2025 Year End Benefits Reminders

Overview

The end of the year flurry of activity in life extends to benefit plans, as well. This article summarizes key reminders for year-end action items for your benefit plans. The intention here is to provide a high-level summary of requirements along with the most basic context information. Deep dive details are intentionally omitted in favor of providing a streamlined summary for easy reference.

Gag Clause Attestation - Due Dec 31^st

One Sentence Summary
The annual Gag Clause attestation is due by December 31, 2025.

What Must Be Certified?
Contracts with providers, networks, third-party administrators (TPAs), pharmacy benefit managers (PBMs), or other service providers do not contain Gag Clauses.

Who Must File?
Group health plans and health insurance issuers of both fully insured and self-funded plans must file a Gag Clause Prohibition Compliance Attestation (GCPCA).

• For fully insured plans, insurance carrier issuers technically must file the GCPCA and often do so on behalf of the employer. Plan sponsors should confirm that the carrier will submit the attestation on their behalf.
  
  
• For self-funded and level-funded plans, the plan sponsor is responsible for filing. Many self-funded plans rely on their TPA, PBM, or other service providers to submit the attestation on their behalf. However, when delegated, the legal obligation for filing remains with the plan sponsor. Vita will assist in this filing process for self-funded employers. Also, CIGNA will handle the filing for CIGNA level funded plans.

What is a Gag Clause?
A Gag Clause is any contractual term that directly or indirectly restricts the plan from:

• Accessing provider-specific cost or quality of care information or data
• Electronically accessing de-identified claims and encounter information or data, or from sharing these types of information or data
• Sharing such information with business associates

Generally, this means that insurers and TPAs can no longer restrict a plan’s access to certain data by claiming that such data is “proprietary” in nature.

How is Filing Done?
Attestations must be submitted through the CMS Health Insurance Oversight System (HIOS). Users access HIOS through the CMS Enterprise Portal and register for a CMS IDM account. Additional information is available in the HIOS Reference Guide

More Information
For additional details on the Gag Clause provision, please refer to our detailed article here.

125 Nondiscrimination Testing

Two Sentence Summary
Pretax plan nondiscrimination testing for calendar year plans should be completed by this time. Unlike 401(k) plans, any necessary corrective action must be finalized by Dec 31^st.

Why is Testing Necessary?
Nearly all benefit programs that provide tax advantages require discrimination testing to ensure that tax benefits do not disproportionately benefit highly compensated and key employees.

Which Plans Must be Tested?
Testing requirements apply to Section 125 cafeteria plans, self-insured health plans, health FSAs, dependent care FSAs, HRAs, and group term life insurance plans.

What is Pre-Testing?
Because corrections must be made within the plan year, it is ideal to pre-test plans early in the year. We recommend applying a green light/yellow light/red light preliminary assessment.

• Green Light: If pre-testing passes with flying colors, it is highly likely that there will not be a discrimination problem, thus employers can safely not worry/wonder.
• Yellow Light: If pre-test results show just barely passing or just barely failing, employers will know to watch the test carefully and retest prior to the end of the plan year so that corrective action can be taken prior to the end of the plan year.
• Red Light: If pre-test results show clear failure, employers will likely want to address corrections with highly compensated and key employees earlier in the year to avoid administrative difficulty with making required corrections later in the year.

If pre-testing was not completed earlier in the year, it is critical to get testing completed as soon as possible so that any necessary corrections can be made prior in the final payroll cycle.

Life Insurance Imputed Income

One Sentence Summary
The value of group term life insurance amounts in excess of $50,000 must be imputed to employees as taxable wages (based on IRS Table I).

Doesn't Payroll Handle That?
Many, if not most employers, process their group term life insurance Table I imputed income through payroll on an ongoing basis throughout the year. However, if your payroll system is not set up to impute the value on an ongoing basis, a one-time calculation of the value of the life insurance benefit (based on Table I) must be added to employee’s W-2 as imputed income.

Is the Imputed Income Subject to Payroll Taxes?
Yes. The value of group term life insurance that is imputed income is added to employees’ gross wages on Form W-2, making it subject to federal and state income taxes as well as FICA taxes (Social Security and Medicare).

1095 Forms

One Sentence Summary
Applicable Large Employers (ALEs) are subject to reporting health insurance coverage information on Form 1095-B and 1095-C.

When is the Deadline?
There are several different deadlines to highlight: