One Big Beautiful Bill & the Future of Health Benefits: A first look

Hold on to your hats, folks! There's a significant development brewing in Washington that could reshape the landscape of employee health benefits as we know it. Dubbed the "one big beautiful bill" by some, the House Ways and Means Committee recently introduced a bill on May 13, 2025, aiming to deliver on the promise of extending the 2017 tax cuts (among many other things). While still in its early stages and subject to change, this bill offers a fascinating glimpse into potential shifts coming our way in 2026 and beyond. 

For employers and employees alike, this is certainly something to keep your eyes on as it potentially delivers on some of the promises of Trump's second stint in the White House. When we considered a second Trump presidency and it's impact on health policy, we were confident that he would continue to expand upon certainly policies that he brought to life, like Individual Coverage HRAs. The rise and fall of the Choice Arrangement Act, a failed attempt to codify ICHRA in 2023,  also laid the groundwork for some of the considered policy changes today. Remember, in the summer of 2019, President Trump announced the regulatory rules that established ICHRA (and Take Command was the only ICHRA administrator invited for the live event at the White House). 

This initial outline contains several provisions specifically targeting employee benefits, and understanding them now can give us a crucial head start in preparing for the future. Our in-house compliance experts have been digging into the details of the 49-page One Big Beautiful Bill, and here’s a breakdown of some key areas to watch.

We will be keeping this blog up to date with the latest as new developments come in. 

Let's jump in! 

What's in the Big Beautiful Bill?"

According to a press release this week from the Ways and Means committee, the "legislation builds on the success of the 2017 Trump tax cuts and carries out the very policies that America voted for, making the economy stronger, expanding tax relief for middle class and low-income Americans, and ushering in a new golden age of prosperity to benefit workers, families, farmers, and small businesses."

But what does that really mean? 

Here are 10 provisions of One Big Beautiful Bill that jumped out at us.

• Tax Cuts for Individuals and Businesses: The bill proposes over $5 trillion in tax cuts, aiming to make permanent the individual income tax cuts from 2017. It also includes potential cuts to taxes on tips, overtime, and auto loan interest.
• Changes to Clean Energy Tax Credits: The bill seeks to roll back clean energy tax credits enacted during President Biden's presidency, such as the $7,500 electric vehicle tax credit.
• State and Local Tax (SALT) Deduction Increase: The bill aims to raise the SALT deduction limit from $10,000 to $30,000 for families earning less than $400,000 annually.
• Temporary Standard Deduction Increase: The legislation includes a temporary boost to the standard deduction, increasing it by $2,000 for joint filers.
• Child Tax Credit Increase: The bill proposes a temporary $500 increase in the child tax credit, bringing it to $2,500.
• Changes to Food Assistance (SNAP): The bill suggests shifting a portion of the Supplemental Nutrition Assistance Program (SNAP) costs to states and expanding work requirements for recipients up to age 64.
• Medicaid Work Requirements: A key aspect of the bill is the introduction of "community engagement requirements" for Medicaid eligibility, mandating at least 80 hours per month of work, education, or service for able-bodied adults without dependents, starting in 2029. It also proposes more frequent Medicaid eligibility checks.
• Increased Deduction for Seniors: The bill includes a bolstered $4,000 deduction on Social Security wages for seniors with adjusted incomes below $75,000 for individuals and $150,000 for couples.
• Temporary Auto Loan Interest Deduction: The legislation provides a temporary deduction of up to $10,000 for interest paid on car loans for vehicles with final assembly in the United States.
• "MAGA Accounts" for Newborns: The bill proposes a pilot program that would deposit $1,000 into new tax-preferred savings accounts called "MAGA accounts" for newborns between 2025 and 2028.
• No tax on tips, overtime or Social Security: The bill proposes tax breaks that affect a range of individuals, from service industry workers to Seniors. 

Key provisions of One Big Beautiful Bill affecting employee benefits

While there are a lot of interesting things that comprise this bill, we are hyper-focused on it's impact on employee health benefits. 

• Premium Tax Credit (PTC) Rules: The bill seeks to tighten the rules on claims for premium tax credits under the ACA and repeal limitations on the recovery of excess advance payments of the PTC. This could affect employees who receive health coverage through the ACA marketplace and receive these tax credits. 
• Expansion of HSAs: The bill aims to expand the use and flexibility of Health Savings Accounts. This could mean more employees have access to HSAs through their employer-sponsored health plans, potentially leading to changes in how employers structure their benefits offerings to integrate more HSA-compatible plans. This might also influence employee decisions regarding their healthcare savings and spending. More on this below!
• Permanent Paid Leave Tax Credit: By making the paid leave tax credit permanent, the bill could incentivize more employers to offer paid family and medical leave benefits to their employees. This would be a direct enhancement of employee benefits, providing financial support during important life events.
• Paid Family & Medical Leave & Child Care Credits: Expect potential adjustments to the existing tax credits for employer-provided paid family and medical leave and child care. These changes could influence how employers approach offering these increasingly important benefits.
• Investing in education: The bill proposes indexing the annual limit for education assistance plans ($5,250) and making the reimbursement of student loans a permanent feature. This could significantly impact employees seeking to further their education and manage student debt.

Oh, did we save the best one for last? 

• Choice Arrangements: A significant "rebrand" for ICHRA, these tax-friendly reimbursement arrangements would build upon the regulatory rules that were established in 2020. This is obviously the one that has the majority of our attention so we will review the exciting changes in further detail below.

