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On Oct. 9, 2025, the IRS released Revenue Procedure 2025-32 (Rev. Proc. 25-32), which includes the 2026 inflation-adjustedlimit on employee salary reduction contributions to health flexible spending accounts (FSAs). For plan years beginning in 2026,the adjusted dollar limit on employees’ pre-tax contributions to health FSAs increases to $3,400 . This is a $100 increase fromthe 2025 health FSA limit of $3,300.  The Affordable Care Act (ACA) imposes a dollar limit on employees’ salary reduction contributions to health FSAs. This limitstarted at $2,500 for plan years beginning on or after Jan. 1, 2013, and has been adjusted for inflation for subsequent planyears. Employers should ensure their health FSAs will not allow employees to make pre-tax contributions over $3,400 for the2026 plan year. Employers can impose a lower limit on employees’ pre-tax contributions to a health FSA.  Employers should confirm that their health FSA contribution limit is included in the plan’s documents and communicate it toemployees at enrollment time.  Pre-tax Contributions  The ACA’s dollar limit applies only to employees’ pre-tax contributions to a health FSA. Nonelective employer contributions toa health FSA (for example, matching contributions or flex credits) generally do not count toward the health FSA contributionlimit. However, if employees may elect to receive the employer contributions in cash or as a taxable benefit, then thecontributions must be treated as salary reductions and counted toward the health FSA contribution limit.  Per-employee Limit  The health FSA limit applies on an employee-by-employee basis. Each employee may only elect up to $3,400 in salaryreductions in 2026, regardless of whether they have family members who benefit from the funds in that FSA. However, eachfamily member eligible to participate in their own health FSA has a separate limit. For example, a married couple who havetheir own health FSAs can both make salary reductions of up to $3,400 for 2026, subject to any lower employer limits.   Health FSA Carryovers  As an exception to the use-or-lose rule, employers with health FSAs may allow employees to carry over a certain amount offunds remaining at the end of a plan year to reimburse eligible expenses incurred in the plan year immediately following. Themaximum carryover amount is adjusted annually for inflation. For 2026, Rev. Proc. 25-32 increases the maximum carryover limitto $680 (from $660 for 2025 plan years). Employers that allow carryovers may impose their own limit that is lower than themaximum carryover limit.

Written by Kara Vines, Sr. Safety Consultant Running commercial vehicles means facing costly risks: regulatory fines, false accident claims, and skyrocketing insurance premiums. The use of camera technology in the trucking industry is drastically increasing, mostly with the forward-facing (or road facing) cameras.  Dashboard Cameras systems continue to grow in popularity, both with motor carriers and drivers because of their ability to accurately capture safety events.  Many times, drivers are concerned with privacy issues but quickly accept and appreciate the cameras once they prove to mitigate potential claims and lawsuits.  In a recent study sponsored by the Federal Motor Carrier Safety Administration (FMCSA) conducted by the American Transportation Research Institute (ATRI), truck drivers said that cameras are their second most preferred in-cab technology. The Problem: Hidden or Surprise Fleet Costs False accident claims : $25,000+ in legal fees per incident Insurance penalties : Poor safety records drive up premiums dramatically Driver turnover : $10,000+ to replace each driver lost to compliance frustration Solution: Dashboard Cameras What They Do Modern dash cams are your 24/7 legal defense systems that record the road, potentially monitor driver behavior, and capture incidents even when your equipment is parked. Your Protection Accident defense : One lawsuit where footage proves innocence saves $50,000+ in legal costs 20% crash reduction : Virginia Tech study shows significant safety improvement Fraud prevention : Video evidence immediately exposes staged accidents Insurance benefits : Fewer at-fault claims lead to lower premiums over time Key Features Forward cameras : Document road incidents Driver cameras : Detect distracted or drowsy driving, and help reduce common violations of your Unsafe Driving BASIC such as seatbelt violations Parking mode : Catch vandalism and hit-and-runs ROI You Can Count On Immediate Savings: Eliminate violation fines: $1,000+ per incident avoided Defend against false claims: $25,000+ per case Long-term Benefits: Lower insurance premiums from improved safety records Operational efficiency from automated record-keeping Typical Payback : 6-12 months for most fleets Getting Started Common Concerns Addressed "Drivers won't like being monitored"  Frame it as protection, not surveillance. When falsely accused, video evidence clears their name immediately. "Technology seems complicated"  Modern devices are designed for simplicity. Most drivers learn basics in under 30 minutes. "Privacy issues"  Be transparent about data usage and establish clear access policies. The Bottom Line These aren't just compliance tools - they're profit protectors. The question isn't whether you can afford this technology, but whether you can afford the next violation, false claim, or insurance rate hike without it. Start with compliance, expand for protection, and watch these simple devices transform your biggest business risks into competitive advantages. Kara Vines Sr. Safety Consultant KVines@smscsafety.com

Cottingham & Butler and the Iowa insurance community are celebrating the induction of John Butler, the visionary leader behind Cottingham & Butler's success, into the prestigious Iowa Insurance Hall of Fame. This recognition honors Butler's six decades of leadership, innovation, philanthropy, and unwavering commitment to his clients and colleagues. Since taking the helm of Cottingham & Butler in the late 1950s, Butler has transformed the company from a small local agency founded by his great-grandfather in 1887 into a national powerhouse. Under his leadership, Cottingham & Butler has grown to become the 3rd largest privately held insurance broker in the U.S., with nearly 1,400 employees across 26 states and annual revenues surpassing $800 million. "John's commitment to serving clients' best interests and his unique approach to developing talent have been the cornerstone of our success," said David Becker, President & CEO of Cottingham & Butler. "His induction into the Iowa Insurance Hall of Fame is a fitting testament to his profound impact on our company and the industry." Butler's innovative spirit and client-centric approach have been the driving force behind numerous groundbreaking initiatives. He revolutionized how employers manage health plan costs with the establishment of Self-Insured Services Company