Federal Health & Welfare Updates

On June 27, 2025, the U.S. Supreme Court announced its long-awaited opinion in Kennedy v. Braidwood Management, Inc., which challenged the legality of ACA preventive care coverage requirements. The Court ruled that members of the U.S. Preventive Services Task Force (USPSTF), an HHS entity that makes evidence-based recommendations regarding preventive healthcare services, were properly appointed under the U.S. Constitution. As a result, group health plans must continue to cover all ACA-required preventive care without cost-sharing, including items and services that receive “A” or “B” ratings from the USPSTF.

Background

In Braidwood, the plaintiffs are several small businesses and individuals who object to the ACA mandate that requires insurers and group health plans to cover certain preventive care without cost-sharing. The lead plaintiff, Braidwood Management, Inc., offers health coverage to approximately 70 employees through a self-insured plan and wants to exclude coverage for certain preventive care drugs and impose copays or deductibles for other preventive services.

The plaintiffs argued that members of the USPSTF were not appointed in accordance with constitutional requirements for appointing either principal or inferior U.S. officers. Therefore, according to the plaintiffs, the USPSTF preventive care recommendations should be voided, so plans and insurers would not be required to cover those items and services without cost-sharing.

The Texas district court agreed with the plaintiffs, ruling that USPSTF members were principal officers who had not been properly appointed. The Fifth Circuit affirmed this ruling on appeal. (See our October 11, 2022, April 3, 2023, and July 2, 2024, editions of Compliance Corner for further details on the prior court decisions.)

Following the Fifth Circuit ruling, the Biden administration’s Department of Justice appealed the case to the Supreme Court. Both the Biden and succeeding Trump administrations argued that the USPSTF members are inferior officers and thus may be appointed by the HHS secretary. (See our February 25, 2025, article for more information on the executive branch’s position.)

The Supreme Court’s Opinion

In a 6-3 decision, the Supreme Court reversed the Fifth Circuit ruling and, agreeing with the Trump administration, held that the USPSTF members were inferior officers who were appointed in accordance with the Constitution. The opinion, written by Justice Kavanaugh, explains that USPSTF members are inferior and not principal officers because their work is “directed and supervised” by the HHS secretary, who is a principal officer appointed by the president and confirmed by the Senate. Specifically, the HHS secretary has the power to remove USPSTF members at will and statutory authority to directly review and block USPSTF recommendations prior to their effective dates. In reaching its conclusion, the Court largely rejected the plaintiffs’ argument that Congress intended the USPSTF to be an independent agency, whose members wield power to make preventive care recommendations unchecked by the HHS secretary.

Furthermore, the Court dispelled assertions by the plaintiffs and the dissent that Congress had not given the HHS secretary authority to appoint USPSTF members. The opinion specifies how Congress, through two laws taken together, expressly vested the power to appoint USPSTF members in the HHS Secretary, thus validating the secretary’s appointments to date.

The Court remanded the case back to the lower court for further proceedings consistent with the opinion.

Employer Takeaway

For group health plan sponsors, the Court’s decision essentially preserves the status quo, meaning non-grandfathered group health plans must continue to cover all preventive care required by the ACA without cost-sharing. As confirmed by the opinion, this requirement includes items and services that receive “A” or “B” ratings (based on the degree of certainty of a net benefit) from the USPSTF. Accordingly, plan participants will continue to be able to receive USPSTF-recommended screenings for diabetes and lung, breast, cervical, and colorectal cancer; statin medications to prevent heart disease; nicotine patches to curtail tobacco use, among numerous other items and services, without cost-sharing.

Of course, in addition to the USPSTF recommendations, plans and insurers must also continue to cover without cost-sharing any vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) and preventive care and screenings for children and women recommended by the Health Resources and Services Administration. Please see our June 17, 2025, article for further details on the general ACA preventive care coverage requirements.

Additionally, the Court’s ruling reinforces the significant control that the HHS secretary has over the USPSTF. Historically, the USPSTF has been comprised of a key panel of healthcare experts who have played a critical role in evaluating preventive services. The HHS secretary, with newly confirmed authority to appoint, supervise, and remove USPSTF members and block recommendations he does not agree with, arguably may be able to reshape the scope of covered preventive care. The current HHS secretary, Robert F. Kennedy, Jr., has already made significant ACIP staffing changes, which could potentially affect vaccine recommendations.

