Side Affects Episode 167 | Compliance in Minutes August

Speaker A: Hello, everyone. I'm Hayden Parsons, the marketing producer at UM, McGo and Brabender, bringing you the August 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'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 August 2026 compliance updates. First up, employers with ERISA group health plans should prepare to review a new type of disclosure from their pharmacy benefit managers, or PBMs. Earlier this year, Congress officially expanded ERISA Section 408 disclosure requirements to include PBMs in their consultants. That means PBMs expecting to receive at least $1,000 in direct or indirect compensation must now disclose how they're being paid and what services that compensation covers before signing, renewing, or extending a PBM contract plan. Fiduciaries are responsible for requesting these disclosures and determining whether the compensation is reasonable. The challenge is that many PBMs have indicated they aren't fully prepared to provide these disclosures yet. Some are waiting for additional guidance or model forms, but at this point there has been no delay in the law's effective date. The takeaway for employers is simple. If you're renewing or entering into a PBM agreement, ask for the required compensation disclosure and document your review. Failing to do so could create an ERISA prohibited transaction. Next, health insurers are expected to distribute approximately $234 million in medical loss ratio or M rebates to employer health plans this August. These rebates occur when insurers collect more premium than allowed under Affordable Care act standards and are required to return the excess. If your organization receives an MLR rebate, remember that the money doesn't automatically belong entirely to the employer. Depending on how premiums were funded, a portion may belong to employees or even former employees. Employers should calculate any participant, share work with their benefits advisor or legal counsel if needed, and distribute any participant funds within 90 days to remain compliant. For many employers, the amount employees receive is relatively small, but following the proper process is still important. Another major development involves one of the nation's largest pharmacy benefit managers. The Federal Trade Commission recently reached a settlement with Caremark over allegations that it inflated drug list prices, particularly insulin to generate larger rebates and fees. This follows a similar settlement announced earlier this year involving Express Scripts. While these settlements don't require immediate action from employers, they reflect growing scrutiny of PBM business practices and increased efforts to improve transparency throughout the prescription drug supply chain. As PBM regulations continue to evolve, employers should remain engaged with their advisors and understand how their pharmacy benefits are being managed. Looking ahead, employers should continue watching for upcoming HIPAA rule changes the proposed HIPAA privacy rule is expected to be finalized soon and could require updates to the Notice of Privacy Practices, commonly called the npp. Meanwhile, broader HIPAA cybersecurity updates have been pushed back until 2027. Although that provides additional time, employers shouldn't wait to strengthen their security practices. Now is a great opportunity to review who has access to protected health information, implement multi factor Authentication where appropriate, encrypt sensitive data, regularly monitor systems for suspicious activity and ensure access is removed promptly when employees change roles or leave the organization. Taking proactive steps today can help reduce risk well before any new requirements become mandatory. Federal agencies have also released their regulatory agenda for the remainder of 2026. Several significant proposals are expected over the coming months, including final HIPAA privacy regulations, updates to transparency and coverage requirements, additional mental health pariety guidance, proposed rules for employer sponsored Trump account programs, and new regulations involving individual coverage HRAs. While none of these changes require immediate UH action today, employers should expect additional guidance throughout the rest of the year. Finally, here are a few quick developments worth keeping on your radar. A federal court recently struck down several exchange related regulatory changes, leaving certain enrollment and actuarial value rules unchanged. The Department of Health and Human Services has officially withdrawn portions of its section 1557 non discrimination rule related to gender identity. However, employers should remember that other federal discrimination laws may still apply, making legal guidance important before changing any plan provisions. Federal courts are also divided on the IRS's authority to assess employer shared responsibility penalties under the Affordable Care Act. If your organization receives an IRS letter 226J or another ACA penalty notice, be sure to respond promptly and work with your legal or tax advisor. And finally, Blue Cross and Blue Shield of Louisiana has announced it will terminate appointments for brokers involved in moving high cost claimants from employer plans into the individual market, highlighting continued regulatory attention to high cost claims and strategies. That's a wrap for our August 2026 compliance in minutes. Thanks for tuning in. And don't forget to subscribe for monthly updates on compliance, employee benefits and health plans.