Congress passes the One Big Beautiful Bill (OBBB) and President Trump signed it into law on July 4th 2025. The final bill includes several provisions aimed at expanding access to Health Savings Accounts (HSAs) and increasing the annual contribution limit for Dependent Care Flexible Spending Accounts (FSAs).

HSA Provisions

  • HSA Funds for Direct Primary Care (DPC) Arrangements

Effective January 1, 2026, HSA funds can be used to pay for Direct Primary Care (DPC) arrangements, subject to certain limits. Until now, individuals enrolled in a DPC arrangement were ineligible to contribute to an HSA, even if also enrolled in an otherwise HSA-compatible high-deductible health plan (HDHP). This provision applies to DPC arrangements with monthly fees of $150 or less ($300 if covering more than one family member).

Comment: Employers and plan sponsors may want to evaluate whether to offer DPC memberships beginning in 2026, now that they can be HSA-compatible.

  • Permanent Pre-Deductible Coverage for Telehealth Services

The final version of the reconciliation bill establishes permanent pre-deductible coverage for telehealth services under HDHPs paired with HSAs. This means individuals can use telehealth services without having to first meet their deductible — without jeopardizing their HSA eligibility.

Comment: Employers and plan sponsors should consider amending their health plans and communications to reflect this permanent telehealth benefit.

Dependent Care Flexible Spending Account Provision

Effective January 1, 2026, the annual contribution limit for dependent care FSAs will increase from $5,000 to $7,500 (or from $2,500 to $3,750 for married individuals filing separately). This marks the first increase to the cap since 1986. Notably, the new limit is not indexed for inflation.

Employers and plan sponsors should continue conducting non-discrimination testing, as highly compensated employees may still be subject to contribution limits.

Comment: Employers and plan sponsors offering a dependent care FSA may want to amend their plans to accommodate the higher contribution limits.

Next Steps

Over the next few months, the Department of Labor (DOL) and Health and Human Services will propose and finalize regulations related to these provisions. Diversified Group will monitor and provide additional analysis of the OBBB.

 

DG Compliance