Plan sponsors that offer high-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs) will no longer be permitted to cover telehealth services before the deductible is met, as Congress failed to extend the safe harbor allowing this benefit as part of the American Relief Act of 2025, the law passed in late December to fund the federal government for the next few months. The provision may be taken up in the next Congress, but current rules expire for plan years beginning on or after January 1, 2025.
The telehealth safe harbor for HSA-qualified HDHPs was originally created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act permitted HDHPs to cover telehealth or other remote-care services before the plan’s deductible is met, effective on March 27, 2020 for plan years beginning on or before December 31, 2021.
Legislation enacted in March 2022 extended this flexibility from April 1, 2022 through December 31, 2022 and subsequent legislation further extended the telehealth flexibility for plan years beginning after December 31, 2022, and before January 1, 2025.
President Biden signed the American Relief Act of 2025 on December 21, 2024. The law funds the government through March 14, 2025, and provides disaster relief appropriations and economic assistance to farmers. However, the bill does not include an extension of HDHP telehealth flexibility.
Congressional leadership had originally negotiated a bipartisan bill that would have extended the HDHP telehealth flexibility rule for an additional two years.
Sponsors of HDHPs that have HSAs with plan years beginning before January 1, 2025 may continue to reimburse individuals for telehealth services before the deductible for the remainder of that plan year. However, for HDHPs with a plan year of January 1, 2025 or later, plans may not reimburse individuals for telehealth services before they meet their deductible. If a plan permits reimbursement for telehealth services before the deductible is met, the HDHP would not be HSA-qualified, and therefore participants could not contribute to an HSA for that plan year.
Consequently, plans should assure that telehealth services provided before the deductible is met in an HDHP are subject to cost-sharing, unless the service is for a preventive benefit required under the ACA (e.g., a telehealth visit to obtain a prescription for a preventive service).
Telehealth services continue to be a popular benefit. Plan sponsors should contact their health plan administrator to determine how they will implement telehealth benefits in an HDHP and whether they will be communicating changes to plan participants. In some cases, plan documents may need to be amended concerning telehealth coverage.
It is possible that the telehealth provision could be revived in the new Congress, although it is likely those efforts would take several months.
However, it is unclear when or whether there will be action on the proposed legislation. Plan sponsors should monitor developments on this issue in the next Congress.
The Internal Revenue Service (IRS) announced the indexed dollar amount for the Patient Centered Outcomes Research Institute (PCORI) fee. For plan years that end on or after October 1, 2024 and before October 1, 2025, the fee is $3.47 per covered life. Issuers of specific health insurance policies and plan sponsors of applicable self-insured health plans are required to pay the PCORI fee.
Self-Insured Plans Subject to the Fee
The PCORI fee applies to self-insured plans providing accident and health coverage, including retiree-only plans. State and local governments sponsoring self-insured plans are also subject to the fee. The PCORI fee does not apply to self-insured plans that provide: 1) only excepted benefits (e.g., limited scope dental); 2) expatriate plans; 3) employee assistance programs; 4) disease specific management programs; or 5)wellness programs that do not provide significant medical treatment benefits.
PCORI fees may also apply to health reimbursement arrangements (HRAs) and health flexible spending accounts (health FSAs) that are considered self-insured health plans; however, these plans are subject to special rules. Archer Medical Savings Accounts and Health Savings Accounts (HSAs) are exempt from the fee.
Calculating and Paying the PCORI Fee Amount
Sponsors of self-insured plans must make annual PCORI payments by July 31 of the calendar year immediately following the last day of the applicable plan year. The PCORI fee is based on the average number of covered lives during the plan year.
Plan sponsors and insurers use IRS Form 720 for the second quarter to report the amount of their PCORI fee. Payments may be made through the IRS Electronic Federal Tax Payment System (EFTPS). For the most recent versions of Form 720 and associated instructions, please see the IRS Form 720 site.
Both the IRS and the three agencies tasked with issuing rules under the Affordable Care Act (“ACA”) have released guidance on new items considered preventive and medical care, as well as some further requirements around existing items plans are required to cover. Some of the guidance related to high deductible health plans (“HDHPs”) is effective retroactively presumably because some HDHPs may have already covered those items believing them to be preventive care.
