Federal Health & Welfare Updates

The IRS recently issued Revenue Procedure 2025-32, providing certain cost-of-living adjustments for a wide variety of tax-related items, including health FSA contribution limits, transportation and parking benefits, qualified small employer health reimbursement arrangements (QSEHRAs), the small business tax credit, and other adjustments for tax year 2026. Those changes are outlined below. 

• Health FSA: The annual limit on employee contributions to a health FSA will be $3,400 for plan years beginning in 2026 (up from $3,300 in 2025). In addition, the maximum carryover amount applicable for plans that permit the carryover of unused amounts is $680 (up from $660 in 2025). 
• Dependent Care Assistance Program (DCAP): While DCAP limits are not annually adjusted for inflation, effective January 1, 2026, the One Big Beautiful Bill Act (OBBBA) increases the maximum annual DCAP tax exclusion from $5,000 to $7,500 (single filers or married filing jointly), and from $2,500 to $3,750 (married filing separately). 
• Qualified Transportation Fringe Benefits: For 2026, the monthly amount that may be excluded from an employee's income for qualified parking increases to $340, as does the aggregate fringe benefit exclusion amount for transit passes (both up from $325 in 2024). The two limits are mutually exclusive. 
• QSEHRAs: For 2026, the maximum number of reimbursements under a QSEHRA may not exceed $6,450 for self-only coverage and $13,100 for family coverage (up from $6,350 and $12,800 in 2025). 
• Adoption Assistance Program: The maximum amount employees may exclude from their gross income under an employer-provided adoption assistance program for the adoption of a child will be $17,670 for 2026 (up from $17,280 in 2025). This exclusion begins to phase out for individuals with modified adjusted gross income greater than $265,080 and will be entirely phased out with a $305,080 modified adjusted gross income. 
• Small Business Healthcare Tax Credit: For 2026, the average annual wage level at which the credit phases out for small employers is $34,100 (up from $33,300 in 2025). 

Employers with limits that are changing – such as for health FSAs, transportation/commuter benefits, and adoption assistance – will need to determine whether their plans automatically apply the latest limits or must be amended (if desired) to recognize the changes. Any changes in limits should also be communicated to employees. 

For further information, please ask your broker or consultant for a copy of the NFP publication Employee Benefits Annual Limits. 

Read the full announcement: IRS Revenue Procedure 2025-32. 

On October 16, 2025, the DOL, HHS, and Treasury (collectively, the departments) released new guidance in the form of FAQs regarding fertility benefit offerings. The guidance was issued in response to President Trump’s Executive Order 14216, "Expanding Access to In Vitro Fertilization," which called for recommendations to protect in vitro fertilization (IVF) access and reduce out-of-pocket and health plan costs for IVF treatment. Specifically, the FAQs clarify the types of “excepted benefits” employers can use to provide fertility benefits.  

Background  

As a reminder, excepted benefits are not required to comply with certain ACA mandates (e.g., coverage of preventive services without cost-sharing, prohibitions on annual limits for essential health benefits), or HIPAA portability requirements (e.g., special enrollment rights). There are several categories of excepted benefits, including independent, noncoordinated excepted benefits, and limited excepted benefits.  

Independent Noncoordinated Benefits  

Independent, noncoordinated excepted benefits include coverage for a specified disease or illness (e.g., cancer-only policies), and certain hospital indemnity or other fixed indemnity insurance. To qualify as independent noncoordinated excepted benefits, all the following conditions must be met: 

1. The benefits must be provided under a separate policy, certificate, or contract of insurance.  
2. There must be no coordination between the provision of such benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor. 
3. The benefits must be paid with respect to an event, regardless of whether benefits are provided for such event under any group health plan maintained by the same plan sponsor. 

The FAQs explain that an employer may offer fertility benefits to employees as an independent, noncoordinated excepted benefit (e.g., a specified disease or illness policy that covers infertility benefits) if the above conditions are met, and the employees would also not need to be enrolled in the employer’s traditional group health plan. Such benefits could not be self-insured (since the coverage must be provided under a separate policy, contract, or certificate of insurance). However, the coverage would not prevent an employee from contributing to an HSA (provided they were also covered by an HDHP and otherwise HSA-eligible).  

Limited Excepted Benefits  

Limited excepted benefits include limited-scope vision or dental benefits, health FSAs, certain employee assistance programs (EAPs), and certain HRAs, such as excepted benefit HRAs (EBHRAs).  

For an EBHRA to qualify as a limited excepted benefit, the following requirements must be met:  

1. Other traditional group health coverage (e.g., major medical coverage) must be made available to employees who are offered the EBHRA, although the EBHRA should not be an integral part of such plan. 
2. Amounts newly made available for each EBHRA plan year must not exceed the inflation-adjusted annual limit ($2,200 for plan years beginning in 2026). 
3. The EBHRA generally must not reimburse health coverage premiums. 
4. The EBHRA must be made available uniformly to all similarly situated individuals (regardless of any health factor), and required notice of such availability must be provided.  