and set new standards for third party administration through Cottingham & Butler Claim Services. Always thinking ahead of the curve, Butler launched divisions for safety consulting, managed care, and captive insurance, long before these became industry trends. "John's relentless pursuit of innovation has not only propelled Cottingham & Butler to the forefront of the insurance industry but has also deeply influenced the way we do business," said Andrew Butler, Executive Chairman of Cottingham & Butler. "His induction into the Iowa Insurance Hall of Fame is a fitting recognition of his contributions to our company, our clients, and our community, and is a proud moment for our family and a testament to the legacy he has built.” But perhaps Butler's greatest legacy is his ability to identify and cultivate exceptional talent. With a firm belief in the potential of people, he has built a culture of continuous learning and growth at Cottingham & Butler. Butler's commitment to teaching the industry and empowering colleagues to push beyond their comfort zones has been instrumental in the company's success. "John has an incredible ability to see the potential in people and to inspire them to achieve greatness," added Becker. "He has mentored countless individuals throughout his career, and his impact on the industry extends far beyond the walls of Cottingham & Butler." Beyond his professional achievements, Butler is renowned for his extensive philanthropic efforts and commitment to his community. His lifelong passion for education has led to long-standing support for numerous schools and youth programs, including serving as a Trustee at the University of Dubuque for over 40 years. Butler's generosity has also significantly impacted the arts, healthcare, and community development, leaving an indelible mark on the lives of countless individuals in Dubuque and throughout Iowa. "John is known as a man of deep integrity and vision," said Joel Wood, President & CEO of the Council of Insurance Agents & Brokers. "Insurance is an integral part of the glue that holds our national economy together, and in so many ways, John is the exemplar of what makes this industry so extraordinary." At age 94, Butler remains actively engaged as Chairman of Cottingham & Butler, offering strategic guidance and mentorship to the company's executive leadership team. His induction into the Iowa Insurance Hall of Fame stands as a testament to his impact as a visionary leader, a guardian of his family's legacy, and a dedicated community advocate. This recognition celebrates his bold thinking, dedication to clients and colleagues, and the lasting impact he has left on the insurance industry and beyond. "I am honored to carry on the legacy of my father, grandfather, and great-grandfather," said John Butler. "This recognition is a testament to the hard work and dedication of my family and the incredible team at Cottingham & Butler who have made our success possible. As I reflect on my journey, I am reminded of the importance of staying true to our core values, embracing innovation, and always putting our clients and our people first. These guiding principles have been the foundation of our success and will continue to light the way for future generations."

From a surprising 52% increase to just 4.7% - this Chicago suburbs manufacturing company avoided over $323,000 in additional premiums while removing $1.5+ million in ongoing claims through strategic workforce planning and innovative benefit solutions. The Situation A Chicago suburbs manufacturing company with 183 eligible employees faced a 52% renewal increase, translating to over $323,000 in additional annual premiums. This stemmed from an aging workforce with multiple high-dollar claims creating unsustainable cost pressures. With limited resources and a workforce heavily concentrated in older age demographics, traditional cost-management approaches were insufficient when addressing this challenge. Key Results 52% to 4.7% Reduction Transformed large renewal increase into manageable growth while maintaining coverage quality. $1.5M Reduction in Claim Exposure Reduced large claimant exposure through participant education on alternative plan options - providing improved coverage. Win-Win Situations Implemented best-in-class Government Assistance Program resources to educate employees eligible for coverages like Medicare on which options helped reduce their out-of-pocket and premium costs the most. Why They Needed Change Premium Increase: 52% increase in medical premiums threatened organizational financial stability with over $323K in additional annual costs Aging Workforce: 3 largest claimants over age 60, 2 over 65, with 20 total members over 65 driving unsustainable utilization Large Claims Concentration: 8 members hit 50% of their specific deductible, accumulating $1.1M in paid claims with 4 exceeding $90K specific limits Limited Traditional Options: Standard cost-containment measures insufficient for addressing concentrated high-dollar claim exposure

What began as a 42% premium increase transformed into substantial savings through innovative medical treatments, strategic workforce transitions, and risk management. This transformation delivered over $450,000 in total impact while maintaining employee satisfaction. The Situation An Illinois manufacturing company with 196 enrolled employees faced escalating healthcare costs driven by an aging workforce and concentrated high-dollar claims. The organization needed immediate solutions to transfer risk and implement cost-reduction strategies. Like many manufacturers with tenured workforces, they confronted demographic-driven utilization increases and catastrophic claims concentration that threatened long-term plan sustainability. Key Wins $93,000 in Unnecessary Surgery Avoidance Implemented innovative treatment plan to help employees with musculoskeletal problems avoid the expensive surgeries and long recovery times. Win-Win Situations Implemented best-in-class Government Assistance Program resources to educate employees eligible for coverages like Medicare on which options helped reduce their out-of-pocket and premium costs the most. $450K Overall Savings Through education of employees eligible for alternative coverages, and implementation of innovative treatment plans for outpatient surgeries. Why They Needed Change Increase in Claims: Overall net claims were up 37%from prior plan year, with gross cost per employee jumping 42%, creating unsustainable financial pressure. Aging Workforce Demographics: The risk profile of the group projected their claims experience to be 30%higher than industry benchmarks – driven by an older, male-dominated demographic. Catastrophic Claims Concentration: 17 members hit 50% of their $65K specific deductible, with 8 exceeding limits, resulting in $1,265,364 total exposure. Limited Traditional Solutions: Standard cost-containment measures insufficient to address magnitude of demographic and claims concentration challenges.

