Employee benefits compliance continued to shift in meaningful ways throughout 2025. For employers, HR teams, and plan sponsors, the challenge is not just keeping up with new laws and court decisions, but understanding which changes require action, which ones are still evolving, and how they may affect plan administration in the year ahead.

This year brought a mix of legislative updates, court rulings, agency guidance, and compliance reminders across areas such as HSAs, dependent care assistance programs, ACA reporting, wellness programs, mental health parity, HIPAA, and fiduciary oversight. Some changes created new flexibility for employers. Others reinforced existing rules or highlighted areas where employers may want to review current processes more carefully.

Below is a practical summary of the major developments covered in the webinar, along with key considerations as employers head into 2026.

Key Takeaways

• The One Big Beautiful Bill Act made certain telehealth relief permanent and increased the DCAP limit to $7,500 beginning in 2026.
• Employers offering HDHPs may want to review plan terms for telehealth and direct primary care arrangements, especially where HSA eligibility is a concern.
• ACA preventive care rules remain in place, and non-grandfathered plans must continue providing preventive services without cost sharing.
• Employers should continue to take ACA employer mandate notices seriously and respond promptly to any IRS correspondence.
• Tobacco surcharge and other health-contingent wellness programs remain an area of active litigation, especially where reasonable alternative standards are not clearly communicated or properly administered.
• Fiduciary oversight, vendor monitoring, HIPAA notices, and mental health parity compliance remain important operational areas even where certain enforcement has paused or rules are still developing.

The One Big Beautiful Bill Act: What Changed for Employee Benefits?

One of the most significant benefits-related developments in 2025 was the passage of the One Big Beautiful Bill Act. The law included several provisions affecting health plans, HSAs, dependent care benefits, and certain tax-favored employee benefits.

What changed for telehealth and HDHPs?

During the COVID-19 pandemic, temporary relief allowed HDHPs to cover telehealth services before the deductible without jeopardizing HSA eligibility. That relief had been extended several times, but had expired at the end of the 2024 plan year.

The new law made that relief permanent and applied it retroactively to the start of 2025.

This means employers may allow HDHP participants to access nonpreventive telehealth and other remote care services before satisfying the minimum deductible without affecting HSA eligibility. This may also include standalone telehealth benefits.

Employer consideration:
If an HDHP currently offers this type of telehealth access, plan documents may need to be reviewed and, where necessary, amended to reflect the updated rule.

How do direct primary care arrangements affect HSA eligibility?

Beginning January 1, 2026, participation in certain direct primary care arrangements will no longer automatically disqualify an individual from HSA eligibility.

To qualify:

• Care must be provided by a primary care practitioner
• The arrangement must not exceed:
  • $150 per month for an individual
  • $300 per month for a family

The law also clarified that fees paid for qualifying direct primary care arrangements may be treated as eligible medical expenses for HSA reimbursement purposes.

Clarification:
Direct primary care arrangements typically involve a flat monthly or annual fee paid directly to a provider in exchange for certain routine medical services.

What changed for marketplace bronze and catastrophic plans?

Starting in 2026, certain bronze and catastrophic individual market plans may qualify as HDHPs. That means individuals enrolled in those plans could also be HSA-eligible, assuming they meet the other HSA requirements.

For most employers, this change will have limited impact. It is more likely to matter where the employer offers an Individual Coverage HRA (ICHRA) or a Qualified Small Employer HRA (QSEHRA), both of which are tied to individual market coverage.

What recent IRS guidance clarified

The IRS also issued guidance clarifying several common questions related to the HSA changes. Among other things, the guidance confirmed that:

• Individuals enrolled in an HDHP before July 4, 2025 who received telehealth services before the deductible can still remain HSA-eligible for 2025
• Telehealth and remote care services are defined by reference to Medicare-payable services and applicable HHS guidance
• If a direct primary care arrangement includes services beyond permitted primary care, participants generally cannot simply disregard those extra services to preserve HSA eligibility
• Direct primary care fees cannot be counted toward the HDHP deductible or out-of-pocket maximum

What Employers Should Know About the New DCAP Limit

The change to dependent care assistance programs, or DCAPs, may be one of the most practical developments for employers and employees alike.

