Essential end-of-year health plan reminders and insights for 2025

The end of the year isn’t just about celebrations and resolutions. For employers and benefits plan sponsors, it’s a crucial time to review health plan regulations and set the stage for the new year. Let’s review some end-of-year action items and reminders as 2024 ends and before we welcome 2025.

Your guide to end-of-year compliance reminders

From updated index figures for Health Savings Accounts (HSAs) and health Flexible Spending Accounts (FSAs) to important notices on hurricane disaster relief measures and telehealth cost-sharing, 2024 has been a year filled with important updates and guidance.

Every year, I look forward to December when I get to review everything that crossed our desks. More than anything, it’s an opportunity to give you the information you need so you can best serve your employees in the coming year. I’ll recap each of the notable alerts, guidance, notices, and reminders from 2024. Please note that each topic is just a summary—full details are included in the compliance alert.

It’s important to note that this is intended to educate employers and plan sponsors on the potential effects of government guidance on employee benefit plans. This summary should not be construed as legal or tax advice. As always, we strongly encourage employers and plan sponsors to consult competent legal or benefits counsel for guidance on how these actions apply to their unique situations.

HSA and FSA limits increase in 2025

On May 8, 2024, the Internal Revenue Service (IRS) released Revenue Procedure 2024-25 to provide the new HSA index figures for 2025. Every year, the IRS publishes this early release to help employers and HSA members budget for the upcoming year.

Then, on October 22, 2024, the IRS issued the 2025 annual inflation adjustments for many tax provisions of the IRS Code, including 2025 contribution amounts for retirement accounts, FSAs, Dependent Care Assistance Programs, Commuter Accounts, Adoption Assistance Exclusion and Adoption Credit, HSAs, Health Reimbursement Arrangements (HRAs), and Archer Medical Savings Accounts (MSAs).

On November 1, 2024, the IRS also announced the dollar limitations for qualified retirement plans for tax year 2025, including 401(k) plans increasing to $23,500 for 2025, up from $23,000 in 2024.¹

Contribution limits increased next year, including:

• 2025 HSA limits: $4,300 for individuals and $8,550 for families

• 2025 FSA limits: $3,300

Relief for areas impacted by hurricanes

The fall hurricane season proved to be exceptionally destructive in 2024. Recovering from disasters like these takes a significant amount of resources and time. That’s why on November 7, 2024, the Department of Labor (DOL) Employee Benefits Security Administration (EBSA) announced compliance guidance and further relief for employee benefit plans, qualified beneficiaries, and other plan members impacted by Hurricanes Helene and Milton.

The Department of Health and Human Services (HHS) later concurred with the DOL and Treasury and will adopt a non-enforcement policy to extend similar timeframes to non-federal government group health plans and health insurance issuers offering coverage in connection with a group health plan. The full list of relief period dates is in my previous post on this subject, plus referenced in the full compliance alert.

First-dollar telehealth cost-sharing relief set to expire

Included in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law on March 27, 2020, was the provision allowing high-deductible health plans (HDHPs) compatible with Health Savings Accounts (HSAs) to cover telemedicine and other remote care service expenses before the deductible was met and with no effect to a participant’s ability to continue to contribute to their HSA for plan years beginning on or before December 31, 2021. This provision was extended in 2022 and 2023 to include plan years beginning after December 31, 2022, and before January 1, 2025.

On December 20, 2024, the House passed a continuing resolution which did not include the two-year telehealth safe harbor extension. The Senate passed that measure on December 21, 2024.

Here’s what you need to know.

HDHPs compatible with HSAs can no longer cover telehealth services before the deductible is met.

Participants in an HDHP that includes no-cost sharing telehealth services will no longer be eligible to make contributions to an HSA for plan years beginning on or after January 1, 2025. For non-calendar year plans, this relief will continue until the end of the plan year beginning in 2024 and ending in 2025 (e.g., for a plan year beginning July 1, 2024, the relief will expire as of June 30, 2025).

Plan sponsors should ensure that telehealth services provided before the deductible is met are subject to cost sharing, except when the service qualifies as a preventive benefit under the ACA.

IRS guidance on expanded male reproductive coverage

On October 17, 2024, the IRS issued IRS Notices 2024-71 and 2024-75 allowing the cost of condoms to be treated as Code § 213(d) medical care expense and clarifying the list of preventive care services that an HSA-compatible HDHP can cover before a deductible is met.

In IRS Notice 2024-71, the IRS classified male condoms as medical expenses under Code § 213(d), making them eligible for reimbursement through health FSAs, MSAs, HRAs, or HSAs.

IRS Notice 2024-75 expands the list of preventive care benefits permitted to be provided by an HDHP under Code § 223(c)(2)(C) without a deductible, or with a deductible below the applicable minimum deductible for the HDHP.

New indexed PCORI fees issued

Under the Affordable Care Act (ACA), a fund for a nonprofit corporation to assist in clinical effectiveness research was created—Patient-Centered Outcomes Research Institute (PCORI). To aid in the financial support for this endeavor, certain health insurance carriers and health plan sponsors are required to pay fees based on the average number of lives covered by welfare benefits plans.

On December 2, 2024, the IRS published Notice 2024-83² updating the amount of the PCORI fees that must be paid by self-insured health plans for plan years ending on or after October 1, 2024, and before October 1, 2025—an increase to $3.47, up from $3.22.

Understanding nondiscrimination testing

Nondiscrimination testing rules are generally designed by and specified within the Internal Revenue Code (IRC) to ensure that plans are not designed in such a way that they discriminate in favor of highly paid employees (HCEs) or certain key employees within the organization. These tests, in turn, help make sure the contributions made by and for non-highly compensated employees (NHCEs) are proportional to contributions made for HCEs.

These tests include many rules, provisions, explanations, and deadlines. For all these details, including clarifying examples, please review my earlier blog post or the full compliance alert.

Employers’ Form 5500 obligations

A frequently overlooked responsibility for plan sponsors is completing Form 5500 filings under certain circumstances. Generally, Forms 5500 must be filed for ERISA health and welfare plans offered under a cafeteria plan. Welfare benefit plans provide benefits such as medical, dental, life insurance, apprenticeship and training, scholarship funds, severance pay, and disability. FSAs contained inside cafeteria plans and HRAs qualify as welfare benefit plans.

As with previous reminders in this compliance alert, the Form 5500 Obligation includes much more detail than can be included in this summary. Please reference my earlier writing on this or the full compliance alert.

Updated 2025 San Francisco healthcare expenditure rates

The San Francisco Office of Labor Standards Enforcement recently released updated Health Care Security Ordinance (HCSO)³ required health expenditure rates for 2025. For 2025, the healthcare expenditure rates include $3.85 for large employers (100 or more employees) and $2.56 for medium employers (20-99 employees) or for non-profits with between 50-99 employes. Small employers (less than 19 employees) or non-profits with 49 or fewer employees are exempt from the rates.

Wrapping up regulatory updates for 2024

These are just a few examples of the specific year-end deadlines and requirements that employers must be aware of and address promptly. I include additional details in the full year-end compliance review.

No matter what, I encourage you all to keep learning about these topics. Compliance becomes clearer for employers through knowledge. You can always reach out to HealthEquity for more information about these topics, as well as contacting your own accounting or legal sources for guidance.

I wish you all a happy and healthy New Year.