Employee Benefits Provisions of the One Big Beautiful Bill Act

Telehealth Coverage 

• Coverage for telehealth services can be provided under a High Deductible Health Plan (HDHP) prior to meeting the statutory deductible (with HSA eligibility maintained). 

• First dollar telehealth coverage was added during the COVID years and was extended through January 1, 2025. Prior legislative efforts to extend this provision failed, therefore, as of January 2025, HDHP plans were required to remove pre-deductible telehealth services from HDHPs to maintain HSA eligibility for participants.  

• This change is effective retroactive to January 1, 2025, and was made permanent.  

Bronze and Catastrophic Plans as HDHPs 

• Bronze and Catastrophic health plans purchased through an Exchange are now considered HDHPs (even though the plans do not meet the standard HDHP plan design requirements).  

• This allows individuals enrolled in these Exchange plans to contribute to an HSA.  

• This provision becomes effective as of January 1, 2026. 

Direct Primary Care   

• Direct Primary Care arrangements are no longer considered disqualifying coverage when paired with an HDHP. This preserves the ability to contribute to an HSA while being covered on an HDHP and also maintaining a Direct Primary Care arrangement.  

• Direct Primary Care expenses are also eligible for reimbursement under an HSA, subject to a limit of $150 per month (individual coverage) or $300 per month (family coverage).  The limits are indexed for future years.   

• This provision becomes effective as of January 1, 2026. 

Increased
Tax-Free limit: 

• $7,500 for single filers and married couples filing jointly ($3,750 for married individuals filing separately). 

• The new limit is not subject to a COLA escalator. 

• This provision becomes effective as of January 1, 2026. 

Permanence and Indexed Limit 

• Employer-sponsored, tax free student loan assistance was made permanent. 

• $5,250 annual limit for §127 qualified educational assistance program is now subject to indexing, as of 2026.   

• The limit applies to both direct educational assistance and student loan repayments.   

General Provisions 

• New account type for children under age 18 for post-secondary education, small business investments, and first home purchases 

• Contributions are after tax, growth is tax-deferred 

• $5,000 annual limit (indexed) 

• $1,000 one-time government contribution per child born 2025-2028 (not counted in the $5,000 limit) 

• Distributions restricted to after 18 

• Assets must be invested in mutual funds tracked to a U.S. equity index 

Employee Benefit 

• Adds new Section 128 to the IRC 

• Allows for tax-free employer contributions to Trump Accounts for employees or their children 

• Up to $2,500 per year per employee (not per child) 

• Limit is indexed 

• Nondiscrimination provisions apply (55% average benefit test from DCAP rules) 

• Must maintain written plan document 

FSA/HRA Rollover to HSA 

• Health FSA or HRA rollovers into an HSA for newly eligible HDHP individuals (capped at 2x health FSA max) 

• Spousal health FSA coverage not disqualifying coverage (for HSA eligibility) 

Other HSA Provisions 

• Increased HSA limits by $4,300/$8,550 (with income phase-outs) 

• Fitness expenses and gym memberships eligible for reimbursement (up to $500/$1,000 per year) 

• Medical expenses incurred up to 60 days before HSA establishment eligible for reimbursement  

• Medicare Part A not disqualifying coverage 

• Certain on-site medical clinic services not disqualifying coverage 

• Both spouses may make $1,000 catch-up contribution to a single HSA  

ICHRA Enhancements 

• There were many ICHRA expansion provisions in the House version of the bill, including allowing employees to pay premiums via a Section 125 plan, employer tax credits for offering ICHRAs, and renaming ICHRAs to CHOICE Arrangements for Custom Health Option and Individual Care Expense Arrangements)  

• All provisions were eliminated from the final bill, therefore, no changes will be made to current ICHRAs.    

Bicycle Commute Benefit 

• The employer-sponsored tax-free bicycle commute benefit was repealed permanently.  

• Employers may continue to provide bicycle commuting benefit. However, they would need to be taxed to the employee. 

• The repeal is effective January 1, 2026.