IRS Provides Guidance on the OBBBA’s Expansion of HSAs
On Dec. 9, 2025, the IRS issued Notice 2026-5, providing guidance on the expanded availability of health savings accounts (HSAs) under the One Big Beautiful Bill Act (OBBBA), which was signed into law by President Donald Trump on July 4, 2025. The OBBBA’s changes expand the availability of HSAs by:
- Permanently extending the ability to receive telehealth and remote care services before meeting the high-deductible health plan (HDHP) deductible while remaining HSA-eligible; and
- Allowing individuals enrolled in certain direct primary care (DPC) arrangements to contribute to HSAs and use their HSA funds tax-free to pay periodic DPC fees.
Telehealth and Remote Care Services
To be eligible for HSA contributions, individuals generally cannot be covered by a health plan that provides benefits, except preventive care benefits, before the minimum HDHP deductible is satisfied for the year. Historically, individuals covered by telehealth programs that provided free or reduced-cost medical benefits were not eligible for HSA contributions. A pandemic-related relief measure temporarily allowed HDHPs to waive the deductible for telehealth services without impacting HSA eligibility. This relief expired at the end of the 2024 plan year. However, the OBBBA permanently extended the ability of HDHPs to provide benefits for telehealth and other remote care services before plan deductibles have been met without jeopardizing HSA eligibility. This extension applies to plan years beginning after Dec. 31, 2024.
Notice 2026-5 confirms that otherwise eligible individuals may contribute to an HSA for 2025 if, before the OBBBA was enacted, the individual was enrolled in a health plan that provided coverage for telehealth or other remote care services before the minimum deductible was satisfied, if the health plan otherwise satisfied the requirements to be treated as an HDHP. This is true regardless of whether the HSA contribution is made before or after July 4, 2025.
Also, Notice 2026-5:
- Addresses the types of benefits that are treated as telehealth or other remote care services that may be offered by an HDHP without a deductible; and
- Clarifies that in-person services, medical equipment or drugs that are furnished in connection with a telehealth or other remote care service generally cannot be provided by an HDHP without a deductible under this exception.
DPC Arrangements
Effective Jan. 1, 2026, the OBBBA expands HSA eligibility by allowing otherwise eligible individuals with DPC arrangements to make HSA contributions if their monthly fees are $150 or less ($300 or less for family coverage). These dollar limits will be adjusted annually for inflation. A DPC arrangement is a subscription-based healthcare delivery model in which an individual is charged a fixed, periodic fee for access to medical care that consists solely of primary care services provided by primary care practitioners. In addition, the OBBBA treats DPC fees as a medical care expense that can be paid for using HSA funds.
Notice 2026-5 addresses the types of arrangements that qualify as DPC arrangements for HSA eligibility purposes. For example, a DPC arrangement does not include an arrangement that:
- Provides certain healthcare items and services to individuals on the condition that they are members in the arrangement and have paid a fixed periodic fee, but bills separately for those items and services (through insurance or otherwise); or
- Provides services other than primary care services, regardless of whether members utilize those other services.
However, a DPC arrangement may include an arrangement that has fees that are billed for periods of more than a month, but no more than a year, provided the aggregate fees are fixed, periodic and do not exceed the monthly limit (on an annualized basis). For example, for 2026, the fee for a single individual could be $1,800 for a year, $900 for six months or $450 for three months.
Notice 2026-5 also addresses how the tax rules for HDHPs intersect with DPC arrangements. For example, an HDHP cannot offer primary care benefits other than those specifically allowed (e.g., telehealth and preventive care) by paying fees for, or providing membership in, a DPC arrangement without a deductible (or before the minimum deductible has been satisfied). For individuals enrolled in both an HDHP and a DPC arrangement, the DPC arrangement fees cannot be counted toward the HDHP’s annual deductible and out-of-pocket maximum.
In addition, Notice 2026-5 provides the following guidance on the reimbursement of DPC arrangement fees from HSAs:
- The fees cannot be reimbursed by an HSA if they are paid by an individual’s employer, including if they are paid through pre-tax salary reductions under a Section 125 cafeteria plan;
- The fees may be reimbursed from an HSA before the coverage period for the arrangement. For example, an HSA may immediately reimburse a substantiated fee for a DPC arrangement that begins on Jan. 1 of that enrollment year, even if the enrolled individuals paid the fee prior to the first day of the enrollment year; and
- Fees that exceed the applicable dollar limit (i.e., $150/$300 per month for 2026) can be reimbursed from an HSA but will disqualify the covered individual from making HSA contributions while they are enrolled.
Employer Takeaway
There are still some unanswered questions left by this most recent notice, and the IRS has requested that additional questions/comments be submitted by March 2026. We will continue to keep you abreast of any changes in these new regulations as additional information is released.