Additional Medical and Preventive Care
In IRS Notice 2024-71, the IRS created a safe harbor stating that male condoms will be considered medical care for tax purposes. Among other results, this means that health plans, health flexible spending arrangements (“Health FSAs”), health reimbursement arrangements (“HRAs”), and health savings accounts (“HSAs”) can pay for or reimburse the cost of male condoms on a tax-free basis. The notice doesn’t specify an effective date, but presumably it is effective immediately.
However, for them to be preventive care for purposes of high deductible health plans and HSA purposes, separate guidance is required. As a reminder, for an individual to contribute to an HSA, they must be covered by a HDHP and not be covered by other non-permitted health insurance. Therefore, even though the IRS has now said that male condoms are medical care, they cannot be covered before the deductible under an HDHP without additional guidance.
Fortunately, the IRS also issued Notice 2024-75. It includes that needed guidance and some other items as well. Specifically, HDHPs can now cover the following items as preventive care before the individual satisfies the deductible:
The retroactive dates were presumably intended to address concerns that plans had already covered some of these items. However, to be clear, HDHPs are not required to cover these items pre-deductible, but this guidance allows them to do so without affecting a participant’s ability to contribute to an HSA.
FAQs part 68
In addition, the Departments of Health and Human Services, Labor, and Treasury issued guidance on some existing items plans are required to cover in their sixty-eighth edition of ACA FAQs.
For plans subject to the Women’s Health and Cancer Rights Act (“WHCRA”), the FAQs clarify that plans are required to cover chest wall reconstruction with an aesthetic flat closure, if elected by the patient in consultation with the attending physician. Under WHCRA, plans are generally required to cover reconstruction of the breast on which a mastectomy was performed, and surgery and reconstruction of the other breast to produce a symmetrical appearance. The guidance now confirms that this requirement includes providing an aesthetic flat closure, where extra tissues in the breast area are removed, and the remaining tissue is tightened and smoothed out to create a flat chest wall. Most plans are subject to WHCRA, including governmental plans, unless they are self-funded and have opted out. Church plans that have elected not to be subject to ERISA are not subject to WHCRA.
The FAQs address some common coding practices for items that are deemed to be medical care. The specifics and nuances of this guidance are more relevant to carriers or third party administrators (“TPAs”). However, in general, if an item is coded as preventive, it should be treated as such unless there’s additional information in the claim that would lead the plan or carrier to believe it should not be treated as preventive. If an item or service is not covered as preventive when it should be, participants and beneficiaries have the right to appeal under the relevant plan claims procedures.
Takeaways
Employers should work with their insurance carriers and TPAs to determine whether and how they plan to cover the additional permitted items for health FSAs, HRAs, and HDHPs. They should also address the coverage of the additional mandatory items from the FAQ guidance. Changes to plan documents, summary plan descriptions, or other communications may be required.
US District Court in Texas Sets Aside Overtime Rule
A rule that was set to dramatically boost the salary threshold for the so-called “white collar” overtime exemptions was just halted by a federal judge on Friday (Nov. 15th) less than two months before the full effective date. According to the court, the U.S. Department of Labor (DOL) exceeded its authority by raising the threshold too high and allowing for automatic adjustments every three years. The judge not only struck down the phase-two increase to $59K set to take effect on January 1, 2025 but also knocked down the first boost that took the salary floor to $44K in July and the automatic three-year adjustments – setting the threshold back to $684 per week. While it is expected that the DOL will appeal the ruling, many believe it’s not likely to gain any traction the incoming Trump administration. It’s also possible that an appeals court could step in and quickly reverse Judge Jordan’s ruling before President Trump takes office, but only time will tell.
In simplest terms- yes.
The Gag Clause Prohibition Clause Attestation (GCPCA) submission must be made annually. The GCPCA attests to a health plan’s (or insurer’s) compliance with the prohibition against “gag clauses” in any agreements with providers, provider networks, or entities offering provider network access. (A gag clause is any contractual term directly or indirectly restricting the plan or insurer from disclosing specified data and information, such as cost or quality of care data.) A group health plan with more than one benefit package may submit a single attestation even if some coverage types are insured and others are self-insured. For employers that sponsor multiple group health plans, a separate attestation is required for each plan.
