New rules for HSA eligibility and tax benefits

The Treasury Department and the IRS released new guidance that explains how the One Big Beautiful Bill Act (OBBBA) expands access to health savings accounts. IRS Notice 2026-05 outlines updated requirements for qualifying plans, clarifying how telehealth and primary care arrangements affect eligibility. The notice also describes new options that become available in 2025 and 2026. These changes are intended to increase participation and help individuals better manage health care costs.

What HSAs provide

An HSA allows eligible individuals to set aside money on a tax-favored basis to pay for qualified medical expenses. Contributions are deductible, earnings are tax-free and withdrawals used for eligible costs are not taxed. A qualifying high-deductible health plan must cover an individual and cannot have disqualifying coverage. These accounts support long-term financial planning and help individuals prepare for current and future medical needs.

Permanent telehealth flexibility

The new law makes permanent the option for telehealth and other remote care services to be offered before the deductible without affecting HSA eligibility. This change takes effect with plan years beginning after Jan. 1, 2025. It also removes the need for annual renewal of temporary telehealth relief.

Key requirements

A plan offering pre-deductible telehealth may still qualify for HSA contributions if:

• Telehealth or remote care services are available before the deductible
• The individual is enrolled in a qualifying high-deductible health plan
• The services do not include non-permitted coverage that would disqualify the individual

This update supports wider access to primary care and mental health services through virtual visits.

Bronze and catastrophic plans treated as HSA compatible

Beginning with plan years starting after Jan. 1, 2026, bronze and catastrophic plans offered on the individual market will qualify as high-deductible health plans even if they do not meet the traditional deductible and out-of-pocket thresholds. This expansion allows many taxpayers who use these plans to contribute to HSAs for the first time.

Key requirements

An individual may treat a bronze or catastrophic plan as an HSA-compatible high-deductible plan if:

• The plan is a bronze or catastrophic plan offered on the individual market
• The plan year begins on or after Jan. 1, 2026
• The individual has no other disqualifying coverage

This change is expected to expand HSA availability to millions who enroll in marketplace coverage.

Direct primary care arrangements are allowed with HSAs

The guidance outlines new rules for direct primary care arrangements, effective as of 2026. Direct primary care involves paying a periodic fee directly to a primary care provider for a comprehensive package of services. Under past interpretations, this arrangement was often considered disqualifying coverage.

The new rules allow individuals in certain direct primary care arrangements to contribute to HSAs and to use HSA funds to pay the monthly fees.

Key requirements

A direct primary care arrangement will not disqualify an individual from HSA eligibility if:

• The arrangement provides primary care services only
• The individual is enrolled in a qualifying high-deductible health plan
• The arrangement meets the periodic fee and service package rules in the guidance

Periodic fees for eligible direct primary care may be treated as qualified medical expenses.

Why these changes are important

These HSA updates aim to enhance access to tax-favored savings and help individuals manage rising medical costs. Expanding plan eligibility allows more taxpayers to choose coverage that fits their needs while still opening or contributing to an HSA. Telehealth flexibility supports preventive care and reduces barriers to treatment. Direct primary care recognition enables individuals to utilize modern care models without compromising their HSA benefits. The new rules give many individuals their first opportunity to participate in an HSA. Taxpayers with bronze or catastrophic plans, who were often excluded under prior law, may now save for medical expenses in a tax-advantaged account. Families who rely on virtual care can continue to use telehealth without risking HSA eligibility. Patients who prefer direct primary care now have clearer guidance on how to coordinate these arrangements with HSA rules.

What has not changed

The notice does not alter every rule that governs HSAs. Contribution limits remain unchanged except for annual inflation adjustments. The definition of a qualified medical expense continues to apply under §213 except for new provisions relating to direct primary care fees.

Key unchanged rules

• Individuals must still have qualifying high-deductible plan coverage.
• Annual contribution limits remain subject to IRS inflation updates.
• Non-qualified withdrawals are subject to tax and penalties.
• Other forms of non-permitted coverage continue to affect eligibility.

Taxpayers should review their coverage carefully to confirm eligibility before contributing.

What to expect next

IRS Notice 2026-05 invites public comments through March 6, 2026. Comments may address any part of the guidance, including plan definitions, eligibility rules and interpretations of direct primary care arrangements. The IRS may issue additional clarification if needed.

Plan sponsors should review the guidance to determine whether plan updates are needed for 2025 and 2026. Individuals should verify whether their current or future coverage qualifies and whether they can begin or continue HSA contributions under the new rules.

Other HSA-related provisions

• The annual HSA contribution limits and HDHP minimum deductible/out-of-pocket maximums continue to be indexed for inflation. For 2026, the HSA contribution limit is $4,400 for self-only and $8,750 for family coverage; the HDHP minimum deductible is $1,700 (self-only) and $3,400 (family); the out-of-pocket maximum is $8,500 (self-only) and $17,000 (family).
• The safe harbor for preventive care and other disregarded coverage (e.g., dental, vision, telehealth) remains unchanged.

Final thoughts

The One Big Beautiful Bill Act introduces one of the most significant expansions to HSA eligibility since these accounts were created. By modernizing telehealth rules, recognizing direct primary care, and allowing bronze and catastrophic plans to qualify, the law helps more taxpayers access the triple tax benefits that HSAs offer. These updates provide new opportunities for saving, budgeting and planning for medical expenses across all stages of life.