On January 17, 2025, the ERISA Industry Committee (ERIC) filed a lawsuit in the U.S. District Court for the District of Columbia against the Department of Health and Human Services (HHS) challenging the validity of the 2024 Mental Health Parity and Addiction Equity Act (MHPAEA) final rule. Specifically, the lawsuit questions the regulatory reach of the 2024 MHPAEA final rule through the “meaningful benefits” provision, the “material differences in access” standard, the NQLT comparative analysis requirements, the fiduciary certification requirement and the January 1, 2025 applicability date. The lawsuit alleges that these aspects of the new MHPAEA regulations were unlawful in that they violated the Administrative Procedures Act, exceeded HHS’s statutory authority under MHPAEA, violated the due process clause in the 5th amendment, and that the requirements were “arbitrary and capricious.” ERIC is asking for an injunction from the court inhibiting the implementation of the final rule. While the outcome of this case could alter the MHPAEA landscape tremendously, presently there is no change for plan sponsors in acting in accordance with all relevant MHPAEA regulations.

On January 15, 2025, the Internal Revenue Service (IRS) released guidance regarding the tax treatment of Paid Medical and Family Leave (PFML) benefits. This ruling comes as more states introduce PFML programs. Employers are advised that the amount they contribute toward PFML on behalf of employees can be deducted as excise tax payments. Employees can deduct their contributions as income tax paid if they itemize deductions. Additionally, the amount of PFML benefits that are attributable to employer contributions are to be included in the employee’s gross income.

On January 14, 2025, the Departments of Health and Human Services, Labor and the Treasury (Agencies) released FAQ guidance on aspects of the Gag Clause Attestation Requirement set forth in the Consolidated Appropriations Act of 2021 (CAA). Specifically, the Agencies clarified that health plans may not enter into agreements with their service providers or TPAs that allow “downstream agreements” with secondary vendors which restrict access to the data relevant to the plan. Additionally, health plans cannot enter into an agreement with a third party administrator (TPA) or service provider that would restrict the plan from providing de-identified claims data to a business associate at the will of the TPA or other service provider. Lastly, the Agencies clarified that a health plan must still file the annual Gag Clause Attestation even if their plan is in violation of the CAA’s gag clause requirements. The attestation must detail how the plan is being violative in the “additional information” box within the attestation form.

On July 1, 2026, Maryland will begin their Paid Family and Medical Leave Insurance (FAMLI) program. Contributions to the plan begin in July 2025. Maryland FAMLI will provide employees with up to 12 weeks of job protected leave and eligibility for up to $1,000 in wages per week. Beginning July 1, 2025, employers and employees will start to contribute toward the state FAMLI fund, with the exception of employers who elect a private plan. Employers who wish to implement a private plan will need state approval for such a plan. As such, proposed regulations have been issued to determine the proper course for an appeal of a private plan denial by the state.

FAMLI can be used for the birth of a child, one’s own or a family member’s serious health condition, or to make arrangements for a family member’s military deployment. To be eligible, an employee must have worked at least 680 hours in the four quarters preceding the leave in a Maryland-based position. Contribution rates depend on employer size. Employers with 15 or more employees will need to contribute 0.9% of covered wages, up to the social security cap, with 0.45% being withheld from employees. Employers with fewer than 15 employees will need to contribute 0.45% of covered wages, all of which can be withheld from the employee.

Beginning May 1, 2026, Maine will begin to pay out benefits under its new Paid Family and Medical Leave Program. The Maine PFML program will be funded by both employer and employee funds, with employer rates varying by employer size. Employers with one or more employees in Maine began payroll withholdings to collect this premium effective January 1, 2025 in order to fund the benefit.  Additionally, Maine has released a set of FAQ guidance to further assist in understanding the new program. The program will be administered by the Maine Department of Labor.

On January 15, 2025, the Departments of Treasury, Internal Revenue Service, Labor and Health and Human Services (Agencies) rescinded a proposed rule from October 28, 2024, that would have expanded access to contraceptive services under the Affordable Care Act (ACA). Specifically, the proposed rule sought to modify the ACA’s current rules to enhance access to preventive services that were deemed medically necessary by an individual’s provider. The proposed rule would have required coverage of recommended over-the-counter contraceptive methods without a prescription, as well as drug or drug-led combination contraceptive products deemed medically necessary. It would have done so without imposing cost-sharing requirements, and would also have required this enhanced contraceptive coverage to be disclosed via the internet self-service price comparison tool (or by paper, if requested by the participant), as required by the Transparency in Coverage regulation.  The Agencies have rescinded this proposed rule to focus on improving other areas of the ACA, including its cost-sharing requirements.

On January 6, 2025, the U.S. Department of Health and Human Services published a proposed regulation aiming to update the standards for the security of electronic protected health information (ePHI). Specifically, the proposed regulation includes updates to the Security Rule under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH Act) governing the protection of ePHI. In response to increased cybersecurity attacks, the proposed rule seeks to set stricter standards for the use and distribution of ePHI by covered entities and business associates. The proposed rule also includes updates to definitions of terms to adapt to the changing cybersecurity environment and updates to privacy standards for handling ePHI by covered entities. If the regulation is finalized as proposed, sponsors of group health plans that are covered entities will need to enhance encryption of ePHI in accordance with these standards.

On January 6, 2025, a settlement was reached in Ruiz v. Bass Pro Shops LLC, a class action lawsuit questioning the legality of tobacco surcharges. According to the complaint against Bass Pro Shops, the surcharge plan design made tobacco users pay an additional $40 more per month unless they completed a smoking cessation program and then stayed tobacco-free for 90 days. The complaint alleged that the use of such a surcharge, without offering a reasonable alternative standard and required notices, ran counter to several provisions of ERISA that prohibit discrimination in wellness plans. The settlement will require Bass Pro Shops to pay $4.95 million to the class participants. Other lawsuits involving 7-eleven, Macy’s and Tractor Supply have been filed with similar allegations.

On December 23, 2024, the Departments of Treasury and Health and Human Services (Agencies) rescinded a proposed rule from February 2, 2023, that would have removed the exemption for plan sponsors of non-religious entities with moral objections to the ACA’s “contraceptive coverage” mandate. As background, there are exemptions to this mandate in place under the ACA for employers and plan sponsors who hold religious or moral objections to contraceptive coverage (even if the entity is not itself a religious entity like a church). The proposed rule would have taken away this exemption for such non-religious employers and plan sponsors, requiring all non-religious, non-grandfathered health plans to cover contraceptives on a first dollar basis. In addition, the proposed rule included a program through which women enrolled in plans with a qualifying religious exemption would have been able to receive contraception on a first dollar basis, outside of their plan.

On December 12, 2024, Texas Attorney General Ken Paxton filed a lawsuit against a doctor in the state of New York for prescribing abortion pills to an individual living in Collin County, Texas. The suit alleges that Dr. Margaret Carpenter mailed pills that are banned in the state of Texas to terminate a 9-week pregnancy for a 20-year-old Texas resident, leading to bleeding and the patient being hospitalized.