On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBB Act), a sweeping piece of tax and spending legislation that carries significant implications for employee benefits. For HR professionals, business owners, and benefits administrators, understanding the changes this law introduces is essential as many of its key provisions take effect starting in 2026.

Key Takeaways:

• Expanded HSA eligibility including ACA bronze and catastrophic plans.
• Telehealth exception for HDHPs is now permanent.
• Higher annual limits for dependent care FSAs.
• Student loan repayment benefits extended beyond 2025.
• Education assistance benefits now adjusted for inflation.
• New child savings vehicle introduced—called Trump Accounts.

Expansion of Health Savings Account (HSA) Eligibility.

One of the most substantial changes brought by the OBBB Act is the expansion of Health Savings Account (HSA) eligibility. Effective January 1, 2026, individuals participating in direct primary care (DPC) arrangements can contribute to an HSA, provided their monthly DPC fees are $150 or less for individuals, or $300 or less for families. These thresholds will be indexed annually for inflation. DPC arrangements, which involve paying a flat periodic fee for access to primary care services, are growing in popularity, and under the new law, these fees can now be treated as qualified medical expenses payable with HSA funds.

In addition, the OBBB Act broadens HSA accessibility within the individual insurance market by categorizing all bronze and catastrophic plans offered through ACA Exchanges as high-deductible health plans (HDHPs). This reclassification allows more individuals who purchase insurance on their own to become eligible for HSAs.

Permanent Telehealth Exception for HDHPs.

The pandemic temporarily allowed HDHPs to cover telehealth services pre-deductible without disqualifying HSA eligibility. The OBBB Act makes this telehealth flexibility permanent for plan years beginning after December 31, 2024. This move is expected to encourage continued growth in virtual care offerings and remove barriers for employees seeking more accessible and affordable healthcare.

Increased Limits for Dependent Care FSAs.

Employers offering dependent care flexible spending accounts (FSAs) will also need to take note of new limits established by the Act. Beginning in 2026, the maximum annual contribution will increase to $7,500 for single individuals and married couples filing jointly, and to $3,750 for married individuals filing separately. These higher limits provide employees with additional tax-free savings opportunities to cover eligible childcare and dependent care expenses, although it’s important to note that these amounts are not indexed for inflation and will remain fixed unless amended by future legislation.

Extended Student Loan Repayment Benefits.

The OBBB Act also brings good news for employees with student loan debt, offering a powerful retention and recruiting incentive, particularly for Millennial and Gen Z employees. Originally set to expire after 2025, the OBBB Act permanently extends the ability for employers to pay down employees’ student loans using educational assistance programs. Employers can continue to contribute up to $5,250 annually toward employees’ student loans on a tax-free basis. Starting in 2027, this $5,250 limit will be adjusted each year for inflation, allowing employers to offer increasingly meaningful benefits to workers who are burdened by educational debt.

Introduction of “Trump Accounts” for Children.

One of the more novel introductions in the OBBB Act is the creation of “Trump Accounts,” a new type of tax-advantaged savings vehicle for children under the age of 18. Set to take effect in 2026, these accounts function similarly to individual retirement accounts (IRAs), with earnings growing tax deferred. The annual contribution limit is set at $5,000 per child, with inflation adjustments beginning in 2028. Children born between 2025 and 2028 may also be eligible for a special $1,000 federal contribution, providing an extra incentive for families to participate. Employers may make tax-free contributions of up to $2,500 per year to these accounts on behalf of an employee’s child or dependent, with these contributions also subject to future inflation adjustments. Employers offering Trump Accounts will need to create a written plan document and follow rules similar to those governing dependent care FSAs, including nondiscrimination testing and employee communications.

Next Steps.

The various changes introduced by the OBBB Act reflect a clear shift in policy aimed at expanding access to healthcare, supporting working families, and incentivizing financial security for the next generation. While the benefits are significant, the administrative responsibilities will also grow. Employers should begin planning now.

• Review your benefits strategy with HR and legal teams.
• Update written plan documents before the 2026 effective dates.
• Communicate changes clearly to employees.
• Explore adding Trump Accounts and HSA-eligible plans to your offerings.

