Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

There are always plenty of new retirement plan investment performance and fee cases, and it’s hard for a plan sponsor, even one that is doing everything properly, to be assured that it won’t be the target of a lawsuit.

A recent case serves as a reminder of the very basic guidance plan sponsors often hear from attorneys and other retirement plan advisors:  if you put it in writing that you’re going to do something, be sure to do it, and be sure to document that you did it.  For retirement plans, this comes up with respect to a plan’s investment policy statement or “IPS”.  In Macias v. Sisters of Charity of Leavenworth Health System, the Colorado federal district court did not grant the defendants’ (the plan sponsor and its board, the retirement investment committee, and others) motion to dismiss the case for failure to state a claim, and the reason for the denial related to allegations of defendants’ failure to follow an IPS.  Even if a defendant is confident that it will ultimately win the case, dismissing it at this point saves the onerous legal costs of getting to that win; due to the costs of litigation, many of these cases end up settling.  In this case, the court concluded that the plaintiffs’ allegations that the defendants failed to evaluate the performance of the plan’s investments at least once a year against certain benchmarks defined in the IPS was enough to state a plausible claim that the defendants failed to follow a prudent process.  In these cases, the process a plan sponsor engages in often can become more important than investment results, and an imprudent process can lead to greater legal risk.

While a retirement plan isn’t required to have an IPS, it’s considered a best practice, and the plan’s investment advisors will want to have this document in place to make sure there is agreement on the decisions and standards on which their services will be measured.  Reviewing that IPS each year to make sure that the retirement investment committee or other investment fiduciary is following the required processes and conducting sufficient oversight of investment alternatives and plan expenses would be wise.  Then, be sure to document any actions or decisions in writing; if it’s not documented, it may become a factual issue that keeps a case alive.  Even doing all of this can’t completely protect a plan sponsor against a case moving into costly discovery, especially where fees are involved, but it will help to put the plan sponsor in the best possible position and may help get a claim related to investment performance dismissed.

By: Lisa Rippey and Elena Humphrey

In a landmark decision, a federal district court in Texas struck down nearly all of the 2024 amendments to the HIPAA Privacy Rule, known as the Reproductive Health Privacy Rule (the “Rule”), ruling that the Department of Health and Human Services (“HHS”) exceeded its statutory authority. The ruling, which applies nationwide, essentially eliminates the enhanced federal privacy protection for reproductive health care information. However, it is important to note that certain regulated entities are still required to comply with applicable state privacy and consumer laws regarding the disclosure of reproductive health care information.

Background

The Reproductive Health Privacy Rule, effective late 2024, introduced protections for reproductive health care information, broadly defined to include services like abortion, IVF, contraception, and gender-affirming care. Key provisions included:

  • Prohibiting the use or disclosure of reproductive health information for investigations regarding or imposing liability on any person for seeking, obtaining, providing or facilitating lawful reproductive health care.
  • Requiring pre-disclosure attestations to ensure information would not be used for prohibited purposes.
  • Defining terms like “reproductive health care” and adjusting related HIPAA compliance obligations.

For a more in-depth discussion of the Reproductive Health Privacy Rule, please see this blog post.

The rule was challenged by a Texas physician and her practice, who argued it unlawfully restricted mandatory child abuse reporting, redefined statutory terms like “person” and “public health,” and violated the “major questions doctrine” by regulating politically significant areas without clear congressional authorization.

Court’s Ruling

The court found the Reproductive Health Privacy Rule invalid for three primary reasons:

  1. Conflict with State Laws: The Rule improperly limited state child abuse reporting laws by prohibiting disclosures based solely on lawful reproductive health care and imposing complex attestation requirements.
  1. Impermissible Redefinitions: The Rule’s definitions of “person” (excluding unborn humans) and “public health” conflicted with federal law, exceeding HHS’s authority.
  1. Major Questions Doctrine: The Rule regulated politically significant issues, such as abortion and gender-affirming care, without explicit congressional approval, and intruded upon the state’s authority as outline in Dobbs.

Compliance Considerations

Although the court has vacated the Reproductive Health Privacy Rule, it is important to understand that the original HIPAA Privacy Rule and its protections remain in effect.

In addition, many states have their own privacy and consumer protection laws that may impose additional obligations on health plans when handling reproductive health care information.  For instance, California recently amended its Confidentiality of Medical Information Act to restrict the disclosure of abortion-related information by health care providers, health plans, contractors and employers in certain situations.

Given this regulatory shift, HIPAA-covered entities and business associates should revisit any compliance measures that were implemented in response to the now-vacated rule.  Recommended next steps include:

  • Policy Updates: Review and revise policies related to PHI disclosures for judicial, administrative, or law enforcement purposes to ensure alignment with the current HIPAA Privacy Rule and applicable state laws.
  • Training Revisions: Update workforce training programs and staff materials to reflect operational or procedural changes.
  • Business Associate Agreements (BAAs): Reassess and, if needed, amend BAAs that were amended in light of the Reproductive Health Privacy Rule.
  • Notices of Privacy Practices (NPPs): Covered entities that updated NPPs in anticipation of the February 16, 2026 compliance deadline should consider making additional updates. Note that NPP requirements related to substance use disorder records under 45 C.F.R. Part 2 remain unchanged. HIPAA regulations indicate revised NPPs should be distributed within 60 days of a material change. In other words, employers should revise and distribute their updated NPPs by August 17, 2025.

Please contact Lisa Rippey or Elena Humphrey if you have any questions about what impact this may have on your group health plan.

On May 15, 2025, the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) issued a statement of non-enforcement (the “Statement”) announcing that they will not enforce the 2024 Final Rule under the Mental Health Parity and Addiction Equity Act (“MHPAEA”).

The MHPAEA requires group health plans to provide mental health and substance use disorder benefits similarly to medical and surgical benefits. On September 9, 2024, the Departments released the 2024 Final Rule under the MHPAEA (the “2024 Final Rule”), which amended the previous 2013 Final Rule (the “2013 Final Rule”). The 2024 Final Rule imposed several significant compliance requirements on plan sponsors including, but not limited to, the following:

  • Plans that provide mental health and substance use disorder benefits must provide “meaningful benefits” for those conditions in every benefit classification in which medical and surgical benefits are provided.
  • Plans must abide by additional requirements for the nonquantitative treatment limitation (“NQTL”) comparative analysis, including a description of the NQTL, identification of the factors and how they are used, and findings and conclusions.
  • Plans must collect and evaluate data to assess the impact of NQTLs and take action when there are “material differences in access” to mental health or substance use disorder benefits.
  • ERISA Plans must certify that they engaged a “qualified service provider” to prepare the plan’s NQTL comparative analysis.

The enforcement of these requirements was staggered. Some provisions were to be enforced for plan years beginning on or after January 1, 2025, while others were to be enforced for plan years beginning on or after January 1, 2026.

The Statement follows a lawsuit filed on January 17, 2025 by the ERISA Industry Committee (“ERIC”) in the U.S. District Court for the District of Columbia. ERIC is challenging specific provisions of the 2024 Final Rule, arguing, among other things, that the rule is arbitrary and capricious and contrary to law. On May 9, 2025, the Departments filed a motion requesting that the court pause the litigation while the Departments reconsider the 2024 Final Rule and determine whether to modify or rescind it. The court granted this request on May 12, 2025, and the Departments issued the Statement soon thereafter.

In response to the ERIC litigation and in line with Executive Order 14219, which directs federal agencies to review rules that may place unnecessary burdens and compliance costs on small businesses and private parties, the Departments announced that they will not enforce the 2024 Final Rule, or pursue enforcement actions based on a failure to comply, until a final decision in the ERIC litigation is issued, plus an additional 18 months. During this time, the Departments will also reexamine how each department enforces the MHPAEA.  

In the Statement, the Departments clarify that “the enforcement relief applies only with respect to those portions of the 2024 Final Rule that are new in relation to the 2013 Final Rule.” In other words, the MHPAEA’s statutory obligations, including those amended by the Consolidated Appropriations Act, 2021 (“CAA”) and subregulatory guidance (specifically, FAQs Part 45), remain in effect and subject to enforcement.

