Legal books and compliance materials on a desk representing new legislation affecting employee Benefit Changes 2026.

Five Benefit Changes for 2026

Dec 10, 2025 | All, Benefits Administration, COBRA, Compliance, FSA, HSA, Legislation

The 2026 plan year brings meaningful updates to account-based benefits and COBRA that employers should start preparing for now. From higher dependent care FSA limits to permanent telehealth flexibility and new fertility benefit options, these changes will impact plan design, compliance, and employee communications.

1. Dependent Care FSA: Permanent Limit Increase to $7,500 (Effective 2026)

For the first time in nearly 40 years, the Dependent Care Assistance Program limit will increase from $5,000 to $7,500 (from $2,500 to $3,750 married filing singly) under the One Big Beautiful Bill that passed in July of 2025. The increase goes into effect for tax years beginning January 1, 2026 and is not indexed for inflation. The $7,500 limit applies to all employer-provided dependent care assistance, including dependent care FSAs.

See our article with additional details and employer action items for this important increase.

2. The ACA’s Enhanced Marketplace Subsidies Are Set to Expire—COBRA Ripple Effects

Unless Congress acts, ACA Marketplace premiums will increase dramatically for millions of Marketplace enrollees beginning January 1, 2026 due to the expiration of enhanced premium subsidies made available during the pandemic.

What this means for COBRA: If Marketplace coverage becomes significantly more expensive for 2026, COBRA may look more attractive than it has under expanded subsidies. Expect:

  • Higher COBRA participation among employees and dependents experiencing qualifying COBRA events who face larger Marketplace premiums.
  • Possibly more employee questions at qualifying events (like terminations or hour reductions) about whether to default to COBRA or shop the Marketplace.
  • The need to update any informational COBRA materials referencing the ACA’s enhanced Marketplace subsidies.
  • Possibly fewer employees seeking early retirement due to the significantly increased costs of Marketplace coverage.

Alternatives under discussion: As of the date of this blog, many leaders in Washington are exploring whether ACA Marketplace subsidies can be provided “directly to the people” in the form of HSA or FSA-like accounts, rather than being provided directly to insurance carriers. These ideas are not enacted policy at this time.

3. Direct Primary Care and HSAs: Finally Some Clarity

A Direct Primary Care (DPC) model provides individuals with primary care services in exchange for a fixed periodic fee. For years, DPC fees were a thorny HSA eligibility issue. However, the One Big Beautiful Bill provides clarity. Beginning January 1, 2026, DPC arrangements are no longer “disqualifying coverage” for HSA eligibility, and HSA funds can be used for DPC fixed fees subject to caps (generally $150/month individual; $300/month family, indexed in future guidance), and with exclusions for items like most prescriptions and certain lab/anesthesia services. Plan design details and IRS/Treasury clarifications are still expected, but for 2026 the statutory framework is in place.

4. Telehealth and HSAs: The Safe Harbor Is Permanent

The pandemic‑era pre‑deductible telehealth safe harbor for HSA‑qualified HDHPs has flip-flopped between temporary extensions and lapses. The One Big Beautiful Bill permanently reinstated the safe harbor effective December 1, 2025, allowing HDHPs and employers to cover telehealth on a first‑dollar basis without jeopardizing HSA eligibility. That means employers can keep or restore $0 telehealth for 2025 and beyond.

5. Fertility Benefits: More Pathways

In October of 2025, the federal government issued guidance clearing the way for employers to more easily offer fertility medical benefits to their employees through a(n):

  • Fully-insured specified-disease policy that covers benefits related to infertility,
  • Excepted benefits health reimbursement arrangement (“HRA”), and/or
  • Employee assistance program that offers coaching and navigation services to help explore fertility options.

In addition to these options, employers may be able to provide fertility medical benefits through their medical plan or an integrated HRA. Employers should consult their benefits advisors for more information.

Summary

2026 brings both complexity and opportunity. As these updates take effect, employers should start planning now to evaluate new benefit opportunities and to stay ahead of compliance and communication challenges. If you have any questions about these benefit changes or opportunities for the new plan year, contact us at sales@ebcflex.com.

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