In this episode, Richard and Sarah are joined by Ian Morrison, a Partner in Seyfarth’s ERISA Litigation group to delve into a new line of cases alleging that forfeitures are plan assets, and must be used to benefit plan participants. The plaintiffs in these cases are claiming that using forfeitures to offset employer contributions – a common practice – amounts to disloyal conduct by the fiduciaries and self-dealing by the employer. This episode also explores the defense’s arguments that this practice is lawful, backed by longstanding Treasury Regulations and Department of Labor guidance. Grab your cup of coffee and tune in to hear Richard and Sarah discuss these recent cases with Ian, and the steps plan sponsors can take to navigate this evolving legal landscape.

Click here to listen to the full episode.

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Seyfarth Synopsis: The IRS has announced increases to key limits for certain health and welfare benefit programs, including HSA contributions for 2025.

The IRS recently released 2025 cost-of-living adjustments applicable to dollar limitations for certain employer-sponsored health and welfare plans in Rev. Proc. 2024-25.

The changes in the 2025 cost-of-living adjustments for employer-sponsored health and welfare plans that were announced in Rev. Proc. 2024-25 are summarized in the table below:

Employers who sponsor health and welfare plans should take advantage of the new increased limits by making adjustments to plan administrative/operational procedures.

Seyfarth Synopsis: Following years of back and forth, new final rules were published by the Department of Health and Human Services (HHS) on May 6, 2024 reinstituting the Department’s interpretation that the prohibition on discrimination by health programs and activities “on the basis of sex” includes treatments for gender-affirming care. In this post, we explore the rule’s impact on self-funded group health plans. Please see our firm’s Legal Update here for a broader look at the rule.

Background and Key Take-Aways

As summarized below HHS’s Final Rule under Section 1557 would essentially prohibit covered health plans from directly or indirectly discriminating on the basis of gender identity (e.g., limiting or otherwise excluding coverage for gender-affirming care). 

While most employer health plans will not be considered covered entities under the Final Rule (and, as such, will be exempt from many of the rule’s process requirements), employers will likely determine they cannot impose such exclusions or limitations regardless, either by operation of the rule’s impact on their third-party administrator, or due to other Federal laws. 

No Discrimination

When the Affordable Care Act was signed into law in 2010, it contained a provision (Section 1557) that forbids discrimination on the basis of race, color, national origin, sex, age or disability by a health program or activity that is receiving federal financial assistance. 42 U.S.C. Section 18116. HHS was authorized to issue regulations under Section 1557, and started out issuing an RFI in 2013, at the time under the Obama Administration. That process culminated in final regulations issued in 2016 that interpreted the protected category of “sex” to include gender identity.  HHS under the Trump Administration then replaced those final rules with new final rules issued in 2020 that reversed course on the interpretation of “sex”.  When the Biden Administration came into office, HHS issued new proposed rules to include sexual orientation and gender identity under the scope of Section 1557, and those rules were finalized recently – the Final Rule

Under Section 1557, covered entities may not restrict a patient’s or participant’s ability to receive medically necessary health care based on one of the protected classes, including “sex.” The Final Rule confirmed “sex” covers gender identity including gender-affirming care, based solely on sex assigned at birth or a person’s gender identity.

Other Requirements

Entities covered by Section 1557 (“Covered Entities”) must:

  • Appoint a Section 1557 Coordinator, if they have 15 or more employees
  • Implement written policies and procedures, including if they have 15 or more employees a grievance procedure.
  • Train relevant employees on the policies and procedures, and document and retain records of the training for at least three years
  • Create a Notice of Nondiscrimination as well as a notice regarding access assistance, which must be distributed annually and upon request, and posted in a conspicuous location on the Covered Entity website and physical locations. The notice of access assistance must be in the 15 most common language in a state that the entity is located or does business.  It must also be included in various other notices, including the Covered Entity’s HIPAA Notice of Privacy Practices, Section 1557’s Notice of Non-Discrimination, and notices of denial of benefits, EOBs and appeal rights. Sample language for the Notices can be found at

Covered Entities

The guidance provides a new definition of “Health Program or Activity” which broadly includes all operations of an entity that is principally engaged in providing or administering health services or health insurance coverage. The Final Rule specifically provides the following are Covered Entities:

  • Health plans (but only if they receive any federal financial assistance from HHS)
  • Health programs or activities administered by HHS
  • Health programs or activities administered by a Title I entity, including State Exchanges and Federally-Facilitated Exchanges

Importantly, the Final Rule also reiterates that Section 1557 does not include employers with regard to their employment practices, including the provision of health benefits (but as discussed below, the definition could potentially encompass an employer’s group health plan). 