It is also important to note that, while the Statement encourages states to also halt the enforcement of the 2024 Final Rule, it does not apply to state regulators who interpret and enforce both the MHPAEA and state mental health parity laws. This means that state insurance departments have discretion regarding whether to follow the Statement for the health plans in which it regulates (e.g., fully-insured plans).

As a result of this statement of non-enforcement, plan sponsors must continue to comply with the requirements under the 2013 Final Rule, perform an NQTL comparative analysis pursuant to the CAA, and closely monitor future developments as the Departments reevaluate the 2024 Final Rule. Plan sponsors, particularly those sponsoring fully-insured plans, should also pay close attention to the applicable state department of insurance’s guidance on this topic to ensure that their parity compliance standards align with the state’s enforcement rules.  

Please contact Lisa Rippey or Elena Humphrey if you have any questions regarding the Statement or what impact it may have on your group health plan.

On May 1, 2025, the Internal Revenue Service (IRS) released Revenue Procedure 2025-19, which provides the 2026 inflation adjusted limits related to Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs).

The following charts summarize the 2026 limits for HSAs and HDHPs. The 2025 limits are provided for reference.

Annual HSA Contribution Limit
20252026
Self-Coverage Only$4,300$4,400
Family Coverage$8,550$8,750
Minimum Deductible of an HDHP
20252026
Self-Coverage Only$1,650$1,700
Family Coverage$3,300$3,400
Maximum Out-Of-Pocket Expense Limit for an HDHP
20252026
Self-Coverage Only$8,300$8,500
Family Coverage$16,600$17,000

For more information on the 2026 HSA and HDHP limits, please contact the Stinson LLP contact with whom you regularly work.

The SECURE 2.0 Act of 2022 requires certain 401(k) and 403(b) plans to include automatic enrollment and escalation features for the first plan year beginning after December 31, 2024, meaning that for those plans with a calendar plan year, the new year brought a new compliance obligation.

Beginning on January 1, 2025, 401(k) and 403(b) plans adopted after December 29, 2022 must automatically enroll plan participants to make pre-tax contributions between 3% and 10% of eligible pay during their first year of participation.  Then, unless the participant affirmatively elects otherwise, the percentage of pay deferred must increase by one percentage point on the first day of each plan year, until the participant is contributing at least 10%, but no more than 15% of pay.

Certain plans adopted after December 29, 2022 are exempt from this requirement, including:

  • plans sponsored by an employer, if the employer has existed for less than three years;
  • plans sponsored by employers with less than eleven employees;
  • governmental plans;
  • church plans; and
  • SIMPLE plans.

Employers should keep in mind guidance published by the IRS in December 2023 covering the application of these requirements to plan mergers.  In this guidance, the IRS noted that in certain circumstances, the merger of a plan exempt from the requirements with a plan that is subject to the requirements will result in the merged plan being subject to the requirements, but in other circumstances the surviving plan will be exempt from the requirements.  Employers considering a plan merger should consult with employee benefits counsel.

Employers who fail to properly implement the new requirements may be able to correct these errors under the IRS’s Employee Plans Compliance Resolution System (“EPCRS”).  Under EPCRS, employers that timely correct automatic enrollment and escalation errors and comply with the applicable notice requirements are able to take advantage of reduced corrective contribution requirements. Please contact any member of Stinson’s Employee Benefits practice if you have questions about the new automatic enrollment and escalation requirements or correcting failures to properly implement these new requirements.

On November 1, 2024, the Internal Revenue Service (IRS) released Notice 2024-80, which sets forth the 2025 cost-of-living adjustments affecting dollar limits on benefits and contributions for qualified retirement plans. The IRS also announced the health savings account (HSA) and high deductible health plan (HDHP) annual deductible and out-of-pocket expense adjustments earlier this year in Revenue Procedure 2024-25 and the health flexible spending arrangement (Medical FSA) adjustments in Revenue Procedure 2024-40. Finally, the Social Security Administration announced its cost-of-living adjustments for 2025 on October 10, 2024, which includes a change to the taxable wage base.

The following chart summarizes the 2025 limits for benefit plans. The 2024 limits are provided for reference.

For more information on the 2025 cost-of-living adjustments, please contact the Stinson LLP contact with whom you regularly work.

