Question: What compliance action items do employers need to keep in mind as we near the start of 2025? 

Short Answer: Upcoming deadlines and considerations as we reach the end of 2024 and the start of 2025 include the Gag Clause Prohibition Compliance Attestation (Dec. 31), a new MHPAEA employer certification requirement (2025 plan year), the expiration of the HDHP first-dollar telehealth relief (2025 plan year), 2024 ACA reporting via Forms 1094-C and 1095-C (Mar. 3 and 31 deadlines), and a number of new state leave laws taking effect in 2025. 

The year goes by much too quickly, and employers are now focused on surviving and wrapping up open enrollment season.  As we all maintain our busy work schedules, it is important to not lose sight of compliance items that fall around the end of the year and start of the new year.  The following are some of the key items employers should keep on their radar as the year draws to a close.   

Year-End CAA Action Items 
The Consolidated Appropriations Act, 2021 (CAA) has been implemented in multiple phases over the past four years and now has reached full implementation. Two impending CAA action items are the Gag Clause Prohibition Compliance Attestation and MHPAEA employer certification.    

1. Gag Clause Prohibition Compliance Attestation (GCPCA): Due December 31, 2024 
   The CAA prohibits health plan contracts from including provisions designed to restrict access to the following: 
   
   - Provider-specific cost or quality of care information or data through a consumer engagement tool or any other means; 
   - Electronic de-identified claims and encounter information or data for individuals upon request and consistent with HIPAA, GINA and the ADA; 
   - The ability to share information or data described above (or to direct information be shared) with a HIPAA business associate, consistent with HIPAA, GINA and the ADA. 
   
   Plans must annually submit an attestation that they have not entered into any of the prohibited contractual restrictions.  The first attestation was due December 31, 2023, to cover the period beginning December 27, 2020 through the date of the attestation.  The next annual attestation is due by December 31, 2024 to report on the 2024 calendar year.  
   
   What does this mean for employers?  
   For employers sponsoring fully insured medical plans, the insurance carrier is directly responsible for completing the GCPCA.  There is no need for the employer to separately complete the attestation.  Employers should confirm that the carrier will be completing the attestation on the plan’s behalf.  
   
   Employers sponsoring a self-insured medical plan (including level funded plans) will need to consult with the TPA to determine which party will complete the attestation.  While the plan (employer) is directly responsible for the GCPCA, many TPAs will agree to contractually assume the attestation requirement.  
   
   - For more details: CAA Gag Clause Attestation Due by December 31 

2. Mental Health Parity Employer Certification 
   The CAA added a Mental Health Parity and Addiction Act (MHPAEA) requirement for group health plans to make a comparative analysis of the design and application of nonquantitative treatment limitations (NQTLs) available to the DOL, HHS and IRS on request.  The new final regulations issued September 23, 2024 clarify the content requirements of the comparative analysis document, including a new certification requirement for employers. These regulations apply to plan years beginning on or after January 1, 2025.  
   
   The plan fiduciary (which is almost always the employer) must certify that they engaged in a prudent process to select qualified service providers to perform and document a comparative analysis in connection with the imposition of nonquantitative treatment limitations that apply to mental health and substance use disorder benefits under the plan, and that they have satisfied their fiduciary duty under ERISA to monitor those service providers with respect to the performance and documentation of the comparative analysis.   
   
   What does this mean for employers? 
   The DOL expects employers as fiduciary to:

• Review the comparative analysis prepared by or on behalf of the plan  

• Ask questions about the analysis to understand the findings and conclusions 

• Ensure the service provider provided assurance that the comparative analysis complies with the requirement of the MHPAEA 

• Certify that they have engaged in a prudent process to select the service provider(s) to perform and document a comparative analysis, and that they have satisfied their duty to monitor the service provider(s) per the standard ERISA duty of prudence.   
  
  Employers sponsoring fully insured plans will look to the insurance carrier as directly responsible for compliance with the MHPAEA requirements, but the employer will still maintain the fiduciary duty to prudently select and monitor all plan service providers and will need to complete the fiduciary certification component of the comparative analysis.    
  
  Employers sponsoring self-insured medical plans (including level funded plans) will generally rely on the TPA to satisfy compliance with the MHPAEA requirement and to prepare the required comparative analysis.  Because the employer (and not the TPA) is directly responsible for compliance with these requirements, the employer will want to ensure that compliance with the MHPAEA final regulations (including completing the comparative analysis) is included in the administrative service agreements.  If the TPA declines to prepare the comparative analysis, the employer will need to prudently select a third-party vendor to review the plan terms and independently perform the comparative analysis.  Regardless, the employer is required to complete the fiduciary certification component of the comparative analysis.   
  
  - For more details: The Mental Health Parity Employer Certification Requirement 

First Dollar Telehealth Coverage Expiring for Plan Years Beginning On or After January 1, 2025 
During the pandemic, the CARES Act, CAA 2022, and CAA 2023 all provided relief from the minimum deductible requirement for telehealth and other remote care services, regardless of whether such services were preventive.  This allowed individuals to maintain HSA eligibility even where the HDHPs waived the deductible for any telehealth or other remote care.    

The telehealth relief only extended to plan years beginning before January 1, 2025.  For plan years beginning on or after January 1, 2025, HDHPs must resume imposing the standard minimum statutory deductible to telehealth and other remote care services in order for covered participants to maintain their HSA eligibility.   

Note: The Telehealth Expansion Act currently proposed in Congress seeks to make the first-dollar telehealth relief permanent.    

