Key takeaways:
The One Big Beautiful Bill Act expands health savings account (HSA) eligibility and what counts as a qualified medical expense. In 2026, more Affordable Care Act marketplace plans will be HSA eligible, and direct primary care fees may qualify as medical expenses.
Dependent care flexible spending accounts (FSAs) are getting their first permanent increase in 40 years. Starting in 2026, the annual limit rises to $7,500 per household.
The biggest updates to tax-advantaged accounts will roll out in 2026.
If you’re looking to reduce your out-of-pocket healthcare costs, you might consider using a health savings account (HSA) or a flexible spending account (FSA) if you’re eligible. The One Big Beautiful Bill Act (OBBBA), a federal law signed by President Donald Trump on July 4, 2025, brings some of the biggest updates these accounts have seen in decades.
Starting in 2026, more people will qualify for HSAs, and more expenses will be covered. Some FSA limits will increase for the first time in nearly 40 years.
Here’s which changes are set to take place and how they could help you save more on healthcare.
How does the One Big Beautiful Bill affect HSAs?
An HSA is a tax-advantaged account available to those with a qualified high-deductible health plan (HDHP). You can use the money in the account to pay for qualified medical expenses, such as prescription medications, copays, and dental care.
HSAs were created by Congress in 2003. With the OBBBA, HSAs are getting some of their biggest updates since they were introduced. Here’s what’s changing:
1. Expanded HSA eligibility
Beginning in 2026, more Affordable Care Act (ACA) marketplace plans will qualify as HSA eligible. This includes bronze and catastrophic plans that have not met the definition of high-deductible health plan. This change could increase the number of HSA-eligible individuals on the marketplace to 10 million.
Bronze plans usually offer the lowest monthly premium on the marketplace. They come with higher deductibles, which means you pay more out of pocket before your insurance starts covering most costs.
Catastrophic plans are meant to protect people from high medical bills. They are available to people under age 30 or to adults of any age who qualify for an exemption due to financial hardship.
2. Direct primary care (DPC) memberships treated as qualified expenses
DPC is a model in which you pay a healthcare professional a flat monthly fee for routine primary care services instead of going through insurance for every visit. According to a Hint Health survey, DPC memberships grew 241% from 2017 to 2021.There are now over 2,700 DPC practices nationwide.
Qualified medical expenses: You might be surprised to learn that you can use your HSA to pay for these qualified medical expenses.
Got an FSA? Here are common FSA-eligible items you may be able to spend your money on before it expires.
Enrolling in a dependent care FSA? Here’s how it works and what you should know before open enrollment.
Starting January 1, 2026, people can use their HSAs to pay for DPC membership fees. But the membership must meet the new federal requirements. Previously, DPC was considered similar to health insurance. It generally did not qualify as an HSA-eligible expense.
To qualify, the membership must meet the following requirements:
Charge a fixed monthly fee: Individual DPC memberships should not exceed $150 per month. Family memberships are capped at $300 per month.
Cover routine primary care services: This includes checkups, preventive care, follow-ups, and basic office procedures.
Cannot function like insurance: The membership cannot include major medical services. Specialty care, emergency care, hospital services, and other benefits that go beyond primary care are not covered.
3. High-deductible health plans (HDHPs) can cover telehealth before the deductible
With telehealth, you can visit a healthcare professional by video or phone instead of going into an office. During the COVID-19 pandemic, Congress temporarily allowed telehealth to be offered before the deductible without causing someone to lose HSA eligibility. OBBBA makes this flexibility permanent, starting with plans that began on or after January 1, 2025.
Under OBBBA, HDHPs can cover telehealth and other remote services before you meet your deductible. Doing so will not affect your ability to contribute to an HSA. Telehealth must still meet federal medical standards.
How does the One Big Beautiful Bill affect FSAs?
