On July 4, 2025, a major piece of benefits legislation was signed into law—offering expanded access and greater flexibility for two popular tax-advantaged programs: Health Savings Accounts (HSAs) and Dependent Care FSAs (DCAs).
This long-awaited update brings employers new tools to strengthen their benefits packages—without raising premiums or payroll taxes—and gives employees more ways to manage rising healthcare and caregiving costs.
Let’s break down the key changes and what they mean for you.
HSA Enhancements: More Access, More Flexibility
1. Telehealth Services Stay HSA-Friendly—Even Before the Deductible
Employers can now offer pre-deductible telehealth services permanently without affecting HSA eligibility.
- Effective for plan years beginning after December 31, 2024
This update locks in the pandemic-era flexibility that allowed employees to access virtual care early without losing their ability to contribute to an HSA.
2. Direct Primary Care (DPC) is Now Covered
Starting January 1, 2026, employees can use HSA funds to pay for Direct Primary Care membership fees:
- Up to $150/month for individuals
- Up to $300/month for families
In the past, DPC arrangements could disqualify someone from HSA participation. This new rule not only removes that barrier but also officially recognizes DPC as an HSA-eligible expense.
3. Marketplace Plans Become HSA-Eligible
Also beginning in 2026, individuals enrolled in ACA marketplace Bronze or Catastrophic plans will be allowed to contribute to an HSA.
This resolves a long-standing issue where many high-deductible plans on the exchange didn’t meet the technical requirements for HSA compatibility—limiting access for lower-income individuals or gig workers.
Bigger Tax Breaks for Dependent Care FSA Contributions
For the first time in decades, the annual contribution cap for Dependent Care FSAs is increasing. Starting in tax year 2026, families can set aside significantly more pre-tax income to pay for childcare, eldercare, and other qualified dependent expenses:
- Up to $7,500 per household
- Or $3,750 if married and filing separately
This change reflects modern care costs and provides meaningful tax relief for working families.
What This Means for Employers
These updates give businesses a competitive edge in today’s benefits landscape:
- Higher DCA limits = More savings for employees and lower payroll tax liability for employers
- Expanded HSA access = More engagement with high-deductible health plans (HDHPs), often leading to cost savings and better plan efficiency
- No added premiums or benefit costs, just smarter design and more employee options
Final Thoughts
This legislation marks a turning point in how employers can deliver cost-effective, flexible, and future-ready health and dependent care benefits. By incorporating these new rules into your 2025 and 2026 plan years, you’ll be able to offer your teams better tools to manage their health and family responsibilities—without increasing your bottom line.
It’s a win for employers, a win for employees—and a big step forward for smarter benefits.
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