Employee Benefits Changes Under the One Big Beautiful Bill Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. This landmark legislation introduces sweeping changes to employer-sponsored benefits, most notably affecting Health Savings Accounts (HSAs), Dependent Care Flexible Spending Accounts (FSAs), and student loan assistance programs.

Employee Benefits Changes – Highlights of the OBBBA

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HSA Enhancements

The OBBBA incorporates three expansions for HSAs:

• Telehealth Coverage;
  • Allows High Deductible Health Plans (HDHPs) to provide first-dollar telehealth and other remote care services without disqualifying HSA contributions. This change is effective retroactively for plan years beginning after December 31, 2024.
• Bronze and Catastrophic Plans available on Exchange as HDHPs;
  • Beginning in 2026, the OBBBA will treat all Bronze and catastrophic plans that are available on an ACA exchange as qualified HSA plans. This is a significant change that will allow individuals covered under these plans to enroll in and contribute to an HSA.
• Direct Primary Care (DPC);
  • The OBBBA, as of 2026, will treat DPC as a health plan that does not disqualify an individual from contributing to an HSA; and
  • DPC service arrangements will qualify as an HSA-eligible medical expense, limited to $150 per month for individuals or $300 per month for multiple covered individuals, indexed for inflation.

Dependent Care Benefits

The Dependent Care FSA limit will increase to $7,500 ($3,750 for married couples filing separately) effective with plan years beginning on or after January 1, 2026. BASIC will amend plan documents to allow for this limit increase, and employers should communicate the new maximum to employees prior to their 2026 plan year.

Student Loan Repayment

The $5,250 annual non-taxable benefit for employer-sponsored student loan assistance is now permanent—and will adjust for inflation. This makes student loan benefits a more viable long-term component of compensation strategies.

Tax-Free Bicycle Commuting

The OBBBA permanently eliminated the tax-free bicycle commuter benefit account. Employers can continue to reimburse these expenses but on a post-tax basis only.

Provisions Cut from OBBBA

Any piece of legislation will undergo changes as it passes through Congress. Below is a list of provisions originally proposed in the House version which did not become part of the final, Senate-passed enrolled bill sent to President Trump for signature:

ICHRA CHOICE Overhaul

Individual Coverage Health Reimbursement Arrangements (ICHRAs) were to have been rebranded as Custom Health Option and Individual Care Expense (CHOICE) Arrangements, with other proposed changes noted below:

• Allow small employers (under 100 employees) to offer a choice between a traditional group health plan and a CHOICE Arrangement.
• Require employers to report the annual CHOICE Arrangement allowance on employees’ Form W-2.
• Permit employees to pay the cost of their individual policy premiums on a pre-tax basis through a cafeteria plan even if the plan is purchased on an ACA exchange.
• Create a two-year tax credit (e.g., $100 per employee per month in their first year of employment) for small employers offering a CHOICE Arrangement for the first time.

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Other Considered HSA Proposals

The three expansions noted at the top of this post were the only HSA changes to be enacted. The following provisions were part of the original draft, but were struck from the OBBBA:

• Allow working seniors (age 65+) who are enrolled in Medicare Part A to continue contributing to an HSA.
• Allow employees who use on-site medical clinics (limited services) to remain HSA-eligible.
• Treat gym memberships and exercise costs (up to $500 per year) as qualified medical expenses for HSAs.
• Permit both spouses (age 55+) to deposit catch-up contributions into a single HSA.
• Allow rollovers of unused FSA or HRA funds into an HSA when switching to an HDHP.
• Permit HSA funds to reimburse medical expenses incurred during the 60 days prior to the date the HSA is opened.
• Allow an individual to be HSA-eligible even if their spouse has a general-purpose FSA.
• Raise annual HSA contribution caps by an additional $4,300 (single) or $8,550 (family) for lower-income households, with phase-outs.