The FAQs point out that an employer can offer an EBHRA that reimburses an employee's out-of-pocket costs for fertility benefits.  

Additionally, an employer can provide benefits for coaching and navigator services to help employees and their dependents understand their fertility options under an EAP that qualifies as a limited excepted benefit. However, the EAP would not be a limited excepted benefit if it offered any fertility benefits that are significant benefits for medical care. (Among other requirements, for an EAP to qualify as an excepted benefit, it must not provide “significant” medical care benefits, considering the amount, scope, and duration of covered services.)  

Employer Takeaway 

Employers who offer fertility benefits (or are considering doing so) should be aware of the new guidance, which represents initial steps by regulators to respond to the Trump administration’s executive order to make such benefits more broadly accessible.  

The option to purchase insured coverage that provides only infertility benefits, which can be made available to all employees, may appeal to some employers who are currently providing these benefits on a self-insured basis through a fertility vendor and traditional HRA, which can only be made available to those enrolled in a traditional group health plan. Of course, the infertility policy options will depend on the carrier offerings, and the guidance did not directly address the cost aspects.  

EBHRAs may be an alternative for employers seeking to provide a more limited benefit to assist employees with out-of-pocket infertility costs; however, such employees would also need to be offered traditional group coverage.  

The departments indicated they intend to propose rules to provide additional ways that certain fertility benefits may be offered as limited excepted benefits. They are also considering changes to the standards under which supplemental coverage, including supplemental infertility coverage, can be provided as an excepted benefit by a group health plan. Accordingly, employers should stay tuned for further guidance, as we will report relevant updates in Compliance Corner. 

Read the departments’ guidance on the legislation here: DOL FAQs about Affordable Care Act Implementation Part 72.

The Affordable Care Act (ACA) enhanced premium tax credits (PTCs) are set to expire at the end of 2025, absent additional congressional action. Employers may question whether the expiration will impact their group health plans.  

Background  

Initially enacted in 2014, the PTC was established to help eligible individuals lower their premium payments for plans offered through the health insurance exchanges (marketplace) created under the ACA. The ACA marketplace determines how much enrollees pay for their health insurance premiums at a certain percent of their income, with the federal government covering the remainder in the form of a tax credit. Specifically, the PTC is calculated as the difference between a benchmark premium (the premium for the second-lowest-cost silver plan available in a region) and a maximum contribution per household, calculated as a percentage of household income and adjusted over time. 

Originally, the PTC was available to people who met specific criteria, including a modified adjusted gross income between 100% and 400% of the federal poverty line (FPL). Eligibility for the PTC was subsequently expanded by the American Rescue Plan Act (ARPA) of 2021, which was later extended by the 2022 Budget Reconciliation Law. Specifically, the “enhanced” PTC established under ARPA eliminated the maximum income limit (400% of the FPL) for PTC eligibility purposes, while also reducing the cost of monthly insurance premiums. These changes were extended through tax year 2025, with a sunset date of January 1, 2026. However, and importantly, employees are not eligible for the PTC if they receive an offer of affordable, minimum value group health plan coverage from their employer.  

Anticipated Impact of Expiration of Enhanced PTCs 

The expiration of the enhanced PTC under ARPA is expected to result in an increase in gross benchmark premiums over the next several years, with the Congressional Budget Office (CBO) estimating a 7.9% increase in premiums every year through 2034. This may result in an increase in individuals leaving the marketplace, and a potential increase in premiums for the remaining enrollees, as the marketplace risk pool may include more people with higher health needs. The CBO has also estimated that the enhanced PTC expiration will result in an annual increase of 3.8 million uninsured individuals over the next eight years.  

Employer Takeaway  

The expiration of the enhanced premium tax subsidies does not have a direct impact on employer-sponsored group health plans. Applicable large employers (ALEs) will still be subject to the ACA employer mandate and potential penalties if they fail to offer affordable minimum value coverage to full-time employees. However, for some employers who fail to offer affordable coverage, the likelihood of a penalty may slightly decrease depending on their employees’ household income, since fewer employees may be eligible for a PTC. 

Additionally, the higher marketplace premiums could also result in more individuals seeking to maintain coverage under an employer-sponsored plan. For example, some employees (and dependents) who experience a COBRA qualifying event may choose to elect COBRA coverage with the employer (despite the premium cost) when presented with the alternative of higher premiums for marketplace coverage.  

As Congress continues to debate the outcome of the enhanced PTC, and the ensuing government shutdown, employers should be aware of the developments and their possible impact.  