Accordingly, employers should be aware of the Braidwood decision and monitor developments regarding preventive services coverage requirements closely. We will report relevant updates in Compliance Corner.

Kennedy v. Braidwood Management, Inc.

On June 18, 2025, a federal court in the Northern District of Texas ordered that the 2024 HIPAA Privacy Rule to Support Reproductive Healthcare Privacy be vacated. This is the latest order in the Purl v. HHS case, which was the subject of an article in the February 11, 2025, edition of Compliance Corner.

Background

In this case, the plaintiffs are a doctor and her clinic. They argued that the rule will impair their ability to report child abuse or participate in public health investigations and that HHS violated the federal Administrative Procedures Act by acting in an arbitrary and capricious manner when the agency promulgated the rule outside its statutory authority. The plaintiffs obtained a preliminary injunction so that they could continue to work with Texas state authorities in their investigations into child abuse. The parties then filed for Summary Judgement, which led to this decision.

The Court’s Opinion

The court relied on the authority granted by the federal Administrative Procedures Act (APA), as well as Supreme Court precedent, to vacate the 2024 Privacy Rule. Under the APA, administrative agencies cannot promulgate rules that go beyond what statutes passed by Congress provide. In addition, the Supreme Court ruled in Loper Bright Enterprises v. Raimundo that courts do not have to defer to agencies when it comes to the subject matter regulated by those agencies. The Supreme Court also established the “major questions” doctrine, under which courts can determine whether an agency rule decides a political question, which is the province of Congress, or interferes with state law. Citing these authorities, the district court concluded that the 2024 Privacy Rule exceeded the authority granted to HHS via HIPAA by preventing states from regulating child abuse, by creating new definitions that extended HHS’s authority beyond that provided by HIPAA, and by asserting authority that Congress did not grant it.

The court agreed with the plaintiffs’ assertion that the 2024 Privacy Rule places limits on states’ ability to require or regulate the reporting of child abuse. The court noted that HIPAA itself states that the statute cannot be used to limit states’ ability to report or regulate child abuse and that the 2024 Privacy Rule can be read to do just that.

The court also determined that HHS included definitions of terms such as “persons” and “public health” in the 2024 Privacy Rule that were not authorized by HIPAA. The court concluded that these new definitions allowed the 2024 Privacy Rule to interfere with the state’s ability to regulate child abuse by excluding unborn children in the rule’s definition of “person,” and excluding both abortions and medical interventions related to gender identity in the “public health” definition. The court reasoned that these definitions provided wider latitude to deny the state access to information that could aid it in determining whether child abuse occurred.

Finally, the court ruled that the “major questions” doctrine required a determination that the 2024 rule exceeds statutory authority because it tackles a subject of political significance that is left to Congress and because it interferes with a law enforcement function that is the province of the states.

For these reasons, the court vacated the 2024 Privacy Rule and granted summary judgment to the plaintiffs in the case. The order to vacate applies nationwide.

Employer Takeaway

Although it is possible that this order will be appealed, it is likely that the 2024 Privacy Rule will remain vacated and will no longer be in effect. This means that group health plans will no longer be required to comply with the additional obligations imposed by the 2024 Privacy Rule regarding reproductive healthcare nor be subject to enforcement by HHS for related violations. However, and importantly, plans must continue to comply with HIPAA's Privacy Rule regarding the protection of PHI, and if applicable, any state laws that provide additional privacy protections. Employers, especially those that sponsor self-insured plans, should work with their legal counsel to review and revise their HIPAA policies and procedures, training materials and other documents, to ensure these conform to current laws and regulations, including when it comes to handling PHI in response to a request by law enforcement or for a judicial or administrative proceeding.

Purl v. HHS

On May 7, 2025, in Watson v. EMC Corp., a U.S. District Court in Colorado ruled in favor of a plaintiff’s claim against the defendant, EMC Corporation, granting the plaintiff’s request for equitable relief on an ERISA fiduciary breach claim.

Background

The plaintiff, Marie Watson, sued EMC Corporation, her husband’s former employer, for leading her husband to believe his basic life insurance coverage remained in force following the termination of his employment. The plaintiff’s husband was insured under the group plan for basic life insurance benefits totaling $663,000. The group life insurance policy was issued by MetLife, and EMC was the ERISA plan fiduciary with a duty to act in the interests of participants and beneficiaries.

