November 2026 Regulatory & Legislative Update

This regulatory and legislative update covers issues involving transparency in final coverage rules, new disclosures for PBMs, maternity billing changes, and more.

Transparency in Coverage Final Rules Released

On Oct. 6, 2026, the Departments of Health and Human Services, Labor, and Treasury issued final regulations updating the Transparency in Coverage (TiC) rules. The changes are intended to make health care pricing data easier to locate, understand, and compare while reducing unnecessary reporting burden.

As a reminder, under the TiC 2020 final rules, non-grandfathered group health plans and health insurance issuers are required to publicly disclose in-network rates for all covered items and services, out-of-network allowed amounts for covered items and services, and a prescription drug file disclosing in-network rates and historical net prices for covered prescription drugs. These items are posted in a machine-readable format. The 2026 final rules revise how the in-network and out-of-network files are prepared, posted, and updated, and provide guidance for the prescription files.

The final rules make several changes intended to streamline the machine-readable file requirements and improve the usefulness of the data:

• Network-level reporting. Plans and issuers will generally prepare one in-network rate file for each provider network rather than separate files for each plan or policy using the same network.
• Removal of “ghost rates.” In-network files will exclude rates for services that providers would be unlikely to furnish based on their specialty.
• Expanded out-of-network data. The rules expand the amount of historical out-of-network claims information included in the files by lowering the applicable claims threshold and extending the reporting periods.
• Quarterly updates. In-network and out-of-network files will be updated quarterly instead of monthly.
• Prescription drug reporting. Prescription drug files will continue to be updated monthly. Additional formatting guidance is expected in 2027.
• Easier access. Plans and issuers will be required to make the files easier to locate through their websites and provide contact information for questions or access issues.
• Applicable files must include an attestation regarding the completeness and accuracy of the information.

For insured plans, the plan sponsor must enter into a written agreement with the insurer to satisfy the applicable machine-readable file requirements. When such an agreement is in place, the insurer assumes full responsibility for compliance.

Self-Funded Plan Responsibilities

Self-funded plans may contract with a third-party administrator (TPA) or other service provider to prepare and maintain the required files. The plan sponsor, however, remains responsible for compliance. If another party hosts the files, the plan sponsor should confirm that the arrangement addresses the new homepage link, plain-text file, monitored email, quarterly update, and attestation requirements. Further, if the health plan has a public-facing website, a link to the files must be placed on the plan’s website.

Price Comparison Tool and Participant Information

The final rules also coordinate the price comparison requirements under the Transparency in Coverage rules and the No Surprises Act. Beginning with plan years starting on or after Jan. 1, 2027, required cost-sharing information must be available by telephone upon request in addition to being available through an internet-based self-service tool and in paper form upon request.

Compliance with these rules will satisfy the No Surprises Act price comparison requirements for both grandfathered and non-grandfathered plans.

The information provided to a participant, beneficiary, or enrollee must include, as applicable:

• An estimate of the individual’s cost-sharing liability for the requested item or service;
• The individual’s accumulated amounts toward the deductible and out-of-pocket limit;
• The applicable in-network rate and, for out-of-network care, the out-of-network allowed amount;
• For bundled payment arrangements, the items and services included in the bundle;
• Any prerequisite to coverage, such as prior authorization, concurrent review, or step therapy; and
• A plain-language notice explaining relevant limitations, including that actual charges may differ from the estimate and that the estimate is not a guarantee of coverage.

The participant notice must also reflect federal protections against balance billing in circumstances covered by the No Surprises Act.

Employer/plan sponsors should confirm with the plan’s insurer or TPA that it is prepared to comply with this requirement.

Applicability Dates

The final rules are effective Dec. 7, 2026. Changes to the in-network rate and out-of-network allowed amount machine-readable files generally apply beginning in 2027, while the revised price comparison tool and telephone-access requirements apply for plan years beginning on or after Jan. 1, 2027. The prescription drug machine-readable file requirement implementation is currently anticipated in December 2027.

New Disclosures, New Rules for PBMs

The Department of Labor (DOL) has issued its final rule and fact sheet related to new disclosure requirements designed to provide employers with greater transparency into the compensation received by pharmacy benefit managers (PBMs) and certain affiliated service providers.

As background, on Jan. 29, 2026, the DOL released a proposed rule mandating that PBMs provide plan fiduciaries of self-insured ERISA health plans with detailed financial disclosures, including information on rebates and spread pricing.