Read the Congressional FAQs here: Enhanced Premium Tax Credit Expiration: Frequently Asked Questions.

As October is Breast Cancer Awareness Month, employers that sponsor group health plans should be aware of the expanded breast cancer screening benefits that are scheduled to take effect in 2026.

Background

The ACA requires non-grandfathered group health plans (whether fully insured or self-insured) to cover certain preventive care in-network without cost-sharing (including deductibles, copayments, or coinsurance). The required covered care includes services given an “A” or “B” rating from the U.S. Preventive Services Task Force (USPSTF), vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), and preventive care and screenings for children and women recommended by the Health Resources and Services Administration (HRSA).

If there are changes in recommendations or guidelines, plans generally must provide coverage for plan years that begin one year after the change. For example, a change recommended in December 2024 would take effect in plan years beginning in 2026. Specific information about recommendations and guidelines is available on the healthcare.gov website: preventive health services | healthcare.gov. The agencies have indicated this site will be updated to reflect the date of adoption of a recommendation so sponsors and insurers will know when coverage is required.

2026 Changes

Updated HRSA Women's Preventive Services Guidelines will broaden the range of breast cancer screening benefits that are covered as preventive care. Currently, ACA guidelines require group health plans to cover routine screening mammograms for women at average risk of breast cancer starting at age 40, at least biennially and as frequently as annually. Effective for plan years beginning in 2026, the coverage must also include additional imaging services (e.g., ultrasounds or MRIs) when medically indicated, and pathology services (e.g., a needle biopsy), if necessary to complete the screening process for malignancies or address findings on the initial mammography.

Furthermore, new HRSA guidance requires coverage (without cost-sharing) of patient navigation services for breast and cervical cancer screening and follow-up to increase use of screening recommendations based on the patient's need for such services. Navigation services would include patient assessment and care planning, referrals to supportive resources (e.g., transportation, language translation, and social services), patient education and coaching, as well as healthcare access and system navigation. These services should be individualized to the patient and can be provided in person and/or virtually. According to the HRSA, navigation services have proven to lead to earlier cancer detection, improved screening rates, and treatment outcomes.

The 2026 HRSA updates are in addition to existing USPSTF-recommended preventive services, which include breast cancer susceptibility gene (BRCA) screening, genetic counseling, and testing, if appropriate for a woman as determined by her healthcare provider (e.g., based on a prior breast cancer diagnosis or family history associated with an increased risk of BRCA-related cancer). The USPSTF guidelines also include coverage of risk-reducing prescription medications (e.g., tamoxifen) for certain women at increased risk for breast cancer, when prescribed by clinicians.

Employer Takeaway

Employers should be aware of the upcoming expanded breast cancer screening and coverage changes in 2026 and consult with their carriers, TPAs, and other service providers regarding necessary updates to plan systems, documents, and participant communications to implement these requirements. Employers may also want to inquire regarding any potential budgetary impact resulting from the expanded coverage recommendations.

Additionally, employers should monitor for further updates to preventive services guidelines generally, since there have been recent staffing changes at the agencies that make the recommendations and pending litigation challenging aspects of the ACA preventive services mandate. We will report relevant developments in Compliance Corner.

Read the full expansion of changes here: Update to the Health Resources and Services Administration-Supported Women's Preventive Services Guidelines

On August 25, 2025, a U.S. District Court denied a motion to dismiss a class action lawsuit against Kaiser Foundation Health Plan Inc. (KFHP) for its denial of coverage for prescription hearing aids, in violation of Section 1557 of the ACA. Specifically, the court found the plaintiff had standing to bring the lawsuit and adequately alleged that the plan's coverage exclusion was discrimination under the ACA.

Background

The plaintiff in the case was an enrollee in a health plan administered by Kaiser Foundation Health Plan of Washington Inc. (KFHPWA) and suffers from bilateral sensorineural hearing loss. The plaintiff has worn prescription hearing aids since childhood in order to work and effectively conduct daily activities. After enrolling in the KFHPWA plan, the plaintiff saw an audiologist who recommended a new type of prescription hearing aid that was not covered under the plan. The plaintiff subsequently brought a single claim on behalf of himself and a putative class alleging that the defendant's exclusion of hearing aid exams and prescription hearing aids violates Section 1557 of the ACA, because it discriminates against plan members on the basis of disability.

The Court's Analysis

The defendant issued a motion to dismiss the claim, arguing that the plaintiff lacked standing under Article III of the U.S. Constitution to bring the lawsuit. Article III standing requires that a plaintiff must have suffered an injury in fact that is fairly traceable to the challenged conduct of the defendant. Here, the defendant argued that the plaintiff's alleged injuries were not fairly traceable to KFHP because the plan was issued by its subsidiary, KFHPWA. However, the court held the plaintiff had established that the alleged harms suffered by himself and the class were fairly traceable to KFHP's plans, including those administered by KFHPWA, which all deny coverage related to prescription hearing aids.

