November 2025 Regulatory & Legislative Update

This regulatory and legislative update covers issues involving fertility benefits, 2026 cost of living adjustments, social security adjustments, and more.

A Boost for Fertility Treatment

Earlier this year, the current administration expressed interest in facilitating fertility benefits, see Executive Order 14216 here. To that end, some regulatory guidance in the form of FAQs was issued on Oct. 16, 2025, by the Employee Benefit Security Administration (EBSA). This guidance affirms that a fertility benefit can be designed as an excepted benefit, meaning it is exempt from the market provisions of the Affordable Care Act (ACA). Importantly, to the extent that it is a medical benefit, ERISA and COBRA would continue to apply. 

According to these FAQs, at this point, an excepted fertility benefit can be offered as an independent non-coordinated excepted benefit, as an excepted benefit health reimbursement arrangement (EB-HRA), or as limited coaching through an excepted employee assistance program (EAP). Further, the FAQs suggest that future guidance may also offer additional ways to offer excepted fertility benefits. 

As a reminder, an independent non-coordinated benefit must meet the following criteria:

• It must be provided through a separate policy, certificate, or contract of insurance. No self-funding is permitted.
• There can be no coordination between benefit and any other comprehensive health plan offered by the employer.
• The policy must pay without regard to whether the benefit is provided by another plan offered by the employer.

Participation in this type of specified disease policy does not jeopardize health savings account (HSA) eligibility. 

EB-HRAs will qualify as a limited excepted benefit if the following conditions are met:

• Other comprehensive group health plan coverage is made available for the plan year.
• Amount of benefit is limited. For EB-HRAs, those amounts cannot exceed $2,150 in 2025 ($2,200 for 2026).
• Cannot reimburse certain premiums (individual health coverage, group coverage).
• The HRA must be available to all individuals regardless of health.

For an EAP to be considered excepted, four conditions must be met:

1. The EAP cannot provide significant medical care;
2. The benefits under the EAP cannot be coordinated with another health benefit plan. Specifically, health coverage cannot be contingent upon first accessing coverage under the EAP, and the EAP benefit cannot be contingent on participating in the health plan;
3. The EAP cannot be financed by another group health plan; and
4. There cannot be any cost-sharing imposed by the EAP.

According to this criteria, the fertility services must be limited to coaching that does not rise to the level of significant medical care.

If the concept of an excepted fertility benefit takes root, time will tell whether an insurance product will be developed that meets independent non-coordinated benefit status. Certainly, an EB-HRA is an option, though the dollar amount available might make it only moderately appealing. Similarly, whether coaching through an EAP is of interest remains to be seen.

2026 Cost-of-Living Adjustments – Various Benefits

On Oct. 9, 2025, the IRS released the 2026 inflationary (cost-of-living) adjustment relating to several types of benefits. Below are selected highlights from IRS Revenue Procedure 2025-32.

Flexible Spending Account (FSA) Cap

The limit on the amount that can be contributed to a health flexible spending account (FSA) through voluntary salary reductions for plan years beginning in 2026 increases.

Carryover

For cafeteria plans that permit a carryover of unused amounts, the maximum carryover limit increases in 2026.

The plan sponsor can set an amount equal to or less than these amounts. Once a determination is made by the plan, the plan should be amended to reflect those amounts.

As a reminder, dependent care assistance plan (DCAP) contributions are not subject to cost-of-living adjustments. However, the July 4^th Act increases the amount to $7,500 ($3,750 for married filing separately) for 2026. For 2025, the amounts are $5,000 ($2,500 for married filing separately). These contributions are based on the calendar year, not a plan year. The DCAP plan sponsor has the discretion to allow the maximum amount or a lower amount, and this should be defined in the plan.

Qualified Transportation Fringe Benefits

With regard to transportation expenses reimbursed by an employer and excludable from the employee’s income under a qualified transportation program, the limits increase for 2026:

Qualified Adoption Assistance Reimbursement Program (IRC §137)

An employer-provided adoption assistance program that meets the qualifications of IRC §137 allows participants to recover expenses relating to adoption, such as reasonable adoption fees, court costs, attorney’s fees, and traveling expenses. 

Below are the exclusion limits and AGI phase-out limits for 2026 and 2025:

Archer Medical Savings Accounts (MSA)

The Archer MSA pilot project ended on Dec. 31, 2007; therefore, no new MSAs could be established after that date.

