IRS Issues Guidance on Changes to Health Savings Accounts

HSA and HDHP updates employers need to know for 2025 and beyond

As health insurance costs continue to rise, Health Savings Accounts (HSAs) have become a cornerstone of cost-effective benefits strategies. Created under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, HSAs were designed to work alongside High-Deductible Health Plans (HDHPs). This allowed companies to:

• Reduce premium costs by requiring higher deductibles for HDHPs.
• Allow individuals and employers to set aside pre-tax dollars to cover out-of-pocket expenses until the deductible is met with an HSA account.

This combination offers a powerful tax advantage allowing tax-deductible contributions, set aside pre-tax savings, and withdrawal for qualified medical expenses that are tax-free.

Key regulatory changes from H.R. 1

As a result of H.R. 1, formerly the One Big Beautiful Bill Act, the IRS introduced guidance and updates that employers and plan sponsors should consider for 2025 and beyond.

1.      Telehealth safe harbor is now permanent

HDHPs will now permanently cover telehealth or remote care services before meeting the deductible. This applies retroactively to plan years beginning after December 31, 2024. This does not automatically cover in-person follow-ups, medical equipment, or drugs unless they independently qualify in the HDHP.

Employer Considerations: 2025 HDHP designs with pre-deductible telehealth remain HSA-compatible.

2.      ACA bronze and catastrophic plans are treated as HDHPs beginning 2026

After December 31, 2025, any Affordable Care Act (ACA) bronze or catastrophic plan available as individual coverage through an Exchange is treated as an HDHP, even if it does not meet normal HDHP deductible or out-of-pocket (OOP) rules.

Employer Considerations: Employers who offer an Individual Coverage Health Reimbursement Arrangement (ICHRA) or the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) will remain HDHP compatible if the HRA reimburses for premiums only. Reimbursements for other qualified medical expenses generally disqualify the plan for HSA compatibility.

3.      Direct Primary Care Service Arrangements and HSA eligibility

Employers can allow Direct Primary Care (DPC) membership when offering a HDHP beginning in 2026. Prior to this change, enrollment in a direct primary care service agreement (DPCSA) would be treated as other health coverage and would block eligibility for HSA contributions. DPC fees paid by the employer will now be eligible to be paid or reimbursed by an HSA if the fee is paid by the employee directly. Employer paid DPC fees are not eligible to be paid by the HSA.

Employer Considerations: Qualifying DPCSA plans must provide only primary care services by primary care practitioners. Services may not include:

• Procedures requiring general anesthesia
• Prescription drugs (except vaccines)
• Certain lab services outside ambulatory primary care

Monthly fee caps of $150/month (single) or $300/month (family) must also be considered to avoid disqualifying coverage.

By leveraging these rules, companies can offer competitive benefits while controlling costs and employees can maximize tax savings and flexibility. Questions on leveraging HSA tax advantages for your company? Contact your Opportunity Advisor.