The “Big Beautiful” tax bill being debated in Congress has several provisions that would make major changes to rules governing individual coverage health care reimbursement arrangements and tax-advantaged health savings accounts. Many of these changes would benefit both employees and employers.
The legislation has not yet been signed into law and could undergo significant changes in committees in the U.S. Senate. After the Senate makes changes to the bill, which has already passed the House, it may be completely different. However, the changes proposed for ICHRAs and HSAs seem to be noncontroversial, with no opposition reported.
Here’s a look at the proposed changes.
Making changes to HSAs
HSAs, which are tied to qualified high-deductible health plans (HDHPs), allow employees to sock away untaxed income for future medical and health-related expenses. Usually, a set amount is withdrawn from their paychecks before taxes are applied.
Account holders can invest the money in these accounts like they do with 401(k) plans; the accounts can be moved from one employer to the next and kept into retirement. Funds are withdrawn tax free to reimburse for qualified medical and health-related expenses.
The bill would:
Allow working seniors who are 65 and older to continue contributing to an HSA, a change from current law that prohibits this.
Expand HSA eligibility to people with ordinary bronze-level plans and catastrophic major medical coverage. Currently, only individuals in HDHPs have access to HSAs.
Allow an HSA to reimburse for gym memberships and other fitness-related costs. The reimbursement limit would be $500 annually for individuals and $1,000 for families.
Permit workers with access to an employer’s on-site clinic to contribute to HSAs. Under current law, access to an employer health clinic violates the rule that an HSA owner must have an HDHP.
Allow married couples who file taxes jointly to make catch-up contributions to the same HSA. Currently, married couples can only make catch-up contributions to their own accounts. The maximum HSA contribution in 2025 is $4,300 for an individual and $8,550 for a family. Individuals over the age of 55 can make catch-up contributions of up to $1,000 each year.
Allow HSA owners to pay dues for a “direct primary care practice,” a subscription service for primary care. It would limit the reimbursable dues to $150 for an individual and $300 for a family.
Allow workers with health reimbursement or flexible spending arrangements that are terminating to roll some unused funds from those accounts into an HSA. The maximum amount that can be converted is linked to the FSA contribution limit, which is $3,300 in 2025.
Would allow one spouse to contribute to an FSA and the other to an HSA. Under current law, if one spouse has an FSA, the other cannot contribute to an HSA.
Would set the maximum HSA contribution based on earnings. For example, for employees making $75,000, the contribution limit would increase to $8,600 for an individual, compared to $4,300 today. For a couple making $150,000 annually, the amount would jump to $17,100 from the current $8,550.
Tweaking ICHRAs
The legislation would rebrand ICHRAs to individual care expense arrangements (CHOICE arrangements), which would be made available through a cafeteria plan.
This change would also address an issue that has plagued ICHRAs: funds in those accounts are not eligible for tax-free status if used to purchase individual coverage on Healthcare.gov or other Affordable Care Act exchange. By funding them through a cafeteria plan, workers with CHOICE arrangements would be able to pay for individual coverage on the exchange using tax-free dollars.
The bill would also allow employers to give workers the option of enrolling in a CHOICE arrangement or a traditional group health plan.
Further, it would provide employers a monthly tax credit of $100 per employee enrolled in a CHOICE plan when the plan includes major medical coverage that offers at least the same type of benefits that a bronze plan on the government exchange would. Typically, bronze plans cover about 60% of medical costs.
The takeaway
Much can change between now and when the tax bill is signed into law. If the above provisions make it into the final version, they could greatly expand the use of HSAs and ICHRAs. One analysis of the bill predicts it would expand the pool of people eligible for HSAs by 20 million.
The IRS has announced slightly higher health savings account contribution limits for 2026, with the amount increasing 2.3% for individual HSA plans.
The IRS updates this amount annually, along with minimum deductibles and out-of-pocket maximums for high-deductible health plans. HSAs, which help employees save for medical expenses, are only available to those enrolled in qualified HDHPs.
