Compliance Matters Newsletter | February 2026

Let our team help you navigate the ever-changing benefits compliance landscape each month. Check out this month’s latest alerts, additional updates, and resources hot off the press:

Employee Benefits Compliance Alerts

This month’s Compliance Matters newsletter provides a comprehensive review of the following topics. To obtain your copy, please use the form below to download.

• Nondiscrimination Rules | Options for Highly Compensated Individuals
• Updated HIPAA Notice of Privacy Practices Due Soon
• CMS Releases Proposed Guidance for ICHRAs & Medicare Part D
• Voluntary Benefits: Considerations & Best Practices for Fiduciary Compliance
• Employee Benefits Litigation Series: Express Scripts Sued for Alleged Under-Reimbursement

Additional Updates & Resources

Pharmaceutical Recovery Opportunities with EPIC Partner MCAG

In light of the increase in litigation against pharmaceutical manufacturers, EPIC has partnered with Managed Care Advisory Group (MCAG), an experienced class action settlement recovery consulting company, to assist our clients in researching potential opportunities to join class action lawsuits against pharmaceutical drug manufacturers. These class actions commonly develop as a result of anti-competitive practices undertaken by the drug manufacturers, and the intent is to recover funds for employer health plans that overpaid for drugs purchased on behalf of their employees due to artificially inflated and/or stabilized prices. There are typically several active lawsuits and/or class action settlements that fall into the category of “pharmaceutical benefit plan settlements” being litigated at any given time. While the number of these opportunities in any given year varies, there can be several ongoing at the same time.

MCAG researches potential class action opportunities for employers. Then, they help employers complete the necessary paperwork and become a class representative for what will ultimately become a class action settlement. Plan sponsors that act as class representatives can receive more money than they would from participating in a general settlement, but there is also more work because, in those cases, the plan would be suing the defendants directly. MCAG takes on most of that work for the employer. For more information about available opportunities, reach out to your EPIC representative and schedule a call with MCAG.

Reminder | Part D Online Disclosure to CMS due March 1 for Calendar Year Plans

Annually, group health plans must disclose to the Centers for Medicare and Medicaid Services (CMS) whether the prescription drug coverage offered to Medicare Part D eligible individuals is creditable or non-creditable. This disclosure is due no later than 60 days after the start of the plan year, which is March 1, 2026, for calendar year plans beginning January 1, 2026. The disclosure form is fairly simple and must be completed online. CMS provides the disclosure form along with instructions and screenshots showing what information is required. This disclosure is in addition to the Medicare Part D Notice of Creditable/Non-Creditable Coverage provided to individuals that is due annually before October 15. For more information, on required Medicare Part D disclosures and notices access our January 2025 Compliance Matters Alert.

HRSA Preventive Services Updates

Non-grandfathered group health plans must cover preventive services included in the updated Health Resources and Services Administration (HRSA)-supported Women’s Preventive Services Guidelines without cost-sharing under the Affordable Care Act (ACA). The cervical cancer screening guideline has been revised for plan years beginning in 2027 to reflect current evidence-based recommendations for average-risk women aged 30 to 65. The guideline retains existing options (Pap tests, co-testing, and primary high-risk human papillomavirus (hrHPV) testing every five years) and adds a recommendation that patient-collected (self-collected) hrHPV testing should also be covered. It also explicitly states that when additional testing (e.g., cytology, biopsy, extended genotyping) is clinically indicated to complete the screening process, those services are part of the cervical cancer screening guideline and must be covered accordingly.

Proposed Legislation: PBMs as ERISA Fiduciaries

A bipartisan bill introduced in December 2025 would amend the Employee Retirement Income Security Act (ERISA) to designate pharmacy benefit managers (PBMs) as fiduciaries when they provide services to employer-sponsored health plans. Under the proposal, PBMs would be legally required to act in the best interests of plan sponsors and participants, similar to how ERISA already treats other service providers. Additionally, PBMs would be required to disclose their compensation, including direct and indirect fees, rebates, discounts, and price concessions. Proponents argue that this increased transparency and fiduciary accountability will help employers better assess whether PBM arrangements are reasonable and aligned with plan cost-management goals. This, in turn, would address longstanding concerns about opaque pricing practices and misaligned incentives in the PBM industry.

ICHRA Premium Look-Up Table Updated

The affordability of an individual coverage health reimbursement arrangement (ICHRA) is tied to the lowest cost silver plan (LCSP) available on the public Exchange/Marketplace. The rates vary based on an employee’s worksite or residence, so the Centers for Medicare and Medicaid Services (CMS) publishes premium data via a Look-Up Table for Federally-facilitated Exchanges (FFEs) and State-based Exchanges using the Federal Platform (SBE-FPs). Employers can use this information to help determine affordability for their ICHRA offering. Access the CMS website for plan year data from 2019-2026.

Arkansas Rule 128 PBM Reporting

The next round of pharmaceutical benefit manager (PBM) reporting under Arkansas Rule 128 is due to the Arkansas Insurance Division (AID) on March 1, 2026. The new round of reporting will cover the second half of 2025, as data from January 2025 to June 2025 was due July 1, 2025.

On December 12, 2025, AID released a bulletin on Rule 128, commenting that the results of audits completed after prior submissions showed a lack of consistency between reimbursement rates reported by plans and pharmaceutical benefit managers.

Rule 128 was implemented with the intent of helping the Arkansas Insurance Division (AID) collect critical pharmaceutical information. AID Bulletin 18-2024 details what must be included in the reporting. In April 2025, a union group filed a complaint alleging that Rule 128 is preempted by the Employee Retirement Income Security Act (ERISA), and in response, the state of Arkansas filed a motion to dismiss, which was granted on September 2, 2025.

The rule is already in effect and is not preempted by ERISA, so it may require action from health plans whose PBMs are not reporting on their behalf. For more information on Rule 128, access our prior Alerts from March 2025 and October 2025.

San Francisco HCSO Top-Off Payments Due Soon

The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to pay a certain amount – a Health Care Expenditure (Expenditure) – toward their covered employees’ healthcare costs. The San Francisco Office of Labor Standards Enforcement (OLSE) regulates the HCSO.

In 2018, HCSO rules were amended to provide new methods for calculating healthcare expenditures in self-funded plans. Self-funded employers pay claims as they are incurred, and the preceding year’s average hourly expenditures meet or exceed that year’s expenditure rate for that employer. This is a calendar year calculation. If the employer has not met the required Expenditure, the employer may use another permissible method to make a top-off payment (such as contributions to the City Option or employees’ Health Savings Accounts), which are due by the end of February following the prior calendar year and reported in the Annual Reporting Form for the applicable year. In 2026, the top-off payment will be due on March 2, 2026.

For more information on the HCSO and the top-off payment, access our prior Alerts from February 2025 and April 2025.