30 Jul 2025

OBBBA Enacts Telehealth Relief, New HSA Flexibility, and Executive Pay Limits

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), which includes several significant provisions affecting employee benefits, most of which take effect January 1, 2026. The OBBBA permanently extends telehealth flexibility for high-deductible health plans (HDHPs) and expands HSA eligibility to cover direct primary care and marketplace bronze and catastrophic plans. It raises the annual contribution limit for dependent care FSAs to $7,500 (catch this at open enrollment) and makes permanent the tax-free employer student loan repayment benefit under qualified educational assistance programs. The new law also modifies the I.R.C. Section 162(m) compensation deduction rules by requiring the aggregation of executive compensation across controlled groups. Additionally, the OBBBA introduces new tax-favored “Trump Accounts” for children under 18, with government and employer contribution options.

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Related Content

  • Health Savings Account Design and Compliance
    Check-out OBBBA’s expansion of HSAs. For months beginning after December 31, 2025, coverage under a so-called direct primary care arrangement will not cause an individual to be ineligible to contribute to an HSA. This rule applies to arrangements providing medical care consisting solely of primary care services provided by primary care practitioners under a fixed periodic fee model, so long as (1) the aggregate fees for all such arrangements do not exceed $150 per month for the individual or $250 per month if the coverage extends to any other individual (indexed for inflation for years after 2026) and (2) the services do not include procedures requiring general anesthesia, prescription drugs (other than vaccines), or laboratory services not typically administered in an ambulatory primary care setting. 
  • Section 162(m) Tax Deduction Limit for Public Company Executive Compensation
    See how the OBBBA amends the I.R.C. Section 162(m) deduction cap of $1,000,000 on compensation paid to certain executives of public companies. The OBBBA requires all entities in a controlled group to aggregate compensation paid to the same executive when determining the $1,000,000 tax deduction limit.
  • Education Assistance Policies: Key Drafting Tips
    Consider student loan payment assistance now that the provision is permanent. The OBBBA makes permanent the I.R.C. Section 127 provision that allows employers to reimburse annually up to $5,250 of an employee’s student loan payments on a tax-free basis. The reimbursements must be made through a qualified educational assistance program. The OBBBA indexes the $5,250 limit (for educational assistance programs generally) for inflation, beginning in 2027.

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