The final rule generally applies to PBMs and affiliated brokers and consultants that provide pharmacy benefit management services to large, self-insured group health plans and that expect to receive at least $1,000 in direct or indirect compensation. Large group health plan means a plan covering 100 or more participants, or a plan sponsored by an employer employing 100 or more employees. Under the final rule, covered service providers must provide plan fiduciaries with an initial written disclosure reasonably in advance of entering into, extending, or renewing a service contract or arrangement. For renewals and extensions, providing the disclosure at least 90 days in advance is considered reasonable.

The required disclosure provides plan fiduciaries with detailed information about the compensation PBMs expect to receive, including:

• Direct compensation received from the plan or plan sponsor;
• Rebates, fees, discounts, and other payments from drug manufacturers;
• Spread compensation, including the difference between what the plan pays the PBM and what the PBM pays pharmacies;
• Pharmacy recoupments, including copay claw-backs and other retroactive adjustments;
• Price protection arrangements with drug manufacturers;
• Formulary placement incentives and other arrangements affecting drug placement; and
• Other compensation received in connection with PBM services.

The rule also requires ongoing disclosures on a semiannual basis (or quarterly, if the plan sponsor elects). No later than 30 calendar days after the end of each six-month period under the contract, PBMs must disclose actual compensation received or reasonably expected to be received. If an amount reported in an ongoing disclosure exceeds the amount disclosed initially by at least 5%, the PBM generally must identify the overage and explain the reason for it.

Plans will also have enhanced audit rights. A plan may audit a covered service provider at least once each year to verify the accuracy of its disclosures and may independently select the auditor. PBMs generally must provide access to records, claims and transaction-level data, and other information reasonably necessary to verify their disclosures.

The disclosures are intended to give plan fiduciaries the information they need to evaluate whether PBM contracts and compensation are reasonable under ERISA. For employers sponsoring large, self-insured health plans, the new requirements should provide greater visibility into PBM compensation and financial arrangements.

The final rule applies to plan years beginning on or after July 1, 2027.

Almost simultaneously with the publication of the proposed regulations noted above, the Consolidated Appropriations Act of 2026 became law. While the bulk of this law does not take effect until Jan. 1, 2029, for calendar-year plans, a service provider fee disclosure provision took effect upon enactment. Notably, this law clarifies that the compensation disclosure requirement of ERISA Section 408(b)(2) applies to PBMs and third-party administrators, defined very broadly to include a wide swath of welfare benefit plan vendors and service providers. Direct or indirect compensation of $1,000 or more must be disclosed to insured and self-funded health plans subject to ERISA.

According to the final rule, the DOL is exercising enforcement discretion in regard to enforcement of this disclosure until plan years beginning on or after July 1, 2027, as long as the service provider is working in good faith to comply. Plan sponsors should be diligent in requesting the disclosures from service providers.

Maternity Billing Changes Coming in 2027

Beginning Jan. 1, 2027, maternity care provider billing will change. The traditional bundled approach will shift to separate reporting for antepartum care, labor management, delivery, and postpartum care. The new structure is intended to better reflect how maternity care is delivered today, including care involving multiple providers, while improving transparency and data quality.

What Could This Mean for Health Plans?

The financial impact of the change remains uncertain. Because the new framework primarily changes how maternity services are billed, some anticipate a generally budget-neutral transition. Others expect costs could increase as more services are separately reported and reimbursed, reimbursement patterns change, and administrative and claims-processing costs increase.

The more detailed reporting could also provide plans with better information about maternity care. Greater visibility into individual services may help identify high-risk pregnancies earlier, support maternity care-management efforts, and provide additional information for evaluating provider cost and quality, as well as value-based maternity arrangements. On the other hand, plans could see increased administrative complexity and additional questions from participants about cost sharing.

Preventive Coverage Still Applies

The coding changes do not alter existing Affordable Care Act preventive-services requirements. Pregnancy-related preventive services must continue to be administered in accordance with applicable ACA preventive-care requirements. These services may include certain prenatal screenings, folic acid supplementation, gestational diabetes screening, tobacco cessation interventions, and breastfeeding and lactation support, counseling, and supplies.

Watch for Pregnancies Spanning Two Plan Years

One issue employers should watch closely is the treatment of pregnancies that span two plan years. Prenatal care may be billed in one plan year, while delivery and postpartum services are billed in the next. Depending on how the plan and its insurer or third-party administrator administer the new structure, separately billed services could be subject to two annual deductibles and out-of-pocket limits.

Employers should ask their insurer or TPA how accumulators and cost sharing will be handled for pregnancies crossing plan years.

What Should Employers Do?

