IRS clarifies health savings account changes in H.R. 1 in new notice

The IRS provided guidance Tuesday on new tax benefits for health savings accounts (HSAs) that include allowing bronze and catastrophic plans to be considered HSA-compatible under Sec. 223.

The changes, which were part of H.R. 1, P.L. 119-21, commonly known as the One Big Beautiful Bill Act, generally expand the availability of HSAs under Sec. 223 and were outlined in Notice 2026-05.

Sec. 223 allows an eligible individual to establish an HSA, which is a tax-exempt trust or custodial account that can receive tax-favored contributions by or on behalf of the individual. The individual then can use those contributions on a tax-free basis to pay or reimburse qualified medical expenses. To be eligible, an individual must be covered under a high-deductible health plan (HDHP) and have no disqualifying health coverage.

As of Jan. 1, 2026, bronze and catastrophic plans available through an exchange are considered HSA-compatible, regardless of whether the plans satisfy the general definition of an HDHP. The notice also clarifies that bronze and catastrophic plans do not have to be purchased through an exchange to qualify for HSA compatibility.

Many bronze plans did not qualify as HDHPs prior to H.R. 1 because the plans’ out-of-pocket maximum exceeded the statutory limits for HDHPs or because they provided benefits that were not preventive care without a deductible. Catastrophic plans could not be HDHPs because they were required to provide three primary-care visits before the minimum deductible was satisfied and to have an out-of-pocket maximum that exceeded the statutory limits for HDHPs.

Other HSA changes

The IRS guidance also covered:

• Telehealth and remote care services: H.R. 1 made permanent the ability to receive telehealth and other remote care services before meeting the HDHP deductible while remaining eligible to contribute to an HSA, effective for plan years beginning on or after Jan. 1, 2025.
• Direct primary care (DPC) service arrangements: Beginning Jan. 1, 2026, an otherwise eligible individual enrolled in certain DPC service arrangements may contribute to an HSA. In addition, they may use their HSA funds tax-free to pay periodic DPC fees.

Comments

The IRS is seeking comments on Notice 2026-05 by March 6, 2026.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.