By Kathryn Mayer
Several changes are coming to health savings accounts (HSAs) that will expand the HSA footprint and impact employers and their health care benefits, industry experts said.
President Donald Trump’s massive tax and spending package, which Congress passed before he signed it into law July 4, contains changes that will expand HSA eligibility and likely result in more employers embracing the savings accounts, touting telehealth options, and adding direct primary care options for employees.
Several other reforms to HSAs — including increased contribution limits and allowing certain sports and fitness expenses to be HSA-eligible — were part of the House-passed budget reconciliation bill, but didn’t make it into law. After initially eliminating all of the HSA provisions in the House version of the bill, the Senate added back two HSA-related provisions and introduced another that did not appear in the House bill.
“The final bill does help modernize HSAs by expanding accessibility and usage to certain populations,” said Joseph Giordano, compliance manager for Dallas-based online retailer Health-E Commerce, the parent brand of FSA Store and HSA Store. “Considering there has been little legislative expansion since HSAs were first introduced, expanded access to potentially millions of Americans is a positive development.”
Many industry experts tout HSAs as a smart way for employees to save for medical expenses, even in retirement, citing their triple tax benefits: Contributions are made pretax, the money in the accounts grows tax-free, and withdrawals for qualified medical expenses are also tax-free. More than 60% of employers offer an HSA, according to the 2025 SHRM Employee Benefits Survey.
Although several proponents were hoping for more HSA changes — SHRM, for its part, urged the Senate to preserve the HSA reforms in the House-passed budget reconciliation bill, saying they “could ease benefit administration, expand access to care, and strengthen the role of HSAs in long-term financial planning — most industry experts say the reforms that were signed into law are a positive step forward and long overdue.
“While more work needs to be done, it is encouraging that Congress recognizes the continued role HSAs will play in helping Americans manage their health care costs,” Giordano said.
Key HSA Changes
The changes that are coming to HSAs are:
Increased plan eligibility. Bronze and catastrophic plans available in the individual health care marketplace will be treated as HSA-qualified high-deductible health plans (HDHPs) after Dec. 31. This will increase HSA availability and usage to new populations because the current law does not allow these plans to be paired with an HSA, even if they have a high deductible.
“This is the largest single increase in eligibility since the HSA was created,” said Shobin Uralil, chief operating officer and co-founder of San Francisco-based health and benefits platform Lively. “However, like any new health care policy change, it will take time to see the impact. Education will drive adoption over the next three to five years before we see the full impact.”
Direct primary care fees become HSA-eligible. Under current law, participation in a direct primary care service arrangement, where individuals pay a fixed monthly fee for primary care services, in most cases disqualifies the individual from opening or contributing to an HSA. The new tax law allows individuals covered under an HDHP to participate in a direct primary service arrangement and still be able to open and contribute to an HSA after Dec. 31.
“These individuals will also have the opportunity to use their HSA funds to pay for direct primary care service fees, which could alleviate the financial strain of paying for health care expenses for many people,” Giordano said.
Telehealth flexibility. A provision not originally in the House bill that made it into the final version is the permanent extension of the telehealth safe harbor for HDHPs. HSA-qualified HDHPs will be allowed to cover telehealth expenses prior to the deductible without disqualifying the individual from opening and contributing to an HSA. This allowance of first-dollar coverage will be retroactive to plans beginning Jan. 1, 2025, and continue permanently.
“The retroactive effective date closes any gap that might have existed when the prior temporary extension terminated at the end of 2024,” Giordano said. “The changes to direct primary care and telehealth eligibility reflect existing and rapidly expanding consumer health trends,” Uralil said.
In 2022, 30% of adults in the U.S. had used telemedicine in the past year, according to the National Center for Health Statistics, and the telehealth market will likely continue to grow significantly, he said.
“Telehealth will become the starting point for most health care experiences. That also means telehealth services’ cost share will increase,” he said. “This also gives employers more flexibility in their plan designs so they can structure solutions that meet the growing needs of their employees without taking away their ability to grow a health safety net,” Uralil said.
What Should Employers Do Now?
Benefits and HR leaders should look at their coverage in preparation for some of the new reforms taking place, experts said.
For one thing, they should look at their current plan design and determine if they offer first-dollar coverage for telehealth, Uralil said. If so, they can now offer HSAs because this is no longer a disqualifying coverage; the change covers plans that began after Dec. 31, 2024.
Employers might also want to begin thinking about if they want to offer direct primary care for employees alongside an HSA-eligible HDHP. They can also start communicating to their workforce that employees can pay for those direct primary care expenses using an HSA, Uralil said.
Small employers who may not offer group coverage or those who offer an individual coverage health reimbursement arrangement should educate their employees that bronze and catastrophic plans will be HSA-eligible beginning Jan. 1. “This can mean more savings for those employees who otherwise couldn’t save dollars on a tax-advantaged basis,” Uralil said.
