Takeaway

  • Plan administrators should review their plan’s 2024 annual funding notice against the model notice and determine whether their plan’s 2024 annual funding notice is compliant.  If not, plan administrators are expected to take corrective action.

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On April 3, 2025, the Department of Labor (the DOL) issued Field Assistance Bulletin 2025-02 (the FAB) and updated model annual funding notices for single-employer and multiemployer plans.  The FAB addresses conflicts between section 101(f) of the Employee Retirement Income Security Act (ERISA), as amended by Secure 2.0, and DOL regulations at 29 CFR 2520.101-5, which predate the Secure 2.0 changes.  The FAB is intended to clarify the conflicts until additional guidance or revisions can be made to 29 CFR 2520.101-5.

Section 101(f) of ERISA requires plan administrators of defined benefit plans to furnish an annual funding notice to participants, beneficiaries, the Pension Benefit Guaranty Corporation, if applicable, the union(s) representing participants or beneficiaries, and each employer required to contribute to a multiemployer plan.  The changes made under Secure 2.0 are effective for plan years beginning after December 31, 2023.  For plans with a calendar year plan year, the changes are required for the 2024 plan year annual funding notice.

Generally, annual funding notices must be provided no later than 180 days after the plan year end.  For plans with a calendar year plan year, the 2024 annual funding notice must be provided no later than April 30, 2025.  There is an exception for small plans, however: the annual funding notice must be provided by the earlier of the date the plan administrator files the annual Form 5500 or the date by which the Form 5500 must be filed (including any extension).

While many plan administrators lean on their actuarial consultant to prepare the annual funding notice, plan administrators should be familiar with the Secure 2.0 changes.  For example, the annual funding notice for single-employer plans should no longer disclose the plan’s “funding target attainment percentage” and should instead disclose the plan’s “percentage of plan liabilities funded.”

The DOL acknowledges that the FAB was released just 27 days before the April 30, 2025, due date, and that some plan administrators may have already prepared or distributed the 2024 annual funding notice.  Despite the eleventh-hour guidance, plan administrators are expected to take corrective action if the 2024 annual funding notice prepared and/or provided before the FAB was issued is not compliant with the guidance in the FAB. 

Plan administrators should review their 2024 annual funding notice against the model notice and determine whether their plan’s 2024 annual funding notice is compliant.  Use of the model notice is optional.  However, using the model notice will ensure “a reasonable, good faith interpretation” of the requirements under Section 101(f), as amended by Secure 2.0.

The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.  Subscribe to the Benefits Law Advisor Blog here.

Each year, National Employee Benefits Day offers a chance to reflect on the ever-changing landscape of employer-sponsored benefits. This year may be the most pivotal since the COVID-19 relief guidance of 2020. The landscape of employee benefits has seen significant changes, particularly in areas such as health and welfare plan administration, compliance with mental health parity, and transparency in coverage. For a comprehensive understanding, read the full article.

Takeaways

  • Employers who sponsor group health plans should review and revise, as needed, their consumer-facing pricing information for any compliance issues under the Executive Orders and applicable regulations.

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On February 25, 2025, President Trump signed “Making America Healthy Again with Clear, Accurate, and Actionable Healthcare Pricing Information,” an Executive Order with the stated purpose of making group health plans and health insurance issuers accountable for compliance with price transparency rules implemented during the first Trump administration.

Specifically, during his first administration, President Trump signed Executive Order 13877 – “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” seeking to address what the new Executive Order describes as “opaque healthcare pricing arrangements” and insufficient accountability concerning healthcare pricing practices.  Under Executive Order 13877, regulations were created requiring group health plans to:

  • Post their negotiated rates with providers;
  • Post out-of-network payments to providers;
  • Post the actual prices the plan or its pharmacy benefits manager pays for prescription drugs; and
  • Maintain a “customer-facing” internet tool through which individuals can access price information. 

The new Executive Order referenced an unidentified 2023 economic analysis that estimated full implementation of the regulations might result in as much as $80 billion in healthcare savings by 2025 for consumers, employers, and insurers.  An unidentified 2024 report was also referenced for the proposition that price transparency could help employers reduce healthcare costs across 500 common healthcare services.

