2026 MARKET TRENDS

Regulatory & Legislative Strategy

Key Takeaways

2025 brought several regulatory and litigation developments with potentially significant consequences for employer-sponsored health and welfare plans
Uncertainty and unpredictability will continue to shape the landscape of health and welfare plan compliance throughout 2026
A continued and sustained focus on fiduciary responsibilities within group health plans, in the wake of several high-profile lawsuits alleging breaches of fiduciary duties related to plan cost management by employer plan sponsors, will likely remain a critical area to monitor in 2026
Litigation is also expected to expand into emerging areas, including coverage for GLP-1 medications and the use of artificial intelligence in health plan administration

Several lawsuits emerged in 2025 targeting group health plans, including those involving tobacco surcharges in wellness programs.

Regulatory Uncertainty for Group Health Plans

The 2024 United States Supreme Court decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce (Loper Bright) reshaped the federal regulatory terrain. The Court overturned the Chevron doctrine, which had required federal courts to defer to a federal agency’s reasonable interpretation of ambiguous statutory provisions. Courts now may exercise independent judgment when determining whether a federal agency has exceeded its statutory authority in issuing regulations implementing an ambiguous law.

Employer group health plan sponsors should prepare for continued turbulence in 2026 as federal agencies regulating health plans navigate the implications of these developments.

This increased judicial scrutiny has already affected the health plan regulatory environment, including suspension of two major federal rules:

The HIPAA final rule strengthened privacy protections in reproductive healthcare. The federal district court in Purl v HHS cited Loper Bright in its decision to vacate most of the rule.
The federal agencies’ non-enforcement policy statement regarding the 2024 MHPAEA Final Rules was issued in response to a January 2025 lawsuit challenging the agencies' authority. Although the complaint did not reference Loper Bright, its arguments align with the administrative law principles emphasized in the decision.

Tobacco Surcharge Wellness Programs Under Scrutiny

Several lawsuits emerged in 2025 targeting group health plans, including those involving tobacco surcharges in wellness programs.

Wellness program benefits may be subject to requirements under ERISA, the Internal Revenue Code, HIPAA, ADA, GINA and COBRA.1 Recent lawsuits related to tobacco surcharges generally focus on HIPAA nondiscrimination rules in program operation, alleging failure to offer a reasonable alternative standard to avoid the surcharge, application of the premium reduction only on a prospective basis after completing the alternative standard and inadequate notice describing the alternative standard. Despite the recent dismissal of a tobacco surcharge suit,2 litigation in this area is expected to continue in 2026.

Employer group health plan sponsors should closely review tobacco surcharge wellness program design and operational practices in light of developing case law.

Continued and Sustained Focus on Fiduciary Duties Within Group Health Plans

The focus on fiduciary duties within group health plans, which gained momentum in 2024 following the class action lawsuit against Johnson & Johnson (J&J) alleging breach of fiduciary duty under ERISA for pharmacy benefit mismanagement, continued through 2025 and is expected to remain a key issue in 2026. Although the J&J lawsuit has now been dismissed twice for lack of standing,3 it signaled a new trend of health plan fiduciary litigation brought by plan participants. These recent lawsuits mirror long-standing ERISA retirement plan fiduciary breach class actions involving excessive fees and imprudent monitoring of plan service providers. Similar ERISA class actions have been filed against organizations such as Wells Fargo (also dismissed) and JP Morgan Chase, among others.4

In Tiara Yachts Inc. v. Blue Cross Blue Shield of Michigan, the Sixth Circuit held that a plan's third-party administrator functioned as a fiduciary under ERISA. This decision reflects a growing litigation trend in which self-funded employer health plan sponsors challenge TPA management practices by alleging a breach of fiduciary duty.5

Employer group health plan sponsors should remain diligent and vigilant in their fiduciary responsibilities. Recommended practices include maintaining a formal benefits committee, conducting RFPs or market checks at regular intervals for all plan service providers and performing claim audits to monitor service provider performance and plan expenses.

