On January 15, 2025, the Departments of Treasury, Internal Revenue Service, Labor and Health and Human Services (Agencies) rescinded a proposed rule from October 28, 2024, that would have expanded access to contraceptive services under the Affordable Care Act (ACA). Specifically, the proposed rule sought to modify the ACA’s current rules to enhance access to preventive services that were deemed medically necessary by an individual’s provider. The proposed rule would have required coverage of recommended over-the-counter contraceptive methods without a prescription, as well as drug or drug-led combination contraceptive products deemed medically necessary. It would have done so without imposing cost-sharing requirements, and would also have required this enhanced contraceptive coverage to be disclosed via the internet self-service price comparison tool (or by paper, if requested by the participant), as required by the Transparency in Coverage regulation.  The Agencies have rescinded this proposed rule to focus on improving other areas of the ACA, including its cost-sharing requirements.

On January 6, 2025, the U.S. Department of Health and Human Services published a proposed regulation aiming to update the standards for the security of electronic protected health information (ePHI). Specifically, the proposed regulation includes updates to the Security Rule under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH Act) governing the protection of ePHI. In response to increased cybersecurity attacks, the proposed rule seeks to set stricter standards for the use and distribution of ePHI by covered entities and business associates. The proposed rule also includes updates to definitions of terms to adapt to the changing cybersecurity environment and updates to privacy standards for handling ePHI by covered entities. If the regulation is finalized as proposed, sponsors of group health plans that are covered entities will need to enhance encryption of ePHI in accordance with these standards.

On January 6, 2025, a settlement was reached in Ruiz v. Bass Pro Shops LLC, a class action lawsuit questioning the legality of tobacco surcharges. According to the complaint against Bass Pro Shops, the surcharge plan design made tobacco users pay an additional $40 more per month unless they completed a smoking cessation program and then stayed tobacco-free for 90 days. The complaint alleged that the use of such a surcharge, without offering a reasonable alternative standard and required notices, ran counter to several provisions of ERISA that prohibit discrimination in wellness plans. The settlement will require Bass Pro Shops to pay $4.95 million to the class participants. Other lawsuits involving 7-eleven, Macy’s and Tractor Supply have been filed with similar allegations.

On December 23, 2024, the Departments of Treasury and Health and Human Services (Agencies) rescinded a proposed rule from February 2, 2023, that would have removed the exemption for plan sponsors of non-religious entities with moral objections to the ACA’s “contraceptive coverage” mandate. As background, there are exemptions to this mandate in place under the ACA for employers and plan sponsors who hold religious or moral objections to contraceptive coverage (even if the entity is not itself a religious entity like a church). The proposed rule would have taken away this exemption for such non-religious employers and plan sponsors, requiring all non-religious, non-grandfathered health plans to cover contraceptives on a first dollar basis. In addition, the proposed rule included a program through which women enrolled in plans with a qualifying religious exemption would have been able to receive contraception on a first dollar basis, outside of their plan.

On December 12, 2024, Texas Attorney General Ken Paxton filed a lawsuit against a doctor in the state of New York for prescribing abortion pills to an individual living in Collin County, Texas. The suit alleges that Dr. Margaret Carpenter mailed pills that are banned in the state of Texas to terminate a 9-week pregnancy for a 20-year-old Texas resident, leading to bleeding and the patient being hospitalized.

On January 1, 2025, the Delaware State Paid Leave program will begin collecting contributions from employers and employees. Delaware employers with 25 or more employees are required to offer Paid Medical Leave (PML), Paid Family Leave (PFL) and Paid Parental Leave (PPL), while employers of 10 to 24 employees are only required to offer PPL. Employees and employers will contribute to these state paid leave benefit programs either directly to the state or through fully insured or self-insured private plans. The state has set up a website called Delaware LaborFirst to assist employers with managing their Delaware leave benefits program.

Beginning January 1, 2025, the state of New Jersey will reintroduce employee contributions for its Temporary Disability Insurance (NJTDI) benefits program after a brief hiatus. For 2025, the employee contribution rate for NJTDI benefits will be 0.23% of the taxable wage base (up from the 0.00% in 2024). For New Jersey Family Leave Insurance (NJFLI), the rate has increased to 0.33% (up from 0.09% in 2024).

Link to NJ Dept. of Labor and Workforce Development Website with NJTDI and NJFLI Rate Information: Here

On December 6, 2024, New York state issued FAQ guidance on its new paid prenatal leave (PPL) benefit. As background, beginning January 1, 2025, the state of New York will require employers to provide 20 hours of PPL to employees in a 52-week period during pregnancy, or related to pregnancy, to attend appointments or receive pregnancy-related healthcare. The new FAQ guidance clarifies, among other things, that this new PPL benefit is a separate and distinct leave entitlement from New York’s other leave entitlements, including its paid sick leave benefits program. Accordingly, eligible employees are entitled to PPL in addition to any other leave options available under New York law.

On December 2, 2024, the Internal Revenue Service (IRS) released the adjusted fee amount for the Patient-Centered Outcomes Research (PCOR) Institute fee for plan years that end on or after October 1, 2024. As background, the PCORI fee has been in place since September 30, 2012, and is paid annually by self-insured health plan sponsors on a “per covered life” basis. The PCOR fee has been increased to $3.47 per covered life under a plan, up from $3.22 in the previous year, and is due annually on July 31.

On November 22, 2024, President-elect Donald Trump nominated one-term congresswoman Lori Chavez-DeRemer, a Republican from Oregon, to serve as Secretary of the U.S. Department of Labor (DOL). Notably, Chavez-DeRemer has historically been touted as pro-union, making her nomination especially surprising to some Republicans. While Chavez-DeRemer has a record of supporting union legislation, she has also supported benefits-related legislation, including introducing bills supporting in vitro fertilization, and was a major factor in passing the Health DATA Act bill, a bill that she introduced.