The One Big Beautiful Bill Act (H.R. 1), signed into law on July 4, 2025, brings the biggest updates to pre-tax benefit plans and tuition benefits in decades. Here’s a quick overview of what you need to know and why these changes matter.

1.       Expanded HSA Eligibility

Starting January 1, 2026, individuals enrolled in Bronze or Catastrophic health insurance plans sold through the Affordable Care Act Marketplace will be eligible to contribute to a Health Savings Account (HSA).

Why this matters: This change expands HSA access to a broader group, giving more individuals the opportunity to take advantage of the tax benefits and long-term savings potential an HSA provides.

Telehealth services will also no longer affect HSA eligibility. Starting January 1, 2025, individuals may use telehealth at any time, even before meeting their deductible (something that previously could make them ineligible to contribute to an HSA).

Why this matters: Making telehealth permanently compatible with HSA eligibility means employees get easier, faster access to care and still qualify to contribute to an HSA.  

2.       New HSA Eligible Expenses

Starting January 1, 2026, employees can participate in a Direct Primary Care (DPC) arrangement and still contribute to an HSA. Direct Primary Care (DPC) is a healthcare delivery model through in which privately owned medical practices provide primary care services directly to patients in exchange for a recurring membership fee. Patients can also use HSA funds to pay for that arrangement, with monthly fees capped at $150 for individuals or $300 for families.

Why this matters: These changes both preserve HSA eligibility for employees who choose to enroll in a DPC arrangement (something that previously could make them ineligible) and allows them to use HSA funds to cover the monthly DPC fees.

3.       Higher Dependent Care FSA Limits

Previously, the maximum annual contribution to a Dependent Care FSA was $5,000 per year ($2,500 if married filing separately). The One Big Beautiful Bill (OBBB) has changed this maximum amount to $7,500 per year ($3,750 if married filing separately).

Why this matters: This is the first time this limit is being increased since 1986. A higher limit means employees can set aside more pre-tax money for dependent care costs, helping to offset rising care costs for things like daycare, preschool, after-school care, and care for elderly or disabled dependents.

4.       Permanent Student Loan Repayment Benefit

Previously, employers could pay up to $5,250 per year toward an employee’s student loans without the employee owing income tax on it. This rule came from a temporary COVID-era change, and now, thanks to the OBBB, it’s here to stay.

Employers can continue offering up to $5,250 per year in tax-free student loan repayments. This provision is now permanent, and starting in 2027 the $5,250 limit will be increased annually, but employers are not required to offer the higher amount each year.

Why this matters: By making this benefit permanent, employees and employers can plan for the long term. Employees receive tax-free assistance to pay down student debt faster, and employers can use it as a valuable recruitment and retention tool. The annual limit increase will also help keep pace with inflation.

Employers should communicate these changes ahead of Open Enrollment 2025 to prepare for the 2026 plan year.

Please note: The information provided in this communication is for general informational purposes only and does not constitute legal advice. ThrivePass is not a law firm and does not offer legal services. Clients are encouraged to consult with their own legal counsel, particularly benefits legal advisors, to ensure compliance with applicable laws and regulations.

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