As we move into 2026, federal guidance continues to evolve in ways that expand flexibility for consumer-driven health plans. The IRS recently released Notice 2026-5, offering long-awaited clarity on several provisions impacting Health Savings Accounts (HSAs) under the One Big Beautiful Bill Act (OBBBA).
These updates meaningfully expand how HSAs can work alongside telehealth, Direct Primary Care (DPC), and certain Affordable Care Act (ACA) plans…creating new opportunities for employers/employees and brokers to design more flexible, tax-advantaged benefit strategies.
Below is a practical breakdown of what changed and why it matters.
Permanent Telehealth Safe Harbor for HDHPs
One of the most impactful updates is the permanent extension of the telehealth safe harbor for High Deductible Health Plans (HDHPs).
HDHPs may now offer telehealth and other qualifying remote care services before the deductible is met without jeopardizing an individual’s ability to contribute to an HSA. This eliminates the uncertainty caused by short-term extensions over the past several years and allows employers to plan more confidently around virtual care.
Qualifying telehealth services will follow the annual Medicare list published by the Department of Health and Human Services (HHS). While the consultation itself is protected, the safe harbor does not extend to in-person follow-ups or prescriptions resulting from the visit.
Why this matters
Employers can integrate telehealth into long-term plan design, employees gain quicker access to care, and brokers can confidently recommend virtual-first strategies without risking HSA eligibility.
Bronze and Catastrophic Plans Now Treated as HSA-Compatible
Beginning with months after December 31, 2025, certain ACA Exchange Bronze and Catastrophic plans will be treated as HDHPs for HSA purposes – even if they do not meet traditional HDHP deductible or out-of-pocket maximum requirements.
This applies to:
- Exchange-based Bronze and Catastrophic plans
- Off-Exchange plans that mirror Exchange offerings
- Individual coverage purchased through an Individual Coverage HRA (ICHRA)
Individuals enrolled in these plans may contribute to an HSA, provided they have no other disqualifying coverage.
Why this matters
This change bridges the gap between the individual market and HSAs. Employees can pair lower-premium coverage with tax-advantaged savings, while employers using ICHRAs gain expanded flexibility and plan choice without sacrificing HSA compatibility.
Direct Primary Care and HSA Eligibility
For months beginning after December 31, 2025, enrollment in a qualifying Direct Primary Care (DPC) Service Arrangement will no longer disqualify an individual from HSA eligibility.
A qualifying DPC arrangement must:
- Cover only primary care services
- Be provided by a primary care practitioner
- Operate for a fixed periodic fee
- Stay within monthly limits of $150 for individuals or $300 for families (indexed beginning in 2027)
Importantly, DPC fees are now considered qualified medical expenses and may be reimbursed tax-free from an HSA. However, HDHPs may not cover DPC fees before the deductible and DPC fees cannot be counted toward the deductible or out-of-pocket maximum. Employer-paid DPC fees (outside of salary reduction) do not affect HSA eligibility, but those employer payments themselves are not reimbursable from the HSA.
Why this matters
Employees can combine the protection of an HDHP with personalized, relationship-based primary care while preserving the long-term savings benefits of an HSA.
Looking Ahead
While Notice 2026-5 answers many key questions, the IRS is seeking public comments through March 6, 2026. This is an opportunity for stakeholders to share practical perspectives that could shape future guidance.
There are a few outstanding areas/questions where additional clarification would be especially helpful, including:
- Can an Excepted Benefit HRA (EBHRA) be used to reimburse Direct Primary Care expenses?
- With Direct Primary Care expenses now considered HSA-qualified, will this extend to HRA reimbursements, further aligning tax-advantaged accounts?
- What impact, if any, does enrollment in a Direct Primary Care arrangement have on COBRA eligibility or coverage, ensuring continuity for transitioning employees?
Diversified will continue to monitor these developments closely in order to help employers, brokers, and participants navigate implementation with confidence. If you have questions about how these changes affect your plan design or administration throughout 2026 (and beyond) our compliance focused, service driven team is here to help.