Compliance Monthly Update
July 2026
A brief update on what happened the prior month in group health plan compliance at the federal level, organized chronologically. An update for the state and local level are further down. If you would like additional information, please reach out to the GBS Compliance Team.
Federal Compliance Update
Final action on HIPAA Security Rule modifications projected for July 2027.
HHS has extended its projected timeline for issuing final regulations modifying the HIPAA Security Rule out to July 2027. Note that this date is not set in stone and often gets extended further. But it represents HHS’ current projection and their intent of when the previously issued proposed rule will be finalized and published.
- As a reminder, HHS issued a proposed rule titled ““HIPAA Security Rule to Strengthen the Cybersecurity of Electronic Protected Health Information” back in January 2025 that (if finalized) would strengthen the HIPAA Security Rule and would require covered entitles to:
- Meet new and expanded requirements for implementing encryption and multi-factor authentication.
- Maintain technology asset inventories and network maps.
- Revise business associate agreements (BAAs) and obtain written verification at least once every 12 months that business associates deploy certain technical safeguards.
- Treat all implementation specifications as mandatory, eliminating the distinction between “required” and “addressable” implementation specifications.
- Review, verify, and update risk analyses on an ongoing basis and at least once every 12 months.
- Perform penetration tests at least once every 12 months.
- Perform vulnerability scans at least every six months.
- Implement additional data backup and recovery controls and testing requirements.
- Audit compliance with the Security Rule at least once every 12 months.
- If the proposed rule is finalized (now currently projected as July 2027 to be finalized), it would be the first modification to the HIPAA Security Rule since 2013 and would add significant compliance obligations (and costs) for HIPAA covered entities and business associates.
Court finds that time theft constitutes gross misconduct, relieving employer of COBRA obligations.
As a reminder, the termination of a covered employee’s employment (other than for gross misconduct) is a triggering event that may require an offer of COBRA continuation coverage. When the gross misconduct exception applies, an employer is not required to provide a COBRA election notice or offer continuation coverage.
- In recent litigation, a former employee sued his employer alleging that the employer failed to offer him COBRA coverage after terminating his employment. The employer had designated the termination as one for gross misconduct based on its determination that the employee had engaged in time theft by logging compensable work hours during periods when he was away from work attending medical appointments. Based on the gross misconduct designation, the employer notified the employee that he was ineligible for COBRA coverage.
- In its ruling, the court noted that the COBRA rules do not define “gross misconduct.” Surveying case law from multiple jurisdictions, the court concluded that gross misconduct goes well beyond mere negligence or occasional lapses in judgment and encompasses conduct that is intentional, wanton, willful, deliberate, reckless, or in deliberate indifference to an employer’s interests. Applying that standard, the court agreed with the employer that the employee had engaged in time theft, illustrating an intentional, willful, deliberate, or reckless indifference to his employer’s interests. So, the court held that the employer had no obligation to notify the employee of his right to continued COBRA coverage and ruled in the employer’s favor.
- Note that the gross misconduct determination is highly fact-specific, and employers that incorrectly invoke the exception may face liability for COBRA notice failures and related penalties. This decision suggests that intentional falsification of time records, particularly when it results in compensation for unworked hours, may support a gross misconduct determination. However, employers considering reliance on the gross misconduct exception should carefully document the facts underlying the termination and ensure that the evidence demonstrates deliberate misconduct rather than poor performance, negligence, or misunderstanding of workplace rules.
Court upholds plan’s exclusion of GLP-1 drugs for weight loss, despite FDA approval to treat sleep apnea.
