The Internal Revenue Service today issued providing guidance on new tax benefits for Health Savings Account participants under the One, Big, Beautiful Bill. “These changes expand HSA eligibility, which allows more people to save and to pay for healthcare costs through tax-free HSAs,” the IRS said.
What is a HSA for Federal Employees and Retirees?
A High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) provides federal employees and retirees traditional medical coverage and a triple-tax advantaged way to help build savings for future medical expenses while providing greater flexibility and discretion over participants you use their health care benefits. Participants may contribute fund their HSA for a tax-deduction, earn interest on the account tax-free, and withdrawals are not taxed for qualified medical expenses. READ ALSO: Health Savings Account: A Tax-Advantaged Way for Paying Current and Future Medical Bills
Those enrolled in Medicare are are not eligible for an HSA. According to OPM, their HDHP will provide a Health Reimbursement Arrangement (HRA) instead.
The expansion of HSAs is due to the passage of under the One Big Beautiful Bill passed early this year.
Expanded Access to Tax-Advantage HSAs
According to the IRS notice, The OBBB expands access to HSAs by:
Telehealth and Remote Care Services: The OBBB made permanent the ability to receive telehealth and other remote care services before meeting the high-deductible health plan (HDHP) deductible while remaining eligible to contribute to an HSA, effective for plan years beginning on or after Jan. 1, 2025.
Bronze and Catastrophic Plans Treated as HDHPs: As of Jan. 1, 2026, bronze and catastrophic plans available through an Exchange are considered HSA-compatible, regardless of whether the plans satisfy the general definition of an HDHP. This expands the ability of people enrolled in these plans to contribute to HSAs, which they generally have not been able to do in the past. Notice 2026-05 clarifies that bronze and catastrophic plans do not have to be purchased through an Exchange to qualify for the new relief.
Direct Primary Care Service Arrangements: Beginning Jan. 1, 2026, an otherwise eligible individual enrolled in certain direct primary care (DPC) service arrangements may contribute to an HSA. In addition, they may use their HSA funds tax-free to pay periodic DPC fees.
The Treasury Department and IRS welcome comments on the notice by March 6, 2026.