One Big Beautiful Bill Act Signed Into Law

Last week, the U.S. Senate and House of Representatives voted on advancing President Donald Trump’s budget reconciliation bill, modestly known as the One Big Beautiful Bill Act (OBBB Act). During the Senate vote, Vice President JD Vance cast the tie-breaking vote to pass the bill. The bill passed the final House vote before Trump’s self-imposed July 4 deadline and the President signed it into law thereafter. 

The legislation enacts many of the President’s key priorities, spanning from immigration reform to tax cuts.  Early versions of the bill included changes in the taxability of employer-sponsored health insurance.  Additionally, some later drafts contained a number of provisions that might have altered the manner in which other employee benefits were provided, particularly with regard to Health Reimbursement Arrangements and Health Savings Accounts. Most of these changes did not make it to the final version that won passage. What follows are highlights of how the Act affected (or, didn’t affect) the health and welfare benefits you and your employees enjoy.

Issue	Current Law	OBBB Act Changes
Telehealth and HSA Eligibility	Prior to 2025, the CARES Act permitted high-deductible health plans to reimburse telehealth services on a pre-deductible basis, thereby preserving an individual’s eligibility to contribute/receive contributions to their HSA.  This safe harbor expired at the end of 2024.	Permanently extends the CARES Act safe harbor.  This means that individuals receiving free or low cost access to telehealth benefits will be able to contribute to and receive employer contributions to their Health Savings Account.
Direct Primary Care Arrangements and HSAs	Some direct primary care arrangements may be classified as health plans, rendering individuals enrolled in these arrangements ineligible to contribute to an HSA.	No direct primary care arrangement will be considered a health plan, thus participation will not affect an individual’s ability to contribute to an HSA. Permits use of HSA monies to reimburse direct primary care arrangement costs ($150/month for individual and $300/month for families).
HSA Contribution Limits	For 2025, Health Savings Account’s annual contribution limit is $4,300 for individuals and $8,500 for families. Individuals may not contribute to their HSA if their spouse participates in an FSA.	No Change. The House-passed version included contribution limit increases and a relaxation of the FSA limitation.  These provisions did not make it to the final.
Tax-free Employer-sponsored Health Insurance	Employers may provide health insurance, premium support and a variety of other health and welfare benefits to employees and their families in tax-free fashion.	No Change. The current tax exclusion for employer-sponsored health insurance will be maintained.
ICHRAs and CHOICE HRAs	Subject to some rules, employers may choose to sponsor an ICHRA instead of providing traditional health insurance for their employees.  Employers may reimburse employees, tax-free, for the costs of individual health insurance.	No Change. Earlier versions included changes in how ICHRAs were to be structured, renaming them “CHOICE HRAs.”  The House version included a financial incentive for small employers to offer CHOICE HRAs.  None of these changes made the final bill.

As the rules associated with some of these new provisions take shape, we will continue to keep you informed about the potential effects these changes may have on your health benefits offerings.  If you have any questions, please contact your Cottingham & Butler team member today.