With the popularity of GLP-1 drugs, plan sponsors are taking a closer look at the costs and benefits of providing GLP-1 coverage. Many plan sponsors have decided to limit their coverage of GLP-1s to only diabetes and not extend coverage to weight loss or other conditions. To limit GLP-1 coverage, a common approach is to add “weight loss medications” or “non-surgical obesity treatments” to the list of the plan’s coverage exclusions. A recent federal court case offers some comfort to plan sponsors that implement this type of weight loss medication exclusion. The plaintiff was prescribed Zepbound to treat sleep apnea, but he was denied coverage because his prescription benefit plan did not cover Zepbound. The plaintiff sued for denial of benefits and breach of fiduciary duty under ERISA. The plaintiff argued that the FDA’s authorization of Zepbound to treat sleep apnea (a separate medical condition under the plan) removed it from the plan’s exclusion for weight loss medications. That is, the use of the drug to treat sleep apnea trumped the plan’s exclusion of weight-loss drugs. But the court disagreed and concluded that the claims administrator had properly denied coverage for Zepbound to treat sleep apnea. The court found that the plan’s prescription drug plan unambiguously excluded coverage for “prescription drugs for weight loss,” and that the GLP-1 medication—designated as an “anti-obesity agent” on the plan’s formulary—fell squarely within that exclusion. The court focused on the wording of the FDA approvals, which stated that Zepbound aids sleep apnea “by reducing body weight.” Based on this express FDA language, the court reasoned that Zepbound improves the condition of sleep apnea because it promotes weight loss, not as a separate, unrelated benefit. And concluded that Zepbound is a weight-loss drug that was excluded under the terms of the plan. In reaching its holding, the court differentiated coverage of similar GLP-1 medications for treatment of diabetes, pointing out that those similar GLP-1 medications have been FDA approved specifically to treat diabetes, regardless of whether the person is also obese. More lawsuits can be expected as group health plan participants seek coverage for usage of GLP-1 medications for a broadening range of conditions, but this case should give some comfort to those plan sponsors who are relying on a simple weight loss or obesity drug exclusion to limit their liability exposure under their plans.
DOL and HHS publish 2026 regulatory agenda.
On July 3, the DOL and HHS released their 2026 regulatory agenda that serves as a public roadmap for how federal agencies intend to implement the President’s policy priorities through rulemaking, guidance, and deregulatory actions. While agencies frequently adjust projected timelines, the regulatory agenda offers insight into areas where the agencies are likely to focus regulatory and oversight efforts in the year ahead. More specifically, the agenda reflects agency planning and priorities, but it does not create legal obligations or a guarantee that a rulemaking will occur on the projected timeline. Below are items of interest to group health plan sponsors, and GBS will provide updates when any proposed and final rules are issued.
- HHS regulations:
- Requirements Related to Advanced Explanation of Benefits and Other Provisions Under the Consolidated Appropriations Act 2021 (expected September 2026). As a reminder, an explanation of benefits (EOB) is a statement detailing how a medical claim is processed, what the insurer paid, and what the insured will pay. Currently, EOBs are provided after a healthcare provider files a claim. An advanced EOB would be disclosed in response to a provider’s disclosure to a health plan of a good faith estimate (GFE) of the items and services to be provided to a participant. Between the GFE and the advanced EOB, the participant would be able to properly estimate the cost of care. The advanced EOB requirement was part of the CAA 2021, but regulations have not yet been issued to make the requirement effective.
- Exchange Pre-Enrollment Eligibility Verification (expected July 2026).
- Patient Protection and Affordable Care Act; State Innovation Waivers and Health Care Choice Compacts (expected July 2026).
- Short-Term, Limited-Duration Insurance (expected August 2026).
- Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement (expected September 2026).
- Requirements Related to the Mental Health Parity and Addiction Equity Act (expected December 2026).
- DOL regulations:
- Excepted Benefits (expected July 2026). These regulations may provide additional guidance on the newly proposed excepted fertility benefit.
- Pooled Employer Plans and Association Health Plans (AHPs). This is a second bite at the apple on AHPs by the Trump administration, whose first attempt was vacated by the courts.
- Individual Coverage Health Reimbursement Arrangements (ICHRAs) (expected July 2026). With only one round of guidance so far, ICHRA guidance will be welcome to resolve some outstanding compliance questions.
