The Spring 2025 Employee Benefits Briefing brought together Nixon Peabody attorneys and industry professionals to explore the latest developments in employee benefits law. The session reflected the growing complexity of the regulatory landscape and the increasing scrutiny facing plan sponsors and fiduciaries.
Below is a summary of the most significant insights from the session, organized by topic and designed to help plan administrators and fiduciaries stay informed and prepared.
Watch the Employee Benefits Briefing (Spring 2025)
Mental health parity: Compliance obligations remain despite regulatory pause
Although the Department of Labor has announced a non-enforcement policy for certain 2024 mental health parity regulations provisions, many core requirements remain in effect. Plan sponsors should not interpret the pause as a blanket exemption.
Key points include:
- Still enforceable:
- Quantitative and non-quantitative treatment limitation (NQTL) compliance
- Comparative analyses under the Consolidated Appropriations Act
- Documentation obligations for agency review and participant requests
- Temporarily suspended:
- Fiduciary certification requirements
- The “meaningful benefit” standard
- Outcomes data review thresholds
Plan sponsors should continue to maintain robust documentation and compliance processes, as enforcement may resume retroactively.
Executive orders and their impact on employee benefits
Recent executive orders issued by the Trump administration signal a shift in federal benefits policy, with implications for prescription drug pricing, wellness programs, and reproductive health benefits.
Highlights include:
- Prescription drug pricing:
- Introduction of “Most Favored Nation” pricing to align US drug costs with international benchmarks
- Direct-to-consumer purchasing initiatives and increased PBM transparency
- Wellness and IVF:
- A task force has been established to explore expanded wellness benefits and reduce IVF costs.
- Potential regulatory flexibility for employer-sponsored wellness programs
- Gender-affirming care:
- Executive orders aim to restrict coverage for individuals under 19, though implementation would require further rulemaking.
These directives are not yet enforceable regulations, but they provide insight into the administration’s policy priorities.
Fiduciary litigation: Prescription drug benefits under the microscope
Litigation targeting health and welfare plan fiduciary governance, with a particular focus on oversight of prescription drug benefits, is gaining momentum. Recent class actions allege fiduciary failures in PBM selection, contract negotiation, and ongoing cost and performance monitoring.
Key takeaways for plan sponsors:
- Include defensive provisions in your health and welfare plan documents.
- Establish a formal health and welfare fiduciary committee to evaluate PBM performance, fees, and guarantees.
- Conduct regular RFPs and engage independent consultants, auditors, and legal counsel.
- Negotiate appropriate fee arrangements and contractual provisions.
- Document fiduciary decisions and oversight activities.
- Evaluate current oversight activities against issues that litigations have and will target.
Although early motions to dismiss have been granted in a couple cases (with re-hearings pending), plaintiffs are refining their strategies. A successful challenge will lead to a wave of similar lawsuits.
Retirement plan administration: Preparing for SECURE 2.0 and beyond
Plan sponsors should prepare for several administrative updates in 2025 and 2026, particularly those stemming from SECURE 2.0 and the Cycle 4 restatement period.
Key developments include:
- Cycle 4 restatements: Required for prototype defined contribution and 403(b) plans by December 31, 2026
- SECURE 2.0 Implementation:
- Mandatory Roth catch-up contributions for high earners (>$145,000) beginning in 2026
- Optional Roth treatment of employer contributions
- “Super catch-up” contributions for participants aged 60–63
- New overpayment recovery rules, including a three-year limitation and participant protections
Plan sponsors should coordinate with payroll and recordkeeping vendors to ensure systems are updated and compliant.
Litigation update: Excessive fees and pension risk transfers
The Supreme Court’s decision in the Cunningham case is concerning because it may preclude defendants from being able to bring motions to dismiss in response to recordkeeping “prohibited transaction” claims. This in turn may effectively enable plaintiffs to circumvent the “meaningful benchmark” standard that applies to prudence claims alleging excessive recordkeeping fees. This could increase ERISA class litigation expense for plan sponsors.
In addition, pension risk transfer transactions are being challenged in court over annuity provider selection. In the first two decisions, the courts have split on whether plaintiffs have standing to sue.
Plan sponsors should:
- Consult with counsel about opportunities to add information to Form 5500 filings that makes them a less attractive target to class action lawyers.
- Monitor litigation trends and developments closely.
Financial wellness programs: Growing demand, evolving risks
Financial wellness programs are becoming a key component of employer benefit strategies. Offerings range from budgeting tools and one-on-one coaching to student loan support and earned wage access.
Legal considerations include:
- Most programs are not subject to ERISA, but tax and discrimination risks remain.
- Benefits may be taxable unless they qualify as de minimis or no-additional-cost fringe benefits.
- Employers should include appropriate disclaimers and indemnification provisions in vendor contracts.
Employers are encouraged to evaluate the structure and delivery of these programs to ensure compliance and mitigate risk.
Conclusion
The Spring 2025 Employee Benefits Briefing underscored the dynamic nature of employee benefits law and the importance of proactive governance. Plan sponsors and fiduciaries should continue to monitor regulatory developments, review internal processes, and engage with legal counsel to ensure compliance and mitigate risk.
For more information or to discuss how these developments may affect your organization, please contact your Nixon Peabody Employee Benefits attorney.