Employee Benefits in 2024: A Year of Change and Compliance

2024 has been a significant year for employee benefits, marked by notable regulatory updates and many judicial opinions. Employers must navigate new requirements under the Pregnant Workers Fairness Act (“PWFA”), new rules under the Mental Health Parity and Addiction Equity Act (“MHPAEA”), and Section 1557 of the Patient Protection and Affordable Care Act (“ACA”), all the while addressing enhanced Health Insurance Portability and Accountability Act (“HIPAA”) privacy protections for reproductive healthcare. Additionally, recent court rulings underscore the importance of fair claims review processes, compliance in wellness programs, and the evolving judicial interpretation of administrative statutes. This article summarizes key events during the year around rulemaking and litigation concerning employee benefits compliance that employers and plan sponsors should be aware of to ensure compliance and optimize their benefit offerings. 

Employer Action Items

• Align Plan Design with Regulatory Updates: Ensure health plans comply with the PWFA, MHPAEA, ACA Section 1557, and HIPAA Privacy Rule changes by their respective effective dates. Work with insurers and TPAs to regularly review and update benefit plan documents, policies, and procedures to ensure compliance with changing requirements.
• Transparency in Plan Communications: Update SPDs and other participant communications to reflect changes in telehealth, mental health parity, and reproductive health care privacy options. Clarify plan coverage for short-term insurance, HSA-eligible telehealth benefits, and non-discrimination protections under ACA Section 1557.
• Enhance Claims Review Processes: Develop or strengthen protocols for thorough and consistent claims determinations, incorporating lessons from recent court decisions (i.e., Tartaro-McGowan v. Aetna) regarding mental health and abuse treatment. Work with TPAs to document decisions comprehensively and align with updated clinical guidelines.
• Preparation for Potential Litigation: Proactively review wellness program designs to mitigate risk from tobacco surcharge lawsuits by ensuring compliance with HIPAA and ERISA standards. Continue to monitor ongoing litigation trends and Supreme Court rulings for potential implications on plan administration.
• Ongoing Monitoring and Updates: Employers should stay informed about ongoing legislative and regulatory developments in the employee benefits field. Establishing a compliance task force may prove beneficial, particularly regarding reproductive health care and agency deference changes post-Chevron decision. Collaborate with legal and benefits advisors to address issues in health plan administration. 

Summary

Significant Rulemaking

• The Equal Employment Opportunity Commission (“EEOC”) issued a Final Rule providing detailed guidance on implementing the PWFA.  Effective June 18, 2024, the PWFA requires covered employers to provide reasonable accommodations to pregnant workers with known limitations related to pregnancy, childbirth, or related medical conditions. This expands protections beyond the Americans with Disabilities Act (“ADA”) and requires proactive measures to support pregnant employees. This applies to private and public sector employers with 15 or more employees.   
• The Department of Health and Human Services, the Department of Labor, and the Department of the Treasury (collectively, the “Departments”) issued a Final Rule impacting short-term, limited-duration insurance (“STLDI”) and fixed indemnity insurance, effective June 24, 2024. These rules, among other things, redefine STLDI, limiting initial coverage to less than 12 months with a maximum duration of 36 months (including renewals), aligning it with its intended purpose as temporary coverage. These changes aim to protect consumers by promoting informed decision-making and preventing using these plans as long-term substitutes for comprehensive health coverage.
• As a general rule, health savings account (“HSA”) contributions have stringent limitations regarding the types of group health plans eligible individuals may enroll in while contributing to an HSA. Following the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) allowed high-deductible health plans (“HDHPs”) a safe harbor to cover telehealth and other remote care services before the plan’s deductible was met without affecting the HDHP’s compatibility with HSAs. This became effective Jan 1, 2020, and has been repeatedly extended but is set to expire on December 31, 2024.
• On September 9, 2024, the Departments released their final ruling designed to strengthen the requirements of MHPAEA. The purpose of MHPAEA is to ensure that individuals with private health coverage do not face greater restrictions when seeking mental health and substance use disorder (“MH/SUD”) benefits than they would face for medical/surgical (“M/S”) benefits. The final ruling added protections against more restrictive nonquantitative treatment limitations (“NQTLs”). The final ruling generally applies to health plans and issuers for plan years beginning on or after January 1, 2025; however, there are components of the final ruling that would only be applicable for plan years beginning on or after January 1, 2026.
• Section 1557 of the ACA was designed to prevent discrimination based on race, color, national origin, sex (including gender-affirming care), age, or disability in certain health programs and activities. The final rule, which was issued by The Department of Health and Human Services (“HHS”), the Office of Civil Rights (“OCR”), and the Centers for Medicare & Medicaid Services (“CMS”), was described by the issuers describing the final rule as “a giant step forward for this country toward a more equitable and inclusive health care system.” The final rule strengthened participants’ protection regarding the unauthorized disclosure of protected health information.  They clarified that sex discrimination does include protections related to pregnancy, including termination of pregnancy or related conditions. It also requires that covered entities make certain disclosures in the form of notices detailing the availability of language translation services and related auxiliary aids to advise LEP individuals and others with disabilities.
• On April 22, 2024, the OCR issued a final rule to modify certain provisions of the HIPAA Privacy Rule. The Final Rule aims to protect reproductive health care access and privacy while bolstering patient-provider confidentiality. These modifications aim to support reproductive health care privacy in response to the U.S. Supreme Court’s holding in Dobbs v. Jackson Women’s Health Organization and subsequent state-level abortion bans. The final rule prohibits covered entities from using or disclosing PHI for the criminal, civil, or administrative investigation of (or any other proceeding against) any person in connection with seeking, obtaining, providing, or facilitating reproductive healthcare where such healthcare is lawful under the circumstances in which it is provided.