The defendant also moved to dismiss the plaintiff's claim under Section 1557 of the ACA, which prohibits discrimination in health programs and activities based on race, color, national origin, sex, age, or disability, for certain covered entities that receive federal financial assistance. First, the court determined the defendant was a “covered entity” because KFHP (the parent company) engaged in health programs or activities that received federal financial assistance.

Next and notably, the court found that the plaintiff had satisfactorily pled that the hearing aid exclusion is a sufficiently close fit to intentional discrimination on the basis of disability. Specifically, the complaint alleged that the prescribed hearing aids are the precise coverage often needed by disabled people with hearing loss that cannot be treated by the bone-anchored hearing aids and cochlear implants covered under the plan.

The court also rejected the defendant's argument that the plaintiff's discrimination claim fails because the plan does not deny hearing disabled enrollees meaningful access to the facets of the plan enjoyed by other enrollees. Rather, the court found the plaintiff had adequately alleged that the proposed class members had no "meaningful access" to the same plan benefits (e.g., outpatient visits and durable medical equipment) as made available to other enrollees who needed the same to treat their own respective diagnosed health conditions. The court concluded the plaintiff sufficiently pled that the discriminatory design and administration of the plan had a disparate impact on hearing-disabled enrollees.

Employer Takeaway

While the case here is still in its very early stages, and the court has not issued a final judgment on the merits of the Section 1557 discrimination claim, the case nonetheless highlights the potential liability risks involved with coverage exclusions under the ACA. Employers should remain aware of these developments and should carefully evaluate any coverage exclusions for prescription hearing aids. We will continue to monitor this case and related legal developments and provide additional updates moving forward.

Read the full case here: Delessert v. Kaiser (Order on Motion to Dismiss)

On September 9, 2025, the Eleventh Circuit Court of Appeals held in Lange v. Houston County that a plan that did not cover gender affirming surgery did not violate Title VII of the Civil Rights Act of 1964 (Title VII).

Background

The plaintiff in the case worked for the defendant as a deputy sheriff. They are transgender and sought gender affirming surgery (as well as the drugs, services, and supplies that went along with it). However, the defendant's plan did not cover those products or services.

The plaintiff filed suit alleging that the plan violated Title VII because it discriminated based on sex. Title VII makes it unlawful for a covered employer to “discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin.” Since health coverage is a privilege of employment, a health plan cannot discriminate based on sex.

The district court ruled in favor of the plaintiff and issued a permanent injunction prohibiting the defendant's plan from excluding sex change surgery from coverage. When the Eleventh Circuit took the case initially, a three-member panel of the appellate court affirmed the district court. However, the appellate court decided to revisit the case en banc (which means all the judges would consider the case, not just a three-member panel). As a result, the Eleventh Circuit reversed its initial ruling, lifted the injunction, and remanded the case back to the district court for further proceedings.

The Court's Analysis

The plaintiff cited the Supreme Court's 2020 decision in Bostock v. Clayton County in support of their contention that the policy exclusion discriminates based on sex. The Bostock case applied a test to determine whether such discrimination exists: change one thing at a time and see if the outcome changes. The plaintiff argued that the exclusion would not have applied if one thing had been different: if they had been female, then the exclusion would not have applied. The district court and the three-member panel of the Eleventh Circuit agreed with the plaintiff's application of this test and ruled in favor of the plaintiff.

However, the new en banc decision relied upon a more recent Supreme Court decision. In 2024, the Court ruled in United States v. Skrmetti that a law did not violate the Equal Protection Clause of the 14th Amendment when it prohibited the use of certain treatments for gender dysphoria but did not prohibit the use of those same treatments for other conditions. The Court reasoned that a law that does not prohibit conduct for one sex that it permits for the other does not discriminate based on sex. If a male participant was denied those treatments to treat gender dysphoria, that same male participant would not be denied those treatments for other conditions.

Although the Court's decision dealt with violations of the 14th Amendment, the Eleventh Circuit applied that reasoning here. The defendant's policy excluded coverage for these treatments from everyone, not just male participants seeking gender affirming care. The Eleventh Circuit reasoned that since the exclusion applied to everyone, regardless of sex, it did not discriminate based on sex.

Employer Takeaway

This case is just the most recent example of the fluid legal status of gender-related treatments, products, and services. Although the Eleventh Circuit issued its ruling based on the application of a recent Supreme Court decision, there is no guarantee that other appellate courts will look at this the same way. Due to the legal uncertainty involved, employers should consult with their lawyer if they wish to make changes to their health plans involving gender-related treatments, products, and services.