A flexible spending account (FSA) lets employees set aside pretax money to pay for certain out-of-pocket healthcare expenses. Health FSAs can help you pay for medical, dental, and vision costs. Dependent care FSAs (DCFSAs) work differently. They help cover certain childcare or dependent care expenses, such as preschool, summer day camp, or care for an adult dependent who cannot care for themselves. OBBBA affects the dependent care FSA rules, not health FSAs.
DCFSA rules have stayed mostly the same since they were introduced in 1986, when the contribution limit was set at $5,000 per household ($2,500 for married couples filing separately). This limit briefly increased in 2021 under the American Rescue Plan Act, but only for that plan year.
Beginning in 2026, the OBBBA permanently raises the dependent care FSA contribution limit to $7,500 per household and $3,750 for married couples filing separately.
Here’s an overview of how the limits have changed:
Year | Household limit | Married couples filing separately |
1986-2020 | $5,000 | $2,500 |
$10,500 | $5,250 | |
2022-2025 | $5,000 | $2,500 |
2026 (OBBBA) | $7,500 | $3,750 |
Which parts of your HSA and FSA won’t change in 2026?
There were various proposals circulating in recent years to change tax-advantaged accounts. But most of those ideas did not make it into OBBA. The final law included only certain HSA and dependent care FSA updates and left many other rules unchanged. Here’s what’s staying the same for HSAs and FSAs:
Rule | HSAs | FSAs |
Tax treatment | Triple tax advantage: tax-free contributions, growth, and withdrawals if used for qualified medical expenses. | Contributions reduce taxable income. |
Eligibility | Must still be enrolled in an HSA-qualified HDHP to contribute. | FSAs must be offered through an employer. |
Unused HSA funds continue to roll over every year. | “Use it or lose it” remains in effect. Employers may offer a grace period or a limited carryover. | |
Contribution timing | You can contribute to an HSA for a tax year until the federal tax filing deadline (typically April 15 of the following year). | FSA contributions must be made during the plan year. But the full FSA annual election is available at the start of the plan year, even though contributions are deducted from paychecks throughout the year. |
The IRS increased the 2026 HSA and health FSA contribution limits. HSA limits increased from $4,300 in 2025 to $4,400 in 2026 for self-only coverage and from $8,550 in 2025 to $8,750 in 2026 for family coverage. The health FSA limit also increased from $3,300 to $3,400 in 2026. These annual adjustments will continue since both HSAs and FSAs remain indexed for inflation.
The bottom line
The One Big Beautiful Bill Act includes some of the biggest updates to HSAs and dependent care FSAs in decades. Starting in 2026, more people will qualify for HSAs, direct primary care memberships will count as a qualified expense, and dependent care FSAs (DCFSAs) will see a permanent contribution increase to $7,500 per household. And beginning with plans on or after January 1, 2025, HDHPs can cover telehealth and other remote services before you meet your deductible without affecting HSA eligibility.
If you’re eligible for an HSA or a DCFSA, weigh the benefits to see whether these accounts make sense for your needs and budget.
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References
HealthCare.gov. (n.d.). How to pick a health insurance plan. Centers for Medicare & Medicaid Services.
Internal Revenue Service. (2020). High deductible health plans and expenses related to COVID-19.
Internal Revenue Service. (2021). Taxation of dependent care benefits available pursuant to an extended claims period or carryover.
Internal Revenue Service. (2025). Treasury, IRS provide guidance on new tax benefits for health savings account participants under the One, Big, Beautiful Bill.
119th Congress. (2025). H.R.1 - an act to provide for reconciliation pursuant to title II of H. Con. Res. 14.
Shryock, T., et al. (2022). High cost of health care may be boosting direct primary care membership. Medical Economics.
U.S. Department of the Treasury. (2003). Treasury issues guidance to encourage use of new innovative health savings accounts (HSAs).
The White House. (2025). Expansion of HSA eligibility under OBBB act to improve marketplace coverage, affordability, and access.
