Compliance Monthly Update
May 2025
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
2026 inflation-adjusted amounts for HSAs, HDHPs, and EBHRAs.
On May 1, the IRS released Revenue Procedure 2025-19 with the 2026 cost-of-living adjusted limits for health savings accounts (HSAs), high-deductible health plans (HDHPs), and excepted benefit health reimbursement arrangements (EBHRAs). These adjusted HDHP and EBHRA limits apply to plan years that start in 2026—so, for HDHPs and EBHRAs with non-calendar plan years, the adjusted limits for the calendar year in which the plan year begins can be applied for that entire plan year. Remember that the out-of-pocket maximums listed below are applicable to HSA-compatible HDHPs. Separate out-of-pocket dollar limits were previously announced for 2026 that apply to non-grandfathered non-HDHP plans (which is $10,150 for self-only coverage and $20,300 for family coverage).
- HSA contribution limits. The 2026 annual HSA contribution limit is $4,400 for individuals with self-only HDHP coverage (up from $4,300 in 2025) and $8,750 for individuals with family HDHP coverage (up from $8,550 in 2025). The catch-up contribution limit for HSA-eligible individuals 55 or older remains unchanged at $1,000.
- HDHP Minimum Deductibles. For plan years beginning in 2026, the minimum annual deductible is $1,700 for self-only HDHP coverage (up from $1,650 in 2025) and $3,400 for family HDHP coverage (up from $3,300 in 2025).
- HDHP Out-of-Pocket Maximums. For plan years beginning in 2026, the limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) is $8,500 for self-only HDHP coverage (up from $8,300 in 2025), and $17,000 for family HDHP coverage (up from $16,600 in 2025).
- EBHRA Contribution Limit. The maximum amount that may be made newly available for plan years beginning in 2026 is $2,200 (up from $2,150 for plan years beginning in 2025).
DOL Cybersecurity Program Best Practices guidance updated.
The DOL recently updated its Cybersecurity Program Best Practices webpage. This guidance can be used by plan fiduciaries who have an obligation to ensure proper mitigation of cybersecurity risks of their group health plan. These best practices can also be utilized as a tool to help group health plans with their HIPAA privacy and security compliance obligations.
Prescription drug pricing executive order.
On May 12, President Trump issued an Executive Order (and an associated fact sheet). This follows on the heels of the April 15 Executive Order that was discussed last month. This new executive order seeks to reduce the price of drugs by requiring manufacturers to offer the United States most-favored-nation (MFN) pricing, or in other words, the lowest price offered to any “comparably developed” foreign country that pays for the same drugs. The stated purpose is to stop American patients from paying higher prices for pharmaceutical products sold at lower prices in other countries.
Highlights of this May 12 executive order include the following:
- Directs the U.S. Trade Representative and Secretary of Commerce to take action to ensure foreign countries are not engaged in practices that purposefully and unfairly undercut market prices and drive price hikes in the United States.
- HHS is directed to establish a mechanism through which American patients can buy drugs directly from manufactures at the MFN price, bypassing traditional supply chains.
- The President will permit a 30-day period for HHS to communicate MFN pricing targets to drug manufacturers for American consumers.
- If there is not significant progress towards achieving the MFN pricing targets, HHS is directed to issue regulations imposing MFN pricing and to take other aggressive measures to significantly reduce the cost of prescription drugs to the American consumer and end anticompetitive practices. These actions could include importation guidance, antitrust enforcement, and reviewing export programs to achieve the desired pricing.
Agencies announce nonenforcement policy of 2024 MHPAEA regulations—however, NQTL comparative analysis is still required.
On May 15, the tri-agencies (DOL/HHS/IRS) issued a statement announcing a nonenforcement policy of the 2024 Mental Health Parity and Addiction Equity Act (MHPAEA) final regulations and that they are considering whether to rescind or modify those rules. This statement is in response to ongoing litigation challenging the validity of the 2024 final regulations that expanded MHPAEA compliance obligations to include, among other things, extensive evaluation of outcomes data and adherence to a “meaningful benefit requirement” that according to the challengers’ complaint is effectively a benefits mandate that the agencies are not authorized to impose. The lawsuit also alleges that the 2024 final rule’s requirements are so “burdensome and unworkable” that they will substantially increase administrative costs and discourage plans and issuers from offering mental health and substance use disorder benefits. The tri-agencies have now asked the court to put the lawsuit on hold, and their statement provides that they will not enforce the 2024 regulations or otherwise pursue enforcement actions based on compliance failures that occur before a final decision in the litigation, plus an additional 18 months.
It is important to note the enforcement relief applies only to those portions of the 2024 final rule that are new in relation to the prior 2013 final rule. The statutory MHPAEA obligations including the non-quantitative treatment limitation (NQTL) comparative analysis requirement remain in effect, but the requirement for an ERISA plan fiduciary to certify that it complied with its fiduciary duties in selecting and monitoring a service provider to perform and document the comparative analyses will not be enforced until future notice. The tri-agency statement reiterates that “MHPAEA provides critical protections for workers and families who need treatment for mental health and substance use disorders,” and that during the period of nonenforcement, the tri-agencies remain committed to “ensuring that individuals receive protections under the law in a way that is not unduly burdensome for plans and issuers.”