What is the new DCAP limit for 2026?

Beginning January 1, 2026, the annual reimbursement limit increases from $5,000 to $7,500.

This is the first significant permanent increase in decades. Unlike many annual limits, this amount is not indexed for inflation, so the new limit will remain in place unless Congress changes it again.

Does every employer have to increase the DCAP limit?

No. The increase is optional.

Employers may choose whether to adopt the higher limit. For some organizations, offering the higher amount may be a helpful enhancement. For others, it may create administrative or testing challenges.

What should employers with non-calendar year plans consider?

Because the increased limit applies on a calendar year basis rather than a plan year basis, non-calendar year plans may need to think carefully about timing.

Employers generally have two paths:

• Wait until the next plan renewal and apply the increase then
• Implement a January 1 change midyear and allow participants to adjust elections accordingly

That second option may require careful coordination to avoid contribution issues between overlapping plan years.

Could the higher limit create nondiscrimination problems?

Possibly.

DCAPs are subject to nondiscrimination testing, and highly compensated employees often elect these benefits more heavily than other employees. Increasing the limit may make it harder for some employers to pass the applicable tests.

This may be especially relevant for employers that have already had testing issues in the past.

Added context:
A benefit can be valuable in theory, but still difficult to offer broadly if it causes the plan to fail nondiscrimination rules. In some cases, employers may need to consider design changes, reduced limits for certain groups, or employer contributions that encourage broader participation.

ACA Updates: What Stayed the Same and What Shifted?

Several ACA-related developments in 2025 clarified existing rules, changed administrative requirements, or introduced issues employers may want to monitor more closely.

Did the Braidwood case change preventive care requirements?

No.

The U.S. Supreme Court upheld the ACA preventive care mandate, meaning non-grandfathered group health plans must continue covering preventive services without cost sharing.

The case centered on whether the advisory bodies that help define covered preventive services were constitutionally structured. The Supreme Court concluded that the arrangement was valid.

What preventive care updates take effect in 2026?

For plan years beginning in 2026, certain updated women’s preventive care requirements take effect. These include:

• Additional breast cancer screenings and follow-up imaging after an initial screening identifies a potential issue
• Ongoing intervention services for victims of domestic violence

Previously, only the initial screening may have been clearly treated as preventive in some cases. These updates extend that treatment further.

What changed with contraceptive coverage exemptions?

A Pennsylvania court vacated rules that had expanded the ability of employers to claim religious or moral exemptions from the ACA contraceptive coverage mandate.

As a result, the broader exemption is no longer available.

At this point, the remaining exceptions are more limited and generally tied to:

• The original ACA exemption for certain religious employers
• An accommodation process available to certain nonprofit and closely held for-profit entities with religious objections

Under that accommodation, contraceptive coverage may still be provided, but not directly through the employer.

What should employers know about ACA employer mandate enforcement?

IRS enforcement activity continues.

What are Letters 5699 and 226J?

Employers may encounter two common ACA enforcement notices:

Letter 5699
Sent when the IRS believes an employer may be an applicable large employer but has not submitted the required ACA reporting forms.

Letter 226J
Sent when the IRS proposes an employer shared responsibility payment based on the employer’s reporting and employee marketplace subsidy data.

Why is it important not to ignore these notices?

Even where an employer believes the IRS is mistaken, the notice still needs to be addressed. Ignoring it can create larger issues.

One court case in 2025 focused on whether an employer could be assessed a certain ACA penalty without first receiving the required certification that an employee had enrolled in subsidized marketplace coverage. The court sided with the employer in that case, but the decision is being appealed.

Practical takeaway:
Employers should continue offering coverage as required, continue ACA reporting, and review any penalty notice carefully. In some situations, a procedural defense may be relevant, but it is not something employers should assume applies automatically.

Is there now an easier way to distribute Form 1095?

Yes.

Employers may still distribute Form 1095 by hand, mail, or electronically with consent. But a newer option also remains available: posting a notice of availability on a public website.

To use this method, employers generally need to:

• Post the notice by March 2
• Keep it available through October 15
• Include an email address, mailing address, and phone number for requests
• Provide the form within 30 days if requested

A portal that only employees can access may not be enough, since the notice must generally be publicly accessible.