Understanding these amounts now can help you get an early start on human resources planning for next year.
Here are the changes coming in 2026:
HSA annual contribution limit
Self-only plan: $4,400, up from $4,300 in 2025
Family plan: $8,750, up from $8,550 in 2025
Catch-up contribution (for those aged 55 and older): $1,000 (unchanged)
HDHP minimum annual deductible
Individual plan: $1,700, up from $1,650 in 2025
Family plan: $3,400, up from $3,300 in 2025
HDHP annual out-of-pocket maximum
Individual plan: $8,500, up from $8,300 in 2025
Family plan: $17,000, up from $16,600 in 2025
Maximum employer excepted-benefit HRA contribution
$2,200, up from $2,150
What to do
If you sponsor an HDHP for your staff, review the plan’s minimum deductible and maximum out-of-pocket limit when preparing for the 2026 plan year.
If you allow employees to make pre-tax contributions to an HSA, you should also update your plan communications to reflect the new amounts.
The many benefits of HSAs
An HSA is a special bank account for your employees’ eligible health care costs. They can put money into their HSA through pre-tax payroll deductions, deposits or transfers. As the amount grows over time, they can continue to save it or spend it on eligible medical and medical-related expenses.
Employers can also contribute to the accounts, but the annual contribution maximum applies to all contributions in total (from the employee and the employer).
The money in the HSA belongs to the employee and is theirs to keep, even if they switch jobs. If they go to a new employer that offers qualified HDHPs, they can continue to fund the account in their new job.
Funds roll over from year to year and can earn interest. Many plans also have investment options to help savers further grow the account.
There are several benefits for employees who have an HSA:
The money an employee contributes to an HSA is not subject to income taxes, which reduces their overall taxable income.
They are not taxed on withdrawals.
If employees contribute to their HSA with after-tax money, they can deduct their contributions at tax time on Form 1040.
Employees can tap the funds for any approved out-of-pocket medical expenses.
They can also grow the account tax-free by investing the funds in the account, like a nest egg for medical expenses in retirement.
HSA-eligible expenses:
Payments for services or medicine that count towards health plan deductibles, copayments or coinsurance.
Dental or vision care (including orthodontics, eye exams and corrective lenses).
Medical devices.
Certain over-the-counter medicines, such as pain relievers, allergy medication, cold and flu medicine and menstrual products.
Vitamins and health supplements, if recommended by a medical or health professional for the treatment or prevention of a specific disease or condition.
If you are offering high-deductible health plans to your staff to reduce overall premium outlays, you know that this type of insurance has one major drawback: higher out-of-pocket expenses that some may struggle to afford if they experience a sudden illness or accident. Fortunately, you can offer a product that can help them cope with unexpected out-of-pocket costs for their health care: gap insurance, otherwise known as supplemental medical expense coverage. Supplemental insurance is an extra layer of coverage designed to help with expenses primary health insurance may not fully cover, including copays, coinsurance, deductibles and even living expenses.
With more Americans going into serious debt due to medical expenses, supplemental insurance can provide a financial lifeline when someone needs it most.
Group supplemental insurance is a voluntary benefit that is usually less expensive than if someone purchases it on their own. There is typically no underwriting or health exams for group policies, which is not always the case with individual policies.
This voluntary benefit can be structured in different ways, but they usually cover deductibles, copays, coinsurance costs, prescription drug costs and other health care-related expenses.
Gap insurance may also cover nonmedical expenses, including living expenses during a hospital stay or while recovering at home from an illness or accident. Other gap plans might include income replacement for periods when individuals can’t work due to an illness, accident or after a medical procedure.
Types of gap insurance
There are a few types of gap insurance, each covering something a bit different:
Hospital indemnity insurance — This can help cover the costs associated with a hospital stay, including the cost of childcare or if a patient needs to travel far from home to receive medical care. Depending on the plan, hospital indemnity insurance gives you cash payments to help pay for added expenses that may come while you recover. Typically, plans pay based on the number of days of hospitalization.