House passes budget reconciliation bill with HSA and ICHRA changes.
In a narrow party-line vote on May 22, the House of Representatives passed the widely publicized budget reconciliation legislation that is being used as a vehicle for tax reform and other spending measures. As of this writing, the bill is now in the Senate where material changes are likely due to scrutiny from both moderate and conservative Republicans. As currently written, there are several provisions that could impact employer-sponsored health benefits and group health plans including changes to Health Savings Account (HSA) flexibility, Affordable Care Act (ACA) Essential Health Benefits, and Individual Coverage Health Reimbursement Arrangements (ICHRAs), but again, we expect significant changes to the bill. We are monitoring this and will keep you informed.
Court dismisses weight-loss drug Section 1557 nondiscrimination lawsuit.
A federal court has dismissed a lawsuit against an insurer / health plan administrator alleging discrimination under ACA Section 1557 for failure to cover weight-loss drugs. The plaintiff alleged that a coverage exclusion for weight-loss medications was a form of illegal disability discrimination in violation of ACA Section 1557 (which prohibits discrimination in certain health programs and activities based on race, color, national origin, sex, age, or disability). The insurer argued that the weight-loss exclusion applied to participants regardless of disability status since it applied equally to overweight persons, obese persons who are not disabled, and obese persons who may be disabled. The court granted the defendant’s motion to dismiss holding that the plaintiff’s conclusory allegations that the defendant regarded her as disabled do not support a finding that the coverage exclusion for weight loss drugs amounts to discrimination. Given the high cost of weight-loss drugs, many plans are considering cost-reduction measures. And plan sponsors can take some solace in this ruling that an exclusion of coverage for weight-loss drugs was not alone sufficient to state a plausible claim that the benefit denial was based solely on the presumed presence of a disability.
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
Los Angeles health benefit payment requirements for hotel and airport workers.
On May 27, Los Angeles passed amendments to the Living Wage Ordinance (LWO) and the Hotel Worker Ordinance (HWO). The HWO amendments include increases to the minimum wage and an hourly health benefit payment (that apply to workers in hotels with at least 60 guest rooms). Effective July 1, 2026, if a hotel employer does not provide a worker with health benefits, the worker must be paid the annually adjusted wage rate plus an additional hourly wage rate equal to the health benefit payment in effect under the LWO for an airport employee (discussed below). Beginning July 1, 2025, the amendments to the LWO require the hourly health benefit payment provided to an airport employee must be at least $7.65/hour (that will be adjusted annually).
Colorado
New Colorado law requires large group insurance carriers to offer plan sponsors the option to cover GLP-1 medications.
Governor Polis signed into law SB 25-048 (the “Diabetes Prevention and Obesity Treatment Act”) that beginning January 1, 2027, requires large group health benefit plans issued or renewed in the state to “provide coverage for the treatment of the chronic disease of obesity and the treatment of pre-diabetes, including coverage for a comparable program to the National Diabetes Prevention Program, medical nutrition therapy, intensive behavioral or lifestyle therapy, and metabolic and bariatric surgery.” In addition, large group carriers are required to offer the option to purchase coverage for FDA-approved anti-obesity medications, including at least one FDA-approved GLP-1 medication.
Missouri
Missouri legislature passes bill repealing state paid sick time law.
As background, a successful ballot initiative in November 2024 (known as Proposition A, the Missouri Earned Paid Sick Time Law) went into effect on May 1, 2025, that requires the accrual of earned paid sick time for employees in Missouri. But now, on May 14, the Missouri legislature passed HB 567 which repeals the requirements of Proposition A. If signed by Governor Kehoe, the repeal will go into effect August 28, 2025.
Oregon
Bulletin on “gender-affirming” treatment.
As background, in 2023, HB 2002 was passed (including Section 20, since codified as ORS 743A.325) that prohibits Oregon carriers offering a health benefit plan from denying or limiting coverage for “gender-affirming” treatment that is medically necessary as determined by the physical or behavioral health care provider who prescribes the treatment and is prescribed in accordance with accepted standards of care. On May 15, Oregon has now issued a bulletin regarding health benefit plan coverage of “gender-affirming” treatment to ensure consistent and uniform implementation of the state requirements across the health insurance market.
Washington
Expansion of options under WA Cares Fund.
On May 20, Governor Ferguson signed a new law expanding options for accessing long-term care support through the WA Cares Fund. The law creates opportunities for individuals to purchase affordable supplemental long-term care coverage from private insurers in the future, allows workers who have a private insurance exemption to join the program, and simplifies the ten-year contribution requirement to qualify for benefits. More information is available on the WA Cares Fund website.