An attestation must be made by December 31 each calendar year. Submissions are made through CMS’s Health Insurance Oversight System (HIOS) and are accepted throughout the year. After the initial attestation that was due Dec 31, 2023, each subsequent attestation covers the period from the date of the prior attestation through the date of the subsequent attestation. For example, if a plan submitted its first GCPCA on November 30, 2023, and submits its second GCPCA on November 15, 2024, the second GCPCA’s “attestation period” would be December 1, 2023, to November 15, 2024, and the “attestation year” would be 2024.
You should make sure that the attestation is filed annually (and of course that the plan complies with the underlying prohibition), either by confirming if your medical carrier is filing on your behalf or if you (the employer) will need to file.
The IRS has announced the 2025 contribution limits for items like flexible spending accounts (FSA). Here’s a look at some of the items changing:
The IRS announced that the affordability percentage for the 2025 calendar year will increase to 9.02% (up from 8.39% which is the rate for the 2024 calendar year).
Under the Affordable Care Act’s employer mandate, an applicable large employer is required to offer at least one health plan that provides affordable, minimum value coverage to its full-time employees (and minimum essential coverage to their dependents) or pay a penalty. For this purpose, “affordable” means the premium for self-only coverage cannot be greater than a specified percentage of the employee’s household income. Based on this recent guidance, that percentage will be 9.02% for the 2025 calendar year.
Employers with non-calendar year plans will still have to use the affordability percentage for 2024 until the start of their 2025 plan year.
Employers need to remember the old “family glitch” was removed starting in 2023. This rule previously prohibited family members of the employee from being eligible for subsidies when the employee was offered affordable, minimum value medical coverage. The removal of the family glitch did not carry new penalty exposure for employers, but it did open the door to subsidy eligibility for family members when the employee’s offer of family coverage is not affordable based on household income. The increase in the affordability percentage for 2025 may lead to some family members who were eligible for subsidies in 2024 no longer being eligible in 2025.
Prior to each year’s Medicare Part D annual enrollment period, plan sponsors that offer prescription drug coverage must provide notices of creditable or noncreditable coverage to Medicare-eligible individuals.
The required notices may be provided in annual enrollment materials, separate mailings or electronically. Whether plan sponsors use the federal Centers for Medicare & Medicaid Services (CMS) model notices or other notices that meet prescribed standards, they must provide the required disclosures no later than Oct. 15, 2024.
Group health plan sponsors that provide prescription drug coverage to Medicare Part D-eligible individuals must also disclose annually to the CMS (within 60 days following their plan renewal) whether the coverage is creditable or noncreditable. The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees.
Background
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires group health plan sponsors that provide prescription drug coverage to disclose annually to individuals eligible for Medicare Part D whether the plan’s coverage is “creditable” or “noncreditable.” Prescription drug coverage is creditable when it is at least actuarially equivalent to Medicare’s standard Part D coverage and noncreditable when it does not provide, on average, as much coverage as Medicare’s standard Part D plan. The CMS has provided a Creditable Coverage Simplified Determination method that plan sponsors can use to determine if a plan provides creditable coverage.
Disclosure of whether their prescription drug coverage is creditable allows individuals to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D during the Part D annual enrollment period. Individuals who do not enroll in Medicare Part D during their initial enrollment period (IEP), and who subsequently go at least 63 consecutive days without creditable coverage (e.g., they dropped their creditable coverage or have non-creditable coverage) generally will pay higher premiums if they enroll in a Medicare drug plan at a later date.
Who Gets the Notices?
Notices must be provided to all Part D eligible individuals who are covered under, or eligible for, the employer’s prescription drug plan—regardless of whether the coverage is primary or secondary to Medicare Part D. “Part D eligible individuals” are generally age 65 and older or under age 65 and disabled, and include active employees and their dependents, COBRA participants and their dependents, and retirees and their dependents.
Because the notices advise plan participants whether their prescription drug coverage is creditable or noncreditable, no notice is required when prescription drug coverage is not offered.
Also, employers that provide prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP) are not required to provide the creditable coverage notice to individuals who are eligible for the EGWP.
