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(December 30, 2025) The IRS recently released Notice 2026-5, which provides guidance and answers to common questions related to the expanded availability of health savings accounts (“HSA”) under the Reconciliation Act (previously named the One Big Beautiful Bill Act) passed into law earlier this year. Background on Qualified HDHPs and HSA Eligibility To be eligible to contribute to an HSA an individual must be enrolled in a qualified high deductible health plan (“HDHP”) and not have any disqualifying coverage. To be a qualified HDHP, the HDHP must meet certain minimum deductible and maximum out of pocket limits and, with limited exceptions, among other things, pursuant to §223(c)(2)(A), cannot provide benefits for any year until the minimum annual deductible for that year is satisfied.

One exception or safe harbor to the requirements under §223(c)(2)(A), is for the receipt of preventive care without first meeting the applicable minimum deductible. In addition, due to the COVID-19 pandemic, there was short-term relief under the CARES Act, which was extended by subsequent legislation, which allowed HDHPs to provide first-dollar coverage of telehealth and other remote care services prior to satisfying the HDHP deductible (and regardless of whether such services were preventive services) while maintaining HSA eligibility.

The Reconciliation Act

The Reconciliation Act further expanded HSA eligibility in several ways. First, the Reconciliation Act resurrected and made permanent the pandemic-related relief previously provided under the CARES Act, which was extended by the CAA 2022 and CAA 2023, and allows HDHPs to provide first-dollar coverage of telehealth and other remote care services prior to satisfying the HDHP deductible (and regardless of whether such services were preventive services) while maintaining HSA eligibility effective for plan years beginning after December 31, 2024.

Further, the Reconciliation Act resolved the unsettled question relating to the viability of HSA coverage for individuals with a direct primary care service arrangement (i.e., a contract between an individual and one or more primary care physicians to receive certain medical care in exchange for a fixed periodic fee). Beginning January 1, 2026, a direct primary care service arrangement is not considered disqualifying coverage (and therefore will not preclude an employee from qualifying for HSA coverage), as long as the fixed periodic fee for the direct primary care service arrangement is no more than $150 per month for the individual, indexed for inflation (or $300 per month if the arrangement covers more than one individual, indexed for inflation).

In addition to satisfying this dollar limit, the direct primary care service arrangement must not include coverage for: procedures that require the use of general anesthesia, prescription drugs (other than vaccines), or laboratory services not typically administered in an ambulatory primary care setting. Finally, the Reconciliation Act confirms that the fixed periodic fees payable for the direct primary care service arrangement are qualified medical expenses that may be paid on a tax-free basis from the individual’s HSA. Finally, beginning January 1, 2026, the Reconciliation Act provides that all bronze and catastrophic level plans available on the individual market through the Exchange will be treated as HDHPs – and will, therefore, be HSA-compatible – even if those plans do not otherwise meet the standard HDHP requirements (e.g., by providing pre-deductible coverage of non-preventive services, failing to conform to out-of-pocket maximums, etc.).

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