The plaintiff’s husband accepted a voluntary separation plan (VSP) in 2015. Under the VSP, he stopped working for EMC, but EMC continued to pay his employee benefits without interruption through November 24, 2016. At the end of the VSP, he emailed EMC to ensure his benefits would remain in place. EMC informed him that his benefits would remain active and that he would be billed by EMC’s payroll vendor, ADP, to continue benefits. Nine months later, he unexpectedly passed away. However, he had paid all the bills sent to him by ADP prior to his death.

MetLife subsequently denied the plaintiff’s beneficiary claim based on her husband’s failure to convert his group life insurance coverage to individual coverage at the end of the VSP period. She later sued EMC for a breach of fiduciary duty under ERISA, alleging that EMC provided misleading information, which led to her husband’s failure to convert his group life insurance coverage to an individual policy. The court ruled in favor of EMC, and the plaintiff later appealed the case to the Tenth Circuit. The Circuit court ruled that the plaintiff may be able to recover under ERISA’s equitable remedy and sent the case back to the district court to consider the plaintiff’s claim for breach of fiduciary duty under ERISA’s equitable relief provision. Specifically, ERISA provides a “catchall” equitable relief for beneficiaries harmed by breaches of fiduciary duties, regardless of whether benefits are due under the terms of either the group plan or a converted individual policy.

The Court’s Opinion

Ruling in favor of the plaintiff, the district court cited EMC’s fiduciary duty to provide complete and accurate information, especially in response to direct inquiries from beneficiaries. While the defendant argued that it had no duty to provide information regarding the husband’s life insurance policy because he failed to clarify that he was inquiring about life insurance benefits, the court held the argument was unavailing. Specifically, the court ruled that as an ERISA fiduciary, EMC had an obligation to respond to his inquiry with complete and accurate information regarding all benefits, including the information that his life insurance policy would need to be converted in order for him to maintain those benefits.

In considering the appropriate remedy for the plaintiff’s claim, the court concluded that a surcharge was justified. The court noted that EMC's breach of fiduciary duty resulted in actual harm to the plaintiff, as she was denied her expected benefits under the life insurance policy. The court, therefore, awarded a surcharge equal to the policy’s value ($663,000) minus any premiums that would have been paid to maintain the coverage.

Employer Takeaway

The court’s ruling underscores the risk for plan fiduciaries when providing inaccurate or incomplete communications with employees on life insurance or similar plan coverage. As noted in our previous article regarding the case, ERISA plan sponsors should always take great care to adequately communicate with plan participants regarding when group life insurance coverage terminates under the terms of the plan, including any conversion options. For further information regarding compliance aspects of group life insurance benefits, please ask your broker or consultant for a copy of the NFP publication Group Term Life Insurance: A Guide for Employers.

Watson v. EMC Corp.

On May 23, 2025, the Congressional Research Service (CRS) published an overview of the ACA’s preventive services coverage requirement. According to this report, between 150 million and 180 million individuals are enrolled in a plan subject to the preventive services coverage requirement.

The ACA requires group health plans (including most private health insurance plans, but not grandfathered plans) and insurers to cover certain preventive care without cost-sharing. The required covered care includes services given an “A” or “B” rating from the U.S. Preventive Services Task Force (USPSTF), vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), and preventive care and screenings for children and women recommended by the Health Resources and Services Administration (HRSA).

The report provides examples of these services. Services given an “A” or “B” rating from the USPSTF include cancer screenings and preventive care; preventive care for prenatal and postpartum individuals, for newborns and children, and for older adults; and cardiovascular disease, healthy weight, and diabetes prevention screenings and care. Most USPSTF recommendations are based on age or sex and include preventive medications as well as services.

The ACIP recommends pediatric and adult vaccines, including vaccines for diphtheria, tetanus, pertussis, measles, mumps, rubella, influenza, and COVID-19. The recommendations are further refined by age and other factors, such as gender or health condition, and include precautions and contraindications.

The HRSA provides guidelines for both pediatric and women’s preventive services. Services for children include both physical and developmental screenings. Services for women include breast and cervical cancer screenings, well-woman visits, and contraceptive services and contraceptive care.

As noted above, the ACA requires plans to provide coverage of recommended services and items without consumer cost-sharing, including deductibles, copayments, or coinsurance. This includes items and services that are “integral to the furnishing of a recommended preventive service.”

