On July 4, 2025, President Trump signed the reconciliation bill entitled An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14 (“Act”) into law. In addition to the expansions of health savings accounts (“HSAs”) and the potential planning opportunities created by those expansions, employers will need to brace for the potential of increased enrollment due to various provisions of the Act which have been predicted to decrease Exchange enrollment.
With more employees turning to employer sponsored plans, plan sponsors will be vulnerable to increases in premium costs, claims costs, penalty exposure, and compliance risk. Hospital budget pressures or insurers who are recalibrating their risk pools based on movement in the Exchange may also impact coverage costs for plan sponsors. As a result, plan sponsors may be motivated to revisit design aspects of their plans, such as cost-sharing amounts or spousal surcharges, or be pushed to explore new plan types, such as high deductible health plans, or to explore less conventional funding arrangements, such as level funded products. These arrangements contain additional compliance considerations over the more traditional fully-insured counterparts.
Notwithstanding these considerations, the earlier House version of the Act contained more numerous provisions relating to the expansion of HSAs, codification and more preferential treatment surrounding Individual Coverage Health Reimbursement Arrangements, additional reimbursements for qualified sports and fitness expenses, and rollovers from flexible spending accounts and health reimbursement arrangements into HSAs. These initiatives did not make it through the Senate reconciliation but demonstrate a continued interest in expanding the utility of consumer driven health care arrangements, which in the future may provide plan sponsors additional planning opportunities to meet their business needs and the needs of their respective workforces.
The Act includes a few other modest employee benefits changes which may further help to fortify non-health employer offerings and attract employees amidst the flux in the health benefits space. The Act provides for:
- Enhancement of Dependent Care Assistance Programs. Provides a boost to dependent care flexible spending account limits by increasing the limit from $5,000 to $7,500. Plan sponsors interested in taking advantage of this increased limit for plan years beginning after December 31, 2025, should revise their plan documents and summary materials to reflect the increase.
- Permanent Exclusion for Employer Payments of Student Loans. Makes permanent an exclusion under Code Section 127 for employer repayment assistance of student loans pursuant to a qualified educational assistance program. The permitted payment is no greater than $5,250 but is now indexed – a departure from the previously fixed limit. Applies to payments after December 31, 2025.
- Employer Contributions to Trump Accounts. Allows for a $2,500 tax-free employer contribution, indexed, into Trump Accounts. These contributions must be made pursuant to a written plan and will be subject to rules similar to those imposed on dependent care flexible spending accounts.
Plan sponsors should consult legal counsel as they revisit their benefits menu to address new design options and the potential compliance risks that may result from or accompany certain options. This article is not intended to serve as legal advice. Please reach out to the Saul Ewing employee benefits group to address opportunities and issues surrounding your specific benefits offerings.