HHS was well aware of the potential legal challenges the Final Rule would face and was careful to state that it would not be interpreted in a manner that would violate Federal protections for religious freedom and conscience. This discussion did not stop an immediate suit by a Catholic Hospital system and two Florida state agencies.

Group Health Plans

Group health plans (a legal term generally characterizing employer-sponsored health plans) clearly are “health plans” (as that term is used under Section 1557). So to the extent a group health plan receives Federal financial assistance, it would be subject to Section 1557. In our experience, this is uncommon and typically would only apply in the context of a retiree benefit receiving a CMS retiree drug subsidy or structured as an Employer Group Waiver Plan (EGWP). Most employer-sponsored group health plans offered to active employees would not be covered by Section 1557. Moreover, insured group health plans will almost certainly be covered where they are Medicare supplemental arrangements.

HHS reiterates the concept found in ERISA that group health plans are separate entities from employers and plan sponsors. So, whether Section 1557 will apply will be analyzed separately as to each.  Even where the employer is not subject to Section 1557, the group health plan might be (and vice versa). HHS states in the preamble “We decline to take the position that a group health plan is an indirect recipient of Federal financial assistance whenever the plan sponsor receives Federal financial assistance.”

Third Party Administrators

Much has already been made about the Final Rule’s approach to regulating third party administrators (TPAs) for self-funded group health plans. A TPA may be a Covered Entity where it is affiliated with a health issuer (which is commonly the case), as most health insurers receive some form of CMS funding. A covered TPA may be held responsible for:

  • A violation of 1557 where the TPA is involved in the plan design
    • “OCR does not intend to enforce this rule against a [TPA] for a plan design that it did not design and over which it has no control. Where the discriminatory terms of the plan originated with the covered [TPA] rather than with the plan sponsor, the [TPA] could be liable for the discriminatory design feature under section 1557.”
    • Note, HHS indicated in the preamble that even if the TPA did not design the plan, OCR may refer the matter to EEOC or DOJ for investigation under other laws.  Notably, the EEOC has jurisdiction over Title VII enforcement, which does apply directly to most employers and similarly prohibits discrimination on the basis of sex.   
  • Administration of a neutral plan term in a manner that could violate 1557
    • HHS warns in the preamble “… if a covered [TPA] applies a plan’s neutral, nondiscriminatory utilization management guidelines in a discriminatory way against an enrollee, OCR will proceed against the covered [TPA] as the entity responsible for the decision.”

Aside from the guidance above, HHS cites to two recent federal cases where TPAs were held liable for a violation of Section 1557 based on a discriminatory feature in a self-funded plan. The preamble provides insufficient context to assess whether the citations to these cases are intended to constitute an endorsement of their rationale. 

Practical Impact

Many employer plans simply adopt the benefit package designed and structured by their TPA.  Within that context, the final rule appears to indicate the TPA in such an instance is likely to be considered to be involved in the plan design, and therefore may be responsible for any 1557 violations by administering that design (even if the group health plan itself is not a Covered Entity). Moreover, given the regulatory ambiguity and recent case law in this space, plan sponsors may see TPAs refusing to administer self-funded plans that seek to exclude treatments for gender-affirming care.  

Other Legal Constraints on Self-Funded Plans

Note that Section 1557 may not be the only constraint on the design and administration of plans regarding coverage for gender affirming care. As ERISA does not preempt other federal laws, plan sponsors should be aware of the implications under Title VII of the Civil Rights Act of 1964 (Title VII), the Americans with Disabilities Act of 1990 (ADA), and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

In 2020, the United States Supreme Court found in Bostock that “sex” as used in Title VII includes gender identity. 