Critical illness insurance — This provides a benefit if a policyholder becomes very ill or suffers a serious medical problem, like a heart attack or stroke. This plan supplements existing health insurance coverage with extra funds when a policyholder incurs extra expenses due to an illness and when they can’t work. They may receive a lump sum to cover these added expenses or monthly payments depending on the plan.
Accident insurance — This can help the policyholder cover medical costs or living expenses if the policyholder is injured in an accident. Policies pay out a preset number of times over a specific time or in a lump sum.
Cancer insurance — This can cover radiation, chemotherapy, immunotherapy, surgery, hospitalization and possibly screening benefits — all related to a cancer diagnosis and treatment. It can pay out in different ways:
Expense incurred policy, which pays a specific percentage of treatment costs up to a set limit.
Indemnity policy, which covers expenses for approved treatments up to a predefined limit.
Lump-sum policy, which pays a fixed amount after a cancer diagnosis.
Benefit to employees
The cost of gap coverage is reasonable, ranging from $10 to $50 a month depending on the coverage. Employers can offer to pay all or part of the premium.
If you offer HDHPs to your staff, supplemental insurance can help your employees weather a serious illness or accident by providing much-needed funds to help them get buy during a difficult period.
One often-overlooked factor that can drive up group health plan premiums is employee health behavior, particularly the tendency to skip preventive care visits.
According to Aflac’s most recent “Wellness Matters Survey,” 94% of Americans have delayed or skipped checkups and screenings that could detect serious illnesses early. When employees avoid the doctor until a major health issue emerges, the resulting claims can be far more costly — both in terms of medical expenses and lost productivity.
For employers, this can lead to higher utilization and claims down the road, ultimately pushing up premiums at renewal time.
Why people skip appointments
Checkups and screenings can help detect chronic conditions like hypertension, diabetes and certain cancers early, when they’re easier and less expensive to treat.
Yet many workers don’t act until a health scare forces the issue. The Aflac survey found that nearly two-thirds of Americans only became proactive about their health after a major incident. Barriers like distrust of doctors, fear of bad news, scheduling hassles and uncertainty about insurance coverage keep many from seeing their primary care physician.
The study sheds light on the myriad reasons so many people are skipping routine checkups and screenings:
37% have canceled or not scheduled a doctor appointment because the wait was too long.
48% of those surveyed say they refrain from regular checkups because of logistical issues (such as difficulty finding a babysitter, taking time off from work or finding transportation).
26% say they do not trust doctors or would rather not be embarrassed.
14%, including 18% of Gen Z workers, say insurance issues keep them from getting checkups and screenings.
41% — primarily Gen Z (51%) and millennials (54%) — rely mainly on urgent care or the emergency room for their medical needs.
62% of those who believe they will be diagnosed with cancer are more likely to delay screenings.
What employers can do
One of the more striking findings was that 87% of those surveyed said they would be more likely to attend routine checkups and screenings if they received a cash incentive to do so.
Employers have a unique opportunity to promote preventive care and reduce friction that stops employees from making appointments.
Practical steps employers can take
Encourage your staff to book annual checkups at a specific time each year and put it on their calendar. The study found that those who book appointments at a specific time of year are twice as likely to complete recommended doctor visits and screenings.
Promote preventive care. Use company newsletters, e-mail, intranet posts or Slack messages to remind employees about the importance of annual physicals and screenings.
Urge employees to get a primary care physician if they don’t already have one. Patients who have a primary care doctor are more likely to attend checkups and receive reminders from their doctor. The survey found that one in five did not have a primary care physician.
Advise employees to get their families involved in health for everyone. Seven in 10 said that a loved one’s urging would make them more likely to go to the doctor.
