Compliance Monthly Update
June 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
Reminder that PCORI fee and filing is due by July 31.
The annual ACA Patient-Centered Outcomes Research Institute (PCORI) filing and fee on insurers and sponsors of self-funded medical plans (including HRAs) is coming up. The filing and payment due July 31, 2026, is required for policy and plan years that ended during the 2025 calendar year. For plan years that ended January 1, 2025 – September 30, 2025, the fee is $3.47 per covered life. For plan years that ended October 1, 2025 – December 31, 2025 (including calendar year plans that ended December 31, 2025), the fee is $3.84 per covered life. The PCORI fee is reported and paid using IRS Form 720. See the Form 720 Instructions for more information and instructions on reporting and paying the fee. As a reminder:
- Insurers report and pay the fee for fully insured group medical plans.
- For self-funded plans (including level-funded plans), the plan sponsor (e.g., the employer) reports and pays the fee.
- An employer that sponsors an HRA along with a fully insured medical plan must pay the PCORI fee based on the number of employees (dependents are not included in this count) participating in the HRA, while the insurer pays the PCORI fee on the individuals (including dependents) covered under the insured plan.
- Where an employer maintains an HRA along with a self-funded (or level-funded) medical plan and both have the same plan year, the employer pays a single PCORI fee. Each person covered by both plans is only counted once. If the HRA covers anyone who is not also covered under the self-funded medical plan, the sponsor counts those individuals using the one-life-per-participant rule.
HHS vacates gender identity provisions under ACA Section 1557 rule.
On June 2, HHS published a Notice of Vacatur informing covered entities that a federal court has vacated certain provisions of the regulations implementing Section 1557 of the ACA—which prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in health programs and activities receiving federal financial assistance. HHS published a final rule in May 2024 which provided, among other things, that discrimination on the basis of sex includes discrimination on the basis of gender identity. But a federal court issued a judgment vacating specific provisions of the 2024 regulations to the extent they expand Title IX’s definition of sex discrimination to include gender-identity discrimination. The HHS notice confirms that the vacated provisions are legally void to the extent they expand Title IX’s definition of sex discrimination to include gender-identity discrimination, and that HHS will not investigate or enforce compliance with those provisions. The notice further clarifies that it applies to all covered entities with respect to the vacated provisions but does not impact the remaining provisions of the 2024 regulations, which remain in force. Note that other federal nondiscrimination laws—including Title VII of the Civil Rights Act, as interpreted by the U.S. Supreme Court—may independently address gender identity discrimination in certain contexts.
Final regulations issued on federal No Surprises Act IDR operations.
On June 4, the DOL, HHS, and IRS published final regulations (and an associated fact sheet) addressing federal independent resolution (IDR) operations under the No Surprises Act (NSA). As a reminder, the NSA established federal protections designed to eliminate surprise medical billing, in which patients are liable for amounts charged for unavoidable encounters with out-of-network health care providers—such as emergency room services, non-emergency services provided by out-of-network providers at in-network facilities, and air ambulance services. The NSA also created the federal IDR process to resolve payment disputes between payers (plans and issuers) and providers for the out-of-network services covered under the NSA. Since its implementation, the IDR process has experienced significant operational and administrative challenges—including high dispute volumes, ineligible claims concerns, processing delays, and IDR awards that are both unreasonable and unsustainable. The final rule is intended to improve the functioning of the IDR process by streamlining communications between plans, insurers, providers, and certified IDR entities; and by clarifying timelines and processes. These final rules represent a significant step in the regulatory agencies’ ongoing efforts to address the inefficiencies in the federal IDR process.
Plan sponsors have begun receiving proceeds from a BCBS settlement—and suggested guidance for the use of those proceeds.
Employers are beginning to receive settlement proceeds from a $2.67 billion class action settlement reached by Blue Cross Blue Shield (BCBS) and the class plaintiffs. Information about the settlement is available at the BCBS Settlement Website. Employers that receive settlement proceeds should be aware that they may have fiduciary duties under ERISA with respect to the use of any proceeds from the settlement fund. Under ERISA, any portion of the settlement proceeds that are considered to be “plan assets” must be used for the exclusive benefit of participants in the plan or to defray the reasonable administrative expenses of the plan. The DOL has not issued any guidance regarding the proper treatment of settlement proceeds. But, the DOL has previously issued guidance related to the treatment of medical loss ratio (MLR) rebates, and employers may want to use the MLR guidance (in Technical Release 2011-04 for ERISA plans and under HHS rules for non-ERISA plans) as a reference when determining how to calculate what portion of the BCBS settlement proceeds should be considered “plan assets,” and how those funds can be used.
