The Washington Report

October 16, 2024

Note to Subscribers

While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Health

CMS Announces Medicare Two Dollar Drug List Model, Sample Two Dollar Drug List; Seeks Comment
On October 9, 2024, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) released a Request for Information and a sample list of prescription drugs that the agency preliminarily intends to include under the proposed Medicare Two Dollar Drug List Model, which was developed in accordance with President Biden’s Executive Order 14087, Lowering Prescription Drug Costs for Americans. Under the model, people enrolled in a participating Medicare prescription drug coverage (Part D) plan would have access to these drugs for a fixed copayment of no more than $2 for a month’s supply per drug.

The news release is available here.

Executive Order 14087, Lowering Prescription Drug Costs for Americans, is available here.

The Medicare Two Dollar Drug List Model is available here.

Comments must be submitted by December 9, 2024, and will only be accepted via the link here.

Retirement

IRS Issues Guidance on Long-Term, Part-Time Employees in 403(b) Retirement Plans; Announces Delayed Applicability Date for Related Final 401(k) Regulation
On October 3, 2024, the Internal Revenue Service (IRS) issued guidance in Notice 2024-73, which addresses long-term, part-time employees in 403(b) retirement plans under the SECURE 2.0 Act, which applies to 403(b) plans beginning in 2025. Notice 2024-73 includes a question-and-answer section on the application of the nondiscrimination rules for 403(b) plans with respect to long-term, part-time employees, including application of the rules to permitted exclusions from participation for part-time employees and student employees. The IRS states that it plans to issue additional guidance with respect to Section 125 of the SECURE 2.0 Act, including proposed regulations with respect to the rules in Notice 2024-73. The Notice also announces that the final regulation the IRS plans to issue for 401(k) plans on long-term, part-time employees will apply no earlier than to plan years beginning on or after January 1, 2026. A proposed regulation related to the rules for long-term, part-time employees in 401(k) plans was issued on November 27, 2023.

IRS Notice 2024-73 is available here.

The November 2023 proposed regulation is available here.

Other HR/Employment

SSA Releases 2025 Indexed Figures; Announces 2.5% Benefit Increase
The Social Security Administration (SSA) released the Social Security 2025 indexed figures on October 10, 2024. The SSA announced that there will be a 2.5% Cost-of-Living Adjustment (COLA) for 2025. Some other changes that take effect in January of each year are based on the increase in average wages. Relevant figures are shown below.

COLA: Based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, Social Security and Supplemental Security Income beneficiaries will receive a 2.5% COLA for 2025. (The 2024 COLA was 3.2%.)

Wage Base: The 2025 Social Security wage base is $176,100. (The 2024 amount was $168,600.)

FICA/Medicare Tax Rate: The FICA tax rate remains at 7.65%: 6.20% for Social Security and 1.45% for Medicare combined.

Beginning in 2013, the Affordable Care Act increased the Medicare tax rate on wages by 0.9% (from 1.45% to 2.35%) for higher-income individuals. The payroll tax increase applies to wages over $200,000 for single tax filers and $250,000 for couples filing jointly ($125,000 for a married individual filing separately). The tax rates above do not include the 0.9%. The Internal Revenue Service has provided frequently asked questions on the Medicare tax increase, available here.

Maximum Monthly Benefit: For someone retiring at full retirement age in 2025, the maximum monthly benefit is $4,018. (The 2024 amount was $3,822.)

Annual Earnings Test Limit: For individuals under full retirement age, the 2025 annual earnings test limit is $23,400. (The 2024 amount was $22,320.) For individuals attaining full retirement age in 2025, the annual earnings test limit for the months prior to attaining full retirement age is $62,160. (The 2024 amount was $59,520.) There is no annual earnings test for individuals who have attained full retirement age.

A more detailed Aon bulletin, SSA Releases 2025 Indexed Figures; Announces 2.5% Benefit Increase, is available in the Publications section of the newsletter.

More information on the SSA COLA is available here.

A Fact Sheet on the SSA's 2025 Social Security changes is available here.

The October 10, 2024, news release is available here.

Aon Publications

SSA Releases 2025 Indexed Figures; Announces 2.5% Benefit Increase
The Social Security Administration (SSA) released the Social Security 2025 indexed figures on October 10, 2024. The SSA announced that there will be a 2.5% Cost-of-Living Adjustment for 2025. Some other changes that take effect in January of each year are based on the increase in average wages.

The Aon bulletin is available here.

Departments Issue Final Regulations on Mental Health Parity
The Departments of Labor, Treasury, and Health and Human Services (the Departments) have issued final regulations on the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). These final regulations require group health plan (plan) sponsors to implement extensive new requirements for plans related to nonquantitative treatment limits under MHPAEA.

This Aon bulletin discusses:

Background to MHPAEA
New Requirements and Significant Changes From the Proposed Rule
Next Steps for Plan Sponsors

Unless otherwise noted, these requirements are effective beginning with the first day of the plan year starting on or after January 1, 2025.