Legislative updates to health benefit accounts

On July 4, 2025, a spending bill was signed into law that includes several provisions relating to employee health benefit accounts such as health savings accounts, dependent care accounts, and more. Here, we’ll break down each of the provisions.

Sec. 71306: Telehealth safe harbor for HSAs

This provision retroactively makes permanent the safe harbor for high-deductible health plans to provide healthcare coverage using telehealth without a deductible (or with a deductible under the statutorily determined high-deductible amount) and still be considered a high-deductible health plan for purposes of HSA contributions. 

Sec. 71307: Bronze and catastrophic plans

According to this provision, any bronze or catastrophic plan offered in the Exchange will be treated as a high-deductible health plan for HSA purposes. 

Sec. 71308: Direct primary care service arrangements

The bill sets out new rules that allow direct primary care service arrangements to be used in conjunction with an HSA. A direct primary care service arrangement will not be treated as a health plan that makes an individual ineligible to contribute to an HSA. The fees paid for a direct primary care service arrangement are considered a qualified medical expense (not insurance). 

For purposes of these rules, a direct primary care service arrangement is limited to primary care services provided by primary care practitioners for a fixed periodic fee ($150 per month for an individual; $300 for more than one person and indexed for inflation for years thereafter). Primary care services do not include (i) procedures that require general anesthesia, (ii) prescription drugs (other than vaccines), and (iii) lab services not typically administered in an ambulatory primary care setting.

Sec. 70404: Dependent care assistance program limits

Under this provision, the limit on dependent care assistance programs will increase from $5,000 to $7,500, and from $2,500 to $3,750 for married individuals filing separately. 

What’s next?

The telehealth safe harbor provision goes into effect retroactively as of January 1, 2025, and the rest of the provisions will go into effect beginning January 1, 2026. We expect that there will be additional guidance handed down from the IRS, as well. Your friends at Omnify are excited about these changes and are working closely with industry leaders to better understand the language of these provisions and the effects they will have on our clients. We will provide more details as they become available, but if you have any questions in the meantime, please don’t hesitate to reach out to your Omnify Relationship Manager.