On November 7, 2024, the IRS introduced Form 15620, a new standardized form for taxpayers opting to make a Section 83(b) election. Previously, taxpayers needed to send a letter to the IRS with the required information to make the Section 83(b) election effective.

When a taxpayer receives restricted property (usually in the form of stock or a partnership interest) in connection with the performance of service (e.g., as an employee), they are generally required to include the fair market value of the property as income in the year that the property vests. However, by filing a Section 83(b) election, the taxpayer can choose to accelerate the income inclusion to the grant date rather than the vesting date, which may be beneficial if the taxpayer expects the property to appreciate significantly in value between these dates. Section 83(b) elections are commonly made for equity grants to employees in start-up companies where the company’s value at the grant date is usually low.

In order for a Section 83(b) election to be effective, the Form 15620 needs to be filed with the IRS within 30 days after the date the property is transferred. Late filings are ineffective and there is currently no approved correction method. Taxpayers should also provide a copy of Form 15620 to their employer for record-keeping.

Currently, the Form 15620 will need to be mailed to the IRS office where the taxpayer files their federal income tax return. However, we expect that the IRS will eventually allow for the new form to be filed electronically.

The U.S. Department of Labor (DOL) announced two settlements with major insurance companies this month that highlight the importance of employers avoiding the collection of group life insurance premiums from employees until the insurer has approved them for coverage, including receipt and approval of required evidence of insurability (EOI). These settlements follow two similar agreements the DOL entered into with other insurers in 2023.

Benefit plans often require submission of EOI when employees attempt to enroll in life insurance outside of an open enrollment period or for amounts above the guaranteed issue amount. The DOL alleged that two insurance companies, Unum Life Insurance Company of America (Unum) and Lincoln Life & Annuity Company of New York and its affiliates (Lincoln), violated ERISA when they accepted premiums for group life insurance without making a decision on whether the employee submitted satisfactory EOI. In many cases, no EOI had been submitted at all. When presented with a claim for plan benefits from beneficiaries of the covered individual, the insurers denied the claims on the grounds that EOI was not provided. The DOL took the position that the insurers had an affirmative duty under ERISA to make timely coverage decisions and to not accept premiums until coverage was approved, regardless of what the plan document provided. In a press release announcing the settlement with Lincoln, the DOL noted that in some cases Lincoln had accepted premiums for covered employees for years without receiving EOI.

Each of the settlement agreements contains generally the same terms, including:

  • A prohibition on denying claims solely on the basis that EOI was not submitted or approved if the insurer had accepted premiums for a certain period of time (three months for Lincoln, and 90 days for Unum). 
  • If Lincoln denies a claim for a reason relating to EOI, it must remit or credit to the employer any premiums paid for the coverage. If Unum denies a claim for a reason relating to EOI, it must remit the premiums to the beneficiary, the covered employee, or the employer, as appropriate.
  • The insurers may not deny continuing coverage to covered employees who have paid premiums for a year or more, but have not yet provided EOI. In fact, both of the settlement agreements bar the insurer from requesting EOI any later than one year after the date on which the insurer received the first premium payment for the coverage. Any request for EOI made during this one-year period may only consider the individual’s health status on the date the first premium payment was received by the insurer. If the insurer wishes to request EOI after receiving premiums, it must provide the employer with a notice to be delivered to the employee or eligible dependent.
  • The insurer is required to send to its group life insurance policyholders (i.e., employers) a notice stating that: (a) employers must not collect premiums from or on behalf of any employee for coverage requiring EOI until the insurer expressly confirms that it has approved the employee’s EOI; and (b) in the event that an employer collects premiums from an employee without first confirming that the insurer has approved such employee’s or eligible dependent’s EOI, the employer may be liable to the beneficiaries of such employee or eligible dependent.

While these settlements are between insurers and the DOL, an employer that sponsors a group life insurance plan is – like the insurer – a fiduciary with respect to such plan, and may have a fiduciary duty to avoid collecting premiums for coverage that is not in effect. 