Court strikes down multiple provisions of HHS’ 2025 ACA Marketplace integrity rule.
A federal court has invalidated key (but not all) portions of final regulations issued by HHS in June 2025 that impacted the ACA Marketplaces and the affordability of health coverage.
- The regulations—which included changes to annual cost-sharing limits, eligibility and enrollment procedures, and the definition of essential health benefits (EHBs)—were originally scheduled to take effect in August 2025, with many provisions that would impact insurance plans available in 2026.
- Before the regulations took effect, a group of cities and nonprofit organizations sued, claiming that certain provisions were contrary to law or arbitrary and capricious. In response, the court blocked several provisions of the regulations from taking effect pending the outcome of the litigation.
- Now, in the June 2026 decision, the court invalidated the following provisions:
- Imposition of a $5 monthly premium penalty on automatic re-enrollees in a Marketplace.
- Revocation of guaranteed issue coverage for individuals with past-due premiums.
- Reinstatement of the “failure-to-reconcile policy,” which impacts eligibility for advance premium tax credits.
- Expanded eligibility verification requirements for Marketplace special enrollment periods.
- Shortening of the Marketplace annual enrollment period.
- And heightened requirements for verification of household income.
- Note that similar changes (to those that were struck down in the 2025 ACA Marketplace integrity rule) were issued in the ACA Notice of Benefit and Payment Parameters for 2027 final rule, that we discussed last month. The same group of plaintiffs have again sued to block that final rule.
- Also note that in the June 2026 decision, the court did uphold the revised premium adjustment percentage methodology that incorporates both employer-sponsored and individual market premiums in calculating the premium adjustment percentage (this impacts key ACA parameters, including maximum out-of-pocket limits and related cost-sharing amounts).
Trump Accounts – additional guidance and draft forms released.
This month, additional regulatory guidance was issued related to Trump Accounts (TAs). In addition, the IRS released draft forms and instructions for reporting TA contributions. As a reminder, TAs were introduced in 2025 under new IRS Code Section 530A with contributions first available beginning July 4, 2026. TAs are a new type of IRA that can be established for eligible minors with an annual contribution limit of $5,000 per year (to be adjusted for inflation and subject to certain exceptions), including up to $2,500 of certain employer contributions. Under a pilot program, children born between 2025 and 2028 may be eligible to receive a special $1,000 contribution to their Trump Accounts from the federal government if certain requirements are met.
- TA draft forms and instructions. The IRS has released drafts of new Form 5498-TA (Trump Account Contribution Information) and its accompanying instructions.
- ERISA generally will not apply to TAs and TA contribution arrangements. On June 17, the DOL issued Technical Release 2026-02 clarifying that TAs and Trump Account Contributions Programs (TACPs) generally will NOT be considered employee pension benefit plans subject to ERISA. Note that TACPs may be offered through cafeteria (Section 125) plan salary reductions for contributions made to the TA of an employee’s dependent. Employers that stay within the guardrails described in Technical Release 2026-02 may offer TACPs and TA-related payroll deductions without triggering the full range of ERISA obligations. The DOL guidance address two scenarios in which ERISA could apply to a TA and TACP.
- TA contribution gift tax safe harbor. On June 29, the IRS issued Revenue Procedure 2026-25 establishing a gift tax reporting safe harbor for certain contributions to TAs.
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.
California
Amendment to health benefit required payment amount for Los Angeles hotels and related businesses.
As a reminder (and as we discussed in our April update), beginning July 1, 2026, the Citywide Hotel Worker Minimum Wage Ordinance requires covered employers with hotels (and ancillary businesses) in Los Angeles to pay a health benefit rate (originally of $8.15 per hour) for the provision of health care benefits for a covered employee and their dependents. On May 26, an amendment was approved to adjust the rate from $8.15 per hour to $4.25 per hour. If no health benefits are provided, the amended $4.25 is required to be provided as an additional hourly wage. And if the covered employer’s hourly health benefit payment is less than $4.25, the difference is required be paid to the covered employee as an additional hourly wage. Employers may satisfy their health benefit rate obligation by providing health, dental, vision, mental health, disability income benefits, increased compensation, or a combination thereof. Employers who own, control, or operate a hotel in Los Angeles (or who have a business in a hotel) should determine if the ordinance applies. And if so, they will want to calculate whether they are making sufficient health benefit payments for each covered employee (and if not, work with their payroll department to provide additional wages) to those employees.