Insurer and TPA approaches may vary, and information regarding 2027 implementation remains limited. Employers should begin discussing the changes with their insurer or TPA and consider:

• How preventive services and participant cost sharing will be handled;
• How pregnancies spanning two plan years will be administered;
• Whether coordination with a stop-loss carrier is necessary for a self-funded plan; and
• Whether plan documents or participant communications will need to be updated.

Employers may also want to monitor early 2027 claims for potential cost-sharing errors, denials, or duplicate payments as the new billing structure takes effect.

IRS Updates Retirement Plan Correction Program

The IRS recently issued Revenue Procedure 2026-34, updating the Employee Plans Compliance Resolution System (EPCRS), which allows employers to correct certain errors in tax-qualified retirement plans while preserving the plans’ tax-favored status. The new guidance incorporates several retirement plan correction provisions enacted under SECURE 2.0 and supersedes the prior EPCRS guidance in Revenue Procedure 2021-30.

EPCRS continues to provide three primary correction programs: the Self-Correction Program (SCP), which allows eligible errors to be corrected without an IRS filing or fee; the Voluntary Correction Program (VCP), which allows plan sponsors to receive IRS approval of a correction before the plan or plan sponsor is under examination; and Audit CAP, which addresses certain failures discovered during an IRS examination.

One of the most significant updates is the incorporation of SECURE 2.0’s expansion of self-correction. Under the revised program, plan sponsors may self-correct a broader range of “eligible inadvertent failures,” including certain plan document, demographic, employer eligibility, and plan loan failures. The guidance also establishes a standard for timely correction. Generally, a self-correction completed by the later of the last day of the third plan year following the year in which the failure occurred or 18 months after the failure is identified is deemed to have been completed within a reasonable period.

The updated guidance also incorporates SECURE 2.0 provisions addressing inadvertent benefit overpayments and correction of elective deferral errors. Among other changes, the IRS expanded and revised safe harbor correction methods for certain missed elective deferrals and incorporated rules governing whether and when inadvertent benefit overpayments must be recovered or restored to a plan.

Employers should keep in mind that self-correction is not automatic. To use SCP, a plan sponsor generally must have established practices and procedures reasonably designed to promote compliance, and the failure must have occurred despite those procedures. Employers also may need to document the failure, the correction, and steps taken to prevent the problem from recurring, particularly if the plan later comes under examination.

Employers that sponsor retirement plans should review their existing plan correction procedures in light of the updated EPCRS rules. The expanded self-correction provisions may provide additional flexibility when plan errors occur, but maintaining appropriate compliance procedures, identifying errors promptly, and documenting corrective action remain important.

2027 Social Security Cost-of-Living Adjustments

The Social Security Administration announced a 3.6% cost-of-living adjustment for 2027. The Social Security wage base in 2027 will increase to $192,300 from the 2026 wage level of $184,500. 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, 2027 Social Security Changes.

2027 Cost of Living Adjustments – Various Benefits

Revenue Procedure 2026-35 was released by the IRS on Nov. 5, 2026. Below are select highlights:

Flexible Spending Account (FSA) Salary Reduction and Carryover Caps

The health FSA salary reduction limit and carryover limit for plan years beginning in 2027 increases.

As a reminder, dependent care assistance plan (DCAP) contributions are not subject to cost-of-living adjustments. The maximum permissible amounts are $7,500 ($3,750 for married filing separately). These contributions are based on calendar year, not a plan year.  

Qualified Transportation Fringe Benefits

The limits increase for 2027:

Educational Assistance Program Exclusion    

For taxable years beginning in 2027, the educational assistance exclusion maximum amount is $5,400 up from $5,250. As a reminder, under IRC § 127(a) an educational assistance plan can be used for qualified student loan repayment as well.

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 2027 and 2026:

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 § 213(d), including premiums 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 2027 and 2026 below.

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

Archer Medical Savings Accounts

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 2027 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:

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 2027 and 2026. 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. 

Allegheny County Ups the Leave Ante

On Oct. 22, 2026, County Executive Innamorato signed Allegheny County Paid Parental Leave into law. This law also amends the County’s paid sick leave ordinance to align it with the City of Pittsburgh’s Paid Sick Days Act. This law takes effect April 20, 2027; however, employers have until Oct. 17, 2027, to comply.

Paid Parental Leave

The paid parental leave law applies to employers employing 15 or more full- or part-time employees in Allegheny County, excluding federal and state employers. An employee is one who works within the geographic boundaries of Allegheny County for at least 80 hours a year. Employee does not include independent contractors, construction labor union employees, or temporary or seasonal employees.