The report clarifies that if the service is provided for a purpose other than prevention, then the ACA will likely not require that it be covered as preventive care. Further, plans can impose coverage limits if the recommendation or guideline does not specify the frequency, method, treatment, or setting for the service. That said, if there are changes in recommendations or guidelines, plans generally must provide coverage as of plan years that begin one year after the change.

The report concludes by highlighting several considerations for Congress. For instance, the report suggests that Congress may wish to revise the coverage requirement by eliminating categories of coverage, requiring coverage beyond what is currently recommended, or basing coverage requirements on something other than the categories of recommendations. In making these suggestions, the CRS cautions that any changes could affect access to and utilization of preventive care, which may in turn affect health outcomes. In addition, changes to the requirement must consider factors such as cost, access, and variations in existing coverage.

Employer Takeaway

Given that the U.S. Supreme Court is soon expected to weigh in on this requirement in Braidwood Management Inc. v. Becerra, the CRS report provides context for what is at issue in the case. Our latest article on the case can be found in the February 25, 2025, edition of Compliance Corner. As we discussed in that article, it is important for employers to monitor developments, but group health plans should generally continue to follow all applicable preventive care services rules and guidance, including, for fully insured plans, requirements imposed at the state level.

The ACA Preventive Services Coverage Requirement

On June 2, 2025, the DOL introduced its enhanced opinion letter program. The program is designed to help employers and other stakeholders understand and comply with federal laws, including employee benefit laws that are enforced by the DOL.

The recently announced program spans five key DOL enforcement agencies, including the Employee Benefits Security Administration (EBSA), which oversees private retirement and health and welfare benefit plans. The EBSA will issue advisory opinions and information letters through the program. Advisory opinions apply the law to real-world questions and specific facts presented by employers and other stakeholders. Generally, these opinions concern matters where it is unclear how to apply existing regulations or guidance. Thus, advisory opinions, although technically limited in scope to the issues posed and requesting party, can provide insights to others regarding the DOL’s position on a particular topic. By contrast, information letters highlight well-established legal principles or interpretations. Both advisory opinions and information letters are designed to promote clarity, consistency, and transparency in the application of federal laws.

To support the program, the DOL launched a landing page at dol.gov/opinion-letters. This site allows users to review past guidance; for example, an employer could review historical information and access an opinion on whether stop-loss insurance purchased by an employer is considered plan assets for ERISA purposes. Moreover, the site provides instructions and tips for writing and submitting new requests for guidance.

Employer Takeaway

By launching the enhanced opinion letter program, the Trump administration is signaling the federal government’s intention to publicly release more guidance. Consequently, an increase in the issuance of DOL advisory opinions and information letters is expected over the next few years. This is likely welcome news for many employers, who, as plan administrators, must often navigate situations in which existing compliance guidance is lacking or ambiguous. The enhanced program may help these employers determine a reasonable course of action with less doubt.

Accordingly, the program provides employers with the opportunity to obtain clear, written guidance from the DOL and possibly reduce compliance and legal risks. Of course, employers considering requesting guidance from the DOL through the program should engage experienced employee benefits counsel to discuss and draft the request and to explain the potential legal and practical implications of an advisory opinion.

We will be monitoring the revamped program and website and will report any relevant updates in Compliance Corner.

DOL.gov, Launch of Opinion Letter Program Announcement

DOL.gov, Opinion Letters

On March 20, 2025, in Owens v. Blue Shield of California et al., a U.S. District Court in California granted and denied in part a motion to dismiss a claim involving the applicability of ERISA to state continuation coverage.

The plaintiff was employed with one of the defendants, Fredrickson and Company, through March 2020 and received employer-sponsored health coverage through Blue Shield of California. The plaintiff’s health benefits ceased on March 31, 2020, at which time she elected continued coverage under Cal-COBRA and paid monthly premiums and received coverage for the next two and a half years. During this time, Fredrickson and Company was acquired by codefendant Gallagher & Co., which subsequently cancelled coverage with Blue Shield. On December 15, 2022, Blue Shield terminated Fredrickson’s health insurance coverage retroactive to July 2022 and notified the plaintiff that her coverage had been terminated. However, the plaintiff received no advanced warning of the cancellation, and Blue Shield continued to accept her premium payments through October. As a result, she was without coverage for several months but still incurred medical bills.