- PBM Fee Disclosures and Prohibited Exemption Procedures (expected September 2026). These regulations will provide processes to help fiduciaries obtain fee information from their PBMs and explain how to analyze that information to avoid a prohibited transaction when engaging a PBM.
- Transparency in Coverage Rules (expected July 2026). These proposed rules would begin to codify many of the actions already taken by employers and their carriers (machine readable files, self-service internet-based tools, and other transparency efforts).
- 530A Accounts. Both the DOL and IRS are expected to offer proposed guidance on 530A Accounts, commonly referred to as Trump Accounts.
Initial contributions to Trump Accounts will default to S&P 500 ETF.
As a reminder, effective July 4, contributions may now be made to Section 530A Trump Accounts. The IRS announced on July 1, that initial contributions will be default invested into the State Street SPDR Portfolio S&P 500 ETF (SPYM), a low-cost ETF that tracks the performance of the S&P 500 Index, with the potential for individuals to allocate to four additional ETFs afterwards.
IRS updates standard mileage rates for second half of 2026.
On July 13, the IRS issued Bulletin No. 2026-29 with the standard mileage rates for business and medical use of an automobile. Normally, the IRS updates mileage rates only once a year, but occasionally it makes interim adjustments like this one, which reflects the rising cost of gas in 2026. For travel on or after July 1, 2026, the business standard mileage rate is 76 cents per mile (up from the original 2026 rate of 72.5 cents per mile). The rate when an automobile is used to obtain medical care—which may be deductible under Section 213 if it is primarily for, and essential to, the medical care—is 23.5 cents per mile for travel on or after July 1, 2026 (up from 20.5 cents per mile). Transportation expenses that are deductible medical expenses under Section 213 generally can be reimbursed on a tax-free basis by a health FSA, HRA, or HSA. (To simplify administration, some employers’ health FSAs or HRAs exclude medical transportation expenses from the list of reimbursable items.) The applicable reimbursement rate is the one in effect when the expense was incurred.
Model state ICHRA tax credit bill emerges.
The National Council of Insurance Legislators (NCOIL) has created a model bill for states to offer state income tax credits to employers sponsoring individual coverage health reimbursement arrangements (ICHRAs). The model bill establishes a tax credit for businesses that employ between 2 and 50 employees and offer an ICHRA. Currently, only Indiana provides an ICHRA tax credit, which has been in place since 2023. However, Georgia is considering a similar bill, and an Ohio state representative is sponsoring an ICHRA tax credit bill there. As a result, more states could soon offer the tax credit as an incentive to employers providing these plans.
2027 ACA affordability percentage increases to 10.22%.
On July 21, the IRS announced in Rev. Proc. 2026-26 that the ACA affordability percentage for plan years beginning in 2027 will be increasing to 10.22% (from 9.96% for 2026). As a reminder, under the ACA employer mandate, applicable large employers (ALEs) must offer affordable health coverage to full-time employees or face potential penalties. The annually adjusted affordability percentage is used to determine the threshold, at or below which the cost of coverage will be considered affordable. Generally, coverage offered to a full-time employee will be considered affordable if the employee’s contribution for self-only coverage does not exceed the applicable percentage of the employee’s household income for the taxable year. Because employers typically are unaware of what an employee’s actual household income is, the rules provide three affordability safe harbors: (1) employee’s Form W-2 wages; (2) employee’s rate of pay; and (3) the federal poverty line. Employers should review the required employee contribution for 2027 coverage if they plan to meet the ACA’s affordability limit under the applicable safe harbor.
DOL proposes new safe harbor for electronic delivery of ERISA-required group health plan disclosures.
