On July 4, 2025, President Trump signed the reconciliation bill entitled An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14 (“Act”) into law. The changes proposed in the earlier House version of the Act demonstrated an interest in expanding utilization of health reimbursement accounts, health savings accounts (“HSAs”), and flexible savings accounts. The final version of the Act was comparatively modest against the earlier draft but made the following changes to enhance HSAs:
- Permanent Extension of Safe Harbor for Absence of Deductible for Telehealth Services. Allows for high deductible health plans to cover telehealth and other remote services on a first dollar basis, regardless of whether the services are strictly preventive, without jeopardizing HSA eligibility. Applies for plan years beginning after December 31, 2024. This change resolves concerns surrounding whether the allowance for first dollar telehealth coverage would be permitted, and further resolves any gap concerns created by the prior extensions of the 2020 telehealth guidance expiring as the last day of the 2024 plan year. Plan sponsors should ensure their summary plan descriptions, plan documents and other plan communications are updated to reflect this change.
- Allowance of Bronze and Catastrophic Plans in Connection with Health Savings Accounts. Provides that Bronze and Catastrophic health plans offered through the Exchange will be deemed high deductible health plans and may be paired with HSAs, regardless of other first dollar coverage which may exist under those plans. Applies for months following December 31, 2025.
- Treatment of Direct Primary Care Service Arrangements. The final HSA modification provides that direct primary care service (“DPC”) arrangements will not be considered disqualifying coverage, regardless of whether the DPCs provide first dollar coverage for non-preventive services. These arrangements allow for individuals to receive primary care services for a fixed fee, which under the new guidance may not exceed $150 for single coverage or $300 for family coverage. The Act provides that prescription drugs, procedures that require the use of general anesthesia, and laboratory services not typically administered in an ambulatory primary care setting will not be considered “primary care services.” Applies for months following December 31, 2025.
Practically, the changes that made it to the final Act and the changes contemplated in earlier versions of the Act may not have as great a benefit to smaller employers with a lower earning workforce. HSAs are frequently considered most beneficial for, and most highly utilized by, higher income earners. The reconciliation bill provisions that survived were restricted to HSA expansions. In addition, the focus on consumer driven health care arrangements demonstrated in the surviving provisions and the earlier draft provisions, particularly codification of the Individual Coverage Health Reimbursement Arrangements, aimed to leverage the individual market. However, commentators have suggested that the Act will have the impact of undermining the individual market, a market which employers depend on when implementing the same types of consumer driven health care arrangements promulgated by the Act. The undermining of the individual market and the lower utilization of HSAs by rank-and-file workers may mitigate some of the utility of the changes to consumer driven health care arrangements made by the current administration.
Although certain design changes may not be suitable for every plan sponsor, the modifications made to allow HSA compatibility with certain DPCs, the permanent extension of HSA compatibility with certain telehealth and remote services arrangements, and the expansion of HSA eligibility for those with Bronze and Catastrophic plans allow for additional planning opportunities that may potentially reduce costs to employers. Employers should revisit their documents with respect to the telehealth changes and keep these new modifications in mind when exploring additional design changes.
