2025 Year-End EB Compliance Round-Up

Question: What compliance action items do employers need to keep in mind as we near the start of 2026?

Short Answer: Upcoming deadlines and considerations as we reach the end of 2025 include OBBB changes to employee benefit options, the Gag Clause Prohibition Compliance Attestation (Dec. 31), ACA reporting via Forms 1094-C and 1095-C (Mar. 2 and Mar. 31 deadlines), and a number of state paid leave benefits taking effect in 2026.

With year-end approaching, many employers are focused on navigating a challenging health insurance renewal and preparing for the year ahead. The “One Big Beautiful Bill Act” (OBBB) also introduced new employee benefits options to consider. As we approach the start of a new year (and for many, a new plan year), we have compiled an overview of the compliance action items to address.

OBBB Changes to Employee Benefits
Dependent Care FSA Limit Increases to $7,500
The dependent care FSA limit has been stuck at $5,000 for 40 years. The OBBB changes this starting in 2026 by setting a new $7,500 ($3,750 married filing separately) limit. This new limit is not indexed for inflation.

What Does This Mean for Employers?
Employers may need to work with their FSA TPA to amend the Section 125 plan document prior to the start of the new plan year to reflect the new $7,500 limit.

Employers with a highly paid workforce will also need to be diligent about running nondiscrimination pre-testing early to monitor whether the dependent care FSA will pass 55% average benefits test. The increased limit, in combination with the enhancements to the alternative child and dependent care tax credit, are likely to further exacerbate the difficulty employers already face with this test. Employes that do not pass the test will need to work with their TPA to make the necessary reductions to the highly compensated employees’ elections to preserve as much of their pre-tax benefit as possible.

First-Dollar Telehealth Coverage Revived and Made Permanent
Before the COVID-19 pandemic, participants could not contribute to a health savings account (HSA) if they were also covered by a telemedicine plan that offered no-cost virtual care before meeting the minimum HDHP deductible. Starting with the pandemic and in multiple subsequent temporary extensions, legislative relief allowed telemedicine services to be provided without cost-sharing while maintaining HSA eligibility. The OBBB now makes this first-dollar telehealth option permanent effective January 1, 2025.

What Does This Mean for Employers?
First-dollar telehealth coverage is an optional plan design feature. Employers wishing to incorporate first-dollar (or reduced cost) telehealth into their HDHP will need to work with their insurance carriers, TPAs, and/or telehealth providers.

Direct Primary Care is Not Disqualifying Coverage (and a New HSA-Eligible Expense)
In a typical direct primary care (DPC) arrangement, members pay a monthly subscription fee that covers standard primary care services like office visits for illnesses or chronic condition management. Most DPCs therefore effectively provide first-dollar coverage for non-preventive services, presenting an HSA eligibility issue for individuals enrolled in a HDHP.

As of 2026, the OBBB specifically excludes DPC arrangements from being a form of disqualifying coverage, thereby allowing the DPC approach to be HSA-compatible. The DPC fees can’t exceed $150/month (indexed) for an individual and $300/month (indexed) for a family to qualify for the exemption. The OBBB also provides that the DPC fees are a qualified medical expense that can be paid tax-free from the HSA.

Student Loan Repayment Assistance Made Permanent (and Indexed for Inflation)
The CARES Act initially provided that employers could pay for or reimburse up to $5,250 of an employee’s student loans on a tax-free basis through the end of 2020 under a §127 qualified educational assistance program. The CAA extended the availability of this option through the end of 2025.

The OBBB now makes permanent the ability to offer tax free student loan repayment assistance under a §127 educational assistance program. It also indexes the $5,250 educational limit, which includes the student loan repayment assistance, starting in 2027.

Trump Accounts – A New Savings Option for Children
The OBBB establishes Trump Accounts (TAs) as a new way to help families save for their children’s future. Each child under the age of 18 has a $5,000 per year contribution limit (indexed) for amounts deposited by parents and employers. Contributions to TAs may begin as of one year from the date of OBBB enactment, which happens to be America’s 250th sesquicentennial birthday on July 4, 2026.

