Proposed Rule – 2025 Marketplace Integrity and Affordability

The Centers for Medicare & Medicaid Services (CMS) released a proposed rule that, if finalized, may impact individual health coverage available through public Marketplaces beginning in 2026. Amongst other things, the rule proposes shortening the open enrollment window to Nov. 1 – Dec. 15, increasing eligibility verification and reconciliation requirements for premium tax credits, and adjusting the methodology used to set premiums. It is estimated that some of the changes may result in lower overall premiums. For applicable large employers who offer an individual coverage HRA (ICHRA), a reduced premium for the lowest cost silver plan could make it easier to make an affordable offer of coverage. View the Fact Sheet. 

Supreme Court to Hear Case on ACA Preventive Coverage Requirements

In April the Supreme Court will hear the case Kennedy (Becerra) v. Braidwood Mgmt. challenging what must be covered by group health plans without cost-sharing as preventive. Specifically, the Supreme Court will rule on whether the U.S. Preventive Services Task Force (USPSTF) has the authority to make recommendations on preventive care. If the Supreme Court decides that the USPSTF does not have the authority to make such recommendations, group health plans would be allowed to impose cost-sharing for any preventive care recommendations that have been made or updated since the Affordable Care Act (ACA) went into effect back in 2010. Group health plans could, but would no longer be required, to cover certain treatments and services without cost-sharing. It’s not clear how the current administration will defend this case or how employers might react if full coverage for certain preventive care becomes optional. In addition, fully-insured plans would still be subject to state-level preventive coverage requirements.

Executive Order – Pricing Transparency

At the end of February, President Trump issued an Executive Order directing several federal agencies to further implement, enforce, and possibly expand existing federal transparency regulations. The existing transparency regulations require hospitals and health plans to, amongst other things, (i) publish machine-readable files with pricing and reimbursement data and (ii) provide consumers with price comparison tools. The hope is that further price transparency will help lower healthcare costs over time, but adoption of and compliance with the requirements has been slow. The new executive order doesn’t make any immediate changes, but we’re likely to see further action via regulations and potentially even new legislation, so it’s something to watch. For the most part, insurance carriers and TPAs handle these requirements on behalf of group health plans, so employers don’t have much responsibility other than to confirm their service vendors are complying. View the Executive Order.

Updated IRS Pub. 969

The IRS released an updated Publication 969 with general information about the taxation rules associated with health savings accounts (HSAs), medical savings accounts (MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs) to be used in preparing individuals’ 2024 tax returns. Read more.

Complaint Filed Challenging MHPAEA Final Rules

At the same time that the previous administration released its annual report to Congress providing an overview of the agencies’ enforcement efforts and findings regarding compliance with the Mental Health Parity & Addiction Equity Act (MHPAEA), The ERISA Industry Committee v. HHS, IRS & DOL was filed in the U.S. District Court of DC challenging the MHPAEA final rules issued in September 2024. The complaint argues broad overreach by the agencies as well as a violation of the Administrative Procedure Act (APA) in regard to the final rules’ introduction of meaningful benefits, material differences in access, and the ERISA fiduciary certification requirements. In addition, the complaint argues that the 2025 effective date is unreasonable and that no clear guidance has been provided on what should be in a comparative analysis. It’s not clear how the new administration will respond to this challenge, but even if the challenge is successful in rolling back some or all of the final rules issued last year, the framework of MHPAEA remains in place, including the requirement for plans to have a written comparative analysis (which was added by legislation).  

Johnson & Johnson Case Dismissed

Lewandowski v. Johnson & Johnson made plan fiduciaries and ERISA attorneys pay closer attention to the risks of fiduciary breaches for health and welfare benefit plans. Amongst other things, the complaint alleged that Johnson & Johnson failed to prudently manage prescription drug costs in its selection and management of the plan’s pharmacy benefit manager (PBM), which led to excessive drug costs for the plan and for plan participants. The case was dismissed for lack of standing. The court determined that the alleged injury due to higher premiums, deductibles and coinsurance was speculative and hypothetical, and the injury due to higher out-of-pocket costs was not redressable. For many employers worried about an increase in litigation and potential liability related to breach of ERISA fiduciary duties, this case dismissal may be interpreted as good news. However, potential plaintiffs may view the detail in the court’s dismissal as a guide to how to successfully bring future claims. Regardless, we encourage employers as plan sponsors and fiduciaries to act in the best interest of plan participants and to regularly monitor benefit compliance requirements and operate their plans accordingly.  

Updated ERISA Penalties

The Department of Labor (DOL) released updated ERISA civil monetary penalty amounts for 2025. For failure to file a Form 5500, the penalty increased to $2,739 per day late (previously $2,670). And for failure to distribute the summary of benefits and coverage (SBC), the penalty increased to $1,443 per failure (previously $1,406). Read the updated penalties HERE.

MHPAEA – Agencies’ Report to Congress

The report released last Friday provides an overview of the agencies’ enforcement efforts and findings regarding compliance with the Mental Health Parity & Addiction Equity Act (MHPAEA) from mid-2022 to mid-2023. Audits uncovered ongoing issues with network adequacy (limited access) and impermissible exclusions for key treatments of covered mental health and substance use disorder conditions, amongst other things, and required several plans to not only make changes going forward but also to reprocess claims retroactively. In addition, as most comparative analyses provided upon request were found to be incomplete, the report suggests that “plans and issuers should aim to provide detailed comparative analyses and supporting documentation, and they can expect full investigations of operations related to NQTLs if they fail to do so.” MHPAEA enforcement has been a priority in recent years, and the report suggests that guidance and enforcement will continue to be a priority. We’ll have to wait and see how this plays out under the new administration, including enforcement of the changes set forth inthe  final rules issued in September 2024. Read the News Release, including links to a Fact Sheet and the Report to Congress can be found HERE.

Agency FAQs – Gag Clause Attestations

This week, the Departments of Labor, Health and Human Services, and the Treasury, along with the Office of Personnel Management, jointly issued a set of FAQs addressing, amongst other things, compliance with the gag clause prohibition and associated attestation requirements. The FAQs clarify that the gag clause prohibition requirements apply beyond a plan’s direct contract with a carrier, TPA or other service provider to any “downstream agreements” that the carrier, TPA or other service providers may enter into to administer the plan’s network. Plan sponsors will be expected to add clauses to contracts with carriers, TPAs and other service providers prohibiting them from entering into downstream contracts that contain gag clauses. The FAQs also provide further clarification, including examples, on contract provisions restricting access to de-identified information that are prohibited by the gag clause prohibition. For future attestations covering group health plan contracts in place as of January 14, 2025 ,and later, plan sponsors must attest to compliance in accordance with the updated guidance or specify any non-compliance on the attestation form submitted. This guidance is found in FAQs #6-9 HERE.

Proposed HIPAA Security Rule

On December 27, 2024, the Department of Health and Human Services (HHS) released proposed rules to modify the Security Rule under HIPAA. Due to the rise in large-scale cybersecurity incidents, these proposed rules would raise the bar for cybersecurity protocols around electronic protected health information (ePHI) for HIPAA-regulated entities, including group health plans. The proposed rule is scheduled to be formally published on January 6, 2024, after which HHS will be accepting comments on the proposal for 60 days. If and when a final rule is published by the Trump administration, the changes would not be effective for at least 180 days. While the potential finalization and implementation of these proposed rules is likely at least a year away, covered entities have been and are continuously encouraged by HHS to strengthen cybersecurity protections around ePHI. HHS’ Fact Sheet for the proposed rules can be found HERE.