Compliance Corner: Announcements
The deadline for 2025 CAA gag clause attestations is just around the corner. Employers should act now to ensure their group health plan contracts are compliant and attestations are timely submitted.
To review, the CAA prohibits group health plans and insurers from directly or indirectly entering into contracts offering access to provider networks that contain certain types of “gag clauses.” In the healthcare context, gag clauses are contract terms that restrict information, including provider network rates and deidentified claims data, that plans or insurers can make available to another party, such as a business associate. An example is a provision in a TPA contract that prohibits the plan's access to network rates because the TPA considers the information to be proprietary.
The CAA also requires plans and insurers to annually attest to compliance with the gag clause prohibition via a CMS web form. The next attestation of compliance is due by December 31, 2025, attesting to compliance for contracts entered since the most recent attestation.
With a fully insured plan, an insurer can agree to submit the required attestation on behalf of the plan. A self-insured plan, including a level-funded plan, may satisfy the attestation requirement by entering into a written agreement under which the plan's service provider(s), such as a TPA, submits the attestation for the plan; however, the plan remains responsible for compliance.
Accordingly, employers should coordinate the submission of their annual attestation(s) with each carrier or plan service provider to ensure it is timely submitted. For this year's attestation, some carriers and service providers are providing early employer response deadlines (e.g., October 31, 2025) if the employer wishes for the service provider to submit the attestation on their behalf. Since response deadlines vary by each service provider, employers should contact their carrier or TPA for specific information to ensure they respond timely.
For further information on the gag clause prohibition and attestation requirements, please review the available resources on the designated CMS Gag Clause Prohibition Compliance Attestation website and ask your broker or consultant for a copy of the NFP publication Gag Clause Prohibition and Attestation: A Guide for Employers.
The ACA requires insurers to submit an annual report to HHS to account for plan costs. If the insurer does not meet the medical loss ratio (MLR) standards, this means that too large a portion of the premiums charged in the previous year went towards the insurer’s administration, marketing, and profit instead of going toward paying plan claims and quality improvement initiatives. In such cases, the insurer must provide rebates to policyholders. For 2025, insurers must distribute rebates to employer plan sponsors between August 1, 2025, and September 30, 2025.
Employers that sponsor fully insured plans and receive a rebate should keep in mind that there are strict guidelines as to how the rebate may be used or distributed. Employers should review their plan document for direction. Generally, absent any specific direction in the plan documents, any portion of the rebate that is considered an ERISA plan asset (e.g., the portion attributable to participant contributions) must be returned to participants in some form (e.g., premium reduction, cash refund, or benefit enhancement) within 90 days of receipt. In such case, the employer, as plan administrator, has a fiduciary obligation to ensure ERISA plan assets are used exclusively for the benefit of plan participants and beneficiaries. Special rules apply for the treatment of rebates issued to non-ERISA plans, such as those sponsored by state or local governments or churches.
For further information, please ask your broker or consultant for a copy of the NFP publication MLR Rebates: A Guide for Employers.
Employers of all sizes that sponsor prescription drug plans (whether fully insured or self-insured) are required to annually inform Medicare-eligible individuals whether the plan’s coverage is “creditable” or “non-creditable.” Medicare Part D-eligible individuals include active, disabled, COBRA, and retired individuals (employees or former employees and dependents) eligible to participate in the employer’s plan(s). Coverage is creditable when it pays, on average, at least as much as Medicare’s standard Part D prescription drug coverage.
The Medicare Part D notice of creditable coverage must be distributed by October 14, 2025 (prior to the October 15 start of the Medicare annual enrollment period). CMS provides Model Notice Letters in English and Spanish for this purpose. The notices are intended to help Part D eligible individuals compare the employer’s coverage options with a Part D plan and make informed decisions about whether to enroll in a Medicare Part D plan. Timely receipt of the notice can help these individuals avoid paying higher premiums (also known as late enrollment penalties) for Medicare Part D coverage. These penalties may apply if an individual fails to maintain creditable coverage for a continuous period of 63 or more days after the end of their initial enrollment period.
