The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, expanded who can stay eligible to contribute to a Health Savings Account (HSA). On December 9, 2025, the IRS released Notice 2026-05 to answer practical questions employers and individuals had been asking.
Two effective dates matter for tax year planning:
- Telehealth/remote care safe harbor is permanent and retroactive for plan years beginning on or after January 1, 2025.
- Direct primary care service arrangements (DPCSA) and bronze/catastrophic Marketplace plans treated as HDHPs apply for plan years beginning on or after January 1, 2026.
For readers filing tax year 2025 returns in 2026, this mainly affects whether you were HSA-eligible during 2025, and whether your 2025 HSA contributions remain valid.
IRS starting points: Notice 2026-05, Form 8889 (Health Savings Accounts), and IRS Publication 969 (HSAs and other tax-favored health plans). Forms and publications are on irs.gov/forms-pubs.
Who is affected
These changes matter most if you are any of the following:
- Enrolled in an HDHP and contributing to an HSA.
- Offered telehealth before meeting your deductible.
- Paying for a subscription primary care plan (direct primary care).
- Buying ACA Marketplace bronze or catastrophic coverage, including through an ICHRA or QSEHRA.
- An immigrant or visa holder whose U.S. tax residency changed in 2025, which can affect HSA reporting on Form 8889.
Visa angle and residency notes:
- HSA rules are based on coverage, not visa status. However, many H-1B/L-1 workers are U.S. tax residents under the Substantial Presence Test and report HSAs like other residents.
- Many F-1/J-1 students are nonresident aliens during their exempt years and may not benefit the same way from itemized medical rules.
- For residency background, see IRS Publication 519 (U.S. Tax Guide for Aliens) at irs.gov/pub/irs-pdf/p519.pdf.
Before / After: what changed under OBBBA and Notice 2026-05
| Topic | Before OBBBA | After OBBBA + IRS Notice 2026-05 |
|---|---|---|
| Telehealth before deductible | Often disqualified HSA eligibility unless temporary relief applied | Allowed without losing HSA eligibility for plan years starting ≥ 1/1/2025 (retroactive). |
| Direct primary care subscription (DPCSA) | Typically treated as disqualifying “other coverage” | Allowed starting plan years ≥ 1/1/2026, but only if the DPCSA is outside the HDHP and meets exclusions. |
| Bronze/catastrophic Marketplace plans | Often not HDHPs because deductibles or OOP limits did not match HDHP rules | Treated as HDHPs for HSA purposes starting plan years ≥ 1/1/2026, limited to individual Marketplace coverage. |
⚠️ Warning: HSA eligibility is month-by-month. One disqualifying coverage month can force a partial-year limit or a 6% excise tax on excess contributions. See Form 8889 and IRC §223 rules discussed in Publication 969.
Change #1 (effective for 2025 plan years): telehealth can be “first-dollar” and you can still be HSA-eligible
Notice 2026-05 confirms an HDHP can cover telehealth and remote care services before the deductible without breaking HSA eligibility. This relief is now permanent and applies to plan years beginning on or after January 1, 2025, even though OBBBA was signed mid-year.
Key practical points:
- Telehealth can be provided inside or outside the HDHP arrangement and still not disqualify HSA eligibility.
- In-person services, equipment, or drugs related to telehealth remain subject to the deductible unless otherwise covered.
Example (tax year 2025):
– Maria is on an employer HDHP for all of 2025. Her plan offers $0 telehealth visits in February. Under Notice 2026-05, that telehealth benefit does not make her ineligible. If she otherwise meets HSA rules, her 2025 HSA contributions generally remain valid and are reported on Form 8889 with her 2025 return filed in 2026.
Change #2 (effective for 2026 plan years): direct primary care can coexist with HSA eligibility, with strict boundaries
Starting with plan years beginning on or after January 1, 2026, Notice 2026-05 explains when a Direct Primary Care Service Arrangement (DPCSA) will not block HSA eligibility.
Key conditions (all must be met):
- The DPCSA must be outside the HDHP.
- The HDHP cannot pay DPCSA fees.
- The HDHP cannot count DPCSA fees toward the deductible.
