Blog

One Big Beautiful Bill: What it means for employee benefit plans

posted by TrueNorth Employee Benefits on Tuesday, July 22, 2025

As your strategic partner in employee benefits, TrueNorth Companies is committed to keeping you informed about significant legislative changes that could impact your organization’s financial health and talent strategy. On July 4, 2025, a significant piece of legislation commonly referred to as the "One Big Beautiful Bill Act" (OBBB Act) was signed into law. This new law includes a range of changes to employee benefits, aiming to enhance the overall welfare of employees. The OBBB Act includes provisions that expand health savings accounts (HSAs), make telehealth exceptions permanent, and introduce new types of tax-advantaged savings accounts. In this blog post, we'll explore the bill's impact on employees and employers alike.

Understanding the core of OBBB

The One Big Beautiful Bill Act introduces comprehensive legislation revolving around various aspects of employee benefits, including health coverage, retirement plans, paid leave, and workplace flexibility.

For Employees

Employees may receive several enhancements related to health, family and financial security.

HSA Expansion

• Effective Jan. 1, 2026, individuals with direct primary care (DPC) arrangements can make HSA contributions if their monthly fees are $150 or less ($300 or less for family coverage). These DPC fees are also now considered medical care expenses that can be paid for using HSA funds.
• To broaden access, the OBBB Act categorizes all bronze plans and catastrophic plans available through an Affordable Care Act (ACA) Exchange as High-Deductible Health Plans (HDHPs), effective Jan 1, 2026. This allows more individuals with these popular plans to become HSA-eligible.

Only eligible individuals can establish HSAs and make HSA contributions (or have them made on their behalf). To be HSA-eligible, an individual must:

• Be covered by an HDHP.
• Not be covered by any health plan that provides coverage below the minimum required HDHP deductible, with some limited exceptions.
• Not be enrolled in Medicare.
• Not be eligible to be claimed as a dependent on another person's tax return.

Permanent telehealth benefits

The temporary relief allowing HDHPs to waive the deductible for telehealth services without impacting HSA eligibility has been made permanent.

• HDHPs can continue to provide benefits for telehealth and other remote care services before plan deductibles have been met.
• This extension applies to plan years beginning after Dec. 31, 2024.

Increased dependent care FSA limits

Effective Jan. 1, 2026, the maximum annual limit for Dependent Care FSAs (DCAPs) increases to $7,500 for single individuals and married couples filing jointly and $3,750 for married individuals filing separately (up from $5,000 and $2,500, respectively). The new limit is not adjusted for inflation.

Student loan assistance

• Employers can offer programs to provide employees with undergraduate or graduate-level educational assistance to pay for employees' books, equipment, supplies, tuition, and other fees.
• These programs can also pay principal and interest on employees' student loans. 
• The option to use educational assistance programs for student loans, set to expire on Dec. 31, 2025, has been permanently extended.
• The $5,250 annual tax-free limit for educational assistance programs will be adjusted annually for inflation, effective for taxable years beginning after 2026.

New "Trump Accounts" for children

Effective in 2026, the OBBB Act creates a new type of tax-advantaged savings account for children under age 18, named a "Trump Account."

• These accounts will operate similarly to individual retirement accounts (IRAs), where earnings grow tax-deferred.
• Annual contributions are generally limited to $5,000 per child (adjusted annually for inflation beginning after 2027).
• A notable provision offers a $1,000 contribution from the federal government for children born between 2025-2028.

For Employers:

The OBBB Act presents opportunities for employers to refine their benefits strategies and enhance their value proposition to employees.

Enhanced benefit offerings

• Expanded HSA eligibility, permanent telehealth options and increased dependent care FSA limits provide opportunities to create more attractive and flexible benefits packages.
• Making employer-provided student loan assistance a permanent offering can significantly boost your appeal to a workforce increasingly burdened by educational debt.
• The ability to contribute tax-free up to $2,500 per year (adjusted for inflation after 2027) to employee or dependent "Trump Accounts" offers a distinctive way to support employee financial wellness. These programs will require a written plan document and will be subject to some of the same tax rules that apply to dependent care FSAs.

Strategic review of current benefit plans

• It's important to review your existing health plans, particularly HDHPs, to ensure they align with the permanent telehealth exception to the new DPC eligibility rules for HSAs.
• Consider updating your Dependent Care FSA offerings to reflect the increased limits and communicate these changes to employees to maximize participation and benefit utilization.
• If you don't currently offer educational assistance for student loans, now is an opportune time to consider this addition due to the benefit now being permanently extended.

Compliance and communication

Be sure to stay informed about any forthcoming IRS guidance related to this new legislation to avoid compliance headaches with the new regulations.

In addition, it's vital to provide proactive and clear communication with your employees about these changes. Your workforce needs to understand:

• Eligibility requirements
• Contribution limits
• How these changes impact their financial well-being

For Trump Accounts, specifically, confirm you have the necessary written plan documents in place and are prepared for annual nondiscrimination testing and employee notifications.

Next Steps

TrueNorth Companies is here to assist you in understanding these legislative updates. Please reach out to your dedicated TrueNorth account manager to discuss how the OBBB Act will specifically impact your organization and to implement a plan for the best path forward for your benefits program.

This Legislative Update is not intended to be exhaustive, nor should any discussion or opinions be construed as legal, tax or financial advice. TrueNorth Companies recommends consulting with legal, tax or benefits professionals before making any decisions related to employee benefit plans.