IRS Announces Expanded HSA Eligibility Under New Law

December 11, 2025

On Dec. 9, 2025, the U.S. Department of the Treasury and the IRS issued Notice 2026-05, outlining new tax benefits for Health Savings Account (HSA) participants under the One Big Beautiful Bill Act (OBBBA). The changes significantly expand HSA eligibility, allowing more individuals to save for and pay healthcare costs on a tax-free basis. The guidance represents one of the most meaningful expansions of HSA rules in recent years and is intended to increase flexibility, access, and affordability for consumers across a wider range of health coverage options.

Key highlights include:

• Permanent telehealth flexibility: For plan years beginning on or after Jan. 1, 2025, individuals may receive telehealth and other remote care services before meeting their high-deductible health plan (HDHP) deductible without losing HSA eligibility. This provision makes permanent relief that had previously been temporary, ensuring continued access to virtual care while preserving HSA contribution eligibility.
• More plans qualify as HSA-compatible: Starting Jan. 1, 2026, bronze and catastrophic health plans are treated as HDHPs and are eligible for HSAs, even if they do not meet the traditional HDHP definition. These plans do not need to be purchased through an Exchange to qualify. This change expands HSA access to individuals enrolled in lower-premium plans in the individual market and provides additional flexibility in plan design and selection.
• Direct primary care arrangements: Beginning Jan. 1, 2026, individuals enrolled in certain direct primary care (DPC) arrangements may contribute to an HSA and use HSA funds tax-free to pay periodic DPC fees.​​​​​​ This removes a longstanding barrier for DPC participants and supports alternative care models focused on preventive and primary care services.

Collectively, these updates broaden the scope and usefulness of HSAs, offering individuals more ways to manage healthcare expenses while maximizing tax-advantaged savings.

As employers navigate these evolving HSA rules, PBS PEO helps simplify compliance and maximize the value of employee benefits. Through comprehensive HR and benefits administration, PBS PEO supports employers with plan design guidance, employee education, and ongoing regulatory compliance. By partnering with PBS PEO, organizations can confidently implement these new HSA opportunities while reducing administrative burden and enhancing the overall employee benefits experience