HSA Changes by Oak Brook Tax Accountants

More employees can now open an HSA—here's what changed

Health savings accounts have long been one of the most tax-efficient benefits a small business can offer employees—contributions are tax-deductible, growth is tax-free, and qualified withdrawals are tax-free. But eligibility was historically limited to employees enrolled in a qualifying high-deductible health plan (HDHP). The OBBBA expanded that pool significantly, effective January 1, 2026.

Strategy: If you have employees enrolled in ACA bronze or catastrophic plans, or who participate in direct primary care arrangements, notify them that they may now be eligible to open and fund an HSA for the first time.

Here's the whole story: The OBBBA made three key changes to HSA eligibility under IRC §223, all clarified by IRS Notice 2026-05.

Bronze and catastrophic plans now qualify. Starting in 2026, ACA bronze and catastrophic plans are treated as HDHP-compatible for HSA purposes, even if they do not meet the traditional minimum deductible and out-of-pocket requirements. Employees in these lower-premium plans—common among younger, healthier workers—can now contribute to an HSA. For 2026, contribution limits are $4,400 for self-only coverage and $8,750 for family coverage, with a $1,000 catch-up for those age 55 and older.

Direct primary care arrangements. Employees who pay a flat monthly fee to a primary care physician under a direct primary care (DPC) arrangement can now contribute to an HSA without disqualifying themselves, provided the monthly DPC fee does not exceed $150 per individual ($300 per family). HSA funds may also be used tax-free to pay those fees.

Telehealth permanently covered. The OBBBA made permanent the COVID-era rule allowing HDHPs to cover telehealth visits before the deductible is met without affecting HSA eligibility, effective for plan years beginning after December 31, 2024.

Alert: If your company pays DPC fees on behalf of employees, those amounts must be reported on the employee's W-2 as a fringe benefit. Work with your payroll provider to ensure proper treatment.

Tip: HSA contributions made by the employer are excludable from employee income and deductible by the business—a rare double tax benefit. Even modest employer contributions can make an HSA-paired plan more attractive than a richer traditional health plan.