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Introduction

Employee benefits compliance continues to evolve quickly, and recent federal updates add several meaningful changes for employers to navigate. During this webinar, the focus centered on provisions from the One Big Beautiful Bill Act (OBBBA), updates to employer shared responsibility penalties, affordability thresholds, reporting changes, and additional legal and regulatory developments affecting group health plans.

For employers, HR teams, and benefits administrators, these updates are less about overhauling existing programs and more about understanding where flexibility has increased, where costs may shift, and where compliance obligations remain unchanged. Several changes, particularly around HSAs, dependent care FSAs, and affordability thresholds, may directly influence plan design decisions for 2026 and beyond.

This article breaks down the key updates in a structured format to help clarify what is changing, what is optional, and what requires immediate or near-term attention.

Key Takeaways

• Telehealth flexibility for HSA plans is now permanent, removing prior uncertainty and allowing plans to eliminate FMV fees if desired.
• Direct Primary Care (DPC) arrangements can now be HSA-compatible under specific federal guidelines starting in 2026.
• Dependent Care FSA limits increase from $5,000 to $7,500, but non-discrimination testing concerns remain important.
• ACA affordability thresholds increase significantly for 2026, allowing higher employee premium contributions while maintaining compliance.
• Employer reporting changes allow a public website posting option for 1095-C forms, but strict distribution rules still apply.
• Several provisions discussed in earlier drafts of federal legislation did not make it into the final bill, including Medicare/HSA integration changes.

Employee Benefits Changes Under the One Big Beautiful Bill Act (OBBBA)

How HSAs and Telehealth Coverage Rules Have Changed

One of the most notable updates involves telehealth and Health Savings Accounts (HSAs).

Previously, employers were required to charge a fair market value (FMV) fee for telehealth services offered alongside HSA-qualified plans to avoid disqualifying employees from contributing to HSAs. This requirement created administrative complexity and was originally a temporary pandemic-era allowance that expired and was extended multiple times.

Under the OBBBA:

• The telehealth flexibility is now permanent
• Telehealth coverage with no cost sharing does not disqualify HSA eligibility
• Employers may remove FMV fees entirely if they choose
• The change is retroactive to January 1, 2025

Employers have flexibility in how they implement this:

• Stop FMV fees immediately
• Apply changes retroactively (with refund considerations)
• Wait until the next plan year for administrative simplicity

Many employers are choosing to wait until plan renewal to avoid mid-year adjustments.

What Changed for Direct Primary Care (DPC) and HSAs?

The legislation also clarifies how Direct Primary Care arrangements interact with HSAs.

Beginning January 1, 2026:

• DPC arrangements are not disqualifying coverage if structured correctly
• Monthly fees must not exceed $150 (individual) or $300 (family), indexed for inflation
• HSA funds can be used to pay DPC fees

Important limitations:

• This applies only to HSAs
• It does not extend to FSAs or HRAs
• IRS guidance is still expected for additional clarity

A practical implication is that employers with on-site or near-site clinics may be able to evaluate whether their arrangements could qualify under DPC rules to maintain HSA compatibility.

Dependent Care FSA Limit Increase: What Employers Should Consider

The Dependent Care Assistance Program (DCAP) annual limit increases from:

5000→75005000 \rightarrow 75005000→7500

Key considerations:

• The limit is not indexed for inflation
• Applies on a calendar-year basis regardless of plan year
• Requires plan document updates
• May increase non-discrimination testing failures for smaller employers

For non-calendar year plans, timing matters. Employers may need to prorate increases or delay implementation until plan renewal to avoid creating election issues later in the year.

Employer Shared Responsibility (ESRP) and Affordability Updates

What Is Changing With ESRP Penalties?

Employer Shared Responsibility Provisions continue to apply to Applicable Large Employers (ALEs), generally defined as:

• 50 or more full-time equivalents in the prior year

Two penalties remain in place:

• Section A penalty: Applies if coverage is not offered to at least 95% of full-time employees
• Section B penalty: Applies if coverage is unaffordable or does not meet minimum value for specific employees receiving subsidies

Penalty amounts are increasing in 2026, continuing the upward trend tied to inflation adjustments.

