Benefits Counselor – May 2026

GENERAL UPDATES

DOL Announces New Enforcement Priorities for Benefit Plans

The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) recently announced new enforcement priorities and guiding principles for employee benefit plans in Field Assistance Bulletin (FAB) 2026-01. The guidance signals a shift in how EBSA will allocate its enforcement resources, with an emphasis on four key priorities:

1. Focusing on the most egregious conduct and significant harm to employees, particularly where there is direct evidence of a breach of the duty of loyalty.
2. Avoiding regulation through enforcement activities as a substitute for notice and comment rulemaking.
3. Requiring senior-level review of significant enforcement initiatives by EBSA officials.
4. Committing to more timely and responsive enforcement.

RETIREMENT PLAN UPDATES

Proxy Voting Advisors Can Be ERISA Fiduciaries Under New DOL Guidance

On April 1, 2026, the DOL issued new guidance warning that proxy voting advisory firms may be considered investment advice fiduciaries when providing services to plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). The guidance states that shareholder rights, including proxy voting rights, associated with ERISA plan investments are plan assets subject to the fiduciary duties of prudence and loyalty. The DOL noted that, in general, proxy voting services concerning how to exercise shareholder rights, which are based on the particular needs of an ERISA-covered plan, performed on an ongoing basis and rendered for a fee pursuant to a mutual understanding, will typically satisfy the five-part test for determining fiduciary status under ERISA. As a result, the guidance states that the management of proxy rights is fiduciary in nature and must be undertaken for the exclusive purpose of maximizing risk-adjusted return on investment, rather than the promotion of public policy preferences.

HEALTH AND WELFARE PLAN UPDATES

IRS Updates Guidance on Section 127 Educational Assistance Programs

On April 20, 2026, the Internal Revenue Service (IRS) issued a revised series of Frequently Asked Questions (FAQs) addressing educational assistance programs under Section 127 of the Internal Revenue Code. The updated FAQs supersede previous FAQ guidance issued by the IRS in 2024. Among other changes, the FAQs incorporate provisions enacted by the One Big Beautiful Bill Act (OBBBA) that provide for indexing the annual reimbursement limit of $5,250 for taxable years beginning on or after 2026. Importantly, the FAQs also clarify that, notwithstanding previous IRS guidance to the contrary, expenses do not need to be paid by employees in the same calendar year in which reimbursement is made by the employer to qualify for tax-free reimbursement. The FAQs retain the requirement, however, that expenses must not be incurred prior to employment, with the exception of qualified student loan expenses.

CMS Finalizes Medicare Part D Changes Affecting Account-Based Plans and Creditable Coverage Determinations

The Centers for Medicare and Medicaid Services (CMS) published final regulations on April 6, 2026, which amend the Medicare Part D regulations. Changes in the regulations are to exempt account-based plans from Part D creditable coverage reporting requirements and sunset the original simplified determination method to determine creditable prescription drug coverage. For more details, please see our recent article, Medicare Part D Regulations Bring Changes for Health Plan Sponsors.

OCR Resolves Enforcement Action Related to Group Health Plan HIPAA Violations

The U.S. Department of Health and Human Services Office for Civil Rights (OCR) recently entered into a settlement agreement with a self-funded group health plan to resolve alleged violations of the HIPAA Privacy and Security Rules. OCR began its investigation after the health plan reported a ransomware incident in 2021, which resulted in unauthorized access to participant names, Social Security numbers, health insurance and plan-related information, and claims data. OCR’s investigation revealed that the plan failed to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to electronic protected health information, as required by the HIPAA Security Rule. As a result, the plan agreed to pay $245,000 to OCR and to implement a corrective action plan that will be monitored by OCR for two years.

Sixth Circuit Affirms ERISA Preemption for Tennessee PBM Regulation

On April 7, 2026, the U.S. Court of Appeals for the Sixth Circuit affirmed a district court decision holding that ERISA preempts a recent Tennessee law regulating pharmacy benefit managers (PBMs) as applied to self-funded ERISA health plans. In McKee Foods Corp. v. BFP, Inc., a group health plan sponsor challenged a Tennessee law (Public Chapter 569): (1) requiring PBMs to admit any willing pharmacy into their pharmacy networks; and (2) prohibiting PBMs from offering incentives or providing financial disadvantages to steer participants toward preferred in-network pharmacies. The Sixth Circuit held that the provisions had an impermissible connection with ERISA plans because they dictated pharmacy network composition and cost-sharing design, intruded on central matters of plan administration, and interfered with nationally uniform plan administration. As a result, the Sixth Circuit confirmed that because the Tennessee law effectively dictates key plan decisions, it cannot escape a preemption finding with respect to the challenged provisions.

COMPLIANCE DEADLINES AND REMINDERS

Health Plan Compliance Deadlines and Reminders

RxDC Reporting. Health plans must file reports on prescription drug and health care spending for the 2025 calendar year by June 1, 2026.