How the One Big Beautiful Bill Changes HSAs and Dependent Care Assistance

In the first week of July 2025, House Budget Reconciliation Bill (HR 1) was signed into law. Included in the final version were several provisions affecting health and benefits accounts.

The original House version of the bill included more provisions that modified and improved employee benefit offerings. Although those possibilities sparked much discussion in benefits circles, many of them were cut from the Senate bill, which became the final version. It’s uncertain if we may see these provisions in future legislation.

Here is additional detail and commentary on the provisions included in the final version that became law.

Health Savings Accounts (HSAs)

Telehealth Safe Harbor
The bill retroactively makes permanent the safe harbor for high-deductible health plans to provide healthcare coverage using telehealth and still be considered a high-deductible health plan for purposes of HSA contributions. In short, telehealth services do not disqualify someone from contributing to an HSA as a “first-dollar expense.” The safe harbor had expired on December 31, 2024 so the bill is retroactive back to January 1, 2025.

Bronze and Catastrophic Plans
Bronze or catastrophic plans offered in the Exchange will be treated as high-deductible health plans (HDHPs) for the purposes of HSA eligibility. According to the Congressional Budget Office analysis and confirmed by other industry experts, this definition is inclusive, regardless of other typical requirements, such as first-dollar coverage, which would usually deem a HDHP incompatible with HSA eligibility. This is effective for plans starting January 1, 2026.

Direct Primary Care Service Arrangements (DPCs) 
The bill establishes new rules that allow DPCs to be used in conjunction with HSAs. Under the new rules, a DPC will not be treated as a health plan that disqualifies an individual from contributing to an HSA. For the purposes of the rules, a DPC arrangement is limited to primary care services provided by primary care practitioners for a fixed periodic fee: $150 per month for an individual or $300 for “more than one” person. The fee is indexed for inflation. Additionally, primary care services do not include:

• procedures that require general anesthesia
• prescription drugs other than vaccines
• lab services not typically administered in a primary care setting

This means that if the definition is met under these rules, a DPC will be considered a qualified medical expense (and not insurance) for the purpose of being reimbursable from an HSA. This is effective starting on January 1, 2026. 

Many have discussed whether and how this might also apply to health FSAs or HRAs. The rules here are specific to permitting reimbursement by HSAs alone, but we are looking at the implications for applying similar criteria to expenses under FSAs and/or HRAs.

Dependent Care Assistance Programs (DCAPs)

The statutory limit on DCAPs will increase from $5,000 to $7,500 for individual or joint married tax filers (and from $2,500 to $3,750 for married individuals filing separately). This is one of the most visible changes among these provisions as the current DCAP limit ($5,000) was set back in 1986 and was long criticized by industry experts for not increasing with either inflation or periodically to meet the rising cost of childcare expenses. This change is effective for tax years starting with 2026.

 

Reach out to Pinnacle’s Health & Benefits team with any questions about accounts and changes with the new law. Learn more at PNFP.com/Benefits.

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