Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

There are always plenty of new retirement plan investment performance and fee cases, and it’s hard for a plan sponsor, even one that is doing everything properly, to be assured that it won’t be the target of a lawsuit.

A recent case serves as a reminder of the very basic guidance plan sponsors often hear from attorneys and other retirement plan advisors:  if you put it in writing that you’re going to do something, be sure to do it, and be sure to document that you did it.  For retirement plans, this comes up with respect to a plan’s investment policy statement or “IPS”.  In Macias v. Sisters of Charity of Leavenworth Health System, the Colorado federal district court did not grant the defendants’ (the plan sponsor and its board, the retirement investment committee, and others) motion to dismiss the case for failure to state a claim, and the reason for the denial related to allegations of defendants’ failure to follow an IPS.  Even if a defendant is confident that it will ultimately win the case, dismissing it at this point saves the onerous legal costs of getting to that win; due to the costs of litigation, many of these cases end up settling.  In this case, the court concluded that the plaintiffs’ allegations that the defendants failed to evaluate the performance of the plan’s investments at least once a year against certain benchmarks defined in the IPS was enough to state a plausible claim that the defendants failed to follow a prudent process.  In these cases, the process a plan sponsor engages in often can become more important than investment results, and an imprudent process can lead to greater legal risk.

While a retirement plan isn’t required to have an IPS, it’s considered a best practice, and the plan’s investment advisors will want to have this document in place to make sure there is agreement on the decisions and standards on which their services will be measured.  Reviewing that IPS each year to make sure that the retirement investment committee or other investment fiduciary is following the required processes and conducting sufficient oversight of investment alternatives and plan expenses would be wise.  Then, be sure to document any actions or decisions in writing; if it’s not documented, it may become a factual issue that keeps a case alive.  Even doing all of this can’t completely protect a plan sponsor against a case moving into costly discovery, especially where fees are involved, but it will help to put the plan sponsor in the best possible position and may help get a claim related to investment performance dismissed.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“Act”), a sweeping tax and spending package, which includes provisions that impact employee benefit plans.  These changes affect health savings account (“HSA”) eligibility, telehealth services, dependent care assistance limits, and other fringe benefits.  The telehealth relief is effective in 2025 and the remaining changes will not be effective until 2026.

Permanent Telehealth Relief for HDHPs

To be eligible to make contributions to an HSA, employees must be covered by a high deductible health plan (HDHP), which generally cannot cover medical expenses (excluding preventive care) until the minimum HDHP deductible is met. Historically this meant that if a group health plan provided telehealth coverage without requiring the participant to pay market value prior to the participant satisfying the HDHP deductible, the coverage would have caused the participant to lose HSA eligibility.

To support broader access to care during the COVID-19 pandemic, Congress temporarily allowed HDHPs to offer first-dollar coverage for telehealth. That temporary relief was renewed multiple times but only extended to plan years beginning before January 1, 2025.  

The Act permanently extends the telehealth relief allowing HDHPs to provide first-dollar coverage of telehealth without impacting HSA eligibility. This change is effective retroactively for plan years beginning on or after January 1, 2025.  Employers who began charging HDHP participants fair market value for telehealth services on January 1, 2025, should consider whether offering first-dollar coverage aligns with the company’s cost-control and employee wellbeing strategies. Employers wanting to offer first-dollar coverage for telehealth should work with legal counsel to ensure plan documents and participant communications are updated accordingly and reflect plan operations.

Direct Primary Care Coverage and HSA Eligibility

The Act makes direct primary care service arrangements , which provide access to certain primary care services for a fixed monthly fee, compatible with HSA participation.  The Act defines direct primary care services and specifically excludes certain services that might otherwise be considered primary care, such as prescription drugs (other than vaccines).  Effective January 1, 2026, direct primary care arrangements will not be considered disqualifying coverage for purposes of HSA eligibility, as long as the membership fee does not exceed $150 per month for an individual or $300 per month for a family. The Act also clarifies that direct primary care fees within these limits are considered qualified medical expenses that are eligible for reimbursement from an HSA.