Proactively adapting your benefits package can give your organization a competitive advantage in recruiting and retaining talent.

If you need help navigating these changes, consult with your benefits advisor or legal counsel to stay compliant and maximize the impact of these new employee benefit provisions.

Cultivating talent and retaining employees can be a challenge for every employer. Wages across all disciplines are increasing, which results in competitive new job offers and a difficulty for employers to staff and retain top talent (unless they can regularly dish out significant raises company-wide). Most employers compensate for their potential wage discrepancy by offering employees attractive, affordable, and comprehensive benefits programs.

Despite these efforts, employee-retention rates are not where most companies would like them to be, a sentiment that supports findings in Payscale’s 2018 Compensation Best Practices Report. Payscale highlights employee retention as one of employers’ top concerns across all sectors. Fifty-nine percent of those surveyed for the report worried about losing their best employees to competitors, and sixty-seven percent were concerned about the difficulty of holding onto skilled labor.

These fears are not ill-founded: In the event a quality employee leaves, the cost to replace them (i.e., disseminating and advertising the open position, interviewing and conducting background checks on candidates, drug testing, referral bonuses, signing bonuses, etc.) can creep up to 20 percent or more of that individual’s annual salary. There’s also a potential uptick in salary expectations from the new employee due to industry trends and recognition of a competitive marketplace. This is on top of the minimum wage increases we all are seeing now.

To further complicate matters, three distinct generations—Baby Boomers, Gen-Xers, and Millennials—with varying needs and expectations compose most of today’s workforce. Fewer in numbers, but also represented, are the Silent Generation (the demographic cohort following the G.I. Generation and the oldest group of employees in today’s workforce) and the Generation Z workers (the generation after Millennials), who represent opposite ends of the age spectrum. This multi-generational labor mix adds value to the work environment, but the combination also creates new demands when it comes to recruitment and retention.

All employees, regardless of their ages, are looking for increasing salaries, rich benefits, and subsidies for dependent coverage. Factoring in medical, dental, life, disability, 403(b), vacation pay, time off, and taxes, the total cost for employers is substantial. This is problematic for companies trying to reduce costs year over year and continue to offer benefits for five demographic cohorts that will help attract and retain talent.

Second only to wages, your employee-benefits program is your next highest expense. Employee benefits is a significant financial and administrative investment that could be a key variable in your efforts to both attract and retain quality team members—and get competitive advantage (if you know how to leverage it). One of the best ways to maximize your investment is to work with your broker to implement a benefits-communication strategy to help employees fully understand and, more importantly, appreciate what your organization offers.

Here are four ways your benefits program can help with recruitment and retention.

Prioritize Employee Retention Over Recruitment

You’ll get more mileage from your benefits program if you work with your broker to focus on employee retention first, as this is ultimately where your greatest return on human-capital investment comes from, and recruitment second. Focusing on retention involves investing time, money, and effort into designing rich, yet affordable, benefits options, and secondly communicating these efforts with your employees to demonstrate your dedication to keeping them. When you subsequently shift your focus to recruiting, be sure to also emphasize to candidates just how great your benefits program is. Prioritizing the “who gets communicated with about our benefits program and when” and in this order is more likely to help you reach your company objectives.

(Re-)Educate Employees about their Benefits Often at Various Touchpoints

Employees often don’t fully understand the scope of time and money an employer invests into offering a competitive benefits program. It’s also easy for employees to lose sight of the benefits package they’re receiving after they’ve been onboarded—rather than appreciating the program’s value with each paycheck, they simply see a hit on their net incomes. Whether they’ve just joined the company or are seasoned team members, employees must be educated and continually reminded of the value of their enrollment. Your broker can help you design a multi-touch educational campaign that includes communications tools such as benefit guides, wallet cards, and announcements, all of which can keep benefits top of mind for employees at every stage of their journey with you. Wellness/health fairs and campaigns throughout the year can also present multiple opportunities to educate employees and go beyond the standard annual open-enrollment meetings. Work with your broker to design the best communications strategy that allows you to speak loudly and frequently to all the perks of working for your community. You stand to get the biggest payback on your benefits-program investment: satisfied employees who stay.

