Keenan Briefings

Briefing

OBBB Signed Into Law: What It Means—And What It Complicates

Signed into law by President Trump on July 4, 2025, the One Big Beautiful Bill Act (OBBB) is a comprehensive, 900-plus-page legislation that significantly impacts tax, budget, and employee benefit programs. The OBBB introduces sweeping changes that may complicate existing benefit strategies. Among its many provisions, the OBBB introduces crucial updates to telehealth services, Health Savings Accounts (HSAs), Dependent Care Assistance Programs (DCAPs), and commuter benefits, directly influencing the landscape of employee benefits.

Understanding what has changed (and what hasn’t) is essential for planning ahead, particularly with 2026 open enrollment on the horizon. Below is a summary of the most relevant benefit-related changes in the OBBB.

TELEHEALTH SAFE HARBOR MADE PERMANENT

Originally introduced under the Consolidated Appropriations Act, 2023, the telehealth safe harbor allowed plan sponsors to offer virtual care at low or no cost alongside high-deductible health plans (HDHPs) without jeopardizing HSA eligibility. That provision expired at the end of 2024, but OBBB revives and makes it permanent.

Key takeaways:

• Telehealth and remote care services may now be covered at no cost to employees before they meet their HDHP deductible.
• This applies retroactively to Jan. 1, 2025.
• Employers are not required to make this change. Carrier or vendor approval is necessary to remove any cost-sharing introduced earlier this year.

HEALTH SAVINGS ACCOUNTS (HSAS) AND DIRECT PRIMARY CARE

In addition to the telehealth update, the OBBB expands the HSA-compatible services to include certain Direct Primary Care (DPC) arrangements.

Effective for plan years beginning after Dec. 31, 2025:

• DPC services will not disqualify an individual from contributing to a HSA if monthly fees stay below $150 (individual) or $300 (family).
• HSA funds can be used to pay for qualifying DPC fees.

This clarification provides added flexibility for employers and employees interested in more personalized and accessible primary care options.

DEPENDENT CARE ASSISTANCE PROGRAMS (DCAPS)

The OBBB increases the annual tax-free reimbursement cap for DCAPs for the first time in decades:

• New cap effective for tax years starting Jan. 1, 2026:
• $7,500 per year (up from $5,000)
• $3,750 for married employees filing separately

Important considerations:

• The cap is not indexed for inflation. It will stay the same each year unless the statute is revised again.
• Employers can set limits on DCAP plans that are lower than the statutory cap.
• Employers should remain cautious about Section 129 nondiscrimination testing, especially if highly compensated employees disproportionately benefit from the increased limit.
• Communication during open enrollment will be critical if you plan to adjust your plan limits.

BICYCLE COMMUTING REIMBURSEMENT SUNSET

The tax-free reimbursement for bicycle commuters — previously allowing employers to offer up to $20/month — will be fully eliminated after Dec. 31, 2025.

While not a widely used benefit, some organizations with green or wellness initiatives may need to reevaluate employee communications and commuter benefit strategies heading into 2026.

LOOKING AHEAD

As always, implementation of these changes will vary depending on your organization’s structure, benefit plan design, and workforce demographics. Keenan is actively engaging with carriers, vendors, and legal experts to monitor guidance and help clients navigate next steps.

We encourage all clients to:

• Review their current benefit offerings and cost-sharing arrangements;
• Begin internal discussions about adjustments for 2026 open enrollment; and
• Reach out to their Keenan consultant to assess compliance implications and communication strategies.

We will continue to monitor updates and provide guidance to help you stay informed and prepared. For questions about how the OBBB may impact your organization, please contact your Keenan representative.

Keenan is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities, and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.