The “One Big Beautiful Bill” (OBBB), a sweeping piece of legislation passed into law on July 4, marks one of the most comprehensive reforms to the U.S. healthcare-related tax policy in recent history. The bill consolidates a broad range of provisions aimed at reducing administrative complexity and increasing flexibility for consumers and employers alike. It covers multiple domains, from telehealth extensions to the expansion of health savings accounts (HSAs) and beyond.

For benefits administrators and employers, OBBBA presents an opportunity to deliver more flexible and attractive benefits. Understanding the nuances of these changes will be key to compliance, communication, and strategic planning ahead of the January 1, 2026 implementation date for most of these provisions.

Below is a summary of how the legislation impacts HSAs and the next steps administrators will want to consider.

• ACA Bronze and Catastrophic plans: Previously, ACA Bronze and Catastrophic plans were disqualified from HSA eligibility due to high out-of-pocket limits. The bill reclassifies these plans as HSA-eligible high-deductible health plans (HDHPs), vastly expanding the eligible population — by approx. 7.5 million, according to ABA estimates.

• Direct primary care (DPC): The bill permits DPC memberships to be used in conjunction with an HSA, allowing those otherwise eligible but for the DPC to establish and contribute to an HSA. DPC subscription services are limited to $150/month (individual) or $300/month (family).

• Telehealth safe harbor for HSAs: The OBBB makes permanent the COVID-era safe harbor for HDHPs to provide telehealth services prior to meeting the deductible. This provision is retroactive to January 1, 2025.

For the first time since the inception of DCAPs, the limit will be increased. The current limit will increase from $5,000 to $7,500 (married filing jointly) and from $2,500 to $3,750 (married filing separately). This increase will be effective for plan years beginning after December 31, 2025.

• The OBBB permanently repeals the qualified bicycle commuting reimbursement benefit, which had been suspended after 2017. Beginning in 2026, any employer reimbursements for bike commuting will be taxable to employees and no longer deductible by employers.

• Other transportation benefits like parking and transit remain unchanged.

1. Update plan documents and communications: Revise Summary Plan Descriptions (SPDs) and employee communications to reflect the expanded HSA eligibility and new contribution limits for the DCAP.

2. Coordinate with payroll and HR systems: Ensure systems are updated to support the new contribution limits and eligibility criteria outlined above.

3. Coordinate with health insurance plans: Determine if any changes are needed to telehealth provisions.

4. Educate employees: Encourage your employer clients to conduct informational sessions or distribute materials to inform their employees about the new HSA opportunities, especially targeting those enrolled in ACA or DPC plans.

5. Monitor regulatory guidance: Stay informed about any additional guidance from the IRS or Department of Labor to ensure compliance with the new provisions.

These changes present an opportunity to enhance employee benefits offerings and support employees in managing their healthcare expenses more effectively.

The passage of the One Big Beautiful Bill marks a positive step forward for HSA expansion, but the work isn’t over. Alegeus and other industry organizations, including the Employers Council on Flexible Compensation (ECFC) and the American Bankers Association’s HSA Council, have worked and will continue to work as a coalition to push for practical CDH reforms.

The passage of the OBBB underscores a recognition of the value HSAs bring to healthcare financing. With ongoing advocacy and collaboration among industry stakeholders, further legislative advancements are possible, aiming to enhance the utility and reach of HSAs for a broader spectrum of Americans.