Compliance Corner

Welcome to Novo Connection's Compliance Corner, where transparency meets expertise in your new benefit program. We understand the evolving nature of compliance and how it can quickly become complex. At Novo Connection, our commitment to transparency ensures that you receive accurate and actionable information. Our webpage serves as a reliable resource for groups and advisors, offering insights, updates, and solutions tailored to navigate new compliance laws effortlessly.

2026 Updates

Quarter 1 Compliance Updates

Complying with ACA Reporting Requirements for 2026

The Affordable Care Act (ACA) created reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056.

Under Section 6055, self-insuring employers and other parties that provide minimum essential health coverage must report information on this coverage to the IRS and to covered individuals upon request.
Under Section 6056, applicable large employers (generally, those with 50 or more full-time employees) are required to report information to the IRS, and to their full-time employees upon request, about their compliance with the employer shared responsibility (pay or play) rules and the health coverage they have (or have not) offered.

This checklist outlines key steps for employers to comply with the ACA’s reporting requirements. Keep in mind that a growing number of states have enacted their own health coverage reporting requirements. Employers need to comply with the federal ACA reporting requirements and any applicable state reporting requirements.

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Section 6055 Questions

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File Returns - March 31, 2026

Information Required to be Reported

Sections 6055 and 6056 require the reporting of several data elements that are not required by taxpayers for preparing their tax returns or by the IRS for tax administration.

Compile Information for Section 6055 Reporting:

The name, address and taxpayer identification number (TIN) of responsible individuals (or date of birth if a TIN is not available). The responsible individual is generally the person who enrolls one or more individuals (which may include themselves) in minimum essential coverage (MEC). This may be the primary insured, employee, former employee, or other related person named on the coverage application.
The name and TIN (or date of birth if a TIN is not available) of each individual covered under the policy and the months for which the individual was enrolled in coverage and entitled to receive benefits.

Compile Information for Section 6056 Reporting:

A certification of whether the ALE offered its full-time employees (and their dependents) the opportunity to enroll in MEC under an eligible employer-sponsored plan, by calendar month.
The months during the calendar year for which MEC under the plan was available.
Each full-time employee’s share of the lowest-cost monthly premium for self-onlycoverage providing minimum value offered to that employee, by calendar month.
The number of full-time employees for each month during the calendar year.
The name, address and Social Security number (SSN) or TIN (or date of birth if a TIN is not available) of each full-time employee and the months (if any) during which they were covered under the eligible employer-sponsored plan during the calendar year.

File Returns With IRS by Applicable Deadline in 2026

For the 2025 calendar year, file returns electronically with the IRS by March 31, 2026.

Under Code Section 6055, reporting entities will generally file Forms 1094-B (a transmittal) and 1095-B (an information return).
Under Code Section 6056, reporting entities file Forms 1094-C (a transmittal) and 1095-C (an information return). Employers reporting under both Sections 6055 and 6056 (i.e., ALEs with self-funded plans) use a combined reporting method by filing Forms 1094-C and 1095-C.

Extension Requests: Reporting entities may receive an automatic 30-day extension to file with the IRS by completing and filing Form 8809 (Application for Extension of Time To File Information Returns) by the due date of the returns.

Work with a third-party vendor to ensure electronic filing is completed through the ACA Information Returns (AIR) Program. In general, the AIR program is used by:

Software developers who develop software for creating electronic files for ACA information returns
Transmitters who will transmit information returns to the IRS on behalf of reporting entities
Issuers who have the capability to transmit information returns directly to the IRS on their own behalf

The IRS’s electronic filing guidance is not generally intended to be used by employers who are required to file under Section 6055 or Section 6056, but it can provide some useful information on standards and procedures for returns transmitted through the AIR Program.

Furnishing Requirements

Reporting entities are no longer required to automatically send Forms 1095-B and 1095-C to covered individuals. Reporting entities can now post a notice on their websites informing individuals that they may request a copy of the statement.

The requirement to provide the statement is met as long as the notice is:

Clear, conspicuous and easily accessible to all covered individuals (the notice must include an email address, a physical address to which a request may be sent, and a telephone number to contact the reporting entity);
Timely posted, which for calendar year 2025 is by March 2, 2026 ; and
Retained in the same website location through Oct. 15, 2026.

In addition, any request must be fulfilled by the later of Jan. 31, 2026, or 30 days after the date of the request. The statement may be provided electronically if the recipient has affirmatively consented at any prior time.

Reporting entities that choose not to use this alternative manner of furnishing may instead provide Forms 1095 to each covered individual and full-time employee (as applicable) by March 2, 2026.

