On August 27, 2025, the U.S. Food and Drug Administration (FDA) updated their approval and recommendations for COVID-19 vaccines, which has caused confusion for insurers, plan sponsors and plan participants. The shots from Moderna and Novavax are now only approved for seniors and individuals with high-risk medical conditions, and for the rest of the population, only Moderna’s vaccine remains available after doctor recommendation. This comes right as the beginning of cold and flu season arrives. Guidance is still needed (and is expected in late September) from the Advisory Committee on Immunization Practices (ACIP), as insurers utilize their guidance to determine which immunizations to cover. It will be important to see what ACIP recommends after they meet later this month to determine what next steps should be.

On August 26, 2025, in response to the U.S. Supreme Court’s June ruling in the case of Braidwood v. Becerra, the U.S. Fifth Circuit Court of Appeals has directed the federal trial court that initially heard the case to address whether the Health Resources and Services Administration (HRSA) and the Advisory Committee on Immunization Practices (ACIP) have proper authority to issue preventive health service recommendations under the Affordable Care Act (ACA). As background, the ACA requires group health plans and insurers to provide specified preventive services without cost-sharing, including certain evidence-based items and services recommended by the United States Preventive Services Task Force (USPSTF), the HRSA and the ACIP. The Supreme Court’s ruling in June held that the USPSTF was constitutionally appointed, but it did not rule on the constitutionality of the appointment of the members of ACIP and HRSA. Accordingly, the federal trial court is expected to rule on this remaining issue.

On August 13, 2025, the U.S. District Court for the Eastern District of Pennsylvania (the “District Court”) vacated the expanded exemptions (“The Religious Exemption Rule” and “The Moral Exemption Rule”) to the Affordable Care Act’s (ACA) requirement that non-grandfathered group health plans cover contraceptives and contraceptive services without imposing cost-sharing requirements (the “Contraceptive Coverage Mandate” or “CCM”). As background, there is an exemption to the CCM in place for certain religious employers and employers who have religious or moral objections to the CCM (subject to an approval process) that allows such employers to not have to cover those services on a first dollar basis. The regulations that expanded these exemptions to the CCM were enjoined by a federal district court, and that decision was then upheld by the U.S. Third Circuit Court of Appeals, but the U.S. Supreme Court reversed the decision, rejecting arguments that the exemption regulations were invalid. The Supreme Court held that the ACA gives the agencies broad discretion to define preventive care and screenings, and to create or expand religious and moral exemptions. The Supreme Court then sent the case back to the District Court, which vacated (invalidated) the regulations in their entirety, ruling that they are arbitrary and capricious under the Administrative Procedures Act (APA), and that the agencies that promulgated them did not provide a satisfactory explanation for the religious beliefs rule and considered improper factors in creating the moral objections rule.

On August 1, 2025, the city of San Francisco released the updated rates for the Health Care Expenditure (“Expenditure”) for the 2026 calendar year. As background, the City of San Francisco has an extraterritorial law called the Health Care Security Ordinance (HCSO) for all employers with at least 20 employees in any location if at least one employee works within San Francisco. The HCSO requires that covered employers spend a minimum amount on healthcare (the Expenditure amount) for each hour worked by an employee within San Francisco, provided that the employee worked for at least 90 days and averages at least 8 hours worked per week within the city. The 2026 Expenditure rates by employer size have increased to $4.11 per hour, with a maximum of $706.92 per month (for employers with 100 or more employees), $2.74 per hour with a maximum of $471.28 per month (for employers with 20-99 employees or 50-99 employees for non-profits) respectively. Additionally, employees who are considered managerial, supervisory and confidential, and who make more than $128,861 per year ($61.95 per hour), are exempt from the Expenditure requirement in 2026. Covered employers should ensure they are using the updated rates in 2026.

On July 22, 2025, the IRS released the updated ACA Employer Shared Responsibility (“Employer Mandate”) penalties for the 2026 calendar year. The Employer Mandate penalties apply to Applicable Large Employers (ALEs) for failing to offer coverage, or for failing to offer coverage that meets certain minimum standards. The updated 2026 penalties are $3,340 per full-time employee for not offering minimum essential coverage (MEC) to at least 95% of the ALE’s full-time employees and their dependent children (increased from $2,900 in 2025) and $5,010 per full-time employee that receives subsidized Exchange coverage due to lack of affordability (increased from $4,350 in 2025). Notably, while last year, these penalties decreased for the first time since their inception, this year, there is a significant increase in the penalty amounts.