The “One Big Beautiful Bill Act, 2025” Will Bring Major Changes to Employee Benefit Plans
On July 4, 2025, the One Big Beautiful Bill Act, 2025 (“OBBBA”) was enacted. While this bill includes a number of provisions, this article summarizes that will directly impact employees and their benefit plans—such as high-deductible health plans (HDHPs), health savings accounts (HSAs), and dependent care savings accounts.
High Deductible Health Plans (HDHP) and Health Savings Accounts (HSAs)
Effective for plan years beginning after December 31, 2024, the OBBBA makes permanent a safe harbor allowing HDHPs to provide first-dollar telehealth and other remote care services before participants have satisfied the plan deductible.
Employers who offer telemedicine services may want to inform employees that they may now be eligible to enroll in those services and still contribute to their HSA accounts.
Treatment of Direct Primary Care Service Arrangements
Effective for months beginning after December 31, 2025, direct primary care service arrangements will not be considered disqualifying coverage for individuals otherwise eligible to contribute to an HSA. This provision is limited to primary care services provided at a fixed fee not exceeding $150 per month for an individual and $300 for more than one person (adjusted for inflation).
Allowance for Bronze and Catastrophic Individual Plans
Effective for months after December 31, 2025, the OBBBA expands the definition of HDHPs to include Bronze and catastrophic plans offered through the individual marketplace exchanges. In other words, someone enrolled in a Bronze plan—even with first-dollar benefits such as office copays—may also contribute to an HSA.
This applies only to individual marketplace plans; it does not currently include employer-sponsored Bronze plans.
Extension of Enhancement of PFML Credit
Effective for taxable years beginning after December 31, 2025, the OBBBA makes the paid family and medical leave (PFML) tax credit permanent. Employers may now calculate the credit based on either:
- Wages paid to employees on leave, or
- Premiums paid for family and medical leave insurance policies (newly allowed).
The OBBBA also expands the definition of a “qualifying employee” to include those employed for at least six months and customarily for at least 20 hours per week.
Increased Dependent Care Assistance Program (DCAP or Dependent Care FSA)
Effective for taxable years beginning after December 31, 2025, the One Big Beautiful Bill Act increases the annual contribution cap for DCAPs to $7,500 (or $3,750 for separate returns filed by a married individual), up from the current cap of $5,000. This new amount is not subject to inflation adjustments.
Advance Payment Recapture Limitation
Effective for taxable years beginning after December 31, 2025, the OBBBA removes limitations on liability for excess advance payments made to individuals with household income below 400% of the Federal Poverty Level.
In other words, the IRS may now fully reclaim any premium tax credits or subsidies that were improperly received—due to factors such as employer-offered coverage or misstatements of household income—without a cap on the amount.
Modification of Qualified Transportation Fringe Benefits
Effective for taxable years beginning after December 31, 2025, the OBBBA eliminates the exclusion for qualified bicycle commuting reimbursements. It also modifies the inflation adjustment calculation used to determine the limitations on exclusions for all qualified transportation fringe benefits.
Click here to download a PDF of the alert drafted by Kutak Rock, which includes all the information shown here—and more.
If you have any questions about the One Big Beautiful Bill Act or how its changes impact your employee benefit plans, contact your Relational Advisors team.
Disclaimer: Any information related to compliance or other subject matters in this email, including any attachments, is intended to be informational and does not constitute legal advice regarding any specific situation. The content of this article is based on the most up-to-date information available at the time of posting and is subject to change. Should you require further assistance or legal advice, please consult a licensed attorney.