The Affordable Care Act (ACA) made widespread reforms to health plan coverage when it was enacted in 2010. Since then, changes have been made to various ACA requirements for employer-sponsored health coverage. These changes include annual cost-of-living increases to certain ACA dollar limits, adjustments to ACA reporting requirements and updates to preventive care coverage guidelines.
Changes to some ACA requirements will take effect in 2025 for employers sponsoring group health plans. For example, the affordability percentage under the ACA’s employer mandate rules for applicable large employers (ALEs) will increase slightly for plan years beginning in 2025, which may provide ALEs with more flexibility when setting their employee contribution rates.
To prepare for 2025, employers can use this checklist to review these ACA requirements and develop a compliance strategy. Employers should ensure that their health plan documents, including the summary of benefits and coverage (SBC), are updated to reflect any new plan limits. Employers should also ensure that up-to-date information is communicated to employees at open enrollment time.
Plan Design Changes
The following plan design requirements have changed for 2025:
Limits on cost sharing for essential health benefits;
Coverage affordability percentage under the employer mandate rules; and
Dollar amounts for calculating penalties under the employer mandate rules.
Reporting Deadlines
The following deadlines apply for reporting under Sections 6055 and 6056:
March 3, 2025: Individual statements for 2024 must be furnished by this date. An alternative method of furnishing Form1095-B is available; and
March 31, 2025: Electronic IRS returns for 2024 must be filed by this date.
Links and Resources
IRS Rev. Proc. 2024-35 indexed the ACA’s affordability percentage for plan years beginning in 2025.
IRS Rev. Proc. 2024-14 modified the penalty amounts under the ACA’s employer mandate for 2025.
CMS guidance established the cost-sharing limits for 2025 plan years.
Plan Design Changes
Overall Cost-sharing Limits
Confirm that your plan’s out-of-pocket limit for essential health benefits (EHB) does not exceed the ACA’s limit for the plan year beginning in 2025.
Effective for plan years beginning on or after Jan. 1, 2025, a health plan’s out-of-pocket limit for EHB may not exceed $9,200 for self-only coverage and $18,400 for family coverage. This limit applies to all non-grandfathered group health plans, including fully insured and self-funded plans. Any out-of-pocket expenses required by or on behalf of an enrollee with respect to EHB must count toward the cost-sharing limit. This includes deductibles, copayments, coinsurance and similar charges but excludes premiums and spending on noncovered services. Also, plans that use provider networks are not required to count an enrollee’s expenses for out-of-network benefits toward the ACA’s cost-sharing limit.
If you have a health savings account (HSA)-compatible high deductible health plan (HDHP), keep in mind that the plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2025, the out-of-pocketmaximum for HDHPs is $8,300 for self-only coverage and $16,600 for family coverage.
Health Flexible Spending Account (FSA) Limits
First-dollar Preventive Care Coverage
Excepted Benefit Health Reimbursement Arrangement (HRA)
Grandfathered Plan Status
Employer Mandate Rules
ALE Status for 2025
Will you be an ALE for 2025?
The ACA’s employer mandate rules apply only to ALEs. ALEs are employers with 50 or more full-time employees (including full-time equivalent employees) on business days during the preceding calendar year. Employers determine each year, based on their current number of employees, whether they will be considered an ALE for the following year.
Under the ACA’s employer mandate rules, ALEs are required to offer affordable, minimum value (MV) health coverage to their full-time employees (and dependent children) or pay a penalty. An ALE will be subject to penalties if one or more full-time employees receive a subsidy for purchasing health coverage through an Exchange. An individual may be eligible for an Exchange subsidy either because the ALE does not offer coverage to that individual, or offers coverage that is unaffordable or does not provide MV.
If you answered “no,” you can stop completing this section of the checklist. Because your company is not an ALE for 2025, the ACA’s employer mandate rules do not apply.
Offer of Health Plan Coverage
Possible Penalty Amounts
Reporting of Coverage (Code Sections 6055 and 6056)
Affected Employers
Is your company subject to ACA reporting under Code Sections 6055 or 6056?
The following employers are subject to ACA reporting under Internal Revenue Code (Code) Sections 6055 and 6056:
Employers with self-funded health plans (Section 6055 reporting)
ALEs with either fully insured or self-funded health plans (Section 6056 reporting)
Employers who are not ALEs and have fully insured health plans are not subject to these ACA reporting requirements.
Employers subject to this reporting must file certain forms with the IRS each year and provide annual statements to individuals who are covered under the health plan (under Section 6055) and each of the ALE’s full-time employees (Section 6056). Note that ALEs with self-funded plans are required to comply with both reporting obligations. However, to simplify the reporting process, the IRS allows ALEs with self-funded plans to use a single combined form to report the information required under both Sections 6055 and 6056.
If you answered “no,” you can stop completing this section of the checklist, as your company is not subject to ACA reporting under Sections 6055 or 6056.
File Electronic Returns by Deadline
Provide Individual Statements by Deadline
Patient-Centered Outcomes Research Institute (PCORI) Fee
Pay PCORI Fees (Self-funded Plans only)
Pay PCORI fees by July 31, 2025, for plan years ending in 2024.
Under the ACA, employers with self-funded plans must pay PCORI fees each year. These fees are reported and paid using IRS Form 720 (Quarterly Federal Excise Tax Return). For fully insured plans, the health insurance issuer is responsible for reporting and paying these fees.
PCORI fees are due each year by July 31 of the year following the last day of the plan year. For plan years ending in 2024, the PCORI fee payment is due July 31, 2025.
Disclosure Requirements
SBC
Provide an updated SBC in connection with the plan’s open enrollment period for 2025.
Health plans and issuers must provide an SBC to applicants and enrollees to help them understand their coverage and make coverage decisions. The SBC should be included with the plan’s enrollment materials. If coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.
The SBC must follow strict formatting requirements. Federal agencies have provided templates and related materials, including instructions and a uniform glossary of coverage terms, for health plans and health insurance issuers to use. It should be updated before the plan’s open enrollment period to reflect any changes in coverage for the upcoming plan year.
For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC; however, this obligation is satisfied for both parties if either one provides the SBC. Typically, the issuer will prepare the SBC for an insured health plan, although the employer may need to provide it to employees.
Employee Notice of Exchange
Notice of Patient Protections
Grandfathered Plan Notice
This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2024 Zywave, Inc. All rights reserved.