On July 23, the DOL published a proposed rule titled “Electronic Disclosure by Group Health Plans Under ERISA” (and provided an associated news release). The proposed rule, if finalized, would create a new optional electronic disclosure safe harbor for ERISA-required group health plan documents (e.g., SPDs, SMMs, annual notices, etc.) that would make it easier for plan sponsors to furnish required notices electronically. As a reminder, the general rule for ERISA-required disclosures is that they are required to be distributed using a delivery method that is reasonably calculated to ensure actual receipt and likely to result in full distribution. Currently, plans may use the 2002 “wired at work” safe harbor to satisfy the general delivery requirements when furnishing disclosures electronically. The 2002 safe harbor applies to recipients in two categories: (1) participants who can be considered “wired at work” (i.e., have computer access as a regular part of their job); and (2) participants, beneficiaries, and other individuals who consent to receive documents electronically. The proposed rule adds to the current 2002 “wired at work” electronic distribution safe harbor and does not replace existing disclosure rules. Plan sponsors can continue using current delivery methods or elect to use the new safe harbor if finalized. Here are the highlights of the new proposed electronic distribution safe harbor:
- Covered plans. The proposed safe harbor would be available only to group health plans and not to other welfare plans (such as disability or life plans). It is unclear how this distinction would impact the distribution of something like a wrap summary plan description (wrap SPD) that includes both health and welfare plans. But the DOL requested comments on whether the new safe harbor should later be extended to other welfare plans, and hopefully the DOL to provide additional guidance and clarification when and if the final rule is published.
- Covered individuals. The proposed safe harbor would be available to individuals entitled to receive the required ERISA disclosures and who provide an email address or smartphone number capable of receiving electronic notices. Adult dependent children (age 18 or older) who provide their own electronic address would be treated as covered individuals independently, to ensure they have access to their healthcare information as well.
- The plan sponsor may obtain the email or phone number through the plan’s enrollment process, as a condition of employment, or by other means. When an employee later terminates, the employer must take reasonable measures to obtain an accurate electronic address for continued use of the new safe harbor after termination.
- Individuals may opt out of electronic delivery and continue to be entitled to paper copies, free of charge, on request.
- Covered documents. The proposed safe harbor generally covers all documents that ERISA requires a group health plan administrator to furnish, including SPDs, SMMs, and other required ERISA disclosures. It would also apply to documents that must be furnished only upon request (e.g., a wrap plan document).
- Website posting requirement. To rely on the safe harbor, a plan administrator would need to maintain a reasonably accessible website or electronic repository (such as a mobile application) where plan documents and disclosures are available. Key requirements include:
- Participants must be able to access the site outside the workplace to ensure compliance with the reasonable access standard.
- Documents must be posted by the date they are otherwise required to be furnished.
- Documents must remain available for at least one year after posting or until superseded by a newer version, if later.
- Documents must be presented in a widely available and searchable format suitable for online viewing and printing (e.g., PDF format).
- The administrator must take reasonable measures to protect the confidentiality of participant information.
- Initial paper notification. Plan administrators must furnish an initial paper notification explaining default electronic delivery of covered documents and the right to opt out before using the new safe harbor. However, the proposed rule would honor consents obtained before the first day of the calendar year following publication of the final rule and exempt them from this initial notice requirement if those consents meet the 2002 safe harbor. The initial paper notification under the proposed new safe harbor must:
- Be written in a manner calculated to be understood by the average plan participant.
- Summarize the required disclosure to be provided electronically.
- Identify the electronic address to be used for the particular individual.
- Include instructions to access the documents.
- Disclose that the documents are not required to be available on the site for more than one year or, if later, after it is superseded by a subsequent version.
- Notify the individual of their right to obtain a paper version, free of charge, and how to exercise that right.
- And notify the individual of their right to opt out of electronic delivery and receive only paper versions of covered documents, and an explanation of how to exercise this right.
- Notice of Internet Availability (NOIA). Participants would be required to receive a Notice of Internet Availability (NOIA) informing them that a plan document has been posted online and is available for review, download, or printing. A plan may use either a separate NOIA for each covered document or an annual combined NOIA that identifies multiple documents. To use the proposed safe harbor, a group health plan administrator would need to receive from the employee an email address or smartphone number that can receive a written NOIA. Employers may use employer-assigned email addresses, although personal email addresses and personal smartphone numbers are also permitted.
