2024 Year End Legislative Summary
Affordable Care Act
Employer Sponsored Plan Statistics
According to the U.S. Census Bureau in 2023 (*1), 92% of the U.S. population (305.2 million people) were enrolled in health insurance, with employment-based health coverage accounting for 53.7% of that enrollment. Rising health care costs are nothing new, however predictions for 2025 are staggering. Industry trend reports predict a 9% increase on average for all U.S employer sponsored coverage in 2025. Within this figure, the highest projected rate of increase for all health benefit plan cost trends is for prescription drugs at 11.4%. This rise exceeds prior cost growth, which was closer to 6% in 2024, and slightly below 6% in 2023.
Presidential Election Impact
The election of Donald Trump as the 47th president is likely to have several benefits related effects in the next year. Based on priorities from his prior presidency, we might see some of the following:
Increase (or elimination) of Flexible Spending Account (FSA) and Dependent Care Account (DCA) annual limits
Expansion of Health Savings Account (HSA) permitted uses and annual contribution limits
Streamlining of Section 6055 and 6056 (employer mandate) reporting
Reduction to Section 4980(H) employer mandate penalties
The ‘Employer Mandate’ Section 4980(H)
4980H(a): If Employer does not offer coverage to 95% of its full time employees, and one employee receives a subsidy to purchase insurance on the Health Exchange, the Employer is subject to a penalty equal to $2,900 x every full time employee (minus 30).
4980H(b): If employer offers coverage that is unaffordable (affordability measure for 2025 is 9.02%) or doesn’t offer minimum value, and any employees qualify for a subsidy to purchase insurance on the Health Exchange, the employer is subject to a penalty equal to $4,350 x the number of full time employees that receive a subsidy to purchase insurance on the Health Exchange.
Infertility and Title VII
While the ACA requires large group plans to cover a myriad of services, fertility benefits are largely up to each states’ insurance laws. Plaintiffs in several cases (2) since 2022 have challenged their employer health plans’ infertility benefits on the grounds of 1557 and Title VII. In one case, Aetna settled with plaintiff, agreeing to change their clinical policy and definition for ‘infertility’ to align with the recent guidelines from the American Society for Reproductive Medicine (*3) which are more inclusive.
GLP-1 Drugs and Section 1557
Anthem, Inc. has been sued by a group of plaintiffs under 1557, who allege that the health plan’s exclusion of GLP-1 drugs for obesity discriminates on the basis of a disability. The complaint filed in Holland v Elevance Health Inc (*4) points to coverage of these drugs for a diagnosis of diabetes, but not a diagnosis of obesity (which is a disability under court precedent), as discrimination.
IRS
Notices 2024-71 and 2024-75
On October 17, the IRS released Notice 2024-75 containing an updated list of items considered ‘preventive,’ and therefore permitted to be covered before deductible satisfaction, without disrupting HSA eligibility for HDHP plans under Section 223 (*5). At the same time, Notice 2024-71 adds ‘male condoms’ to the list of items considered ‘medical care’ under code section 213(d) for purposes of eligible FSA expenses.
The following will be treated as preventive care for purposes of an HDHP:
All types of breast cancer screening for individuals who have not been diagnosed with breast cancer
Continuous glucose monitors for individuals diagnosed with diabetes, when the monitor both monitors and provides insulin
Over-the-counter oral contraceptives (including emergency contraceptives) and male condoms
The guidance interprets items in the Inflation Reduction Act of 2022, and while issued in 2024, it is applicable to plan years beginning after on or after January 1, 2023.
HHS & CMS
Medicare Part D Reforms
The Inflation Reduction Act (6) contained Medicare Part D reforms slated to take effect in 2025. These changes will impact employer sponsored health plans that offer prescription drug coverage in an important way. Employers must inform employees annually, prior to the start of the Medicare open enrollment period beginning October 15, if their drug plans are ‘creditable’(7). This determination depends on many factors and is the responsibility of the plan sponsor to confirm. Most relevant to creditable status determinations, the Part D annual out-of-pocket costs will be capped at $2,000 for people with Medicare Part D starting in 2025 (in 2024, the limit was $8,000). Employees that postpone Medicare enrollment until they retire at an age older than 65 will face a life long penalty (*8) if they do not maintain creditable coverage prior to Medicare Part D enrollment. As such, the new Medicare cost limits will render many employer plans non-creditable, therefore exposing employees to Part D penalties when they eventually enroll in Medicare.
New Final HIPAA Rule (Reproductive PHI)
HHS has issued a new final rule(*9) which specifically prohibits the disclosure of PHI related to lawful reproductive health care, when the disclosure is for ‘criminal or civil investigation or individual identification purposes’. Following the momentous Supreme Court ruling in Dobbs and subsequent state laws regulating abortion, HHS has stepped in to add a layer of protection for employees and employers alike.
The new rule applies to requests for PHI, when the health plan finds:
The reproductive health care is lawful under the law of the state in which it is provided (ie. if a resident of one state traveled to another state to receive reproductive health care, such as an abortion, that is lawful in the state where such health care was provided)
The reproductive health care is protected, required, or authorized by Federal law (such as use of contraceptives)
The reproductive health care was provided by a person other than the entity that receives the request for PHI.
