IRS Touches Up The One Big Beautiful Bill

Summary

The Upshot

The Bottom Line

In a recent notice, the Internal Revenue Service (IRS) has provided guidance on modifications that the One Big Beautiful Bill (OB3) made to the rules governing health savings accounts (HSAs).

Exception for Telehealth Services. The new guidance addresses three issues affecting when telehealth (and other remote health care) services may be covered under a high deductible health plan without causing an individual to lose eligibility for HSA contributions:

• It confirms the retroactive effect of the OB3 provision that extended the exception for telehealth services, so the exception, which had expired on December 31, 2024, now applies without a break on and after January 1, 2025.
• It defines telehealth services that qualify for the exception by reference to rules that govern when Medicare benefits will be paid for remote services.
• It requires the deductible to apply to any in-person services, medical equipment, or drugs that are provided in connection with telehealth services.

Treatment of Bronze and Catastrophic Plans. OB3 provides that bronze-level and catastrophic plans purchased through a health insurance exchange established under the Affordable Care Act will be treated as a high deductible health plan, allowing a participant in one of those plans to make and receive HSA contributions. The new guidance provides, among other things, that these rules apply:

• Even if the bronze or catastrophic plan does not meet the standards for minimum deductibles and maximum out-of-pocket limits otherwise applicable to high deductible health plans.
• Within certain parameters, even if an individual coverage health reimbursement arrangement or qualified small employer health reimbursement arrangement reimburses some or part of the cost of the bronze or catastrophic plan.
• To bronze and catastrophic plans offered on the individual market outside of an exchange if the same coverage is offered through an exchange. The rules apply even if the same coverage is not offered through an exchange; provided that the individual purchasing the coverage has no reason to believe that the exchange does not make the coverage available.
• Only to individual coverage. Specifically, the rules do not apply to coverage offered through the Small Business Health Options Program (SHOP) because that is group coverage. However, a SHOP plan could, itself, be designed as a high deductible health plan.

Exception for Direct Primary Care Services. Under OB3, coverage under certain arrangements that provide only primary care for a limited fixed fee will not cause an individual to lose eligibility for HSA contributions. The guidance includes some clarifications, including:

• Providers in a direct primary care services arrangement can offer health care items and services beyond primary care to members if they bill members for those items and services, and if the providers also offer the items and services to (and bill) non-members.
• An individual will not remain eligible for HSA contributions if the individual is enrolled in a high deductible health plan that pays the fees for a direct primary care services arrangement, or if the high deductible health plan counts fees paid by the employee toward the employee's deductible.
• An HSA may reimburse an individual for the fees to participate in a direct primary care services arrangement, but not if the individual's employer pays those fees, even if those payments trace back to employee contributions to a cafeteria plan.

The IRS has requested comments on this guidance by March 6, 2026.

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