- Timing rules:
- A NOIA generally must be provided to covered individuals when a covered document is made available electronically.
- A combined annual NOIA would be timely if it is furnished each plan year (and generally no later than 14 months after the prior year’s combined notice).
- Using a combined NOIA does not delay the underlying deadline for posting required documents.
- Documents that must be furnished only upon request would require a NOIA when the requested document is made available electronically.
- Required content of a NOIA:
- A title or subject line must include a prominent statement, for example, “Disclosure About Your Health Plan.”
- A statement must be included that reads: “Important information about your health plan is now available. Please review this information.”
- Identification of the covered document by name (for example, a statement that reads: “your HIPAA Notice of Special Enrollment Rights is now available”) and a brief description of the covered document if the document name does not convey the document’s nature. For example, “Michelle’s Law Notice” would not convey the nature of the right and would require a further brief description.
- The internet address or hyperlink where the documents are available. A plan may require a log-in, but the login page must provide a prominent link to the covered document.
- A statement of the right to request and obtain paper versions of covered documents, free of charge, and an explanation of how to exercise this right.
- A cautionary statement that the disclosure is not required to be available for more than one year, or if later, until it is superseded by a new document.
- Contact information for the plan administrator or designated representative.
- The NOIA may include a statement as to whether action by the covered individual is invited or required in response to the covered document and how to take such action, or that no action is required, provided that such statement is not inaccurate or misleading. Notably, the NOIA may contain only the information permitted by the rule, although the administrator may include logos, branding, and other non-misleading design elements.
- NOIA delivery standards:
- NOIA must be sent electronically to the covered individuals’ provided email address or smartphone number.
- NOIA must be provided separately from any other documents or disclosures provided to covered individuals (subject to the limited consolidation rules described above).
- And the NOIA must be written in a manner understandable by the average plan participant.
- Timing rules:
Court stays portions of 2027 Notice of Benefit and Payment Parameters Final Rules.
As we discussed last month, in June a court invalidated portions of the 2025 ACA Marketplace integrity rule. And the same plaintiffs sued to block similar provisions in the 2027 ACA Notice of Benefit and Payment Parameters that was published in May. Then on July 16, a district court granted the plaintiff’s motion to stay those challenged provisions of the 2027 ACA Notice of Benefit and Payment Parameters, which includes the following individual coverage Marketplace rules:
- The expansion of eligibility for less comprehensive forms of coverage.
- The increased out-of-pocket spending burdens for certain enrollees.
- Mandatory verifications for low-income enrollees.
- Refusal to accept attestation from applicants when tax data is lacking.
- Verification requirements for special enrollment periods.
- The failure-to reconcile penalty.
- Reduced standards for network adequacy.
- The elimination of standardized plans and non-standardized plan limits.
Updated model CHIP Notice released.
The DOL has released a new model employer CHIP Notice (available HERE) with information current as of July 31, 2026. As a reminder, group health plans that maintain a plan with participants who reside in a state that provides premium assistance under Medicaid or CHIP have an annual notice requirement to notify employees of the potential opportunities for premium assistance. The model CHIP notice is updated periodically to reflect changes in the states that offer premium assistance and changes to the relevant state contact information.
State/Local Compliance Update
A brief update on what happened the prior month in group health plan compliance at the state and local level, listed alphabetically. If you would like additional information, please reach out to the GBS Compliance Team.
Arizona
Arizona expands military leave protections for national guard and armed forces reserves.