For existing MSAs, the annual deductible limits of a high-deductible health plan used in conjunction with an Archer medical savings account for 2026 are increased:

Long-Term Care Premiums

The IRS limitations relating to eligible long-term care premiums includible as medical care, as defined by IRC §213(d) are:

Small Business Tax Credit (SBTC) 

Small businesses and tax-exempt employers who provide health care coverage to their employees under a qualified health care arrangement are entitled to a tax credit, as established by the Affordable Care Act. 

To be eligible for the small business tax credit, the employer must employ fewer than 25 full-time equivalent employees whose average annual wages are less than $68,200 for 2026 (the wage ceiling in 2025 is $66,600). The tax credit phases out for eligible small employers when the number of its full-time employees (FTEs) exceeds 10; or, when the average annual wages for the FTEs exceed $34,100 in the 2026 tax year (the phase-out wage limit in 2025 is $33,300). 

As a reminder, only qualified health plan coverage purchased through a SHOP marketplace is available for the tax credit and only for a 2-year consecutive period.

QSEHRA Payments and Reimbursements

A qualified small employer health reimbursement arrangement, known as a “QSEHRA,” allows eligible small employers (those employing fewer than 50 employees and who do not offer health coverage) to reimburse health insurance premiums for individual coverage purchased either through or outside the marketplace. Such arrangement must meet certain criteria, specifically, the QSEHRA:

1. Must be funded solely by the eligible small employer; no salary reduction contributions can be made under this arrangement; and,
2. Provides, following the employee’s proof of coverage, for the payment or reimbursement for medical care expenses, as defined in IRC Section 213(d), including the premium for health coverage through the individual market, incurred by the eligible employee or his/her family members. These limits are subject to inflationary adjustments. Amounts for 2026 and 2025 are below:

As a reminder, the total amount of permitted benefits received under a QSEHRA must be reported in Box 12, using Code FF of Form W-2.

Penalties for Failure to File Correct Information Returns and Failure to Furnish Correct Payee Statements

In the case of any failure relating to a return required to be filed or a statement required to be furnished in 2026 and 2025. Examples include W-2s and 1095s.

The penalty amounts for each information return or payee statement under § 6721 and § 6722 are:

There is no maximum penalty for intentional disregard. As of 2022, good-faith relief is no longer available for late filings; therefore, it is very important that information returns are timely filed and provided to individuals. 

The inflationary adjustments related to health savings accounts (HSAs) and ACA out-of-pocket limits were previously released. For additional information on those amounts, see the August 2025 Benefit Beat, here. 

We are still awaiting some additional COLAs, such as those applicable to the definition of key employees and highly compensated employees; hopefully, those will be forthcoming soon.

2026 Social Security Cost-of-Living Adjustments

The Social Security Administration announced a 2.8% cost of living adjustment for 2026. The Social Security wage base in 2026 will increase to $184,500 from the 2025 wage level of $176,100. The combined Social Security and Medicare tax rate remains at 7.65%; the Social Security portion is 6.2% on wages up to the applicable maximum taxable amount, and the Medicare portion is 1.45% on all wages. 

Additional adjustments are included in the SSA’s Fact Sheet, 2026 Social Security Changes.

2026 Brings Changes to Washington Paid Family Leave

Governor Ferguson signed a law expanding protections under the Paid Family and Medical Leave (PFML) Act. These changes take effect Jan. 1, 2026. The law reduces the minimum leave increments, expands job protection rights, clarifies health continuation, and addresses stacking of benefits as outlined below.

As a reminder, Washington paid family and medical leave law provides up to 12 weeks of medical leave for an employee’s own illness and up to 12 weeks of family leave for baby bonding, family care, and military exigency, not to exceed a combined 16 weeks of leave in a year. For additional information, see WA paid leave website.

Minimum Leave Increments

The minimum amount of PFML an employee may take is four consecutive hours (currently eight consecutive hours).

Job Restoration

An employee will be entitled to job restoration if he/she works for an employer for at least 180 calendar days (currently to be eligible, the individual must have been employed for 12 months and must have worked 1,250 hours immediately preceding the leave).

Smaller employers (currently employers with 50 or more employees) must comply with the job protection requirement as follows:

Health Benefit Continuation

The employer must continue to offer health benefits for any period of time that an employee is entitled to job protection under the PFML law (currently, it is only required if there is overlap with FMLA). 

The health coverage continuation obligation is extended to employers subject to the job restoration requirement as described above. Employers should confirm with their insurers or stop loss vendors that the plan will honor this requirement.

