Top 10 health, leave benefit compliance and policy issues in 2025 

November 19, 2024

Republican control of the White House and Congress next year will put many 2025 employer-sponsored health plan compliance issues in flux and generate extensive federal and state regulatory activity, legislation, and litigation. This GRIST summarizes potential year-end 2024 and expected 2025 compliance and policy developments affecting health and leave benefits and suggests action steps for employers. Download the 94-page print-friendly PDF to read the complete coverage.

Many bipartisan bills have advanced in Congress, including House-passed legislation that would reform PBM business practices; increase health plan, provider and hospital transparency; foster greater competition among providers and hospitals, including site-neutral payment reforms in Medicare; extend pandemic-related telehealth flexibilities; lower prescription drug prices; and ease employers’ ACA reporting duties, among other things.

Plan sponsor groups and other stakeholders are urging lawmakers to add these proposals to possible lame-duck healthcare legislation that could get tacked onto a must-do government funding bill or other measure. Republicans’ election sweep could, however, result in a limited lame-duck agenda that punts many issues to next year when they will have more negotiating leverage.

Legislation may extend pandemic-related relief that allows high-deductible health plans (HDHPs) paired with health savings accounts (HSAs) to cover telehealth and other remote care services on a pre- or no-deductible basis. The current relief expires Dec. 31, 2024, for calendar-year plans and during 2025 for noncalendar-year plans.

Other provisions in a year-end healthcare package would likely defer many effective dates to 2026 or later, though some requirements could hit next year. Bipartisan healthcare legislation that does not cross the finish line in 2024 will need to be reintroduced in 2025.

Congress has shown bipartisan support for reforming how PBMs do business, and numerous proposals are in play for potential year-end action. Any final legislation will likely draw from the Lower Costs, More Transparency Act (HR 5378), which the House overwhelmingly approved in December 2023. The bill would mandate that plan sponsors receive extensive semiannual PBM reports with detailed information on rebates, drug spending, total out-of-pocket spending and formulary placement rationale, among other things. Another provision would require PBMs and third-party administrators (TPAs) to disclose extensive information about their direct and indirect compensation to plan fiduciaries. Similar legislation is pending in the Senate.

Additional PBM reforms in the mix for employer plans and/or public programs would delink list drug prices and PBM compensation; ban PBMs from engaging in “spread pricing” (i.e., charging a plan sponsor or insurer more than the amount reimbursed to the pharmacy dispensing the drug); and require PBMs to pass through all rebates, fees and discounts directly to health plans.

Speeding generics to market and capping out-of-pocket costs for insulin in employer plans (similar to what has already been done for Medicare) are other bipartisan priorities that could make the cut.

The Lower Costs, More Transparency Act would implement more price and operational transparency in the healthcare industry. Provisions would codify and strengthen current price transparency rules for health plans and hospitals. Besides enhancing existing transparency-in-coverage (TiC) rules, the measure would require new price transparency for services like diagnostic lab tests, imaging and ambulatory surgical centers owned by hospitals.

The bill also advances “site-neutral” Medicare payment policies, which plan sponsor groups hope lawmakers will extend to the commercial market. The legislation includes proposals to require that Medicare and Medicare beneficiaries pay the same rates for certain physician-administered drugs in off-campus hospital outpatient departments and physician offices. In addition, each off-campus hospital outpatient department would have to include a unique provider identifier on payment claims to help Medicare determine whether charges are appropriate.

Another provision in the bill would strengthen one provision of the No Surprises Act (NSA) in the 2021 Consolidated Appropriations Act (CAA) (Pub. L. No. 116-260). In particular, the bill would amend the NSA’s gag clause prohibition to ensure that employer plan sponsors are not contractually restricted from obtaining their plans’ cost or quality-of-care data from service providers.

Other House and Senate bills seek to expand transparency and encourage more provider competition by barring anticompetitive contract provisions that prevent plans from directing employees to higher-value, lower-cost providers. Other proposals would ban hospital facility fees for telehealth and certain other services.

Many PBM and site-neutral Medicare and Medicaid reforms are projected to raise substantial revenue and could prove attractive to lawmakers looking for ways to pay for other priorities in a final healthcare package.

Bipartisan House and Senate bills would make permanent the pandemic-related relief that allows HSA-qualifying HDHPs to cover telehealth and other remote care services on a pre- or no-deductible basis. Lawmakers have shown broad support for extending the relief. Nonetheless, some Democrats have concerns that the policy might discriminate against communities facing obstacles to telehealth, such as a lack of broadband, and that HSAs favor more affluent individuals. Any extension Congress might grant at the end of 2024 is likely to be temporary, possibly for only one year. Without an extension, the relief will expire on Dec. 31, 2024, for calendar-year plans and during 2025 for noncalendar-year plans.

Congress is not expected to take up separate telehealth legislation to extend the now-expired relief that treated stand-alone telehealth benefits and other remote care services for certain employees like an excepted benefit, exempt from many ERISA and ACA group health plan mandates.

Bipartisan House-passed bills that could make their way into year-end legislation would streamline reporting requirements under the ACA’s employer shared-responsibility (ESR) provisions:

• The Paperwork Burden Reduction Act (HB 3797) would codify and expand existing IRS rules that excuse an employer from having to mail paper copies of Forms 1095-B and 1095-C to all employees if its website contains a “clear and conspicuous notice” that employees may receive paper copies on request.
• The Employer Reporting Improvement Act (HR 3801) would allow substituting any covered individual's birthdate for that person's taxpayer identification number (TIN) if the reporting entity has been unable to collect the TIN. Another provision would give employers more time — 90 days instead of the current 30 days — to respond to proposed IRS assessments (via Letter 226-J) for alleged ESR violations. The bill would also set a six-year statute of limitations for ESR assessments. IRS’s current position is that no statute of limitations applies to ESR assessments.