To be eligible for parental leave, a full-time employee must have been employed with the employer for at least 180 continuous days. A part-time employee must have been employed with the employer for 180 days and worked at least 625 hours during that period of time. For part-time employees, the amount of leave is calculated based on the employee’s average weekly hours worked during the six months immediately preceding the date of the request for benefits.

Leave Amount and Use

Eligible employees are entitled to 12 weeks of paid parental leave. Parental leave can be used for the birth, adoption, or placement of a child, or in the event of a stillbirth or fetal death. Parental leave must be used within 12 months of the qualifying event. Both parents are eligible for leave following a qualifying event.

Funding

Parental leave must be paid at an employee’s rate of pay up to a maximum of $4,200 per week. Paid parental leave is solely funded by the employer. An employer can choose to self-fund or use a private insurance policy for this benefit.

Notice

Employees must provide written notice to the employer of the need for taking leave at least 30 days prior to taking the leave. Employees must make reasonable efforts to schedule the leave in a manner that does not unduly disrupt the operations of the employer. For unforeseeable absences, employees must notify the employer as soon as practicable.

Employers must provide written notice of paid parental leave at the time of hire and annually thereafter. Additionally, employers must annually certify compliance to the Allegheny County Health Department.

Job Protection

Employees using parental leave are entitled to job restoration after leave, and health insurance must be maintained for the duration of leave.

Coordination with Other Laws

Paid parental leave runs concurrently with leave under the federal Family and Medical Leave Act (FMLA).

Paid Sick Leave

This law aligns the County’s paid sick leave ordinance with the City of Pittsburgh’s Paid Sick Days Act by accelerating accrual and increasing sick leave hours as outlined in the table below. Employers have until Oct. 17, 2027, to comply with these requirements.

Colorado PFL Rates for 2027

Colorado’s family and medical leave insurance (FAMLI) program provides up to 12 weeks of paid family and medical leave funded through a payroll tax paid by employers and employees in a 50/50 split.

The premium rate for 2027 will be 0.86% of an employee’s wages, down from 0.88% in 2026. The maximum weekly benefit for claims on or after July 1, 2026, is $1,448.02.

An employee can top off their FAMLI benefit with accrued PTO or sick leave, as long as the combined total stays at or below their average weekly wage.

Additional information about Colorado’s FAMLI program.

Massachusetts PFL Rates for 2027

Beginning Jan. 1, 2027, the Massachusetts Paid Family and Medical Leave (PFML) contribution rate will remain the same as 2026 at 0.88% of eligible wages up to the Social Security wage base ($192,300 in 2027). The maximum weekly benefit amount for 2027 will be $1,284.61 ($1,230.39 in 2026). Additionally, employer PFML contributions shift from medical leave to family leave in response to new IRS guidance on tax liability issues.

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 medical leave contribution, and 40% of the family leave contribution from employees. The employer must pay the remaining 60% of the family leave contribution.
• Employers with 24 or fewer Massachusetts employees are not obligated to pay the employer share of the family leave contribution. Employers need only remit the employee’s 40% share of the family leave contribution and 100% of the employee’s medical 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 annually submit a Health Insurance Responsibility Disclosure (HIRD) form. 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 at Massachusetts Department of Revenue .

Washington PFL Rates for 2027

Beginning Jan. 1, 2027, the paid family and medical leave (PFML) premium rate will be 1.2% (1.13% in 2026) of an employee’s gross wage up to the Social Security wage base ($192,300 in 2027). Additionally, employer PFML contributions shift from medical leave to family leave in response to new IRS guidance on tax liability issues.

Employers with 50 or more employees working in the state of Washington will pay 29.3% of the premium, and employees will pay 70.7%. 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.

As a reminder, Washington’s 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 Washington Paid Leave .

MD FAMLI Model Notice

Maryland’s Family and Medical Leave Insurance (FAMLI) department has issued the 2026 Model Employee Notice explaining the paid family leave (PFL) funding and payroll withholding and notice guidance. Funding for PFL begins Jan. 1, 2027, and benefits become available in January 2028.

Employers must provide this notice one pay period before payroll deductions begin Jan. 1, 2027, and when an employee is hired. All employers should provide this notice to employees whether the employer is withholding the contribution from employees or covering the employee’s share. 

The 2026 model employee notice and guidance can be found at Maryland FAMLI. This notice can be modified to fit an employer’s needs. The notice may be distributed by print, email, mail, or an electronic employee portal. 

A second notice informing employees about PFL eligibility and benefits must be provided by July 1, 2027. The 2027 Model Employee Notice will be provided by Maryland FAMLI prior to that date.