Compliance in Motion – July 2025

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Supreme Court Upholds ACA Preventive Care Mandates

On June 27, 2025, the US Supreme Court upheld Congress’s ability to have many of the Affordable Care Act (ACA) preventive care mandates be determined based on “A” and “B” recommendations of the US Preventive Services Task Force (USPSTF). As a result, there is no change to the method for determining which ACA preventive care services non-grandfathered medical/Rx plans must cover in-network without cost sharing.

WHO THIS APPLIES TO:
• All employers sponsoring a non-grandfathered medical/Rx plan.

In Kennedy v. Braidwood, plaintiffs argued that members of the USPSTF are not appropriately appointed with the power to dictate federal health coverage mandates. The Supreme Court concluded that “Congress has by law vested appointment authority in the Secretary of HHS” over members of the USPSTF. Therefore, they are appropriately authorized to make “legally binding healthcare recommendations” to determine the preventive care which all non-grandfathered plans must cover in-network without cost-sharing.

Practical Impact to Employers:

For employers sponsoring non-grandfathered medical/Rx plans, nothing changes. The usual list of ACA-mandated preventive care services which must be covered in-network without cost-sharing remains.

Keep in mind, the ACA’s preventive care list is updated occasionally. When the USPSTF adds or amends its A or B recommendations, plans must cover those beginning the start of the plan year that is one year from the date the updated recommendation is published.

GO DEEPER:
https://www.supremecourt.gov/opinions/24pdf/24-316_869d.pdf

Court Overturns 2024 HIPAA Rule on Reproductive Health Privacy

In June 2024, a new HIPAA Privacy Rule took effect adding extra privacy protections for reproductive health care information. On June 18, 2025, the U.S. District Court for the Northern District of Texas struck down the rule, saying regulators exceeded their authority.

WHO THIS APPLIES TO:
• All employers sponsoring a self-insured health plan, including level-funded plans, health flexible spending accounts (health FSAs), and health reimbursement arrangements (HRAs, ICHRAs, etc.).
• Fully-insured carriers for plans that are fully-insured.

GO DEEPER:

The 2024 rule required employers (and their vendors) to:

• Put extra privacy safeguards in place for medical information related to reproductive care
• Update HIPAA Privacy policies and procedures to reflect the rule’s requirements by December 23, 2024
• Train staff on new procedures for handling this information
• Require an official attestation form before sharing reproductive health-related info with law enforcement or government agencies
• Update HIPAA privacy notices to reflect these new reproductive health protections by February 16, 2026

Because the court overturned the rule:

• Employers can now pause or undo the changes made last year for reproductive health privacy.
• The attestation form is no longer required.

While we do not expect HHS to appeal the ruling, it is certainly possible it could be appealed and requirements may change again. So, cautious employers may prefer to wait before making changes.

Practical Implications to Employers

Even though the reproductive privacy rule was struck down, the usual privacy rules still apply for proper uses and disclosures of protected health information (PHI).

Also, one extra requirement from that rule still requires updating privacy notices by February 16, 2026, to include new language about substance use disorder privacy. We expect the government to issue a revised model notice with this language by early 2026.

https://www.federalregister.gov/documents/2024/04/26/2024-08503/hipaa-privacy-rule-to-support-reproductive-health-care-privacy
https://litigationtracker.law.georgetown.edu/wp-content/uploads/2024/10/Purl_2025.06.18_MEMORANDUM-OPINION-AND-ORDER.pdf

Final Rules Amend Some 2026 ACA Figures

On June 23, 2025, a final rule amended the methodology for determining the Affordable Care Act’s (ACA) premium adjustment percentage, which is used to index the out-of-pocket (OOP) maximums for non-grandfathered medical plans and the §4980H penalties for applicable large employers (ALEs). With the 2026 premium adjustment percentage increasing under the revised methodology, the OOP maximums and ALE penalties previously announced last October are also increasing.

WHO THIS APPLIES TO:
• Non-grandfathered medical plans subject to the ACA’s annual OOP maximums
• Applicable large employers (ALEs) subject to potential penalties under §4980H

With the premium adjustment percentage being increased for 2026, this is causing both the OOP maximums and ALE penalties to increase. Below is a table of the 2025 amounts along with the 2026 original and revised amounts.

• The revised OOP applies to plan years beginning in 2026.
• The revised ALE penalties apply to calendar year 2026.

GO DEEPER:

https://www.federalregister.gov/documents/2025/06/25/2025-11606/patient-protection-and-affordable-care-act-marketplace-integrity-and-affordability

PCORI Fees Due by July 31, 2025

Each year by July 31, employers sponsoring certain self-funded health plans must file and pay an annual fee to the IRS to fund the Patient Centered Outcomes Research Institute (PCORI). Employers must report the fee on the second quarter IRS Form 720.