Enhancements made to Medicare Part D as part of the Inflation Reduction Act have increased the actuarial value of the Part D standard plan (thus raising the creditability bar). Although it is expected that most prescription drug plans will maintain creditable coverage status, employers should work with their carriers, TPAs, and actuaries, as applicable, to determine if their prescription drug coverage is creditable. There is no requirement that an employer offer creditable coverage, but they must determine the creditable status of each of their plans and timely notify Medicare Part D eligible individuals.
For further information on the creditable coverage disclosure requirements and changes to Part D under the Inflation Reduction Act, please ask your broker or consultant for a copy of the NFP publication Medicare Part D Creditability Disclosures: A Guide for Employers.
Sponsors of ERISA plans subject to the Form 5500 filing must distribute the Summary Annual Report (SAR), a summary of the information reported on Form 5500, to participants within nine months of the end of the plan year. A calendar year plan is therefore generally required to distribute the SAR for the 2024 plan year by September 30, 2025. If the plan applied for an extension to the Form 5500 filing, the SAR is due within two months after the extended filing deadline.
Plans not subject to the Form 5500 filing are exempt from the SAR notice requirement. This includes church plans, governmental plans, and unfunded or insured plans with fewer than 100 participants. Additionally, large, unfunded self-insured plans are exempt from the SAR requirement, even though they are subject to the Form 5500 filing requirement. “Unfunded” generally refers to a self-insured plan where benefits are paid out of the plan sponsor’s general assets and no plan assets are maintained in a separate account or trust.
For further information on SAR requirements, please ask your broker or consultant for a copy of the NFP publication Summary Annual Report: A Guide for Employers.
Please join NFP’s Benefits Compliance and Retirement teams as they break down the employee benefit impact from the recently enacted OBBBA. We will walk through the OBBBA’s provisions on HSA eligibility for telehealth and direct primary care coverage, increased DCAP limits, the extension and expansion of the PFML employer tax credit, tax-free bicycle commuter reimbursement, Medicaid, and the ACA Marketplaces, as well as so-called “Trump accounts.” Join us to hear practical impacts and employer takeaways and to ask questions live!
Note: The speakers will answer as many questions as possible during the webinar. If your question isn’t answered, please reach out to your advisor for further assistance.
Date/Time: August 7, 2025
2:00 – 2:45 p.m. ET
This program is pending approval for 1.0 (general) recertification credit hours toward PHR, SPHR and GPHR recertification through the HR Certification Institute. For more information about certification or recertification, visit the HR Certification Institute website at hrci.org.
Note: Those listening to a recorded webinar will not be eligible for credit.
The ACA imposed the PCOR fee on health plans to support clinical effectiveness research. The PCOR fee, which applies to plan years ending on or after October 1, 2012, and before October 1, 2029, is generally due by July 31 of the calendar year following the close of the plan year.
As a reminder, the insurer is responsible for filing and paying the fee for a fully insured plan. The employer plan sponsor is responsible for filing for a self-insured plan, including an HRA or point solution program that provides medical care. However, stand-alone dental or vision plans and health FSAs that qualify as excepted benefits would not be subject to the PCOR fee.
PCOR fees must be reported annually on Form 720, Quarterly Federal Excise Tax Return, for the second quarter of the calendar year. Plan sponsors that are subject to PCOR fees and no other types of excise taxes should file Form 720 only for the second quarter. The IRS recently published Form 720, Quarterly Federal Excise Tax Return, for the second quarter of 2025, which reflects “Rev. June 2025” in the upper left-hand corner and includes accurate PCOR fee rates in Part II (items 133 (a), (b), (c), and (d)) for plan years ending in calendar year 2024. Additional details are available on the IRS PCOR website.
Generally, the PCOR fee is assessed based on the number of covered lives, which include enrolled employees, retirees, and COBRA participants and their enrolled spouses, domestic partners, and dependents. The fee for policy and plan years ending on or after October 1, 2023, but before October 1, 2024, is calculated based on the applicable rate of $3.22, multiplied by the average number of covered lives under the plan. For plan years ending on or after October 1, 2024, but before October 1, 2025, the fee is increased to the applicable rate of $3.47, multiplied by the average number of covered lives under the plan.
According to the IRS, the fee is tax-deductible as a business expense. ERISA plan assets should not be used to pay the fee.
For further information regarding the PCOR fee and filing, please ask your broker or consultant for a copy of the NFP publication ACA: A Quick Reference Guide to the PCOR Fee.