Read the full case: Lange v. Houston County (USCourts.gov)

On September 2, 2025, a U.S. District Court in Illinois dismissed an ERISA preemption lawsuit by Central States, Southeast, and Southwest Areas Health and Welfare Fund against the Arkansas Insurance Commissioner and Department. Specifically, the plaintiff (a self-funded, multiple employer welfare plan) challenged an Arkansas state rule that permits the Arkansas Insurance Commissioner (the commissioner) to review the adequacy of pharmacy reimbursement payments made by health plan PBMs, arguing that the rule's reporting and dispensing fee requirements were preempted by ERISA.

The court ultimately held that the plaintiff failed to sufficiently allege that the rule referred to, or had an impermissible connection with, ERISA plans and dismissed the case.

At issue in the case was a rule issued by the commissioner (Rule 128) in response to the Arkansas Pharmacy Benefits Manager Licensure Act (PBMLA). The rule allowed the commissioner to impose a dispensing fee (payable to pharmacies) if pharmacy compensation is not deemed “fair and reasonable” and also included a reporting provision that required health plans to submit to the commissioner certain pharmacy compensation information. The plaintiff argued that ERISA expressly preempts any state law that may relate to an employee benefit plan (29 U.S.C. § 1144(a)). Specifically, a law “relates to” an employee benefit plan if it has a connection with or reference to the plan. The plaintiff also argued that the rule's reporting and dispensing fee requirements had a reference to ERISA plans because the rule imposes obligations directly on plans (as opposed to merely regulating PBMs). However, in its ruling, the court noted that benefit plans subject to the rule did not necessarily need to be ERISA plans and held the plaintiffs failed to allege that the rule acted exclusively on ERISA plans or that the existence of an ERISA plan was essential to the rule's operation.

In addition, the court held that the rule’s dispensing fee requirement was not ERISA-preempted because it was essentially a cost regulation that did not impose substantive requirements for ERISA plans and noted that the rule may (but does not automatically) impose an additional fee on plans. The court also dismissed the preemption claim against the rule’s reporting requirement, citing a Sixth Circuit Court of Appeals decision in Self-Ins. Inst. of Am., Inc. v. Snyder, 827 F.3d 549, 558 (Sixth Cir. 2016), which held that ERISA does not preempt state laws that impose incidental reporting obligations on ERISA plans.

Employer Takeaway

While the court’s dismissal of the preemption claim may be viewed as a validation of state laws that regulate PBMs, there has been a growing number of cases involving challenges to state PBM laws under ERISA. As noted in our previous Compliance Corner article, nearly every state has implemented laws that seek to impose wide‑ranging reforms on PBMs and regulate PBM business practices. Nonetheless, courts have remained largely split regarding the applicability of state PBM laws to self-funded plans, and whether the ERISA preemption doctrine applies. As a result, employers should not rely on the assumption that a self-funded plan is automatically exempt from state PBM regulations or reporting obligations. Employers should continue to monitor legal developments in this area and carefully evaluate the scope and applicability of state PBM laws for prescription drug plans.

Read the full case: Cent. States, Se. & Sw. Areas Health & Welfare Fund v. McClain, (N.D. Ill. Sept. 2, 2025)

A recently filed putative class action lawsuit, Barbich et al v. Northwestern University et al, raises concerns that a new wave of ERISA fiduciary breach claims may be on the horizon. In Barbich, the plaintiffs allege that Northwestern University, as the group health plan sponsor, breached its fiduciary duties by failing to prudently select and monitor their medical plan options and by not disclosing material plan information to participants. The case, which was filed in the federal district court in the Northern District of Illinois, is still in its early stages, and the plaintiffs face many hurdles; however, it is a development worth monitoring.

Background

Defendant Northwestern University sponsors an ERISA self-insured group health and welfare benefit plan. Under the plan, the major medical options offered to employees include a preferred provider organization (PPO) with three different tiers: 1) Premier, the low-deductible option; 2) Select, the mid-deductible option; and 3) Value, the high-deductible option. All three tiers provide the same healthcare coverage and network, but differ with respect to the financial terms, including participant premium amounts, coinsurance rates, copayments, maximum out-of-pocket expenses, and eligibility for HSA or FSA accounts.

Lead plaintiffs Natalie Barbich and Bruce Lindvall are former plan participants who were enrolled in the Premier PPO option for several years. They allege the defendants breached their ERISA fiduciary duty of prudence by assembling the PPO options such that the low-deductible Premier option cost more (in terms of the premium) but provided no additional benefit than (i.e., was “dominated” by) the other two higher deductible options. That is, the other two options resulted in lower total out-of-pocket expenses for participants, inclusive of premiums and regardless of the amount of medical care received. Furthermore, the plaintiffs assert that the defendants were aware that the Premier PPO option provided insufficient value actuarially compared to the other options but failed to disclose this information to participants, in breach of their ERISA fiduciary duty of loyalty. Finally, the plaintiffs claim Northwestern University failed to monitor other fiduciaries (including the HR director appointed to manage the plan), who were also named as defendants. On behalf of themselves and the class of current and former Premier PPO plan participants, the plaintiffs seek recovery of “millions of dollars” in purported financial losses, among other forms of relief.

