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April 2, 2026

Benefits News to Know

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April 2, 2026

Compliance Deadlines

  • March 31, 2026 – File Forms 1094/1095 with the IRS (if filing electronically)
  • April 1, 2026 – Distribute SPD & COBRA notices for new 1/1 plan participants
  • June 1, 2026 – File annual RxDC & Healthcare Spending Report via CMS
  • July 31, 2026 – File Form 5500 via DOL’s eFAST2 portal
  • July 31, 2026 – Pay PCORI fee for self-funded plans using IRS Form 720

Cafeteria Plans Must Have a Plan Document

Cafeteria Plans, AKA, Section 125 Plans (named after the IRS Statute), offer a vehicle for employer and employee tax savings. A 125 Plan offers employees the option of purchasing employer-sponsored benefits on a pre-tax basis. Many employers are not properly documenting such plans. Under statutes, such plans must be in writing. Review key requirements below and read the full blog for guidance .

Pre-tax salary reductions are only permitted if they are made under a written cafeteria plan. If no written plan exists, or if the document is outdated or inconsistent with actual operations, the IRS may treat all employee contributions as taxable income. A common misconception is that payroll practices or other enrollment materials can substitute for a written plan; however,SPDs, benefit summaries, or other insurance carrier certificates do not replace a Section 125 plan document.

The plan must be formally adopted and should clearly spell out:

  • Eligible employees
  • Benefits offered on a pre-tax basis
  • Election rules (including irrevocability and change-in-status events)
  • Other administrative provisions required under Section 125.

Is your Self-Funded Plan HIPAA Compliant?

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1. Does your company receive, transmit, or maintain PHI? Likely, yes. A HIPAA process must be in place.

2. Do you have HIPAA Privacy & Security Policies in place? These are required by HHS.

3. Who is the named Privacy Officer in the Privacy Policy that outlines practices to protect PHI?

4. Is your Notice of Privacy Practices current? This was recently updated for Part 2 rules with a Model Notice.

5. Have you conducted a Risk Assessment & created a Security Policy? Required for all self-funded plans.

6. Do you have Business Associate Agreements on file with all plan providers? Required in writing.

7. How often do you assess your cybersecurity & fiduciary health? Annually is suggested.

Wellness Program “Incentives”

Q:“We want to offer “healthy lifestyle” information sessions next year to promote wellness. Employees who attend every session will receive a cash bonus of $200 at the end of the year. Will employees be taxed on this wellness incentive?”

A:“Rewards that employers provide to employees who participate may be taxable. Rewards such as lower major medical plan premiums or additional employer contributions to a health FSA, HRA, or HSA would be excluded from an employee’s income and would not be subject to income or employment tax withholding, provided that applicable nondiscrimination requirements are satisfied. However, rewards in the form of cash (e.g., cash bonuses, like these) or cash equivalents (e.g., gift cards or gift certificates) are subject to federal income and employment taxes and withholding. They are also reportable on the recipient’s Form W-2

Certain wellness program designs purports to offer provide tax-free payments to employees. Such programs are often funded with employee salary reduction contributions—i.e., employees pay a high “premium” to participate. The programs then provide cash payments as a tax-free “reward” for the employee’s participation in certain wellness activities.Caution: the payments are effectively repayments of the employees’ pre-tax salary reduction contributions and there is no basis for excluding them from income.Employers considering such arrangements should carefully review them with counsel or simply avoid them.

Wellness programs are typically implemented by employers and funded by employer contributions; programs requiring employee salary reductions must be reviewed.Arrangements that purport to provide additional take-home pay or additional benefits with no reduction in net pay are especially suspect.HIPAA, GINA, and the ADA must also be considered when designing wellness programs and incentives. Because this question is for a wellness incentive that does not depend on health results or require employees to provide health information, it avoids often complex issues.”~Source: Thompson Reuters, 2026. Edited for concision

Disclaimer: Content presented is not, nor is it intended to be legal advice; it is for general education purposes. Please consult local legal & tax counsel for specific guidance regarding any one welfare benefits plan. Content is the sole property of Patriot Growth Insurance Services, LLC, and is not to be modified in any way or used for any other purpose. © 2026 Patriot Growth Insurance Services, LLC.