Increased Dependent Care FSA Limits

Starting with tax years after December 31, 2025, the annual limit for dependent care flexible spending account (FSA) increases from $5,000 ($2,500 for married couples filing separately) to $7,500 ($3,750 for married couples filing separately). The annual limit will not be indexed for inflation in future years.

Employers wishing to increase the dependent care FSA limit for 2026 should work with their third-party administrators and legal counsel to adopt necessary plan amendments and update participant communications. Employers should also conduct periodic nondiscrimination testing throughout 2026, which may be more difficult to pass with a higher contribution limit, and consider whether contributions should be limited for some participants. 

Permanent Student Loan Repayment Assistance

Employers may provide up to $5,250 per year to employees on a tax-free basis for certain education expenses (such as tuition, fees, books and supplies) through qualified educational assistance programs that meet the requirements of Section 127 of the Internal Revenue Code. During the pandemic, Congress passed legislation temporarily allowing employers to use qualified educational assistance programs to pay for or reimburse an employee’s qualified student loans.

The Act permanently extends the ability of employers to pay or reimburse qualified student loan payments on a tax-free basis through qualified education assistance programs. In addition, the $5,250 annual limit for qualified education assistance programs will be indexed for inflation starting in 2026.  Employers wanting to take advantage of this permanent option should work with legal counsel to update plan documents accordingly.

Trump Account Benefits

Beginning in 2026, children under 18 will be eligible to participate in a new tax-advantaged savings program, which uses accounts known as “Trump Accounts.” These accounts will have a $5,000 annual contribution limit, which will be indexed for inflation. Investments in these accounts grow on a tax-deferred basis, and distributions are generally prohibited until the child attains age 18.

Employers may adopt Trump Account contribution programs and contribute up to $2,500 per year (as indexed for inflation) on a tax-free basis to a Trump Account of an employee or an employee’s dependent. However, this requires employers to adopt written plan documents, and the program must meet nondiscrimination requirements similar to those applicable to dependent care FSAs.

More information about some of the Act’s additional tax provisions that affect employers, including the expanded application of tax on excess compensation with respect to tax-exempt organizations, is available here: https://www.stinson.com/newsroom-publications-one-big-beautiful-bill-explained.

Please contact Audrey Fenske, Lisa Rippey or Stephanie Schmid if you have questions about the Act’s employee benefit provisions.

By: Lisa Rippey and Elena Humphrey

In a landmark decision, a federal district court in Texas struck down nearly all of the 2024 amendments to the HIPAA Privacy Rule, known as the Reproductive Health Privacy Rule (the “Rule”), ruling that the Department of Health and Human Services (“HHS”) exceeded its statutory authority. The ruling, which applies nationwide, essentially eliminates the enhanced federal privacy protection for reproductive health care information. However, it is important to note that certain regulated entities are still required to comply with applicable state privacy and consumer laws regarding the disclosure of reproductive health care information.

Background

The Reproductive Health Privacy Rule, effective late 2024, introduced protections for reproductive health care information, broadly defined to include services like abortion, IVF, contraception, and gender-affirming care. Key provisions included:

  • Prohibiting the use or disclosure of reproductive health information for investigations regarding or imposing liability on any person for seeking, obtaining, providing or facilitating lawful reproductive health care.
  • Requiring pre-disclosure attestations to ensure information would not be used for prohibited purposes.
  • Defining terms like “reproductive health care” and adjusting related HIPAA compliance obligations.

For a more in-depth discussion of the Reproductive Health Privacy Rule, please see this blog post.

The rule was challenged by a Texas physician and her practice, who argued it unlawfully restricted mandatory child abuse reporting, redefined statutory terms like “person” and “public health,” and violated the “major questions doctrine” by regulating politically significant areas without clear congressional authorization.

