July 2025 Regulatory & Legislative Update 

This regulatory and legislative update covers issues involving preventive services, HIPAA reproductive health privacy, marketplace integrity, and more.

Tax and Spending Law Signed

On July 4, 2025, President Trump signed HR1, dubbed the One Big Beautiful Bill, a massive tax and spending bill. The benefit-related provisions of the law are relatively small. The implications for overall healthcare costs due to changes applicable to Medicaid and the Marketplace remain to be seen.

Following are highlights of benefit-related provisions:

HSA/Telehealth

The on again/off again status of HSA and telehealth compatibility is made permanent. For background see past Benefit Beat articles here and here. Under the law, telehealth can be offered without jeopardizing HSA-eligibility, even if the telehealth services are covered prior to satisfying the HSA minimum statutory deductible. This provision is effective retroactive to January 1, 2025, and is made permanent. 

Direct primary care

Beginning January 1, 2026, an individual may receive medical care consisting solely of primary care services provided by primary care practitioners through a direct primary care service arrangement without jeopardizing HSA-eligibility.

Primary care services shall not include procedures that require the use of general anesthesia, prescription drugs (other than vaccines), and laboratory services not typically administered in an ambulatory primary care setting.

The fee for direct primary care service arrangements for an individual for any month shall not exceed $150 ($300 for family coverage) subject to a cost-of-living adjustment.

In addition, the law defines marketplace bronze and silver level coverages as HSA compatible. 

Dependent care assistance

Dependent care assistance amounts available through a Code Section 129 dependent care assistance plan are increased to $7,500, up from $5,000, and $3,750, up from $2,500 (for married couple filing separately). This becomes effective for tax years beginning after December 31, 2025. Notably, these amounts are not tied to a cost-of-living adjustment.

Extension of tax credit for family leave

Extends the tax credit to taxable years beginning after December 31, 2025. As a reminder, the Tax Cuts and Jobs Act added a new tax credit for wages paid to qualifying employees during any period in which an employee is absent from work due to a family and medical leave event.

An employer is eligible for a general business tax credit under Code Section 45S if it has a separate written policy in place that allows all qualifying full-time employees a minimum of two weeks of annual paid family and medical leave. It is important to note that this credit is available to an employer without regard to whether it is subject to the federal Family and Medical Leave Act (FMLA), as long as the employer maintains the written policy that meets the wage payment criteria.

Student loans

The CARES Act allows educational assistance plans to cover qualified student loan repayment. This provision, which was set to expire December 31, 2025, is made permanent. Further, the $5,250 educational assistance dollar amount will be tied to a cost-of-living adjustment beginning January 1, 2026.

Qualified transportation

The qualified bicycle commuter benefit is removed from the qualified transportation program permanently. This change is applicable to tax years beginning after December 31, 2025.

Trump account

The law establishes an IRA-type savings account specifically for children beginning January 1, 2026. It would allow the taxpayer and others to contribute up to $5,000 tied to cost-of-living adjustments annually. Up to $2,500 of that amount could be contributed by an employer.

Preventive Services Survive

On June 27, 2025, the U.S. Supreme Court issued its opinion in Kennedy, et al. v. Braidwood Management, Inc., et al. See past Benefit Beats here and here. The Court found that the appointment of Task Force members is consistent with the Appointments Clause and that the Secretary of the Dept. of Health and Human Services had properly exercised his appointment authority. The lower court’s ruling was reversed and remanded. This means that the preventive mandate of the Affordable Care Act remains in effect.

At the time of this writing, the Advisory Committee on Immunization Practices is meeting to review immunization schedules. If their recommendations change, that could impact what immunizations are covered under the preventive services mandate.

HIPAA Reproductive Health Privacy Rule Vacated

A recent court decision, Purl, et al. v. United States Department of Health and Human Services, et al, vacates a HIPAA Privacy Rule related to reproductive health. As background, these regulations would have required an attestation that the requested health information would not be used for impermissible purposes. See past Benefit Beat here.

The Court determined that the Department of Health and Human Services exceeded its statutory authority in issuing these regulations. Importantly, reproductive health must continue to be protected like any other PHI, but the additional attestation requirement no longer applies. Further, notices of privacy practices no longer need to be amended to reflect this now vacated provision. The one portion of the regulations that remains in effect is protection for certain substance use disorder information. Notices of Privacy Practices must be amended by February 16, 2026, to reflect this protection. 

Marketplace Integrity and Affordability Final Rule Issued

On June 20, 2025, the Centers for Medicare and Medicaid Services (CMS) issued the Patient Protection and Affordable Care Act – Marketplace Integrity and Affordability Final Rule, setting standards for the Marketplace. One of the provisions of the Rule relates to the out-of-pocket limits for 2026. Specifically, the following adjustments were made:

• Maximum annual limit on cost sharing: $10,600 for self-only coverage and $21,200 for family coverage
  • This results in an increase of 4.4% from previously released 2026 amounts of $10,150/self and $20,300/family
  • This also results in an increase of 15.2% from 2025 amounts of $9,200/self and $18,400/family

In addition to changes to the out-of-pocket adjustments, the Final Rule makes changes to the open enrollment period. Specifically, it narrows the marketplace open enrollment window for benefit years starting January 1, 2027. For federal exchanges, the open enrollment period will be November 1 through December 15. The previous open enrollment window was November 1 to January 15. State exchanges have flexibility in setting open enrollment dates, however, the open enrollment period for state exchanges cannot exceed nine weeks and must occur between November 1 and December 31.

