Two Key HSA Provisions Make It In The Final Budget Bill

We've been pushing for these low-cost provisions that improve incentives for healthcare consumers

Now that the dust has settled on the final budget bill (now the OBBA), Danny and I are happy to report that two healthcare provisions we’ve been researching for quite a while have made it into law.

Sec. 71307 - Allowance of bronze and catastrophic plans in connection with health savings accounts

Millions of ACA enrollees who buy insurance on individual exchanges who choose bronze or catastrophic insurance plans will now be eligible to contribute to health savings accounts. This new HSA eligibility will take effect starting in 2026.

Along with Lanhee Chen, we’ve written about this weird glitch previously. Most high-deductible health plans on the ACA exchanges have become ineligible for HSAs over time due to having maximum allowable out-of-pocket costs that were too high.

This change finally pairs the highest-deductible plans with savings accounts that make sense for those who have large out-of-pocket expenses.

And as it only applies to those who purchase insurance on the exchanges, it mainly affects low-income Americans. The revenue effect is small, as it constitutes lost tax revenue from a set of Americans that don’t pay much in income taxes in the first place.

Sec. 71308 - Treatment of direct primary care service arrangements

I’ve been writing about DPC arrangements for years. They’re one of the most obvious improvements to the American medical system we could push for, but legally they haven’t been able to used by people who contributed to HSAs. That’s now legal (and sensible), and consumers can use their HSA dollars to pay for plans.

DPC membership fees up to $150 a month ($300 for couples, plus indexed to inflation afterward) now count as qualified medical expenses.

I truly hope it supercharges the DPC movement around the country, and I strongly suggest you look at the DPC Alliance map of almost every DPC practice in the country and find one for yourself.

Danny and I have much more to say on the rest of the bill (permanent expensing: good, trillions more deficit spending: bad), but for now we’ll celebrate seeing millions of healthcare consumers have more options, better incentives, and more financial protection.