More recently, the Fourth Circuit ruled in their 2022 decision in Williams v Kincaid that although the ADA explicitly excludes certain conditions from being a covered disability (i.e., transvestism, transsexualism, and gender identity disorders), gender dysphoria (as a distinct condition) may be a covered disability under the ADA. SCOTUS denied cert. So that decision stands in that jurisdiction. 

Further, the MHPAEA prohibits plans from imposing non-quantitative treatment limitations on mental health conditions unless such limitations are in parity with those imposed on medical conditions. Most commonly recognized medical classification systems would treat gender dysphoria as a mental health condition, meaning heightened protections apply. 

We will continue to monitor this space. And, be sure to contact your Seyfarth Employee Benefits lawyer for counsel as you tackle this thorny area.

On Wednesday, May 22, at 3:00 p.m. Eastern, Employee Benefits partners Ben Conley and Diane Dygert will present “The Final Rule: 1557 Nondiscrimination Rule and LGBTQ Protections under the Civil Rights Act of 1964” as part of a webinar for The ERISA Industry Committee (ERIC).

Diane and Ben will lead a discussion on the Department of Health and Human Services (HHS) new final rule that rewrites the previous administration’s nondiscrimination rules and strengthens protections that prohibit discrimination on the basis of sex, including discrimination on the basis of sexual orientation and gender identity. The webinar will discuss the major changes and how it may impact plans.

For more information and to register, click here.

On April 23, 2024, the DOL finalized its 2023 proposed package of amendments to the regulations defining who is a fiduciary under ERISA by virtue of providing investment advice for a fee, and amendments to seven existing prohibited transaction exemptions. This latest iteration of the fiduciary rule, the DOL’s third attempt at revising this rule, was published in the Federal Register on April 25, 2024, and is set to become effective September 23, 2024 (although there is a one-year transition period for PTEs 2020-02 and 84-24).

The DOL made a number of changes from the 2023 proposed rule in response to comments it received, and went to great lengths to distinguish the new rule from its 2016 rule, which was vacated by the 5th Circuit Court of Appeals. Still, on May 2, 2024 the new rule was challenged in the Eastern District of Texas.

We hit the highlights and the significant changes from the 2023 proposed rule in our Legal Update available here. As always, if you have any questions on how this impacts your retirement plan, please do not hesitate to reach out to your Seyfarth Employee Benefits attorney.

This post was originally published to Seyfarth’s Global Privacy Watch blog.

Seyfarth Synopsis: This past Monday, the Office for Civil Rights (OCR) at the Department of Health and Human Services (HHS) issued its final rule aimed at strengthening the HIPAA Privacy rules as they are applied to reproductive health data.

On the heels of the release of the 2022 US Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, the Biden Administration directed the Federal agencies to examine what they could do to protect women’s health and privacy. Shortly thereafter, HHS released guidance under HIPAA related to reproductive health care services under a health plan, focusing on information required to be disclosed by law, for law enforcement purposes, and to avert a serious threat to health or safety (see our earlier Alert here). Then, in April 2023, HHS issued proposed modifications to the HIPAA Privacy Rule aimed at these concerns. A year later, the agency finalized those rules on April 22, 2024 – the Final Rule.

Continue Reading HHS Strengthens HIPAA Rules to Protect Reproductive Health Privacy

Seyfarth Synopsis: On March 28, 2024, Washington State’s Governor, Jay Inslee, signed into law a bill that creates a new state-run retirement program called “Washington Saves.”  Under the program, “covered employers” must give “covered employees” the opportunity to contribute a portion of their pay to an individual retirement account (“IRA”) on a pre-tax basis in order to save for retirement. 

Which Employers Must Comply With Washington Saves?

