Benefit Changes in OBBBA (One Big Beautiful Bill Act)
The final version of the OBBBA contains a few items of note to the employee benefits community. Here are some of the details.
Telehealth Before Meeting a High Deductible Health Plan’s (HDHP) Deductible
First-dollar telehealth coverage was reinstated and made permanent beginning with plan years after December 31, 2024. This common-sense benefit saw a lot of starts and stops, beginning with the CARES Act, and followed by temporary extensions (and some gaps in the law’s applicability) from CAA 2022 and CAA 2023. The OBBBA now extends first-dollar telehealth and other remote coverage options to HDHPs, even if the cause of the telehealth visit is not preventive, without causing a loss of the ability of an employer or employee to contribute to a Health Savings Account (HSA).
Kushner & Company is proud to have worked with a number of associations in pushing for this common-sense, permanent change.
Dependent Care FSA Limit Raised Starting in 2026
In 1986, Congress last set a non-indexed limit of $5,000 for dependent care benefits offered by an employer. Apparently, in the last 40 years, dependent care costs have somewhat increased (duh!), even though the allowable limit has not. The OBBBA raises the limit for plan years beginning on or after January 1, 2026 to $7,500 ($3,750 for those who are married filing separately). Unfortunately, this new limit is not indexed either. Hopefully we’ll get greater relief in something less than 40 years.
Bronze and Catastrophic Exchange-Based Plans are Now Eligible as HDHPs
By opening up Bronze-level and catastrophic plans that are available on a state- or the federal Exchange to be treated as HDHPs enables those enrollees to receive employer and/or employee HSA contributions, as long as they are:
- enrolled in that plan;
- not enrolled in Medicare Part A;
- not enrolled in a disqualified plan; and
- not claimed as a dependent on another’s current-year tax return.
Tax-Free Student Loan Repayment Assistance
In 2020, the CARES Act first enabled employers to provide up to $5,250 per year to employees for student loan repayment assistance under a qualified Secton 127 Educational Assistance plan. However, that provision was scheduled to sunset at the end of calendar year 2025, regardless of the Educational Assistance plan’s year. The OBBBA makes permanent that CARES Act provision, extending into the future beyond 2025. Note that a qualified Educational Assistance plan still requires a plan document and does come with significant nondiscrimination rules to prevent a disproportionate benefit going to key and other highly compensated employees.
This benefit can be used to pay for student loans of the employee. It can also be used to pay for student loans where the employee is legally obligated to make payments on behalf of a tax dependent, such as when a parent/employee co-signs and guarantees a student loan of a dependent child.
Summary and Next Steps
Now that the OBBBA has passed both houses of Congress and is expected to be signed into law by the time you read this, there are some significant changes to the benefits landscape for employers to consider. While there were many other changes first proposed in the House of Representatives that didn’t make the final cut (allowing HSA contributions for Medicare enrollees; allowing HSAs to reimburse up to $500 per year tax-free for gym memberships; and many others), there are some good first-steps in the OBBBA that employers should note and discuss.
As always, Kushner & Company stands ready to assist employers in deetermining which of these changes they might wish to consider and help implement later this year and into the future.