Notice Requirements
The Medicare Part D annual enrollment period runs from Oct. 15 to Dec. 7. Each year, before the enrollment period begins (i.e., by Oct. 14), plan sponsors must notify Part D eligible individuals whether their prescription drug coverage is creditable or non-creditable. The Oct. 14 deadline applies to insured and self-funded plans, regardless of plan size, employer size or grandfathered status
Part D eligible individuals must be given notices of the creditable or non-creditable status of their prescription drug coverage:
According to CMS, the requirement to provide the notice prior to an individual’s IEP will also be satisfied as long as the notice is provided to all plan participants each year before the beginning of the Medicare Part D annual enrollment period.
Model notices that can be used to satisfy creditable/non-creditable coverage disclosure requirements are available in both English and Spanish on the CMS website. Plan sponsors that choose not to use the model disclosure notices must provide notices that meet prescribed content standards.
Notices of creditable/non-creditable coverage may be included in annual enrollment materials, sent in separate mailings or delivered electronically. Plan sponsors may provide electronic notice to plan participants who have regular work-related computer access to the sponsor’s electronic information system. However, plan sponsors that use this disclosure method must inform participants that they are responsible for providing notices to any Medicare-eligible dependents covered under the group health plan.
Electronic notice may also be provided to employees who do not have regular work-related computer access to the plan sponsor’s electronic information system and to retirees or COBRA qualified beneficiaries, but only with a valid email address and their prior consent. Before individuals can effectively consent, they must be informed of the right to receive a paper copy, how to withdraw consent, how to update address information, and any hardware/software requirements to access and save the disclosure. In addition to emailing the notice to the individual, the sponsor must also post the notice (if not personalized) on its website.
In Closing
Plan sponsors that offer prescription drug coverage will have to determine whether their drug plan’s coverage satisfies CMS’s creditable coverage standard and provide appropriate creditable/noncreditable coverage disclosures to Medicare-eligible individuals no later than Oct. 15, 2024.
With a presidential election coming up in three months, politics are a hot topic of conversation nearly everywhere you go—including the workplace. As a result, many employers are considering whether to issue or adjust policies to address civility among employees, set rules for political discussions, and even clarify dress codes.
One common question: Can employees wear political gear into the office or display other paraphernalia supporting a candidate or political cause?
As long as speech and images are not violating anti-discrimination and anti-harassment laws, political statements and images can legally be permitted in the workplace.
But ultimately, employers are allowed to dictate what’s appropriate and allowed, just as they often regulate work hours or have rules about dress codes.
In the private-sector workplace, employees traditionally do not have First Amendment rights to express their political views through office decorations or apparel.
But in the current climate, the definition of what is considered political has broadened to include many topics for which an employee may indeed have the right of expression in the workplace. For example, if employees are joining together to improve their working conditions—such as protesting gender, race, or religious discrimination in the workplace—then wearing so-called political apparel could be protected speech under the National Labor Relations Act. And the act provides such protection even in workplaces where employees are not currently represented by a labor union, he noted.
The difficulty for an employer in defining what is meant by political speech means that the employer risks being overbroad, which creates a bigger problem than was present with the original decoration or clothing. Instead, employers are well served to remind all employees of existing anti-harassment or respectful-workplace policies and take action if there is a complaint about unwelcome, offensive, or intimidating behavior by an employee toward a co-worker.
For the most part, when it comes to the upcoming presidential election, employers will most likely want to avoid allowing workers to wear or decorate with obvious political paraphernalia—such as a Donald Trump shirt or a Kamala Harris sign in one’s office.
Even an employer that champions engagement and self-expression should consider whether it should be allowed. Simple parameters such as prohibiting names and images of politicians, names and logos of political parties, and identifiable campaign slogans are a good place to start as such prohibitions can help minimize the emotional heat that is often an unintentional consequence of political expression.
In general, most employees prefer that politics not play a big role in the workplace. Recent data from jobs site Monster found that 68% of workers are not comfortable discussing politics at work. While 64% of workers say they respect their co-workers’ rights to their political beliefs without passing any judgment, 33% say they have judged co-workers negatively based on their political beliefs.
Richard Birke, chief architect of JAMS Pathways, a conflict resolution firm that works with employers, said permitting employees to wear clothing with overt political statements may be offensive to colleagues or stir up arguments or incivility in the workplace.
