Government Policy Changes That Could Affect Your Employee Benefits in 2025
- ewalker223
- Feb 21
- 2 min read
As we progress through 2025, several government policy changes are poised to impact employee benefits. Here's an overview of key developments:
1. Paid Family and Medical Leave (PFML) Updates
The Internal Revenue Service (IRS) has issued guidance on PFML, which is set to expire on January 1, 2026. In 2025, employers are exempt from withholding taxes on PFML payments. The standard contribution rate is 1% of an employee's weekly wages, with benefits covering up to 12 weeks of paid family leave and 12 weeks of paid medical leave annually. Covered conditions include childbirth, adoption, serious health conditions, and caring for a family member with a serious health condition. Eligibility requires employees to have worked for at least one year. Employers can claim a tax credit for PFML benefits provided.
2. Minimum Wage and Sick Leave Revisions in Michigan
In Michigan, the House and Senate have passed bills modifying the state's minimum wage and sick leave policies. The new legislation incrementally raises the minimum wage to $15 by 2027 and adjusts sick leave accrual rates based on business size. These changes aim to balance worker protections with business flexibility.
3. Social Security Fairness Act Enactment
The Social Security Fairness Act, signed into law on January 5, 2025, repeals the Government Pension Offset and Windfall Elimination Provision. This change ensures that public sector retirees, including certain government employees, will receive full Social Security benefits without reductions previously applied due to non-covered pensions.
4. Department of Government Efficiency (DOGE) Initiatives
The establishment of DOGE, led by Elon Musk, introduces significant changes to federal employee benefits. DOGE has implemented a $1 spending limit on most government employee credit cards to reduce costs. Additionally, a "deferred resignation" program offers federal employees the option to resign effective September 30, 2025, while continuing to receive pay and benefits until that date. These measures are part of broader efforts to restructure the federal workforce and enhance efficiency.
5. Health Plan Compliance Adjustments
Employers should be aware of several health plan compliance changes in 2025, including:
Expanded Fertility Benefits: Coverage now includes in vitro fertilization (IVF) and artificial insemination.
Anti-Obesity Medication Coverage: Health plans are now required to cover anti-obesity medications.
Postal Service Health Benefits (PSHB) Program: The launch of the PSHB program introduces new health benefits for postal employees.
Dental and Vision Plan Increases: Adjustments to dental and vision plans may affect coverage and costs.
6. Trends in Employee Benefits
Organizations are navigating several trends in employee benefits, including:
Improving Healthcare Affordability: Efforts to make healthcare more affordable for employees.
Total Health and Well-Being: A holistic approach to employee health, encompassing physical, mental, and financial well-being.
Support for Flexible Work Environments: Benefits tailored to onsite, hybrid, and flexible work arrangements.
Upskilling and Professional Development: Programs focused on employee growth and skill enhancement.
Personalized Benefits: Customization of benefits to meet individual employee needs.
Family-Friendly Benefits: Supportive policies for employees with family responsibilities.
Retirement and Financial Security Benefits: Enhanced offerings to support employees' financial futures.
Diversity, Equity, and Inclusion: Initiatives promoting a diverse and inclusive workplace.
Staying informed about these policy changes is crucial for both employers and employees to navigate the evolving landscape of employee benefits in 2025.
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