Court’s Ruling

The court found the Reproductive Health Privacy Rule invalid for three primary reasons:

  1. Conflict with State Laws: The Rule improperly limited state child abuse reporting laws by prohibiting disclosures based solely on lawful reproductive health care and imposing complex attestation requirements.
  1. Impermissible Redefinitions: The Rule’s definitions of “person” (excluding unborn humans) and “public health” conflicted with federal law, exceeding HHS’s authority.
  1. Major Questions Doctrine: The Rule regulated politically significant issues, such as abortion and gender-affirming care, without explicit congressional approval, and intruded upon the state’s authority as outline in Dobbs.

Compliance Considerations

Although the court has vacated the Reproductive Health Privacy Rule, it is important to understand that the original HIPAA Privacy Rule and its protections remain in effect.

In addition, many states have their own privacy and consumer protection laws that may impose additional obligations on health plans when handling reproductive health care information.  For instance, California recently amended its Confidentiality of Medical Information Act to restrict the disclosure of abortion-related information by health care providers, health plans, contractors and employers in certain situations.

Given this regulatory shift, HIPAA-covered entities and business associates should revisit any compliance measures that were implemented in response to the now-vacated rule.  Recommended next steps include:

  • Policy Updates: Review and revise policies related to PHI disclosures for judicial, administrative, or law enforcement purposes to ensure alignment with the current HIPAA Privacy Rule and applicable state laws.
  • Training Revisions: Update workforce training programs and staff materials to reflect operational or procedural changes.
  • Business Associate Agreements (BAAs): Reassess and, if needed, amend BAAs that were amended in light of the Reproductive Health Privacy Rule.
  • Notices of Privacy Practices (NPPs): Covered entities that updated NPPs in anticipation of the February 16, 2026 compliance deadline should consider making additional updates. Note that NPP requirements related to substance use disorder records under 45 C.F.R. Part 2 remain unchanged. HIPAA regulations indicate revised NPPs should be distributed within 60 days of a material change. In other words, employers should revise and distribute their updated NPPs by August 17, 2025.

Please contact Lisa Rippey or Elena Humphrey if you have any questions about what impact this may have on your group health plan.

On May 15, 2025, the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) issued a statement of non-enforcement (the “Statement”) announcing that they will not enforce the 2024 Final Rule under the Mental Health Parity and Addiction Equity Act (“MHPAEA”).

The MHPAEA requires group health plans to provide mental health and substance use disorder benefits similarly to medical and surgical benefits. On September 9, 2024, the Departments released the 2024 Final Rule under the MHPAEA (the “2024 Final Rule”), which amended the previous 2013 Final Rule (the “2013 Final Rule”). The 2024 Final Rule imposed several significant compliance requirements on plan sponsors including, but not limited to, the following:

  • Plans that provide mental health and substance use disorder benefits must provide “meaningful benefits” for those conditions in every benefit classification in which medical and surgical benefits are provided.
  • Plans must abide by additional requirements for the nonquantitative treatment limitation (“NQTL”) comparative analysis, including a description of the NQTL, identification of the factors and how they are used, and findings and conclusions.
  • Plans must collect and evaluate data to assess the impact of NQTLs and take action when there are “material differences in access” to mental health or substance use disorder benefits.
  • ERISA Plans must certify that they engaged a “qualified service provider” to prepare the plan’s NQTL comparative analysis.

The enforcement of these requirements was staggered. Some provisions were to be enforced for plan years beginning on or after January 1, 2025, while others were to be enforced for plan years beginning on or after January 1, 2026.

The Statement follows a lawsuit filed on January 17, 2025 by the ERISA Industry Committee (“ERIC”) in the U.S. District Court for the District of Columbia. ERIC is challenging specific provisions of the 2024 Final Rule, arguing, among other things, that the rule is arbitrary and capricious and contrary to law. On May 9, 2025, the Departments filed a motion requesting that the court pause the litigation while the Departments reconsider the 2024 Final Rule and determine whether to modify or rescind it. The court granted this request on May 12, 2025, and the Departments issued the Statement soon thereafter.

