The 2025 tax legislation, dubbed the "big, beautiful bill" or OBBB, signed into law under the administration of President Donald Trump, has introduced several noteworthy changes to the United States tax framework. Among these modifications is a significant expansion of the scope and qualifying features of Health Savings Accounts (HSAs), which are designed to assist individuals in managing healthcare expenses with tax benefits.
HSAs serve as a specialized financial vehicle that enables participants to accumulate funds to cover medical costs. Contributions to these accounts are made pre-tax, and any disbursements utilized for qualifying medical expenditures are free from tax obligations. Additionally, the funds deposited can be invested and allowed to appreciate over time tax-free until utilized, commonly during retirement. Unlike Flexible Spending Accounts (FSAs), the balances in HSAs do not expire annually, thus allowing funds to carry over indefinitely without forfeiture.
Previously, individuals were required to be enrolled in a high-deductible health plan (HDHP) to be eligible to open or contribute to an HSA. For 2026, this entailed having a deductible of no less than $1,700 for an individual coverage or $3,400 for family coverage. Consequently, certain health plans such as the Bronze-tier plans available through the Affordable Care Act (ACA) marketplace, as well as catastrophic plans characterized by low premiums but high deductibles, did not qualify as HDHPs and therefore were ineligible for HSA access.
Following the enactment of the OBBB, these policies have shifted, now allowing both Bronze and catastrophic plan enrollees to qualify for HSAs. Bronze plans constitute about 30% of ACA marketplace choices recorded during the 2025 open enrollment period and, starting January 1, 2026, all such plans are recognized as HSA-compatible. This inclusion also extends to approximately 54,000 catastrophic plans within the marketplace.
Moreover, the new legislation extends eligibility to individuals participating in specific direct primary-care arrangements. It further amends the enrollee age criteria for catastrophic plans, permitting individuals over the age of 30 to enroll in certain cases, whereas previously such plans were primarily limited to those younger than 30.
The implications of these adjustments are substantial. The White House projects that approximately three million additional individuals will become eligible for HSAs due to the altered catastrophic plan eligibility, contributing to a total increase of around ten million people qualifying for HSA-compatible health plans.
This expansion is significant because HSAs provide a flexible and tax-efficient method for consumers to manage healthcare expenses. Funds can be used for a variety of medical needs, including but not limited to prescription and over-the-counter medications, dental services, ambulance rides, contact lenses, diagnostic tests, eyeglasses, surgical procedures, psychiatric care, and structured weight-loss programs.
For those who possess or are considering Bronze or catastrophic health plans, these changes warrant careful examination of their health coverage options regarding HSA eligibility. Leveraging HSAs can facilitate immediate cost savings on medical expenses while offering a vehicle to accumulate savings for more substantial healthcare costs during retirement years.
Individuals should review their current health plans in light of the revised guidelines to determine whether they are now qualified to contribute to and benefit from Health Savings Accounts under the new rules implemented by the OBBB.