Under OBBBA, changes expanded eligibility for Health Savings Accounts (HSAs), effective January 1, 2026. HSAs are triple tax-advantaged, with tax-deferred contributions, tax-free earnings, and tax-free withdrawals for qualified medical expenses. You can roll over any balance remaining at the end of 2026 into 2027. Nonqualified withdrawals before age 65 are subject to a tax penalty. After age 65, you can take penalty-free withdrawals for any reason, but you must pay income tax on the non-qualified amount. To contribute to an HSA, you must have a high-deductible health plan (HDHP).
EXPANDED BY OBBBA
OBBBA made changes that expand the health plans that qualify as HDHPs. First, it extends the rule allowing plans to be considered HDHPs, despite not having a deductible for telehealth services retroactively to January 1, 2025. Second, OBBBA expands HSA eligibility to include those enrolled in Bronze and Catastrophic plans available on state and federal insurance exchanges under the Affordable Care Act.
This provision takes effect on January 1, 2026. Third, it allows individuals with HDHPs to enroll in Direct Primary Care arrangements (sometimes referred to as “concierge medical care”) while remaining HSA eligible, provided the monthly fee for DPC services doesn’t exceed $150 for individuals or $300 for families (both adjusted for inflation). DPC fees are also considered qualified medical expenses that can be paid with HSA funds.