Unless an exception applies, each ERISA group health plan must file an annual report with the DOL via Form 5500 (Annual Return/Report of Employee Benefit Plan). The Form 5500 must be submitted electronically by the last day of the seventh month following the end of the plan year (e.g., July 31 for a calendar-year plan). A two-and-a-half-month extension of the Form 5500 due date will be automatically granted by filing a Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns) on or before the normal due date.
The 2024 Form 5500 and instructions are accessible on the DOL website.
One important exception to the Form 5500 filing is for plans with fewer than 100 participants as of the beginning of the plan year that are unfunded, fully insured, or a combination of unfunded and fully insured. “Unfunded” refers to a plan that pays benefits from the employer’s general assets (and not through a trust or other funding vehicle). Additionally, group health plans sponsored by a government or church organization typically do not require a Form 5500 filing since these plans are not subject to ERISA.
Plans must maintain sufficient records to document information required by the plan’s Form 5500 for at least six years after the filing date of the Form 5500. As a practical matter, this means that records should be retained for approximately eight years from their creation, which considers the plan year for which the form is being filed and the subsequent filing period.
For further information on the Form 5500 filing and content, please ask your broker or consultant for a copy of the NFP publication Form 5500: A Guide for Employers.
The ACA imposed the PCOR fee on health plans to support clinical effectiveness research. The PCOR fee, which applies to plan years ending on or after October 1, 2012, and before October 1, 2029, is generally due by July 31 of the calendar year following the close of the plan year.
As a reminder, the insurer is responsible for filing and paying the fee for a fully insured plan. The employer plan sponsor is responsible for filing for a self-insured plan, including an HRA or point solution program that provides medical care. But stand-alone dental or vision plans and health FSAs that qualify as excepted benefits would not be subject to the PCOR fee.
PCOR fees must be reported annually on Form 720, Quarterly Federal Excise Tax Return, for the second quarter of the calendar year. Plan sponsors that are subject to PCOR fees and no other types of excise taxes should file Form 720 only for the second quarter. The IRS recently published Form 720, Quarterly Federal Excise Tax Return, for the second quarter of 2025, which reflects “Rev. June 2025” in the upper left-hand corner and includes accurate PCOR fee rates in Part II (items 133 (a), (b), (c), and (d)) for plan years ending in calendar year 2024. Additional details are available on the IRS PCOR website.
Generally, the PCOR fee is assessed based on the number of covered lives, which include enrolled employees, retirees, and COBRA participants and their enrolled spouses, domestic partners, and dependents. The fee for policy and plan years ending on or after October 1, 2023, but before October 1, 2024, is calculated based on the applicable rate of $3.22, multiplied by the average number of covered lives under the plan. For plan years ending on or after October 1, 2024, but before October 1, 2025, the fee is increased to the applicable rate of $3.47, multiplied by the average number of covered lives under the plan.
According to the IRS, the fee is tax-deductible as a business expense. ERISA plan assets should not be used to pay the fee.
For further information regarding the PCOR fee and filing, please ask your broker or consultant for a copy of the NFP publication ACA: A Quick Reference Guide to the PCOR Fee.
Unless an exception applies, each ERISA group health plan must file an annual report with the DOL via Form 5500 (Annual Return/Report of Employee Benefit Plan). The Form 5500 must be submitted electronically by the last day of the seventh month following the end of the plan year (e.g., July 31 for a calendar-year plan). A two-and-a-half-month extension of the Form 5500 due date will be automatically granted by filing a Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns) on or before the normal due date.
The 2024 Form 5500 and instructions are accessible on the DOL website.
One important exception to the Form 5500 filing is for plans with fewer than 100 participants as of the beginning of the plan year that are unfunded, fully insured, or a combination of unfunded and fully insured. “Unfunded” refers to a plan that pays benefits from the employer’s general assets (and not through a trust or other funding vehicle). Additionally, group health plans sponsored by a government or church organization typically do not require a Form 5500 filing since these plans are not subject to ERISA.
Plans must maintain sufficient records to document information required by the plan’s Form 5500 for at least six years after the filing date of the Form 5500. As a practical matter, this means that records should be retained for approximately eight years from their creation, which considers the plan year for which the form is being filed and the subsequent filing period.