What changed in the marketplace that could affect employers?

CMS issued a marketplace rule aimed at reducing waste and fraud. Some parts were temporarily blocked by a court, but not all of them.

One provision that remains in effect changes how marketplace premiums are set for 2026, using a methodology that considers changes in both the individual and employer-sponsored insurance markets.

The webinar also noted the expiration of enhanced COVID-era premium tax credits. For some individuals, that may mean losing access to subsidies or receiving less financial assistance.

Does losing a premium tax credit allow an employee to join the employer plan midyear?

No.

A reduction or loss of a premium tax credit does not create a HIPAA special enrollment right for the employer’s group health plan.

That distinction may become important if employees ask to join the employer plan outside the regular enrollment window.

Wellness Programs: Why Are Tobacco Surcharges Under Scrutiny?

Wellness program litigation increased in 2025, especially around tobacco surcharges.

What is the issue with health-contingent wellness programs?

Health-contingent wellness programs must comply with specific HIPAA requirements. These are programs where a reward or surcharge depends on a health-related activity or outcome.

Examples include:

• Completing a walking challenge
• Meeting a biometric target
• Avoiding a tobacco surcharge by completing a cessation program

These programs generally must offer a reasonable alternative standard, often called an RAS, for individuals who cannot meet the original standard.

What is a reasonable alternative standard?

A reasonable alternative standard gives participants another way to earn the reward or avoid the surcharge.

For tobacco programs, that often means completing a smoking cessation course, whether or not the participant actually quits smoking.

Why are employers being sued?

Recent lawsuits have alleged that employers:

• Did not properly disclose the availability of the reasonable alternative standard
• Did not explain how it worked
• Did not give participants the full reward after they completed it
• Failed to administer the program consistently

Some cases have favored employers, but the broader message is clear: program design and communications need to match the rules.

Employer consideration:
If your wellness program includes a health-related standard tied to premiums or other plan costs, it may be worth reviewing both the design and the communication materials to confirm the required language and processes are in place.

Creditable Coverage Notices: What Is Changing in 2026?

Employers offering prescription drug coverage must notify Medicare-eligible individuals and CMS whether the plan’s coverage is considered creditable.

What does “creditable” mean?

Creditable coverage means the prescription drug coverage is expected to pay, on average, at least as much as standard Medicare Part D prescription coverage.

Plans do not have to offer creditable coverage. They only have to disclose whether the coverage is creditable or non-creditable.

What changes in 2026?

For prior years, plans could generally determine creditable status using either:

• An actuarial method
• A simplified method

For 2026, a revised simplified method is also available. It sets a somewhat higher threshold, which means fewer plans may qualify as creditable under that approach.

For 2026, plans may use:

• The actuarial method
• The original simplified method
• The revised simplified method

It is not yet clear how long the original simplified method will remain available beyond 2026.

Mental Health Parity: What Is Still Required During the Non-Enforcement Period?

A temporary non-enforcement period applies to certain parts of the 2024 mental health parity final rule.

That pause affects some newer requirements, including:

• Certain meaningful-benefit requirements
• Some data collection requirements
• A fiduciary certification requirement tied to compliance

Does that mean mental health parity is on hold?

No.

The underlying mental health parity law still applies. Plans must still ensure that mental health and substance use disorder benefits are not treated more restrictively than medical and surgical benefits in ways that violate parity rules.

That also includes the longstanding requirement to prepare a written comparative analysis for nonquantitative treatment limitations, or NQTLs.

Clarification:
An NQTL is a limit that is not expressed numerically, such as prior authorization rules, medical necessity standards, network admission criteria, or formulary design. Plans must be able to show that these types of rules are applied comparably and no more stringently to mental health benefits than to medical and surgical benefits.

HIPAA Privacy and Security: What Actually Requires Action?

HIPAA also remained active in 2025, though not always in the way employers may have expected.

What happened to the reproductive health privacy rule?

A Texas court vacated most of the 2024 HIPAA privacy rule related to reproductive health information.

That means the major new restrictions around disclosures involving reproductive health care information are no longer in effect.

For many plans, that means HIPAA policies can largely revert to the pre-2024 framework.

