As a reminder, an important compliance obligation is just around the corner. As background, in March of 2024, the Departments of Labor, Health and Human Services, and Treasury (Agencies) issued final rules regarding fixed indemnity plans and short-term limited-duration health insurance (discussed in our previous e-Alert here). As discussed, the final rules imposed new notice requirements, among other requirements, for fixed indemnity plans. These new notice requirements were issued to ensure transparency regarding the specific types of coverage provided, and to clarify that such plans are not comprehensive major medical plans. These final rules will go into effect for plan years beginning on or after January 1, 2025.

As a reminder, an important compliance obligation is just around the corner. As background, the Consolidated Appropriations Act of 2021 (CAA) prohibits group health plans from entering into any agreement with insurers, third party administrators or any other plan service provider that contains a gag clause. Gag clauses are contract provisions that restrict the ability of the contracting parties to review plan information, such as underwriting principles or other similar types of information, that these service providers frequently attempt to restrict. Beginning December 31, 2023, the CAA required that each year sponsors of group health plans must submit an attestation that their insurance contracts, administrative services agreements and other plan service provider agreements do not contain these illegal gag clauses. The upcoming attestation deadline is right around the corner—December 31, 2024. Employers and plan sponsors should take the necessary steps to review their agreements with plan service providers to ensure that there are no gag clauses, and then should submit the gag clause attestation or ensure that the carrier will submit it on their behalf.

The Final Forms 1094-B and 1095-B, as well as 1094-C and 1095-C, for ACA information reporting have been published for the 2024 calendar year. As a reminder, Forms 1094-B and 1095-B are submitted by providers of minimum essential coverage (i.e., health insurers and sponsors of self-insured health plans), while the Forms 1094-C and 1095-C are filed by applicable large employers (i.e., generally, employers that employed 50 or more full-time employees, including full-time equivalents, in the prior calendar year) to report information to the IRS for purposes of the ACA’s Employer Shared Responsibility rules (commonly referred to as the “Employer Mandate”). While there are not many changes to the Forms themselves, the penalty for intentional disregard of the reporting requirement has been raised to $660 from the previous $630. The deadline for paper filing of the 2024 Forms is February 28, 2025, with the deadline for electronic filing of the 2024 Forms being March 3, 2025. Employers should ensure that they are taking measures to prepare for the for these deadlines, whether through their payroll vendors, other vendors or internally.

Links to 2024 Forms:

Link to 1094-B

Link to 1095-B

Link to 1094-C

Link to 1095-C

Links to 2024 Instructions: 

Instructions for the “B” Forms

Instructions for the “C” Forms

On October 22, 2024, the IRS released inflation-adjusted benefit limits for various types of benefit plans for the 2025 calendar year, including, among other plans, healthcare flexible spending arrangements (health FSAs) and qualified transportation fringe benefits. For example, for 2025, the employee salary reduction contribution limit on health FSAs will be $3,300, with a maximum carryover of $660 for plans that permit it. The maximum contribution for qualified transportation fringe benefits for 2025 for transportation in a commuter highway vehicle and any transit pass will be $325, and the maximum fringe benefit exclusion amount for qualified parking will also be $325. Employers and plan sponsors should ensure that they adjust applicable amounts annually to remain in compliance.

On October 21, 2024, the Departments of Health and Human Services, Labor and Treasury (Agencies) issued a proposed regulation (“Proposed Rule”) seeking to expand coverage of government-recommended preventive services for contraception, and expand access to contraceptives, without cost sharing under the Affordable Care Act (ACA). As background, the ACA requires the coverage of certain preventive care without cost sharing for all non-grandfathered health plans and issuers. The proposed expansion of the ACA’s recommended preventive service items in the Proposed Rule includes new over-the-counter contraceptives (e.g., condoms), as well as a general expansion of access to contraceptives. Additionally, the Agencies’ Proposed Rule would require plans’ exceptions process for medical management to not be unduly burdensome on the participant, beneficiary or enrollee. If finalized as proposed, the Proposed Rule would go into effect for plan years beginning on or after January 1, 2026.