The Final Rule also prohibits coverage of gender affirming care as an essential health benefit (EHB). Plans can continue to provide gender affirming care, at least in states that do not ban it. However, it no longer qualifies as an EHB. This means such care is subject to out-of-pocket restrictions as well as annual and lifetime limits.

Restrictions on Access to Gender Affirming Care Upheld

On June 18, 2025, the U.S. Supreme Court in United States v. Skrmetti upheld a lower court’s ruling that a Tennessee Law banning gender affirming care for minors is not in violation of the 14^th amendment equal protection clause. This decision only applies to Tennessee; however, time will tell how this ruling affects states with or without similar bans. The impact on broader swaths of gender affirming care also remains open.

As a reminder, a few years ago, the Supreme Court issued an opinion in Bostock. In that case, the Court found that sex discrimination protections, including gender identity and sexual orientation, apply in an employment setting. Currently, there is a case winding its way through the 11^th Circuit, Lange, et al., v. Houston County, Georgia, et al.. This case may ultimately reach the Supreme Courts and could have implications on how courts decide similar restrictions across the country.

Reminder to Monitor Service Providers

A recent 6^th Circuit Court of Appeals decision in Tiara Yachts v. Blue Cross Blue Shield of Michigan, provides an important reminder to sponsors of self-funded health plans, specifically as it relates to fiduciary duty. In this case, the plaintiff/plan sponsor offers a self-funded plan to its employees. It hired Blue Cross Blue Shield of Michigan (BCBSM), to administer the plan. The allegations against BCBSM include:

• Engaging in a systematic process of overpaying providers;
• Participating in self-dealing by using a Shared Savings Program to ultimately profit from the mismanagement of plan assets; and
• Hiding this practice from the plan fiduciary

The lower court determined that these were contractual matters and that BCBSM is not a fiduciary. The 6^th Circuit Court of Appeals reversed and determined that in fact an entity cannot hide behind a contractual argument to avoid functional fiduciary status. Because the defendant had discretionary control over its compensation and assets of the plan, it rose to the level of a fiduciary.

The takeaway for sponsors of self-funded plans is to carefully monitor service providers to ensure proper use of plan assets.

Nebraska Amends Paid Sick Leave Law

On June 4, 2025, Nebraska Governor Jim Pillen signed into law amendments to the Nebraska Healthy Workplaces and Families Act (HWFA), which passed via ballot initiative in November 2024. The HWFA will still take effect on October 1, 2025. See prior Benefit Beat article here.   

Employers subject and eligible employees

As amended, the law applies to private sector employers employing 11 or more employees (originally one or more employees).   

As amended, the HWFA now excludes individual owner-operators, independent contractors, individuals employed in seasonal or temporary agricultural employment, and individuals under 16 years of age, in addition to the originally excluded individuals who work in Nebraska for fewer than 80 hours in a calendar year and employees subject to the federal Railroad Unemployment Insurance Act.

Accrual

An employee will begin to accrue paid sick time after 80 hours of employment in Nebraska rather than on commencement of employment. An employee will accrue one hour of paid sick time for every 30 hours worked. 

Employees of employers employing 11-19 employees may earn no more than 40 hours of paid sick time in a year, and employees of employers employing 20 or more employees may earn no more than 56 hours of paid sick time in a year.

Paid sick time made available between January 1, 2025, and before October 1, 2025, counts toward the employer’s obligation.

Time need not be paid out upon termination of employment. However, if the employee returns to work within twelve months, unused sick time must be reinstated.

Existing time off policies

Any employer with a paid leave policy, such as a paid time off policy, who makes available an amount of paid leave that equals or exceeds the requirements of the HWFA and that may be used in accordance with the HWFA, is not required to provide additional paid sick time.

Enforcement

The HWFA no longer includes a private cause of action. The Nebraska Department of Labor is responsible for enforcement of the law. 

Changes to Pittsburgh’s Paid Sick Days Act

On June 12, 2025, Mayor Ed Gainey signed an amendment to the Paid Sick Days Act, changing the amount of accrual requirements and amount of paid sick leave that must be provided beginning January 1, 2026.

Employers in Pittsburgh, regardless of size, must allow covered employees to accrue one hour of paid sick leave for every 30 hours worked in the city, instead of 35 hours. 

Employers with 15 or more employees must provide up to 72 hours (up from 40 hours) of paid sick leave each year, while employers with 14 or fewer employees must provide up to 48 hours (up from 24 hours) of paid sick leave each year.

