President Donald Trump signed the One Big Beautiful Bill (OBBB) into law on July 4, 2025. The OBBB is a wide-ranging piece of legislation that introduces significant reforms across multiple areas of federal policy, including changes affecting group health plans in the areas of telehealth coverage and dependent care assistance.
Permanent Telehealth Relief for High Deductible Health Plans
A widely supported and long-awaited change included in the OBBB is the permanent extension of telehealth relief for individuals enrolled in high deductible health plans (HDHPs). Specifically, individuals enrolled in an HDHP may access first-dollar telehealth services without affecting health savings account eligibility. Making this COVID-era relief permanent eliminates the uncertainty caused by prior temporary extensions.
This change is effective retroactively to plan years beginning on or after December 31, 2024, which is when the last extension expired.
Increase to Dependent Care Flexible Spending Accounts
Dependent care flexible spending accounts (DCFSA) have historically offered a $5,000 limit ($2,500 for married couples filing separately) without indexing for inflation. After decades of being limited to this cap, the OBBB increases the DCFSA limit to $7,500 ($3,750 for married couples filing separately). This new limit is not indexed for inflation.
While many may welcome the increase, the legislation does not resolve ongoing challenges related to nondiscrimination testing. In fact, these issues could become more pronounced with the higher contributions limit. As a result, employers may still need to limit deferrals by highly compensated employees to comply with IRS nondiscrimination requirements—either by capping their annual contributions, or in some cases, prohibiting them from contributing altogether.
This change is effective for tax years beginning on January 1, 2026.
Next Steps
Employers and group health plan sponsors that want to implement the foregoing changes should review and update any participant communication materials, including amending legal plan documents (as may be necessary). For more information or for assistance updating communications or plan documents, please contact the authors of this blog post or your Morgan Lewis contacts.