Employers can contribute up to $2,500 tax-free (indexed) each calendar year to the TAs of employees’ dependents. Employer tax-free contributions to TAs must be made pursuant to a separate written plan for the exclusive purpose of providing the benefit to employees’ dependents. The TA rules apply nondiscrimination requirements for employer tax-free contributions that are similar to the §129 dependent care FSA rules.

For more OBBB details:

• How the One Big Beautiful Bill Affects Employee Benefits

• Trump Accounts as an Employee Benefit

• The OBBB Dependent Care FSA Increase Could Backfire

• Webinar—Navigating the OBBB: Key Insights with Newfront

Gag Clause Prohibition Compliance Attestation (GCPCA): Due December 31, 2025
The CAA prohibits health plan contracts from including provisions designed to restrict access to the following:

1. Provider-specific cost or quality of care information or data through a consumer engagement tool or any other means;

2. Electronic de-identified claims and encounter information or data for individuals upon request and consistent with HIPAA, GINA, and the ADA;

3. The ability to share information or data described above (or to direct information be shared) with a HIPAA business associate, consistent with HIPAA, GINA and the ADA.

Plans must annually submit an attestation via the CMS Health Insurance Oversight System (HIOS) Portal on the CMS GPCA Website that they have not entered into any of the prohibited contractual restrictions. The 2025 annual attestation is due by December 31, 2025, covering the period since the last attestation (typically the prior calendar year.)

What Does This Mean for Employers?
For employers sponsoring fully insured medical plans, the insurance carrier is directly responsible for completing the GCPCA. There is no need for the employer to separately complete the attestation. Employers should confirm that the carrier will be completing the attestation on the plan’s behalf.

Employers sponsoring a self-insured medical plan (including level funded plans) will need to consult with the TPA to determine which party will complete the attestation. While the plan (employer) is directly responsible for the GCPCA, many TPAs will agree to perform the attestation requirement on the plan’s behalf.

• For more details: CAA Gag Clause Attestation Due by December 31

Year-End ACA Reminders
Deadlines for ACA Reporting in 2026
The 2025 ACA reporting deadlines for all ALEs in 2026 (regardless of plan year) are as follows:

Form 1095-C Paper Copies: Deadline to Furnish to Individuals
Due Date: March 2, 2026*

Form 1094-C (+Copies of Form 1095-C): Deadline to Electronically File with IRS
Due Date: March 31, 2026

Non-ALEs sponsoring a self-insured plan (including level funded plans) must provide Forms 1095-B to employees by March 2 and file Forms 1094-B and 1095-B with the IRS by March 31, 2026.

• For more details: ACA Reporting Requirements in 2026

*ACA Reporting No Longer Requires Furnishing of Forms 1095-C to All Full-Time Employees
In a late-2024 stocking stuffer, Congress passed the Paperwork Burden Reduction Act providing that Applicable Large Employers (ALEs) no longer have to furnish Forms 1095-C to full time employees. ALEs simply need to make the Form 1095-C available on request.

To take advantage of this new “alternative manner of furnishing statements,” ALEs must satisfy two requirements:

1. Notice of Availability: Post on the employer’s benefits website by March 2, 2026 a clear, conspicuous, and accessible notice to employees that they may request a copy of the Form 1095-C; and

2. Provision Upon Request: If the employee requests a copy, the employer must provide a copy by the later of a) January 31, or b) 30 days after the date of the request.

The notice of availability posted on the website must be written in plain, non-technical terms using a font size large enough and any visual clues or graphical features to call attention to the notice. IRS guidance suggests as an example a statement on the website reading “Tax Information” linking to a secondary page that includes a statement in capital letters “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS.” That page should explain how to request a copy of the Form 1095-C. The notice must remain on the site through October 15, 2026.

