The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. While simplified from earlier drafts, the OBBBA legislation introduces sweeping changes to employee benefit plans, with most provisions taking effect in 2026. Employers should begin preparing now to ensure compliance and maximize benefit opportunities.
Health Savings Accounts (HSAs)
The OBBBA expands access to Health Savings Accounts (HSAs)— tax-advantaged medical savings accounts traditionally available only to individuals enrolled in high-deductible health plans (HDHPs) and without other disqualifying coverage.
Under the OBBBA, employers offering HDHPs may now provide telehealth and remote care services before the deductible is met without jeopardizing HSA eligibility. This change permanently extends the pandemic-related relief measures for telehealth and virtual care. Although this relief expired at the end of the 2024 plan year, the OBBBA retroactively and permanently extends the relief for plan years that began after December 31st, 2024.
What Should Employers Do? Employers offering HDHPs should review their telehealth coverage and assess whether any changes are needed. Any changes must be clearly communicated to plan participants.
Additionally, effective January 1, 2025, the OBBBA expands HSA eligibility to individuals enrolled in direct primary care (DPC) arrangements, provided monthly fees are $150 or less for individual coverage, or $300 or less for family coverage. These limits will be adjusted annually for inflation. Additionally, DPC fees are now considered qualified medical expenses and may be paid using HSA funds.
What Should Employers Do? Employers may consider integrating DPC arrangements into their benefit packages and should monitor future regulatory guidance related to compliance requirements.
Dependent Care Assistance
The OBBBA increases the maximum contribution limit for dependent care flexible spending accounts (FSAs). Before 2026, limits were $5,000 for single individuals / married couples filing jointly and $2,500 for married individuals filing separately. Effective January 1, 2026, the OBBBA raises these limits to $7,500, or $3,750 for married individuals filing separately.
What Should Employers Do? Employers offering dependent care FSAs should consult with their advisors to assess how increasing contribution limits could impact annual nondiscrimination testing results. Employers should review plan documents, make necessary updates, and communicate the new limits to employees.
Beginning in 2026, the OBBBA enhances the employer childcare tax credit by increasing the maximum annual credit to $500,000 and raising the percentage of qualified expenses to 40%. Small businesses may qualify for a 50% credit with an annual cap of $600,000. These thresholds will be adjusted in future years.
Student Loan Assistance
The OBBBA permanently expands employer-sponsored student loan assistance under education. Although educational assistance programs have been available for many years, the option to use them to pay for student loans was set to expire on December 31st, 2025. The OBBBA permanently extends this student loan payment option. The $5,250 limit per employee per year will be adjusted for inflation for taxable years beginning after 2026, enhancing this benefit’s long-term value.
What Should Employers Do? Employers without an educational assistance program may consider establishing one to take advantage of the OBBBA’s student loan provision.
Trump Accounts
Beginning in 2026, the OBBBA introduced “Trump Accounts,” a new tax-advantaged savings account for children under age 18. These Trump Accounts allow employers to contribute up to $2,500 annually (adjusted for inflation beginning after 2027), with annual contributions generally being capped at $5,000 per child. Children born between 2025 and 2028 may be eligible to receive a special $1,000 federal contribution. Employer contributions require a written plan document and will be subject to similar rules that apply to dependent care FSAs. The IRS is expected to issue future regulations addressing implementation details.
What Should Employers Do? Employers may evaluate their overall benefit strategy to determine whether Trump Accounts align with their organization’s needs, along with continuing to monitor developments as guidance is released.
All employers should continue communicating any plan expansion or updates to plan participants.