Impactful Litigation

• In January 2024, the United States Court of Appeals for the Fourth Circuit, in Tartaro-McGowan v. Aetna, examined whether Aetna, as the claims administrator, had improperly denied coverage for a residential treatment program for the plaintiff’s son. The court found that Aetna abused its discretion by relying on internally inconsistent guidelines and failing to adequately consider the patient’s specific needs. This case highlights the importance of thorough and consistent review processes by plan administrators when making coverage determinations, particularly for mental health and substance abuse treatment.
• Throughout the year, a wave of class-action lawsuits targeted employer-sponsored health plans that imposed tobacco surcharges. Plaintiffs alleged these surcharges violated ERISA and HIPAA’s non-discrimination rules by penalizing tobacco users without offering a reasonable alternative standard – a requirement of a compliant wellness program. These lawsuits raise questions about the design and implementation of wellness programs, potentially impacting how employers structure incentives and encourage healthy behaviors among their employees.  Stay tuned for additional information from the BRCC as more verdicts are delivered on this subject.
• In the Loper Bright decision, the Supreme Court overturned the legal precedent known as the “Chevron deference.” This ruling required courts to defer to an administrative agency’s reasonable interpretation of a silent or ambiguous federal statute on a particular challenged issue (or dispute). Now, for any silent or ambiguous federal statutes, the federal judges now must exercise independent judgment when determining the best interpretation of a statute and cannot simply defer to the agency’s interpretations.
• On March 28, 2024, the Supreme Court heard oral arguments regarding whether a federal law requiring hospitals participating in Medicare to provide “necessary stabilizing treatment” in emergencies overrides an Idaho law that restricts most abortions. Congress passed the Emergency Medical Treatment and Labor Act (“EMTALA”) to ensure that every person who visits a Medicare-funded hospital with an “emergency medical condition” is offered stabilizing treatment. Congress has not made any changes to this act for the past three decades and makes clear that in a situation in which a doctor determines that an abortion constitutes the “necessary stabilizing treatment” for a pregnant patient, federal law requires the hospitals to offer it.” The court dismissed the case after determining they should not have agreed to hear the case’s merits before the Ninth Circuit, holding its appeal and ruling; the case was remanded back to the Ninth Circuit.
• On March 26, 2024, the Supreme Court heard oral arguments in the Alliance for Hippocratic Medicine v. Food and Drug Administration case regarding the Food and Drug Administration (“FDA”) approval and subsequent prescriptive guidelines related to mifepristone. Plaintiffs in the Supreme Court matter, the Alliance of Hippocratic Medicine, challenged the FDA’s 2000 approval of mifepristone, as well as its 2016 and 2021 actions designed to reduce access barriers to the medication (e.g., availability by telemedicine and legality of interstate shipping). However, such practitioners already have access to moral and religious conscious exemptions, exempting them from any requirement to conduct or participate in the procurement of an abortion. The Supreme Court, in a unanimous decision, determined that the plaintiffs did not have the legal standing to bring this challenge in federal court.

The BRCC’s Winter Compliance Update will focus on these significant legislative and judicial updates that impact employee benefits compliance and administration. We will examine these key changes, their impact on organizations, and the importance of integrating compliance best practices to ensure compliance with all regulatory requirements. Attendees will have opportunity to pose questions to our compliance experts during a Q&A session following our presentation.

Additional Resources:

• Pregnant Workers Fairness Act
• Summary of Key Provisions of EEOC’s Final Rule to Implement the Pregnant Workers Fairness Act (PWFA)
• DOL Fact Sheet on Short-term, Limited-Duration Insurance and Independent, Noncoordinated Expected Benefits Coverage.
• IRS Press Release regarding Telehealth and HDHPs.
• COVID-19 guidance under Section 125 Cafeteria Plans related to High Deductible Health Plans.
• Federal Register for the Requirements Related to the Mental Health Parity and Addiction Equity Act.
• Fact Sheet: Final Rules under the Mental Health Parity and Addiction Equity Act.
• Section 1557 Final Rule
• Fact Sheet: 1557 Final Rule
• Fact Sheet: HHS HIPAA Privacy Rule to Support Reproductive Health Care Privacy
• Tartaro-McGowan v. Aetna
• Loper Bright Enterprises v. Raimondo
• Mike Moyle, Speaker of the Idaho House of Representatives v. ET AL Petitioners
• Alliance for Hippocratic Medicine v. Food and Drug Administration (FDA)