Reminder: Electronic Filing Required
Employers filing 10 or more returns in aggregate (includes Form W-2s, 1099s, 1095s) must file their reporting forms electronically. All ALEs will need to file their 2025 Forms 1094-C and 1095-C electronically. Virtually all non-ALEs sponsoring a self-insured health plan will also need to file their 2025 Forms 1094-B and 1095-B electronically. Employers subject to ACA reporting should ensure that they engage with a third-party vendor (e.g., ACA reporting specialty vendor, benefits administration system, payroll system) that can complete the electronic filing on their behalf in 2026.

HIPAA Notice of Privacy Practices Update Required by February 16, 2026
Employers with a self-insured (including level funded health) plan must provide employees with a HIPAA Notice of Privacy Practices describing the plan’s use and disclosure of PHI upon enrollment and with 60 days of a material change to the notice. Employers also need to inform employees of the availability of the Notice of Privacy Practices at least once every three years.

While a court recently vacated the new HIPAA reproductive health care rules, the decision preserved the requirement to update the Notice of Privacy Practices for additional substance use disorder treatment protections referred to as the Part 2 rules.

What Does This Mean for Employers?
Employers need to update the Notice of Privacy Practices for the new Part 2 substance use disorder treatment protections by February 16, 2026, and provide the updated notice to employees.

• For more details: Newfront Office Hours Webinar: HIPAA Training for Employers

Section 125 Cafeteria Plan Nondiscrimination Testing
All cafeteria plans must undergo annual nondiscrimination testing. Each year, employers are tempted to procrastinate performing the dreaded cafeteria plan nondiscrimination testing (NDT) because of the hassle. While most employers will pass almost all the required cafeteria plan tests without concern, it is common for employers to have challenges passing the 55% average benefits test required for the dependent care FSA. In that case, the employer must adjust the HCEs’ elections by the end of the plan year (year-end for a calendar year plan) to preserve as much of the HCEs’ pre-tax benefit as possible.

For more details:

• The Dependent Care FSA 55% Average Benefits Test

• The Health FSA Nondiscrimination Tests

New State Paid Leave Benefits Effective 2026
There have not been any new states jumping on the paid family medical leave bandwagon recently. However, three states have paid leaves and/or contributions that will begin in 2026.

• Delaware Paid Leave
  Delaware paid leaves will start January 1, 2026. (Taxation began January 1, 2025). Employees will be able to take up to 12 weeks leave in a 12 month period for the birth adoption or foster placement of a child, and up to 6 weeks in a 24 month period for their own serious illness, to care for a spouse, child or parent with a serious health condition, or for qualifying reasons relating to military service of a family member. The maximum amount of leave in a 12 month period is 12 weeks total. Visit the Delaware Paid Leave website for employer information and resources

• Maine Paid Family Medical Leave
  Effective May 1, 2026, employees will be eligible for paid leave. (Taxation began January 1, 2025). Employees are eligible for up to 12 weeks maximum within a 12-month period to bond with a child after birth, adoption or placement for adoption, the serious health condition of the employee or a family member, safe leave, organ donation, or a qualifying exigency. The Maine Paid Family Leave website contains both employer and employee resources.

• Minnesota Paid Family and Medical Leave
  Minnesota has taken an unusual approach to paid family leave. Taxation (employer and employee) and leaves start January 1, 2026. Employers pay 50% of the required .88% of taxable wages up to the social security wage base. Employees can take up to 12 weeks of family leave or 12 weeks of medical leave. The maximum amount of leave in a 12-month period for multiple events is up to 20 weeks total. Minesota has an employer checklist to help employers prepare for the upcoming leave and taxation.

Summary
The tangled web of employee benefits compliance requirements continues to expand and increase in complexity each year. This post is only a shorthand overview for some of the items requiring attention heading into 2026, but keep in mind that there are many more employee benefits compliance items employers should consider that are not tied to these specific year-end deadlines. Newfront provides tools to help remain in compliance year-round and team members are always available to assist with questions.

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).