Arizona has amended its military leave law under HB 2663 to expand employment protections for members of the National Guard and United States Armed Forces Reserves. The law clarifies that employees are entitled to leaves of absence from employment to comply with competent military orders for active duty or training and provides that military leave may not adversely impact vacation or seniority rights. The legislation also extends protections afforded under federal military reemployment laws to members serving under competent orders of any state of the United States. The law further revises military leave provisions applicable to state and local government officers and employees by basing military leave on the average number of regularly scheduled work hours in a weekly work period, clarifying that employees may not be charged military leave for days they were not otherwise scheduled to work, and preserving leave, pay, and related employment protections while performing qualifying military service.
Arkansas
Court finds Arkansas geographic coverage requirements for PBMs are preempted by ERISA
On June 29, the Eighth Circuit Court of Appeals ruled that Arkansas regulations imposing geographic coverage requirements for pharmacy benefit managers (PBMs) are preempted by ERISA and therefore unenforceable. The geographic coverage requirements mandated that PBMs servicing a health plan ensure that a high percentage of covered individuals (90% for urban or suburban plans, 70% for rural) live within a relatively short distance from a network pharmacy (two miles for urban, five miles for suburban, and fifteen miles for rural). The court, citing the general rule that ERISA preempts state laws that have an impermissible “reference to” or “connection with” an ERISA plan, concluded that the geographic coverage requirements had an impermissible connection with ERISA plans because they forced a particular scheme of substantive coverage and interfered with nationally uniform plan administration. The court distinguished the geographic coverage requirements from requirements that create only a “modest” disuniformity in plan administration and are thus not preempted in other court rulings—reasoning that PBMs would need to tailor and “retailor” their pharmacy networks to state-specific access standards as plan participants moved, areas were reclassified, or pharmacies closed. According to the court, this is precisely the kind of burden Congress enacted ERISA to prevent. The court left open the question of whether a broader statutory provision regarding pharmacy network adequacy and accessibility, standing on its own or implemented through different regulations, would be preempted.
Hawaii
Hawaii expands family leave protections for military families.
Hawaii has expanded its Family Leave Law to permit eligible employees to take family leave for a qualifying military exigency related to the active-duty service of the employee’s child, spouse, reciprocal beneficiary, sibling, grandchild, or parent in the U.S. Armed Forces. Enacted through SB 3082, the amendment incorporates a new definition of “qualifying military exigency” based on the federal FMLA regulations in 29 C.F.R. § 825.126 and adds such exigencies as a covered reason for leave. Prior to the amendment, Hawaii’s Family Leave Law provided eligible employees of employers with 100 or more employees up to four weeks of unpaid, job-protected leave during a calendar year for the birth or adoption of a child, or to care for a child, spouse, reciprocal beneficiary, sibling, grandchild, or parent with a serious health condition. The law did not recognize military-related family needs as an independent basis for leave. Legislators noted that military families often face urgent obligations arising from deployments and active-duty service, including arranging childcare, attending military briefings, and handling legal or financial matters, and concluded that Hawaii law should be aligned more closely with the federal FMLA’s military-family leave protections.
Kansas
Kansas issues guidance on income tax subtraction for portable benefit plan contributions.
On July 1, Kansas issued Notice 26-08 discussing legislation that established an income tax subtraction modification for contributions during the tax year to voluntary portable benefit plans for independent contractors. The subtraction applies to the amount contributed to a plan by private or public businesses, including internet or application-based companies, and individuals that hire or contract with independent contractors. Independent contractors can also claim a subtraction modification for amounts contributed to a portable benefit plan.
Louisiana
IRS grants tax relief to victims of Tropical Storm Arthur in Louisiana.
The IRS has announced tax relief for taxpayers who reside or have a business in the federal disaster areas of Avoyelles, Lafourche, Pointe Coupee, St. Landry, St. Tammany, and Terrebonne parishes in Louisiana—which were impacted by Tropical Storm Arthur that began June 17, 2026. The relief extends until November 2, 2026, deadlines for filing various returns, including the filing of Form 5500s, and paying taxes otherwise due during the period of June 17, 2026, and before November 2, 2026.
