The end of 2024 brings important deadlines and dates for employers that sponsor 401(k) plans, 403(b) plans, governmental 457(b) plans, and group health plans.
- December 23, 2024 is the deadline for group health plans to adopt policies and procedures regarding reproductive health care as required by the Health Information Portability and Accountability Act (HIPAA). This is a new requirement.
- December 31, 2024 is the deadline for group health plans to submit a "gag clause" attestation. This is the second year of this requirement.
- January 1, 2025 is the deadline for calendar-year plans to complete a fiduciary certification required by the Mental Health Parity and Addiction Equity Act (MHPAEA). This is a new requirement.
- January 1, 2025 is the date when relief is no longer available for calendar-year plans that allowed a high-deductible health plan (HDHP) to pay for telehealth on a first-dollar basis without affecting eligibility for a health savings account (HSA).
- January 1, 2025 is the operational deadline for calendar-year 401(k) plans and 403(b) plans to liberalize service-based exclusions on elective deferrals for certain long-term, part-time employees.
- January 1, 2025 is the first opportunity for 401(k) plans, 403(b) plans, and governmental 457(b) plans to incorporate the optional increased catch-up contribution limit for individuals who reach ages 60-63 during the calendar-year.
- January 1, 2025 begins the 12-month time frame for calendar-year 401(k) plans, 403(b) plans, and governmental 457(b) plans to allocate forfeitures incurred before and during the 2024 plan year.
Group Health Plans:
HIPAA and Reproductive Health Care
Earlier this year, the government amended the HIPAA Privacy Rule. Under the amended Privacy Rule, an employer group health plan must not use or disclose PHI that is related (or potentially related) to reproductive health care in certain circumstances, and in other circumstances, the use or disclosure is permitted only with an attestation from the party requesting the use or disclosure.
No later than December 23, 2024, group health plans must revise their HIPAA policies and procedures to incorporate the new use and disclosure prohibition and the attestation requirements. We strongly recommend that, by the same date, plans ensure that relevant personnel receive training regarding the updated policies and procedures.
Note: Group health plans are also required to update their notices of privacy practices to address uses and disclosures relating to reproductive health care. However, the compliance date for that requirement is not until February 16, 2026.
Group Health Plans:
Gag Clause Attestation
A 2020 law prohibits group health plans from entering into contracts that contain gag clauses. (Essentially, gag clauses said that one party could not reveal certain prices. For example, pharmacy benefit managers often prohibited pharmacists from telling plan participants how much a drug would have cost without plan coverage.) Gag clauses are now prohibited in contracts between major medical plans and third-party administrators (TPAs), providers, and networks. Plans must attest that their contracts do not contain gag clauses. Plans must submit the attestation to the Center for Medicare and Medicaid Services (CMS), through its Health Insurance Oversight System. CMS created an online resource page with instructions for submitting the attestation here.
The deadline for submitting the gag clause attestation is December 31, 2024.
Each group health plan is responsible for submitting the attestation. However, TPAs may submit the attestation on behalf of the plan if a written agreement permits them to do so.
Group Health Plans:
MHPAEA and the Fiduciary Certification
For several years, group health plans have been required to prepare a "comparative analysis" regarding the plans' nonquantitative treatment limitations (NQTLs). Essentially, the comparative analysis requires plans to determine whether the NQTLs apply more or less equally to mental health/substance use disorder benefits on the one hand and medical/surgical benefits on the other. Earlier this year, the government amended the rules concerning the comparative analysis. As relevant here, the amended rules require at least one plan fiduciary to certify that the fiduciary has (i) engaged in a prudent process to select a qualified service provider to prepare the comparative analysis; and (ii) has engaged in a process to monitor the service provider's performance. The monitoring process should include, at a minimum, the fiduciary asking questions about and discussing the comparative analysis with the service provider so that the fiduciary understands the findings and conclusions. The fiduciary should secure assurances from the service provider that, to the best of its ability, the comparative analysis complies with the dictate of MHPAEA and its implementing regulation.
For calendar-year plans, the deadline for the fiduciary certification is January 1, 2025. For fiscal-year plans, the deadline is the first day of the plan year beginning in 2025.
Group Health Plans:
HDHPs, HSAs, and Telehealth
Currently, an HDHP may offer telehealth benefits to enrollees who have not yet met their deductibles, without jeopardizing those enrollees' eligibility for an HSA. This rule has been in effect for several years under statutory relief enacted during the COVID-19 pandemic.
For calendar-year plans, the relief expires on January 1, 2025. For fiscal-year plans, the relief expires on the first day of the plan year beginning in 2025.
Note: Certain advocacy groups are urging Congress to extend this relief beyond its current expiration date. We will provide an update to this alert if the relief is extended.
401(k) Plans and 403(b) Plans:
Elective Deferral Eligibility for Long-Term, Part-Time Employees
The SECURE Act of 2019 (SECURE 1.0) prohibits a 401(k) plan from imposing a service-based exclusion for elective deferrals on an employee who has completed at least three consecutive 12‑month periods with at least 500 hours of service in each 12-month period.
Employees affected by this requirement are called "long-term, part-time employees." Long‑term, part-time employees must be permitted to make their own salary deferrals to a 401(k), although a plan can still exclude them from automatic contribution arrangements, employer matching contributions, and employer nonelective contributions.
The SECURE 2.0 Act of 2022 (SECURE 2.0) reduced the three consecutive 12-month period threshold to a two consecutive 12-month period threshold for plan years beginning on or after January 1, 2025, and extended these requirements to 403(b) plans that are subject to ERISA (generally, non-governmental, non-church 403(b) plans). 403(b) plans must count all hours of service for long-term, part-time employees in 12-month periods beginning on or after January 1, 2023. As a result, qualifying long-term, part-time employees will become eligible to make elective deferrals as early as the 2025 plan year. Employers must promptly notify such employees of their eligibility.
401(k) Plans, 403(b) Plans, and Governmental 457(b) Plans:
Increase in Catch-up Limit for Individuals Aged 60-63
SECURE 2.0 increases the catch-up contribution limit for individuals who reach ages 60-63 by the end of the year. The new limit, which is optional, is equal to the greater of (1) $10,000 or (2) 150% of the generally applicable age 50 catch-up limit. Plans that wish to incorporate the increased catch-up contribution limit should work with their payroll department and their recordkeeper to ensure the new limit can be administered. The new limit is permitted on and after January 1, 2025.
401(k) Plans, 403(b) Plans, and Governmental 457(b) Plans:
12-Month Time Frame to Allocate Forfeitures
In 2023, the IRS issued proposed regulations (upon which there is reliance) that require defined contribution plans to use forfeitures no later than 12 months after the end of the plan year in which the forfeitures were incurred. The rules took effect for plan years beginning on or after January 1, 2024. The rules included a transition period allowing forfeitures incurred during a plan year beginning before January 1, 2024 to be treated as though they were incurred in the first plan year beginning on or after January 1, 2024.
Forfeitures incurred before and during the 2024 plan year must be allocated during the first plan year beginning on or after January 1, 2025.
