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Tax Byte
On December 9, the IRS released Notice 2026-05 providing guidance on Health Savings Account (HSA) changes from the One, Big, Beautiful Bill Act (OBBBA). Access to HSAs was expanded under the OBBBA to include telehealth services, bronze and catastrophic plans, and direct primary care service arrangements (DPCSAs). This gives clients more opportunities to use tax-free HSAs to pay for their healthcare costs.
Bronze and Catastrophic Plans Now Qualify as High Deductible Health Plans (HDHPs)
Starting January 1, 2026, bronze and catastrophic plans available through an Exchange (the ACA health insurance marketplaces established under sections 1311 or 1321 of the Affordable Care Act) are treated as high-deductible health plans under Section 223(c)(2)(H) for HSA purposes, regardless of whether they meet traditional HDHP requirements. Many bronze plans previously failed to qualify because their out-of-pocket maximums exceeded the HDHP statutory limits ($8,500 for self-only coverage and $17,000 for family coverage in 2026) or they covered services before the deductible. Catastrophic plans couldn’t qualify 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.
The IRS clarified that plans don’t need to be purchased through an Exchange to qualify. While Section 71307 of the OBBBA requires plans to be “available as individual coverage through an Exchange,” bronze and catastrophic plans purchased off-Exchange qualify if an identical plan is available on an Exchange. The IRS’s notice provides a good-faith safe harbor: if individuals enroll in bronze or catastrophic plans on the individual market and have no reason to believe their plan isn’t Exchange-available, the IRS will treat them as eligible individuals who may contribute to HSAs.
Small Business Health Options Program coverage generally doesn’t qualify because it’s not individual coverage. However, employers can use individual coverage HRAs to purchase qualifying bronze or catastrophic plans.
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Direct Primary Care Service Arrangements
Individuals enrolled in qualifying direct primary care service arrangements can contribute to HSAs under Section 223(c)(1)(E), beginning on January 1, 2026. Additionally, they can use HSA funds tax-free to pay periodic DPCSA fees, however there are some caveats that clients should be aware of.
DPCSA Qualifying Criteria
A DPCSA must provide only primary care services from qualified primary care practitioners for a fixed periodic fee. The fee cannot exceed $150 monthly for individuals or $300 monthly for family coverage in 2026 (adjusted annually for inflation for taxable years after 2026). Primary care services cannot include:
- Procedures requiring general anesthesia.
- Prescription drugs other than vaccines.
- Laboratory services not typically administered in ambulatory primary care settings.
What is Disqualified from DPCSA
Arrangements that charge members a fixed periodic fee but also bill separately for individual services don’t qualify—the fixed fee must be the sole compensation for all covered services. Whether an arrangement qualifies depends on its terms, not which services an individual uses. An individual cannot make a non-qualifying arrangement qualify by simply declining to use disqualifying services it offers. If an HDHP pays DPCSA fees or provides membership before the deductible, this doesn’t count toward the HDHP’s deductible requirements.
Notice 2026-05 establishes different rules for DPCSA eligibility versus reimbursement. DPCSA fees exceeding $150/$300 monthly can be reimbursed from an HSA as qualified medical expenses under Section 223(d)(2)(C), but individuals enrolled in such arrangements cannot make HSA contributions during the enrollment period.
Important for employer-sponsored coverage: DPCSA fees paid by an employer (including through cafeteria plan salary reductions) are not HSA-reimbursable expenses. Only fees paid directly by the individual qualify for HSA reimbursement under Section 223(d)(2).
Telehealth Permanently Available
The OBBBA made permanent the ability for HDHPs to cover telehealth and remote care services before the deductible under Section 223(c)(2)(E), applying retroactively to plan years beginning on or after January 1, 2025. HSA contributions made by clients before the OBBBA’s July 4 enactment are valid even if their HDHP covered telehealth before the minimum deductible.
Planning Considerations for 2026
For clients currently enrolled in bronze or catastrophic plans, January 1, 2026 opens immediate HSA eligibility. Maximum contribution limits for 2026 are $4,400 for self-only coverage and $8,750 for family coverage. Under Section 223(b), clients have until April 15, 2027 to make 2026 contributions.
Clients who are interested in DPCSAs should verify that the arrangement provides only qualifying primary care services, accepts fixed periodic fees within dollar limits, and doesn’t bill separately for covered services.
The IRS requests comments on Notice 2026-05 by March 6, 2026. If you would like to learn more about IRS Notice 2026-05, follow the link below:
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