PayPro Administrators

Big Beautiful Bill and Dependent Care FSA and HSA Changes

Effective for plans that renew January 1, 2026 and later - Your new limit for the Child/Dependent Care FSA from $5000 to $7500.
Aside from a temporary increase in the American Rescue Plan Act of 2021, the limit was set by Congress in 1986 and has remained constant since then. The increase will benefit working families by lowering their cost of childcare, although the amounts are not indexed for inflation going forward. (this has not permanently changed since 1986)!
Summary: The new plan year limit beginning for January 1 2026 and later start dates will be $7500 for a married couple filing jointly or individual filing. If you are married and filing separately, your limit will be $3750 per plan year.

If you have a plan that you participate in or wish to participate that begins in January of 2026 or later, we will automatically adjust your plan limits to the new maximum and increase the limit within your enrolment materials and/or enrollment platform used by your Employer.

HSAs will have enhancements as well:

HSA eligibility for Bronze and Catastrophic ACA exchange plans
Starting in 2026, individuals enrolled in these high-deductible ACA plans—around 7.3 million people—can finally open and contribute to HSAs. This change empowers more Americans to save pre-tax for healthcare expenses.

Direct primary care (DPC) and HSAs can now coexist
DPC arrangements are no longer considered a separate health plan that would otherwise disqualify an individual from HSA eligibility. That means employees can now use their HSA funds for fixed-fee DPC services (up to $150/month for individuals or $300/month for families), offering more flexibility and access to personalized care.

Permanent reinstatement of pre-deductible telehealth coverage
The safe harbor for employers to offer telehealth coverage before meeting the deductible is now permanent and retroactive to the start of the year—making it easier for companies to support accessible, affordable care.

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Wishing everyone a wonderful a wonderful Season. We are hard at work with year-end services as you likely are too!