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Latest alert

Federal pharmacy benefits manager (PBM) reforms are here

March 2, 2026

New federal rules are reshaping how employers oversee PBM contracts and compensation. A proposed DOL rule (effective as early as July 2026 for some plans) and a new law signed in February 2026 (effective 2028-2029) will require greater PBM transparency, new participant notices, and full pass-through of rebates and fees for ERISA plans. Employers should begin reviewing PBM contracts and fiduciary processes now, as non-compliance carries penalties up to $10,000 per day.

Updates

  • RxDC surveys are here, respond promptly Employers sponsoring group medical and Rx plans should watch for their carrier or TPA's annual questionnaire requesting employer vs. employee premium contribution data, needed to complete RxDC reporting by the June 1 deadline. Self-funded plans have additional calculation considerations, and any gaps in submissions must be resolved through HIOS or a third-party vendor.

  • HHS updates penalties and 2027 out-of-pocket limits Each year, HHS publishes updated penalty amounts and out-of-pocket maximums that affect all employers sponsoring group health plans. For 2026, updated HIPAA, SBC, and Medicare Secondary Payer penalties took effect, and for 2027, non-grandfathered out-of-pocket limits will rise to $12,000/$24,000 and ACA employer mandate penalties will increase to $3,780/$5,670 annually. Employers should review plan designs now to ensure 2027 out-of-pocket maximums are within the new limits and that coverage remains affordable enough to avoid mandate penalties.

  • Model Employer CHIP Notice updated The DOL updated its Model Employer CHIP Notice as of January 31, 2026, reflecting updated contact information for Louisiana. All employers sponsoring medical coverage where employees contribute to premiums must annually provide this notice to employees in states with Medicaid or CHIP premium assistance subsidies. Employers should always pull the latest version for new hire packets and open enrollment materials, as outdated contact information can leave employees unable to reach the right state resources.

  • Federal pharmacy benefits manager (PBM) reforms are here New federal rules are reshaping how employers oversee PBM contracts and compensation. A proposed DOL rule (effective as early as July 2026 for some plans) and a new law signed in February 2026 (effective 2028-2029) will require greater PBM transparency, new participant notices, and full pass-through of rebates and fees for ERISA plans. Employers should begin reviewing PBM contracts and fiduciary processes now, as non-compliance carries penalties up to $10,000 per day.

  • HIPAA privacy notices require substance use disorder (SUD) language by February 16, 2026 Employers with fully insured or self-insured health plans that handle PHI must update their HIPAA Notice of Privacy Practices by February 16, 2026 to reflect new, stricter protections for Substance Use Disorder records, and may need benefits counsel support since model language has not yet been issued.

  • Take advantage of new reporting relief for ACA reporting due in March The ACA requires employers to file annual 1094/1095 health coverage reporting with individuals by March 2 and the IRS by March 31 (with limited new relief for providing statements upon request), and penalties for late or inaccurate filings can be significant.

  • Reporting the value of health coverage on Form W-2 Employers that issued 250 or more W-2s than the prior year must report the total value of applicable employer-sponsored health coverage on current W-2 forms in Box 12 using code DD, with potential penalties for incorrect or missing reporting.

  • Reporting creditability to Centers for Medicare and Medicaid Services when new plan year begins Employers sponsoring medical plans with prescription drug coverage must report to CMS within 60 days of each new plan year (or 30 days if coverage changes or terminates) whether their drug coverage is creditable or non-creditable compared to Medicare Part D, using the CMS web form and keeping records of the submission.

  • 2026 federal poverty level (FPL) updated, increasing FPL affordability safe harbor The federal government has updated the 2026 Federal Poverty Level (FPL) to $15,960 for the mainland U.S., increasing the ACA affordability safe harbor threshold to $132.46 per month for non-calendar year plans beginning in 2026 and applying to Applicable Large Employers offering medical coverage or an ICHRA.

  • New flexibility for fertility benefits On Thursday, October 16, 2025, federal agencies published new FAQs Part 72 granting additional flexibility for employers with respect to fertility benefits.

  • ACA women’s preventive service updates for 2026 The Affordable Care Act (ACA) requires non-grandfathered health plans to cover a specific list of preventive health services in-network without cost-sharing to the plan participant. As ACA-required preventive service recommendations are updated, plan years starting one year after the new recommendation must cover those updated services in-network with no cost-sharing.