Benefits Counselor - January 2026

HEALTH AND WELFARE PLAN UPDATES

New Transparency in Coverage Proposed Rule Expands Cost-Sharing Data Requirements

On Dec. 19, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a Transparency in Coverage Proposed Rule, updating the existing regulations. The current rules require health insurers and group health plans to provide participants with (1) cost-sharing information for health care items via machine-readable files; and (2) a consumer price transparency tool. The 2025 Proposed Rule would update the regulations by imposing:

• New disclosure and data standardization requirements to simplify and improve machine readable file usability.
• A requirement that plans and insurers make information available by phone rather than only through the online tool.

IRS Provides Guidance on Changes to HSAs

On Dec. 9, 2025, the Internal Revenue Service (IRS) issued guidance on the One Big Beautiful Bill Act's expansion of health savings account (HSA) eligibility in Notice 2026-05. The Notice provides:

• A plan will not fail to be a high deductible health plan (HDHP) because it provides telehealth benefits without a deductible for limited telehealth services.
• Certain types of employer-sponsored health reimbursement arrangements (HRAs), such as individual coverage HRAs or qualified small employer HRAs, may be used to purchase bronze or catastrophic level plans available as individual coverage without affecting the plans' HDHP status.
• HDHPs may not pay direct primary care service arrangement fees or provide membership before the HDHP's minimum deductible is met. These fees also may not be applied toward the HDHP deductible or out-of-pocket maximum.

EBSA Expands Compliance Program to Include Form M-1 Filers

On Dec. 31, 2025, the Employee Benefits Security Administration (EBSA) began allowing entities that must file the Form M-1 to use the Delinquent Filer Voluntary Compliance Program (DFVC Program). The DFVC Program provides reduced penalties for plan administrators of multiple employer welfare arrangements (MEWAs) and entities claiming exception (ECEs) who voluntarily submit overdue Form M-1 reports.

HHS Reiterates HIPAA Rules Regarding Parental Access to Minor Children's Medical Records

On Dec. 3, 2025, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) published a letter reaffirming that the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule generally provides parents access to their minor children's medical records. OCR published the letter in response to reports of parents not receiving their children's medical records as required by the HIPAA Privacy Rule.

Ninth Circuit Affirms that ERISA Preempts State Law Claims for Negligent Misrepresentation and Promissory Estoppel

In Healthcare Ally Mgmt. of Cal., LLC v. United Healthcare Servs., the U.S. Court for the Ninth Circuit upheld a district court's dismissal of state law claims for negligent misrepresentation and promissory estoppel. The plaintiff's state law claims relied on the allegation that UnitedHealth Services represented by phone call that it would reimburse an out-of-network provider based on the "usual, customary and reasonable" rate rather than a lower Medicare rate. The court held that the plaintiff's state law claims were preempted by the Employee Retirement Income Security Act of 1974 (ERISA) because the claims: (1) impermissibly referenced an ERISA plan—the plaintiff sought to recover plan-covered payments premised on the existence of an ERISA plan; and (2) had an impermissible connection to an ERISA plan—plan insurance verification calls are a "central matter" of plan administration.

RETIREMENT PLAN UPDATES

IRS Promulgates the Required Amendments List for Qualified and 403(b) Plans

The IRS has published its annual Required Amendments List for 2025 in Notice 2025-60. Plan sponsors generally have until Dec. 31, 2027, to amend plan documents in accordance with the List.

Changes in law or guidance that generally will require amendments to most plans include:

• Amendments to reflect any change in the plan's required beginning date, or to clarify that no change to the plan's required beginning date has been adopted.
• For defined contribution plans, an amendment to reflect the accelerated payment requirements for death benefits payable to certain non-spouse beneficiaries.

Additionally, the List notes that recent changes to Treasury Regulations regarding partnership and trust attribution rules for controlled group purposes could require a plan amendment.

President Trump Issues Executive Order on Proxy Advisors

On Dec. 11, 2025, President Trump issued an executive order directing federal agencies to review the proxy advisor industry in relation to diversity, equity and inclusion (DEI) and environmental, social and governance (ESG) related investment practices. The order does not compel specific action by plan administrators without subsequent regulation.

