By: HUB’s EB Compliance Team

Each year, the U.S. Department of Health and Human Services (“HHS”) issues a “Notice of Benefit and Payment Parameters” under the Affordable Care Act (“ACA”). This annual rule announcement is sometimes called the “Payment Notice.” Historically, a proposed version has been issued around December or January and finalized around May. This year’s was proposed in October, which is earlier than any prior one in recent memory.

However, starting in 2022, HHS committed to release the calculations for out-of-pocket maximum limits no later than January of the preceding calendar year. This allows even more time for employers to react to the changes. The calculations described in the guidance also determine the ACA Employer Mandate penalties for 2026.

2026 Out-of-Pocket Maximums

In the guidance memo, the ACA out-of-pocket maximum (OOPM) limits for 2026 will be $10,150 for self-only coverage and $20,300 for family coverage (defined as anything other than self-only coverage). This is a roughly 10.3% increase from the 2025 limits of $9,200 and $18,400, respectively.

As a reminder, HHS requires that the individual OOPM be embedded for each enrolled individual within the family OOPM. (Loosely defined, the embedded requirement applies an individual limit for each family member ahead of the family cap. This design helps a single family member access medical benefits sooner than having to meet the full family amount.) High deductible health plans will need to comply with the lesser of the Internal Revenue Service (IRS) OOPM and the ACA OOPM. Detailed information about the challenges connected to navigating these different thresholds is available in this earlier article.

Projected 2026 Employer Mandate Penalties

The same calculation that applies for purposes of the OOPM limits is also used to determine the change in the ACA employer mandate penalties (among other items). Given the approximately 10.3% increase in out-of-pocket maximums and the premium adjustment percentage in the final rule, we project that the 2026 employer mandate penalty change will be similar: $3,200 for the (a) penalty (up from $2,900 for 2025) and $4,800 for the (b) penalty (up from $4,350 for 2025). This represents the first time the (a) penalty has gone over $3,000. We await official confirmation from the IRS.

Takeaways

While these changes are not effective until 2026, the much earlier announcement gives employers ample time to prepare for 2026 enrollments. The most immediate impact from a design standpoint is the change to out-of-pocket-maximums applicable to all insured and self-insured non-grandfathered medical plans.

The increases are significant. The penalty figures are consistently increasing to higher and higher levels creating more incentive for employers to ensure they are making compliant offers of coverage to their full-time employees.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your organization’s particular needs.