- On July 8, 2025
By now, you’ve likely heard about the sweeping “One Big Beautiful Bill Act” (OBBB), recently passed by Congress and signed into law on July 4, 2025. While much of the coverage has focused on its tax and healthcare provisions, a lesser-known but highly impactful aspect of the legislation is its effect on employee benefits. The OBBB introduces significant changes to Health Savings Accounts (HSAs), Dependent Care FSAs, student loan repayment benefits, and a new savings vehicle called “Trump Accounts.”
Health Savings Accounts
The OBBB delivers several long-awaited reforms to HSAs:
- Telehealth Services: Initially included in the CARES Act, the OBBB makes permanent the rule that allowed HSA-qualified High-Deductible Health Plans (HDHPs) to cover telehealth services before the deductible is met. This change is retroactive to December 31, 2024, meaning participants can receive first-dollar telehealth coverage in 2025 without jeopardizing HSA eligibility.
- Direct Primary Care (DPC): The law clarifies that the DPC coverage model may be integrated without impacting HSA eligibility. In DPC, members typically pay a monthly fee to cover services related to primary care. Under the OBBB, DPC is excluded from the definition of disqualifying coverage, so long as fees for the coverage do not exceed $150/month for an individual or $300/month for a family (indexed for inflation). This is effective for months after December 31, 2025.
- Expand Eligibility: For those shopping for plans on the ACA Marketplace, all Bronze and Catastrophic plans are now considered HSA-eligible HDHPs for months beginning after December 31, 2025.
Dependent Care FSAs
At long last, the dependent care FSA limit has been increased.
- New Limit: For plan years starting on or after January 1, 2026, the new dependent care FSA limit will increase to $7,500/year (or $3,750 for married couples who file taxes separately).
- No Inflation Indexing: Unfortunately, this new limit is not indexed for inflation.
Employers should begin working with their plan document providers to update plan materials and prepare for the 2026 plan year.
“Trump Accounts”
Previously referred to as “Invest America” accounts, the “Trump Accounts” are a new type of custodial savings account, which function similarly to Individual Retirement Accounts (IRAs), designed to promote long-term financial growth for children:
- Eligibility: Children born between January 1, 2025, and December 31, 2028, are eligible to receive a one-time $1,000 government contribution.
- Contributions: Parents, relatives, and employers can contribute up to $5,000 annually (indexed for inflation). Employers may contribute up to $2,500 per year per employee or dependent.
- Investment Rules: Funds must be invested in low-cost index-tracking mutual or exchange-traded funds.
- Withdrawals: Distributions are generally restricted until the child turns 18, after which the account functions similarly to a traditional IRA.
To offer this benefit, employers must adopt a plan document and comply with similar nondiscrimination requirements that apply to dependent care FSAs.
Student Loan Repayment
Originally introduced under the CARES Act, employers were allowed to provide up to $5,250 in tax-free student loan repayment assistance per employee using a Section 127 educational assistance program from March 27, 2020, through the end of that year. This provision was later extended through 2025 by the Consolidated Appropriations Act (CAA).
The OBB permanently extends the tax exclusion for employer-provided student loan repayment assistance under Section 127 of the Internal Revenue Code. Additionally, starting in 2027, the $5,250 annual limit will be indexed for inflation.
Tax-Free Bicycle Commuting Reimbursement
A small but symbolic benefit has officially been retired. The Tax Cuts and Jobs Act of 2017 (TCJA) suspended the $20/month tax-free bicycle commuting reimbursement benefit, initially introduced in 2009. The benefit allowed employers to reimburse employees for qualified bicycle commuting expenses. The TCJA repeal was set to expire at the end of 2025, meaning the benefit would have returned in 2026. However, the OBBB permanently repeals the exclusion, eliminating the possibility of its return.