By Erin Powell, RHU® | Seubert Compliance Officer
As employers prepare for 2026, several regulatory updates from the IRS and Department of Labor will impact employer-sponsored health and welfare plans. Below is a summary of the most recent developments—covering ACA affordability thresholds, reporting reminders, transparency requirements, and flexible spending account limits.
At a Glance
- ACA Affordability: 2026 threshold set at 96%
- ACA Reporting: No changes to Forms 1094/1095 for 2025; e-filing due March 31, 2026
- Gag Clause Attestation: Due December 31, 2025
- FSA Limits: Health FSA increases to $3,400; carryover to $680; Dependent Care to $7,500
Affordable Care Act
2026 Affordability Percentage: The Internal Revenue Service (IRS) has set the 2026 affordability percentage as 9.96% for applicable large employers (ALEs) who sponsor a group health plan renewing on or after January 1, 2026. The single-only employee contribution must not exceed 9.96% calculated using an affordability safe harbor method (W-2, Rate of Pay, or Federal Poverty Limit) to avoid ACA §4980H Penalty B amounts.
Forms 1095/1094
The IRS has issued 2025 final Forms 1094 and 1095. There are no changes from 2024. Applicable large employers (ALEs) and small employers who sponsor a self-insured group health plan, including level funded plans and individual coverage health reimbursement arrangements (ICHRAs) are required to file a Form 1095 for each full-time employee with a Form 1094 by entity electronically with the IRS by March 31, 2026. Please note that most employers cannot electronically file directly with the IRS AIR Program, use of third party software or vendor is needed. Complete IRS filing details can be found here.
Under the Paperwork Burden Reduction Act of 2024 (PBRA), ALES may post a notice of availability of Forms 1095 on their website and only furnish Forms 1095 to participants upon request. IRS guidance can be found here.
Several states have an employer reporting requirement, including California, District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont. Further information on state filing requirements can be found here.
Gag Clause Prohibition Compliance Attestation (GCPCA)
The Consolidated Appropriations Act, 2021 (CAA) included new transparency rules for group health plans that require an annual Gag Clause Prohibition Compliance Attestation (GCPCA) that the plan did not enter into any agreements with a healthcare provider, network or association of providers, third-party administrator, or other service provider offering access to a network of providers that would directly or indirectly contain a gag clause.
Plans and issuers must annually submit an attestation of compliance with these requirements to the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments). The Centers for Medicare & Medicaid Services is collecting GCPCAs on behalf of the Departments
Attestations are due by December 31 of each year. Seubert submits the attestation on behalf of clients when the carrier or third party administrator does not complete the attestation. More information can be found here.
Health and Dependent Care 2026 FSA Limits Announced
On Oct. 9, 2025, the IRS released Revenue Procedure 2025-32 (Rev. Proc. 25-32), which includes the 2026 inflation-adjusted limit on employee salary reduction contributions to health flexible spending accounts (FSAs). For plan years beginning in 2026, the adjusted dollar limit on employees’ pre-tax contributions to health FSAs increases to $3,400. This is a $100 increase from the 2025 health FSA limit of $3,300.
As an exception to the use-or-lose rule, employers with health FSAs may allow employees to carry over a certain amount of funds remaining at the end of a plan year to reimburse eligible expenses incurred in the plan year immediately following. The maximum carryover amount is adjusted annually for inflation. For 2026, Rev. Proc. 25-32 increases the maximum carryover limit to $680 (from $660 for 2025 plan years). Employers that allow carryovers may impose their own limit that is lower than the maximum carryover limit.
For 2026, the Dependent Care FSA contribution limit increases to $7,500 for single filers or married couples filing jointly, up from $5,000 and to $3,750 for married couples filing separately, up from $2,500 as a result of the “One Big Beautiful Bill Act”.
Need Help Staying Compliant?
Seubert’s Employee Benefits team monitors evolving compliance requirements to help employers stay ahead of regulatory changes and minimize risk. Contact us at 412-734-4900 or [email protected] your Seubert representative for guidance on how these updates impact your organization.
Erin is the Compliance Officer in Seubert’s Employee Benefits Department. She joined Seubert in 2008 and has more than 16 years of experience in the employee benefits and compliance industry. In her current role, Erin is responsible for ensuring awareness of new developments and/or changes in the various federal and state laws that may impact a business’ employee benefits program.
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