Compliance Matters Newsletter | March 2025

Let our team help you navigate the ever-changing benefits compliance landscape each month. Check out this month’s latest alerts, additional updates, and resources hot off the press:

Employee Benefits Compliance Alerts

This month’s Compliance Matters newsletter provides a comprehensive review of the following topics. To obtain your copy, please use the form below to download.

• IRS Guidance for ACA Health Coverage Reporting
• RxDC Reporting Is Due June 1, 2025
• The Potential Impact of Gender Executive Orders on Employee Benefits
• Lawsuit Questions the Validity of MHPAEA Final Rules
• Employee Benefits Litigation Series: Copay Assistance Program’s Cost-Sharing Exclusions Challenged
• 2025 State Regulation Series: Arkansas PBM Law Impacts Employer Plan Sponsors
• 2025 State Regulation Series: Texas Attorney General Says PBM Law Is Not Preempted by ERISA

Additional Updates & Resources

Updated Federal Poverty Level for 2025

In January 2025, the Department of Health and Human Services (HHS) released the 2025 federal poverty guidelines. Employers can use the federal poverty level (FPL) to calculate affordability under §4980H (the Employer Mandate) for applicable large employers (ALEs) to comply with the Affordable Care Act (ACA) FPL safe harbor and avoid penalties for providing unaffordable coverage. FPL refers to any of the poverty guidelines in effect within six months before the first day of the ALE’s plan year. The FPL is typically updated in late January, so a calendar-year plan will generally rely upon the FPL of the previous year, while plans beginning in February or later can rely upon the current year’s FPL.

2024 MHPAEA Congressional Report Released

In January, the 2024 version of the Mental Health Parity Addiction and Equity Act (MHPAEA) Report to Congress was released. The report provides an overview of the agencies’ enforcement efforts and findings regarding compliance with MHPAEA from mid-2022 to mid-2023. The Report to Congress is required under the Consolidated Appropriations Act of 2021 (CAA). The Employee Benefits Security Administration (EBSA), a division of the Department of Labor (DOL), released the report along with a fiscal year 2023 fact sheet and press release.

The report highlights that plan 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 “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, despite a change in presidential administrations.

IRS Issues Publication 969

The Internal Revenue Service (IRS) annually reviews and periodically updates Publication 969. This document provides 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). The most current version is now available on the IRS website to be used in preparing individuals’ 2024 tax returns.

Updated ERISA Civil Penalties

The Department of Labor (DOL) recently released updated penalty amounts for violations under the Employee Retirement Income Security Act (ERISA). The updated penalties were published in the Federal Register on January 10, 2025. For failure to timely 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).

Monthly FAQ: Can an employer change their Affordable Care Act (ACA) measurement periods during the year?

The Internal Revenue Service (IRS) provided proposed rules for addressing whether, or under what conditions, an applicable large employer (ALE) may change their measurement period in 2014. With no final guidance released, employers may continue to rely on the proposed guidance.

An employer may change their measurement period method applicable to a category of employees, provided that the transition rules for employees who change between the monthly and look-back measurement methods due to the change apply to all employees impacted, for a transition period after the effective date of the change. A change in measurement method may include changing from the monthly measurement method to the look-back measurement method, or vice versa, or a change in the duration or start date of a measurement period when using the look-back method.

For a change from the look-back measurement method to the monthly measurement method (or vice versa), the status of each affected employee as of the date of the change is determined in accordance with the regulations, as if on the date of the change each of those employees had transferred from a position to which the original measurement method applied, to a position in which the revised measurement method applied.