NEWSROOM

The start of the new year brings more than fresh deductibles and an end to Q4 open enrollment meetings. For brokers and their clients, January is when the tone is set for how health plans will operate – compliantly and consistently – for the year ahead. While many compliance calculations technically look backward, the calculations, decisions, and actions taken now shape what happens going forward.

Annual Group Size Determinations

Early each calendar year, employers must calculate and confirm their workforce size based on the prior calendar year to determine key compliance responsibilities. These group size calculations drive several important obligations, including:

• ACA applicability – Whether the employer qualifies as an Applicable Large Employer (ALE) and is subject to the ACA employer mandate and related reporting requirements.

• COBRA applicability – Whether federal COBRA or a state mini-COBRA law applies (Cal-COBRA, Arizona Mini-COBRA, etc.)

• Medicare primary vs. secondary payer status – This determines coordination of benefits for Medicare-eligible employees and dependents

Each of these determinations uses different counting rules. ACA and COBRA applicability are generally set on January 1 each year. Medicare primary versus secondary payer status is measured across 20 or more calendar weeks over a two-year period, though many employers align this determination with other January compliance calculations for administrative consistency.

Midyear Group Size Fluctuations

A common misconception is that employer group health compliance obligations can be revisited if headcount fluctuates midyear. In reality, ACA and COBRA applicability are fixed for the calendar year once established. Mid-year workforce changes instead affect next year’s compliance status.

Medicare primary versus secondary payer status is more flexible, as it is based on the employer’s selected 20 or more calendar weeks over a two-year period. While this status can technically change midyear, many employers effectively lock in their determination for the year unless their selected weeks change.

Employers should ensure these determinations – and the resulting compliance obligations and policies – are clearly documented and applied consistently for the year ahead.

Employee Education in January

As we move into 2026, employees are paying closer attention to their health plans than ever before. Rising health care costs and resulting premium increases have heightened awareness, while the start of the calendar year brings deductible resets, fresh out-of-pocket maximums, and claims hitting new balances.

January is an ideal time for employers to reinforce basic benefits education, including:

• How deductibles, coinsurance, copayments, and out-of-pocket maximums work

• What it means when these amounts reset at the beginning of the year

• How network usage impacts costs

• When to use primary care, urgent care, or the emergency room

Employers cannot directly control health care inflation, but they can help employees better understand how to navigate the benefits they already have. Educated plan participants who understand their coverage and practice informed consumerism tend to have better experiences and outcomes.

Tools and Support

Word & Brown offers a variety of compliance guidance and resources to support brokers and their employer-clients during this annual reset and throughout the year. For more information, refer to the WB Compliance Wiki – and keep an eye on it in 2026 as additional resources and updates are added.