- The DPCSA must fit the statutory definition — it generally excludes general anesthesia, most prescription drugs (other than vaccines), and non-primary lab services.
Timing of DPCSA fee treatment for HSA reimbursement:
1. Fees may be treated as incurred on the first day of each month of coverage (pro rata).
2. Or on the first day of the coverage period.
3. Or on the payment date.
That timing matters if you pay a year upfront and want reimbursement from an HSA — choose and document the method carefully.
Example (plan year 2026):
– Asha pays $1,200 in January 2026 for a 12-month DPCSA. Under the Notice’s timing options, the arrangement may support reimbursement in a way that matches the chosen method. Documentation is essential.
Change #3 (effective for 2026 plan years): bronze and catastrophic Marketplace plans can qualify as HDHPs for HSAs
OBBBA treats bronze and catastrophic plans bought on the ACA individual Marketplace as HDHPs for HSA purposes, even if they do not match typical HDHP deductible or out-of-pocket rules. Notice 2026-05 confirms this begins for plan years starting on or after January 1, 2026.
Points about employer-related and marketplace purchases:
- This treatment applies to Marketplace coverage purchased through an Individual Coverage HRA (ICHRA) or a Qualified Small Employer HRA (QSEHRA).
- It does not apply to SHOP or other small- or mid-size business exchanges.
- For new arrivals or those changing residency, buying a Marketplace bronze/catastrophic plan in 2026 may expand HSA access and affect payroll/HSA setup with a new employer.
Transition rules and retroactive relief
Notice 2026-05 provides two types of transition guidance:
- Telehealth is retroactive: applies to plan years beginning on or after 1/1/2025. This helps taxpayers who used telehealth in early 2025, before OBBBA passed.
- DPCSA and bronze/catastrophic treatment are not retroactive: plan years must begin on or after 1/1/2026.
Implication:
– For tax year 2025, the main “fix” is telehealth eligibility.
– DPCSA and bronze/catastrophic rules primarily affect 2026 contributions and plan-year treatment.
📅 Deadline Alert: Your tax year 2025 return is generally due April 15, 2026 (or October 15, 2026 with extension). HSA reporting is done on Form 8889, attached to Form 1040.
Contribution limits and reporting reminders
- The Notice notes the 2026 HSA limit for self-only coverage is $4,400 under IRC §223(b)(2)(A). Limits are indexed annually; confirm the applicable year when you contribute.
- For tax year 2025 (filed in 2026):
- Report contributions and distributions on Form 8889.
- Employer HSA contributions appear on Form W-2.
- Excess contributions can trigger a 6% excise tax unless timely corrected. See Publication 969.
Recommended actions and timeline (applies to immigrants and visa holders too)
Now (December 2025 to early 2026)
– Ask HR whether your 2025 HDHP telehealth benefit is treated under Notice 2026-05 for HSA eligibility.
– Gather HSA records: contributions, distributions, receipts, and coverage-month documentation.
Before filing your 2025 return (by April 15, 2026)
– Confirm each month of HSA eligibility for 2025.
– Prepare Form 8889 accurately, especially if you had mid-year coverage changes.
– If you became a U.S. tax resident in 2025, confirm whether you have a dual-status year. See Publication 519.
Planning for 2026 (plan years starting ≥ January 1, 2026)
– If you want a DPCSA, ensure it is structured outside your HDHP and meets the exclusions.
– If you are buying Marketplace coverage, confirm whether it is bronze or catastrophic and whether it is individual Marketplace coverage (including via ICHRA/QSEHRA).
IRS references: Notice 2026-05, Publication 969, Publication 519, Form 8889, and Form 1040 on irs.gov/forms-pubs. International taxpayer hub: irs.gov/individuals/international-taxpayers.
⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.
Recent legislation and IRS guidance have modernized HSA rules. Telehealth services are now permanently eligible for first-dollar coverage starting in 2025. By 2026, certain Marketplace plans and primary care subscriptions will also qualify, provided they meet specific IRS criteria. These updates aim to provide more flexibility for individuals using high-deductible health plans while maintaining the tax-advantaged status of their savings.