For further information on the Form 5500 filing and content, please ask your broker or consultant for a copy of the NFP publication Form 5500: A Guide for Employers.
Individuals who were HSA-eligible in 2024 have until the tax filing deadline, April 15, 2025, to make or receive 2024 HSA contributions. The 2024 HSA contribution limit is $4,150 for self-only HDHP coverage and $8,300 for any tier of HDHP coverage other than self-only. Employer HSA contributions, if any, are included in the applicable limit. Those aged 55 and older are permitted an additional catch-up contribution of $1,000. As indicated below, April 15, 2025, is also the deadline for individuals to remove 2024 excess contributions (i.e., contributions exceeding their permitted maximum) from their HSA to avoid potential penalties.
Under the HSA monthly contribution rule, an individual’s maximum 2024 annual contribution is limited by the number of months they were HSA-eligible during the calendar year. HSA eligibility is determined on the first day of each month. As a reminder, to be HSA-eligible, an individual must be covered by a qualified HDHP, not be eligible to be claimed as a tax dependent of another, and not be covered by Medicare or other impermissible coverage (i.e., coverage providing benefits before the statutory HDHP minimum deductible is met, absent a specific exception).
There is an exception to the monthly contribution rule known as the full or last month contribution rule. Under the full contribution rule, an individual who was HSA-eligible on December 1, 2024, is permitted to contribute up to the full statutory limit for the year based on their HDHP coverage tier. However, if the individual does not remain HSA-eligible through December of the following year (i.e., December 2025), the amount exceeding their permitted maximum under the monthly contribution rule becomes taxable as income and subject to an additional 10% penalty tax.
Individuals who contributed more than their allowable HSA contribution amount for 2024 should remove the excess contributions and associated earnings by April 15, 2025. The excess and earnings will be subject to income tax. If an individual fails to remove the excess contribution by the income tax filing deadline, an additional 6% penalty applies for each tax year the excess remains in the account. Accordingly, employees who were not eligible for a contribution or contributed more than their permitted maximum through their employer’s cafeteria plan should notify their employer and work with the HSA custodian to remove the excess contribution. Employees should consult with their tax advisors for specific tax advice and guidance.
For further information, please see IRS Publication 969 and ask your broker or consultant for a copy of the NFP publication Health Savings Accounts: A Guide for Employers.
Background
Applicable large employers (ALEs) with 50 or more full-time employees (FTEs), including full-time equivalent employees, in the prior year must comply with IRC Section 6056 reporting in early 2025. Specifically, ALEs must complete and file Form 1095-C for full-time employees with the IRS by Monday, March 31, 2025. The form should include details regarding whether the employee was offered minimum value, affordable coverage during 2024.
Additionally, employers with a self-insured plan during 2024 must comply with Section 6055 reporting in 2025. Self-insured ALEs must complete Section III of Form 1095-C detailing which months the employee (and any applicable spouse and dependents) had coverage under the employer's plan. Self-insured employers with fewer than 50 FTEs must complete Form 1095-B with such information.
Alternative Manner of Furnishing Health Coverage Information Forms (“Upon-Request” Option)
Furnishing Form 1095-B and Form 1095-C to Part-Time and Nonemployees
If a self-insured employer has fewer than 50 FTEs, an alternative remains available for distributing Form 1095-B to individuals. These small employers are permitted to post a clear and conspicuous notice on a website (accessible to individuals who may request a form) of the document's availability and the necessary contact information (email address, physical address and phone number) to request it. Any such request must be fulfilled within 30 days. This option is also available to deliver Form 1095-C to part-time and nonemployees.
Furnishing Form 1095-C to Full-Time Employees – Paperwork Burden Reduction Act (Updated February 25, 2025)
Under prior guidance, Form 1095-C must be delivered to full-time employees by March 3, 2025, by mail, hand delivery, or electronic delivery (the latter only if proper consent is provided in accordance with IRS instructions). However, under the Paperwork Burden Reduction Act (PBRA), which was recently enacted, employers have the option to provide Form 1095-C to such employees only upon request. (For more information on changes to ACA reporting under the PBRA and the Employer Reporting Improvement Act, please see our related article.) Such requests must be fulfilled within 30 days after the date of the request.