To address what was described as “stalled” progress on price transparency during the intervening administration, the new Executive Order gave the Secretaries of the Treasury, Labor, and Health and Human Services 90 days to act to:

  • Instead of estimates, require the disclosure of actual prices of items and services;
  • Ensure pricing information is standardized and easily comparable across health plans and hospitals by issuing updated guidance or proposed regulations; and
  • Ensure compliance with transparency requirements by issuing guidance or proposed regulations updating enforcement policies.

The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.  Subscribe to the Benefits Law Advisor Blog here.

Takeaways

  • Employers may post a notice on their website instead of automatically furnishing Forms 1095-B and 1095-C to all full-time employees.  The first due date for such a notice is March 3 for 2024 forms, and the notice must remain accessible until October 15.

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The Employer Reporting Improvement Act and the Paperwork Burden Reduction Act (the Acts) introduced significant changes to the reporting and enforcement rules of the Affordable Care Act (ACA).  We discussed the Acts in an earlier blog.  Recently, the IRS issued Notice 2025-15, which provides the promised guidance for reporting entities on how to furnish Forms 1095-B and 1095-C.  Here is what plan sponsors need to know:

Alternative Method for Furnishing Forms

  • Rather than automatically sending out Forms 1095-B and 1095-C, sponsors may post a notice on their website indicating that such forms are available upon request.
  • Sponsors must ensure the notice is clear, conspicuous, and accessible to anyone entitled to such a form.
  • Forms must be provided within 30 days of any request or by January 31, whichever is earlier.
  • In order to ensure compliance with the new IRS guidance, we recommend posting the notice to the sponsor’s website, even if the notice is also provided via email or otherwise.

Additional Compliance Requirements

  • Notices must be posted by the due date for delivering the forms, including the automatic 30-day extension.
    • For example, for 2024 forms, sponsors must post the notice by March 3, 2025.
  • Entities must also adhere to any state requirements for furnishing the forms, and some states do require that the forms (or their state equivalent) be sent to all individuals.
    • Note that forms still must be filed with the IRS, even if they are not provided to all employees.

Effective Date

  • The guidance is effective starting with the 2024 calendar year forms.

Following these steps can help ensure compliance with IRS requirements for ACA forms.  The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.  Subscribe to the Benefits Law Advisor Blog here.

Takeaways

  • On January 14, 2025, the DOL issued Field Assistance Bulletin (FAB) 2025-01, providing sponsors and administrators of ongoing defined contribution plans with a new option for missing participant balances of $1,000 or less: transfer to the state unclaimed property fund associated with the participant’s last known address.

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BACKGROUND

Historically, when terminating defined contribution plans, the DOL specified IRAs as the preferred destination for missing participant account balances. However, the DOL also noted that, in seemingly narrow circumstances, transfer to a state unclaimed property fund may also be appropriate.  See FAB 2014-01.  Before making a distribution to a state unclaimed property fund, the plan fiduciary was required to prudently conclude that this distribution was appropriate despite the adverse tax consequences — income tax withholding and potential early distribution penalties — that would apply in lieu of tax-deferred rollover to an IRA.  In later guidance, the DOL expressed concerns over IRA fees that outpaced investment returns. It noted that there were a number of features of state unclaimed property funds that might increase the likelihood that missing participants would actually be reunited with their retirement savings — noting that state unclaimed property funds do not deduct fees from amounts returned to claimants.

TEMPORARY ENFORCEMENT POLICY

Citing the underlying purpose of state unclaimed property funds — reuniting individuals with their lost assets — and noting data supporting that state unclaimed property funds have collectively returned billions of dollars in unclaimed property to rightful owners — FAB 2025-01 announced DOL’s temporary enforcement policy, applicable until formal guidance is issued:  The DOL will not take action to enforce breach of fiduciary duty claims where an unclaimed account of $1,000 or less is transferred to a state unclaimed property fund.  Naturally, there are many requirements and conditions, including:

  • In calculating whether the benefit is $1,000 or less, the amount of outstanding plan loans are disregarded and rollover contributions are included;
  • The plan fiduciary must conclude that the state unclaimed property fund is a prudent destination;
  • The plan fiduciary must have implemented and exhausted a prudent program to find missing participants and
  • The summary plan description must explain that missing participants may have their account balances transferred to a state unclaimed property fund and identify a plan contact for further information.

