers who sponsor health plans, third-party administrators (TPAs), insurance brokers, and other healthcare providers.
This includes, but isn’t limited to:
About 74% of Americans with private health insurance worry about whether they can afford an unexpected medical bill3. Luckily, the No Surprises Act created stricter patient protections and reporting standards, which are crucial for regulating healthcare costs.
New procedures for the No Surprises Act include:
Before the No Surprises Act, around a fifth of emergency claims and a sixth of in-network hospital stays included an out-of-network medical bill4. A patient’s health insurance plan may have covered a part of a surprise medical bill. But the individual would have to pay the remaining balance. This meant patients needing unexpected medical care, with few in-network options, frequently went into debt when paying the balance.
The No Surprises Act increases transparency in the healthcare system in three ways:
These new regulations on transparency and pricing improve the patient experience and send fewer provider bills to debt collectors.
The main aspects of the No Surprises Act are surprise balance billing, the Good Faith Estimate, and gag clauses. These three rules lay the foundation for protecting consumers from surprise medical bills.
Let’s review each of these No Surprises rules in the sections below.
The term "out-of-network" describes a provider or facility outside your health plan. An out-of-network provider can bill a patient for the difference between what their health insurance plan agreed to pay and the total amount charged for a service. This is called a “balance bill”, which has gone through a process called balance billing.
Under the No Surprises Act, consumers have federal protections against balance billing from emergency care providers and specific services at in-network hospitals, ambulatory surgical centers, and other medical centers.
A health plan typically must:
Healthcare providers must also give an uninsured patient an estimated bill for medical items and services. This is called a Good Faith Estimate.
Consumers have the right to a Good Faith Estimate for the total expected dollar amount of any non-emergency services or medicine.
This includes related expenses such as:
Individuals can ask their provider for an estimate before scheduling their appointment. But even if they don’t, their provider should give them a written estimate no later than one business day before they receive their service or healthcare item.
It’s critical to save a copy of the Good Faith Estimate. Thanks to the No Surprises Act, patients can dispute the bill if their balance is $400 more than the estimate they received.
Lastly, the No Surprises Act prohibits gag clauses5. Gag clauses prevent health plans and insurers from entering into contracts with healthcare providers, networks, TPAs, or other service providers that would restrict the plan from accessing or sharing certain information.
Under a gag clause, contracts can’t restrict the following information:
The No Surprises Act requires insurers that provide fully insured and self-insured health plans to submit a gag clause attestation on December 31 each year on the Centers for Medicare & Medicaid Services (CMS) website6 For those offering one of these group health plans, the Department of Health & Human Services, Labor, and Treasury websites have instructions on how to fill out the form properly7.
The following health benefits don’t require an attestation:
Even with the No Surprises Act, costly medical expenses may still be an issue for some individuals. Employers should review the type of health benefits they offer to ensure it does enough to combat rising healthcare costs.
If you’re an employer looking to do more to support your employees’ medical care, an HRA may be your best bet.
An HRA is an IRS-approved personalized health benefit that allows employers to reimburse employees tax-free for qualified out-of-pocket medical expenses. Depending on the type of HRA, health insurance premiums may also be eligible costs.
Employers give employees a set monthly allowance that they can use to buy healthcare services and items. Once employees submit proof that they bought an eligible expense, their employer reimburses them tax-free up to their allowance amount.
Unused HRA funds stay with the employer at the plan year's end or if an employee leaves their company. This makes them a good option for businesses that want greater control over their budget and taxes.
Here are three HRAs that employers can design and manage with PeopleKeep by Remodel Health:
Using a flexible and customizable HRA, employees can better protect themselves from surprise bills and better control their out-of-pocket costs, regardless of whether they go to an in-network or out-of-network facility.
The healthcare system is always under the watchful eye of the federal government and the Department of Health and Human Services. So, it’s not surprising that several new regulations have appeared in recent years. The No Surprises Act is complex. But creating billing standards for health insurance companies improves the rights and protections of millions of Americans.
Even with surprising billing under control, employers should double-check their health benefits package to ensure their employees have enough financial support. An HRA is a great way to cover more out-of-pocket medical costs for your staff and their families. Book a call with an HRA specialist to learn more about how this customized health benefit can work for you.
This article was originally published on April 13, 2022. It was last updated on June 27, 2025.
1. The burden of medical debt in the U.S.
2. Unforeseen health care bills and coverage denials by health insurers in the U.S.
3. Americans' challenges with health care costs
4. An examination of surprise medical bills and proposals to protect consumers from them
5. The No Surprises Act: “Gag clauses”
6. Gag clause prohibition compliance attestation submission
7. Gag clause prohibition compliance attestation instructions