What HR needs to know about what’s in the One Big Beautiful Bill Act while it’s with the Senate
You’ve likely heard the buzz around the One Big Beautiful Bill Act (OBBA). OBBA is a proposed tax and spending bill that has been passed by the House of Representatives and is now heading to the Senate. But change is inevitable, especially in bills that move from the House to the Senate—OBBA is destined to evolve after Senate review. However, we are keeping a close eye on the employee benefits portion of OBBA. Specifically, how it relates to employers’ group health plans.
Whether you’re an HR professional or benefits broker, this curated watchlist will keep you informed and equipped to tackle possible upcoming changes. Here’s what you need to know:
OBBA: Top Group Health Benefits Changes to Watch
Health Savings Account (HSA) Overhaul
HSAs are leveling up in a big way under OBBA! Changes may include the following advantages:
- More HSA Eligibility: Medicare Part A participants and bronze/catastrophic health plan enrollees would qualify, which they previously did not.
- FSAs and HRAs: Would allow employees to convert their FSA and HRA balances into an HSA when the employee enrolls in a high-
deductible health plan (HDHP), which would then enable them to become HSA eligible.
- Catch-Up Contributions for Spouses that Have Both Reached 55 Years Old: Both spouses would be able to contribute the extra $1,000 to the same HSA, making saving for the household easier. Currently, if both spouses are 55 or over and not enrolled in Medicare and eligible, both spouses can make $1,000 HSA catch-up contributions, but only in separate HSAs.
- Married Employees HSA Contribution Eligibility: Would allow individuals to contribute to an HSA when they are eligible, even if their spouse is enrolled in an FSA.
- New Qualified Expenses: Allowing certain fitness and sport expenses (such as gym membership fees or participation/instruction in physical exercise or activity) to be eligible HSA expenses with limits of $500 per individual annually or $1,000 per family annually.
- Greater Affordability: HSA caps may double for individuals earning less than $75,000 (phased out at $100,000 annually) and families earning under $150,000 (phased out at $200,000 annually).
- HSA Monies Used Prior to being Earned: Would allow individuals to use HSAs for qualified medical expenses incurred in the 60-day period after enrollment in an HDHP, if the HSA is established by the end of the 60-day period.
Wondering how this impacts your benefits plans? These changes may offer new opportunities in your benefits and compensation package to attract and retain top talent.
On-Site Employer Health Clinics
Here’s some fantastic news for employers offering on-site health services:. OBBA could make clinics HSA-compatible, meaning employer clinics would no longer need to limit service offerings to just physicals and immunizations. This would exempt clinics from HSA restrictions, giving employers room to expand services without putting participant HSA eligibility on the line.
Custom Health Option and Individual Care Expense (CHOICE) Arrangements
Say goodbye to ICHRAs and hello to CHOICE arrangements. This rebranding comes with increased flexibility:
- Employees could fund their CHOICE arrangements through a cafeteria plan, using those funds to pay premiums for coverage on the exchanges.
- Small businesses (<50 employees) would be eligible for temporary credits ($100/employee per month in the first year and $50/employee per month in the second year) for adopting CHOICE arrangements.
What’s in it for you? More options to create tailored benefits programs without breaking the bank.
Why CHOICE Arrangements and Expanded HSAs Matter
Compliance isn’t just a regulatory checkbox. These updates open the door to build benefits programs that better serve employees while saving your company time and money. Small businesses should take special note of those tax credits! They would make implementing CHOICE arrangements very appealing if adopted.
What HR and Brokers Should Do Next
- Stay Tuned for Adjustments Post-Reconciliation: The Senate is likely to revise parts of OBBA, with final decisions expected to unfold in the next few months.
- Plan for Possible Implementation: Get your game plan ready to implement CHOICE arrangements or expand clinic services as soon as the bill passes if those options are the right fit for your organization.
- Engage with Top Vendors:
- Leading vendors like Businessolver are already initiating discussions about potential HSA implementation changes that may arise with OBBA. This proactive approach ensures that we stay ahead of compliance requirements.
- Reach out to your top vendors to confirm they are similarly preparing for these possible updates. A collaborative approach with your vendor will be critical in ensuring a smooth transition and optimizing the benefits of any forthcoming changes.
Want OBBA insights tailored to your company or clients? Reach out to us today to simplify your compliance responsibilities. We help turn overwhelming regulations into actionable steps that make a difference.
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