One Big Beautiful Bill includes employer-friendly provisions 

The Republican budget and tax package (“One Big Beautiful Bill Act,” HR 1) signed into law by President Trump on July 4 contains a host of employer-friendly health and welfare provisions. The measure will, among other things, renew and make permanent pandemic-related telehealth relief for Health Savings Account-qualifying High-Deductible Health Plans, expand eligibility and uses for HSAs, make permanent and enhance the employer tax credit for paid family and medical leave, make permanent and extend employers’ ability to provide tax-free educational assistance, and create new tax-favorable “Trump accounts” for children under age 18.

The new law does not change the tax-favored treatment of employer-provided healthcare benefits. Health and welfare provisions in the law include:

• Reinstatement and permanent relief for telehealth services covered by HSA-qualifying HDHPs before the deductible is met. Reinstate retroactively to January 1, 2025, and permanently allow (i) HSA-qualifying HDHPs to cover telehealth and other remote care services on a pre- or no-deductible basis, and (ii) an otherwise HSA-eligible individual to receive pre- or no-deductible coverage for telehealth and other remote care services from a stand-alone vendor outside of the HDHP. In both cases, the pre- or no-deductible telehealth coverage won’t interfere with an individual’s eligibility to make or receive HSA contributions (relief expired for calendar-year plans on December 31, 2024).
• Favorable HSA treatment for coverage under, and fees associated with, Direct Primary Care Service Arrangements. Allow otherwise HSA-eligible individuals enrolled in DPCSAs to make or receive HSA contributions and allow individuals to use HSA funds to pay for certain DPCSA services. For this purpose, a DPCSA is an arrangement which (i) provides medical care consisting solely of “primary care services” provided by primary care practitioners, (ii) the sole compensation for such care is a fixed periodic fee, and (iii) with respect to any individual for any month, the aggregate DPCSA fixed fees are capped at $150 per month, or twice that for DPCSA’s covering more than one individual (indexed annually for inflation). “Primary care services” does not include (i) procedures that require the use of general anesthesia, (ii) prescription drugs other than vaccines, and (iii) laboratory services not typically administered in an ambulatory primary care setting.
• Permanence of employer tax-free payments up to $5,250 (indexed) for employees’ qualified student loans. Permanently extend the $5,250 annual tax exclusion for employer payments of qualified student loans under an educational assistance program (currently set to expire Dec. 31, 2025); indexes the current $5,250 cap for all IRC Section 127 education assistance programs for inflation.
• Permanence and enhancement of employer tax credit for Paid Family and Medical Leave. Permanently extend the employer tax credit for PFML (currently set to expire Dec. 31, 2025), and make three enhancements: (i) modifies the credit to allow it to be claimed for an applicable percentage of premiums paid or incurred by an eligible employer for insurance policies that provide PFML for qualifying employees; (ii) makes the credit available in all states; and (iii) lowers the minimum employee work requirement from 1 year to 6 months.
• Higher income exclusion for dependent care assistance programs. Increase the annual income exclusion for dependent care assistance programs (e.g., dependent care Flexible Spending Arrangements) to $7,500 (from $5,000), and to $3,750 (from $2,500) in the case of a married individual filing separately. These amounts will not be adjusted for inflation.
• Enhancement of dependent care tax credit. Enhance the dependent care tax credit by increasing the maximum credit rate to 50% (from 35%) and creating a more generous phase down schedule.
• Enhancement of employer-provided childcare tax credit. Increase the maximum employer-provided childcare credit from $150,000 to $500,000 (adjusted for inflation), and percentage of qualified childcare expenses covered from 25% to 40%.
• Enhancement of adoption assistance tax credit. Enhances the adoption assistance credit by making it partially refundable up to $5,000 (adjusted for inflation) beginning in 2025.
• Permanence of elimination of tax-free bicycle commuting reimbursements. Permanently eliminate the $20/month qualified bicycle commuting reimbursement gross income exclusion and add an additional year of inflation adjustment for all other IRC Section 132(f) qualified transportation fringe benefits.
• Certain Affordable Care Act exchange plans HSA-qualifying. Treat ACA exchange-based bronze and catastrophic plans offered in the individual market as HSA-qualifying HDHPs.
• New “Trump accounts” for children under age 18; pilot program provides a $1,000 government contribution for newborns from 2025 through 2028. Establishes new tax-advantaged "Trump accounts" for children under 18, allowing annual contributions of up to $5,000 (adjusted for inflation). These accounts are governed by specific rules regarding contributions, distributions, and investments. Employers can contribute up to $2,500 (adjusted for inflation) on a tax-free/deferred basis, subject to various rules. Additionally, a pilot program will be implemented where the Treasury will provide $1,000 to the “Trump accounts” of U.S. citizen children born between 2025 and 2028.

All these provisions except the reinstatement of telehealth/HDHP relief and the enhanced adoption assistance tax credit take effect starting January 1, 2026.