The U.S. Department of the Treasury and the Internal Revenue Service issued new guidance this month detailing expanded tax benefits for health savings account holders under the tax package enacted earlier this year by President Trump and congressional Republicans.
The One Big Beautiful Bill Act, signed into law in July, expanded eligibility for health savings accounts (HSAs), according to new guidance. The changes allow more Americans with certain health plans to contribute to HSAs and broaden the use of HSA funds for healthcare services. HSAs let users save and invest money tax-free, deduct contributions, grow balances without taxes, and make tax-free withdrawals for qualified medical expenses.
The OBBBA permanently allows Americans to receive telehealth and other remote care before meeting a high-deductible health plan deductible while remaining eligible to contribute to an HSA, effective for plan years beginning Jan. 1, 2025. Beginning next year, bronze and catastrophic health plans will be treated as HSA-compatible—even if they don’t meet the standard HDHP definition—expanding HSA contribution eligibility. Treasury and IRS guidance clarified that these plans do not need to be purchased through an exchange to qualify. Treasury and the IRS also expanded the ability of individuals enrolled in particular direct primary care (DPC) service arrangements to contribute to an HSA, effective next year. They may also use HSA funds tax-free to pay periodic DPC fees.
The new HSA guidance comes as Congress has yet to extend enhanced Obamacare subsidies set to expire at year’s end. Those expanded premium tax credits were enacted during the COVID-19 pandemic and extended under the Biden administration. Democrats are pushing to renew them, and a group of moderate Republicans has joined a discharge petition to force a House vote when lawmakers return next year.
Sens. Mike Crapo and Bill Cassidy have introduced legislation to redirect funds from enhanced Obamacare subsidies into health savings accounts. The plan would provide $1,000 to participants ages 18–49 and $1,500 to those 50–64, but a procedural Senate vote on the proposal failed, as did a separate Democratic push to extend the enhanced subsidies for three years.
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