The plaintiff subsequently sued Fredrickson, Gallagher, and Blue Shield under ERISA. However, the defendants moved to dismiss the complaint, arguing that California law (and not ERISA) governed the case. In addition, the defendants argued that, even if ERISA applied, the plaintiff had failed to state a claim for relief against them under the cited provisions.

The court ultimately ruled that ERISA governed the case, as it involved a Cal-COBRA continuation plan, where an employee receives continuing health coverage under an employer’s ERISA-governed plan after the employee’s employment ends. Significantly, the court allowed the plaintiff’s denial of benefits claim under ERISA Section 502(a)(1)(b) to proceed, finding the plaintiff had sufficiently alleged entitlement to benefits under an ERISA plan, and the cancellation of the benefits without adequate notice and an explanation of her rights. Furthermore, the court denied the motion to dismiss the plaintiff’s claim for failure to provide requested plan documents, to the extent asserted against defendants Frederickson and Gallagher, since the complaint adequately alleged they had served as plan administrator.

However, the court dismissed the plaintiff’s fiduciary breach claims under Section ERISA 502(a)(2), which requires allegations of a plan-wide injury, because the facts of the complaint only supported claims of injuries to individual participants. The court also dismissed the plaintiff’s fiduciary breach claim under Section 502(a)(3), citing the complaint’s failure to allege the type of equitable relief the plaintiff was seeking or to differentiate this relief from the denial of benefits claim for unpaid medical bills.

Employer Takeaway

The applicability of ERISA to claims involving state continuation coverage (such as Cal-COBRA) remains an unsettled area of law, as courts continue to grapple with the interplay between state and federal laws governing continuation coverage. However, the court’s decision in this case highlighted the potential liability issues for plan sponsors under ERISA for state continuation coverage breaches. While the court chose to dismiss several portions of the plaintiff’s claim pertaining to ERISA, it did rule that ERISA would govern claims involving state continuation coverage if the underlying plan is governed by ERISA. As a result, employers must remain aware of their ERISA fiduciary responsibilities for both federal and state continuation coverage, particularly with regard to participant notification and communication requirements. Employers should also be especially mindful of continuation coverage issues in situations where there is a change in a plan or plan administrator due to an acquisition.

Owens v. Blue Shield of California et al.

On May 21, 2025, in Tiara Yachts v. Blue Cross Blue Shield of Michigan, the Sixth Circuit Court of Appeals determined that the defendant carrier acted as a fiduciary for a plan governed by ERISA and violated its fiduciary duty to the plan by overpaying providers for services rendered to plan participants.

Background

The plaintiff is a company that offered its employees a self-insured benefits plan and hired the defendant carrier to administer it. According to the contract between the parties, the defendant was responsible for interpreting the plan’s terms, calculating benefits, deciding whether to grant or deny claims on the plaintiff’s behalf, and ultimately paying providers. The plaintiff had some oversight of the defendant, such as the authority to contest paid claims within 60 days and to request an audit of claims from the preceding 24 months.

The plaintiff terminated the relationship with the defendant and filed this federal lawsuit, alleging that the defendant overpaid providers and then profited by clawing back those overpayments (a scheme referred to as “flip logic”). The plaintiff asserted that the defendant acted as a fiduciary to the benefits plan and that this behavior was a violation of the defendant’s fiduciary duty to act in the interest of the plan. This duty prohibited the defendant from “self-dealing” and engaging in transactions that benefit the defendant at the expense of the plan. Allegedly, “flip logic” allowed the defendant to use plan assets to enrich itself instead of preserving those assets and using them for the benefit of participants.

At the district court level, the defendant argued that the plaintiff failed to establish that the defendant acted as a fiduciary and, therefore, could not claim that it violated any fiduciary duty. The district court agreed with the defendant, determining that the claim payment process at the heart of the “flip logic” arrangement was a matter of contract rather than a fiduciary issue. In addition, the district court determined that the defendant had similar arrangements in other plans that it administered and that the practice was a way of doing business rather than a specific practice that applied only in this case (and, therefore, could not form the basis of a violation of a duty to this specific plan). Accordingly, the district court granted the defendant’s motion to dismiss the case.

Sixth Circuit’s Opinion

The Sixth Circuit took the case on appeal and made several determinations. First, the appellate court determined that a fiduciary relationship existed between the parties, since the defendant had control over the plan assets. The contractual relationship did not trump this fiduciary relationship. Indeed, the appellate court noted that the contract supported the case that the defendant was a fiduciary by establishing the defendant’s control over the plan’s assets. The Sixth Circuit reasoned that potential violations of the contract could also mean that the defendant violated its fiduciary duty.

