What's Happening?
The U.S. Department of the Treasury and the IRS have released new guidance on health savings account (HSA) updates as part of President Donald Trump's legislative initiative, referred to as the 'big beautiful bill.' This legislation introduces expanded
eligibility for HSAs, allowing more individuals to save for healthcare costs through tax-free accounts. The changes include making bronze and catastrophic ACA marketplace plans HSA-compatible, even if they do not meet previous high-deductible health plan (HDHP) criteria. Starting in 2026, enrollees in these plans can contribute to HSAs. Additionally, the legislation makes permanent the 'safe harbor' for telehealth services under HDHPs, allowing individuals to use these services without affecting their HSA eligibility. The IRS also announced that certain direct primary care arrangements will not block HSA contributions, and HSAs can be used to cover these fees.
Why It's Important?
The expansion of HSA eligibility is significant as it potentially increases the number of Americans who can benefit from tax-advantaged savings for healthcare expenses. With over 59 million Americans already holding HSAs, the changes could lead to broader adoption and utilization of these accounts. This development is particularly relevant as the future of Affordable Care Act (ACA) subsidies remains uncertain, with pandemic-era tax breaks set to expire after 2025 unless Congress intervenes. The expanded HSA eligibility could provide an alternative means for individuals to manage healthcare costs, especially if ACA subsidies are not extended. The legislative changes reflect ongoing debates between Democrats and Republicans over healthcare policy, with each party proposing different solutions to address affordability and access.
What's Next?
As the new HSA rules take effect, individuals enrolled in bronze and catastrophic plans will need to assess their eligibility and consider the benefits of contributing to HSAs. The permanence of telehealth service coverage under HDHPs may encourage more widespread use of remote healthcare services. Meanwhile, the expiration of ACA subsidies looms, with potential impacts on millions of Americans' insurance premiums. Lawmakers will likely continue to debate the future of these subsidies, with possible legislative actions to extend or replace them. Stakeholders, including healthcare providers and insurers, will need to adapt to these changes and communicate the implications to consumers.