The Complaint

As highlighted above, the complaint generally alleges that Northwestern University breached its ERISA fiduciary duties by mismanaging its group health and welfare plan. However, the specific allegations raise new questions regarding the scope of ERISA fiduciary obligations in the group health plan context.

To illustrate, the complaint asserts that the defendants breached fiduciary duties by failing to prudently structure their medical plan options to prevent any option from being financially dominated by another. Yet, matters of plan design have traditionally been viewed as settlor (i.e., business) decisions, rather than fiduciary decisions, and therefore are not subject to ERISA’s fiduciary duties. Accordingly, it remains to be seen whether the plaintiffs’ efforts to frame the assembly of plan options as a fiduciary function (i.e., the implementation of a plan design decision) will be successful.  

Additionally, the plaintiffs’ arguments largely attempt to apply recognized fiduciary standards of conduct in the retirement plan realm to the group health plan context. For example, by reference to various court decisions, the plaintiffs attempt to equate the group health plan fiduciary’s obligations to those of a retirement plan fiduciary charged with managing plan assets, monitoring investment options and removing imprudent options. But whether and how these decisions can be applied to the group health plan context is uncertain, particularly since there is a lack of established guidance on determining whether a group health plan option is prudent, and any such criteria may not be limited to financial benchmarks.

The plaintiffs also claim that the defendants breached their fiduciary duties by failing to disclose to participants that the Premier PPO was dominated by the other options and erroneously suggesting it was the most financially advantageous option. Plan fiduciaries do have an obligation to provide material information to participants regarding plan benefits, including when they know silence would be harmful or participants may materially misunderstand the benefits. However, it is unclear if this obligation requires a fiduciary to disclose whether a plan option actuarially provides sufficient value as compared to another option.

Employer Takeaway

Employers should be aware of and monitor developments in this unique case. However, it’s early in the litigation process, and the defendants have yet to respond to the allegations. So, it would be premature to try to draw any meaningful conclusions at this time.

That said, while this case proceeds in court, employers, as ERISA plan sponsors, should be mindful of their fiduciary obligations, including with respect to the duties of prudence and loyalty. As enrollment season approaches, employers should carefully review and evaluate their medical plan options. Moreover, employers should ensure they provide employees with adequate and accurate information, in an understandable format, so they can make informed and cost-conscious decisions regarding their plan benefits. Employers that offer multiple medical plan options may determine that charts and other comparison tools should be provided to employees so they can effectively assess their choices and select the most appropriate option.

NFP will continue to monitor this case and report any relevant updates in Compliance Corner.

Read the complaint: Barbich et al v. Northwestern University et al Complaint.

On August 26, 2025, the Fifth Circuit Court of Appeals remanded Braidwood Management Inc. v. Becerra, Inc. back to the district court for further proceedings. The Fifth Circuit made this move in response to the recent Supreme Court ruling in this case.

Background

The Braidwood case concerns the ACA’s preventive care mandate. Under the ACA, insurers and group health plans offering non-grandfathered individual or group health coverage must cover certain preventive services without cost-sharing. The covered requirements include services given an “A” or “B” rating from the U.S. Preventive Services Task Force (USPSTF), vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), and preventive care and screenings for children and women recommended by the Health Resources and Services Administration (HRSA).

When the plaintiffs initiated this case, they brought five claims against the defendants, including allegations that the ACA preventive-care mandates violate the Constitution's Appointments Clause because the appointment process for members of the USPSTF, ACIP, and HRSA did not satisfy the constitutional method for appointing officers of the United States. On this issue, the court ruled that the appointment of officers of the ACIP and HRSA satisfied the constitutional requirements, but the appointment of USPSTF officers did not. We covered the district court’s ruling in our October 11, 2022, article.

As a result, the district court issued a judgment that invalidated and prohibited the DOL, IRS, and HHS (the departments) from enforcing all USPSTF-recommended preventive care mandates issued since the ACA's March 23, 2010, enactment on a nationwide basis. Additionally, the final judgment prevents the departments from enforcing the PrEP coverage requirements for the plaintiffs with religious objections. We covered the consequences of this judgment in our April 3, 2023, article.