Extensive regulatory activity continues as the Biden administration works to complete as much of its policy agenda as possible before President-elect Trump takes office on Jan. 20, 2025. Besides recently finalizing mental health parity regulations, the administration is considering proposed and/or final rules increasing transparency (e.g., addressing air ambulance reporting, agent/broker disclosures, provider enforcement and advanced explanations of benefits (EOBs)). Other regulatory developments could address the permissible use of voluntary employees’ beneficiary association assets for welfare benefits, along with moral and religious exemptions to certain ACA preventive services.

On the drug front, regulators intend to issue rules addressing the extent to which drug manufacturers’ financial assistance programs (e.g., coupons) must count toward (or can be excluded from) a health plan’s deductible and out-of-pocket maximum. The regulators also intend to issue rules on whether all prescription drugs covered by large insured and self-funded group health plans are ACA essential health benefits (EHBs) and thus subject to EHB requirements, including in-network OOPMs and restrictions on annual and lifetime dollar limits.

In response to the Supreme Court’s Dobbs decision (142 S. Ct. 2228 (2022)), regulators have asked for comments on a possible requirement that nongrandfathered group health plans cover certain over-the-counter (OTC) preventive items and services, including contraceptives and male condoms, without cost sharing or a prescription. In response, the regulators issued a proposed rule that would adopt that change for OTC contraceptives and would expand preventive services coverage in other ways.

But any proposed rules not made final when the Trump administration takes over on January 20 will be subject to an expected regulatory freeze while the administration assesses which rules it wants to stop or revise. Even rules finalized by then, however, could be overturned and rewritten by the Trump administration under the more lengthy notice-and-comment rulemaking process.

Trump’s website states that he will “increase fairness through price transparency, and further reduce the cost of prescription drugs and health insurance premiums.” These themes likely align him with bipartisan legislation on PBM reforms, price transparency and site neutrality.

Although Trump apparently has not ruled out the possibility of another ACA repeal-and-replace effort, congressional Republicans are not likely to go along. Nonetheless, his first term suggests that he would do little to promote ACA coverage, and he supports allowing the expanded and enhanced ACA public exchange subsidies to expire. The incoming Trump administration could also reprise his first-term implementation of non-ACA coverage options for individuals and employers, such as short-term, limited-duration insurance and association health plans — reforms since rolled back by the Biden administration.

The first Trump administration also focused on drug costs and price transparency. Trump signed several executive orders aimed at lowering prescription drug costs, including one on healthcare price and quality transparency that resulted in new price transparency rules for hospitals and insurers.

Trump’s drug pricing plans for a second term, however, are not clear. He has not stated a position on the Inflation Reduction Act’s drug price negotiation program in Medicare enacted by Democrats, though some conservative think tanks hope a potential Republican-led Congress will repeal the law and its drug price controls.

Congress will debate tax policy in 2025, and Republicans plan to pursue much of their agenda (including extending virtually all the 2017 tax cuts set to expire at the end of 2025) through a budget “reconciliation” process that allows legislation to pass the Senate by a simple majority instead of the usual 60-vote threshold. That legislation could include a proposal from conservative House GOP members (with input from several think tanks) to limit the current uncapped employee tax exclusion and/or employer tax deduction for employer-provided healthcare coverage. Trump has not weighed in on whether he would support capping the tax exclusion or deduction for employer-sponsored coverage.

Even with full control of government, however, Republicans may find it difficult to fulfill some aspects of their legislative agenda. Their majorities in both chambers are narrow, providing little room for defections. As a result, the Trump administration will likely lean heavily on its executive and regulatory authority to implement its health policy priorities, although a recent US Supreme Court decision could make it easier for successful legal challenges to how that authority is exercised. (See the Litigation outlook section below.)

Employers planning for 2025 and beyond will need to keep a close eye on potential health and tax policy changes under the Trump administration and Republican-controlled Congress.

Federal regulations facing litigation may now become subject to review under the US Supreme Court’s Loper Bright decision (144 S. Ct. 2244 (2024)), which overturned a 40-year-old principle of administrative law known as the Chevron deference doctrine. That doctrine required courts to defer to administrative agencies’ reasonable interpretation of a federal law that is silent or ambiguous on a point. Now, federal courts must exercise independent judgment when determining the best interpretation of a statute and cannot simply defer to agency interpretations, however reasonable. This will probably increase courts’ scrutiny of federal regulations subject to legal challenges.

Under a Trump administration, litigation challenging prior Democrat administration regulatory efforts to implement and expand healthcare reforms will likely increase. Ongoing legal challenges target the ACA’s preventive services mandate and ban on discrimination in health programs and activities (Section 1557). Other cases involve the surprise billing regulations implementing the 2021 CAA’s provisions and the administration’s position on access to abortion-related services and medications. Litigation over ERISA preemption of state PBM laws and regulations will have major implications for employers’ pharmacy benefit programs.

There may also be a shift in whether and how vigorously the Department of Justice will challenge or defend federal regulations and state laws in court, such as a challenge to a Tennessee state law prohibiting gender-affirming care for minors (US v. Skrmetti), and on-going litigation regarding whether all group health plans and insurers would be allowed to exclude coverage of, or impose cost sharing on, many ACA-mandated preventive services, and allow employer plan sponsors with religious objections to exclude coverage of PrEP HIV medications (Braidwood Mgmt. Inc. v. Becerra). Skrmetti will be heard by the US Supreme Court in their 2024-2025 term. The Court has yet to decide whether it will hear Braidwood. Another case focuses on whether a former employee has the right to sue under the Americans with Disabilities Act for discrimination in post-employment benefits (Stanley v. Sanford).