The rise of CHOICE: a new era for personalized healthcare

One of the most notable aspects of the bill is the codification and revamping of Individual Coverage Health Reimbursement Arrangements (ICHRAs). Under the proposed legislation, ICHRAs would be rebranded as "CHOICE Arrangements" – Custom Health Option and Individual Care Expense – signaling a potential move towards greater individualization in health coverage. That certainly has a nice ring to it, if you ask us. 

Beyond the name change, several significant adjustments are on the table:

• Streamlined Notice: The advance notice period for these arrangements could be reduced from 90 to 60 days, potentially easing administrative burdens. This would be a welcome change from the original ICHRA 90 day notice, which has long been considered a potential pain point for ICHRA.
• Pre-Tax Premiums on the Exchange: This is a big one! The bill proposes allowing pre-tax payment for individual health insurance premiums purchased on the Exchange. Currently, employers can only offer pre-tax deductions for Medicare or off-Exchange individual premiums through cafeteria plans. This change could significantly enhance the appeal and affordability of Exchange-based coverage.
• Incentivizing Small Businesses: To encourage adoption, the bill introduces a new two-year tax credit for non-Applicable Large Employers (non-ALEs) that newly implement a CHOICE Arrangement. This credit would start at $100 per enrolled employee per month in the first year (with potential for indexing) and be halved in the second year. This could be a game-changer for smaller organizations looking for flexible health benefit solutions. It reminds us of Indiana's small business HRA tax credits—and we're here for it!

Here's a quick video explainer from our CEO, Jack Hooper, on these exciting developments! 

HSA and FSA Expanded Flexibility

For those utilizing Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), the proposed changes could offer greater flexibility and control. While FSA vs HSA vs HRA will continue to be confusing, we're happy to see some movement expanding these tax-friendly benefits solutions. 

• HSA Enrollment Window: Employees may have up to 60 days after enrolling in a Qualified High-Deductible Health Plan (QHDHP) to establish an HSA, with expenses potentially reimbursable back to the QHDHP's start date.
• HSA Compatibility: The definition of HSA-compatible plans could broaden to include Medicare Part A, certain direct primary care (DPC) arrangements (with specific monthly cost limits and service exclusions), bronze or catastrophic Exchange plans, and limited on-site clinic access.
• Preventive Care Clarity: The IRS Notice 2019-45 chronic preventive care safe harbor for HSAs would be codified into law, providing greater certainty.
• Fitness Focus: A potentially exciting addition is the allowance of qualified sports and fitness expenses, including gym memberships, to be reimbursable from HSAs up to $500 per year for individuals ($1,000 for joint filers), indexed for inflation. It remains to be seen if this will extend to health FSAs. This is a great motivator for employees to engage in health activities. Bravo!
• Spousal HSA Contributions: When both spouses are on a family QHDHP, they may be allowed to make catch-up contributions to the same HSA account.
• Increased HSA Contribution Limits (with Income Phase-Out): The bill proposes allowing significant extra employee HSA contributions, subject to income-based phase-outs. For single coverage, this could be up to an extra $4,300, and for family coverage, up to an extra $8,550, both adjusted for inflation. These additional contributions would phase out for individuals with adjusted gross income between $75,000 and $100,000, and for joint filers with family coverage between $150,000 and $200,000 (also inflation-adjusted).
• DPC as a Medical Expense: Fees for direct primary care could become reimbursable from both health FSAs and HSAs.
• FSA/HRA to HSA Rollover: The bill proposes allowing individuals to convert unused funds from FSAs or HRAs into newly established HSAs under certain conditions (not being enrolled in a QHDHP for the past four years and up to the annual FSA salary reduction contribution cap).
• Spousal FSA Flexibility: A spouse having an FSA may no longer disqualify the other spouse from having an HSA. Clarification is needed on whether the spouse's FSA can reimburse the employee's medical expenses.

What does this mean for employers?

It's important to remember that this bill is in its initial stages and could undergo significant revisions before potentially becoming law. However, this sneak peek offers valuable insights into the direction Congress might be considering for employee benefits in the coming years. 

Now is the time for proactive thinking. We recommend considering the potential implications of these proposed changes for your organization and your employees.

Could CHOICE Arrangements offer a more flexible and cost-effective solution for some or all of your workforce? How might the enhanced HSA and FSA rules impact employee engagement and healthcare spending?

What comes next

Let's review what the status of the One Big Beautiful Bill.  After a marathon 17-hour discussion on May 14, the Ways and Means Committee gave the green light to the bill that aims to make Trump's 2017 tax cuts permanent.

Later that day, the Energy and Commerce Committee wrapped up a 26-hour session, passing legislation that included significant reductions to Medicaid. Meanwhile, the House Agriculture Committee also had a long day, approving a $290 billion cut to the Supplemental Nutrition Assistance Program (SNAP).

The House Budget Committee will ultimately be responsible for consolidating all the various sections of the larger package into a single legislative bill, which will then proceed through the House Rules Committee before a final vote by the House, all in accordance with Speaker Mike Johnson's Memorial Day deadline. If the final package passes the House vote, it would need to pass the Senate, potentially making the July 4th deadline set forth by the White House. 

This is just the beginning of the conversation. We'll be closely monitoring the progress of this "big beautiful bill" and will keep you updated on any significant developments. In the meantime, we encourage you to start thinking about how these potential changes could impact your benefit strategy. Perhaps it's time for an internal brainstorming session to explore how your organization could potentially leverage these opportunities.

The future of health benefits is evolving, and staying informed is the first step towards navigating it successfully. We're here to help you every step of the way. Stay tuned for more updates!