On July 4, 2025, President Trump signed into law the One Big Beautiful Bill (OBBB). This client alert summarizes key provisions of the OBBB impacting employee benefits. The provisions become effective January 1, 2026 unless otherwise specified.
HDHPs and HSAs
- Telehealth: The OBBB permanently extends pandemic-era relief that permitted a high-deductible health plan (HDHP) to offer telehealth benefits to enrollees who had not yet met the deductible, without jeopardizing enrollees’ eligibility for a health savings account (HSA). The pandemic-era relief had expired at the end of 2024. This provision is effective retroactive to plan years beginning on or after January 1, 2025.
- Direct Primary Care: The OBBB permits a HDHP to cover direct primary care services to enrollees who have not yet met the deductible, without jeopardizing enrollees’ eligibility for an HSA. The direct primary care services must be for a fixed fee that cannot exceed $150 per month for a single individual (or $300 per month for two or more individuals). The OBBB also expands the definition of HSA-eligible medical expenses to include payments for such direct primary care services.
- Bronze and Catastrophic Plans: The OBBB expands the types of plans that qualify as HSA-eligible HDHPs to include bronze and catastrophic plans on the marketplace exchange.
Dependent Care FSAs
- The OBBB increases the annual contribution limit to a dependent care flexible spending account from $5,000 to $7,500 ($2,500 to $3,750 for an individual with a tax filing status of married filing separately).
Educational Assistance Programs
- The OBBB makes permanent a temporary law allowing employers to reimburse annually up to $5,250 of an employee’s student loan payments on a tax-free basis. The reimbursements must be made through a qualified educational assistance program. The temporary law was set to expire at the end of 2025. Also, the OBBB indexes the $5,250 limit (for educational assistance programs generally) for inflation, beginning in 2027.
Executive Compensation
- The OBBB amends the Code Section 162(m) deduction cap of $1,000,000 on compensation paid to certain executives of public companies. The OBBB requires all entities in a controlled group to aggregate compensation paid to the same executive when determining the $1,000,000 tax deduction limit.
Trump Accounts
- The OBBB allows new investment accounts for children under the age of 18 (called “Trump Accounts”). The Trump Accounts function similarly to an IRA with an annual contribution limit of $5,000 (indexed for inflation) per child. Employers may contribute up to $2,500 (indexed for inflation) annually to the Trump Accounts of employees on a tax-free basis. The employer contributions must be made pursuant to a written plan document to be eligible for favorable tax treatment. The federal government will make a $1,000 contribution to the Trump Account of a child born in 2025-2028.
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If you have questions regarding this client alert, please contact the authors, any member of Venable's Employee Benefits and Executive Compensation Group, or your regular Venable lawyer.