In response to the ERIC litigation and in line with Executive Order 14219, which directs federal agencies to review rules that may place unnecessary burdens and compliance costs on small businesses and private parties, the Departments announced that they will not enforce the 2024 Final Rule, or pursue enforcement actions based on a failure to comply, until a final decision in the ERIC litigation is issued, plus an additional 18 months. During this time, the Departments will also reexamine how each department enforces the MHPAEA.  

In the Statement, the Departments clarify that “the enforcement relief applies only with respect to those portions of the 2024 Final Rule that are new in relation to the 2013 Final Rule.” In other words, the MHPAEA’s statutory obligations, including those amended by the Consolidated Appropriations Act, 2021 (“CAA”) and subregulatory guidance (specifically, FAQs Part 45), remain in effect and subject to enforcement.

It is also important to note that, while the Statement encourages states to also halt the enforcement of the 2024 Final Rule, it does not apply to state regulators who interpret and enforce both the MHPAEA and state mental health parity laws. This means that state insurance departments have discretion regarding whether to follow the Statement for the health plans in which it regulates (e.g., fully-insured plans).

As a result of this statement of non-enforcement, plan sponsors must continue to comply with the requirements under the 2013 Final Rule, perform an NQTL comparative analysis pursuant to the CAA, and closely monitor future developments as the Departments reevaluate the 2024 Final Rule. Plan sponsors, particularly those sponsoring fully-insured plans, should also pay close attention to the applicable state department of insurance’s guidance on this topic to ensure that their parity compliance standards align with the state’s enforcement rules.  

Please contact Lisa Rippey or Elena Humphrey if you have any questions regarding the Statement or what impact it may have on your group health plan.

On May 1, 2025, the Internal Revenue Service (IRS) released Revenue Procedure 2025-19, which provides the 2026 inflation adjusted limits related to Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs).

The following charts summarize the 2026 limits for HSAs and HDHPs. The 2025 limits are provided for reference.

Annual HSA Contribution Limit
20252026
Self-Coverage Only$4,300$4,400
Family Coverage$8,550$8,750
Minimum Deductible of an HDHP
20252026
Self-Coverage Only$1,650$1,700
Family Coverage$3,300$3,400
Maximum Out-Of-Pocket Expense Limit for an HDHP
20252026
Self-Coverage Only$8,300$8,500
Family Coverage$16,600$17,000

For more information on the 2026 HSA and HDHP limits, please contact the Stinson LLP contact with whom you regularly work.

On December 23, 2024, President Biden signed into law two important pieces of legislation that aim to ease the administrative and reporting burdens on health plan sponsors and insurance providers under the Affordable Care Act (ACA). The Paperwork Burden Reduction Act and the Employer Reporting Improvement Act bring significant changes to the way employers must handle ACA reporting, particularly regarding the distribution of Forms 1095-B and 1095-C, and offer more flexibility in responding to IRS penalty assessments.

Here’s a breakdown of the changes introduced by these new laws and what they mean for employers going forward.

I.          The Paperwork Burden Reduction Act: Easing ACA Reporting Requirements

For over a decade, employers and insurers have been required to provide Forms 1095-B and 1095-C to inform employees whether they had minimum essential coverage under the ACA in the previous year. Applicable Large Employers (ALEs) had to annually provide employees a paper copy of the applicable form unless the employee affirmatively consented to receiving an electronic copy.

