Expanded HSA Eligibility Under the One Big Beautiful Bill Act
The One Big Beautiful Bill Act significantly expands access to Health Savings Accounts by modifying the rules that determine who qualifies as an eligible individual. IRS Notice 2026-5 provides detailed guidance on how these changes apply, including permanent relief for telehealth coverage, new treatment of certain Affordable Care Act plans, and clarification on direct primary care arrangements. These changes open HSA planning opportunities for individuals who were previously excluded under strict technical rules.
Permanent Telehealth Safe Harbor
The Act permanently allows high deductible health plans to provide telehealth and other remote care services before the deductible is satisfied without disqualifying HSA eligibility. This rule applies retroactively to plan years beginning after December 31, 2024. Telehealth services are generally limited to those recognized by Medicare, and the safe harbor does not extend to in person services, medical equipment, or prescription drugs unless they otherwise qualify as telehealth services.
Bronze and Catastrophic Plans Now Qualify
Beginning in 2026, bronze and catastrophic plans available as individual coverage through an ACA Exchange are treated as high deductible health plans for HSA purposes, even if they do not meet the traditional deductible or out of pocket maximum requirements under IRC §223. This is a major expansion, as many Exchange plans were previously incompatible with HSAs due to cost sharing design. Off Exchange plans that are otherwise identical to Exchange plans are also treated as qualifying coverage.
Direct Primary Care and HSA Compatibility
Notice 2026-5 confirms that enrollment in a qualifying direct primary care service arrangement does not disqualify an individual from making HSA contributions. A qualifying arrangement must provide only primary care services, be compensated solely through a fixed periodic fee, and stay within monthly dollar limits of $150 for an individual or $300 for family coverage, indexed after 2026. Direct primary care fees may be reimbursed from an HSA as qualified medical expenses, but employer paid fees are not treated as expenses of the HSA beneficiary.
Key Tax Impacts
- Telehealth coverage before the deductible is permanently permitted without affecting HSA eligibility.
- Bronze and catastrophic Exchange plans qualify as high deductible health plans beginning in 2026.
- Enrollment in a qualifying direct primary care arrangement no longer disqualifies HSA contributions.
- Direct primary care fees are treated as qualified medical expenses eligible for HSA reimbursement, subject to key limitations.
- New planning opportunities exist for individuals previously locked out of HSAs due to coverage design.
These changes create meaningful planning opportunities, especially for self employed individuals, early retirees, and taxpayers purchasing coverage through the individual market. Reviewing health coverage elections before 2026 can unlock long term tax advantaged savings through HSAs that were not previously available.
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