The American Transportation Research Institute (ATRI) has released its 2025 findings from  An Analysis of the Operational Costs of Trucking , providing critical data on cost and performance trends shaping the trucking industry today. Overall Operating Costs In 2024, the average cost to operate a truck was $2.26 per mile, reflecting a slight 0.4% decrease from the previous year. However, when excluding fuel costs, non-fuel operating expenses rose 3.6% to $1.779 per mile — the highest level recorded in ATRI’s history. Cost Breakdown Highlights Fuel and Maintenance:  Both fuel expenses and repair/maintenance costs declined compared to 2023. Driver Wages:  Driver wages increased by 2.4%, slightly below the inflation rate. Truck and Trailer Payments:  These payments rose by 8.3%, reaching a record high of $0.39 per mile. Driver Benefits:  Costs increased 4.8%, reaching $0.197 per mile. Profitability Impact The trucking industry continues to face tight margins. Average operating margins were below 2% across all sectors except less-than-truckload (LTL). The truckload segment reported an average operating margin of -2.3%, highlighting ongoing financial pressures. Operational Adjustments Several operational impacts were noted as carriers respond to market conditions: Truck capacity declined by 2.2% as fleets sold or sidelined trucks. Empty miles increased to an average of 16.7%, indicating underutilized capacity. The number of drivers per truck decreased to 0.93. Non-driver staff headcount was reduced by 6.8%. These improvements demonstrate ongoing efforts to maintain efficiency and reliability. Benchmarking and Performance Analysis Carriers participating in ATRI’s benchmarking program receive customized reports comparing their operational performance to anonymized peer groups of similar size and sector. These insights are valuable for identifying cost management opportunities and enhancing operational effectiveness. Full Report Access The complete ATRI report is available at https://truckingresearch.org/2025/07/an-analysis-of-the-operational-costs-of-trucking-2025-update Sources American Transportation Research Institute (ATRI),  An Analysis of the Operational Costs of Trucking , 2025 Report ATRI Website:  https://truckingresearch.org Industry Cost and Performance Benchmarks, ATRI Data Sets, 2024-2025

Robust insurance coverage is a key piece of effective risk management. A single uninsured event can lead to severe financial disruption, halt operations and threaten long-term viability. Yet, despite these risks, underinsurance remains a frequently overlooked vulnerability. Whether due to outdated valuations or budget decisions, carrying insufficient coverage can leave businesses exposed. Business owners need to be aware of the causes and consequences of underinsurance and take steps to address it. Several factors contribute to underinsurance in businesses, including the following: Outdated property valuations - Business owners may overlook the need to routinely update the value of their buildings, equipment or inventory, resulting in coverage that doesn’t accurately reflect current replacement costs. Business growth without policy changes - Business owners may add staff, change locations or increase assets without adjusting their insurance coverage, creating new exposures and increasing the risk of uncovered losses. Misunderstanding policy terms - Business owners may misinterpret complicated insurance policy language, leading to false assumptions about what is covered, when coverage applies and how limits or sublimits work. Fixating on premiums - Business owners may focus on minimizing insurance costs without considering the implications of reduced coverage limits, broader exclusions or how higher deductibles may compromise coverage. Neglecting emerging risks - Business owners may fail to account for new threats such as cyberattacks, climate-related events or supply chain disruptions that may not be covered under standard policies. The financial and operational consequences of underinsurance can be significant and include: Partial or denied claims - If coverage limits are too low or exclusions apply, insurance may not fully cover the cost of losses. This can leave the business responsible for the remaining expenses. Lengthy downtime - Coverage should be in place to adequately cover loss scenarios. For example, without business interruption coverage, a business may struggle to meet ongoing expenses during recovery following significant property damage, increasing the risk of prolonged closures or permanent shutdown. Regulatory and legal exposure - Insufficient liability coverage can leave businesses vulnerable to fines, penalties or lawsuits, particularly in highly regulated industries. Reputational damage - Delays in service or failure to meet obligations due to uninsured losses can erode client trust and damage long-term relationships. To minimize underinsurance risks, business owners should regularly reassess their insurance coverage, particularly after operational changes (e.g., expansion, new hires or equipment upgrades). Obtaining professional appraisals of property and assets is also crucial, especially during periods of inflation or supply-chain volatility. Additionally, businesses should evaluate whether their existing policies account for emerging risks, including cyberthreats, climate-related events or evolving liability exposures. Business owners should carefully examine policy terms and understand exclusions to reduce the risk of insurance shortfalls. Working with a knowledgeable broker or agent can help uncover insurance gaps and ensure coverage closely aligns with the business’s current operations, assets and evolving risk landscape. Contact us today for more risk management information.