This reporting process, particularly the paper-based distribution of these forms, created significant administrative burdens for employers. The Paperwork Burden Reduction Act (Reduction Act), alleviates this pressure in several key ways:

  • No Mandatory Distribution: Employers are no longer required to automatically send Forms 1095-B or 1095-C to employees unless the employee specifically requests a copy, if the notice requirements below are met. This change drastically reduces the volume of paperwork employers must distribute each year.
  • Notice of Availability: Employers must provide employees with a “clear, conspicuous, and accessible notice” informing them that they can request a copy of the form. The law directs the IRS to provide further guidance on the timing and manner of this notice, but employers should be prepared to notify employees accordingly.
  • Timely Response: If an employee requests a Form 1095-B or 1095-C, the employer must provide it by the later of January 31 of the year following the form’s reporting year or 30 days after receiving the request.

These changes will be effective for Forms 1095-B and 1095-C related to the 2024 calendar year and beyond. The new rules will apply to forms that are due by March 3, 2025, for the 2024 coverage year. However, it is important to note that some states have their own individual mandate requirements (e.g., Massachusetts, New Jersey, California, Rhode Island, and Washington, D.C.).  Employers subject to state laws with their own individual mandate requirements may still be required to provide paper forms.

II.        The Employer Reporting Improvement Act: Enhancing ACA Compliance

The Employer Reporting Improvement Act (Reporting Act) codifies key IRS regulations designed to simplify the ACA reporting process for employers and modifies penalty assessment rules under the ACA. Among the notable provisions of the Reporting Act are:

  • Substitution of Date of Birth for TIN: The Reporting Act codifies IRS guidance allowing employers to substitute an employee’s date of birth for their Tax Identification Number (TIN) on ACA-related returns when the TIN is unavailable. This provision reduces the administrative burden on employers who may have difficulty obtaining an employee’s TIN in a timely manner.
  • Electronic Delivery of Forms: The Reporting Act also confirms and strengthens IRS rules allowing employers to deliver Forms 1095-B and 1095-C electronically to employees who consent to electronic delivery. This can significantly streamline the reporting process and reduce paper-related administrative work.
  • Extension of Response Time to Penalty Letters: Previously, employers had only 30 days to respond to an IRS penalty notice (Letter 226-J) related to ACA coverage failures. The Reporting Act extends this window to 90 days for letters issued on or after January 1, 2025.
  • Statute of Limitations on Penalties: For the first time, the Reporting Act establishes a statute of limitations for penalty assessments related to Section 4980H coverage failures under the ACA. The statute of limitations, which is six years, will begin to run on the later of (1) the due date of the employer’s Form 1094-C and 1095-C filings, or (2) the actual filing date of those returns. Prior to the Reporting Act, the IRS could assess penalties indefinitely. This statute of limitations applies to coverage failures occurring after December 31, 2024, and employers may still face penalties for violations prior to this date without the benefit of this time limitation.

III.       Next Steps for Employers

With these changes coming into effect, ALEs should take certain steps to ensure compliance and minimize their administrative burden:

1.   Ensure Timely Filing: ALEs must still file Forms 1094-C and 1095-C with the IRS by March 31, 2025 (for electronic filings) or February 28, 2025 (for paper filings) for the 2024 coverage year.

2.   Implement Notice of Availability: Employers who plan to take advantage of the Reduction Act’s relief from automatic distribution before the IRS issues guidance should begin preparing the “clear, conspicuous, and accessible notice” to inform employees of their right to request a copy of Form 1095-C. Although a model notice has not yet been issued by the IRS, employers can prepare a notice based on good faith efforts and monitor the IRS for further guidance.

3.   Consider State Mandates: Employers with employees in states that have individual health insurance mandates should be aware that those states may still require paper copies to be distributed. Employers should consult with their ACA vendors and legal advisors to determine the best approach for state-specific compliance.

4.   Review Response Protocols for Penalty Letters: Employers should familiarize themselves with the new 90-day response period for IRS penalty letters and update their internal procedures for addressing these letters. This additional time can help employers better manage their response and prevent penalties from escalating.

5.   Monitor IRS Guidance: Employers should stay informed about additional IRS guidance on the Reduction Act’s notice requirements and the Reporting Act’s changes to ACA reporting. As the IRS issues regulations, employers will need to adapt their compliance efforts accordingly.

