In our January issue, we outlined the major compliance themes shaping 2026. This month, we build on that foundation with a deeper look at the annual updates, effective dates, and action steps employers need as the new year begins.

As employers enter 2026, a wave of regulatory updates, benefit limit changes, and new reporting requirements are taking effect. This year’s compliance landscape is shaped by provisions of the One Big Beautiful Bill Act (OBBBA), IRS inflation adjustments, and heightened federal scrutiny of mental health parity and plan administration. Below is a comprehensive roundup of the annual changes employers must address now to stay compliant and keep employees informed.

Dependent Care FSA Limit Increases to $7,500 (Effective January 1, 2026)

For the first time in nearly four decades, the Dependent Care Assistance Program (DCAP) limit has increased from $5,000 to $7,500 for plan years beginning in 2026. This change applies to all employer‑provided dependent care assistance, including dependent care FSAs.

Employer action:

• Update plan documents and cafeteria plan materials
• Adjust payroll systems
• Communicate the new limit to employees during Q1

Fringe Benefit Changes Under OBBBA (Effective January 1, 2026)

Several fringe benefit rules shift this year, including the permanent elimination of the bicycle commuter reimbursement exclusion as a tax‑free benefit. Employers who reinstated this benefit during the temporary relief period must amend their fringe benefit documentation to reflect the change.

Employer action:

• Review transportation and fringe benefit policies
• Update employee handbooks and onboarding materials

Telehealth Flexibility Becomes Permanent (Effective 2026 Plan Year)

Telehealth relief that began during the pandemic is now embedded in 2026 plan rules, allowing employers to continue offering virtual‑first care options without jeopardizing HSA eligibility.

Employer action:

• Confirm carrier/TPA alignment
• Update Summary Plan Descriptions (SPDs)
• Communicate virtual care options to employees

Mental Health Parity Enforcement Tightens (Ongoing in 2026)

Federal agencies are increasing audits and enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA). Employers must be able to produce detailed comparative analyses showing that mental health and substance use disorder benefits are no more restrictive than medical/surgical benefits — including non‑quantitative treatment limits.

Employer action:

• Request updated parity analyses from carriers or TPAs
• Review prior authorization, network adequacy, and reimbursement policies
• Prepare for potential audits

Retirement Plan Updates Under SECURE 2.0 (Effective January 1, 2026)

Several SECURE 2.0 provisions take effect this year, including:

• Roth catch‑up contributions for certain high‑income earners
• Annual paper statement requirements for many plans
• Updated contribution and income limits for 2026

Employer action:

• Coordinate with recordkeepers and payroll
• Update plan notices and enrollment materials
• Communicate changes to employees during annual meetings

ACA Reporting and Affordability Requirements (2026 Filing Season)

Employers must continue filing Forms 1094‑C and 1095‑C, but mailing requirements have shifted. Employers no longer need to mail 1095‑C forms if they provide clear notice of electronic availability.

Affordability thresholds for 2026 have also changed, requiring employers to reassess safe harbor strategies.

Employer action:

• Update employee communications regarding electronic access
• Validate affordability calculations for 2026
• Confirm ALE status for the new year

PCORI Fees for 2026 (Due July 31, 2026)

PCORI fees continue through 2029. For plan years ending between October 1, 2024, and September 30, 2025, the fee is $3.47 per covered life, payable by July 31, 2026.

Employer action:

• Confirm headcounts
• Prepare Form 720 filing

COBRA and Account‑Based Plan Adjustments (Effective 2026)

COBRA continuation coverage rules and account‑based benefit limits (FSAs, HSAs, HRAs) have been updated for 2026, including higher contribution limits and new administrative requirements for some plans.

Employer action:

• Update COBRA notices
• Adjust plan documents and payroll systems

The Bottom Line for Employers

2026 brings one of the most significant rounds of benefits compliance changes in recent years. Employers should prioritize:

• Updating plan documents and employee communications
• Coordinating with carriers, TPAs, and payroll vendors
• Reviewing parity, affordability, and reporting obligations
• Preparing for increased regulatory scrutiny

For more Employee Benefit resources, contact your INSURICA today.

Copyright © 2026 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.