With 2025 on the horizon, it’s time for California employers and HR professionals to review and update their employee benefits plans. Staying compliant with evolving state and federal regulations while ensuring your benefits remain competitive is essential for retaining talent and minimizing legal risks. This comprehensive guide highlights key steps to ensure your benefits plan is ready for the new year.
Why Keeping Your Benefits Plan Compliant Matters
Employee benefits compliance isn’t just about adhering to the law—it’s about protecting your business, supporting your workforce, and avoiding regulatory penalties. Non-compliance can lead to costly fines, audits, and harm to your company’s reputation. A proactive approach to compliance ensures your benefits program remains a valuable asset to your organization.
Step-by-Step Compliance Checklist for 2026
1. Review California-Specific Legislation
California has its own unique regulatory requirements for employee benefits, which often go beyond federal standards.
- Stay Current on State Laws
Changes like the increased scope of the California Family Rights Act (CFRA) or updates to health insurance coverage mandates might impact your plan. Check annually for updates from the California Department of Industrial Relations regarding wage replacement rates or leave policies. - Check for Wellness Program Updates
California increasingly emphasizes mental health benefits. Ensure your wellness programs comply with anti-discrimination and privacy laws under both state and federal guidelines.
2. Understand Federal Regulations
Federal laws are critical baseline requirements for any benefits plan.
- ACA Updates
The Affordable Care Act (ACA) is still evolving. Confirm that your plan meets the latest ACA affordability thresholds and coverage standards. - ERISA Compliance
The Employee Retirement Income Security Act (ERISA) governs most employer-sponsored benefits plans. Ensure that Summary Plan Descriptions (SPDs), annual notices, and plan features meet ERISA guidelines. - HIPAA and COBRA
With increased remote work arrangements, ensure your health plans comply with HIPAA data privacy and COBRA continuation coverage requirements.
3. Conduct a Plan Audit
A thorough review of your current benefits plan will reveal gaps and opportunities for improvement.
- Verify Contributions and Coverage Levels
Compare your current contributions (both employer and employee) with updated ACA and state-level affordability standards. - Ensure Non-Discrimination
Run non-discrimination testing if you offer benefits such as retirement plans or cafeteria plans. Testing prevents benefits from skewing too heavily toward highly compensated employees and ensures compliance with IRS rules. - Evaluate Vendor Agreements
Audit your agreements with benefits vendors to confirm they meet compliance requirements and offer transparent pricing.
4. Prepare for Transparency in Coverage Rules
Transparency regulations by the Department of Labor (DOL) will expand further in 2025. Ensure your health plan provides detailed cost-sharing disclosures to participants and complies with price transparency mandates.
5. Communicate Clearly with Employees
Good communication isn’t just about awareness—it’s also about compliance.
- Provide Legally Required Notices
Distribute updated SPDs, COBRA notices, wellness program disclosures, and other required documentation on time. - Offer Culturally Inclusive Benefits
Create materials in multiple languages to meet California’s diverse workforce needs and comply with anti-discrimination laws.
6. Plan for Future Trends
Employee benefits trends often intersect with compliance. Consider incorporating flexibility, equity, and sustainability into your plan design.
- Expand Family Benefits
California’s workforce increasingly values parental leave, dependent care benefits, and surrogacy or adoption support. These programs can help you attract and retain top talent while remaining compliant. - Support Mental Health
Build mental health support into your benefits offerings. State regulations strongly encourage parity between physical and mental health coverage. - Include DEI in Benefits Policies
Update policies to ensure they align with Diversity, Equity, and Inclusion (DEI) best practices, making your organization more inclusive for all employees.
Key Considerations for Mitigating Risk
- Track Legislative Proposals
Stay proactive by monitoring pending California and federal legislation that could impact employee benefits. - Consult a Benefits Attorney
Complex cases may require professional expertise to resolve plan disputes or regulatory confusion effectively. - Adopt Digital Tools
Use compliance tracking software to assess risks, ensure deadlines are met, and streamline reporting processes.
Final Thoughts
Preparing your employee benefits plan for 2025 requires attention to both legal compliance and the evolving needs of your workforce. By staying informed and proactive, California employers can design programs that not only comply with regulations but foster a supportive workplace culture.
Support a More Inclusive Workplace with EBPA
At EBPA, we help California employers design benefits that reflect the values of today’s workforce. Let us guide you in creating inclusive, compliant, and competitive employee benefit plans.
📞 Call us today at (800) 231-1856 or 📧 email info@ebpa.net — and build a benefits program that supports everyone.