KEY TAKEAWAY

The key takeaway from these settlement agreements for an employer sponsoring a group life insurance plan is: To avoid potentially having to pay a life insurance claim out of its own pocket, the employer should have a process in place to ensure that it does not collect premiums from employees until coverage has been approved by the insurer, including approval of any EOI. Consistent with what is suggested in the terms of the settlement agreements, a number of courts have held that an employer breaches its fiduciary duty under ERISA if it collects premiums for life insurance coverage that is not in effect. In the event an insurer returns to an employer premiums collected by the employer with respect to an employee who is not covered by the group life insurance plan due to EOI issues, the employer should ensure that any portion of such premiums withheld from the employee’s pay is returned to the employee (or the employee’s estate, if applicable).

As signed into law, Section 603 of the SECURE 2.0 Act of 2022 (“SECURE 2.0”) required that effective as of January 1, 2024, participants in 401(k) plans, 403(b) plans, or governmental 457(b) plans, who were age 50 or older and whose Social Security wages for the previous year exceed $145,000 (indexed), only be permitted to make catch-up contributions under such plans on a Roth (after-tax) basis.  This requirement of SECURE 2.0 has raised a number of legal and plan administration concerns among plan sponsors and retirement plan service providers.

On the legal side, plan sponsors were concerned that plans that did not offer Roth contributions would have to cease allowing older workers to make catch-up contributions effective as of January 1, 2024.  This concern stemmed from language in Section 603 that required all plan participants to have the option to make catch-up contributions on a Roth basis if any plan participant is required to make their catch-up contributions on a Roth basis.  Consequently, in order to comply with the requirements of SECURE 2.0, sponsors of plans which do not permit Roth contributions would have to either begin allowing Roth contributions effective January 1, 2024, or eliminate the ability of older participants to make catch-up contributions to the plan.  In addition, an apparent drafting error in SECURE 2.0 can be read as eliminating the ability to allow catch-up contributions from the Internal Revenue Code.

On the administrative side, plan service providers and plan sponsors have struggled to design systems to timely and accurately identify those plan participants who would be required to make catch-up contributions on a Roth-only basis.  Appropriately identifying those workers limited to Roth catch-up contributions would typically require the sharing of data between retirement plan recordkeepers and the plan sponsor’s payroll provider.  Service providers and plan sponsors have expressed concern that coordinating information sharing among all the affected parties would not be possible by January 1, 2024.

In response to these concerns, the IRS issued Notice 2023-62 on August 25, 2023.  In this notice the IRS announced transition relief that will give plan sponsors and plan service providers additional time to prepare for the implementation of Section 603 of SECURE 2.0.  The transition relief provides, among other things, that:

  •  As anticipated, SECURE 2.0 does not prohibit plans from offering catch-up contributions;
  • Until January 1, 2026, retirement plans that: (i) allow participants who are age 50 or older and had wages in excess of $145,000 (indexed) in the previous year to make catch-up contributions on a pre-tax basis or (ii) do not provide for designated Roth contributions; will be treated as satisfying the requirements of Section 603 of SECURE 2.0; and
  • The Treasury Department and IRS intend to release additional guidance with respect to Section 603 of SECURE 2.0, providing that: (i) plan participants who do not have wages for purposes of FICA for the preceding calendar year (e.g., partners, self-employed individuals, and certain governmental employees) are not subject to the requirement to make catch-up contributions on a Roth basis; (ii) plan sponsors may treat an election to make catch-up contributions on a pre-tax basis by a plan participant required to make catch-up contributions on a Roth basis pursuant to Section 603 of SECURE 2.0 as an election to make such contributions on a Roth basis; and (iii) in the case of multiple employer and multiemployer plans, Section 603 of SECURE 2.0 would not require  unrelated employers to aggregate the wages of plan participants to determine which participants are limited to making only Roth catch-up contributions.

In addition to providing a preview of future guidance, Notice 2023-62 also requests comments on whether future guidance should address plans that allow catch-up contributions, but do not include a qualified Roth contribution program. Plan sponsors are not required to take any action in response to Notice 2023-62; but, plan sponsors that were contemplating adding Roth contributions to their plans effective January 1, 2024, in order to comply with Section 603 of SECURE 2.0 may want to revisit those plans.  If you have any additional questions regarding the impact of Notice 2023-62 on your retirement plans, please reach out to a member of Stinson’s employee benefits and executive compensation practice group.