Stacking of Benefits

This law provides employers with a tool to discourage leave stacking by allowing employers to deny job restoration if an employee chooses not to use available FMLA and WA PFML concurrently. 

Though the employer cannot require the individual to use WA PFML, job restoration can be denied once the FMLA period expires. The employer would need to notify the individual about the risk of losing the job protection. The Employment Security Department is to develop a model notice that explains eligibility rights, weekly benefits, and employment protection rights for an employer’s use. 

Premium Rate

Beginning Jan. 1, 2026, the paid family leave premium rate will increase from 0.92% to 1.13% of an employee’s gross wage up to the Social Security cap of $184,500 for 2026.

Employers with 50 or more employees working in the state of Washington will pay 28.57% of the premium, and employees will pay 71.43%.  Employers with fewer than 50 employees are not required to pay the employer portion of the premium; however, the employee premium must still be collected.

2026 New York PFL rates

New York’s Department of Financial Services has released the premium rate and maximum employee contribution for paid family leave benefits for the 2026 calendar year. 

The premium rate increases to 0.432% in 2026 (0.388% in 2025) of an employee’s gross wages each pay period, with a maximum annual contribution cap of $411.91 for 2026 ($354.53 for 2025).

As a reminder, the paid family leave law provides up to 12 weeks of paid time off for baby bonding, to care for a family member, or military exigency. The paid family leave benefit is fully funded by employees through a payroll deduction. Additional information about the New York Paid Family Leave Program is available on the state’s dedicated webpage.

New Jersey TDI and PFL Rates for 2026

Individuals employed in the state of New Jersey may be entitled to temporary benefits for a disability caused by non-occupational sickness or accident, including pregnancy and related medical conditions. The law applies to those employers who are subject to the state’s Unemployment Insurance law. Temporary disability insurance (TDI) is funded by both employer and employee contributions.

Individuals may also be eligible for family leave insurance when they need time off work for baby bonding or to care for a loved one. Family leave insurance (FLI) is fully funded by the employee. 

The maximum benefit rates, the alternative earnings and base week amounts, and the taxable wage base for temporary disability (TDI) and family leave insurance (FLI) for calendar year 2026 are as follows:

• Maximum TDI and FLI weekly benefit rate: $1,199
• Alternative earnings test amount for TDI: $15,500
• Base week amount: $310
• Employers taxable wage base for TDI: $44,800
• Workers taxable wage base for TDI/FLI: $171,100

Beginning Jan. 1, 2026, the employee contribution rate for temporary disability will be 0.19% (0.23% in 2025) of the first $171,100 in wages. For family leave, the employee will contribute 0.23% (0.33% in 2025) of the first $171,100 in wages. 

New Jersey’s Department of Labor and Workforce Development Division of Temporary Disability and Family Leave Insurance has additional information on its website, including an employer toolkit, FAQs, workplace posters, and more.

Massachusetts Paid Family Leave Updates for 2026

Beginning Jan. 1, 2026, the Massachusetts Paid Family and Medical Leave contribution rate will remain the same as 2025, at .88% of eligible wages up to the Social Security wage base ($184,500 in 2026). The maximum weekly benefit amount for 2026 will be $1,230.39 ($1,170.64 in 2025). 

As a reminder:

• Employers with 25 or more Massachusetts employees must remit the entire 0.88% contribution to the trust fund. Employers may deduct 100% of the family leave contribution, and 40% of the medical leave contribution from employees. The employer must pay the remaining 60% of the medical leave contribution.
• Employers with 24 or fewer Massachusetts employees are not obligated to pay the employer share of the medical leave contribution. Employers need only remit the employee’s 40% share of the medical leave contribution and 100% of the employee’s family leave contribution.

The law requires employers to provide written notice of the new contribution rate 30 days in advance of the rate change. Since there is no change in the contribution rate, the employer is not required to notify current employees; however, the employer may choose to do so. Contribution rate notices can be found on the Department of Paid Family and Medical Leave website.

In addition, and as a reminder, every employer in Massachusetts with six or more employees must submit a Health Insurance Responsibility Disclosure (HIRD) form annually. The HIRD form collects information about the health coverage offered by Massachusetts employers to their employees.

The HIRD form may be filed by either the employer or the employer’s payroll company; however, it is the employer’s responsibility to ensure that the HIRD form is timely filed. The HIRD report can be filed starting November 15 and must be completed by December 15 of each year with the current year’s information. Employers that do not offer any health coverage still must file a HIRD report. The HIRD form and FAQs can be found on the  Massachusetts Department of Revenue website.

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.