What employers need to know about new HSA and FSA rules in the budget reconciliation bill

From telehealth to childcare, new rules offer more flexibility and savings potential

The 2025 budget reconciliation bill, signed into law on July 4, presents an opportunity for employers to adapt their offerings and enhance employee value in the coming years. 

1. 01

   Dependent Care FSA limit increased for the first time in nearly 40 years

   Starting in 2026, the annual pre-tax contribution limit will increase from $5,000 to $7,500. This is the first permanent increase since the early 1980s, a major win for working parents facing rising childcare costs.

   Employer considerations:

   • Decide whether to update your plan to adopt the $7,500 cap (allowed, but not required)
   • Consider potential non-discrimination testing issues when deciding to increase the maximum or not
   • Update plan documents and enrollment materials
   • Prepare communications to boost employee awareness

2. 02

   Telehealth services no longer disqualify employees from HSA eligibility

   During the pandemic, temporary relief allowed employers to offer telehealth services before employees met their deductible, without jeopardizing HSA eligibility. The 2025 budget reconciliation bill provides permanent relief. Employers can now safely offer pre-deductible telehealth access under high-deductible health plans (HDHPs) without any HSA-related penalties.

   Employer considerations:

   • Consider updating HDHP plan design(s) to include pre-deductible telehealth services
   • Revise summary plan descriptions and enrollment materials
   • Promote the value of this change in benefits education efforts

3. 03

   Direct Primary Care (DPC) Arrangements are now HSA-compatible

   Under DPC arrangements, employees pay a flat monthly fee to a provider for unlimited primary care. DPCs can now be offered alongside an HSA-eligible medical plan without disqualifying the employee from contributing to an HSA.

   Under the new rules, DPC fees are also eligible for HSA reimbursement, within limits:

   • Fee for services cannot exceed $150/month for individuals, or $300/month for families (indexed annually for inflation)
   • Services must be provided by a primary care practitioner and must not include anesthesia-based procedures, most prescriptions, or lab services atypical to primary care
   • The arrangement must be billed as a fixed periodic fee

   Employer considerations:

   • Review plan design to determine if DPCs are appropriate for your benefits strategy
   • Update plan documents as needed

4. 04

   ACA Bronze and Catastrophic plans will become HSA-eligible in 2026

   Currently, many Affordable Care Act (ACA) marketplace plans resemble high-deductible health plans but aren’t technically HSA-compatible due to minor plan design elements. That’s about to change. Starting in 2026, all Bronze and Catastrophic plans will qualify for HSA contributions. 

   This opens the door for employers exploring Individual Coverage Health Reimbursement Arrangements (ICHRAs) and marketplace-based insurance solutions.

What’s next for employers 

The bill marks a major win for benefits modernization and provides more clarity and predictability for employers. Employers who act now can unlock new savings, boost employee satisfaction, and build smarter, more adaptable benefits programs. 

Author

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Douglas Morse Jr.

Director, Business Product Owner, Via Benefits

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