Preparing for 2025 – The Evolving Landscape of Employee Benefits Compliance
Susan Rider, MS, GBHR, REBC, ASF, CSFS, CDHC, PBC, CFAA
I help employers with their HR and compliance needs.
As we approach 2025, the regulatory landscape for employee benefits continues to evolve, placing more responsibilities on employers to ensure compliance while offering competitive benefits packages. In this issue of Compliance Groove, we dive into some of the most pressing compliance topics and provide actionable insights to keep your organization ahead of the curve.
1. ACA Affordability Threshold Updates
Background:
Under the Affordable Care Act (ACA), employers must ensure that their health plans are “affordable” and meet minimum value standards. The affordability threshold—adjusted annually—is decreasing to 8.39% of household income for 2025, the lowest in recent years. This change reflects broader economic conditions and pressures employers to evaluate their contributions to employee premiums.
Deadline:
The deadline for ACA reporting is January 31, 2025 (for reporting 2024 data). Employers must provide employees with their 1095-C forms by this date and file with the IRS by February 28, 2025 (paper filing) or March 31, 2025 (electronic filing).
Action Step:
Calculate affordability using tools like an affordability calculator. For employees with varying pay structures, consider safe harbor methods, such as the federal poverty line or W-2 wages. Consulting a benefits broker can simplify the process and ensure compliance.
2. Mental Health Parity – A Renewed Focus
Background:
The Mental Health Parity and Addiction Equity Act (MHPAEA) requires group health plans to provide mental health benefits equivalent to medical and surgical benefits. The Department of Labor (DOL) has ramped up audits, focusing on quantitative (e.g., copays) and non-quantitative treatment limitations (e.g., preauthorization requirements).
Deadline:
Employers should ensure parity compliance as soon as possible, with increased audit risk for 2025 plan years. The DOL’s enforcement efforts are ongoing, so organizations should be proactive in their self-audit process.
Action Step:
Conduct a self-audit or seek professional guidance to evaluate compliance. Pay special attention to NQTLs, as they are a common source of violations. Involve TPAs and PBMs to ensure alignment across all plan components.
3. Transparency in Coverage Rule – Enhanced Reporting
Background:
The Transparency in Coverage (TiC) Rule, introduced in 2020, requires insurers and self-funded plans to provide public access to machine-readable files outlining negotiated rates and cost-sharing information. In 2025, new enforcement mechanisms will come into play, requiring stricter adherence to these rules.
Deadline:
By July 1, 2025, insurers and self-funded health plans must provide the required machine-readable files and cost-sharing tools for public access.
Action Step:
Audit your insurer’s or TPA’s compliance with TiC requirements. Confirm that cost-sharing tools for employees are accessible and user-friendly. Regular updates and data integrity checks are essential to avoid penalties.
4. Inclusive Benefits for Diverse Workforces
Background:
As the workforce becomes more diverse, addressing cultural and demographic disparities in healthcare access has gained prominence. For example, Hispanic and Latino men face barriers in seeking preventive care, often due to cultural stigmas and language barriers. Employers play a vital role in bridging these gaps.
Deadline:
This is an ongoing process, but employers should aim to implement inclusive benefits programs by Q1 2025 to align with diversity and inclusion goals and prevent disparities in healthcare access.
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Action Step:
Develop wellness programs tailored to specific populations, incorporating bilingual resources and culturally sensitive outreach. Partner with community health organizations or diversity consultants to align efforts with employee needs.
5. Preparing for New Legislation
Background:
The regulatory environment for benefits is dynamic. For instance, potential changes to PBM transparency laws aim to curb hidden fees, while COBRA regulations may see updates to streamline processes for employees and employers.
Deadline:
It’s crucial to monitor potential legislative updates, particularly for PBM transparency and COBRA changes, which could affect 2025 plan years. Employers should stay up-to-date on proposed legislation to ensure timely adjustments.
Action Step:
Stay informed by attending industry webinars and legislative updates. Regularly review your policies with compliance professionals to ensure alignment with emerging rules.
6. W-2 Reporting and Compliance
Background:
W-2 reporting for 2025 will require continued compliance with ACA mandates, including the accurate reporting of healthcare costs in Box 12 (Code DD). Additionally, incorrect filings can lead to costly penalties under IRS guidelines.
Deadline:
Employers must distribute W-2s to employees by January 31, 2025, and file with the IRS by February 28, 2025 (paper) or March 31, 2025 (electronic).
Action Step:
Coordinate with payroll providers to ensure accurate reporting of benefits. Perform a mid-year review of payroll records to address discrepancies before year-end reporting.
7. OSHA Compliance for Employee Benefits
Background:
While OSHA traditionally focuses on workplace safety, compliance overlaps with benefits in areas like workers' compensation and return-to-work programs. Recent OSHA updates emphasize integrating health benefits with workplace safety initiatives.
Deadline:
While OSHA enforcement is ongoing, employers should aim to update their safety programs and align benefits strategies by Q1 2025 to stay ahead of potential changes.
Action Step:
Review your workplace safety programs and ensure they align with your benefits policies. For example, ensure workers' compensation claims are processed efficiently and that return-to-work programs comply with OSHA guidelines.
Non-compliance risks penalties and can erode employee trust and satisfaction. Staying informed and collaborating with your benefits partners can help you navigate these challenges confidently.
The road to compliance may seem complex, but with the right tools and strategies, you can ensure your organization remains compliant while supporting employee well-being. Let’s continue racing ahead together!
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