When the Fifth Circuit took up the case the first time, they agreed with the district court that the members of the USPSTF were not validly appointed as required by Article II of the Constitution and that the federal government had not cured this deficiency. However, the appellate court also determined that the district court overreached by enjoining all government action taken to enforce the preventive care mandate because it lacked the statutory authority to do so. Similarly, the Fifth Circuit found that the district court lacked the authority to vacate all previous decisions made by the USPSTF. Instead, the Fifth Circuit limited the injunction by preventing the government from enforcing the mandate against the plaintiffs in the case.

The Fifth Circuit also remanded the case back to the district court to consider the fate of two other government entities involved in determining what must be covered under the preventive care mandate. Although the district court and the Fifth Circuit found that the members of the ACIP and the HRSA were properly appointed, the Fifth Circuit questioned whether the process that these entities followed when making their recommendations complied with requirements under the federal Administrative Procedures Act (APA) and therefore remanded the matter back to the district court for further consideration. We covered this in our July 2, 2024, article.

The government appealed this decision to the Supreme Court, which issued its opinion on June 27, 2025. The Court reversed the Fifth Circuit ruling and held that the USPSTF members were inferior officers who were appointed in accordance with the Constitution. The Court then remanded the matter back to the Fifth Circuit for further proceedings. We covered this opinion in our July 1, 2025, article.

Now the Fifth Circuit has kicked the can back to the district court. Although the Supreme Court decided on the issue of USPSTF, the Fifth Circuit points out that the question of whether the process that the ACIP and the HRSA followed when making their recommendations complied with requirements under the federal Administrative Procedures Act (APA) has not yet been answered. Accordingly, the Fifth Circuit has sent the matter back to the district court.

Employer Takeaway

The courts are not yet done with the ACA’s preventive care mandate. Although it appears that the recommendations made by the USPSTF are on solid legal ground, other preventive care recommendations made by ACIP and the HRSA are still in question. In the meantime, the ACA preventive care mandate is still in effect and health plans must continue to comply with its requirements. Employers should be aware of the latest developments in the ongoing Braidwood litigation. We will report relevant updates in Compliance Corner.

Read the remand on the case: Braidwood Management Inc. v. Becerra, Inc.

On August 12, 2025, in Erban v. Tufts Medical Center Physicians Organization, et al., a Massachusetts district court found that the fiduciaries of an ERISA group life insurance plan breached their fiduciary duties to provide accurate and complete information to a terminally ill participant and his spouse regarding coverage continuation options. The ruling provides helpful insights for ERISA plan fiduciaries regarding their disclosure obligations to participants and beneficiaries, particularly those impacted by serious illnesses or impairments.

Background

Dr. John Erban worked as an oncologist for over 30 years at Tufts Medical Center. In August 2019, he was diagnosed with terminal brain cancer that left him cognitively impaired. While on medical leave, Dr. Erban and his family sought guidance from Tufts, and specifically their HR director, Nicolas Martin, about how to preserve his life insurance benefits, which totaled $800,000. Dr. Erban’s employment ended in February 2020, and he passed away in September 2020.

When Dr. Erban’s widow, plaintiff Lisa Erban, applied for life insurance benefits as the beneficiary of his policies, her claim was denied by the carrier, the Hartford, because the coverage had lapsed. The denial letter explained that premiums stopped being paid when Dr. Erban's employment ended, thereby terminating the group life insurance coverage. Additionally, the Hartford had not timely received a conversion form to convert the terminated group coverage to an individual policy.

After an unsuccessful appeal, Lisa Erban sued Tufts, in their capacity as her husband’s former employer and the group life plan administrator, and Tufts' HR Director, Martin, for surcharge damages equal to the lost policy benefits. She claimed the defendants breached their ERISA fiduciary duties, which resulted in the Hartford’s benefit denial, and that she detrimentally relied on Martin’s material omissions and misrepresentations in his communications regarding her husband’s life insurance continuation and conversion options. The court denied the defendants’ motions to dismiss these claims; please see our February 14, 2023, article on the court’s prior ruling. Both parties then motioned for summary judgment.

The Court’s Analysis

The court began its analysis by explaining that ERISA plan fiduciaries may have an affirmative duty to convey material plan information to participants and beneficiaries if they know that silence could be harmful. A breach may occur if a participant or beneficiary seeks benefit information and the fiduciary responds with misleading or inaccurate information. To prevail on a fiduciary breach claim, a plaintiff must show that the defendants 1) were acting as plan fiduciaries and 2) breached their ERISA fiduciary duties.

Here, the court found that both Tufts and Martin were plan fiduciaries. Tufts was the designated plan administrator and a named fiduciary in the plan documents. In the court’s view, HR Director Martin was a functional fiduciary because he was aware of Dr. Erban’s illness and had affirmatively assumed the role as the Erbans’ point of contact for benefits preservation advice. He invited the Erbans to direct questions to him, responded to their detailed inquiries regarding the plan terms and made representations about the coverage, such that the Erbans reasonably relied upon him for accurate guidance.