Artificial intelligence (AI) is rapidly changing how businesses function, offering powerful tools to enhance efficiency, strengthen security and improve customer engagement. To adopt AI effectively, business leaders must understand both its strategic advantages and potential downfalls to make informed decisions that align with long-term objectives. AI offers a range of practical applications that can help businesses operate more strategically, securely and efficiently, including: Resolving problems before they happen - AI-powered tools assist businesses with anticipating and addressing issues early. For example, route optimization software can actively adapt delivery plans based on traffic, weather or vehicle capacity. Similarly, inventory planning tools can forecast demand to prevent shortages. Automating repetitive tasks - AI programs can streamline operations by performing repetitive tasks like generating invoices, freeing up time for high-value activities. Improving security - AI can detect cyberthreats, identify vulnerabilities and respond to suspicious activity faster than manual systems, helping businesses stop cyberattacks before they escalate. Analyzing data - AI analytic tools can efficiently examine large volumes of business data to spot trends, inefficiencies and growth opportunities. These insights can help businesses make informed decisions, lower costs and identify new revenue streams. Generating and managing content - AI can create product descriptions, draft and schedule social media posts, and write responses to online reviews to support marketing and brand engagement initiatives. Enhancing customer service - AI-powered chatbots can respond to common questions, help with orders and provide 24/7 support, improving the customer experience. However, understanding the potential risks of AI is crucial for businesses to protect operations, uphold stakeholder, client and employee trust, and support sound decision-making. Businesses should be aware of the following AI limitations: AI depends on data that is potentially flawed or outdated. AI systems are only as strong as the data they use. Inaccurate, biased or incomplete data can lead to incorrect decisions, poor recommendations and unreliable insights. AI can weaken cybersecurity. AI integration can expand an organization’s attack surface and create new entry points for cyberattacks. Hackers may use generative AI tools to craft phishing emails, deepfakes or automated threats, increasing the risk of breaches. AI can raise ethical and privacy concerns. Using AI to collect, store or analyze personal or sensitive data without clear consent and proper safeguards can violate privacy laws, reinforce biases and damage customer trust. AI can outpace internal capabilities. Limited in-house expertise and insufficient resources can hinder effective AI implementation and increase the risk of mismanagement. Overreliance on AI can lessen human oversight. Overreliance on AI can lead to unchecked decisions, missed errors and reduced accountability in complex situations. Responsible adoption of AI is essential as it becomes increasingly embedded in business operations. Businesses must maintain transparency in how AI tools are used, apply ethical standards to data use and collection, and ensure consistent oversight of automated decisions. These organizations can help mitigate operational, legal and reputational risks by establishing clear governance frameworks, designating AI oversight accountability and investing in staff training and education. Businesses should also review their insurance policies (e.g., cyber insurance, commercial crime insurance and professional liability insurance) to ensure adequate coverage for AI-related exposures. Contact us today for further risk mitigation guidance and insurance solutions. An American Express survey found that 86% of U.S. small businesses using AI feel more confident in decision-making, citing fewer errors and greater efficiency. Still, it's crucial to scrutinize AI risks to minimize exposures and ensure responsible implementation.

Overview Nuclear verdicts (jury awards exceeding $10 million, or "thermonuclear" at $100+ million) are at a 15-year high, up 27% since 2022. Of 89 recent nuclear verdicts across industries, the median award was $44 million, totaling $14.5 billion in combined damages. Key Drivers Social inflation : Growing corporate distrust and demands for transparency Broadened liability definitions : Courts expanding corporate responsibility scope Litigation financing : Third-party funding enabling more plaintiffs to pursue cases Evolved trial tactics : Emotional appeals, anchoring high amounts, and jurisdiction shopping Regulatory changes : New compliance standards influencing jury perceptions Management Liability Impact Nuclear verdicts now increasingly target corporate leadership decisions across three main areas: Directors & Officers (D&O): Claims of harmful leadership acts Employment Practices (EPL): Harassment, discrimination, wrongful termination allegations Fiduciary Liability: Employee benefits mismanagement claims Consequences Financial/Reputational : Large awards plus defense costs and media attention Coverage Gaps : Awards often exceed policy limits, leading to higher premiums and restrictions Executive Scrutiny : Increased stakeholder oversight of leadership decisions Mitigation Strategies Risk Assessment : Address nuclear verdict scenarios in company risk evaluations Strong Governance : Implement clear policies, proper vetting, and stakeholder engagement Leadership Training : Regular ethics and accountability education for directors/officers Compliance : Stay current with employment, financial, and industry regulations Insurance Review : Regularly assess D&O, EPL, and fiduciary coverage adequacy Proactive Claims Management : Handle allegations swiftly with documented protocols and early settlement strategies How Cottingham & Butler Can Help At Cottingham & Butler, we help businesses navigate the evolving nuclear verdict landscape with comprehensive management liability solutions. Our risk management experts provide industry-specific coverage strategies to ensuring your leadership team has adequate protection against today's litigation environment. From coverage gap analysis and policy optimization to claims management and executive training programs, we deliver tailored solutions that address your organization's unique exposures. Contact us today to review your management liability coverage and ensure your business is prepared for the new reality of nuclear verdicts. Conclusion As nuclear verdicts continue rising, businesses must understand these trends and implement comprehensive safeguards to protect their leadership teams and operations from costly litigation.

