IRS releases health savings account expansion details under Trump's 'big beautiful bill'

The U.S. Department of the Treasury and IRS this week shared details about the health savings account updates enacted via President Donald Trump's "big beautiful bill."

The notice covers the legislation's new tax benefits for HSAs, including wider eligibility via high-deductible health plans, or HDHPs. Participants must have an eligible HDHP to make HSA contributions.

HSAs offer three tax benefits: an upfront deduction for contributions, tax-free growth and tax-free withdrawals for qualified medical expenses.   

"These changes expand HSA eligibility, which allows more people to save and to pay for healthcare costs through tax-free HSAs," the IRS said in a news release on Tuesday.

More than 59 million Americans had an HSA as of Dec. 31, 2024, according to a survey from Devenir, a company that provides HSA investment solutions and research, and the American Bankers Association's Health Savings Account Council. The survey polled the top 20 HSA providers. 

Here are the key things to know about the HSA changes enacted via Trump's "big beautiful bill."

Before Trump's "big beautiful bill," many bronze and catastrophic ACA marketplace plans weren't HSA-eligible, meaning those enrollees couldn't make HSA contributions.

But starting in January, bronze and catastrophic plans will be "HSA-compatible," even if the plans don't meet the previous high-deductible health plan rules, the IRS said Tuesday.

In 2026, these enrollees can start making HSA contributions. The health plans don't have to be purchased via the ACA exchange to qualify.

Trump's legislation also made permanent the "safe harbor" for certain telehealth and remote health services for high-deductible health plans, which was temporarily allowed during the pandemic.

Retroactive to Jan. 1, 2025, individuals can still use these services before meeting their deductible without jeopardizing eligibility for HSA contributions, according to the IRS.

Starting in 2026, certain direct primary care arrangements, or PCA, which aren't billed through insurance, also won't block eligibility for HSA contributions, with some restrictions. Plus, these individuals can use HSAs to cover their PCA fees, the IRS said.

The latest IRS guidance comes as lawmakers battle over the future of enhanced subsidies for Affordable Care Act marketplace health insurance. The pandemic-era tax break, which makes ACA plan premiums more affordable, will expire after 2025 without changes from Congress.

For 2025, more than 22 million people, roughly 92% of enrollees, receive the subsidy, according to KFF, a health policy research group. 

While Democrats have pushed to extend the ACA subsidies, Republicans have countered with alternative proposals. 

Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor and Pensions Committee, and Sen. Mike Crapo, R-Idaho, chair of the Senate Finance Committee, this week unveiled a proposal that would let ACA subsidies lapse, while directing funds to eligible HSA accounts.

"We need to give Americans more control over their own health care decisions," Sen. Crapo said in a statement on Monday.

Under the senators' proposal, individuals with income less than 700% of the federal poverty level would receive the HSA funds if enrolled in bronze or catastrophic plans in 2026 or 2027. The payment would be $1,000 for participants aged 18 to 49 and $1,500 for those aged 50 to 64.

However, it's unclear whether either party will approve a plan before year-end.