2026 Employee Benefits Market Outlook 15 wish to explore integrating DPC arrangements into their benefits packages and should watch for regula- tory guidance on related compliance issues. Dependent Care Assistance Effective for 2026, the OBBBA increases the max- imum annual limit for dependent care flexible spending accounts (FSAs). Offering a dependent care FSA allows employees to save and pay for eligible dependent care expenses on a tax-free basis. Before 2026, the annual contribution limit for dependent care FSAs was $5,000 for single individuals and married couples filing jointly and $2,500 for married individuals filing separately. This limit, which is not indexed for inflation, has been in place since 1986 (except for a temporary increase during the COVID-19 pandemic). Effective Jan. 1, 2026, the OBBBA increases this limit to $7,500 (or $3,750 for married individuals filing separately). Employers with dependent care FSAs should work with their advisors to assess how increasing their plans contribution limit may impact annual nondiscrimi-nation testing results, particularly the 55% average benefits test, which ensures that highly compensated employees (HCEs) do not disproportionately partici- pate in the plan. Note that the OBBBA also enhances the dependent care tax credit, which may further com- plicate nondiscrimination testing by making it more likely that non-HCEs will claim the tax credit instead of participating in their employer s dependent care FSA. There are steps an employer can take if it is concerned about failing nondiscrimination testing, such as limiting contribution elections for HCEs. Also, employers with dependent care FSAs should review the written plan document to determine if updates are necessary due to the increased limit and communicate the new limit to employees. Also, the OBBBA encourages employers to provide child care services to their employees by substan- tially increasing the child care tax credit starting in the 2026 tax year. It raises the maximum annual credit from $150,000 to $500,000 and boosts the percentage of qualifying expenses covered from 25% to 40%. For small businesses, the rate increases to 50%, with an annual cap of $600,000. These thresholds will be adjusted for inflation for future years. Student Loan Assistance The OBBBA expands options for employer-sponsored educational assistance programs by permanently extending and expanding student loan assistance. While educational assistance programs have been available for many years to pay expenses such as books, equipment, supplies, fees and tuition, the option to use them to pay for student loans was set to expire on Dec. 31, 2025. The OBBBA permanently extends this student loan payment option. Also, the OBBBA adjusts the tax-free benefit limit ($5,250 per employee per year) for inflation for taxable years beginning after 2026, enhancing this benefits long-term value. As employees increasingly look to their employers for student loan assistance, employers that dont have an educational assistance program may want to consider establishing one to take advantage of the OBBBAs stu- dent loan provision. By offering student loan support, employers can show employees they are valued and provide them with much-needed financial assistance and support.