Search the News Archive

Which 2026 ACA Adjustments Apply to Healthcare Plans in Puerto Rico?

"The employer shared responsibility requirements of Code Section 4980H do not apply in Puerto Rico ... [However,] healthcare plans in operation in Puerto Rico are subject to limitation on cost-sharing requirements of PHSA Section 2707(b) ... [F]or plan year 2026, annual cost sharing on in-network essential health benefits covered by healthcare plans in operation in Puerto Rico cannot exceed $10,600 for plan participants with self-only coverage and $21,200 for plan participants with coverage other than self-only, such as family coverage."

Operating Employee Stock Purchase Plans in Puerto Rico

"[E]ffective as of July 1, 2022, Puerto Rico Act No. 52-2022 amended the Puerto Rico Internal Revenue Code ... [to] allow for the operation of ESPPs in Puerto Rico.... [Some] publicly traded companies doing business in Puerto Rico are now allowing their Puerto Rico employees to participate in their ESPPs. This article summarizes the process that these companies should follow for including their Puerto Rico employees as participants in their U.S.-based ESPPs."

Puerto Rico Health and Welfare Plan Sponsors Need Cybersecurity (PDF)

"Modeled after the Insurance Data Security Model Law issued by the National Association of` Insurance Commissioners, [Puerto Rico Insurance Code] Rule No. 108 requires all insurance companies doing business in Puerto Rico to develop, implement, and periodically update a cybersecurity program reasonably designed to protect the confidentiality, integrity, and availability of the nonpublic information kept in their computer, communications, or information systems and ensure the security of such systems.... Rule No. 108 does not regulate nor impose any requirements on employers doing business in Puerto Rico, their ERISA plan administrative committees, or self- funded employee benefits plans."

2025 Limits on Contributions to 401(k) Plans Qualified in Puerto Rico

"Unfortunately, Hacienda did not increase vis-à-vis 2024, the maximum amounts that Puerto Rico participants can contribute to their 401(k) plan accounts through pre-tax, catch-up, or after-tax contributions. And, because the Puerto Rico Internal Revenue Code of 2011 does not provide for Roth contributions, Puerto Rico participants remain ineligible to make Roth contributions to their 401(k) plan accounts."

W-2 Reporting of Healthcare Coverage Costs for Puerto Rico Employees

"[E]mployers with operations in Puerto Rico must report in box 5 of the local Form W-2 the aggregate cost of their healthcare benefits to Puerto Rico employees.... [L]ocal tax laws do not provide for, or grant favorable tax treatment on, health Flexible Spending Arrangements (FSAs).... Thus, Puerto Rico employees should not be allowed to participate in FSAs ... In fact, the local tax rules require that the employee share of healthcare premiums be paid with after-tax dollars."

Matching Puerto Rico 401(k) Participants’ School Debt Repayments (PDF)

"U.S. companies that provide matching contributions on qualified student loan payments for employees in retirement plans that are qualified in the United States and Puerto Rico must do so under the same terms and conditions for participants in both jurisdictions. P.R.-only qualified plans may safely provide such QSLP matching contributions by following the relevant rules of I.R.C. Section 401(m)(4)(D) and (m)(13) ... In either case, the dual- or P.R.-only qualified plan must be amended accordingly, and the corresponding amendment must be filed with the Puerto Rico Department of the Treasury (Hacienda)[.]"

Cut Cyber Breaches, Services Fees for Puerto Rico Benefit Plans (PDF)

"Sponsors of retirement plans operating in Puerto Rico, particularly in the wake of an Infosys security breach last November ... have undertaken to evaluate the cybersecurity practices of local service providers that have access to sensitive information of plan participants. Pursuant to their fiduciary duties under [ERISA], plan sponsors can and have negotiated to pay lower fees to those providers, such as Puerto Rico trustees, recordkeepers, and, to a lesser extent, paying agents.

Puerto Rico Taxation of Severance Payments

"Employers considering reductions in workforce in Puerto Rico should be aware that the rules on the taxation of severance pay in the United States and Puerto Rico are different. The U.S. rule is straightforward: severance pay is always taxed as wages.... In Puerto Rico, however, severance pay is largely, and often totally, exempt from the withholding of local income tax, but it is still subject to the withholding of FICA taxes."

Operating HSAs and HDHPs in Puerto Rico

"If the entity administering the HSA is not a local financial institution, then the governing documents for the HSA, but not those of the HDHP, would need to be filed with Hacienda to obtain an administrative determination confirming that, both in its terms and operation, the HSA meets the requirements of PRIRC Section 1081.04.... [The] local limits are comparable to the U.S. 2012 limits. Since the limits are established by PRIRC Section 1081.04, rather than through Hacienda's administrative guidance, and are not indexed for inflation, Hacienda cannot approve a higher limit."

Statute of Limitations for Benefits Lawsuits in Puerto Rico Plans

"Retirement plans in operation in Puerto Rico can impose a statute of limitations for the filing of ERISA claims for benefits that is substantially shorter than the four-year period that would apply absent such a plan-imposed period. However, to be valid and enforceable the plan-imposed period must be: [1] Reasonable, [2] Incorporated within the official plan documents, and [3] Disclosed in the notification of benefit determination that the claims administrator issues to the claimant as part of the internal review process under ERISA Section 503."