The enactment of the One, Big, Beautiful Bill Act (OBBBA), Pub. L. 119-21, on July 4, 2025, introduced significant amendments to Section 223 of the Internal Revenue Code intended to expand the availability of Health Savings Accounts (HSAs). Prior to this legislation, strict definitions regarding High Deductible Health Plans (HDHPs) and disqualifying coverage often prevented taxpayers from utilizing HSAs despite having high out-of-pocket medical costs. The IRS has issued Notice 2026-5 to provide technical guidance on these statutory changes, specifically addressing the permanent expansion of telehealth safe harbors, the inclusion of certain Bronze and Catastrophic plans as HDHPs, and the treatment of Direct Primary Care Service Arrangements (DPCSAs).

Permanent Safe Harbor for Telehealth and Remote Care

The OBBBA, via Section 71306, permanently codifies the safe harbor initially introduced by the CARES Act, allowing plans to provide coverage for telehealth and other remote care services before the minimum deductible is satisfied without losing HDHP status. While the CARES Act provision expired for plan years beginning on or after January 1, 2025, the OBBBA reinstatement applies retroactively to plan years beginning after December 31, 2024.

Practitioners should note that the IRS defines eligible telehealth services by reference to the list of services payable by Medicare published annually by the Department of Health and Human Services (HHS) under Section 1834(m)(4)(F) of the Social Security Act (SSA). For services not explicitly listed by HHS, taxpayers must apply the principles of Section 1834(m) of the SSA and 42 CFR 410.78. Crucially, the Notice clarifies that this safe harbor is strictly limited to remote services; it does not extend to in-person services, medical equipment, or pharmaceuticals furnished in connection with the remote care unless those items themselves constitute telehealth services under the cited guidance.

Classification of Bronze and Catastrophic Plans as HDHPs

Section 71307 of the OBBBA amends Section 223(c)(2) to align HSA eligibility with the reality of the individual health insurance market. Effective for months beginning after December 31, 2025, plans described in ACA Section 1302(d)(1)(A) (Bronze plans) or Section 1302(e) (Catastrophic plans) that are available as individual coverage through an Exchange are treated as HDHPs. This statutory change overrides previous limitations where such plans failed HDHP testing because their out-of-pocket maximums exceeded Section 223 statutory limits or because they provided non-preventive benefits (such as the three primary care visits required in Catastrophic plans) prior to the deductible.

Off-Exchange Plans and Taxpayer Reliance

A Bronze or Catastrophic plan purchased off-Exchange in the individual market qualifies as an HDHP if the same plan is available on an Exchange. This includes plans sold exclusively off-Exchange without a cost-sharing reduction load, provided they are otherwise identical to on-Exchange plans. Recognizing the difficulty taxpayers may face in verifying Exchange availability, the IRS has provided a safe harbor: an individual will remain an eligible individual if they enroll in a Bronze or Catastrophic plan on the individual market and have "no reason to believe" the plan is not available on an Exchange.

Interaction with Health Reimbursement Arrangements

The Notice confirms that utilizing an Individual Coverage HRA (ICHRA) to purchase a qualifying Bronze or Catastrophic plan does not disqualify the plan from HDHP status. However, the HRA itself must still comply with existing guidance (such as Notice 2008-59) to ensure it does not constitute disqualifying coverage.

Impact on Indian Health Services Eligibility

The Notice modifies Notice 2012-14 regarding the three-month lookback period for individuals receiving care at Indian Health Services (IHS) facilities. Under the new guidance, individuals enrolling in Bronze plan variants with cost-sharing reductions for American Indians and Alaska Natives (under ACA Section 1402(d)) are not disqualified from HSA eligibility even if they received medical services at an IHS facility within the previous three months.

Direct Primary Care Service Arrangements

Perhaps the most technically complex change involves DPCSAs. Historically, these arrangements were viewed as "other health plans" that provided coverage before the deductible, thereby disqualifying an individual from HSA contributions. Section 71308 of the OBBBA amends Section 223(c)(1) to disregard DPCSAs for eligibility purposes, provided specific criteria are met.

Definition and Limitations

To qualify as an excepted DPCSA, the arrangement must provide medical care consisting solely of "primary care services" provided by "primary care practitioners" for a fixed periodic fee.

Practitioners: Defined under SSA Section 1833(x)(2)(A) to include physicians with primary specialties in family medicine, internal medicine, geriatric medicine, or pediatric medicine, as well as nurse practitioners, clinical nurse specialists, and physician assistants.
Services: The Notice specifies that "primary care services" do not include procedures requiring general anesthesia, prescription drugs (other than vaccines), or laboratory services not typically administered in an ambulatory primary care setting. Notably, the definition of services is not tied to HCPCS codes.
Fee Cap: The aggregate fees for the DPCSA cannot exceed $150 per month per individual (or $300 for an arrangement covering more than one individual), adjusted for inflation after 2026.

Disqualifying vs. Non-Disqualifying Arrangements

If a DPCSA meets the definition but exceeds the fee cap (e.g., fees higher than $150/month), the fees are treated as qualified medical expenses reimbursable from an HSA, but the arrangement itself remains disqualifying coverage, preventing the individual from making HSA contributions. Conversely, if the fees are within the cap, the individual remains eligible to contribute.

Reimbursement of Fees

The OBBBA amended Section 223(d)(2)(C) to permit HSA funds to pay for DPCSA fees, an exception to the general rule prohibiting the use of HSAs for insurance premiums. However, practitioners must distinguish between employer-paid fees and employee-paid fees. If an employer pays the DPCSA fees (including via salary reduction in a cafeteria plan), the payment is excludable compensation under Section 106 and cannot be treated as a qualified medical expense of the HSA beneficiary. Furthermore, fees paid for membership in a DPCSA do not count toward the HDHP's deductible or out-of-pocket maximum.

Effective Dates and Request for Comments

The provisions regarding DPCSAs and the expansion of the HDHP definition to Bronze and Catastrophic plans are effective for months beginning after December 31, 2025. The telehealth safe harbor is effective retroactively for plan years beginning after December 31, 2024.

The Treasury Department and IRS have requested comments on all aspects of Notice 2026-5, with a submission deadline of March 6, 2026. Practitioners wishing to submit comments may do so electronically via the Federal eRulemaking Portal.

Prepared with assistance from NotebookLM.