Take a Traditional and Forward-Looking Approach to Benefits Communication

Since different age groups have different needs when it comes to benefits communications, there are multiple communications technologies your broker should be making available for you, including the following:

• Online enrollment
• Benefit portals
• Intranets
• Mobile phone apps (becoming very prevalent with Millennials)
• Webinars (livecast and on-demand)
• Video (generally preferred by Millennials and Generation Z populations)

Your broker shouldn’t discontinue administering the more traditional open-enrollment group meetings in favor of newer technologies though. In-person one-on-one meetings and answering employees’ questions via Q&A sessions are employee-communications approaches that are still generally preferred by the Baby Boomer and Silent Generation populations. As the workforce continues to evolve, multiple means of communication that are both “old school” and more leading edge will be needed to communicate effectively across all demographic bands.

Communicate the Total Value of Your Benefits Package

Another way to demonstrate to employees how greatly you value them is to employ a total-compensation strategy to share with them the full scope of their benefits and compensation programs. Total-compensation statements go beyond standard paychecks to provide a greater overview that gives a quantitative value of your benefits program. Research shows 80 percent of employees who ranked their benefits satisfaction as “extremely high” also ranked job satisfaction as “extremely high,” meaning a transparent communication approach can help increase employee appreciation and satisfaction. Use your existing benefits-administration system to set this up, or ask your broker to help you provide this to employees. Total-compensation statements are also a valuable recruitment tool, as they can also be shown to potential candidates to demonstrate how well you treat your employees.

If you want to retain your workforce and build employee morale, getting your management team behind the idea of communicating often and consistently throughout the year, using different communication vehicles, and providing total compensation statements can foster good will and improved productivity among your employees, which ultimately leads to a happier workforce and increased employee retention.

 

About the Author

 

Tuan Nguyen is Vice President, Employee Benefits, at Relation Insurance Services in Walnut Creek, CA. He can be reached via email at [email protected], via phone at (925) 322-6441, or on LinkedIn.

 

It’s available to firms of all sizes.

As employers look for any and every means to control employee benefit expenses, an investment in outsourcing absence management has the potential to yield meaningful returns both objectively, in terms of costs and productivity, and subjectively, in terms of employee satisfaction. This solution is no longer available solely for the Fortune 1,000. It’s now an option for small and mid-sized firms and may also be a fit for your organization.

Among the numerous responsibilities of Human Resource teams, absence management is extremely time-consuming and perilous if executed incorrectly. There are a wide array of federal, state, county, and local statutes with which to comply, plus an ever-shifting landscape of constantly updating legislation, leaving government agencies and courts to interpret the statutes and regulations. To add to the complexity, company-specific absence procedures can lead to inadvertent and inconsistent application of policies and procedures that in turn could prompt allegations of discrimination.

The numerous types of programs involving mandated absences can also trip up an organization. Making matters worse, more than one type of mandated leave can be triggered at the same time. It’s not uncommon for there to be overlaps with short-term disability insurance and workers’ compensation return-to-work programs. Managing competing leave requirements, while staying within the law, creates an additional level of risk.

Types of Mandated Absences:

• Family medical leave – federal, state, local
• Military leave – federal, state, local
• State-mandated leaves – e.g., jury duty, state disability, pregnancy disability, domestic violence, organ donation
• ADA accommodation absences
• Company-specific leaves – e.g., personal, bereavement, paid sick time, extended family care, sabbaticals, education

One strategy to remain compliant in this environment is for an organization to continually strengthen current leave protocols and procedures and to retain full administrative responsibilities in-house. What many firms may not realize, however, is the administration and risks related to absence management can now be economically transferred to outsourcing administrators. While historically this was only a viable solution for very large firms, that’s now changed due to a combination of life, health, and disability insurers that have been acquiring absence management firms to broaden their in-house service capabilities, as well as quantum leaps in technology that have dramatically reduced the costs of outsourcing. As a result, an increasing number of small and mid-sized firms are choosing to outsource.

