🗓️ September 2025
Keeping HR pros updated with important compliance, benefits, and human resources information.
Table of Contents
Federal Court Pauses New Restrictions on ACA Marketplace Enrollment
On Aug. 22, 2025, the U.S. District Court for the District of Maryland paused several key portions of a final rule imposing stricter enrollment and eligibility standards for the Affordable Care Act’s (ACA) Marketplaces (or Exchanges). Many of the new standards were scheduled to take effect on Aug. 25, 2025, although some provisions have a later effective date.
Background
The U.S. Department of Health and Human Services (HHS) published the final rule on June 25, 2025, to reduce “widespread fraud” by strengthening the integrity of the Exchange’s eligibility and enrollment systems. Two nonprofit organizations and the cities of Baltimore, Chicago and Columbus, Ohio, brought a lawsuit against HHS, alleging that the final rule violates the Administrative Procedures Act (APA) and creates numerous barriers to affordable health coverage. The U.S. Supreme Court has limited the ability of federal courts to issue universal injunctions of government policies. In most instances, federal courts may only grant relief to the plaintiffs who brought the lawsuit. However, broader relief may be obtained where a plaintiff asks a judge to set aside a new agency rule under the APA.
Court Injunction
The U.S. District Court for the District of Maryland stayed the implementation of several key provisions of the final rule while the litigation remains pending. As a result of the court’s order, the following changes to Exchange eligibility and enrollment have been paused:
- Requiring enrollees in fully subsidized Exchange coverage who fail to timely submit an application for an updated eligibility determination to pay a $5 per month premium until they confirm their eligibility information;
- Allowing health insurance insurers to require payment of past-due premiums before effectuating new coverage, to the extent permitted by state law;
- Determining an individual ineligible for the advance premium tax credit (APTC) if they failed to file their federal income tax return and reconcile the APTC for a certain period;
- Conducting pre-enrollment eligibility verifications for special enrollment periods;
- Verifying household income inconsistencies when a taxpayer’s attested projected annual household income differs from trusted data sources; and
- Verifying a consumer’s annual household income when tax return data is unavailable. Other changes made by the final rule, including shortening the Exchange’s open enrollment period effective for 2027, remain in effect.
Key HSA Features and Updates for 2026
New limits on HSA contributions and HDHP cost sharing apply for 2026.
The 2026 contribution limit is $4,400 for individuals with self-only HDHP coverage and $8,750 for individuals with family HDHP coverage.
- Individuals who are age 55 or older may make an additional $1,000 “catch-up” contribution.
- For 2026 plan years, the minimum deductible is $1,700 for self-only HDHP coverage and $3,400 for family HDHP coverage.
- Permanently extends the ability of HDHPs to provide benefits for Telehealth and other remote care services before plan deductibles have been met without jeopardizing HSA eligibility. This extension applies to plan years beginning after Dec. 31, 2024;
- Allows individuals with direct primary care (DPC) arrangements to make HSA contributions if their monthly fees are $150 or less ($300 or less for family coverage), effective Jan. 1, 2026. These dollar limits will be adjusted annually for inflation. A DPC arrangement is a subscription-based health care delivery model where an individual is charged a fixed periodic fee for access to medical care consisting solely of primary care services. In addition, the OBBB Act treats DPC fees as medical care expenses that can be paid using HSA funds.
Medicare Part D Annual Notices: Deadline October 15
Each year, employers that offer prescription drug coverage must provide a Medicare Part D notice to all Medicare-eligible individuals – including retirees, active employees, dependents, and COBRA participants – by October 15, the start of Medicare’s open enrollment period. To simplify compliance, many employers choose to send this notice to their entire covered population.
What You Need to Know
Creditable Coverage Status
Employers must disclose whether their prescription drug coverage is considered creditable – meaning it is expected to pay, on average, as much as Medicare’s standard prescription drug plan. This disclosure is required both to Medicare-eligible individuals and to CMS.
Upcoming Changes
Under the Inflation Reduction Act, Medicare’s out-of-pocket maximum will drop from $8,000 in 2024 to $2,000 in 2025. This change could mean some employer plans – especially high-deductible health plans – may no longer meet the creditable coverage standard. Additional updates in 2026 may also impact determinations.
Notice Requirements
Notices must be provided:
- Annually before October 15
- Before an individual’s initial enrollment period for Part D
- Before the effective date of enrollment in prescription drug coverage
- Upon any change affecting creditable status
- Upon request
Deliver Options
CMS provides model notices (English and Spanish). Employers may mail them, include them in enrollment packets, or deliver them electronically (if strict consent and access rules are followed). Non-personalized electronic notices must also be posted on employer websites.
Disclosure to CMS
Employers must report to CMS whether their coverage is creditable within 60 days of the start of each plan year, as well as within 30 days after coverage changes or termination.
Action Steps
- Confirm with your carrier or TPA whether your prescription drug coverage is creditable for 2025.
- Distribute the Medicare Part D notice to all required participants before October 15.
Question of the Month
Q: An individual is on COBRA and had planned to enroll in his wife’s plan when he exhausts 18 months of COBRA coverage at the end of October 2025 but was served divorce papers in May. Does this create a second qualifying event that triggers a COBRA extension from 18 months to 36 months?
A: The divorce is not a second qualifying event that would extend the former employee’s 18 months of COBRA. For a divorce to extend COBRA, the divorce must be a second qualifying event. This means the divorce would have caused a loss of coverage if the former employee was not already on COBRA. That is not the case here since the divorce would not impact the employee’s eligibility under his former employer’s plan (only his spouse’s eligibility). As a result, the former employee is not entitled to extended COBRA due to his divorce.
Answers to the Question of the Month are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