Massachusetts
Massachusetts 2027 PFML contribution structure change.
Massachusetts has announced that, beginning January 1, 2027, there will be changes to the structure of the Massachusetts PFML contribution rates. In particular, the employer-required share of PFML contributions will shift from medical leave to family leave. The change is intended to mitigate the impact of recent IRS guidance regarding the tax treatment of state PFML benefits. While the change does not alter employers’ obligation to remit PFML contributions, it will impact how contributions are allocated between employers and employees for employers with 25 or more covered individuals. Note that contribution rates are established annually and that the actual 2027 total contribution rate has not yet been determined—rates are expected to be set by October 1, 2026.
- Employers with fewer than 25 employees. Employers with fewer than 25 covered individuals are responsible for sending the funds withheld from covered individuals’ wages but are under no obligation to contribute themselves. However, they may elect to cover some or all of the covered individuals’ share.
- Current PFML contribution structure for employers with 25 or more employees. For 2025 and 2026, employers with 25 or more covered individuals contribute to PFML through a combination of employee payroll withholdings and employer-paid contributions. Under the current structure:
- Employees may be charged up to 100% of the family leave contribution.
- Employees may be charged up to 40% of the medical leave contribution.
- Employers are responsible for the remaining 60% of the medical leave contribution.
- New 2027 contribution structure for employers with 25 or more employees. Beginning January 1, 2027, Massachusetts will effectively reverse that allocation. In other words, the employer’s required contribution will move from the medical leave side of PFML to the family leave side. The overall contribution framework remains in place, but the allocation between family and medical leave changes significantly. So, starting in 2027, for employers with 25 or more covered individuals:
- Employers will be required to pay 60% of the family leave contribution.
- Employees may be charged up to 40% of the family leave contribution.
- Employees may be charged up to 100% of the medical leave contribution.
Minnesota
Minnesota adopts paid sick and safe time rules.
Minnesota has issued final regulations (and associated FAQs) implementing the Minnesota Earned Sick and Safe Time Law. Of note, employers can continue to offer attendance-based incentives but cannot require employees to use leave. The rules also address exceptions to when employers can request documentation, when leave is deemed “accrued,” and how the law impacts employers that offer generous paid leave benefits. Employers should determine whether the rules impact their current paid sick and safe time (or other paid leave) policies, procedures, and practices—and modify accordingly.
Mississippi
IRS grants tax relief to victims of severe storms, straight-line winds, tornadoes, and flooding in Mississippi.
The IRS has announced tax relief for taxpayers who reside or have a business in the federal disaster areas of Franklin, Lamar, Lawrence, Lincoln, and Wilkinson counties in Mississippi—which were impacted by severe storms, straight-line winds, tornadoes, and flooding that began May 6, 2026. The relief extends until November 2, 2026, deadlines for filing various returns, including the filing of Form 5500s, and paying taxes otherwise due during the period of May 6, 2026, and before November 2, 2026.
New Jersey
New Jersey enacts employer NJ FamilyCare assessment.
On June 30, New Jersey enacted A5324 that establishes a new annual assessment on certain employers whose employees (and, in some cases, their dependents) receive health coverage through NJ FamilyCare/Medicaid. NJ FamilyCare includes Medicaid, CHIP, and Medicaid expansion populations. The law is intended to raise revenue to defray State Medicaid costs. The assessment generally applies to employers that, during the preceding calendar year, employed 50 or more employees who received health benefits coverage through NJ FamilyCare/Medicaid. Once an employer is subject to the assessment, the annual fee is calculated with respect to each covered employee and each covered dependent attributable to the employer, subject to statutory exclusions. The law directs state agencies to administer the assessment program and establish procedures for notification, collection, and appeals. On or before March 1 of each year, employers subject to the assessment should receive notices from the Division of Revenue and Enterprise Services regarding the number of NJ FamilyCare beneficiaries attributed to the employer for whom a fee will be due on or before April 15. An employer who fails to pay the fee for each impacted employee or dependent as required under the law shall be subject to a penalty not to exceed $500 per day for each day the fee remains unpaid. The annual fee is determined using a tiered structure based on the number of NJ FamilyCare beneficiaries attributable to the employer. The statute provides the following assessment levels:
- 50 – 249 covered beneficiaries attributable to the employer = $325 annual fee per beneficiary.
