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2026 Federal Poverty Level Updated, Increasing FPL Affordability Safe Harbor
The federal government updated the 2026 Federal Poverty Level (FPL), increasing the mainland U.S. amount to $15,960 (up from $15,650 in 2025). Hawaii’s FPL is now $18,360, and Alaska’s is $19,950. As a result, the mainland FPL affordability threshold for non-calendar year plans beginning in 2026 increases to $132.46 per month.
Applies To:
Applicable Large Employers (ALEs) sponsoring a fully insured, self-insured, or level-funded medical plan, or an Individual Coverage Health Reimbursement Arrangement (ICHRA). ALE status for 2026 is based on averaging 50 or more full-time and full-time equivalent employees in 2025, including controlled or affiliated service groups.
Go Deeper:
Review our January 14, 2026 Alert, Federal Poverty Level Updated, in the Content Library.
Reporting Creditability to CMS When the New Plan Year Begins
Within 60 days of the start of each new medical plan year, employers must notify the Centers for Medicare and Medicaid Services (CMS) whether their prescription drug coverage is creditable or non-creditable for Medicare Part D purposes. This deadline shortens to 30 days if coverage creditability changes or the plan terminates.
For calendar year plans, reporting is due by March 2 (or January 30 if creditability changed or the plan terminated).
Applies To:
Employers of any size sponsoring a medical plan with prescription drug coverage, including fully insured, self-insured, and level-funded plans. At this time, this also appears to include HRAs and ICHRAs that reimburse prescription drug expenses.
Go Deeper:
Employers must submit their disclosure through the CMS Creditable/Non-Creditable Coverage web form. The process is quick, but employers should retain proof of submission since CMS does not provide confirmation access after filing.
Practical Impact:
Determining whether prescription drug coverage is creditable can be challenging if carriers, TPAs, or PBMs will not make that determination. Incorrect reporting can negatively impact both employers and participants, particularly those delaying Medicare Part D enrollment. When in doubt, an actuarial-based determination is recommended.
Reporting the Value of Health Coverage on Form W-2
Large employers that filed 250 or more W-2 forms in the prior year must report the value of employer-sponsored health coverage in Box 12 of Form W-2.
Applies To:
Large employers sponsoring:
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Fully insured, self-insured, or level-funded medical plans (excluding ICHRAs)
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Health FSAs with employer contributions
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Employer-paid hospital indemnity or specified illness plans
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EAPs or on-site clinics when a COBRA premium is charged
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Certain wellness programs providing medical care
Go Deeper:
The IRS provides a detailed table outlining what must be reported, what is optional, and what must never be included.
Practical Impact:
This reporting is informational only and does not affect employee taxation. Payroll systems typically handle this automatically, but employers should verify special circumstances—such as EAPs or on-site clinics that charge COBRA premiums—are properly reported to avoid penalties and reissued W-2s.
ACA Reporting Due in March — Take Advantage of New Reporting Relief
ACA reporting under Internal Revenue Code sections 6055 and 6056 is due each March. Employers must provide Form 1095 statements to individuals by March 2, and electronically file with the IRS by March 31.
New reporting relief allows employers to provide 1095 statements upon request, provided specific language is posted on the employer’s public website by March 2 and maintained through October 15.
Applies To:
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ALEs required to file Forms 1094-C and 1095-C
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Non-ALEs sponsoring self-insured or level-funded medical plans or ICHRAs (Forms 1094-B and 1095-B)
Go Deeper:
State-level requirements may still apply in states such as CA, DC, MA, NJ, and RI, some of which require proactive distribution regardless of federal relief.
Practical Impact:
ALEs remain fully responsible for ACA reporting accuracy and timeliness. Inaccurate or delayed filings can extend the IRS’s statute of limitations to pursue Employer Shared Responsibility Penalties (ESRPs), increasing long-term risk.
HIPAA Privacy Notices Require SUD Language by February 16, 2026
HIPAA Notices of Privacy Practices (NPPs) must be updated by February 16, 2026, to reflect enhanced privacy protections for Substance Use Disorder (SUD) records. The government has not yet issued model language.
Applies To:
Employers sponsoring:
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Fully insured plans with access to PHI
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Self-insured or level-funded plans, FSAs, HRAs, or ICHRAs
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Integrated benefits such as telemedicine, fertility, or Rx carve-outs
Go Deeper:
Updated NPPs must address stricter disclosure rules, enhanced privacy rights, redisclosure warnings, legal proceeding limitations, and fundraising opt-out rights related to SUD data.
Practical Impact:
With the deadline approaching and no model language available, employers may want to engage benefits counsel now to ensure compliance and avoid potential HIPAA penalties.
Fiduciary Lawsuits Target Voluntary Benefits
In late 2025, Schlichter Bogard LLC filed new lawsuits against large employers and brokers alleging excessive fees and poor fiduciary oversight in voluntary benefit plans. These cases follow a broader trend of increased scrutiny driven by transparency initiatives.
Practical Impact:
Employers and benefit decisionmakers are fiduciaries and must act prudently and solely in participants’ best interests. Thorough documentation of benefit decisions, service provider selection, and fee evaluations is essential. Establishing a fiduciary committee with employee representation can help demonstrate good-faith compliance.