What did the One Big Beautiful Bill change for health benefits?

June 16, 2026June 16, 2026

Short answer: The One Big Beautiful Bill Act (signed July 2025) made several 2026 changes: it expanded HSA eligibility (individual-market bronze/catastrophic plans, direct primary care, permanent telehealth), raised the dependent-care FSA limit to $7,500, and enhanced the dependent-care tax credit to a 50% top rate.

The One Big Beautiful Bill Act (OBBBA, Pub. L. 119-21) included several employee-benefits provisions, most effective in 2026:

HSA eligibility expanded: all individual-market bronze and catastrophic plans are treated as HSA-eligible; qualifying direct primary care arrangements (monthly fee up to $150/$300) no longer disqualify HSA contributions and are HSA-payable; and the telehealth pre-deductible safe harbor is now permanent.
Dependent-care FSA limit raised to $7,500 ($3,750 if married filing separately), the first increase since 1986.
Dependent-care tax credit enhanced to a 50% top rate (from 35%), phasing down by income.

Notably, OBBBA did not let working seniors enrolled in Medicare Part A keep contributing to an HSA, so Medicare enrollment still ends HSA contributions.

Sources

One Big Beautiful Bill Act, Pub. L. 119-21; IRS Notice 2026-05; Rev. Proc. 2025-32 and OBBBA dependent-care provisions.

Content history
Originally published: June 16, 2026
Last reviewed: June 16, 2026

Accounts HSAs

About Effective Date Rules

Your coverage effective date depends on the plan's rules and any waiting period. These FAQs explain when coverage starts after you enroll.

About Waivers and Declinations

Employees who turn down the employer's coverage should sign a waiver documenting the choice. These FAQs explain how waivers and declinations work and how they affect future enrollment.

About Minimum Value and MEC

Minimum essential coverage (MEC) and minimum value (MV) are two different ACA standards employers must meet. These FAQs explain the difference and why it matters.

About Marketplace Notice

Nearly all employers must give new hires a Notice of Coverage Options about the ACA Marketplace. These FAQs explain the requirement and what the notice must say.

About Opt-Out Payments

Some employers offer cash to employees who decline coverage, which can affect ACA affordability. These FAQs explain opt-out payments and the rules around them.

About MPRAs

A Medicare Premium Reimbursement Arrangement (MPRA) lets a small employer reimburse Medicare-enrolled employees for their premiums tax-free. These FAQs explain how MPRAs work and their limits.

About ICHRAs

An Individual Coverage HRA (ICHRA) lets an employer of any size reimburse employees for individual-market coverage instead of offering a group plan. These FAQs explain how ICHRAs work and their rules.

About QSEHRAs

A Qualified Small Employer HRA (QSEHRA) lets small employers without a group plan reimburse employees for individual coverage. These FAQs explain QSEHRA rules and limits.

About Reference-Based Pricing

Reference-based pricing pays providers a set multiple of Medicare instead of a negotiated network rate. These FAQs explain how RBP works and its trade-offs.

About Level-Funding

A level-funded plan is a form of self-funding packaged to feel like a fully insured plan, with a fixed monthly cost and a possible year-end refund. These FAQs explain how it works.

About Self-Funding

In a self-funded plan the employer pays employees' claims directly, usually with stop-loss protection. These FAQs explain how self-funding works and when it fits.

About Medicare Secondary Payer

Medicare Secondary Payer (MSP) rules decide whether the employer plan or Medicare pays first. These FAQs explain coordination, the size thresholds, and what employers may not do.

About Medicare Part D Notice

Employers must tell Medicare-eligible members whether their drug coverage is 'creditable' and disclose it to CMS. These FAQs explain Part D creditable-coverage rules and deadlines.

About Ancillary Benefits

Ancillary benefits round out a package beyond major medical, including accident, critical illness, and hospital indemnity coverage. These FAQs explain how supplemental policies work and when they help.

About EPOs

EPO stands for Exclusive Provider Organization. It's a type of health plan that features a larger provider network like a PPO, but, unlike a PPO, does not provide out-of-network benefits. EPOs usually do not require a Primary Care Physician or referrals to see a specialist.

About Metal Tiers

ACA plans are grouped into Bronze, Silver, Gold, and Platinum tiers by actuarial value. These FAQs explain what the metal tiers mean and how to compare them.

About Cost Drivers

Premiums rise with the underlying cost of care. These FAQs explain what drives health insurance costs, why premiums increase even when coverage doesn't change, and the 2026 trends.

About Provider Networks

A Provider Network is a group of healthcare providers that insurance plans contract with to offer medical services to their members. For small group health insurance, understanding the composition and coverage of provider networks is key in guiding businesses and employees to make informed choices about their healthcare options.

About Prior Authorization

Prior authorization requires the plan's approval before certain care or drugs are covered. These FAQs explain how it works and the recent reforms.