What still needs to be updated?

The notice of privacy practices still requires updates related to substance use disorder information.

These updates apply to covered entities, including group health plans, and the compliance deadline is February 16, 2026.

Once updated, the revised notice generally must be distributed within 60 days of a material change.

What about the proposed HIPAA security rule changes?

The proposed security rule changes are still only proposed. They are not final and are not yet in effect.

Even so, they offer a useful signal about current regulatory thinking, especially around cybersecurity and the misunderstanding that “addressable” security standards are optional.

They are not optional. Rather, the entity must either implement the measure or adopt an appropriate alternative that addresses the same risk.

Practical example:
If encryption is “addressable,” that does not mean a plan can simply ignore encryption. It means the plan needs to evaluate the risk and determine the proper safeguard.

ERISA Fiduciary Litigation: Why This Matters Beyond Retirement Plans

Health and welfare plans also remain subject to ERISA fiduciary duties, and 2025 saw increased litigation in this area.

What are employers being challenged on?

Recent cases involved allegations that employers mishandled prescription drug plan administration or relationships with pharmacy benefit managers, resulting in higher participant costs.

Some of these cases were dismissed, including on standing grounds, but they still reflect a growing focus on fiduciary oversight in health plans.

What should plan sponsors be doing now?

The webinar highlighted several practical steps employers may consider:

• Establish a benefits or fiduciary committee
• Conduct regular compliance reviews
• Handle participant contributions carefully
• Review plan claims and dependent eligibility
• Maintain fiduciary liability coverage where appropriate
• Document vendor selection and monitoring processes
• Confirm that fees paid to vendors are reasonable

Why vendor oversight matters

Employers do not necessarily eliminate fiduciary risk by hiring outside vendors. Selecting and monitoring those vendors is itself part of the fiduciary responsibility.

That includes reviewing performance, understanding services, documenting decisions, and checking whether fees remain reasonable over time.

Other Hot Topics for 2026

Several additional topics may not require immediate action for every employer, but they are worth monitoring.

Trump Rx and direct-to-consumer drug pricing

A proposed direct-to-consumer prescription platform may offer discounted prices on certain drugs. However, for most insured individuals, the cost may still exceed what they would pay through their group health plan.

In addition, purchases made outside the plan generally would not count toward deductibles or out-of-pocket limits.

ICHRA adoption continues to grow

Individual Coverage HRAs continue to gain traction, particularly for employers seeking more flexibility or an alternative to traditional group coverage.

They can work well in certain situations, but they come with their own compliance structure. Employers cannot freely assign ICHRAs to any group they choose. The arrangement must be offered on a uniform basis within permitted employee classes.

State paid family leave laws continue to expand

State paid family leave remains an active area. Several state programs are moving toward implementation in 2026 and beyond, while additional states continue proposing new legislation.

Multi-state employers may want to continue monitoring this area closely, especially where payroll deductions begin before benefits become available.

2026 Planning Reminders

As employers head into 2026, the webinar emphasized a few practical reminders:

• Review whether HDHP and telehealth plan terms align with the new permanent relief
• Decide whether to adopt the higher DCAP limit and consider the testing impact
• Continue complying with ACA employer reporting and respond promptly to IRS notices
• Review wellness program materials, especially for tobacco surcharge arrangements
• Confirm your approach to Medicare creditable coverage determinations for 2026
• Maintain focus on mental health parity documentation despite current non-enforcement of some newer rules
• Prepare for HIPAA notice of privacy practices updates by February 16, 2026
• Keep an eye on fiduciary governance, vendor oversight, and compliance documentation
• Remember the annual gag clause attestation deadline, which the presenters noted is due December 31

Final Thoughts

The 2025 compliance landscape was shaped by both meaningful legal change and ongoing regulatory uncertainty. Some updates created welcome flexibility, especially around telehealth, HSAs, and dependent care benefits. Others served as a reminder that even when rules are paused, challenged, or revised, the underlying compliance responsibilities often remain.

For employers, the most practical next step is usually not sweeping redesign. It is careful review: looking at current plan operations, communications, notices, and administrative processes to make sure they still align with the rules that apply now.

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

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