As the final quarter of 2025 begins, several developments in benefits administration are reshaping how employers manage compliance, coverage, and communications. From rebate distribution rules to state-level legislation, benefits managers should take note of key updates that may affect plan operations and documentation heading into year-end.

Medical Loss Ratio (MLR) Rebates Released

Health insurance carriers have begun issuing annual Medical Loss Ratio (MLR) rebates, as required under the Affordable Care Act. These rebates are triggered when insurers fail to spend at least 80–85% of premium dollars on clinical services and quality improvement.

For employers, the critical question is whether the rebate—or a portion of it—is considered a plan asset under ERISA. If so, fiduciary rules apply, and the employer must allocate the rebate to participants in a fair and timely manner. This may involve cash refunds, premium reductions, or benefit enhancements.

The determination hinges on factors such as who paid the premiums (employer vs. employee), plan funding structure (fully insured vs. self-funded), and contractual arrangements. Employers should review their plan documents and consult legal or compliance advisors to ensure proper handling.

Texas SB 1332 Expands Termination Flexibility

A new Texas law—Senate Bill 1332—has introduced greater flexibility for employers in terminating health coverage for employees. Effective September 1, 2025, the legislation allows coverage to end on the date of termination rather than extending through the end of the month, provided the plan documents support this approach.

This change affects several administrative touchpoints:

• COBRA Triggers: The termination date now becomes the qualifying event date, which may shorten the coverage window and impact COBRA notices.
• Eligibility Audits: Employers must ensure their systems accurately reflect termination dates and align with carrier rules.
• Plan Documentation: Summary Plan Descriptions (SPDs) and employee handbooks may need updates to reflect the new termination logic.

While the law applies only in Texas, it may influence plan design decisions in other states, especially for employers with multi-state operations seeking consistency.

Year-End Compliance and Reporting

In addition to MLR and termination updates, several year-end tasks are approaching:

• Gag Clause Prohibition Attestations: Due by Dec. 31, 2025, plans must confirm they do not include contractual language that restricts access to cost or quality data.
• San Francisco HCSO Reporting: Employers with workers in San Francisco must prepare for 2025 expenditure tracking and submit compliance reports by April 30, 2026.
• ACA-Reporting Prep: Employers should begin gathering data for 1094/1095 filings, including coverage offers, affordability metrics and safe harbor documentation.

Final Takeaway

Benefits administration continues to evolve, with new rules affecting rebate handling, termination timing and compliance workflows. Employers should review plan documents, audit systems and prepare for key deadlines to ensure smooth operations and regulatory alignment. Staying ahead of these changes helps protect plan integrity and supports a positive employee experience.

For more Employee Benefits resources, contact INSURICA today.

Copyright © 2025 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.