Pay-or-Play Affordability Percentage Set at 9.02%

On September 9, 2024, the IRS issued Revenue Procedure 2024-35, which significantly increases the affordability threshold for ACA employer mandate purposes to 9.02% for plan years beginning in 2025. The new 9.02% level is higher than last year, as indicated below:

2015 Percentage: 9.56%

2016 Percentage: 9.66%

2017 Percentage: 9.69%

2018 Percentage: 9.56%

2019 Percentage: 9.86%

2020 Percentage: 9.78%

2021 Percentage: 9.83%

2022 Percentage: 9.61%

2023 Percentage: 9.12%

2024 Percentage: 8.39%

2025 Percentage: 9.02%

The affordability percentages apply for plan years beginning in the listed year. A calendar plan year will, therefore, have the 9.02% affordability threshold for the plan year beginning January 1, 2025.

Supporting Article – Pay or Play Affordability Percentage

View Revenue Procedure 2024-35

New COVID-19 Vaccine Approvals for 2024-2025

The U.S. Food and Drug Administration (FDA) has approved new COVID-19 vaccines for the 2024-2025 season, applicable to both adults and children. Below is a summary of the key approvals:

• COMIRNATY: A vaccine for adults, developed by BioNTech and Pfizer
• Pfizer-BioNTech Pediatric Vaccine: Approved for children aged 6 months to 11 years
• SPIKEVAX: An updated vaccine for adults, developed by Moderna
• Moderna Pediatric Formula: A new formula designed specifically for children aged 6 months to 11 months

Employer Considerations:
Employers offering fully insured health plans or self-insured employer-sponsored plans must cover these vaccines with no cost-sharing, as required by the Affordable Care Act (ACA). This ensures employees can access the vaccinations without additional out-of-pocket costs.

Regulatory Update: Key Health Care Regulations and Anticipated Release Dates

The Biden administration has released its final Unified Agenda, outlining important healthcare regulations in development and their expected release dates. Below are some key regulations HR professionals should keep on their radar:

Mental Health Parity

These regulations aim to improve access to mental health and substance use disorder benefits by tightening compliance with mental health parity requirements. Employers and insurance carriers have raised concerns about the complexities in meeting these new standards. Final regulations are expected September 2024.

Surprise Billing Requirements

Updates will formalize the open negotiation period, clarify details required in negotiation notices, and revise the use of service codes for batched claims. The release of these final regulations has been delayed to November 2024, with additional regulations on air ambulance services postponed until March 2025.

Advanced Explanation of Benefits (EOB)

Federal agencies have allowed self-insured plan and insurance carriers to issue EOBs without penalty until formal advanced EOB regulations are enacted. After receiving stakeholder input in 2021, proposed regulations are not expected in March 2025.

HIPAA Privacy and Cybersecurity

For the first time, federal agencies are developing HIPAA regulations specifically focused on enhancing cybersecurity for medical providers, health plans, and third parties managing personal health information. These proposed regulations are scheduled for release in December 2024.

HR professionals should stay informed about these upcoming changes to ensure compliance and support employee health and wellness initiatives. If you have any questions or need guidance on these regulations, feel free to contact us.

Legal Updates and Key Takeaways for HR Professionals

Johnson and Johnson Litigation: ERISA Fiduciary Duty

Update: Johnson and Johnson is facing litigation alleging violations of the Employee Retirement Income Security Act (ERISA) fiduciary duty rules in its prescription drug program. The plaintiffs claim the program overcharged for medications, through JNJ has filed a motion to dismiss, arguing that the plaintiffs have not demonstrated harm or legal standing.

HR Impact: This case highlights the importance of fiduciary responsibilities under ERISA, particularly in managing prescription drug programs. HR professionals must ensure their company’s health plans and pharmaceutical benefit managers (PBMs) are selected prudently, with fair pricing and transparency in mind. Failure to do so could result in litigation and financial penalties.

Wells Fargo PBM and Fiduciary Duty Lawsuit

Update: Wells Fargo is being sued for allegedly engaging in prohibited transactions and breaching fiduciary duties under ERISA. The complaint claims Well Fargo’s health plan paid excessive administrative fees to its PBM significantly higher than comparable plans. The plaintiffs are seeking compensation for plan losses and a change in plan fiduciaries and PBM.

HR Impact: This case underscores the need for HR to closely monitor PMB contracts and administrative fees to ensure they are reasonable and comparable to industry standards. HR professionals should review fees paid by their company’s health plan to avoid overpayment and potential legal challenges. Additionally, transparency in PMB selection and contract terms is crucial to maintaining compliance.

New Hampshire Prior Authorization Improvement

Update: A new law in New Hampshire, effective next year, sets clear deadlines for insurance companies to respond to prior authorization requests. Urgent cases must be addressed within 72 hours (about 3 days), and non-urgent cases within seven days for electronic submissions. Failure to meet these deadlines results in automatic approval of the requested procedure. Insurers must also use qualified medical experts to determine the medical necessity of a procedure, grounding decisions in evidence-based practices.

HR Impact: While the law directly affects New Hampshire, it could set a precedent for other states or federal regulations to follow. Stay alert to similar reforms in your regions. If you are a multi-state employer, you may face varying authorization processes, and adopting best practices like electronic submissions can improve efficiency for all employees.

Key HSA Features for 2025

HSA Annual Limits for 2025

• The 2025 contribution limit is $4,300 for individuals with self-only HDHP coverage and $8,550 for individuals with family HDHP coverage.
• Individuals aged 55 or older may make an additional $1,000 “catch-up” contribution.
• For 2025 plan years, the minimum deductible is $1,650 for self-only HDHP coverage and $3,300 for family HDHP coverage.

HSA Advantages

• HSAs have three levels of tax savings; contributions, interest or earnings, and distributions for medical expenses are all tax-free.
• Individuals keep their HSAs even if they change jobs, change medical coverage, or make other life changes.
• There is no deadline for using HSA funds, which allows individuals to save for current or future expenses.

Question of the Month

Q. Are there any situations in which a domestic partner can be eligible for COBRA?

A. No, a domestic partner is not entitled to COBRA coverage regardless of a qualifying event of the employee or upon the dissolution of the domestic partnership.