One Big Beautiful Bill Act: What Employers Need to Know

Understanding the Big Beautiful Bill and its impact on Employers graphic

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces several key updates to employee benefits that will take effect in 2026. While the legislation doesn’t require immediate employer action, it includes changes that may impact HSAs, telehealth and direct primary care arrangements, dependent care programs, and paid family and medical leave credits.

Here’s a breakdown of the most notable updates, and what they could mean for employers.

Telehealth Gets a Permanent HSA Safe Harbor

One of the most significant changes is the permanent extension of the telehealth safe harbor for high-deductible health plans (HDHPs). Previously, offering no-cost telehealth could jeopardize an employee’s HSA eligibility. That concern is now gone.

Employers can decide whether to make this change effective immediately, wait until 2026, or even apply it retroactively to January 2025.

  • Excess Re Observation: While the update offers flexibility, retroactive implementation could create administrative challenges for carriers and telehealth vendors. Employers should confirm feasibility with their partners before making changes and communicate any updates clearly through enrollment materials and plan documents. This permanent change also covers virtual primary care, specialty, and behavioral health visits, expanding access to care while maintaining HSA eligibility.

Direct Primary Care Arrangements and HSAs

The OBBBA also expands HSA flexibility by creating a new exception for certain direct primary care service arrangements (DPCSAs) starting in 2026.

Under the new rule, employees enrolled in a qualifying DPCSA can still contribute to an HSA, provided the arrangement only covers defined primary care services and not specialty, surgical, or emergency care.

  • Excess Re Observation: Employers should confirm that employees participating in HSAs are enrolled in qualifying HDHPs and not receiving disqualifying coverage elsewhere. While employers aren’t responsible for tracking outside coverage, partnering with HSA vendors to educate employees can help reduce confusion and compliance risk.

Higher Dependent Care Assistance Limits

Beginning in 2026, the annual limit for Dependent Care Assistance Programs (DCAPs) increases from $5,000 to $7,500 (or from $2,500 to $3,750 if married filing separately), with future indexing for inflation.

Employers aren’t required to adopt the higher limit, but will need to update plan documents, enrollment materials, and payroll systems if they do.

  • Excess Re Observation: Raising the limit may make nondiscrimination testing more challenging if participation among lower-paid employees doesn’t rise proportionally. To promote balance and maintain compliance, employers may need to adjust plan design or improve communication to encourage broader participation.

Paid Family and Medical Leave (PFML) Credits

The OBBBA makes PFML tax credits permanent, allowing employers to continue receiving credits for offering paid leave. However, state-mandated PFML programs still don’t qualify directly; only the employer-paid portion beyond state requirements counts toward the credit.

Employers should consult tax advisors for details on how these expanded credits apply to their plans.

What This Means for You

While the OBBBA introduces several positive developments for employer-sponsored benefits, most provisions are optional. Employers have time to assess which updates align with their plan goals and administrative capacity. Excess Re will continue to monitor regulatory guidance as details emerge, helping plan sponsors navigate compliance while optimizing cost and care outcomes.