News Archive

The IRS has now released all of the 2026 benefit limits, including both the cafeteria and health plan limits as well as all of the qualified retirement plan limits. Earlier this year, IRS also released the High Deductible Health Plan (HDHP) and Health Savings Account (HSA) limits. This chart shows all of these limits for 2025 and 2026.  MORE >>

"[A] handy chart (updated for this year) [describes] how each of these account types varies around eligible employers; eligible employees; the need for a plan document; who can make contributions to the account; this year's contribution limits (if any); the tax benefits to the employee and to the employer; and if investment earnings (if any) are taxed. [It also covers] funds availability to participants; any carryover provisions; portability of the account; eligible expenses to be reimbursed; substantiation requirements; and whether debit cards are available."  MORE >>

"While DCAPs provide significant tax benefits, they do so at a cost -- participant benefit elections are generally irrevocable for the next 12 months.... The exception to this rule is when the employee experiences a qualifying event (sometimes referred to as a qualifying life event, or 'QLE') as defined by the plan."  MORE >>

"Employers may structure their open enrollments as either active or passive.... Employers ... need to clearly communicate when the open enrollment period starts and ends.... Employers should be conscious of those who newly become eligible for their plans around the time of open enrollment as there may be confusion around the timing of elections.... While the IRS determines the allowable limits under the tax code, employers determine the allowable contribution limits under their [account-based] plans."  MORE >>

"An employer-sponsored plan may fail nondiscrimination tests if it includes any of these provisions that favor executives, management or other high-paid employees: [1] Lower contributions; [2] Availability of more benefits; [3] Higher level of benefit reimbursement; [4] Shorter waiting period; [5] Benefit limits that vary based on age, years of service or compensation."  MORE >>

"As a reminder, these annual adjustments are permissive, meaning employers/plan sponsors are not required to adopt [the] plan limit adjustments within their plan. If an employer/plan sponsor chooses to adjust their employee contribution/reimbursement amounts, they should reflect such changes within their accompanying document(s) that describe the plan(s)."  MORE >>

"Plan changes generally occur every year in today's world, and those annual actions could trigger plan amendment procedures. Plan sponsors should review the changes taking place for the upcoming year and determine whether they need a plan amendment, SMM, or SMR. Some of these changes may also require distributing an updated Summary of Benefits and Coverage."  MORE >>

"This article breaks down each update in plain language, helping HR leaders understand what's changing, what to review, and how to keep their benefits plans compliant. Learn how proactive HR teams use these annual updates to strengthen compliance processes and build employee trust."  MORE >>

"On October 9, 2025, the IRS issued Rev. Proc. 2025-32, which announces the 2026 indexed limits for certain health and welfare benefits. This is in addition to the limits the IRS announced in Rev. Proc. 2025-19 on May 1, 2025." [A chart shows 2025 and 2026 limits.]  MORE >>

"The adjustment for 2026 represents a $100 increase to the $3,300 health FSA salary reduction contribution limit for 2025.... The indexed carryover limit for plan years starting in calendar year 2026 to a new plan year starting in calendar year 2027 increases to $680. The carryover amount does not count toward the annual contribution limit."  MORE >>

"This revenue procedure modifies certain sections of Rev. Proc. 2024-40 ... to reflect the amendments to the Internal Revenue Code by ... the One, Big, Beautiful Bill Act (OBBBA). This revenue procedure sets forth inflation-adjusted items for 2026 for various Code provisions as in effect on October 9, 2025.

• For taxable years beginning in 2026, the dollar amount in effect under Section 45R(d)(3)(B) is $34,100. This amount is used under Section 45R(c) for limiting the small employer health insurance credit and under Section 45R(d)(1)(B) for determining who is an eligible small employer for purposes of the credit....
• For taxable years beginning in 2026, the dollar limitation under Section 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $3,400. If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is $680....
• For taxable years beginning in 2026, the monthly limitation under Section 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $340. The monthly limitation under Section 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $340....
• For taxable years beginning in 2026, the term 'high deductible health plan' as defined in Section 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,900 and not more than $4,400, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $5,850....
• For taxable years beginning in 2026, the term 'high deductible health plan' means, for family coverage, a health plan that has an annual deductible that is not less than $5,850 and not more than $8,750, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $10,700."

