It’s hard to believe, but 2025 is coming to an end, and although the year is winding down, one major legislative change is just ramping up. In July of this year, the One Big Beautiful Bill Act (the “OBBB”) was signed into law, carrying with it several changes impacting employee benefits and benefit plans. What does this mean for plan sponsors? Take a look at some of these key provisions and effective dates:
- HSA Policy- Telehealth: The OBBB restores the telehealth safe harbor that expired in December 2024 for calendar year plans. As a result, high-deductible health plans (“HDHPs”) may continue to provide telehealth and remote care services with no deductible or a lower deductible, while preserving employees’ eligibility to contribute to a health savings account (“HSA”). This change is retroactive to plan years beginning on or after January 1, 2025.
- HSA Policy – Direct Primary Care Services: Effective January 1, 2026, an employee’s participation in a direct primary care service arrangement (“DPCSA”) no longer, by itself, disqualifies an otherwise HSA-eligible individual from contributing to an HSA. Additionally, HSA funds may be used to reimburse DPCSA fees. A service arrangement qualifies as a DPCSA if services are limited to “primary care services” provided by a “primary care practitioner” for a fixed periodic fee. Primary care services do not include procedures requiring general anesthesia, prescription drugs other than vaccines, or laboratory services that are not typically administered in an ambulatory primary care setting.
- Educational Assistance Policy – Permanent Extension for Educational Assistance Program Benefits: Previously, the Educational Assistance Program benefits allowed under Internal Revenue Code Section 127 permitted employers to provide tax-free educational assistance (up to $5,250 annually) to their employees. Under prior law, the CARES Act expansion allowing employer payments of employees’ student loans was scheduled to expire after December 31, 2025. The OBBB removes the January 2026 sunset date and
makes student loan payment assistance under Section 127 a permanent benefit. Additionally, effective in 2027, the $5,250 limit on employer assistance will be indexed for inflation. Accordingly, the educational assistance benefit will increase to account for cost of living increases. - Dependent Care Assistance Policy – Exclusion Limits: The OBBB permanently raises the annual tax exclusion for dependent care assistance programs from $5,000 ($2,500 if the employee is married filing separately) to $7,500 ($3,750 if the employee is married filing separately). This change is effective for tax years beginning in 2026. Be sure to amend plan documents accordingly and update any necessary notices and materials for employees. While many of the policy changes outlined in the OBBB won’t go into effect until 2026 and beyond, it’s important to remain aware of the ways in which employer plans may be impacted. Be sure to work with advisors, TPA partners, and benefits counsel if you have questions or concerns about your plans!