In addition, the state unclaimed property fund must be an “eligible state fund,” meaning, among other things, that the fund:

  • Allows claims for transferred benefits to be made and paid in perpetuity;
  • Does not impose fees or other charges;
  • Has a free searchable website that includes the name of the plan in its search results and allows electronic claims;
  • Participates in an unclaimed property database that the National Association of Treasurers has approved;
  • Conducts annual searches for updated addresses of missing participants with accounts of $50 more and, if a new address is found, provides written notice that the money is being held and
  • In the event a missing participant reappears and is paid directly by the plan, reimburses the plan fiduciary.

The plan fiduciary may also rely on the state unclaimed property fund’s representation that it satisfies all requirements of an “eligible state fund.”

CONCLUSION

Plan fiduciaries will likely welcome this temporary enforcement policy, but it does come with limitations — applying only to account balances of $1,000 or less — and with conditions, including SPD amendment.  The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.  Subscribe to the Benefits Law Advisor Blog here.

In a significant development for employers managing Paid Family and Medical Leave (PFML) programs, the IRS has issued new guidance clarifying the federal income and employment tax treatment of contributions and benefits under state-funded PFML programs. This guidance, detailed in Revenue Ruling 2025-4, addresses key tax implications for both employers and employees, ensuring compliance and proper reporting. Employers are encouraged to review this guidance to align their payroll and finance practices accordingly. For a comprehensive understanding, read the full article.

Takeaways

  • Plan sponsors of defined contribution plans may now self-correct the delinquent remittance of participant contributions and loan repayments when those amounts are deposited to the plan within 180 days of the pay date and the missed earnings amount is $1,000 or less.

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On January 14, 2025, the Employee Benefits Security Administration (EBSA) within the Department of Labor (DOL) updated its Voluntary Fiduciary Compliance Program (VFCP).  The VFCP allows plan officials to correct certain breaches of fiduciary duties under the Employee Retirement Income Security Act (ERISA).  Plan officials who correct certain fiduciary breaches consistent with the VFCP’s terms and conditions receive a “no action letter,” which declares that the EBSA will not pursue enforcement action or assess penalties against plan officials for the corrected breach.

While the update includes several changes to the VFCP, this blog focuses on the new self-correction component (SCC), which will be available beginning March 17, 2025. This component will correct the delinquent remittance of participant contributions and loan repayments, the most common breach corrected under the VFCP.

Under DOL regulations, participant contributions and loan repayments withheld from participant pay must be segregated from an employer’s general assets on the earliest date such amounts can be reasonably segregated.  Due to the widespread use of electronic funds transfers, many employers segregate these amounts within 1-2 business days of the applicable pay date.  A fiduciary breach occurs when these amounts are deposited after the applicable timeframe.

Plan sponsors may use the SCC to correct a delinquent remittance if:

  • the delinquent contributions and loan repayments (principal amounts) are deposited to the plan within 180 days of the applicable pay date, and
  • the lost earnings on the principal is $1,000 or less.

Self-correctors must use the VFCP Online Calculator to calculate lost earnings from the pay date through the date the earnings are deposited to the plan.

A SCC notice must be submitted using EBSA’s online tool.  The notice must include the plan sponsor’s name, email address, and EIN, the plan name and number, principal and earnings amounts, the date earnings were paid to the plan, the pay date, and the number of participants affected by the correction.  Rather than receiving a no-action letter, the self-corrector will receive an acknowledgment email from EBSA.

In addition, the plan sponsor must submit a completed SCC Retention Record Checklist (Checklist) and supporting documents to the plan administrator.  The Checklist must include:

  • a brief statement explaining why the principal amounts were not deposited timely
  • proof of payment of the principal and earnings amounts (for example, bank statements or executed wire transfers)
  • a copy of the “printable results” generated by the VFCP Online Calculator
  • a copy of the policies or procedures implemented, if any, to prevent future delinquent remittance
  • a copy of the acknowledgment email generated by the online tool
  • a signed penalty of perjury statement from the plan official or fiduciary seeking relief under the SCC and
  • A copy of the authorization if a service provider submits the SCC notice.     

So, how does correcting a delinquent remittance under the SCC differ from the formal application?  Plan sponsors will not receive the no-action letter many are accustomed to receiving when submitting a formal VFCP application to EBSA.  That’s about it.  Neither correction method requires a filing fee, so the cost to the plan sponsor is generally the same under the formal application and the SCC.  The SCC notice and Checklist require similar information as required under the formal application.  Depending on the principal amount, filing a formal application and receiving a no-action letter may be more beneficial.  It remains to be seen how many plan sponsors will take advantage of the new SCC process.