GLP-1 Coverage for Weight Loss and Compliance Concerns

GLP-1 medications remain a significant topic in health plan coverage for conditions such as diabetes and obesity. The drug class has a broad pipeline, including alternate formulations such as oral versions, and multiple indications under study. Employers continue to monitor rising cost impacts, particularly for weight-loss indications. Some employers restrict or exclude GLP-1 coverage for weight-loss purposes. The 2026 Brown & Brown Employer Health and Benefits Strategy Survey reports 61% of employers place restrictions on GLP-1 coverage for weight loss, and 86% of employers currently covering GLP-1s for weight loss plan to maintain that coverage in the next 12–24 months.

These restrictions or exclusions may pose litigation risks under disability discrimination laws if obesity is considered a disability under applicable state or local law. Two class action lawsuits challenging GLP-1 coverage exclusions under ACA Section 1557 were dismissed by a federal district court in Maine,6 but similar cases continue to move through the courts.7 Federal courts have generally determined that obesity does not qualify as a disability under federal law, consistent with EEOC informal guidance.9, 10

GLP-1 coverage decisions may also raise compliance concerns under HIPAA nondiscrimination rules if changes occur outside the plan’s renewal or if restrictions do not apply uniformly to similarly situated plan participants. For example, part-time and full-time employees, employees working in different geographic locations, and employees with different dates of hire or lengths of service can be treated as different groups of similarly situated individuals.

Employers are encouraged to monitor these developments and align GLP-1 coverage decisions with annual renewal cycles. This requires careful documentation of coverage decisions, including restrictions or exclusions.

Artificial Intelligence and Group Health Plans

Recent lawsuits have challenged the use of artificial intelligence in processing and denying claims,11 signaling the potential for AI-related regulations at the federal and state level in 2026. Scrutiny of AI tools used in claim determinations and in the aggregation of healthcare data indicates growing interest in developing new laws and regulations.

State-level AI legislation continues to advance. Recent examples include California SB 1120, which requires a qualified human reviewing utilization management decisions, and California AB 3030, which requires disclosure when generative AI produces patient communications containing clinical information.

Employer group health plan sponsors should monitor federal and state legislative and regulatory activity as the intersection of AI and healthcare continues to evolve.

At the federal level, HHS released a HIPAA Security proposed rule in December 2024 addressing cybersecurity of electronic protected health information and requesting public comment on how to define AI when used in diagnosis and treatment. The proposal also seeks input on how HIPAA-covered entities, including employer plans, can use AI in ways that protect confidentiality, integrity and availability of electronic protected health information. Recently, President Trump issued an Executive Order intended to remove barriers to the development and use of AI, with the goal to prevent states from implementing AI related laws by creating a national policy framework, among other efforts.

New AI regulations may also affect ERISA-governed plans by influencing fiduciary obligations related to the selection and oversight of service providers using AI in claim or medical management decisions.

1Americans with Disabilities Act of 1990; Genetic Information Nondiscrimination Act of 2008; Consolidated Omnibus Budget Reconciliation Act (COBRA) 2Williams v. Bally’s Management Grp., LLC 3“Standing” — legal concept defining sufficient stake to bring a dispute before a court 4Barbich & Lindvall v. Northwestern University 5Kraft Heinz v. Aetna (voluntarily dismissed December 2023) and Owens & Minor, Inc. v. Anthem Health Plans of Virginia, Inc. (filed late 2024) 6Whittemore v. Cigna and Holland v. Elevance Health Inc. 7Simonton v. Washington State Health Care Authority 8U.S. Equal Employment Opportunity Commission (EEOC) 9U.S. Equal Employment Opportunity Commission. EEOC Informal Discussion Letter 187. 10Kisting Leung et al. v. Cigna Corporation et al.; Estate of Gene B. Lokken et al. v. UnitedHealth Group, Inc. et al.; Barrows et al. v. Humana, Inc. 11The White House. Ensuring a National Policy Framework for Artificial Intelligence.

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Brown & Brown, Inc. and all its affiliates, do not provide legal, regulatory, tax guidance and/or advice. If legal advice, counsel or representation is needed, the services of a legal professional should be sought. The information in this document is intended to provide a general overview of the topics and services contained herein. Brown & Brown, Inc. and all its affiliates make no representation or warranty as to the accuracy or completeness of the document and undertakes no obligation to update or revise the document based upon new information or future changes.