President Signs “One Big Beautiful Bill Act”

July 9, 2025

President Donald Trump’s One Big Beautiful Bill (OBBB) was signed into law on July 4th. The OBBB was subject to intense negotiation and significant change as it worked its way from the House through the Senate. In the end, the OBBB includes multiple significant benefit provisions that impact employer and group sponsored plans. Most notably, the OBBB provides some additional flexibility in Health Savings Account (HSA) plan design and retroactively makes permanent the extension of the provision giving employers the permanent flexibility to offer telehealth services pre-deductible to employees with an HSA eligible high-deductible health plan (HDHP).

Below is a summary of the provisions of the OBBB that impact employers and group benefit plans:

Health Savings Account Expansions

1. Pre-Deductible Telehealth Coverage Made Permanent: The OBBB now provides permanent relief allowing HDHPs to provide first-dollar telehealth and other remote care services. This change is effective retroactively to plan years beginning after December 31, 2024. The prior COVID-19 temporary relief allowed individuals to maintain HSA eligibility even where their HDHP waived the deductible for any telehealth or other remote care, but that relief only extended to plan years beginning before January 1, 2025.  Accordingly, employers who intended to ensure that their employees remained HSA eligible during the 2025 plan year and beyond needed to consider making changes to their telehealth benefit offerings to preserve HSA eligibility.  See our Update on the prior temporary relief. Employers who began charging fair market value for a telehealth visit until the minimum HDHP deductible is met, or who otherwise stopped pre-deductible coverage, may wish to now align plan design and communications with the permanent safe harbor and its retroactive application.
2. All Bronze and Catastrophic Plans Available on Exchange are HDHPs: HSA eligibility is required for any individual to establish an account and make or receive HSA contributions. To be HSA eligible, individuals must be covered by a qualified HDHP.  Effective in 2026, the OBBB automatically treats all Bronze and Catastrophic level plans that are available on the individual market through the Exchange as an HDHP.  Currently, most of these plans are not HSA compatible.  ICHRA sponsors may consider educating their employees about Bronze or Catastrophic ACA exchange plans being HSA-compatible.
3. Direct Primary Care Integrated with HSA Eligibility: Effective in 2026, the OBBB specifically excludes direct primary care (DPC) arrangements from being a form of HSA disqualifying coverage and provides that HSA funds can be used tax-free to pay periodic fees for DPC arrangements.  These provisions apply only to DPC arrangements with a monthly fee of $150 or less ($300 if the arrangement covers more than one individual).

Dependent Care FSA Limit Increase to $7,500

Since 1986, the dependent care flexible spending account (FSA) limit has been set at $5,000 (not indexed for inflation). Effective for tax years beginning on and after January 1, 2026, the OBBB increases the annual limit on contributions from $5,000 to $7,500 ($3,750 for taxpayers who are married filing separately). The new amounts are still not indexed for inflation going forward.

Student Loan Repayment Assistance Made Permanent

Since 2020 and through the end of 2025, employers have been able to provide up to $5,250 per year to employees for tax-free student loan repayment assistance under a qualified Section 127 Educational Assistance plan. The OBBB now makes this permanent, extending this opportunity into the future beyond 2025. This benefit can be used to pay for student loans of the employee, and can also be used to pay for student loans where the employee is legally obligated to make payments on behalf of a tax dependent, such as when a parent/employee co-signs for a student loan of a dependent child. This limit, which has been fixed at $5,250 since 1979, will now be indexed.

Invest America/Trump Accounts

The OBBB creates the new “Invest America” or “Trump Accounts” starting in 2026, providing for a $5,000 annual contribution limit for a child. Trump Accounts investments grow tax-deferred, and children born in 2025-2028 will receive a $1,000 federal contribution. Employers may also contribute up to $2,500 per year (indexed) to the Trump Accounts of employees or their dependents on a tax-free basis.  These accounts will require a written plan document and must comply with nondiscrimination rules similar to those that apply to dependent care FSAs.

Tax-Free Bicycle Commuting Reimbursement Permanently Repealed

The OBBB has now permanently removed the tax-free bicycle commuter benefit option. A $20/month tax-free benefit that was originally added to the tax code in 2009 permitted employers to reimburse certain bicycle commuting benefits. This tax benefit was temporarily repealed from 2018 to 2025.

Summary

The OBBB provisions provide several meaningful new options for employers to consider moving into 2026.  As always, Conner Strong & Buckelew is prepared to assist our clients with any changes they might wish to consider later this year and into the future. We also note that given the Republican focus on HSA issues, there may be more to come related to a more comprehensive package of HSA reforms over the coming months. Should you have questions, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.