In an era of rising healthcare expenses and evolving medical delivery models, recent regulatory updates have addressed a critical disconnect between modern health insurance and the rules governing tax-advantaged savings, significantly expanding access to Health Savings Accounts (HSAs) for millions of Americans. The Internal Revenue Service, through detailed new guidance, has operationalized legislative changes that modernize the definition of what constitutes a qualifying health plan. These reforms tackle long-standing barriers related to telehealth services, the structure of Affordable Care Act plans, and the growing popularity of direct primary care models. This shift marks a pivotal moment in aligning federal tax policy with the practical realities of how individuals and families purchase and utilize healthcare services, potentially unlocking powerful savings and investment tools for a much broader segment of the population facing substantial out-of-pocket medical costs.
Permanent Telehealth Integration for High Deductible Plans
A cornerstone of the new regulations is the permanent establishment of a safe harbor that allows High Deductible Health Plans (HDHPs) to cover telehealth and other remote care services before a plan member has met their annual deductible. This change solidifies a popular and practical provision first introduced on a temporary basis, ensuring that the use of convenient virtual care does not disqualify an individual from making valuable contributions to their HSA. By making this policy permanent and retroactive for plan years beginning after December 31, 2024, the guidance removes a significant point of friction and uncertainty for both consumers and plan administrators. The move acknowledges telehealth’s integral role in the modern healthcare system, allowing individuals to seek timely care for minor issues remotely without being penalized by losing access to one of the most powerful tax-advantaged savings vehicles available for medical expenses. This permanent flexibility is expected to encourage continued adoption of remote care, which can improve access and lower overall costs.
While the permanent telehealth safe harbor is a significant step forward, the IRS guidance provides crucial clarifications on its scope and limitations to ensure proper application. The definition of “eligible telehealth services” is directly tied to the list of Medicare-payable services published by the Department of Health and Human Services, providing a clear and established standard for plan administrators to follow. For any services not explicitly found on this list, a more complex, principles-based analysis must be applied. It is critical for consumers to understand that the safe harbor is strictly confined to services rendered remotely. It does not automatically extend to ancillary benefits that might arise from a virtual consultation, such as in-person follow-up appointments, prescribed medical equipment, or pharmaceuticals. Unless these associated items independently qualify as a telehealth service or fall under separate preventive care guidelines, they remain subject to the plan’s deductible, maintaining a clear distinction between the remote consultation itself and the subsequent steps in a care plan.
Expanding the Definition of Qualifying Health Plans
In a landmark change designed to broaden HSA eligibility, the new rules fundamentally redefine what constitutes a qualifying HDHP, particularly for plans available on the individual health insurance market. Effective for months beginning after December 31, 2025, health plans categorized as either Bronze or Catastrophic under the Affordable Care Act will be statutorily treated as HSA-qualified HDHPs. This reform directly addresses a long-standing issue where many of these plans, despite featuring high deductibles, were previously ineligible because their out-of-pocket maximums exceeded the federally prescribed limits or because they provided certain non-preventive benefits before the deductible was met. By statutorily overriding these technical barriers, the new rules will open the door for millions of individuals enrolled in these common plan types to begin taking advantage of the triple-tax benefits of an HStax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
The guidance implementing this expansion includes several important provisions aimed at ensuring a smooth transition and protecting consumers. The new classification applies not only to Bronze and Catastrophic plans purchased on an official government exchange but also to identical plans sold in the off-exchange individual market. Recognizing that consumers may struggle to verify a plan’s on-exchange availability, the IRS has instituted a taxpayer reliance safe harbor, which protects an individual from being penalized for contributing to an HSA if they had no reason to believe their plan was not eligible. Furthermore, the notice confirms that individuals can use funds from an Individual Coverage Health Reimbursement Arrangement (ICHRA) to purchase these newly qualified plans without jeopardizing their HDHP status. Finally, the rules provide a specific modification for American Indians and Alaska Natives eligible for Indian Health Services (IHS) care, waiving a rule that previously disqualified them from HSA eligibility if they had recently received care at an IHS facility.
A New Framework for Direct Primary Care Arrangements
Perhaps the most intricate reform involves the novel treatment of Direct Primary Care Service Arrangements (DPCSAs), which have grown in popularity as an alternative to traditional fee-for-service models. Historically, these membership-based arrangements, which provide a range of primary care services for a fixed periodic fee, were considered a form of “other health plan” that disqualified an individual from contributing to an HSA. The new legislation carves out a specific and carefully defined exception, allowing individuals to maintain a DPCSA alongside a qualifying HDHP without losing their HSA eligibility. However, to qualify for this exception, the DPCSA must meet a strict set of criteria regarding the services offered, the practitioners providing them, and the fees charged. This change represents a significant acknowledgment of innovative healthcare delivery models and seeks to integrate them into the existing framework of tax-advantaged health savings.
To be considered an “excepted DPCSA” and thus compatible with an HSA, the arrangement must satisfy three key conditions. First, the care must be provided exclusively by “primary care practitioners,” a term that includes physicians in family medicine, internal medicine, geriatrics, or pediatrics, as well as certain nurse practitioners and physician assistants. Second, the arrangement must offer solely “primary care services,” explicitly excluding procedures that require general anesthesia, most prescription drugs, and laboratory services not typically performed in an ambulatory primary care setting. Third, the aggregate fees for the DPCSA are capped at $150 per month for an individual or $300 per month for a family, with these figures subject to inflation adjustments in subsequent years. If a DPCSA fails to meet any of these requirements, it reverts to being disqualifying “other coverage,” preventing the individual from making any HSA contributions during the months of their membership.
A Modernized Approach to Healthcare Savings
The final guidance issued by the Treasury and the IRS operationalized a landmark legislative effort that significantly broadened access to HSAs. These changes reflected a clear policy shift to adapt tax law to the evolving structures of health insurance and healthcare delivery in the United States. The permanent telehealth safe harbor acknowledged the central role of remote care, while the reclassification of Bronze and Catastrophic plans recognized the realities of the individual insurance market. Moreover, the creation of specific rules for Direct Primary Care Service Arrangements provided a pathway for integrating innovative care models with established savings tools. With staggered effective dates and a period for public comment, the framework for a more inclusive and modern approach to healthcare savings was successfully put into place, aiming to provide more Americans with the ability to manage their out-of-pocket medical costs in a tax-advantaged manner.