Major PBM Reforms Advance in Congress as DOL Proposes New PBM Fee-Disclosure Rule

Federal oversight efforts directed at the pharmaceutical benefit manager (PBM) industry have expanded in recent years, culminating in several significant actions. On Feb. 3, 2026, the Consolidated Appropriations Act (CAA) of 2026 was signed into law, a funding package containing a broad range of healthcare provisions, including significant PBM industry reforms. Separately, the U.S. Department of Labor (DOL) announced on Jan. 28, 2026, a proposed rule that would establish new PBM fee-disclosure obligations, further underscoring the federal government’s increasing focus on regulatory oversight of the industry.

Background

PBMs are third parties that manage most health plans’ prescription drug benefits. Health plans generally rely on PBMs to process prescription drug claims, design pharmacy networks and negotiate rebates from drug manufacturers. In recent years,the PBM industry has faced growing scrutiny amid questions from stakeholders regarding lack of PBM transparency and certain PBM practices, such as retaining a share of drug manufacturer rebates and use of spread pricing. In response, state PBM laws have surged nationwide in the absence of federal regulations.

CAA Bill Highlights

To address these growing concerns, the CAA bill includes comprehensive PBM industry reforms. Key highlights for health plan sponsors and health insurance issuers include the following:

Mandatory PBM Reporting

PBMs must provide group health plans and health insurance issuers detailed prescription drug spending data at least twice per year, or quarterly if requested. PBMs must also supply drug spending summary documents that plans can share with participants and beneficiaries upon request.

Group Health Plan Notice Requirements

Each year, group health plans must provide participants and beneficiaries with a written notice explaining that their PBM is required to submit prescription drug spending reports. This notice may be incorporated in plan documents or provided separately to individuals. Upon request, plans must also furnish:

The PBM’s summary document; and
For large plans, information showing the difference between what the plan paid the PBM and what the PBM paid the pharmacy for a covered drug associated with the requesting participant or beneficiary’s claim.

Penalties

Failure to provide the required information by a PBM or group health plan may result in a civil monetary penalty of $10,000 foreach day the information is not reported. Additional penalties may apply if false information is provided. Penalties may be waived for good-faith efforts to comply.

Full Rebate Pass-through to Plans

In order for their contracts to be considered reasonable under the Employee Retirement Income Security Act (ERISA)compensation disclosure rules, PBMs must pass on 100% of all rebates, fees, alternative discounts and other remuneration to group health plans and issuers. These rebates, fees and alternative discounts must generally be paid on a quarterly basis,fully disclosed and enumerated to the group health plan or issuer, and returned to the PBM if an audit by a plan sponsor,issuer or designated third party indicates overpayment to the plan. If a PBM fails to remit required rebates, plan fiduciaries will not be treated as violating ERISA as long as they satisfy certain requirements.

In addition, the bill expands ERISA’s “covered service provider” definition specifically to encompass PBM services , along with other health plan related services. ERISA requires covered service providers to disclose specified information about their services and all expected direct and indirect compensation to ensure plan fiduciaries have the information necessary to evaluate the reasonableness of service contracts.

Medicare Part D Reforms

In addition, the bill contains several Medicare Part D-related reforms, including:

Prohibiting PBM compensation in Medicare Part D from being tied to the manufacturer’s list price of a drug;
Requiring the Centers for Medicare & Medicaid Services (CMS) to define and enforce “reasonable and relevant” Medicare Part D contract terms, including reimbursement and dispensing fee information, with enforcement authority to impose monetary penalties; and
Authorizing CMS to track pharmacy payment trends and pharmacy inclusion in PBM networks, including a designation of“essential retail pharmacies.”

DOL Proposal

Similar to the CAA bill, the DOL’s proposed rule would significantly expand PBM disclosure obligations under ERISA’s compensation disclosure provisions by implementing an April 2025 Executive Order aimed at improving employer health plan transparency regarding PBM compensation.

Specifically, PBMs would be required to provide compensation disclosures to fiduciaries of ERISA-covered self-insured group health plans, enabling those fiduciaries to assess the reasonableness of PBM compensation in fulfilling their fiduciary duties under ERISA. The proposal would require PBMs to disclose the following information:

Rebates and other payments from drug manufacturers;
Compensation received when the price paid by the plan for a prescription drug exceeds the amount reimbursed to the pharmacy; and
Payments recouped from pharmacies in connection with prescription drugs dispensed to the plan.

The proposed rule would also allow plan fiduciaries to audit the accuracy of PBM disclosures and provide additional relief for plan fiduciaries if their PBM fails to meet its obligation.

While the proposal excludes fully insured group health plans, the DOL stated that disclosure obligations for these plans are being reserved for future action and specifically requested public comments on this issue. Public comments on the proposal are due on or before March 31, 2026.