Top 10 health, fringe and leave benefit compliance and policy issues in 2026 

Republican interest earlier this year in moving a second party-line reconciliation measure, which would likely be even more difficult, has waned. But advancing legislation under “normal order” that requires 60 votes and thus some support from Senate Democrats is proving to be a major challenge, as evidenced by the government shutdown driven mainly by the partisan standoff over whether/how to extend the enhanced ACA subsidies that expire at year end. Although key lawmakers in both parties would like to pass a bipartisan healthcare package this year that may include employer-backed bipartisan policies contained in a failed December 2024 government spending bill, the fraught political environment makes the outlook uncertain.

Democrats, already feeling burned by the partisan reconciliation OBBBA process that included deep cuts to Medicaid spending and some ACA reforms expected to increase the number of uninsured, have demanded that Republicans negotiate on extending the enhanced subsidies as a condition for ending the shutdown. While some Republicans support an extension of current subsidies, and some conservative members staunchly oppose any extension, still others are open to extending them if major changes are made. Ideas under discussion include reinstating an income cap above which individuals could not receive subsidies, requiring some level of cost-sharing for all enrollees and further tightening sign-up procedures.

Since the expanded/enhanced ACA marketplace subsidies were put in place during the coronavirus pandemic, enrollment in marketplace plans has more than doubled from about 11 to over 24 million people, with the vast majority receiving the expanded/enhanced subsidies, according to the health policy research group KFF.

Projections by the non-partisan Congressional Budget Office expect more than four million individuals to lose marketplace coverage over the next 10 years if the expanded/ enhanced ACA subsidies expire. Provisions in the OBBBA that will shorten ACA marketplace enrollment periods in 2027, eliminate auto-reenrollment for certain individuals receiving subsidies and end the monthly low-income special enrollment periods are likewise expected to dampen enrollment.

If Congress allows the expanded/enhanced ACA subsidies to expire or substantially pares them back for 2026, there could be ramifications for employer health plan sponsors. Employer plans may become more affordable and valuable in the eyes of current and potential employees and providers may attempt to make up lost revenue by charging higher rates to employer-sponsored plans.

As the government shutdown continues as of this writing, any congressional vote on extending the ACA subsidies in some form is not likely to happen until late this year, possibly as part of an end-of-year government funding measure. While the legislative path forward is unclear, a year-end bill could also be a vehicle for bipartisan priorities that raise offsetting revenue — like PBM reforms, site-neutral provider payment requirements, healthcare price transparency and curbs on anti-competitive provider contracts.  

Bipartisan bills addressing these and other issues have passed committees in the House and Senate in recent years but have not cleared the finish line, partly due to external factors. A PBM overhaul that would have required regular PBM reports to employers detailing their direct and indirect compensation and providing extensive data on employers’ prescription drug spending was part of a bipartisan spending bill that nearly passed in December 2024, but that was derailed by then President-elect Trump and his allies over broader concerns about the cost of the overall package.

Additional PBM reforms that could be in the mix for employer plans and/or public programs would delink list drug prices and PBM compensation; ban PBMs from engaging in “spread pricing” (i.e., charging a plan sponsor or insurer more than the amount reimbursed to the pharmacy dispensing the drug); and require PBMs to pass through all rebates, fees and discounts received from drug manufacturers directly to health plans.

Speeding generics to market and capping out-of-pocket costs for insulin in employer plans (similar to what has already been done for Medicare) are other bipartisan priorities that could make the cut.

Other potential add-ons include legislation to codify and strengthen current price transparency rules for health plans and hospitals and require new price transparency for services like diagnostic lab tests, imaging and ambulatory surgical centers owned by hospitals.

Democrats and Republicans have also eyed aligning Medicare payments for outpatient services across care settings (e.g., a hospital outpatient department or a freestanding physician office), to control costs and raise revenue. Plan sponsor groups hope lawmakers will extend the policy to the commercial market. Legislation under discussion would, for example, require each off-campus hospital outpatient department to include a unique provider identifier on payment claims to help Medicare and employers determine whether charges are appropriate.

Another possible bipartisan proposal would strengthen the No Surprises Act’s (Pub. L. No. 116-260) gag clause prohibition to ensure that employer plan sponsors are not contractually restricted from obtaining their plans’ cost or quality-of-care data from service providers. Other proposals would expand transparency and encourage more provider competition by barring anticompetitive contract provisions that prevent plans from directing employees to higher-value, lower-cost providers.

Negotiations on any year-end healthcare package would likely see Republicans also push for new HSA enhancements and codification of first-term Trump era rules that created individual-coverage health reimbursement arrangements (ICHRAs) and expanded association health plans (since rolled back by courts and the Biden administration).

After years of work on these bipartisan proposals, key lawmakers will be looking for opportunities to move them forward this year, but the outlook is uncertain in a legislative environment where mutual trust between Republicans and Democrats is at low ebb. Their fate this year may be determined by how Congress addresses the expiring ACA subsidies, as a compromise on that issue could pave the way for some of these longtime agenda items. 

Provisions in a year-end healthcare package would likely defer many effective dates to 2027 or later, though some requirements could take effect next year.

Healthcare legislation that does not cross the finish line in 2025 will roll forward into the second session of the 119th Congress next year without having to be reintroduced. Although all eyes next year will be on November’s midterm elections and mean a smaller legislative calendar, lawmakers may be motivated to showcase legislative accomplishments to their constituents and push for passage of bills that address pocketbook issues like healthcare.