Only “covered employers” must comply with Washington Saves.  A “covered employer” is an employer that:

  • has been in business in Washington State for at least two (2) years;
  • has a physical presence in the State as of the immediately preceding calendar year;
  • does not offer a qualified retirement plan, such as a 401(a), 401(k), 403(b) plan, to their “covered employees” (employees who are at least age 18) who have been continuously employed for at least one year; and
  • employs, and at any point during the immediately preceding calendar year employed, employees working a combined minimum of 10,400 hours (which translates to approximately 5 full-time or full-time equivalent employees.)
Continue Reading Washington Saves; Washington State’s New State-Mandated Retirement Program

Seyfarth Synopsis: The FTC approved a final rule to implement a nationwide ban on non-compete agreements between employers and their workers. The rule would supersede most state laws regarding noncompete provisions except where a state law prohibition is stricter.

On April 23, 2024, the Federal Trade Commission (FTC) approved in a 3-to-2 vote a final rule (“Final Rule”) which bans post-employment non-compete clauses between employers and their “workers,” including independent contractors. The Final Rule will become effective 120 days after being published in the Federal Register. As of the date of this post, the Final Rule has not been published in the Federal Register. If it becomes effective, the Final Rule would supersede any contrary state laws. 

The ban covers not just traditional non-compete provisions, but any restrictive covenant with a worker that acts to prevent the worker from taking a position with another employer or starting a separate business. For example, the Final Rule explains that an overbroad confidentiality provision could prevent an employee from working for other employers in the same field and, therefore, may be treated as a prohibited non-compete restriction. On the other hand, the ban provides an exception for covenants not to compete as part of a sale of a business, and it grandfathers certain agreements with “senior executives” that are entered into prior to the effective date.

The ban’s scope is very broad and leaves many questions open for interpretation. To assist our clients, Seyfarth has published a multidisciplinary legal update and FAQs. For access, please click here.

Seyfarth Synopsis: The agencies have finalized a portion of their proposed rules impacting so-called “junk insurance” regarding short-term limited-duration insurance, but deferred finalizing the more significant changes that would have impacted most fixed indemnity policies. 

In early April 2024, the Treasury Department, Department of Labor, and Health and Human Services (the “agencies”) issued final rules regarding short-term limited-duration insurance (STLDI). Avid readers of this blog may recall our earlier post on the proposed rules, found here, which impacted STLDI as well as other issues surrounding excepted benefits. The new final rules primarily address the STLDI portion of the proposed rules, and generally adopt them as proposed. Aside from a new notice requirement, the agencies delayed finalizing the rules on fixed indemnity insurance, but warned that the delay should not be an endorsement of the abusive practices that have emerged in this space.

Continue Reading Agencies Defer Final Action on Junk Insurance, While Suggesting Caution Against One Last “Binge”

In 2024, we commemorate a significant milestone in the landscape of employee benefits law: the 50th Anniversary of the Employee Retirement Income Security Act (ERISA). Enacted on Labor Day in 1974 by President Gerald Ford, ERISA has since served as a cornerstone in safeguarding the retirement and welfare benefits of American workers.

Here at Seyfarth, our employee benefits team is thrilled to embark on a celebration of this momentous occasion. Join us as we delve into the evolution of ERISA over the last half-century, sharing insights on its historical significance and its enduring impact on employers nationwide.

Throughout the year, we’ll be posting regular nuggets of knowledge, exploring the intricacies of ERISA’s development and its current implications for employers. From its inception as a response to concerns about pension abuses, to the shift to 401(k) plans and the focus on health and welfare benefits, ERISA has undergone significant transformations, shaping the way businesses approach their employee benefits.

But our journey doesn’t stop at reflection; we’re also looking ahead. As we celebrate ERISA’s past, we’ll dare to envision its future. What will ERISA look like in the next 50 years? How will it adapt to changing workforce dynamics, emerging technologies, and evolving societal needs? These are questions we’ll explore as we peer into the crystal ball of employee benefits law.

As we embark on this commemorative journey, we invite you to join the conversation. Follow #SeyfarthEB and #ERISAis50 on LinkedIn and subscribe to our blog for updates, insights, and perhaps a bit of speculation about the future of ERISA. Together, let’s celebrate 50 years of ERISA and look forward to the next chapter in the ever-evolving landscape of employee benefits law.