About Claims & Appeals

When a claim or prior authorization is denied, members have the right to appeal. These FAQs explain Explanations of Benefits (EOBs), coordination of benefits, and the internal and external appeal process.

About Broker Compensation

How brokers and advisors are paid shapes the advice employers receive. These FAQs cover commissions, fee arrangements, and the federal compensation-disclosure rules.

About Dental Insurance

Dental plans are structured differently from medical coverage, with tiered benefits and annual maximums. These FAQs explain how dental insurance works and what to watch for.

About Vision Insurance

Vision insurance covers a routine eye exam and an allowance for glasses or contacts. These FAQs explain what vision plans cover and what they don't.

About Life Insurance

Group term life and AD&D coverage provide a benefit to an employee's beneficiary. These FAQs explain how group life insurance works and how it differs from AD&D.

About Disability Insurance

Disability insurance replaces part of your income when illness or injury keeps you from working. These FAQs explain short-term and long-term disability coverage.

About Plan Offering

Deciding what plans to offer is one of an employer's core benefits decisions. These FAQs cover plan menus, base-and-buy-up designs, and matching options to a workforce.

About Premium Tiering and Plan Design

How premiums are tiered and plans are designed shapes employee cost and choice. These FAQs explain premium tiers and plan-design strategy.

About Employer Contributions

How much an employer pays toward premiums affects affordability and participation. These FAQs cover contribution requirements, strategies, and carrier rules.

About Open Enrollment Periods (OEPs)

Open enrollment is the once-a-year window to enroll in or change your coverage. These FAQs explain how open enrollment works for employer plans.

About Waiting Periods

A waiting period is the time duration employees must wait before their coverage becomes effective. Under the ACA, the maximum new-hire waiting period is 90 days from the date of full-time employment. However, small employers might be able to add a one-month orientaion period or a cumulative hours requirement prior to the beginning of the waiting period. And companies with variable-hour employees can impose a one-year initial measurement period during which time they determine full- or part-time employee status.

About Stop-Loss

Stop-loss insurance protects a self-funded employer from catastrophic claims. These FAQs explain specific and aggregate stop-loss and how they work.

About Captives & MEWAs

Group captives and Multiple Employer Welfare Arrangements (MEWAs) let employers pool risk to fund benefits. These FAQs explain how each works and the trade-offs involved.

About Cost Containment

Self-funded and level-funded plans can use levers a fully insured plan can't to lower claims. These FAQs cover reference-based pricing, pharmacy strategies, networks, and care navigation.

About Premium Tax Credits

Premium Tax Credits are available in the individual health insurance market, offering financial assistance to individuals and families to help lower the cost of health insurance premiums. For small employers, it's important to know that the group health plan they offer, if affordable, could block employees (and potentially their family members if the employer contributes to dependent premiums) from receiving a premium tax credit.

About Prescription Drugs

Pharmacy benefits work differently from medical coverage, with formularies, tiers, and PBMs. These FAQs explain how drug coverage and costs work.

About Telehealth

Telehealth provides virtual care, with specific rules for HSA-qualified plans. These FAQs explain telehealth coverage and the HSA safe harbor.

About HSAs

Health Savings Accounts (HSAs) are powerful, tax-advantaged tools for covering medical expenses and building long-term savings. Browse these FAQs to learn who qualifies, how much you can contribute, what expenses are eligible, and how HSAs compare to other benefit options.

About Contribution Strategies and Cost Controls

How an employer structures its premium contributions affects both cost and participation. These FAQs cover contribution strategies and tools for controlling benefit costs.

About Participation

Most small group health plans have minimum participation requirements set by insurers. The required participation percentage will vary by state and by carrier and is usually calculated after removing eligible employees with valid waivers (those declining because they have other coverage). Carriers can have different criteria for what determines a valid waivers. Note that participation requiremetns are waived for small employers that enroll during the annual small group enrollment period (usually Nov. 15 - Dec. 15 for a Jan. 1 effective date).

About Mental Health Parity

The Mental Health Parity and Addiction Equity Act requires comparable coverage for mental health and substance-use care. These FAQs explain what parity means and what it requires.

About Preventive Care

On small group plans, preventive care encompasses services like screenings, vaccinations, and health check-ups. These are crucial for early detection and prevention of diseases, helping to maintain the overall health and productivity of employees in a small group setting. On all ACA plans, prevntive care is covered up-front with no cost-sharing.

About PCORI Fee

The PCORI fee is a small annual fee on self-funded plans and insurers that funds patient-centered outcomes research. These FAQs explain who pays it, how much, and when.

About Gag Clause Attestation

Health plans must annually attest that their contracts contain no 'gag clauses' that block access to cost and quality data. These FAQs explain the requirement and its deadline.

About RxDC Reporting

RxDC reporting is an annual submission of prescription-drug and spending data required of group health plans. These FAQs explain the requirement and deadline.