The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer affordable, minimum-value health coverage to their full-time employees (and dependents) or risk paying a penalty to the IRS. This employer mandate is also known as the “pay-or-play” rules. An ALE is an employer with at least 50 full-time employees, including full-time equivalent employees, during the preceding calendar year. An ALE’s health coverage is considered affordable if the employee’s required contribution for the lowest-cost self-only coverage that provides minimum value does not exceed 9.5% (as adjusted) of the employee’s household income for the taxable year. For plan years beginning in 2025, the adjusted affordability percentage is 9.02%. The adjusted affordability percentage increases to 9.96% for plan years beginning in 2026. Because an employer generally will not know an employee’s household income, the IRS has provided three optional safe harbors that ALEs may use to determine affordability based on information that is available to them: the Form W-2 safe harbor , the rate-of-pay safe harbor and the federal poverty line (FPL) safe harbor . Safe Harbor Requirements The safe harbors allow ALEs to determine if their health plan coverage is affordable based on factors other than employees’ household income. ALEs may use the affordability safe harbors if they offer their full-time employees (and dependents) the opportunity to enroll in health plan coverage that provides minimum value. A health plan provides minimum value if it includes substantial coverage of both inpatient hospital services and physician services and covers at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan. The three affordability safe harbors are all optional. An ALE may choose to use one or more of the safe harbors for all its employees or for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category. Reasonable categories of employees generally include: Specified job categories; Nature of compensation (for example, salaried or hourly); Geographic location; and Similar bona fide business criteria. A listing of employees by name (or other specific criteria having substantially the same effect) is not considered a reasonable category. The affordability safe harbors are only used to determine whether an ALE’s coverage satisfies the affordability test under the pay-or-play rules. They do not affect an employee’s eligibility for a premium tax credit for purchasing individual health insurance coverage through an ACA Exchange, which is based on the affordability of employer-sponsored coverage relative to an employee’s household income. Selecting a Safe Harbor To select a safe harbor for its employees (or for a reasonable category of employees), an ALE should review how each one works. This includes assessing each safe harbor’s level of predictability and ability to maximize employee contributions. Certain safe harbors may be more appropriate than others, depending on an ALE’s workforce. The following table provides a quick overview of the three affordability safe harbors and identifies the types of employers who may benefit the most from each. SafeHarbor Quick Overview Pros and Cons Form W-2 An ALE determines the affordability of its health coverage for each employee by looking at the employee’s wages reported in Box 1 oftheir Form W-2 after the end of the year. This safe harbor is the least predictable method fordetermining affordability because it is based on the actual amount of each employee’s W-2 wages, which is not known until after the end of the year. Due to this uncertainty, it works best for employees whose annual compensation canbe predicted with accuracy before the start of the year. Employees’ wages can change during the year for various reasons that are not within the employer’s control, such as an increase to pre-tax 401(k) contributions or an unpaid leave of absence. However, if employers are comfortable with this risk, this safe harbor potentially allows them to maximize employee contributions toward the cost of health coverage based on actual compensation.  Rate of Pay An ALE determines the affordability of itshealth coverage for each employee by looking at the employee’s hourly rate multiplied by130 hours (regardless of the number of hoursworked). Monthly salary is used for salaried employees instead of the hourly rate.  This safe harbor provides a more predictable, design-basedmethod for determining affordability. It is especially useful for ALEs with a significant number of hourly employees since ituses an assumed rate of 130 hours per calendar month, regardless of the actual number of hours worked by the employee. However, this safe harbor may not maximize employee contributions toward the cost of health coverage if hourly employees regularly work more than 130 hours per month.  FPL An ALE determines the affordability of its health coverage for all employees by looking at the FPL for a single individual. This safe harbor provides the most predictable, design-basedmethod for determining affordability. It gives ALEs a predetermined maximum amount of employee contribution that, in all cases, will result in the coverage being deemed affordable. It is relatively easy to apply because it does notrequire any employee-specific data. However, it oftenrequires the largest employer contribution toward the cost of health coverage.  