Why Affordability Is Changing Significantly in 2026

Affordability determines both:

• Employer penalty exposure
• Employee eligibility for ACA premium subsidies

For 2026, the affordability percentage increases from:

9.02%→9.96%9.02\% \rightarrow 9.96\%9.02%→9.96%

This means employers can generally charge employees more for coverage while still remaining compliant.

The updated threshold applies to plan years beginning on or after January 1, 2026.

Affordability Safe Harbors Explained

Employers typically use one of three safe harbors:

1. Federal Poverty Level (FPL) Safe Harbor

• Based on federal poverty guidelines, not employee wages
• For 2026, the monthly threshold is approximately $129.90
• Simplest option for compliance

2. Rate of Pay Safe Harbor

• Uses hourly rate × 130 hours
• Adjusted using affordability percentage
• Allows higher employee contributions in 2026 due to updated threshold

3. W-2 Safe Harbor

• Based on Box 1 wages
• More accurate but harder to predict during the year
• Does not include all compensation types (such as certain commissions or tips in some cases)

ACA Reporting Updates: 1095-C Distribution Changes

Employers now have an additional option for distributing 1095-C forms.

New Alternative Method

Employers may:

• Post a clear notice on a public website stating forms are available
• Include contact information for requesting copies
• Keep notice available through October 15
• Provide requested forms within 30 days

Important limitation

The website must be publicly accessible. It cannot be:

• An internal intranet
• A payroll portal requiring login
• A benefits enrollment system

Electronic delivery is still allowed but requires specific employee consent.

Mental Health Parity and Compliance Enforcement Updates

The Mental Health Parity and Addiction Equity Act (MHPAEA) continues to evolve, with major regulatory expansion over time.

Recent developments include:

• Increased focus on non-quantitative treatment limitations (NQTLs)
• Documentation and comparative analysis requirements
• 2024 rules requiring fiduciary certification and data analysis (currently paused)

Current enforcement status

• Certain 2024 final rule requirements are temporarily not enforced
• Core parity obligations remain in place
• Employers must still maintain comparative analyses for NQTLs

This creates a “compliance continues, but some reporting enhancements are paused” environment.

Preventive Care and ACA Plan Design Updates

A recent Supreme Court decision upheld ACA preventive care requirements, meaning:

• Preventive services must remain covered without cost sharing
• Applies to non-grandfathered plans
• Includes recommendations from federal preventive care bodies

2026 ACA Maximum Out-of-Pocket (MOOP) Updates

• Individual: $10,600
• Family: $21,200

Employers should ensure plan designs properly embed family MOOP limits where required.

Medicaid Changes and Potential Employer Impact

Federal Medicaid changes under OBBBA include:

• Work requirements beginning in 2026 (80 hours/month for certain adults)
• More frequent eligibility redeterminations
• Expanded loss of eligibility for some groups

Why this matters for employers

Loss of Medicaid coverage qualifies as a HIPAA special enrollment event. This may result in:

• Increased mid-year enrollments in employer plans
• Higher administrative activity for HR teams
• Potential shifts in employee coverage decisions

Clarifications & Added Context

A few key clarifications from the discussion:

• Medicare participation still disqualifies HSA contributions (no change under OBBBA)
• Not all provisions originally proposed in draft legislation were included in the final bill
• Some AI-generated summaries circulating online are incorrectly stating Medicare/HSA changes
• Employer reporting penalties still require proper offer-of-coverage tracking regardless of court challenges

Optional Expansion: Practical Employer Consideration

For many employers, the most immediate planning impact from these changes comes from three areas:

• Dependent Care FSA limit increases (plan design and testing implications)
• ACA affordability threshold increases (potential employee contribution strategy adjustments)
• Telehealth/HSA alignment (removal of FMV administrative friction)

While none of these require immediate mandatory redesigns, they do present opportunities to reassess benefit competitiveness and administrative efficiency ahead of 2026 renewals.

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Disclaimer

This content is provided for general informational purposes only and is not intended as insurance or legal advice. Coverage, regulations, requirements, and availability can vary by carrier and state. For guidance specific to your situation, we recommend speaking with a licensed insurance or legal professional.

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