The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.  Subscribe to the Benefits Law Advisor Blog here. 

As we bid farewell to 2024 and look ahead to the new year, we reflect on the many evolving compliance obligations that health and welfare plan sponsors tackle each year. Although this list is by no means exhaustive, it highlights four items and associated deadlines that have recently emerged on the health and welfare scene. Plan sponsors should review their routine compliance checklists and update as necessary to ensure a smooth transition into 2025.

  1. Gag Clause Attestations

The Consolidated Appropriations Act of 2021 generally prohibits the use of gag clauses in certain agreements and requires group health plans and health insurance issuers to annually submit a Gag Clause Prohibition Compliance Attestation. A fully insured group health plan’s responsibility is satisfied if the issuer submits an Attestation on behalf of the plan. Similarly, a self-insured plan may delegate the task of submitting the Attestation to a third-party administrator (TPA) via a written agreement if the TPA will accept this responsibility. The Attestation must be submitted to the Departments of Labor, Health & Human Services, and the Treasury by December 31st.  See this link for further details and instructions on submission.

  1. Mental Health Parity – Fiduciary Certification

In September, the Departments of Labor, HHS, and the Treasury issued new final rules amending regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and adding new regulations implementing the nonquantitative treatment limitation (NQTL) comparative analyses requirements. Consistent with the proposed rules, the final rules strengthen consumer protections by aiming to achieve parity between mental health/substance use disorder (MH/SUD) benefits and medical/surgical (M/S) benefits. The final rules generally apply to group health plans and group health insurance coverage for plan years beginning on or after January 1, 2025, although many provisions will not apply until 2026.

The final rules require that, in addition to the NQTL comparative analysis, each plan or issuer must prepare and make available to the Secretary, upon request, a written list of all NQTLs imposed under the plan or coverage. In addition, for ERISA-covered plans, this written list must be given to the named plan fiduciaries, who are required to include a certification as part of the comparative analysis. At least one of these named fiduciaries will certify they have engaged in a prudent process to select one or more qualified service providers to perform and document a comparative analysis in connection with the imposition of any NQTLs that apply to MH/SUD benefits under the plan in accordance with applicable law and regulations and have satisfied their duty to monitor those service providers as required by part 4 of ERISA. At a minimum, the certifying fiduciary should review the comparative analysis, ask questions, and discuss the findings and conclusions with the service provider responsible for performing and documenting the comparative analysis, and obtain assurance from the service provider that, to the best of its ability, the NQTL and associated comparative analysis complies with MHPAEA and its implementing regulations.

Plans subject to MHPAEA should update their existing comparative analyses to reflect the new certification requirement by the first day of the 2025 plan year.

  1. Reproductive Health Care ‒ Updates to HIPAA Policies, Procedures, and Notice of Privacy Practices

In response to the decision in Dobbs v. Jackson Women’s Health Organization that effectively overturned Roe v. Wade, the Biden-Harris Administration, through OCR, issued a final rule to modify the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule to support privacy in reproductive health care. The rule places limitations on the use and disclosure of reproductive healthcare information by healthcare providers and group health plans. The rule also requires several updates to HIPAA policies and procedures concerning health plans and operations of health care providers. Although most of those changes went into effect on December 23, 2024, HIPAA-covered entities have until February 16, 2026, to update their Notices of Privacy Practices. For more information about this change, see our blog posts: New HIPAA Final Rule Imposes Added Protections for Reproductive Health Care Privacy and HIPAA Final Rule For Reproductive Health Care Privacy with December 23, 2024, Compliance Deadline.

  1. ACA Section 1557 Notices of Nondiscrimination and Availability

The U.S. Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) enforces Section 1557 of the Affordable Care Act (Section 1557), which prohibits discrimination on the basis of race, color, national origin, age, disability, or sex (including pregnancy, sexual orientation, gender identity, and sex characteristics), in covered health programs or activities. Last spring, OCR issued a final rule under Section 1557 advancing protections against discrimination in health care. Under the final rule, covered entities (i.e., health programs and activities that receive HHS funding or are administered by HHS) must provide an annual notice of nondiscrimination to participants, beneficiaries, enrollees, applicants of their health programs and activities, and members of the public. This notice must be provided within 120 days of July 5, 2024, under the requirements of 45 CFR § 92.10. Similarly, covered entities must provide, within one year of July 5, 2024, a notice of the availability of language assistance services and auxiliary aids and services, stating at a minimum that these are free of charge when necessary for compliance with Section 1557. See 45 CFR § 92.11.