About Employer Reporting

While small groups that are not applicable large employers (ALEs) under the ACA do not have traditional reporting requirements, there are still some reporting obligations under other sections of the tax code, particularly for small employers with level-funded plans.

About Section 125 Testing

A Section 125 cafeteria plan lets employees pay for benefits pre-tax, subject to nondiscrimination testing. These FAQs explain the testing and why it matters.

About State Continuation

Sometimes referred to as "mini COBRA" or "state COBRA," State Continuation laws provide similar rights to continue health coverage as COBRA, but are state-specific and often apply to employers not subject to federal COBRA, typically smaller businesses. State Continuation normally applies only to fully-insured employers, so level-funded plans might not have a continuation option. In many states, employers subject to state continuation laws have notice requirements similar to COBRA and may want to outsource the compliance reponsibilities to a third-party administrator (TPA).

About COBRA

COBRA gives employees and their families who lose health benefits the right to choose to continue group health benefits under certain circumstances. COBRA applies to groups with 20 or more employees in the preceding calendar year, but counting employees can be tricky since part-timers count as a fraction of a full-time employee. COBRA has a number of notice requirements along with fines for non-compliance, so some small employers choose to outsource their COBRA administration responsibilities to a Third-Party Administrator (TPA).

About Form 5500

Form 5500 is the annual report many employee benefit plans must file with the Department of Labor. These FAQs explain who must file, deadlines, penalties, and what documentation is required.

About SBCs

SBCs are standardized documents that clearly outline the benefits and coverage of health insurance plans. They are designed to help consumers understand and compare different health plans. For small group agents, SBCs are important tools for explaining plan details and assisting employers and employees in making informed health insurance decisions. Employers are required to provide eligible employees with an SBC for each plan offered at initial enrollment and at renewal time each year.

About SPDs

A Summary Plan Description (SPD) is the ERISA document that explains a plan to participants. These FAQs explain SPDs and related plan documents.

About DCAs

Dependent Care Accounts (DCAs), a type of FSA, allow employees to set aside pre-tax dollars to pay for eligible child care or dependent care expenses. These FAQs cover contribution limits, qualifying dependents, eligible expenses, and coordination with other tax benefits like the Child and Dependent Care Tax Credit.

About ERISA

ERISA sets standards for retirement and health benefit plans in private industry to protect individuals in these plans. The law was passed in 1974, but it is still applicable today as it creates compliance requirements for employers of all sizes that offer group health insurance benefits, particularly egarding plan management and employee communications. Some employers choose to purchase an "ERISA Wrap" document from a third-party administrator (TPA) to make sure they are in compliance with the ERISA law.

About Re-hire Rules

The ACA's break-in-service rules decide whether a rehired worker is treated as a new hire or a continuing employee. These FAQs explain the rehire and reinstatement rules.

About Part-Timers

Whether part-time employees are eligible for benefits depends on plan terms and ACA rules. These FAQs explain how part-time and variable-hour employees are treated.

About Eligibility Classes

Employers define which employees are eligible for benefits, often by class such as full-time or part-time. These FAQs explain eligibility classes and how they're applied.

About ALEs

An Applicable Large Employer (ALE) is generally one with 50 or more full-time-equivalent employees, which makes it subject to the ACA employer mandate. These FAQs explain how ALE status is determined and what it requires.

About ACA Affordability Rules

Under the ACA's employer mandate, applicable large employers must offer coverage that is 'affordable' or face penalties. These FAQs explain how affordability is calculated, the safe harbors employers can use, and the 2026 thresholds.

About Safe Harbors

ACA affordability safe harbors let employers measure affordability against W-2 wages, rate of pay, or the federal poverty line. These FAQs explain each safe harbor.

About POPs

Premium Only Plans (POPs) are simple Section 125 plans that allow employees to pay their share of health insurance premiums with pre-tax dollars. These FAQs explain how POPs work, who can participate, and what employers need to do to stay compliant with IRS rules.

About FSAs

Flexible Spending Accounts (FSAs) let employees set aside pre-tax dollars to pay for eligible healthcare or dependent care expenses. Explore these FAQs to better understand how FSAs work, what expenses are covered, how much you can contribute, and how to avoid common pitfalls like forfeiting unused funds.

About HRAs

Health Reimbursement Arrangements (HRAs) are employer-funded accounts that reimburse employees for eligible healthcare expenses. Explore these FAQs to learn how HRAs work, what expenses can be reimbursed, how they differ from FSAs and HSAs, and how plan design affects flexibility and rollover options.

About MERPs

Medical Expense Reimbursement Plans (MERPs) are a type of Health Reimbursement Arrangement (HRA) that allow employers to self-fund a portion of employees’ out-of-pocket medical costs, often to offset high deductibles. These FAQs explain how MERPs work, when to use them, and how they can be paired with traditional or high-deductible group health plans.

About Dependents and Domestic Partners

Who counts as an eligible dependent affects enrollment and coverage. These FAQs explain dependent eligibility, domestic partners, and related enrollment rules.