The greatest increase in outsourcing activities is by firms in the 50-249 and 250-999 employee bands.¹ However, other employers are increasingly evaluating a continuum of outsourcing options. They range from “co-sourcing,” in which the firm engages an outside insurance carrier or technology partner to handle some but not all absence management functions, to fully outsourced management and administration.

Why is Outsourcing Absence Management a Good Idea?
Whether an organization chooses to take a partial or a total approach, a well-designed outsourced absence management program offers the opportunity to implement a consolidated, consistent application of leave policies across multiple business units and jurisdictions. Beyond the reduced compliance risk and exposure to penalties afforded by having access to each state’s unique laws and coordination guidance—especially when they overlap with federal legislation, the benefits for employers are broad.

Outsourcing administrators leverage powerful technology tools to measure, analyze and monitor absence metrics, which reduces HR staff workloads. In addition, employees’ experiences improve with better communication about the full offering of company-provided benefits, which in turn increases productivity due to lower absentee rates and decreased employee abuse of leave benefits. It’s no surprise then that interest in outsourcing continues to increase for firms of all sizes, and employer satisfaction with outsourcing vendors is high.²

Is it Viable for My Organization?
Although outsourcing absence management holds the promise of being a valuable solution, the evaluation process can be significant and time-consuming. Project complexity will vary based on factors such as firm characteristics (e.g., headcount, different operating jurisdictions, and centralized vs. decentralized management) and the number of programs qualified for outsourcing. Regardless of project scope, a systematic approach and a detailed implementation timeline is needed to make an effective evaluation.

The first step is to establish a cross-functional evaluation team with complementary areas of expertise. In addition to human resources, internal stakeholders will likely include senior management, finance, legal, and IT. External participants typically comprise the firm’s benefit consultant, outsourcing partners (e.g., carriers and/or technology firms), and any other impacted outside vendors (e.g., payroll administrators, workers’ compensation/disability insurers, or third-party administrators).

Next, the effectiveness of existing programs must be assessed by looking at current policies and process flows, as well as the sources and cost drivers of employee absences. The overall objective is to develop baseline data to compare outsourcing against the status quo.

The final step in the evaluation process involves formulating a business case and designing an operating model to outsource some or all programs involving employee leaves. This will include anticipated results for increased productivity, operational savings, risk-mitigation efforts, technology enhancements, and the effect on employees.

How Do I Bring a Program to Life in My Organization?
If management agrees the business case is compelling and decides to proceed, the operating model and timeline from the evaluation project becomes the implementation roadmap. To ensure the outsourced absence management program is successful, senior management must explain the rationale for the change, as well as the goals and expected outcomes. Providing employees with clear, detailed communication on policies, procedures, and training requirements, and leveraging technology to monitor performance metrics is essential to actively manage and fine-tune the program on an ongoing basis.

 

About the Authors

 

Michael Stallone is a Senior Vice President  in the employee benefits practice at Relation Insurance Services in Walnut Creek, CA. He can be reached on LinkedIn, via email at [email protected] or via phone (925) 956-1640.

 

This article originally appeared on the BenefitsPro website here.

 

Footnotes

• The 2017 Guardian Absence Management Activity Index (SM) and Study
• 2016 Disability Management Employer Coalition and Spring Consulting Group

Ascension is pleased to announce that we have been invited to speak and will be sponsoring a booth at HR West again this year from March 7^th to March 9^th.

Come see Ed Bray, SVP, Compliance, and Tuan Nguyen, AVP, present The 2016 ABC’s of Employee Benefits (annually published in Employee Benefit News) on Monday,  March 7^th from 1:50pm – 3:05pm where he will provide a checklist of employee benefit to-do’s for 2016!

Come see Ascension at our booth!  Stop by for a chance to win some fun prizes, including $100 gift cards, and learn how we can we meet your wants, needs and expectations in this new world of employee benefits.

In addition to our session, the conference will feature 88 sessions, and speakers from companies like Pandora, Salesforce and Twitter. Find out about best practices and proven strategies of leading companies in the West that are paving the way for HR innovation. With tracks for startups, small business and technology, plus evergreen topics like employment law, recruiting and leadership, there’s something for everyone at HR West!