• For more details: The 2025 HSA Contribution Limits  

What does this mean for employers?  
Employers with fully insured plans will rely on their insurance carriers to comply. Employers with self-funded or level-funded plans should work with their TPA to ensure that Telehealth or remote services other than preventive which are provided through a HDHP or to HDHP participants are subject to the deductible.   

• For more details: CAA 2023 Two-Year Extension of HSA Telehealth Relief 

Year-End ACA Reminders 
The ACA reporting deadlines are now standard each year, and the reporting needs to be filed electronically.  

Reminder: Electronic Filing Required Once Again for ACA Reporting in 2025 
Prior to 2024, employers could file their ACA reporting forms by paper if filing fewer than 250 returns.  Since 2024, employers filing 10 or more returns in aggregate (including Form W-2s, 1099s, 1095s) must file the ACA reporting forms electronically.  This means all ALEs will need to file their 2024 Forms 1094-C and 1095-C electronically in the first quarter of 2025.  Virtually all non-ALEs sponsoring a self-insured health plan will also need to file their 2024 Forms 1094-B and 1095-B electronically in the first quarter of 2025.    

What does this mean for employers?  
The technical expertise required to complete electronic ACA filing via the IRS AIR system makes the task impractical for nearly all employers.  Accordingly, all employers subject to ACA reporting should ensure that they engage with a third-party vendor (e.g., ACA reporting specialty vendor, benefits administration system, payroll system) that can complete the electronic filing on their behalf in 2025.  

Reminder: Deadlines for ACA Reporting in 2025 
The ACA reporting deadlines for all ALEs in 2025 (regardless of plan year) are as follows:  

• Form 1095-C: Deadline to Furnish to Individuals 

  • Due Date: March 3, 2025  

  • Note: The 30-day extended deadline is typically March 2.  However, March 2, 2025 is a Sunday, moving the deadline to March 3^rd.   

• Form 1094-C (+Copies of Form 1095-C): Deadline to Electronically File with IRS 

  • Due Date:  March 31, 2025   

Non-ALEs sponsoring a self-insured plan (including level funded plans) must provide Forms 1095-B to employees by March 3 and file Forms 1094-B and 1095-B with the IRS by March 31, 2025.  

• For more details: ACA Reporting Requirements in 2025 

Year-End Section 125 Cafeteria Plan Action Items 
All cafeteria plans must undergo annual nondiscrimination testing.  Each year, employers are tempted to procrastinate performing the dreaded cafeteria plan nondiscrimination testing (NDT) because of the hassle. While most employers will pass the majority of the required cafeteria plan tests easily, some dependent care FSA plans which have a large number of highly compensated employees (HCEs) participating may fail the 55% average benefits test required under the §129 NDT.  In that case, the employer must make adjustments to the HCEs elections by the end of the plan year to preserve at least a portion of the HCEs’ pre-tax benefit.     

• For more details: The Dependent Care FSA 55% Average Benefits Test 

Year-End State Law Action Items 
States continue to expand and enhance paid medical and family leave offerings across the country.  The following are a few notable state laws and changes taking effect at the start of 2025:  

• California SDI/PFL Benefit Enhancements 
  In 2025, SB 1090 provides that California employees will receive 70% or 90% of wages (up to a maximum of $1,681) depending on income levels (in 2024, the benefit amounts were 60% or 70%).  In addition, employees will be able to initiate claims up to 30 days in advance of the first compensable day of the leave.  The new law requires that initial payment for those benefits be made within the later of 14 days of receipt of the claims, or 14 days after the approved leave begins.     

  • For more details: California SDI Benefits Increase in 2025 

As a reminder, 2024 was the first year in which no SDI/PFL wage ceiling applied to employee contributions.  The removal of the wage ceiling is permanent and continues into 2025, requiring employees to contribute 1.2% of all wages (i.e., without any cap).  

• Delaware Paid Leave 
  Starting January 1, 2025, employers will be required to deduct payroll taxes for Delaware Paid Leave.  The tax is split equally between the employer and employee.  Employers with 10-24 employees must start taxing employees for parental leave (.16%) only.  Employers with 25 or more employees must begin taxing employees for family caregiving (.04%), medical leave (.2%) and parental leave (.16%).  Employers are required to pay the additional 50% of the tax but can choose to pay more than 50% of the premium.  Leaves will commence January 1, 2026.    

• Maine Paid Family Medical Leave 
  Effective January 1, 2025, employers will begin deducting payroll taxes for Maine Paid Family Medical Leave.  Employers with fewer than 15 employees will be required to deduct .5% of wages up to the Social Security wage base ($176,100) from employees.  Employers with 15 or more employees will be required to deduct .5% from employees and also contribute an additional .5% up to the Social Security wage base.    

• Maryland Paid Family Medical Leave 
  Maryland Family and Medical Leave taxation, which was previously scheduled to begin 10/1/2023, has been delayed to July 1, 2025. 

Summary 
The tangled web of employee benefits compliance requirements continues to expand and increase in complexity each year.  Use this checklist as a shorthand for some of the items requiring immediate attention heading into 2025, but keep in mind that there are many more employee benefits compliance items that employers should consider and that are not tied to these specific year-end deadlines.  Newfront provides tools to help remain in compliance year-round and team members are always available to assist with questions.   

And what about next year? We have a summary of the possible changes in store to start considering here: Potential Employee Benefits Changes in the Second Trump Term. 

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship.  Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).