Colorado
Colorado maximum weekly FAMLI benefit increase.
Effective July 1, 2026, the maximum weekly benefit under the Colorado Family and Medical Leave Insurance (FAMLI) program increases to $1,448.02 (from $1,381.45).
Connecticut
Connecticut enacts new AI legislation.
Public Act No. 26-15 was signed by Governor Lamont on May 29. The new AI legislation will, among other things, restrict employers’ use of AI-powered tools in employment decisions and require employers to provide disclosures to employees before AI-related reductions in force (RIFs). The law imposes a notice requirement when AI-powered tools are used in making employment-related decisions, clarifies that the use of AI tools is not a defense to antidiscrimination claims, provides whistleblower protections for employees of certain AI developers who report safety concerns or risks, and requires transparency about reductions in force related to the adoption of AI. The compliance timeline is staggered, with some provisions immediately effective, and the most operationally intensive obligations taking effect in October 2027.
Connecticut expands job posting transparency requirements to include a general description of benefits.
On June 24, Governor Lamont signed Public Act No. 25-113, amending its pay transparency requirements for job postings. Under existing law, employers in Connecticut cannot restrict or prohibit employees from discussing or inquiring about wages or compensation, nor can they take adverse action against employees engaging in protected conduct under the law. During the hiring process, employers cannot inquire about or elicit information about an applicant’s wage or salary history. In addition, Connecticut law already requires employers to provide information about a position’s wage range upon request or at the time an offer of compensation is made. Under the new amendments, Connecticut expands these requirements so that in external and internal job postings, employers must include a good faith listing of the salary or wage range and a general description of benefits. With respect to benefits, this includes health insurance benefits, retirement benefits, fringe benefits, paid leave, and any other compensation other than wages.
Louisiana
New Louisiana Data Privacy Act to take effect in 2027.
Governor Landry signed SB 386 on May 29, adding Louisiana to the list of states who have enacted comprehensive consumer privacy laws. Like similar laws in Texas, Virginia, Colorado, and other states—the Louisiana Data Privacy Act (LDPA) adopts a controller/processor framework, grants consumers rights over their personal data, and authorizes enforcement by the state attorney general rather than private litigants. The LDPA takes effect January 1, 2027, and applies to a person or entity that does business in the state and meets at least one of these thresholds: (a) annual gross revenues over $25 million; (b) annually buys, receives, sells, or shares for commercial purposes the personal information of 75,000 or more consumers, households, or devices; or (c) derives 50 % or more annual revenues from selling consumers’ personal information. Note that the LDPA provides for entity-level and data-level exemptions. So, the law does not apply to various entities, including HIPAA-covered entities and business associates. And one of the data-level exemptions is for protected health information (PHI) under HIPAA.
Maine
Increase in maximum weekly benefit under Maine’s paid family and medical leave program.
Effective July 1, 2026, the maximum weekly benefit under Maine’s paid family and medical leave program increases to $1,249.12 (from $1,198.84), for new claims beginning on or after July 1, 2026.
Maryland
Maryland’s paid family and medical leave program payroll contributions begin next year.
Maryland’s DOL published final regulations for the state’s paid family and medical leave insurance (FAMLI) law. The FAMLI program will provide eligible employees with up to 12 weeks of paid, job-protected leave for certain qualifying family and medical reasons, with up to $1,000 per week in wage replacement. Employees may be eligible for FAMLI benefits if they perform covered employment in Maryland and have worked at least 680 hours in covered employment during the applicable base period for any employer. Payroll contributions begin January 1, 2027, and benefits begin to be payable starting January 2028. Once leave and benefits begin in January 2028, employer must also provide notice: (a) at time of hire, (b) annually, (c) at least 30 days before any changes to the employer’s FAMLI procedures or plan, and (d) when the employer knows that an employee’s leave or leave request may be FAMLI-qualifying.
Massachusetts
Massachusetts sets 2027 state individual mandate coverage dollar limits.