Employers can gather enrollment counts from their third-party administrator (TPA) for their health plan that ended during calendar year 2024, and complete the filing and payment using the second quarter Form 720 anytime between now and July 31.

WHO THIS APPLIES TO:
• Self-funded plans, including level-funded plans, HRAs that are paired with fully insured plans, and ICHRAs.
• Fully insured plans are the carrier’s responsibility.

EXEMPT:
• Excepted benefits (e.g., stand-alone vision or dental, HSAs or health FSAs) are exempt.

The PCORI fee must be reported each year on the second quarter version of IRS Form 720 and paid electronically or mailed to the IRS using the Form 720-V payment voucher.

Employers that are subject to PCORI fees but no other types of excise taxes should file Form 720 only for the second quarter. In other words, no filings are needed for the other quarters, only the second quarter.

For plan years ending in 2024 before October 1, the PCORI fee due July 31, 2025 is $3.22 per covered life. For plan years ending between October 1, 2024 and December 31, 2024, the PCORI fee due July 31, 2025 is $3.47 per covered life.

How to Calculate the Number of Covered Lives?

The PCORI fee is based on the number of employees, spouses and dependents that are covered by the plan (for an HRA, it is based only on the number of enrolled employees, not spouses and dependents).

There are four permissible counting methods to calculate covered lives. The employer can choose the method that generates the lowest count and does not have to choose the same counting method each year. Below is more information on each of the approved counting methods:

1. Actual Count Method: Calculates the average of covered lives by adding the number of lives covered each day of the plan year divided by the number of days in the plan year.

2. Snapshot Method: Adds lives covered on a date during the first, second, or third month in each quarter, or equal number of dates, divided by the number of dates.

3. Snapshot Factor Method: Uses number of participants with other than self-only coverage x 2.35, plus number of employees with self-only coverage.

4. Form 5500 Method: Based on the average number of lives from Form 5500 if filed by the fee due date.

If corrections are needed, submit them on Form 720-X.

https://www.irs.gov/pub/irs-pdf/f720.pdf

Reminder to File Form 5500 for Calendar Year Plans

Employers must file Form 5500 for health and welfare plans by the end of the seventh month following the last day of the plan year, unless the small plan exception applies.

GO DEEPER:

Calendar year 2024 plans must file by July 31, 2025, or can request a 2 ½-month extension by filing Form 5558 before the plan’s original filing due date. (Note, effective January 1, 2025 Form 5558 can be electronically filed through EFAST2). Governmental, church or Indian tribal plans are not required to file a Form 5500 unless they have opted to be subject to ERISA requirements.

Additionally, the plan administrator must distribute the Summary Annual Report (SAR) within nine months after the close of the plan year when 5500 filing is required. If a 5500 extension was filed, the employer must send the SAR within 2 months after the close of the period for which the extension was granted. For example, a calendar year plan has to distribute the SAR for the 2024 plan year by Sept. 30, 2025. If the plan applied for an extension to the Form 5500 filing, the SAR is then due within two months after the filing. (Note that the SAR is only required if the plan includes fully-insured or funded (i.e. trust) component benefits.)

https://www.irs.gov/prior-year-forms-and-instructions?find=720&items_per_page=200
https://www.efast.dol.gov/#:~:text=Electronic%20filing%20for%20Form%205558%20is%20available%20beginning%2001/01/2025

Question of the Month:
Can we have different eligibility and/or waiting periods?

ERISA generally gives employers the discretion to define their plan eligibility as long as they adhere to federal guidelines (e.g., no waiting period longer than 90 days under the ACA rules).

This includes the ability to determine the length of waiting periods. However, IRS rules require that any classifications used to impose different waiting periods on different groups must exist for bona fide business purposes. In other words, classification cannot occur solely for the purpose of varying waiting periods (i.e. the employer must class the groups of employees together for other business reasons).

However, there are two areas of the tax code that might restrict the waiting period requirement an employer can implement:

• If any premium contributions are paid by participants with pre-tax salary reductions, Section 125 rules generally require uniform waiting periods within classifications established by the employer, which cannot “be discriminatory in favor of highly compensated employees”. If that requirement is difficult for the employer to achieve, another option is to only offer coverage on a post-tax basis during a shorter waiting period (as that eliminates receiving pre-tax benefits that are subject to Section 125 rules).

• Additionally, if a plan is self-insured, providing a shorter waiting period for the top 25% paid employees is strictly prohibited. A self-insured plan with disparate waiting periods of this nature violates Section 105(h) non-discrimination rules and doing so would result in unfavorable tax consequences to all of the highly-compensated individuals covered under the plan.

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