New York City Updates Earned Sick Time Rules to Include Prenatal Leave

The New York City Department of Consumer and Worker Protection issued amended rules incorporating the state prenatal leave requirement into the Earned Sick and Safe Time Act (ESSTA). The amended rules take effect July 2, 2025. 

Employers in NYC must update the written ESSTA policy to include prenatal leave entitlements and provide the written policy to employees upon hire, within 14 days of the effective date of any policy change, or upon an employee’s request. 

Under the ESSTA, employers must post a Notice of Employee Rights and provide this notice to new hires and current employees when rights change. In addition, employers must maintain a record of receipt by the employee. The Department of Consumer and Worker Protection has prepared an Updated Notice of Employee Rights that can be used to satisfy this requirement.

Additionally, if an employee uses paid prenatal leave, the employer will need to document, on the employee’s pay stub, the amount of paid prenatal leave used, and the remaining balance available for use in the 52-week period. 

Updates to Colorado’s Paid Family and Medical Leave

Colorado amended its Family and Medical Leave Insurance (FAMLI) law to provide an additional 12 weeks of paid leave for a parent who has a child receiving care in a neonatal intensive care unit (NICU) beginning January 1, 2026. The parent would be eligible to take up to 24 total weeks of paid FAMLI leave (12 weeks of bonding leave and 12 weeks for the time the newborn is in the NICU).

The FAMLI premium rate for the period January 1, 2026, through December 31, 2026, will decrease to 0.88% (from 0.9% in 2025) of wages per employee. For the 2027 calendar year and subsequent years, FAMLI will set the premium on or before September 1 of the preceding year. The law caps the premium at 1.2% of wages.

Colorado’s Division of Workers’ Compensation announced that beginning July 1, 2025, through June 30, 2026, the state average weekly wage (SAWW) is $1,534.94. Effective July 1, 2025, the maximum weekly FAMLI benefit will increase to $1,381.45 from $1,324. 

Vermont Expands Unpaid Family Leave

Vermont’s family leave law provides up to 12 weeks of unpaid leave during any 12-month period for parental leave or family leave. Beginning July 1, 2025, Vermont’s family leave law is expanded to include bereavement leave, safe leave, and qualifying exigency leave to employees of employers with 10 or more employees. 

An employee may use up to two weeks out of the 12 weeks available for bereavement leave. An employee will be limited to not more than five consecutive workdays taken within one year of the family member’s death. An employee may use the full 12 weeks for safe leave or qualifying exigency leave. 

Additionally, the law expands the definition of family member to include civil union, domestic partner, and similar committed relationships, grandparents, grandchildren, and siblings, including those for whom the individual stood in loco parentis.

Employers should keep an eye on the Vermont Department of Labor website for an updated poster. 

Changes Coming to Washington Cares in 2026

Washington amended its long-term care insurance program, WA Cares. The program is funded by a 0.58% payroll deduction, which began in July 2023. Benefits will be available for eligible individuals starting July 1, 2026. 

The amendments expand participation options, provide supplemental insurance options, and streamline qualification requirements.

Beginning July 1, 2026, an employee or self-employed person who relocates outside of Washington may elect to continue participation in the program if the employee has contributed to the program for at least three years and has worked at least 500 hours in each of those years in Washington. An out-of-state participant who has elected to continue participation in the program may not withdraw from coverage. The Employment Security Department (ESD) must cancel out-of-state elective coverage if the out-of-state participant fails to make required payments or submit reports.

Effective January 1, 2026, an individual who has his/her own private long-term care insurance exemption and opted out of WA Cares will be able to cancel his/her exemption and join WA Cares prior to July 1, 2028. The ESD will provide additional information on how to join WA Cares after this provision takes effect.

Beginning May 1, 2026, a private insurer may offer a supplemental long-term care policy that provides at least 12 months of coverage after WA Cares benefits are exhausted and allow continuity of care providers when transitioning between programs. The policy must also include flexible premium options to prevent loss of coverage and cover care for qualified family members.

To qualify for benefits, an employee must either contribute to program for a total of 10 years without interruption of five or more consecutive years, or contribute to the program for three years within the last six years from the date of application for benefits. The amendment removes the without interruption of five consecutive years requirement effective January 1, 2026.

Additional information can be found on the WA Cares webpage. 

New Mexico’s Vaccine Fund Reporting Obligation

New Mexico’s Vaccine Purchasing Act (VPA) requires employers that sponsor health plans and all health insurers, whether fully insured or self-funded, to report to the Office of the Superintendent of Insurance by July 1, 2025, the total number of children in New Mexico who were enrolled in the plan during any part of the previous year and were under the age of 19.

Children who are not residents of New Mexico, children who are members of a Native American tribe, and children who are enrolled in Medicaid or another medical assistance program administered by the state need not be counted. 

The VPA took effect in 2015 and provides a way for the state to be reimbursed for the purchase, storage, and distribution of vaccines for insured children. Instructions on how to report the number of children and pay the assessment can be found on the Office of the Superintendent of Insurance webpage.

An employer sponsoring a self-funded health plan covering children in New Mexico should confirm reporting obligation with the TPA.

 The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.