Check Out the Complete Session Lineup

HR West Also Brings You:

• Four world-renowned keynote speakers
• Recertification credit toward your SHRM-CP/SHRM-SCP and PHR/SPHR for most sessions
• An Executive Learning Lab led by TEDx presenter, Haas/Princeton professor (senior practitioners only)
• Innovative ways to donate unused vacation hours to the American Heart Association or a charity of your choice
• Community reception, networking lunches, speed networking and dinner meet-ups

The Premier HR Conference on the West Coast

NCHRA Members: $979

Join NCHRA: $1,146

SHRM Affiliate Member: $1,085

SHRM Member: $1,134

Non-member: $1,174

We would love to see you and are offering a $100 special guest discount to join us at HR West!
Use PROMO CODE: Guestofspeaker

Register today

Rates expire on March 3^rd, 2016.

 

Date: Tuesday, February 23 2016
Time: 10am PST
Who Should Attend: Forward thinking Sr HR and Financial Professionals in the Technology Industry
Duration: 60 minutes
Captive Launch Date: January 1 2017

While projections vary, the indisputable facts are that your health care costs will continue to increase, the competition for talent will intensify and you will be tasked with offering a competitive, relevant benefits package that attracts and retains talent. Consider this:

• Almost 50% of CFOs rate the cost of benefits and attracting & retaining talent as top concerns in 2016. Click HERE for survey
• 78% of hiring managers said finding highly-skilled tech talent will be a top hiring priority in 2016. Click HERE for survey
• Median unemployment and starting salary for tech workers in the Bay Area is <3% and $176k, respectively compared to national averages of 7% and $107k

If you have a Total Rewards philosophy and an interest in innovative strategies, funding your benefits through the Technology Captive and sharing risk with like-minded technology leaders may be the solution for your 2017 calendar year.

Join us to learn more about the timeline, opportunities, risks and rewards of funding your benefits through a Captive.

REGISTER NOW.

Congratulations on making it through one of the most legally and administratively challenging years in employee benefits history. But, as you know, employee benefits never sleep. Ed Bray, senior vice president of compliance with Ascension, provides the 2016 ABC’s of employee benefits – what he calls the annual “just tell me what I need to do” list.

See the list.

Please join us for a seminar and panel discussion, led by Shiraz Saeed, Cyber Specialist at AIG, and John Simios, ARM, AAI, Vice President, Captive Resources LLC.

This seminar will focus on sharing ideas and expertise regarding creative risk transfer solutions and assessing new and growing exposures for middle- market companies.

Questions Answered/Topics Covered:

• Market Update: Property & Casualty and Employee Benefits
• How can I assess my Cyber Risk?
• Am I large enough for a Captive? Isn’t that only for large companies?
• What are rates doing? Should I expect an increase in next year’s renewal?
• Regulatory Environment Changes: OSHA, ACA Compliance
• Learn about current Trends and Best Practices

Date:
Thursday, October 29th, from 8:00am to 10:00am
Location:
Charlotte Country Club, 2465 Mecklenburg Avenue, Charlotte, NC 28205

RSVP to Michael Betters

Senior Vice President, Compliance, Ed Bray is interviewed in the June 2015 edition of WorldatWork’s Workspan magazine. The article, Face Your Fears and Be a Good Listener, begins on page 60 in “Profiles in Career Excellence” section, (scroll through the online PDF of the magazine to read the article.)

With health & welfare benefit compliance not only moving a mile a minute, but twisting in many different directions, it’s hard to keep track of what you need to do and when.

To help you stay on track with the “what, when, why, who, and how,” we invite you to join our monthly compliance update webinar. Ed Bray, SVP, Compliance, will review and analyze the top health & welfare benefit compliance stories and issues for the month.

Each webinar will start at 10am PST / 1pm EST and will generally run about 30 minutes.

The webinar dates for the remainder of 2015 are:

• May 21
• June 18
• July 16
• August 20
• September 17
• October 15
• November 19

Register now. Please note that if you have registered for a webinar and are unable to attend, we will email you a link of the recording.