On July 4, 2025, the One Big Beautiful Bill (BBB) was signed into law, ushering in a wave of changes across tax, employment, and benefits landscapes. While the bill is broad in scope, several provisions directly impact employee benefits, offering both opportunities and challenges for employers and workers alike.
1. Telehealth Coverage Under HDHPs
One of the most welcomed changes is the permanent extension of pre-deductible telehealth coverage under High-Deductible Health Plans (HDHPs). Previously allowed temporarily under the CARES Act, this provision now enables HDHPs to cover telehealth services before the deductible is met—without jeopardizing Health Savings Account (HSA) eligibility. Employers can choose to implement this change retroactively or prospectively, but must update plan documents and coordinate with third-party administrators accordingly.
HBC’s thoughts – this is an exciting move and will hopefully curb the health insurance companies’ activity of making these types of visits apply to a deductible and not being covered at 100% with no costs. Please note, this will NOT be an automatic change. With most providers, you may not see anything until your next renewal, AND even then, it may not be available as an option. Always consider outside, direct telemedicine contracts. Those are available, always have been.
2. Increased Dependent Care FSA Limits
The BBB raises the maximum contribution limit for Dependent Care Flexible Spending Accounts (FSAs) from $5,000 to $7,500 starting January 1, 2026. This change is not indexed for inflation, and while it offers greater tax-advantaged savings for families, employers must be cautious about nondiscrimination testing, especially for highly compensated employees.
HBC’s thoughts – This is actually pretty awesome. This amount hasn’t changed in a LONG time, and childcare is SUPER expensive. This isn’t something that will impact everyone, everywhere, but any $ amount that you can save on taxes is a good thing.
3. Student Loan Repayment Through Educational Assistance Programs
Employers can now use educational assistance programs to repay student loans, a provision that builds on pandemic-era relief. This allows up to $5,250 annually in tax-free payments toward an employee’s student loans, helping reduce financial stress and improve retention among younger workers.
HBC’s thoughts – This is another benefit that is a bit niche but can help employers who are recruiting recent college grads.
4. Trump Accounts
A new type of savings vehicle called “Trump Accounts” has been introduced, allowing employees to contribute post-tax dollars for specific qualified expenses. While details are still emerging, these accounts may function similarly to Roth IRAs or HSAs, with potential tax advantages and employer match options.
HBC’s thoughts – Any new savings vehicle is good, but the retirement savings world is complex. There’s not a ton of info available on these just yet, and actual regulations on how these will work are pending. They appear to be limited to somewhat small contribution amounts each year, and withdrawals look to be taxed in most situations. We’ll see how this all shakes out. Our advice? Invest based on your financial advisor’s recommendations. This would be another arrow in their quiver and may make sense for some, but from what we can tell, it doesn’t seem to dramatically change a whole lot when it comes to trying to get people to save or put money away towards retirement.
5. Executive Compensation Deduction Limits
For public companies, the BBB modifies Section 162(m) of the tax code, expanding the definition of “covered employees” and aggregating compensation across controlled group members. This change tightens the $1 million deduction limit for executive pay, requiring more detailed tracking and reporting across affiliated entities.
HBC’s thoughts – This will impact potential tax savings for people who could be considered highly compensated employees among controlled group employers. This is the gov.’s effort at trying to pull in more taxes, but IMO, most people in this situation are using tax attorneys and will just find other loopholes.
Conclusion
While on paper, some of this may sound exciting, I don’t really see anything here that is going to move the needle a whole lot for anyone in the benefits space. The telemedicine changes will be welcome to folks who are enrolled in HSA-eligible medical plans once the changes land, but for most people will be 6 – 18 months down the road. The biggest benefit from our standpoint would be the Dependent Care FSA contribution increases, as they are long overdue, but again, that’s an under-utilized benefit, so I don’t think it will impact a lot. Don’t get us wrong, this bill wasn’t a healthcare or benefits bill; some of these items were just added in, like with any other legislation. This bill’s main intent is to lower taxes for working Americans. Will it work? Only time will tell, as with anything and everything in this country right now, everything is very divisive. Let’s all remember this passed next year when we go to file our taxes and then look back at prior years. That’s how we’ll know for sure if this legislation was a win or not.
Thanks for the read!!