Host an “Annual Checkup Day.” Block off a “no meetings” hour across the company and encourage employees to use the time to schedule their appointment or even take a walk, meditate or engage in another wellness activity.
Offer incentives for scheduling checkups. Small rewards like gift cards or company swag can go a long way.
Protect paid time off. Reassure employees that they won’t have to take paid time off to attend a medical appointment.
Educate employees about coverage. Make sure employees know which screenings are covered under their plan.
A new poll has found that most small and mid-sized enterprises consider offering group health insurance benefits to their staff a fundamental business value, despite many firms making difficult financial tradeoffs to maintain that coverage.
It’s been well-reported that SMEs are disproportionally burdened by rising health insurance costs and a labor market that demands robust benefits. A study by Morgan Health, a unit of JP Morgan, found that one-third of SMEs drop their health insurance each year, but the ones that stay the course must be nimble and sometimes make choices that allow them to continue offering health insurance.
The goal of the survey was to better understand how businesses make tradeoffs to keep health care coverage in place and areas where they need additional support or innovation.
Here’s a look at how most SME operators view their role in group health benefits, the challenges they face and steps they are taking to provide benefits and improve their offers.
Firms, staff value health coverage
Most SMEs polled said they consider group health insurance a fundamental part of their benefits package to stay competitive in the job market.
The challenge facing these firms is balancing the cost of group health insurance against the financial benefits of attracting the best and brightest. SMEs often struggle to match the expansive benefits choices of larger employers who usually have more resources to offer wellness programs, mental health benefits and virtual care.
As a result, SMEs will often prioritize their employees’ well-being and happiness as part of a family-like company culture to set themselves apart from larger employers. This focus can positively affect employee satisfaction and business performance, even if that means absorbing other costs.
Financial tradeoffs
A separate report by JPMorganChase Institute found that one out of three small businesses discontinue paying health insurance premiums from one year to the next. However, many executives polled by Morgan Health said that prospect would be the absolute last option.
One executive of a firm with between 100 and 500 employees told the surveyors, “There would have to be a lot of cuts made in our budget before we would [discontinue benefits] … I think that would be one of the last things on the chopping block.”
Dropping coverage is only an option for firms with fewer than 50 full-time and full-time equivalent employees. Employers with 50 or more of these workers are required under the Affordable Care Act to offer group health insurance to their staff that is affordable and covers essential services.
Employers may take other steps like:
Reducing family plan contributions (not always popular).
Shifting to a high-deductible health plan, which in turn lowers the premium. On the flipside, your employees will have higher maximum out-of-pocket expenses. This can include promoting health savings accounts, which allow employees to save for future medical expenses with pre-tax dollars. HSAs can only be tied to an HDHP.
Choosing a plan that doesn’t cover doctor office visits or prescription drugs until the deductible is met.
Selecting a carrier with lower rates even though you may sacrifice network availability.
Offering an individual coverage health reimbursement arrangement. These are basically accounts that the employer funds to allow their staff to purchase health insurance in the private market or on an ACA marketplace.
The takeaway
A word of warning: Making big changes to save money can result in unintended consequences. As a result, considering a big change requires research, which takes time and money. Large employers will usually have a dedicated human resources team that can do the research, but SMEs, not as much.
We can help you evaluate your options, stay competitive in the talent market and retain key personnel. As your strategic partner, we can work with you to manage your health insurance costs and explore new options as the market continues to evolve.
According to recent study by Business Group on Health and the Kaiser Family Foundation, 90% of large employers believe that the cost of employee-sponsored healthcare and pharmacy benefits will become unsustainable within the next decade.
A major contributing factor is the cost of prescription drugs, which has risen 9% annually over the past ten years. For employers, this trend has increased the cost of healthcare for plans. For employees, it translates to higher deductibles and copays.
A Reality Check
As the healthcare marketplace continues to rapidly evolve, including rising costs, employers and benefit advisors are facing growing pressure to keep costs down while continuing to provide high-quality care to employees.