The IRS recently issued Notice 2025-15, which clarifies how employers can utilize the alternative manner to furnish Form 1095-C. Employers may use the same format as allowed for Form 1095-B but must substitute the term “full-time employee” for “responsible individual” and the term “Form 1095-C, Employer-Provided Health Insurance Offer and Coverage” for “Form 1095-B, Health Coverage.” Detailed information on the required verbiage can be found in the Form 1095-B instructions under the section “Alternative manner of furnishing statements.”
Employers who elect to use this new alternative method for furnishing 1095-Cs for the 2024 calendar year must post a required notice on their website by March 3, 2025. The notice must be posted in a location that is reasonably accessible to all full-time employees and state that a copy of the statement is available upon request. The notice must be written in plain language in a font size large enough to draw an employee’s attention and include the necessary contact information (email address, physical address and phone number) for the employee to request or inquire about it. The notice must remain on the website through October 15 of the year following the calendar year to which the statement relates.
It is important for employers to weigh the pros and cons of using the upon-request option for furnishing Form 1095-C to full-time employees for the 2024 reporting period. For many employers, it may make sense to maintain past automatic delivery practices for this 2024 reporting year. At this late date, employers likely have engaged ACA reporting vendors to distribute Form 1095-C. Given the short timeframe (the Forms must be distributed by March 3), the conservative approach is to distribute the 2024 Form 1095-C as usual and consider the upon-request option next year. Also note that state individual mandates in CA, DC, MA, NJ, and RI generally require employers to distribute Form 1095-C/B to employees residing in those states by separate annual deadlines.
Electronic IRS Filing Requirement
Finally, as a reminder, employers that file 10 or more returns of any type (i.e., counting Form 1094-B/1095-B, 1094-C/1095-C, W-2, and 1099 together) to the IRS in a calendar year must do so electronically absent a hardship waiver; please see our article for more information on this change that commenced last year. For those employers still able to file by paper, the filing deadline is February 28, 2025.
For further information on the reporting requirements, please refer to the IRS forms and instructions below and ask your broker or consultant for a copy of the NFP publication ACA: FAQs for Employer Reporting Under Sections 6055 and 6056.
Individuals who were HSA-eligible in 2024 have until the tax filing deadline, April 15, 2025, to make or receive 2024 HSA contributions. The 2024 HSA contribution limit is $4,150 for self-only HDHP coverage and $8,300 for any tier of HDHP coverage other than self-only. Employer HSA contributions, if any, are included in the applicable limit. Those aged 55 and older are permitted an additional catch-up contribution of $1,000. As indicated below, April 15, 2025, is also the deadline for individuals to remove 2024 excess contributions (i.e., contributions exceeding their permitted maximum) from their HSA to avoid potential penalties.
Under the HSA monthly contribution rule, an individual’s maximum 2024 annual contribution is limited by the number of months they were HSA-eligible during the calendar year. HSA eligibility is determined on the first day of each month. As a reminder, to be HSA-eligible, an individual must be covered by a qualified HDHP, not be eligible to be claimed as a tax dependent of another, and not be covered by Medicare or other impermissible coverage (i.e., coverage providing benefits before the statutory HDHP minimum deductible is met, absent a specific exception).
There is an exception to the monthly contribution rule known as the full or last month contribution rule. Under the full contribution rule, an individual who was HSA-eligible on December 1, 2024, is permitted to contribute up to the full statutory limit for the year based on their HDHP coverage tier. However, if the individual does not remain HSA-eligible through December of the following year (i.e., December 2025), the amount exceeding their permitted maximum under the monthly contribution rule becomes taxable as income and subject to an additional 10% penalty tax.
Individuals who contributed more than their allowable HSA contribution amount for 2024 should remove the excess contributions and associated earnings by April 15, 2025. The excess and earnings will be subject to income tax. If an individual fails to remove the excess contribution by the income tax filing deadline, an additional 6% penalty applies for each tax year the excess remains in the account. Accordingly, employees who were not eligible for a contribution or contributed more than their permitted maximum through their employer’s cafeteria plan should notify their employer and work with the HSA custodian to remove the excess contribution. Employees should consult with their tax advisors for specific tax advice and guidance.
For further information, please see IRS Publication 969 and ask your broker or consultant for a copy of the NFP publication Health Savings Accounts: A Guide for Employers.
NFP Corp. and its subsidiaries do not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.
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