TPG’s Employer Services: Q4 Blog

On Oct. 9, 2025, the IRS released Revenue Procedure 2025-32 (Rev. Proc. 25-32), which includes the 2026 inflation-adjusted limit on employee salary reduction contributions to health flexible spending accounts (FSAs) and cost-of-living adjustments for employee qualified transportation fringe benefits for the 2026 taxable year, along with annually adjusted numbers for 2026 for other tax provisions.

The post-COVID health insurance landscape has changed dramatically. Specialty drugs now account for more than a quarter of stop-loss claim costs, hospitals are operating at negative margins, and multi-million-dollar claims are becoming routine. Healthcare unit cost trends are climbing above 10% on average — a level not seen in years. The rising cost of providing health insurance is now directly threatening profit margins and long-term capital plans. For business leaders, this is no longer a nuisance to be dealt with once a year at renewal.  For many, the answer is to move into a self-funded captive with like-minded employers and take a more active role in risk management. Self-funded captives have moved beyond the early-adopter stage. They’re becoming a mainstream option for mid-sized employers who want the benefits of self-funding but recognize the challenges of going it alone.

On Oct. 16, 2025, the U.S. Departments of Labor, Health and Human Services, and the Treasury (the Departments) jointly issued guidance that clarifies existing categories of excepted benefits that employers can use to offer fertility benefits. The guidance follows Executive Order 14216, which directed the Domestic Policy Council (DPC) to submit a list of policy recommendations to protect in vitro fertilization (IVF) access and reduce out-of-pocket and health plan costs for IVF treatment. As part of those policy recommendations the DPC recommended issuing regulations or guidance that would allow employers to expand access to coverage for fertility through the provision of an excepted benefit.