Side Affects Episode 163 | Compliance in Minutes - May 2026

Speaker A: Hello everyone. I'm Hayden Parsons, the marketing producer at UM, McGo and Brabender, bringing you the May 2026 edition of Compliance in Minutes. When employees hear the words employee benefits, they might think of healthcare perks, wellness programs, pto. The list goes on. But when HR professionals hear the words employee benefits, they they're likely thinking about cost management, compensation, open enrollment, and most importantly, compliance. Compliance is the cornerstone of today's insurance landscape, and for good reason. As your broker, MB is committed to delivering timely compliance updates, empowering our clients to operate efficiently, overcome challenges, and remain aligned with the ever evolving laws and regulations. With that in mind, let's dive into your May 2026 compliance upd. First up, RXDC Reporting challenges are becoming more common this year. More employers than ever are finding themselves responsible for submitting part of their prescription drug data collection reporting to CMS. In the past, carriers and TPAs were very proactive about communicating deadlines, but this year, many moved those deadlines earlier and communicated less, leaving some employers caught off guard. If an employer misses their vendor's internal deadline, the carrier will typically submit only the data they have, and the employer is then responsible for submitting the missing pieces. In most cases, that means completing and submitting the D1 and P2 files through CMS's HiOS system by the June 1 deadline. Now, here's where it gets tricky. Gaining access to the HiOS system can take a couple of weeks since it requires identity verification and system setup. So if you've missed your vendor's deadline, it's important to start that process right away. The big takeaway here? Don't assume your vendor handled everything. Confirm what was submitted, identify any gaps, and take action early to avoid last minute issues. Next up, the IRS has released an updated sample plan document for educational assistance programs under section 120. While employers aren't required to use this exact template, they are required to have a separate written plan document in place. And this update gives helpful insight into what the IRS expects. There are a few notable changes. First, the new version includes evergreen indexing language. That means the annual $5,250 limit on educational assistance can automatically adjust for inflation starting in 2027 without requiring annual plan amendments. Second, the guidance reflects that student loan repayment assistance is now a permanent feature, not just a temporary pandemic era provision. And third, it expands the definition of eligible educational institutions to include certain internships in residency programs. One important reminder, these programs are not ERISA plans and should not be included in your ERISA plan documents. And they also don't belong in your Section125 cafeteria plan. If a compliant written plan isn't in place, any reimbursements could become taxable income to employees. So this is an area worth reviewing carefully. Now let's talk about changes to Medicare Part D Credible Coverage rules CMS has finalized updates that will impact employers starting in 2020. First, certain account based plans like HRAs, ICHRAs, FSAs and HSAs are now exempt from providing credible coverage notices and reporting to cms. This is a helpful administrative relief for those types of plans. However, traditional group health plans are not exempt and must still provide notices and report their credible status each year. The second update is an increase in the actuarial value threshold used to determine whether prescription drug coverage is considered Credible. Starting in 2027, plans must cover at least 73% of prescription drug costs, up from 72%, with gradual increases expected in future years. For most employers, carriers or PBMs will handle these determinations, but the key responsibility remains the same. Make sure the correct notice is provided and reporting is completed each year. Finally, let's look at some developments in the pharmacy benefit manager or PBM space. There is a lot happening here at the state level. Ohio has passed a new law that will introduce stricter regulations on PBMs starting in 2027, including new transparency requirements and consumer protections. Meanwhile, a federal court recently ruled that parts of Tennessee's PBM laws are preempted by erisa, meaning they can't be applied to self funded employer health plans. And on the litigation side, a major lawsuit has been filed against a large PBM alleging improper rebate practices under federal racketeering laws. While these developments are still evolving, they signal increased scrutiny around how prescription drug benefits are managed to for employers. This reinforces the importance of understanding how your PBM operates, how pricing and rebates are handled, and what protections are in place for your plan and participants. That's a wrap for our May 2026 compliance in minutes. Thanks for tuning in. And don't forget to subscribe for monthly updates on compliance, employee benefits and health plan.