How the One Big Beautiful Bill Expands HDHPs and Broadens Access to HSAs

Health Savings Accounts (HSAs) have become a central component of modern financial planning. They offer a combination of tax advantages and flexibility that few other accounts provide, while helping individuals prepare for one of the most significant and unpredictable expenses: healthcare.

Recent legislative changes under the One Big Beautiful Bill Act build on the existing HSA framework by expanding eligibility and clarifying how these accounts can be used. The updates focus on removing limitations that previously restricted access, allowing more individuals and families to incorporate HSAs into their long-term financial strategies.

How HSAs Worked Before the New Law

Before these changes, HSA eligibility was tightly defined. To contribute to an HSA or receive employer contributions, an individual had to be enrolled in a qualified High Deductible Health Plan (HDHP). In most cases, they also could not have any additional health coverage that paid for medical expenses before the deductible was met.

There were limited exceptions. Preventive care services such as annual checkups, immunizations, and certain screenings could be covered at no cost without affecting eligibility. However, outside of those services, plans needed to follow strict deductible and out-of-pocket limits set by law.

This structure excluded several types of coverage that many individuals already used:

• Bronze plans: These plans typically offer lower monthly premiums and higher out-of-pocket costs. On average, they cover about 60 percent of medical expenses, leaving the individual responsible for the remaining portion. They are often selected by people who want protection against major medical events while managing monthly costs.
• Catastrophic plans: These plans generally have even lower premiums but require individuals to pay a significant amount out of pocket before coverage begins. They are designed primarily for worst-case scenarios rather than routine care.

Despite their high deductible nature, neither Bronze nor Catastrophic plans met the technical requirements to qualify as HDHPs. As a result, individuals enrolled in these plans were not eligible to contribute to an HSA.

In addition, participation in Direct Primary Care (DPC) arrangements also prevented HSA eligibility. These arrangements, which typically involve a fixed monthly fee for primary care services, were treated as disqualifying coverage under prior guidance.

Key Changes to HSAs Under the New Law

The updated legislation focuses on three primary areas: eligibility, qualified expenses, and long-term planning clarity. Together, these changes expand how HSAs can be used and who can benefit from them.

At a high level, the law:

• Expands eligibility to additional health plan types
• Establishes permanent rules for telehealth coverage
• Allows HSAs to be used alongside Direct Primary Care arrangements

These changes directly influence how individuals choose health coverage, manage out-of-pocket costs, and plan for future medical expenses.

Expanded Eligibility for Bronze and Catastrophic Plans

Beginning in 2026, individuals enrolled in Bronze and Catastrophic plans will be eligible to open and contribute to HSAs. This marks a significant shift from prior rules.

The legislation effectively reclassifies these plans as compatible with HSA requirements, even if they do not meet the traditional deductible and out-of-pocket thresholds applied to HDHPs. This applies whether the plans are purchased through a public exchange or off-exchange.

This update is particularly relevant for:

• Individuals who prioritize lower premiums
• Self-employed individuals purchasing their own coverage
• Younger households that prefer higher deductibles paired with savings strategies

The change also creates new opportunities for employers using Individual Coverage Health Reimbursement Arrangements (ICHRAs). Employers can reimburse premiums for these plans while employees contribute to HSAs, creating a coordinated approach to managing healthcare costs.

Permanent Telehealth Flexibility

Telehealth has become an integral part of healthcare delivery. Prior to this legislation, the ability to offer telehealth services before meeting a deductible was allowed only through temporary regulatory relief.

The new law makes this flexibility permanent. Individuals can now access telehealth services without jeopardizing their HSA eligibility, even if those services are covered before the deductible is met.

Guidance also clarifies how telehealth services are defined. Taxpayers may refer to the list of eligible telehealth services published annually by Medicare, along with additional guidance from the Department of Health and Human Services when needed.

It is important to note that any in-person services, medical equipment, or prescriptions associated with a telehealth visit remain subject to standard deductible rules.

This change provides consistency for individuals, employers, and health plans that rely on virtual care as part of their overall healthcare strategy.

Integration of Direct Primary Care (DPC)

The legislation also addresses how Direct Primary Care arrangements interact with HSAs.

Under the updated rules, individuals can participate in a DPC arrangement without losing HSA eligibility. This removes a longstanding barrier that limited the use of these care models.

In addition:

• Monthly DPC fees are now considered qualified medical expenses, subject to statutory limits
• HSA funds can be used to pay these fees on a tax-free basis
• Individuals can combine DPC with high-deductible coverage and HSA savings

This approach allows for a more consistent and predictable primary care experience while maintaining the tax advantages of an HSA. It also supports a model where routine care is managed through a fixed monthly cost, while insurance is reserved for larger, unexpected expenses.

What These Changes Mean for Planning

The expansion of HSA eligibility and usage creates new planning opportunities across different income levels and life stages.

For individuals and families, these changes may support:

• Earlier adoption of HSA savings strategies
• Greater alignment between insurance choices and tax planning
• More flexibility in managing healthcare expenses over time

For business owners and higher-income individuals, HSAs can continue to function as a supplemental planning tool alongside retirement accounts and other tax-advantaged strategies.

Next Steps to Consider

With the updated rules taking effect, it is important to review how current coverage and savings strategies align with the new opportunities.

Consider the following actions:

• Review whether your current health plan will qualify under the updated eligibility rules
• Reassess HSA contribution strategies based on expanded access
• Evaluate how HSAs fit into broader financial and retirement planning

These changes do not require immediate action, but they do provide additional flexibility for those who want to take a more structured approach to managing healthcare costs.

Get Started

If these changes apply to your situation, you may now have new opportunities to take advantage of the tax benefits and flexibility that Health Savings Accounts offer.

If you are eligible, you are welcome to open an HSA with us by using this link or by connecting with one of our specialists. Our team can help you understand your eligibility, align your account with your health plan, and ensure you are set up to make the most of your contributions.