For more information regarding these changes, please contact one of the attorneys listed below, or the Stinson LLP contact with whom you regularly work.

The SECURE 2.0 Act of 2022 requires certain 401(k) and 403(b) plans to include automatic enrollment and escalation features for the first plan year beginning after December 31, 2024, meaning that for those plans with a calendar plan year, the new year brought a new compliance obligation.

Beginning on January 1, 2025, 401(k) and 403(b) plans adopted after December 29, 2022 must automatically enroll plan participants to make pre-tax contributions between 3% and 10% of eligible pay during their first year of participation.  Then, unless the participant affirmatively elects otherwise, the percentage of pay deferred must increase by one percentage point on the first day of each plan year, until the participant is contributing at least 10%, but no more than 15% of pay.

Certain plans adopted after December 29, 2022 are exempt from this requirement, including:

  • plans sponsored by an employer, if the employer has existed for less than three years;
  • plans sponsored by employers with less than eleven employees;
  • governmental plans;
  • church plans; and
  • SIMPLE plans.

Employers should keep in mind guidance published by the IRS in December 2023 covering the application of these requirements to plan mergers.  In this guidance, the IRS noted that in certain circumstances, the merger of a plan exempt from the requirements with a plan that is subject to the requirements will result in the merged plan being subject to the requirements, but in other circumstances the surviving plan will be exempt from the requirements.  Employers considering a plan merger should consult with employee benefits counsel.

Employers who fail to properly implement the new requirements may be able to correct these errors under the IRS’s Employee Plans Compliance Resolution System (“EPCRS”).  Under EPCRS, employers that timely correct automatic enrollment and escalation errors and comply with the applicable notice requirements are able to take advantage of reduced corrective contribution requirements. Please contact any member of Stinson’s Employee Benefits practice if you have questions about the new automatic enrollment and escalation requirements or correcting failures to properly implement these new requirements.

On November 1, 2024, the Internal Revenue Service (IRS) released Notice 2024-80, which sets forth the 2025 cost-of-living adjustments affecting dollar limits on benefits and contributions for qualified retirement plans. The IRS also announced the health savings account (HSA) and high deductible health plan (HDHP) annual deductible and out-of-pocket expense adjustments earlier this year in Revenue Procedure 2024-25 and the health flexible spending arrangement (Medical FSA) adjustments in Revenue Procedure 2024-40. Finally, the Social Security Administration announced its cost-of-living adjustments for 2025 on October 10, 2024, which includes a change to the taxable wage base.

The following chart summarizes the 2025 limits for benefit plans. The 2024 limits are provided for reference.

For more information on the 2025 cost-of-living adjustments, please contact the Stinson LLP contact with whom you regularly work.

On November 7, 2024, the IRS introduced Form 15620, a new standardized form for taxpayers opting to make a Section 83(b) election. Previously, taxpayers needed to send a letter to the IRS with the required information to make the Section 83(b) election effective.

When a taxpayer receives restricted property (usually in the form of stock or a partnership interest) in connection with the performance of service (e.g., as an employee), they are generally required to include the fair market value of the property as income in the year that the property vests. However, by filing a Section 83(b) election, the taxpayer can choose to accelerate the income inclusion to the grant date rather than the vesting date, which may be beneficial if the taxpayer expects the property to appreciate significantly in value between these dates. Section 83(b) elections are commonly made for equity grants to employees in start-up companies where the company’s value at the grant date is usually low.

In order for a Section 83(b) election to be effective, the Form 15620 needs to be filed with the IRS within 30 days after the date the property is transferred. Late filings are ineffective and there is currently no approved correction method. Taxpayers should also provide a copy of Form 15620 to their employer for record-keeping.

Currently, the Form 15620 will need to be mailed to the IRS office where the taxpayer files their federal income tax return. However, we expect that the IRS will eventually allow for the new form to be filed electronically.