The Final Rule continues to permit health plans to use or disclose PHI for purposes otherwise permitted under the Privacy Rule. Additionally, providers are required to obtain an attestation from any party that requests access to the type of PHI described in the final rule.
SCOTUS
Loper Bright Enterprises v Raimondo
In the landmark decision (*10) published by the Supreme Court on June 28, a long standing principal known as “Chevron Deference’ was explicitly overruled. Justice Roberts delivered the majority decision, noting “we have sometimes required courts to defer to “permissible” agency interpretations of the statutes those agencies administer— even when a reviewing court reads the statute differently.” For employers, this decision implicates much of the IRS, DOL and HHS guidance on which employers have relied for decades in the administration of their employee health plans.
“The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous; Chevron is overruled.” (Pp. 7–35)
DOL
No Surprise Act
In August, the 5th Circuit Court of Appeals upheld the lower court's holding in Texas Medical Assoc. v HHS (*, which essentially creates an environment where health plans may end up paying larger fees to health service providers.
Many health care providers have challenged the regulations implementing the No Surprise Act, arguing that the independent dispute resolution process and the guidelines’ reference to 'qualifying payment amounts’ (QPA) are beyond the language (and scope) of the statute itself. Plaintiffs argued that the Departments are “...tilting the arbitration process in insurers’ favor and resulting in unacceptably low payments to providers”.
Unless the Departments announce intentions to reform the dispute resolution and qualifying payment rules, the uncertainty will continue. In the meantime, plan sponsors (especially those with self insured health plans) may see higher costs associated with claims submitted to arbitration under the No Surprise Act.
Mental Health Parity
Employers will recall the amendments to existing Mental Health Parity and Addiction Equity Act (MHPAEA) made by the 2021 Consolidated Appropriations Act. Notably, these updates require all plans to perform and maintain a comparative analysis for all non-numerical (non-quantitative) treatment limitations (NQTLs) applicable to mental health benefits. The Final Rules codifying many of the proposed changes were issued on September 9, and many take effect on January 1, 2025.
Among the myriad provisions contained in the Final Rules, several will be of particular significance to employers. While fully insured health plans will generally rely on their carriers for substantive compliance, there are still several aspects that will fall to these employers. As with many compliance tasks, self-funded employers will need to collaborate with their ASO providers and benefits consultants on these requirements. Key changes include:
Elimination of any hurdles to mental health services
Requirement for comparative analysis of non-quantitative treatment limits (NQTLs)
Prohibition on plans and issuers using discriminatory information, evidence, sources, or standards that systematically limit access to MH/SUD benefits as compared to medical/surgical benefits when designing NQTLs
New York
New York PFL for 2025
The 2025 State Average Weekly Wage (SAWW) is $1,757.19. The PFL maximum weekly benefit for claims initiated in 2025 is 67% of the applicable SAWW, which equals $1,177.32.
The employee withholding rate in 2025 is 0.388% of an employee's gross wages per pay period, up to a maximum annual contribution of $354.53 (which is an increase from the 2024 rate of 0.373% and a maximum annual contribution of $333.25).
Paid Prenatal Leave
Beginning January 1, pregnant employees will be entitled to 20 hours of paid leave for all prenatal care (defined very broadly). This is in addition to existing paid time off, paid sick leave, and PFL entitlements. Time off can be taken in one hour increments, and must be available on January 1 without accrual requirements. The leave will be paid by employers, and is not an insured benefit related to existing PFL policies.
New Jersey
New Jersey TDI for 2025
The employee contribution for NJ TDI is reinstated for 2025, at 0.23% of wages (to a maximum of $380.42), with a wage cap of $43,300.The maximum weekly benefit remains 85% of the employee weekly wage, to a maximum of $1,081.00 in 2025.
2024 Versus 2025 Plan/ Out of Pocket/ FSA Limits
State Paid Leave
(*1) Health Insurance Coverage in the United States: 2023, issued September, 2024
(*2) Briskin v City of New York et al., No. 24 Civ. 3557 (S.D.N.Y.) , Goidel v Aetna (CASE NO 1:21-cv-07619-VSB-VF), Berton v Aetna (CASE N.: 4:23-cv-01849-HSG)
(*3) Committee opinion published in 2023 to replace the definitions of infertility and recurrent pregnancy loss under the 2020 guidance
(*4) Holland v. Elevance Health, Inc., No. 24-cv-00332 (D. Me. Sept. 20, 2024)
(*5) Section 223(c)(2)(c) provides a safe harbor for HDHPs to cover preventive care before deductible satisfaction
(*6) https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements
(*7)Creditable coverage refers to an employer plan’s drug coverage relative to the coverage provided by Medicare part D. Plans that pay at least the same as Medicare Part D, with out of pocket costs to individuals that are the same are less than those enrolled in Medicare, are considered ‘creditable’.
(*8) Individual Part D penalties depends on several factors including how many month an individual was enrolled in non-creditable coverage prior to enrolling in Medicare Part D
(*9) Published in the Federal Register on April 26, 2024
(*10) 22-451 Loper Bright Enterprises v. Raimondo (06/28/2024) (603 U. S. ____ (2024))
(*11) Texas Medical Assoc. V HHS Case No. 6:22-cv-450-JDK