Using the Safe Harbors Form W-2 Safe Harbor An ALE using the Form W-2 safe harbor retroactively determines the affordability of its health coverage by looking at each employee’s wages reported in Box 1 of Form W-2. These wages include taxable wages, tips and other compensation paid to the employee for the year, minus any pre-tax benefit deductions. An ALE’s health coverage is considered affordable under the Form W-2 safe harbor for an employee if the employee’s required contribution for the ALE’s lowest-cost self-only coverage does not exceed 9.5% (as adjusted) of their Form W-2 Box 1 wages for the year. For example, for an ALE’s health plan to be considered affordable for the plan year beginning in 2026, the maximum monthly premium for an employee with W-2 wages of $60,000 is $498. Here is the formula: $60,000 x 9.96%affordability=$5,976] / 12 months=$498 maximum per month. The following table shows the maximum contribution amounts for selected W-2 wages. W-2 Wages Maximum Monthly Contribution: 2024 Plan Years (8.39% affordability) Maximum Monthly Contribution: 2025 Plan Years (9.02%affordability) Maximum Monthly Contribution: 2026 Plan Years (9.96% affordability) $30,000 $209.75 $225.50 $249.00 $35,000 $244.71 $263.08 $290.50 $40,000 $279.67 $300.67 $332.00 $45,000 $314.63 $338.25 $373.50 $50,000 $349.58 $375.83 $415.00 W-2 Wages Maximum Monthly Contribution: 2024 Plan Years (8.39% affordability) Maximum Monthly Contribution: 2025 Plan Years (9.02%affordability) Maximum Monthly Contribution: 2026 Plan Years (9.96% affordability) $55,000 $384.54 $413.42 $456.50 $60,000 $419.50 $451.00 $498.00 $65,000 $454.46 $488.58 $539.50 $70,000 $489.42 $526.17 $581.00 $75,000 $524.38 $563.75 $622.50 $80,000 $559.33 $601.33 $664.00 $85,000 $594.29 $638.92 $705.50 $90,000 $629.25 $676.50 $747.00 $95,000 $664.21 $714.08 $788.50 $100,000 $699,17 $751.67 $830.00 $105,000 $734.13 $789.25 $871.50  To use the Form W-2 safe harbor, the employee’s required contribution must remain a consistent amount or percentage of all Form W-2 wages during the plan year. Thus, an ALE may not make discretionary adjustments to the required employee contribution for a pay period. However, a periodic contribution that is based on a consistent percentage of all Form W-2 wages may be subject to a dollar limit specified by the employer. The Form W-2 safe harbor is adjusted for employees who are not offered coverage for the entire calendar year. The employee’s Form W-2 wages are adjusted to reflect the period when the employee was offered coverage, and the adjusted wages are then compared to the employee’s share of the premium for the employer’s lowest-cost self-only coverage for the periods when coverage was offered. Rate-of-Pay Safe Harbor The rate-of-pay safe harbor allows ALEs to prospectively satisfy the ACA’s affordability requirement without analyzing every employee’s hours. To use the rate of pay safe harbor for hourly employees, an ALE must: Take the lower of the hourly employee’s rate of pay as of the first day of the coverage period (generally, the first day of the plan year) or the employee’s lowest hourly rate of pay during the calendar month; Multiply that rate by 130 hours per month (regardless of whether the employee works more or less than 130 hours in a calendar month); and Determine affordability for the calendar month based on the resulting monthly wage amount. An ALE’s health coverage is considered affordable under the rate of pay safe harbor for an employee if the employee’s required monthly contribution for the lowest-cost self-only coverage does not exceed 9.5% (as adjusted) of the computed monthly wages (that is, the employee’s applicable hourly rate of pay multiplied by 130 hours). For example, to meet the affordability threshold for a plan year beginning in 2026, an employee who makes $15 per hour must have a monthly premium of no more than $194.22. Here is the formula: ($15 x 130 hours) x 9.96% affordability=$194.22. The following table shows the maximum monthly contribution amounts for selected hourly rates of pay. Rate of Pay Maximum Monthly Contribution: 2024 Plan Years (8.39% affordability) Maximum Monthly Contribution: 2025 Plan Years (9.02% affordability) Maximum Monthly Contribution: 2026 Plan Years (9.96% affordability) $10 per hour $109.07 $117.26 $129.48 $12.50 per hour $136.34 $146.58 $161.85 $15 per hour $163.61 $175.89 $194.22 $17.50 per hour $190.87 $205.21 $226.59 $20 per hour $218.14 $234.52 $258.96 Rate of Pay Maximum Monthly Contribution: 2024 Plan Years (8.39% affordability) Maximum Monthly Contribution: 2025 Plan Years (9.02% affordability) Maximum Monthly Contribution: 2026 Plan Years (9.96% affordability) $22.50 per hour $245.41 $263.84 $291.33 $25 per hour $272.68 $293.15 $323.70 $27.50 per hour $299.94 $322.47 $356.07 $30 per hour $327.21 $351.78 $388.44 $32.50 per hour $354.48 $381.10 $420.81 $35 per hour $381.75 $410.41 $453.18  An ALE may use the rate-of-pay