Control of both chambers will be in play in the 2026 midterms, and the results could dramatically reshape congressional healthcare priorities after 2026.

Since taking office in January, President Trump has moved quickly to outline his healthcare agenda, largely through numerous EOs, policy directives, deregulatory actions and a sweeping reorganization of federal health agencies. While there have been high-level expressions of policy priorities, specific regulatory actions are still taking shape with several political appointees just now being confirmed by the Senate. Staff reductions and budget cuts across many agencies may slow the pace of new rules, however.

The administration characterizes its agenda as focused on lowering drug prices; expanding healthcare price transparency; targeting “waste, fraud and abuse” in federal health programs; addressing chronic disease and prevention through the new “Make America Healthy Again” (MAHA) Commission; and reducing regulation and broadening consumer choice.

EOs and policy directives to date have laid out broad strategies aimed at, among other things:

• Lowering prescription drug prices, speeding regulatory approval of generic drugs and biosimilars and increasing PBM transparency, including disclosures of direct and indirect compensation to health plan fiduciaries
• Improving (and potentially expanding) existing hospital and health plan price transparency requirements
• Expanding access to fertility treatment, including in-vitro fertilization
• Prohibiting gender-affirming care for children aged 18 or younger
• Banning use of federal funds for elective abortions

Agencies are working on advancing related rulemaking on these issues, with more expected. Whether they can meet the deadlines for new rules specified in many of these EOs and policy directives is uncertain, as is what rules might ultimately take effect.

Regulators are also working on guidance to implement the OBBBA’s health and fringe benefit provisions effective in 2026. These include the interplay of HSAs and direct primary care service arrangements (DPCSAs), the retroactive reinstatement and permanence of HSA-qualifying high-deductible health plans’ (HDHPs’) ability to cover (and otherwise HSA-eligible individuals to receive) telehealth and other remote care services on a pre- or no-deductible basis. The law also sets up new tax-preferred “Trump accounts” for children. It is unclear whether we will see guidance on the expansion of employer paid family and medical leave tax credits under § 45S of the Internal Revenue Code.

Other regulatory projects identified in the Spring 2025 Unified Agenda of Regulatory and Deregulatory Actions may bring new proposed and/or final rules in these areas:

• Default electronic delivery of health and welfare plan disclosures under ERISA
• PBM fee disclosures
• Healthcare and health plan transparency (e.g., air ambulance services reporting, agent/broker disclosures, provider enforcement, advanced explanations of benefits and amendment of 2020 Transparency in Coverage rules, etc.)
• No Surprises Act’s independent dispute resolution process
• HIPAA Security rule, particularly cybersecurity
• Minimum essential coverage (MEC) reporting and employer shared-responsibility (ESR)
• Application of ESR and self-funded health plan nondiscrimination rules to individual-coverage health reimbursement arrangements
• Gender identity and dysphoria nondiscrimination under section 1557
• Tax treatment of funded welfare benefit plans under IRC §4976

The Trump administration did not include in its regulatory agenda published in September a Biden administration rule that would have addressed whether drug manufacturer cost assistance (e.g., coupons) must count towards (or can be excluded from) a plan member’s annual cost-sharing limits. It still may be addressed, possibly in the next iteration of the Notice of Benefit and Payment Parameters, which should be issued later this year.

The administration is also rolling back several Biden-era initiatives, including expanded special enrollment periods, funding for ACA marketplace plans and restrictions on the duration of short-term limited duration insurance. It has also announced a nonenforcement policy for the 2024 final mental health parity regulations pending the outcome of a legal challenge to the rules.

So far, we do not have details on the regulatory priorities of the Equal Employment Opportunity Commission (EEOC). However, with the EEOC now having a quorum following the recent confirmation of a second Republican commissioner, it is expected to advance Trump administration priorities, including challenging employers’ diversity, equity and inclusion programs and scaling back protections for LGBTQ+ individuals.

Employers also need to monitor administration actions regarding tariffs. While key elements of the president’s proposals are the subject of litigation, experts warn that tariffs on healthcare industry products and prescription drugs could increase costs, disrupt the medical supply chain, hamper pharmaceutical innovation and exacerbate ongoing shortages of certain medical equipment and products.

A monumental tariff case is pending before the US Supreme Court. Oral argument is slated for Nov. 5. The decision will have major implications for pharmaceuticals and other aspects of the healthcare ecosystem. Another case seeks US Supreme Court review of the parameters of ERISA fiduciary liability.

We are likely to see a sharp decline in the use of nationwide injunctions, as a result of the decision in Trump v. CASA. The degree of fiduciary responsibility will continue to warrant close attention, particularly related to three large employers facing legal challenges from participants in federal district court.

Behavioral health litigation should remain in the spotlight as participants continue to contest actions by insurers and third-party administrators on mental health parity grounds.

Several lower court cases will likely progress, testing the limits of state PBM laws in light of ERISA preemption.

Applicable large employers (ALEs) should also keep an eye on the Faulk Company v. Kennedy case, currently on appeal to the 5th Circuit. The District Court rejected the IRS Letter 226-J process used to assess tax penalties against ALEs for ESR violations.

Finally, litigation on the validity of certain ACA-mandated preventive services (Kennedy v. Braidwood Management) continues at the lower courts, even after the US Supreme Court upheld the US Preventive Services Task Force recommendations as being constitutional.