Although the rule was scheduled to go into effect on July 5, 2024, certain provisions have been stayed or enjoined pending multiple lawsuits. For example, under the final rule, a notice of nondiscrimination states in part that the covered entity does not discriminate on the basis of sex, which includes discrimination based on gender identity. However, in Tennessee v. Becerra, No. 1:24cv161-LG-BWR (S.D. Miss.), the court stayed nationwide several regulations to the extent they “extend discrimination on the basis of sex to include discrimination on the basis of gender identity”. The case is currently pending appeal.

Covered entities must continue to provide notices of nondiscrimination and availability unless specific provisions are stayed or enjoined. OCR’s sample notice of nondiscrimination currently characterizes as optional the inclusion of a statement of nondiscrimination based on gender identity. Still, covered entities should be prepared to adjust their notices if the stay is lifted. Sample notices are available on OCR’s website. For more information, see Section 1557 of the Patient Protection and Affordable Care Act | HHS.gov.

The new year often presents an opportunity to renegotiate or terminate existing service provider agreements, so now is a perfect time to reanalyze contracts before renewal. For an overview of health plan fiduciary compliance issues and strategies, see our five-part blog series, Health Plan Hygiene.

If you have questions, please contact a member of the Jackson Lewis Employee Benefits Practice Group or the Jackson Lewis attorney with whom you regularly work.

In a win for plan sponsors, the recently enacted Employer Reporting Improvement Act and the Paperwork Burden Reduction Act (the Acts), among other things, introduce several significant changes to the reporting and enforcement rules of the Affordable Care Act (ACA). 

The Current Rules

Forms 1095-B and 1095-C:  Under the ACA, plan sponsors, specifically Applicable Large Employers (ALEs), must report information about the health coverage they offer to their employees.  This ACA reporting is done through Forms 1095-B and 1095-C, which must be filed with the IRS and provided to all full-time employees and employees receiving employer-sponsored coverage. (This is the case, even though the ACA’s individual mandate is currently set to $0, and therefore functionally isn’t being enforced.)

Key aspects of ACA enforcement also include:

  • A Tight Turnaround to Respond to Proposed Assessments: The IRS may assess employer shared responsibility payments (ESRP) based on a plan sponsor’s reporting.  Before making this assessment, the IRS will send a letter with a proposed ESRP, to which sponsors can respond with corrected coding and other mitigating information.  Plan sponsors currently have only 30 days to respond to these letters.  This can be particularly challenging, as the letters are sent via US mail and often take time to get to the right person.  A late response can result in an ESRP assessment when one isn’t warranted, and additional penalties.
  • No Statute of Limitations: The period for assessing and collecting ESRPs has generally been open-ended, with no statute of limitations to potentially limit liability for aged amounts.

Changes Introduced by the Acts

The Acts introduce several changes which will improve the reporting and enforcement process for sponsors:

  • Forms 1095-B and 1095-C:  Plan sponsors (and health insurance providers for fully insured plans) are no longer required to send these Forms to all full-time employees and covered individuals. Instead, these Forms must only be sent in response to an employee/covered individual’s request.  If requested, the applicable Form must be provided by the later of January 31 or 30 days after the date of the request. One big caveat – in order to take advantage of this change, sponsors must provide notice to employees, telling them about their right to ask for a Form.  Further guidance on the form and requirements for this notice is likely forthcoming. Meanwhile, a good faith interpretation may suffice when drafting the notices.
  • Extended Response Time for Proposed ESRPs: Plan sponsors will now have at least 90 days to respond to a proposed ESRP before further action is taken. This extension provides plan sponsors more time to open their mail! (With more time to gather necessary information and respond appropriately, which may result in fewer ESRP assessments and other penalties.)
  • Statute of Limitations on Penalty Assessment: There will now be a six-year period for collecting ESRPs, counting from the due date for filing the applicable Forms 1095-B and 1095-C or the actual filing date, whichever is later. This extension provides clarity and predictability for plan sponsors, capping potential assessments and allowing sponsors to better manage their compliance efforts.

The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance with these latest changes. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.