Federal Initiatives to Align U.S. Drug Prices With Global Rates
Recent federal initiatives and related agreements may affect prescription drug pricing in the United States. Actions by the Trump administration and federal agencies, along with subsequent commitments from major pharmaceutical manufacturers, aim to reduce U.S. drug costs by aligning them with the lowest prices paid by other developed nations, a strategy referred to as the “most-favored-nation” (MFN) price.
Executive Orders
On May 12, 2025, President Donald Trump issued an Executive Order (EO) directing federal officials and agencies to prevent foreign practices that undercut U.S. market prices, establish a mechanism for Americans to purchase drugs directly from manufacturers at MFN prices and communicate price targets to pharmaceutical manufacturers. On May 20, 2025, federal agencies released a statement detailing how they plan to satisfy the EO’s requirements.
Industry Agreements
Following the EO, major manufacturers such as Pfizer, Eli Lilly and Novo Nordisk agreed to MFN pricing and direct-to-consumer discounts via TrumpRx.gov, a federally operated website that is expected to launch in 2026.
Employer Takeaway
The impact of these initiatives on drug prices remains to be seen, so employers and plan sponsors should monitor developments and consider the following proactive steps to prepare for MFN pricing changes:
- Review prescription drug coverage to align with anticipated cost reductions for high-cost medications;
- Engage pharmacy benefit managers and carriers to confirm readiness for MFN pricing and evaluate whether savings can be passed through to employer-sponsored plans; and
Update employee communications to explain upcoming changes, including potential TrumpRx.gov options and how they interact with existing benefits.
New State Employment Laws Effective Jan. 1, 2026
Many states have adopted new or amended existing labor and employment laws that take effect on Jan. 1, 2026. Please see our Compliance Bulletins for an overview of labor and employment laws that states have adopted, which take effect on Jan. 1, 2026. However, please be aware that they do not address changes to minimum wage rates or data privacy laws.
What HR Professionals Can Learn from Holiday Movies
Holiday movies are fun, familiar and surprisingly packed with HR lessons. Here are some takeaways HR professionals can pull from classic festive films:
- Prioritize Workplace Well-Being | Movie: Elf
Buddy thrives because he feels valued and supported, until he doesn’t.
HR lesson: Employees do best when they feel seen, appreciated and psychologically safe. Culture matters more than “productivity hacks.” - Communicate Clearly and Early | Movie: Home Alone
One missed head-count check, and the whole team (family) falls apart.
HR lesson: Whether it’s open enrollment, PTO deadlines or policy changes, clear communication prevents costly mistakes and panicked last-minute scrambles. - Don’t Ignore Performance Issues | Movie: The Grinch
Isolation + unresolved conflict = someone steals Christmas.
HR lesson: Unaddressed issues—such as performance, interpersonal conflict and disengagement—can escalate. Early intervention is key. - Culture Drives Engagement | Movie: The Santa Clause
When leadership changes, the North Pole’s culture shifts with it.
HR lesson: Leaders influence morale, communication style and organizational identity. HR helps guide leaders to model the behaviors they want in others. - Flexibility Matters | Movie: The Holiday
Swapping houses leads to all kinds of personal and professional breakthroughs.
HR lesson: Remote work, flexible scheduling and thoughtful leave policies improve well-being and retention. - People Can Change with the Right Support | Movie: A Christmas Carol
Scrooge isn’t doomed; he just needed feedback, reflection, and incentives.
HR lesson: Coaching, development plans and constructive feedback can transform an underperformer into an engaged contributor. - Celebrate Wins, Big and Small | Movie: National Lampoon’s Christmas Vacation
People want recognition (preferably before the meltdown).
HR lesson: Show appreciation – bonuses, shout-outs, recognition programs or a simple thank-you all matter for morale. - Boundaries Prevent Burnout | Movie: The Polar Express
Not every crisis needs an all-hands response; sometimes, the team just needs rest and clarity.
HR lesson: Promote healthy work-life boundaries, especially during the holidays. - Policies Should Still Leave Room for Humanity | Movie: Miracle on 34th Street
Rules are necessary, but empathy builds trust.
HR lesson: HR can uphold compliance and treat employees with compassion.
Employer Takeaway
Holiday films may be lighthearted, but they highlight real workplace lessons. They remind HR professionals about the importance of clear communication, strong culture and early intervention when issues arise. They reinforce the value of employee recognition, flexibility and empathetic leadership. Above all, they show that people thrive when they feel supported, included and appreciated. Whether it’s avoiding Home Alone-level miscommunication or helping a “Scrooge” transform through coaching, holiday movies offer timeless insights for building healthier, happier workplaces.