Moreover, the court ruled the defendants had breached fiduciary duties in their communications with the plaintiff regarding the plan’s coverage continuation and conversion options. First, the court observed that defendant Martin failed to explain that Dr. Erban’s basic and supplemental life insurance coverage could be continued for twelve months after he stopped working due to illness, if the premiums were timely paid. Because Martin never informed the Erbans of this continuation option, including when Lisa Erban specifically asked if she could “just private pay” their current life insurance plan, the court found the defendants breached their fiduciary duty to provide accurate and complete benefit information.

Second, the court found the defendants breached their fiduciary duties to disclose to Lisa Erban the existence of supplemental life insurance and the option to convert that policy to an individual policy. In the court’s view, defendant Martin had an affirmative duty to provide information about the supplemental policy given his knowledge of the circumstances and his role in assisting the Erbans with their coverage conversion questions.

However, the court determined that Martin had adequately notified the couple of their right to convert the basic life insurance policy and had provided a conversion form, which conveyed the conversion deadline in three places. The court noted that while it might have been helpful if Martin had reminded Lisa Erban in person of the conversion deadline, the written materials with accurate information were sufficient.

Therefore, the court granted the plaintiff’s motions for summary judgment on the life insurance continuation claim and the supplemental life insurance conversion claim, and the defendants’ motion for summary judgment regarding the basic life insurance conversion claim.

Employer Takeaway

The case underscores the risk imposed when employers, as ERISA plan fiduciaries, fail to accurately and completely provide information to participants and beneficiaries regarding life insurance coverage. Avoiding material omissions is particularly crucial when assisting participants diagnosed with serious illnesses who are inquiring about continuation and conversion options. Accordingly, employers should carefully review life insurance plans and policies to ensure they understand all the options available to participants whose group coverage will otherwise end (e.g., due to illness or termination of employment), and their obligations to timely furnish adequate information and the appropriate forms and materials. Human resources staff who will be assisting participants with benefits preservation questions should be properly trained regarding their disclosure obligations.

For further information regarding group life insurance benefits and ERISA fiduciary obligations, please ask your broker or consultant for a copy of our NFP publications Group Term Life Insurance: A Guide for Employers and ERISA Fiduciary Governance: A Guide for Employers.

Read the full case Erban v. Tufts Medical Center Physicians Organization, Inc., et al.

On August 13, 2025, the District Court of the Eastern District of Pennsylvania vacated federal rules that provided exemptions for contraceptive coverage requirements imposed by the ACA. The court determined that those rules violated the federal Administrative Procedure Act (APA).

Background

The ACA requires health insurance plans to cover women’s preventive services, including contraceptive services. However, due to rulemaking and several court cases, exemptions were allowed for religious organizations and other employers with religious objections to contraception if those organizations self-certified to their insurers or to the federal government that they objected to that requirement.

Several religious and nonreligious employers filed lawsuits challenging the requirement, as well as the exemptions. Essentially, they argued that the requirement to certify their objections to the requirement was too burdensome. In response, the first Trump administration issued final interim rules allowing both religious and nonreligious employers to opt out of the requirement for both religious and moral reasons without certifying their objections.

Pennsylvania and New Jersey filed a lawsuit challenging these rules, stating that they violated the APA because the federal government did not follow the process laid out in the statute for promulgating rules and that the federal government acted in an “arbitrary and capricious” manner when it developed the rules. The case went up to the Supreme Court, which did not agree that the process for promulgating the rules violated the APA. However, the Supreme Court did not weigh in on whether the government acted in an “arbitrary and capricious” manner in violation of the APA, and the case continued in the district court.

The Court’s Analysis

The district court concluded that the government failed to establish a rational connection between the problem of providing exemptions for religious organizations and the rules. The court found that the rules expanded the exemption to include any employer who has a religious or moral objection. In addition, the rules do not require those employers to certify the basis for their objection. The court determined that these changes did not just address the issue of exemptions for religious organizations but also provided the exemption for others who are unlikely to have a religious objection. The court also found that the federal government did not consider other alternatives and did not adequately justify its rules. Accordingly, the district court ruled that the government acted in an “arbitrary and capricious” manner in violation of the APA and vacated the rules.

Employer Takeaway

The district court’s action is the latest in a series of lawsuits and federal rulemaking efforts to define the scope of the ACA’s contraceptive coverage mandate. This highlights the uncertainty surrounding this issue. Since the district court’s decision may be appealed, the decision does not end the matter. Employers should monitor developments and consult with an attorney if they wish to exempt themselves from this mandate.

Read the full case Pa. v. Trump.