safe harbor even if an hourly employee’s rate of pay is reduced during the year. In this situation, the rate of pay is applied separately to each calendar month rather than to the entire year, and the employee’s required contribution may be treated as affordable if it is affordable based on the lowest rate of pay for the calendar month multiplied by 130 hours. Also, the affordability calculation under the rate of pay safe harbor is not altered by a leave of absence or reduction in hours worked. For salaried employees, monthly salary as of the first day of the coverage period would be used instead of hourly salary multiplied by 130 hours. For example, for a plan year beginning in 2026, if a salaried employee makes $4,000 per month, the maximum monthly premium must be no more than $398.40 ($4,000 x 9.96%=$398.40). However, if the monthly salary is reduced, including due to a reduction in work hours, the rate-of-pay safe harbor may not be used. FPL Safe Harbor The FPL safe harbor allows ALEs to prospectively satisfy the ACA’s affordability requirement without analyzing employees’ wages or hours. The FPL safe harbor provides ALEs with a predetermined maximum amount of employee contribution that, in all cases, will result in the ALE’s health coverage being deemed affordable. An ALE’s health coverage is considered affordable under the FPL safe harbor for all employees if the employee monthly contribution amount for the lowest-cost self-only coverage does not exceed 9.5% (as adjusted) of the FPL for a single individual for the applicable year, divided by 12. ALEs may use any FPL guidelines that are in effect within  six months before the first day of the plan year. This provides employers with time to establish premium amounts in advance of the plan’s open enrollment period. However, because the federal government does not typically release the updated FPL for the year until January, employers with calendar-year health plans generally use the prior year’s FPL. To calculate affordability for a calendar-year health plan for 2026, take the 2025 FPL for an individual ($15,650), multiply it by 9.96% and then divide it by 12. This formula is as follows: ($15,650 x 9.96% affordability)/12=$129.90. In general, if employee contributions for the lowest-cost self-only coverage do not exceed $129.90 per month, the health coverage meets the ACA’s affordability standard for all employees. The following table shows the FPL affordability thresholds using the FPL guidelines for 2024 and 2025. 2024 FPL Guidelines 2025 FPL Guidelines State of Employment FPL for a single individual Maximum monthly contribution for 2024 plan years (using 8.39% affordability) Maximum monthly contribution for 2025 plan years (using 9.02% affordability) FPL for a single individual Maximum monthly contribution for 2025 plan years (using 9.02% affordability) Maximum monthly contribution for 2026 plan years (using 9.96% affordability) 48 contiguous states and the District of Columbia $15,060 $105.29 $113.20 $15,650 $117.64 $129.90 Alaska $18,810 $131.51 $141.39 $19,550 $146.95 $162.27 Hawaii $17,310 $121.03 $130.11 $17,990 $135.22 $149.32  Links and Resources IRS final regulations on the ACA’s pay-or-play rules IRS Revenue Procedure 2025-25 , adjusting the affordability percentage for 2026 IRS Revenue Procedure 2024-35 , adjusting the affordability percentage for 2025

In today's complex regulatory environment, staying compliant with DOT drug and alcohol testing requirements is more critical - and more challenging - than ever. Our recent webinar was designed to equip safety professionals, fleet managers, and HR personnel with the knowledge and tools needed to manage their drug and alcohol programs confidently. From understanding mandatory testing protocols to avoiding costly violations that can impact your FMCSA safety ratings, these expert insights provide the practical guidance you need to maintain compliance while protecting your drivers and your business. Here are the key takeaways from our discussion: DOT Drug & Alcohol Testing Requirements : DOT requires testing for five drug classes: marijuana, cocaine, opiates, amphetamines/methamphetamines, and PCP. Only urine testing is currently approved for DOT drug tests. Policy & Compliance Essentials : Employers must implement a 13-section DOT-compliant policy from the start of CMV operations. It’s recommended to include a non-DOT section for additional substances or methods. Clearinghouse & Violations : Employers must check the FMCSA Clearinghouse before hiring and annually for current drivers. Violations must be reported within 3 business days. Testing & Best Practices : All testing procedures must be documented especially post-accident and refusal cases. Proper documentation and protocol adherence are critical to prevent common violations like letting drivers operate after positive tests. Impact on Safety Ratings : Acute and critical violations directly affect FMCSA safety ratings. Two acute violations in the Drug & Alcohol factor result in an "Unsatisfactory" rating for that factor, potentially leading to an "Overall Conditional" rating. Click here to view the presentation.

Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part Dand to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable.  Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2025 - the start dateof the annual enrollment period for Medicare Part D. CMS has provided model disclosure notices for employers to use.  This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and donot enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Although there areno specific penalties associated with this notice requirement, failing to provide the notice may be detrimental to employees.  Action Steps  Employers should confirm whether their health plans’ prescription drug coverage is creditable or non-creditable and prepare tosend their Medicare Part D disclosure notices before Oct. 15, 2025. To make the process easier, employers often include Medicare Part D notices in open enrollment packets they send out prior to Oct. 15.  Creditable Coverage  A group health plan’s prescription drug coverage is considered creditable if its actuarial value equals or exceeds the actuarialvalue of standard Medicare Part D prescription drug coverage. In general, this actuarial determination measures whether theexpected amount of paid claims under the group health plan’s prescription drug coverage is at least as much as the expected amount of paid claims under the Medicare Part D prescription drug benefit. For plans that have multiple benefit options (forexample, PPO, HDHP and HMO), the creditable coverage test must be applied separately for each benefit option.  Model Notices  CMS has provided two model notices for employers to use:  A Model Creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is creditable; and A Model Non-creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is notcreditable.  These model notices are also available in Spanish on CMS’ website .  Employers are not required to use the model notices from CMS. However, if the model language is not used, a plan sponsor’s notices must include certain information, including a disclosure about whether the plan’s coverage is creditable andexplanations of the meaning of creditable coverage and why creditable coverage is important.  Notice Recipients  The creditable coverage disclosure notice must be provided to Medicare Part D - eligible individuals who are covered by, or whoapply for, the health plan’s prescription drug coverage. An individual is eligible for Medicare Part D if they:  Are entitled to Medicare Part A or are enrolled in Medicare Part B; and Live in the service area of a Medicare Part D plan.  In general, an individual becomes entitled to Medicare Part A when they actually has Part A coverage, and not simply whenthey are first eligible. Medicare Part D-eligible individuals may include active employees, disabled employees, COBRA participants and retirees, as well as their covered spouses and dependents.  As a practical matter, group health plan sponsors often provide the creditable coverage disclosure notices to all plan participants . Timing of Notices At a minimum, creditable coverage disclosure notices must be provided at the following times: Prior to the Medicare Part D annual coordinated election period—beginning Oct. 15 through Dec. 7 of each year Prior to an individual’s initial enrollment period for Part D Prior to the effective date of coverage for any Medicare-eligible individual who joins the plan Whenever prescription drug coverage ends or changes so that it is no longer creditable or becomes creditable Upon a beneficiary’s request If the creditable coverage disclosure notice is provided to all plan participants annually before Oct. 15 of each year, items (1) and (2) above will be satisfied. “Prior to,” as used above, means the individual must have been provided with the notice within the past 12 months. In addition to providing the notice each year before Oct. 15, plan sponsors should consider including the notice in plan enrollment materials for new hires. Method of Delivering Notices Plan sponsors have flexibility in how they must provide their creditable coverage disclosure notices. The disclosure notices can be provided separately, or if certain conditions are met, they can be provided with other plan participant materials, like annual open enrollment materials. The notices can also be sent electronically in some instances. As a general rule, a single disclosure notice may be provided to the covered Medicare beneficiary and all of his or her Medicare Part D-eligible dependents covered under the same plan. However, if it is known that any spouse or dependent who is eligible for Medicare Part D lives at a different address than where the participant materials were mailed, a separate notice must be provided to the Medicare-eligible spouse or dependent residing at a different address. Electronic Delivery Creditable coverage disclosure notices may be sent electronically under certain circumstances. CMS has issued guidance indicating that health plan sponsors may use the electronic disclosure standards under Department of Labor (DOL) regulations in order to send the creditable coverage disclosure notices electronically. According to CMS, these regulations allow a plan sponsor to provide a creditable coverage disclosure notice electronically to plan participants who have the ability to access electronic documents at their regular place of work, if they have access to the sponsor's electronic information system on a daily basis as part of their work duties. The DOL’s regulations for electronic delivery require that: The plan administrator uses appropriate and reasonable means to ensure that the system for furnishing documents results in actual receipt of transmitted information; Notice is provided to each recipient, at the time the electronic document is furnished, of the significance of the document; and A paper version of the document is available on request. Also, if a plan sponsor uses electronic delivery, the sponsor must inform the plan participant that they are responsible for providing a copy of the electronic disclosure to their Medicare-eligible dependents covered under the group health plan. In addition, the guidance from CMS indicates that a plan sponsor may provide a disclosure notice electronically to retirees if the Medicare-eligible individual has indicated to the sponsor that they have adequate access to electronic information. According to CMS, before individuals agree to receive their information via electronic means, they must be informed of their right to obtain a paper version, how to withdraw their consent and update address information, and any hardware or software requirements to access and retain the creditable coverage disclosure notice. If the individual consents to an electronic transfer of the notice, a valid email address must be provided to the plan sponsor and the consent from the individual must be submitted electronically to the plan sponsor. According to CMS, this ensures the individual’s ability to access the information and that the system for furnishing these documents results in actual receipt. In addition to having the disclosure notice sent to the individual’s email address, the notice (except for personalized notices) must be posted on the plan sponsor’s website, if applicable, with a link on the sponsor’s homepage to the disclosure notice. Disclosure to CMS Plan sponsors are also required to disclose to CMS whether their prescription drug coverage is creditable. The disclosure must be made to CMS on an annual basis, or upon any change that affects whether the coverage is creditable. At a minimum, the CMS creditable coverage disclosure notice must be provided at the following times: Within 60 days after the beginning date of the plan year for which the entity is providing the form; Within 30 days after the termination of the prescription drug plan; and Within 30 days after any change in the creditable coverage status of the prescription drug plan. Plan sponsors are required to provide the disclosure notice to CMS through completion of the disclosure form on the CMS Creditable Coverage Disclosure webpage . This is the sole method for compliance with the CMS disclosure requirement, unless a specific exception applies.