Massachusetts has published 2027 dollar limits on deductibles and other cost sharing for minimum creditable coverage (MCC). As a reminder, the Massachusetts individual mandate (that has been in effect since 2007) requires state residents to maintain MCC or face a potential state tax penalty. Employers are not mandated to provide MCC, but many employees use employment-based health coverage to satisfy the individual mandate. In addition, health plan reporting requirements compel plan sponsors (or their vendors) to determine whether their coverage meets MCC standards. Deductibles and out-of-pocket maximums are reviewed annually and typically adjusted. And by each January 31, after the close of a coverage year, health plans providing MCC must distribute form MA 1099-HC to covered individuals residing in Massachusetts and report this information to the state Department of Revenue (DOR). While the law applies to plan sponsors and state-regulated insurers, most self-funded employers rely on their TPA to determine MCC status, distribute forms, and file the DOR report. Insurers subject to the regulation must comply with the reporting requirements. MCC reporting becomes an employer obligation if an insurer is not subject to the state’s laws and will not agree to file the reports.
Montana
IRS grants tax relief to victims of severe winter storm and straight-line winds in south-central Montana.
The IRS has announced tax relief for taxpayers who reside or have a business in the federal disaster area of the Crow Tribe of Montana in south-central Montana, which were impacted by severe winter storm and straight-line winds that occurred between December 17, 2025 and December 19, 2025. The relief extends deadlines until September 28, 2026, for filing various returns—including the filing of Form 5500s and paying taxes otherwise due during the period of December 17, 2025, and before September 28, 2026.
Oregon
Increase in maximum weekly benefit under Paid Leave Oregon.
The maximum weekly benefit under Paid Leave Oregon increased to $1,692.16 (from $1,636.56), for new claims beginning on or after June 28, 2026.
Rhode Island
Rhode Island passes PBM oversight legislation.
On June 22, Governor McKee signed SB 3060, a comprehensive PBM law that places PBMs under the direct oversight of the Rhode Island Office of the Health Insurance Commissioner (OHIC) to increase transparency, created greater accountability, and provide more state oversight. Historically, PBMs have operated in a regulatory environment that differed significantly from insurers, pharmacies, and other health care entities. Rhode Island’s new law changes that dynamic. Now, beginning January 1, 2027, PBMs operating in Rhode Island will be required to obtain a certificate of authority from OHIC. The law creates a formal licensure structure, authorizes examinations and investigations, and gives regulators the ability to suspend or revoke a PBM’s authority to operate in the state. In addition, PBMs must annually report a broad range of information to regulators, including: rebates received from manufacturers, amounts passed through to insurers, amounts passed through to patients at the point of sale, amounts retained by the PBM, spread pricing practices, pharmacy network information, manufacturers compensation arrangements, and other financial compensation arrangements. Practically, Rhode Island is moving PBMs into a category that looks far more like a regulated insurance industry participant than a private contractor operating behind the scenes.
Vermont
Vermont passes consumer privacy bill.
On June 16, Governor Scott signed SB 71, a comprehensive privacy law that, effective January 1, 2028, will regulate how covered entities collect, use, disclose, sell, and protect personal data. The law applies to people who conduct business in Vermont or produce products or services targeted at Vermont residents and meet one of several thresholds during the preceding calendar year. A business may be covered if it: (a) controls or processes the personal data of at least 35,000 consumers (not counting personal data controlled or processed solely to complete a payment transaction); (b) controls or processes the sensitive data of at least 3,000 consumers (not counting personal data controlled or processed solely to complete a payment transaction); or (c) offers for sale the personal data of at least 3,000 consumers. Similar to other states, the law includes numerous exemptions including an exemption for HIPAA regulated entities (i.e., HIPAA covered entities and business associates) and an exemption for HIPAA regulated data (i.e., PHI).
Washington
Washington increases WAPAL assessment rate.
An increase in the Washington Partnership Access Lines (WAPAL) assessment rate was announced for employers with covered Washington-based employees. The rate will increase to $0.09 per covered life per month (up from $0.07) and will apply to quarterly payments due November 15, 2026, February 15, 2027, May 15, 2027, and August 15, 2027. As a reminder, WAPAL funding is provided to maintain certain psychiatry and behavioral sciences consultation and referral lines overseen by the state. The assessment generally applies to both fully insured and self-insured health plans covering Washington-based employees. Insurers are responsible for filing covered lives counts and paying the assessment on behalf of their fully insured clients. For self-insured health plans, employers should confirm if their TPA is completing the quarterly reporting and payments—if not, the employer will need to complete it. More information is provided by the state in FAQs and on the WAPAL Fund website.
Increase in maximum weekly benefit under Washington’s paid family and medical leave program.
The maximum weekly benefit under Washington’s paid family and medical leave program increases to $1,727 (from $1,647), for new claims beginning on or after January 1, 2027.