In addition, the Sixth Circuit ruled that the fact that the defendant had similar arrangements elsewhere, as part of a “business practice,” was not enough to avoid any allegation of a breach of fiduciary duty. Although the appellate court had ruled in a previous case (that also involved the defendant) that such a practice was not a violation of fiduciary duty because the defendant was not acting as a fiduciary in that case, in this instance, the court determined that the defendant was acting as a fiduciary for the reasons discussed above. The court also noted that the fact that this practice was widespread did not mean that it was immune to breach of fiduciary duty claims.

The Sixth Circuit reversed the district court’s decision, sending the matter back to the district court for further proceedings.

Employer Takeaway

This case highlights the importance of ERISA’s fiduciary obligations when determining the relationship between the employer and a third-party claims administrator. Although there is a contractual relationship between the parties, that contract does not act as a shield against claims of violations of fiduciary duties against a TPA when that fiduciary relationship exists. It is important for TPAs to take their delegated duties seriously and not assume that they do not apply simply because other legal relationships exist. Employers should monitor the behavior of TPAs and consult with their attorneys if they have questions concerning the applicability of ERISA’s fiduciary obligations to any issue with their own plans. For further information concerning fiduciary governance, please ask your broker or consultant for a copy of the NFP publication ERISA Fiduciary Governance: A Guide for Employers.

Tiara Yachts v. Blue Cross Blue Shield of Michigan

On May 22, 2025, the House of Representatives passed the “One Big Beautiful Bill Act” to implement President Trump’s agenda as part of the budget reconciliation process. In addition to the bill’s numerous tax provisions, the legislation includes a large number of sweeping changes to the rules governing tax-advantaged savings accounts, Medicaid, PBM transparency, and Medicare. However, the bill is still in the early stages of the legislative process, and these provisions could change significantly in the Senate and before the legislation is signed into law.

The bill includes a number of new proposals regarding HSAs, which are individually owned savings and investment bank accounts that can be used to pay for the qualified medical expenses of account holders, their spouses, and their tax dependents. Under existing law, there are several restrictions on HSA eligibility, including being covered by a qualified HDHP and not having “impermissible coverage,” which is any other coverage that pays toward the HDHP plan deductible. Impermissible coverage also includes a general purpose HRA or health FSA or enrollment in Medicare Part A. However, the legislation would allow individuals who are eligible for Medicare Part A but enrolled in an HDHP to continue contributing to an HSA.

In addition, the bill would relax HSA eligibility for those individuals who might be enrolled in a direct primary care service arrangement or an onsite employee medical clinic, which under current law could make someone ineligible to contribute to an HSA. The legislation would also allow individuals to be eligible for an HSA even if an individual’s spouse is enrolled in an FSA. The bill would also modify the rules that would allow a rollover from a terminated FSA or HRA into an HSA. There would also be an increase in HSA contribution limits by $4,300 for HSA-eligible individuals with single-only coverage and by $8,550 for individuals with family coverage. Furthermore, the bill includes a provision that allows HSA money to be used for “qualified sports and fitness expenses” up to certain limits. This could include things like gym memberships or fees and participation or instruction in physical exercise or a physical activity. The sports and fitness expenses limit would be $500 for single coverage and $1000 for all others.

Beyond the numerous HSA provisions, the bill includes proposed Medicaid spending cuts and provisions related to Medicare Part D PBM transparency. The legislation proposes to codify the Trump Administration’s Final 2019 Regulations permitting Individual Choice Health Reimbursement Arrangements to be used for purchasing qualified health insurance and to rename the policy as the Custom Health Option and Individual Care Expense (CHOICE) arrangements. The CHOICE arrangements would satisfy certain nondiscrimination and ACA requirements, including the ACA requirement that HRAs must be fully integrated with a group health plan. For small employers (non-ALEs), a CHOICE arrangement would include a bonus tax credit based on the number of enrolled employees.

Employer Takeaway

While the proposed changes would generally take effect in 2026, the bill must still undergo further consideration in the Senate, and the proposals could change significantly before the legislation makes its way to the president. Nonetheless, employers should closely monitor legislative developments regarding the act, and should be prepared to take further action when the bill is finally enacted. A copy of the full bill can be accessed here.