Additionally, on the same day, the IRS issued guidance in IRS Notices 2024-75 and 2024-71, which, consistent with the Proposed Rule, permit qualified high deductible health plans (HDHPs) to provide preventive care for certain preventive contraception, including over-the-counter (OTC) condoms and oral contraceptives, such as birth control pills and emergency contraception (regardless of whether they are purchased with a prescription), prior to satisfaction of the minimum annual HDHP deductible. The IRS guidance above further clarifies that some of these types of preventive care items (e.g., condoms), and others, would be considered “medical care” under Section 213(d) of the Internal Revenue Code, and as such, would be eligible for reimbursement as a medical expense under a health savings account, health flexible spending account and health reimbursement arrangement. The IRS guidance above can be adopted retroactively, and with some exceptions, is generally effective for plan years beginning on or after Dec. 30, 2022.

Link to Proposed Rule

Link to HHS Fact Sheet on Proposed Rule

Link to IRS Notice 2024-75

Link to IRS Notice 2024-71

On October 8, 2024, the Department of Health and Human Services’ Center for Medicare and Medicaid Services (CMS) released the updated cost sharing limitations under the Affordable Care Act (ACA) for plan years beginning in 2026. As background, the ACA requires cost sharing limits on essential health benefits, commonly referred to as the “ACA out-of-pocket maximum,” and CMS adjusts these amounts every year. The updated ACA out-of-pocket maximum for cost sharing for 2026 has been increased to $10,150 for individual coverage, and $20,300 for other-than-individual coverage, up from 2025’s $9,200 and $18,400 respectively. Employers and plan sponsors should work with their advisors to ensure compliance with these new limits on an annual basis.

Beginning January 1, 2025, insurers who offer individual and group health plans in the Washington D.C. market will be required to cover infertility treatments, including in vitro fertilization and fertility preservation services, under a new a law, D.C. Law 25-49 (the “Law”). The Law has required insurers to provide these fertility services to D.C. residents enrolled in Medicaid or the DC Healthcare Alliance since January 1, 2024. The Law was designed to alleviate some of the financial burden of infertility treatments for families pursuing their dream of having children

On September 6, 2024, the Department of Labor (DOL) issued guidance in a Cybersecurity Compliance Assistance Release. It clarified that prior guidance issued in April 2021 about cybersecurity practices for employee benefit plans was not just applicable to retirement plans, but also, health and welfare plans as well. The guidance includes best practices and action steps to be taken by plan sponsors and fiduciaries when hiring plan service providers and administering benefit programs using online resources.

On September 4, 2024, the Texas Attorney General filed a complaint against the Department of Health and Human Services (HHS) in a federal district court in Texas questioning the validity of the new HIPAA Reproductive Healthcare Privacy Rule (“the Rule”). In the complaint, Texas argues that the Rule’s provisions run contrary to the HIPAA statute and improperly prohibit states from enforcing their abortion laws. Regardless of the case outcome, it will likely be appealed to the Fifth Circuit Court of Appeals, an appellate court that has been sympathetic to complaints like the one filed by Texas in prior rulings.

On August 15, 2024, the Biden Administration announced their successful negotiation for lower prices on 10 high-cost drugs for Medicare enrollees. This marks the first time the government has engaged in price negotiations with drug manufacturers. These negotiations are the result of the Biden Administration’s efforts to ease financial hardship for seniors on Medicare due to prescription drug costs. These drugs are commonly used in the treatment of cancers, heart disease, diabetes and other ailments. These prices are set to take effect in 2026 and are estimated to save Medicare enrollees roughly $1.5 million in out-of-pocket costs in the first year. The government expects to negotiate further price cuts on other drugs in an effort that will bring even more savings to Medicare enrollees.

On August 8, 2024, the Department of Health and Human Services (HHS) published updated civil monetary penalty amounts for HIPAA violations. The updated penalty amounts will be applied to any penalty assessed on or after August 8^th, 2024. HHS is responsible for assessing HIPAA penalties, penalties associated with failing to distribute Summaries of Benefits and Coverage (SBCs) and penalties under the Medicare Secondary Payer statute. These penalties are updated annually to ensure that they increase with inflation and therefore retain their deterrent power against violations.