When it comes to controlling the cost of prescription drugs, pharmacy Benefit Managers (PBMs) have long been at the center of this challenge, but the traditional PBM model, often driven by profits, hasn’t always been in the best interest of member care or the employer’s bottom line.
This is where the fiduciary PBM model comes into play, offering a transformative solution that not only benefits the bottom line, but also prioritizes the well-being of members.
The Big Difference the ‘F’ Word Can Make
A fiduciary PBM is a one that is legally and ethically required to put the interests of its clients above all else, including its own profits. Unlike traditional PBMs, which may have conflicts of interest and profit incentives tied to formulary decisions, pricing, or rebates, fiduciary PBMs operate with complete transparency and a member-first philosophy, focusing solely on the best interest of the employer and plan members.
This means that there are no hidden rebates or kickbacks that benefit the PBM at the expense of plan nor any profits from dispensing medications. It’s about providing the most effective and affordable medications to employees and ensuring that they get them at the lowest possible cost. This typically results in a 30%-50% reduction in plan spend per member per month (PMPM)—with no change in benefit design—and a 30% (or more) reduction in out-of-pocket cost for plan enrollees.
Why is This Alignment with Member-First Principles So Important?
The importance of a member-first approach cannot be overstated. For employers, offering a benefits plan that focuses on the health and satisfaction of employees can improve workforce productivity, reduce absenteeism, and promote overall well-being.
In the long run, that means lower healthcare costs and a more engaged population.
Cost Savings and Transparency
One of the most significant advantages of the fiduciary PBM model is the level of transparency it offers based on ERISA defined terms. Traditional PBMs and many “transparent PBMs” often have hidden fees, kickbacks from drug manufacturers, dispensing profits, and opaque pricing structures that inflate the costs for employers and members. This can result in inflated drug prices, higher premiums, and a general lack of clarity around the true cost of medications. “Transparency” is not a legal term. “Fiduciary,” as defined by ERISA and embraced by US-Rx Care, is legally binding, which is why plan fiduciary status is not accepted by traditional and transparent PBMs. It can’t be without violating its core principles inherent in those conflicted PBM models.
On the other hand, Fiduciary PBMs—like US-Rx Care—offer full transparency in pricing and reimbursement, working directly with employers to ensure the lowest possible costs for prescription drugs while maintaining high-quality care. By eliminating conflicts of interest, fiduciary PBMs also pass 100% of savings directly onto employers and members. This means that employers can expect better value from their pharmacy benefits program, and employees will benefit from lower out-of-pocket costs and better access to the medications they need.
Impacts on Future Growth
The fiduciary PBM model isn’t just about saving money in the short term—it also sets the stage for sustainable, long-term growth for both employers and their members. By maintaining transparency and focusing on cost-effective solutions, employers are able to reinvest the savings into other areas of their business, whether it’s improving employee benefits or income, enhancing health programs, or even offering more comprehensive care options.
It’s truly a win-win!
By prioritizing the long-term needs of their clients and members, fiduciary PBMs are also better equipped to navigate the evolving healthcare landscape and provide solutions that can scale with the growth of the organization. This unique future-proof approach helps employers plan for tomorrow while addressing the needs of today.
The US-Rx Care Solution
Since our founding in 2007, US-Rx Care has built our fiduciary model around the core principles of ERISA-defined transparency and conflict-free accountability in the best interest of the plan and enrollees always. With no conflicts of interest, no misaligned profit incentives, no benefit constraints, and no waste, employer groups can trust that they’re getting the best deal and best outcomes possible.
If you’re ready to make the shift toward a fiduciary PBM solution that effectively mitigates risk while offering substantial savings and better long-term outcomes, let’s talk about what US-Rx Care can deliver for you.
In the meantime, click below to see how our model helped a multi-state hospital group save more than $10 million in annual drug costs!