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"Health FSAs are subject to the Section 105(h) nondiscrimination rules. The components of these rules are many and layered, which creates a degree of complexity best left to the TPA to perform on the employer's behalf.... Unlike the dependent care FSA's nondiscrimination 55% average benefits test, the health FSA nondiscrimination tests offer sufficient alternatives and low thresholds that make it nearly unheard of to fail."  MORE >>

"[A] participant must be covered by a health FSA when an expense is incurred for the expense to be eligible for reimbursement.... Expenses that are incurred before the date of an employee's enrollment in the plan are not considered to be incurred when the employee is covered by the plan."  MORE >>

"An SPD will be required for your company's new health FSA because it is an ERISA plan. This is the case regardless of your company's size, as the SPD requirements do not include an exception for small welfare plans."  MORE >>

"While the DCFSA contribution limit is increasing, [OBBBA] did not make changes to [nondiscrimination testing] requirements. You can take a few proactive steps to help increase the likelihood that your plan design does not discriminate. [1] Boost non-HCE participation ... [2] Offer incentives to NHCEs ... [3] Limit HCE elections ... [4] Conduct early or interim testing ... [5] Customize maximum elections by employee group."  MORE >>

"This critical period consistently highlights the many complex rules applicable to employer-sponsored health and welfare plans, and this year brings some new additions due to changes in federal law.... [1] Employer mandate under the [ACA] ... [2] Cafeteria Plans under the Internal Revenue Code ... [3] IRS limits for account-based plans ... [4] Open enrollment rights under COBRA and the FMLA ... [5] Required disclosures under ERISA and other laws."  MORE >>

"In general, section 125 does not allow retroactive coverage paid with pre-tax employee contributions, with two exceptions: [1] when new hires have no waiting period for benefits; and [2] for employees requesting enrollment under the HIPAA special enrollment rules due to the birth, adoption or placement for adoption of a child.... Employers should review their plan documents and summary plan descriptions and make changes, if necessary, to ensure they accurately describe the coverage effective date and pre-tax/after-tax nature of employee contributions in an election change scenario."  MORE >>

"Most employers today opt for active enrollment, but the best option for your business depends on the specific characteristics of your organization and employee population. Here's a useful breakdown of the pros and cons to help your organization make the best decision to use active or passive open enrollment."  MORE >>

"Dependent Care FSA limit increased for the first time in nearly 40 years ... Telehealth services no longer disqualify employees from HSA eligibility ... Direct Primary Care (DPC) Arrangements are now HSA-compatible ... ACA Bronze and Catastrophic plans will become HSA-eligible in 2026."  MORE >>

"[I]ndividuals who elect to continue health FSA coverage through COBRA are generally only required to have this coverage extended through the plan year in which their qualifying event occurs. However, if the employer’s cafeteria plan allows for a carryover (currently up to $660 in 2025), a qualified beneficiary will still have access to this carryover amount in the following plan year, or if earlier, until the end of their maximum COBRA period.... The cost of coverage for the health FSA will be the amount of contributions elected by the employee for the plan year. "  MORE >>

"[This article provides] a high-level overview of the various nondiscrimination rules that can apply to health and welfare plans, [as well as] some of the unsettled ambiguities in the nondiscrimination rules under Sections 125 and 105(h) of the Internal Revenue Code."  MORE >>

"Although it is legally permissible to require employees who want health coverage to pay their share of the premiums on a pre-tax basis, this design may create hardships for your employees ... [P]articipating in the cafeteria plan could restrict their ability to make midyear election changes, decrease their Social Security benefits, and adversely affect benefits under programs that do not treat salary reductions as compensation for benefit calculation purposes."  MORE >>

"Public agency employers in California are facing increasing pressure to offer competitive, flexible, and legally compliant employee benefits. But there is one foundational document many agencies still overlook or perhaps do not fully understand -- the Section 125 cafeteria plan. Without it, certain popular and tax-advantaged benefits cannot be offered, and agencies may inadvertently run afoul of federal tax law."  MORE >>

"Generally, health care Flexible Spending Accounts (FSAs) are not required to file a Form 720 unless the employer (and not just the employee) makes contributions to it that exceed the lesser of $500 annually or a dollar-for-dollar match of the employee's contribution.... For Health Reimbursement Arrangements (HRA) ... [if] the integrated group health plan ... is fully insured, then the employer must file the 720 for the HRA and pay the [PCORI fee per employee].... If however, the underlying group health plan is self-funded then no separate 720 need be filed [for the HRA]."  MORE >>

"From flexible reimbursement models to lean compliance-focused plans to transparency-first pricing strategies, you have more than one option of traditional group insurance. Each approach comes with its own pros and cons -- and understanding those trade-offs is key to making the best decision for your business and your employees."  MORE >>