The One Big Beautiful Bill: Impact on Employee Benefit Plans

Legal Alert

July 17, 2025

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The One Big Beautiful Bill (the “Bill”) was signed into law on July 4, 2025. The Bill is extensive and includes a number of provisions that affect employee benefits, as summarized below.

Health Savings Accounts (“HSAs”)

The final version of the Bill did not include many of the proposed revisions to HSAs that were included in earlier drafts. However, the following changes were codified:

Telehealth safe harbor: In response to the COVID-19 pandemic, Congress enacted a safe harbor to ensure HSA eligibility would not be negatively affected by telehealth services provided before participants have satisfied the deductible. The Bill retroactively makes this safe harbor permanent, effective for plan years beginning after December 31, 2024. This is a welcome change for many employers who expanded coverage of telehealth services under the safe harbor and wish to continue that coverage.
Primary care service arrangements: Effective January 1, 2026, direct primary care service arrangements, which provide access to certain primary care services for a fixed monthly fee paid directly by the individual receiving services to the provider, also will not negatively impact HSA eligibility. Such arrangements will be considered disqualifying coverage for HSA purposes, however, if (i) the aggregate fees cost more than $150 per month for an individual or $300 for family coverage (adjusted annually for inflation), and/or (ii) the services include anesthesia, prescription drugs, and lab services not typically administered in primary care.

Dependent Care Assistance Programs

The Bill increases the annual limit for dependent care flexible spending accounts to the following, effective for tax years beginning after December 31, 2025:

Single: $7,500 (from $5,000)
Married couples filing separately: $3,750 (from $2,500)

Like the previous limits, these limits are not indexed for inflation.

Fringe Benefits

Other revisions to fringe benefit provisions may also affect employer offerings as follows:

Student loan repayments: The final version of the Bill makes the exclusion from income for student loan payment employer reimbursements permanent. These reimbursements must be made through employer established educational assistance programs. The current cap on the educational assistance benefit income exclusion is $5,250. This amount will be indexed annually for inflation.

Childcare tax credit: Effective for amounts paid or incurred after December 31, 2025, the employer-provided childcare tax credit is increased up to $500,000 ($600,000 for eligible small businesses) on up to 40% of the employer’s qualified childcare expenses (and 50% for eligible small businesses). These caps on the credit will also be indexed for inflation.

Individual Coverage Health Reimbursement Arrangements (ICHRAs) – Changes Not Included

Previous versions of the Bill included significant revisions to the provisions regarding ICHRAs. These revisions were not included in the final Bill.

Trump Accounts

The Bill created Trump Accounts, which are essentially accounts similar to individual retirement accounts set up for the benefit of children under age 18. Beginning on July 4, 2026, individuals may contribute up to $5,000 annually and employers can contribute up to $2,500 annually, on a tax-free basis, to Trump Accounts of their employees or their employees’ dependents. These caps on the tax-exempt contributions will be indexed for inflation. While no distributions from Trump Accounts are permitted before the child turns age 18, upon reaching age 18, the child can take a distribution for any purpose.

Affordable Care Act Subsidies

Plan sponsors should also note that the Bill includes significant changes to the Affordable Care Act that requires additional analysis before individuals are eligible to receive premium tax credits for coverage purchased through the Exchange. Ideally, this would cut down on the number of Employer Shared Responsibility Payment notices employers receive.

If you have any questions regarding the employee benefits provisions of the Bill, please contact your SGR benefits counsel.