Eleventh Circuit Affirms that Arbitration Provisions Cannot Prevent Individuals from Obtaining Plan-Wide Relief

In Williams v. Shapiro, the U.S. Court of Appeals for the Eleventh Circuit agreed that the defendant plan sponsor and fiduciaries could not compel arbitration because the plan document's arbitration provision impermissibly forbid the plaintiffs from obtaining plan-wide relief.

Under the "effective vindication doctrine," a doctrine now endorsed by seven circuits in ERISA lawsuits and refuted by none, an arbitration clause is invalid if it prospectively waives a party's right to pursue statutory remedies. ERISA Section 502(a)(2) allows plan participants to bring civil actions for relief on behalf of the plan for breaches of fiduciary duty. Accordingly, the Eleventh Circuit declared that the plan's arbitration provision preventing plan-wide relief violated the "effective vindication doctrine" because it prevented participants from pursuing the plan-wide remedy for fiduciary breach specifically provided under ERISA.

Fifth Circuit Overturns District Court Award of Attorney's Fees for Plaintiff When Plaintiff Won No Other Relief

In Cloud v Bell, the U.S. Court of Appeals for the Fifth Circuit overruled the district court's award of attorneys' fees to a plaintiff who did not receive relief on the merits of his case. ERISA permits courts to award attorneys' fees at the court's discretion. Here, the Fifth Circuit held that courts have no discretion to award attorneys' fees pursuant to ERISA when a party wins no measure of relief on the merits of their case.

COMPLIANCE DEADLINES AND REMINDERS

General

Forms 1099-MISC and 1099-NEC: If a plan makes payments of more than $600 for certain services, rent or other specified purposes, such plan must furnish the applicable form to the service provider or recipient of payment by Feb. 2, 2026, and file with the IRS by March 2, 2026 (or March 31, 2026, if filing electronically).

Forms W-2 and W-3: Plans with employees must furnish Form W-2 to employees by Feb. 2, 2026, and file Form W-3 and copies of the Forms W-2 with the Social Security administration by Feb. 2, 2026, regardless of whether filing on paper or electronically.

Health and Welfare Plan

HIPAA Annual Breach Report: The annual report for HIPAA breaches affecting fewer than 500 individuals is due by March 2, 2026, for breaches discovered during the 2025 calendar year. Breaches affecting 500 or more individuals must be reported within 60 days of discovery.

Medicare Creditable Coverage: Plans must report the creditable coverage status of their prescription drug plan to the Centers for Medicare & Medicaid Services annually, no later than 60 days from the beginning of the plan year. For calendar year plans, this date is March 2, 2026. This disclosure can be completed online.

Forms 1094-B and 1095-B, 1094-C and 1095-C: Forms 1094-B, 1095-B, 1095-B and 1095-C must be filed with the IRS by March 2, 2026 (or March 31, 2026, if filing electronically). Unless posting the alternative notice online about the availability of the Form 1095-B or 1095-C, Forms 1095-B and 1095-C must be furnished to individuals by March 2, 2026.

Retirement Plans

Form 1099-R: Plan sponsors must provide Form 1099-R to plan participants by Feb. 2, 2026, including a statement of the participant's account as of Dec. 31, 2025, and must file the Form 1099-R with the IRS by March 2, 2026 (or March 31, 2026, if filing electronically).

Code Section 430(j)(3) payment deadline: For defined benefit plans that had a funding shortfall in 2024, plan sponsors must make the final 2025 minimum funding quarterly installment payment by Jan. 15, 2026.

Deadline to Notify Defined Benefit Plan Participants of Underfunding: For defined benefit plans that are less than 60 percent funded, the plan sponsor must notify participants and beneficiaries of any benefit restrictions by Jan. 30, 2026.

Defined Contribution Quarterly Fee/Benefit Statement: For participant-directed defined contribution plans, the plan sponsor must notify participants with the quarterly benefit/disclosure statement and statement of plan fees and expenses charged to individual plan-accounts during the last quarter of 2025 by Feb. 14, 2026.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.