What the OBBB Means for Your Benefits Team

Signed into law by President Trump on July 4th, the “One Big Beautiful Bill” (OBBB) is already making waves in tax policy and Social Security headlines. But for employee benefits administrators, the bill quietly ushers in key updates that will reshape plan design, compliance, and employee communication in the months ahead.

Here’s what benefits professionals need to know:

1. Health Savings Account (HSA) Updates

• Telehealth Coverage Pre-Deductible: Permanently reinstated for high-deductible health plans, restoring flexibility for plan design.
• Direct Primary Care (DPC): Monthly DPC arrangements are now HSA-compatible, with federal contribution limits: $150 for individuals and $300 for families.
• Bronze and Catastrophic ACA Plans: Newly designated as HSA-eligible, expanding enrollment options for younger or lower-income workers.

Impact: Employers must revisit plan eligibility criteria, update employee-facing materials, and adjust payroll deduction protocols.

2. Student Loan Repayment Assistance

• Employer-provided student loan repayment under Section 127 has been made permanent.
• The annual limit remains at $5,250, now indexed for inflation starting in 2026.

Impact: HR teams offering this benefit must ensure proper tax documentation and payroll coding.

3. Trump Accounts

• Introduces tax-advantaged savings accounts for education, housing, and retirement.
• Eligible individuals may contribute up to $5,000 annually, with a $1,000 federal seed for children born between 2025 and 2028.
• Employers may optionally contribute up to $2,500/year, tax-free.

Impact: These accounts may integrate into future benefits offerings, requiring coordination across financial wellness and payroll systems.

4. Medicaid & Payroll Implications

• The bill includes $1 trillion in Medicaid reductions, and adds work requirements for able-bodied adult beneficiaries.
• New, temporary federal income tax exemptions on tips and overtime wages:
• Up to $25,000 for tips
• Up to $12,500 for overtime
• Phased out above certain income thresholds

Impact: Payroll systems must adjust reporting, and employee education materials need revisiting.

5. Compliance & Coordination Challenges

With sweeping changes to HSA eligibility, student loan treatment, and new account structures, benefits teams must:

• Update Summary Plan Descriptions (SPDs)
• Audit communication materials and decision-support tools
• Align closely with brokers, TPAs, and legal advisors to ensure ongoing compliance

Bottom Line for Benefits Professionals

The OBBB is far more than a tax package—it’s a quiet overhaul of benefits infrastructure. While some popular provisions (like HSA access for Medicare enrollees and wellness expense eligibility) didn’t make it into the final law, the confirmed updates require immediate attention.

The smart move? Treat this bill like a strategic inflection point—and get ahead of the compliance curve before the questions start.

Key Effective Dates for Benefits-Related Provisions in OBBB

(HRA-to-HSA and ICHRA flexibility were removed from the final bill.)

Benefits Admin Action Items

• Review documents with TPAs by Q4 2025
• Prep open enrollment comms for 2026
• Coordinate payroll + compliance for updated tax rules
• Consider offering Trump Accounts + Dep-Care FSA
• Track Medicaid/SNAP reforms for impact on hourly workforce.

For more Employee Benefits resources, contact INSURICA today.

This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.