Tax-Advantaged Healthcare Arrangements

Health Savings Accounts

HSAs are triple tax-advantaged with tax-deferred contributions, tax-free potential earnings, and tax-free withdrawals for qualified medical expenses. You can roll over any balance you had left at year-end 2025 to 2026. Nonqualified withdrawals made before age 65 are subject to a tax penalty. After reaching 65, you can take penalty-free withdrawals for any reason but must pay income tax on the nonqualified amount. To save in an HSA, you must have a high-deductible health plan (HDHP).

OBBBA made changes that expand the health plans that qualify as HDHPs. First, it extends the rule allowing plans to be considered HDHPs, despite not having a deductible for telehealth services retroactively to January 1, 2025. Second, OBBBA expands HSA eligibility to include those enrolled in Bronze and Catastrophic plans available on state and federal insurance exchanges under the Affordable Care Act. This provision takes effect on January 1, 2026. And third, it allows individuals with HDHPs to enroll in Direct Primary Care arrangements (sometimes referred to as "concierge medical care") while remaining HSA eligible, provided the monthly fee for DPC services doesn't exceed $150 for individuals or $300 for families (both adjusted for inflation). DPC fees are also considered qualified medical expenses that can be paid with HSA funds. This provision takes effect on January 1, 2026.

Health Reimbursement Arrangements

(HRAs) are accounts funded by your employer to help pay qualified health expenses. In 2026, employers can fund each employee's HRA with a maximum of $2,200 in benefits, up from $2,150 in 2025.