Is Your Benefits Plan Compliance-Ready for 2026?

NOVEMBER 4, 2025

Compliance is an often-overlooked but critical part of employee benefits management. Organizations that do not prioritize health and welfare plan compliance may face significant challenges when an issue arises, including hefty penalties and fines:

• Failing to provide summary plan descriptions can result in a penalty of up to $110 per day per participant and $195 per day (up to $1,956) for failing to provide plan documents in response to a Department of Labor (DOL) request.
• Failing to provide Forms 1095-C to employees annually can result in a fine of up to $330 per form. A separate fine of $330 per form may be imposed for failing to file Form 1094-C with the IRS.
• Failing to provide summary benefits of coverage (SBC) with enrollment materials can result in penalties of up to $1,443 per failure and $100 per day per affected individual.

Regularly reviewing what’s required can help employers take steps to reduce the risk of noncompliance and fines — and spend less time dealing with issues when they occur.

Key Compliance Considerations: Year-End Reminders 

As we approach the end of 2025, take the time to review several key compliance issues:

New OBBBA Health Plan Provisions

The One Big Beautiful Bill Act (OBBBA), passed in July 2025, included several provisions related to health and welfare plans. Employers should consider whether to adopt these changes:

• OBBBA expanded health savings account (HSA) eligibility to first-dollar telehealth or other remote care services, and allows employers to offer direct primary care (DPC) arrangements alongside an HSA. While more guidance is expected on “other remote care services” and the types of services that cannot be offered by a DPC, employers can consider whether to incorporate these changes into their plan design.
• OBBBA also expanded the dependent care assistance program (DCAP) maximum annual limits from $5,000 to $7,500, though employers should be aware that this may impact nondiscrimination testing. If adopted, employers must update plan documents to reflect the new maximum.

Gag Clause Attestation Due December 31

Group health plans and insurance carriers are prohibited from entering into agreements that contain a gag clause, which is contractual language that directly or indirectly restricts what information a plan or carrier can share with another party. This includes any clauses that restrict plans from accessing provider-specific cost or quality of care information, electronically accessing de-identified claims and encounter data, or sharing information as permitted under applicable privacy rules. Carriers and plan sponsors are required to submit information annually to the Centers for Medicare and Medicaid (CMS) attesting that their contracts do not contain gag clauses.

Most carriers will handle the attestation for fully insured groups. For self-funded plans, employers may be responsible for submitting the attestation via the Health Insurance Oversight System (HIOS). The attestation is due by December 31, 2025.

Litigation Over Tobacco Cessation Incentives

There has been an increase in litigation against employers with tobacco cessation incentive programs that do not meet requirements for compliance under the Health Insurance Portability and Accountability Act (HIPAA). Allegations include an absence of a practical, compliant alternative to being tobacco-free; insufficient disclosure of such alternatives in plan materials; and failure to provide the full incentive, including retroactive refunds. Plaintiffs claim these practices breach fiduciary duties under the Employee Retirement Income Security Act (ERISA) and violate HIPAA’s nondiscrimination rules by penalizing individuals based on health status.

Employers should carefully review their wellness incentives — especially any tied to tobacco use — to ensure compliance and reduce the risk of a costly and time-consuming lawsuit.

Other Considerations

Employers should also keep an eye on changes to vaccine recommendations. Based on guidance from the Advisory Committee on Immunization Practices (ACIP), the Centers for Disease Control and Prevention (CDC) now recommends that COVID-19 vaccination be based on individual decision-making (between patient and provider), and that toddlers receive the chickenpox vaccine as a standalone immunization. For plan years beginning after January 1, 2026, non-grandfathered group health plans must cover COVID-19 vaccinations in-network and without cost sharing based on individual decision-making.

The IRS has released cost-of-living adjustments for 2026 under various provisions of the Internal Revenue Code, which may affect employee benefit plans. These adjustments include higher limits for flexible spending accounts (FSAs), health savings accounts (HSAs), health reimbursement arrangements (HRAs), and transportation benefits. Employers should review these changes and make necessary updates to plan documents.

Forms 1094-C and 1095-C, as required by the Affordable Care Act (ACA), are now available for calendar year 2025 reporting. Final instructions for Forms 1094-C and 1095-C should be published in the near future. The deadline to furnish Form 1095-C to employees is March 2, 2026. The deadline for electronically filing Form 1094-C and all 1095-Cs with the IRS is March 31, 2026.

Employers are subject to many more regulatory requirements at the federal level — and may have additional requirements at the state and local levels. To help clients stay on top of their obligations for the year ahead, USI Insurance Services’ National Employee Benefits Compliance team has prepared a 2026 Health & Welfare Compliance Requirements checklist. Contact your service team for a compliance check-up for your organization.

Contact your local USI representative or email ebsolutions@usi.com to learn more about these and other solutions designed to help you improve regulatory compliance, avoid penalties and fines, and reduce administrative headaches.