- 250 – 499 covered beneficiaries attributable to the employer = $525 annual fee per beneficiary.
- 500 or more covered beneficiaries attributable to the employer = $725 annual fee per beneficiary.
FAQ guidance issued for the New Jersey Family Leave Act (NJFLA) and Temporary Disability Insurance Law (TDI).
New Jersey issued FAQs related to recent amendments to the NJFLA and TDI law, which are effective July 17, 2026. The FAQs explain new and extensive job protections under the amendments, which impact every employer in the State.
- As a reminder, the NJFLA allows employees to take 12 weeks of job protected leave in a 24-month period to care for a family member with a serious health condition or to bond with a newly born or adopted child. Effective July 17, 2026, the amendments reduce the threshold for employer coverage under the NJFLA, from 30 to 15 employees (on July 17, 2027, the threshold drops to 10 employees, and on July 17, 2028, the threshold drops to 5 employees).
- To be eligible for NJFLA, under the amendments, employees must only work 250 hours (formerly 1,000 hours) in the 12 months preceding their need for leave. And employees with three months of employment (formerly 12 months) are now eligible for job-protected NJFLA leave.
The amendments also require job protection for employees taking Family Leave Insurance (FLI) or Temporary Disability Insurance (TDI) benefits. The FAQs clarify the scope of this job protection, and unlike job protection coverage under the NJFLA or federal FMLA, there are no minimum employer size requirements or work history requirements to be eligible for job protection while on leave during which the employee is receiving TDI or FLI benefits. Specifically, effective July 17, 2026, eligible New Jersey employees may receive up to 26 weeks of job-protection while receiving TDI benefits and up to 12 weeks while receiving FLI benefits, with reinstatement rights to their job or an equivalent position when the benefits end.
New York
New York City issues final regulations on amended Earned Safe and Sick Time Act.
As a reminder, last year New York City (NYC) amended the NYC Earned Safe and Sick Time Act (ESSTA) to expand the covered uses for safe and sick time and to require employers to provide an additional 32 hours of unpaid safe and sick time immediately available upon hire in addition to paid safe and sick time already required by the statute, and to frontload such time at the start of each year. NYC has now issued final regulations implementing those amendments. The final regulations took effect on July 23, 2026, and adds new leave entitlements, clarifies employer obligations regarding unpaid leave, addresses post-employment record access obligations, and provides guidance on the use of unpaid leave by exempt employees.
South Carolina
New South Carolina Civil Air Patrol leave.
Governor McMaster has signed the Civil Air Patrol Act that will require employers to provide leave for eligible employees who serve as members of the Civil Air Patrol. Employees who are members of the Civil Air Patrol, the official civilian auxiliary of the U.S. Air Force, are eligible for leave for qualifying reasons. Effective October 1, 2026, employers must provide: (a) emergency response leave of up to 30 days per calendar year for participation in Civil Air Patrol emergency service operations, including mutual aid missions for other jurisdictions; and (b) training leave of up to 10 days per calendar year for Civil Air Patrol training and proficiency activities, including qualifying training conducted by the Civil Air Patrol, the U.S. Air Force, the Federal Emergency Management Agency, or other emergency management organizations. Unlike other military leave statutes that apply only to public employers, the Civil Air Patrol Leave Act applies to both public and private employers operating in South Carolina. But the law distinguishes between public and private employers regarding whether the leave is paid or unpaid. For public employers, the leave is paid. For private employers, the leave can be paid or unpaid, at the employer’s option. Unused leave does not carry over from year to year and is not payable upon separation from employment.