“At our company, for example, we want to help you solve your problem; we don’t want to incidentally get in a fight with you on the way in by wearing a T-shirt advocating for a particular candidate,” he said.
Leading up to the election—and even afterward—employers should communicate clear policies around political gear and paraphernalia to employees and enforce those policies, experts said.
The policies should apply to all workers, including remote workers who may appear on video calls. If you’re on a Zoom call for work, you’re at work.
As a best practice, if a private-sector employer issues a policy about restricting political decorations or apparel, the employer should ensure it applies the same restriction to all nonwork-related decorations or apparel.
The employer has to be diligent about enforcing the same restriction when it comes to charitable causes, community events, religious organizations, and even favorite sports teams or entertainers.
A Texas federal court just struck down the FTC’s proposed ban on non-competition agreements on a nationwide basis mere weeks before it was set to take effect, meaning employers across the country can breathe a sigh of relief and continue to maintain non-competes as their state laws allow. While there is a slim chance the rule could be resurrected by a federal appeals court in the future, what’s for certain after the ruling on 8/20/24 is that you will not have to comply with the rule by September 4 as originally scheduled. What do you need to know about this significant development and what should you do now that the landscape has shifted once again?
What Happened?
A Texas employer, the U.S. Chamber of Commerce, and a handful of other business organizations sued the Federal Trade Commission (FTC) in federal court seeking an order blocking the non-compete rule from taking effect on September 4 as scheduled.
Judge Ada Brown from the Northern District of Texas initially agreed that the rule was an invalid exercise of the agency’s power on July 3, but only blocked the rule as it applied to the parties in the case and left open the question of whether the FTC could proceed with the ban. She later promised to issue a final ruling on the matter by August 30.
Judge Deploys 2 Main Arguments to Kill Non-Compete Ban
The judge took a two-pronged attack to the FTC’s non-compete ban. Her first line of attack was ruling that the agency didn’t have the power to issue the rule because Congress only authorized it to issue procedural rules to address unfair methods of competition, not substantive rules. “The role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do,” she said.
Her second rebuke was concluding that the rule itself was “arbitrary and capricious” for the following reasons:
Rule Blocked for All Employers Across the Country
Most importantly for employers, Judge Brown concluded that her order setting aside the non-compete ban should apply to all employers across the country. As noted above, she originally just blocked the rule from taking effect for those parties that had filed suit in the Texas case. In fact, in a separate decision just a week or so after her July 3 limited ruling, she again declined to extend the preliminary injunction nationwide – leaving employers in a state of uncertainty as the days dwindled down towards the effective date.
Following Judge Brown’s ruling, a Pennsylvania court in a separate lawsuit declined a motion to block the rule, and a Florida court granted a limited injunction similar to the Texas court’s original order, leaving employers in doubt about whether the rule might be vacated prior to its September 4 effective date.
But this updated ruling put an end to all of that concern. Brown noted that federal law required her to “hold unlawful” and “set aside” the non-compete ban with nationwide effect. All parties in all judicial districts across the country are equally covered by the ruling, she said.
Post-Chevron Shockwaves
The decision is one of the first prominent cases to demonstrate the evolving power of courts to overrule agency actions now the Supreme Court has struck down the Chevron doctrine. For those unfamiliar, SCOTUS issued the groundbreaking Loper Bright ruling on June 28 tossing out a decades-old standard that had required courts to give substantial deference to agencies like the FTC.
The new standard? Courts should instead exercise their independent judgment when deciding whether an agency’s actions are proper exercises of power – essentially enabling courts to strike down agency rules more easily.
And this decision is a perfect example of how this new standard will be deployed by courts to significant effect. The first sentence of Judge Brown’s analysis section quotes the Supreme Court’s Loper Bright case, in fact, noting that the Administrative Procedure Act should serve “as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their offices.”
What’s Next?
The FTC could try to breathe new life into the rule by filing an appeal of this decision in the coming weeks. It could also seek an emergency order from the appellate court that would cause the rule to take effect as scheduled.
However, any appeal would be heard by the notoriously business-friendly 5th Circuit Court of Appeals, where the odds of the rule being resurrected are slim. And the next step after that would be a potential visit to the Supreme Court, which has taken direct aim at the regulatory state in recent years and is likely a hostile environment for any attempt by the FTC to wield such power.
What Should You Do?