There are a number of trends and milestones in the legislative and regulatory arena in 2025 that have the potential to impact healthcare costs for employers and employees alike. Employers should be aware of these trends and make informed decisions when it comes to employee benefits.
- Increase of Health Benefits Costs
- Increase of Demand for Mental Health Services
- The Family Glitch Fix
- Innovation in Health Insurance and Employee Benefits
- Consolidated Appropriations Act
Increase of Health Benefits Costs
Some experts predict a 10% increase in overall health benefits costs, but that isn’t the whole story. Factors like labor costs, Rx, and supply chain issues also have major implications for the 2025 overall healthcare spending.
Increase of Demand for Mental Health Services
Over the past decade, the use of mental health services by the workforce has skyrocketed. With the continuing impacts of COVID and legislation that has required more transparency and tighter regulations, people have greater access to, and awareness about the importance of, mental health. But finding practitioners for mental health services continues to be an issue, with extended appointment wait times and rising costs.
The Family Glitch Fix
In October, the Treasury and the IRS issued final updates amending the Affordable Care Act (ACA) regulations that determine affordability for an employee’s family members with regard to employer-sponsored health care. These changes were effective beginning with the 2025 tax year and are intended to fix a situation known as the Family Glitch.
Under existing regulations from 2012, the affordability of employer-sponsored coverage for a family member was determined by the affordability of self-only coverage. Depending on how an employer-subsidized the cost of family coverage, it was possible that coverage could be considered affordable for the employee, but not for family members. Yet those family members would not be eligible for subsidized coverage on the exchange.
With these amended regulations, family members would potentially be eligible for a premium tax credit in the marketplace, but the employee would not. When families applied for 2025 coverage during the open enrollment period in the fall of 2024, the new rules were used to determine whether anyone in the household qualified for a premium subsidy. Will this lead to more employees with families seeking coverage from the marketplace? That remains to be seen.
Innovation in Health Insurance & Employee Benefits
While health care is a tightly regulated industry, there is still room for innovation in health insurance and employee benefits. In recent years, we’ve seen new models emerge for managing costs for both employers and employees.
While similar in function to health insurance, health care sharing ministries (HCSMs) are not actually health insurance providers. These organizations are made up of members who share religious or ethical beliefs and make regular financial contributions which are used to reimburse health care costs for other members. To control spending costs, HCSMs generally require members to be in good health and to agree to a shared statement of belief. The statement of belief may impact what types of procedures and medications are eligible for reimbursement.
Available beginning in 2020, an individual coverage health reimbursement arrangement (ICHRA) allows tax-free reimbursement of individual health insurance for businesses of all sizes. An ICHRA is a formal, group health plan that allows the employer to reimburse employees for health care plans purchased from the marketplace. Once an employee has enrolled in an individual health care plan, they submit their receipts for qualified expenses or premium payments and their employer reimburses them, tax-free. From the employer side, payroll deductions are handled in the same way as employer-sponsored group plans.
Another cost-containment strategy is reference-based pricing (RBP), which eliminates the disparity between in-network and out-of-network pricing. Used by some self-insured employers, RBP establishes benchmark pricing for services, usually indexed to Medicare reimbursement rates. Covered employees may see the providers of their choice, with no network requirements, as long as the provider agrees to accept the RBP amounts as payment in full.
Consolidated Appropriations Act (CAA)
Some healthcare-related elements of the Consolidated Appropriations Act (CAA) go into effect at the end of 2024, while other provisions are being postponed until at least 2025. One piece to be aware of moving into 2025 relates to surprise billing reports.
The No Surprises Act puts limits on most surprise medical billing — unexpected and often large out-of-network bills sent directly to patients. The Secretary of Health and Human Services, in consultation with the Federal Trade Commission and U.S. attorney general, is required to conduct an annual study on the effects of the provisions in the Act. Additionally, the General Accounting Office must submit a report to Congress on the impact of surprise billing provisions and a report on adequacy of provider networks.
Get Help with Employee Benefits
Employers looking to get started on looking for a new health insurance carrier can do so now, rather than waiting for open enrollment to begin.
To learn more about Payday HCM's employee benefits services, or to see how we are already helping countless businesses with employee benefits and health insurance plans, contact us today.
