Hold on tight, everyone! There’s a major development unfolding in Washington that could completely transform the world of employee health benefits. Known by some as the “One Big Beautiful Bill,” the House Ways and Means Committee introduced this sweeping legislation on May 13, 2025, aiming to extend the 2017 tax cuts—and so much more. Though it’s still in its early stages and subject to change, this bill offers a tantalizing preview of potential shifts coming our way in 2026 and beyond.
Quick update: On May 22nd, the House narrowly passed President Trump’s tax and spending cuts package by a 215-214 vote, moving the Individual Coverage Health Reimbursement Arrangement (ICHRA) one step closer to becoming law.
For both employers and employees, this is a development worth watching closely as it promises to build on some of the key policies from Trump’s first term. When we contemplated a second Trump presidency and its impact on health policy, we expected expansions on initiatives like ICHRA. The earlier Choice Arrangement Act of 2023—though unsuccessful—laid important groundwork for today’s evolving policy landscape. And don’t forget that back in 2019, President Trump announced the original ICHRA rules, with Take Command being the only ICHRA administrator invited to that live White House event.
This new bill contains several provisions targeting employee benefits specifically, and understanding them now will give you a vital head start in preparing for what lies ahead. Our in-house compliance team has poured over the 49-page “One Big Beautiful Bill,” and here’s a breakdown of key points to watch.
We’ll keep this blog updated as new developments unfold, so stay tuned!
Let’s dive in!
What’s inside the One Big Beautiful Bill?
According to a recent press release from the Ways and Means Committee, this 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 for you?
Here are 10 provisions from the bill that grabbed our attention:
- Massive Tax Cuts: The bill proposes over $5 trillion in tax cuts, aiming to make the 2017 individual income tax cuts permanent. It also targets reductions in taxes on tips, overtime, and auto loan interest.
- Clean Energy Credit Rollbacks: It seeks to unwind some clean energy tax credits put in place during President Biden’s term, including the $7,500 electric vehicle tax credit.
- State and Local Tax (SALT) Deduction Increase: The SALT deduction cap could rise from $10,000 to $30,000 for families earning less than $400,000.
- Temporary Standard Deduction Boost: A $2,000 temporary increase to the standard deduction for joint filers.
- Child Tax Credit Hike: A temporary $500 bump in the child tax credit, raising it to $2,500.
- Changes to Food Assistance (SNAP): Proposes shifting some SNAP costs to states and expanding work requirements for recipients up to age 64.
- Medicaid Work Requirements: Starting in 2029, able-bodied adults without dependents may be required to engage in 80 hours per month of work, education, or service, with more frequent eligibility checks.
- Increased Deduction for Seniors: Seniors with adjusted incomes under $75,000 (individuals) or $150,000 (couples) could benefit from a $4,000 deduction on Social Security wages.
- Temporary Auto Loan Interest Deduction: Up to $10,000 deduction for interest on U.S.-assembled vehicle loans.
- “MAGA Accounts” for Newborns: A pilot program to deposit $1,000 into tax-preferred savings accounts for newborns from 2025 to 2028.
And yes, tax breaks would be available for service workers on tips, overtime, and Social Security.
Key Provisions Affecting Employee Benefits
While the bill covers a wide array of topics, our focus is laser-sharp on its impact on employee health benefits:
- Premium Tax Credit (PTC) Changes: Tightening rules on ACA marketplace premium tax credits and repealing limits on recovering excess payments could affect employees who rely on these credits.
- Expansion of Health Savings Accounts (HSAs): The bill proposes making HSAs more flexible and accessible, potentially encouraging employers to offer more HSA-compatible plans.
- Permanent Paid Leave Tax Credit: Making this tax credit permanent might motivate more employers to provide paid family and medical leave benefits.
- Adjustments to Family & Medical Leave and Child Care Credits: These changes could influence employer offerings around these vital benefits.
- Education Investment: Indexing the annual limit for education assistance plans and making student loan reimbursements permanent could benefit employees pursuing further education or managing debt.
The Rise of CHOICE Arrangements: A New Era in Personalized Healthcare
One of the most exciting features of the bill is the rebranding and codification of Individual Coverage Health Reimbursement Arrangements (ICHRAs) as CHOICE Arrangements—Custom Health Option and Individual Care Expense plans. This shift signals a move toward more personalized, flexible healthcare options.
Some proposed upgrades include:
- Streamlined Notice: Reducing advance notice requirements from 90 to 60 days to ease administrative burdens.
- Pre-Tax Premiums on the Exchange: Allowing employees to pay individual health insurance premiums on the ACA Exchange with pre-tax dollars—a huge leap in affordability and attractiveness.
- Small Business Incentives: Introducing a two-year tax credit for smaller employers implementing CHOICE Arrangements, starting at $100 per enrolled employee per month in year one. This incentive could be a game-changer for small businesses struggling to offer competitive health benefits.
Check out a quick explainer video from our CEO, Jack Hooper, for more on these exciting developments!
Expanded Flexibility for HSAs and FSAs
The bill also aims to make Health Savings Accounts and Flexible Spending Accounts more flexible and user-friendly, with highlights like:
- A 60-day enrollment window for HSAs after enrolling in a qualified high-deductible health plan.
- Expanded definition of HSA-compatible plans to include Medicare Part A, some direct primary care arrangements, bronze or catastrophic Exchange plans, and limited on-site clinic access.
- Codification of IRS preventive care safe harbors to clarify coverage.
- Allowing up to $500 (individual) or $1,000 (joint) per year in qualified sports and fitness expenses reimbursed from HSAs.
- Permitting spousal catch-up contributions when both spouses are covered under a family plan.
- Significant increases to HSA contribution limits with income phase-outs.
- Allowing direct primary care fees to be reimbursed from FSAs and HSAs.
- Enabling rollover of unused FSA or HRA funds into newly established HSAs under certain conditions.
- Greater spousal FSA and HSA compatibility.
What Does This Mean for Employers?
Remember, this bill is still a work in progress and could undergo major changes before becoming law. But this early glimpse gives employers a valuable opportunity to start thinking ahead.
Could CHOICE Arrangements offer your workforce more flexibility and cost savings? How might enhanced HSA/FSA rules impact employee healthcare engagement? These are important questions to consider now.
What’s Next?
Here’s the roadmap for the bill:
- Introduced and Referred to Committee: The bill passed the Ways and Means Committee on May 13, 2025.
- House Budget and Rules Committees: Passed with some modifications and will be reviewed before full House debate.
- House Floor Vote: Passed on May 22, 2025.
- Senate Review: The bill will move to the Senate for committee reviews, debates, and a vote, with hopes to finalize by July 4th.
- Potential Conference Committee: To reconcile differences between House and Senate versions.
- Presidential Signature: If all goes smoothly, the bill could become law under President Trump.
We’ll keep monitoring this evolving story and update you on any major breakthroughs.
Final Thoughts
The future of health benefits is on the brink of transformation. Staying informed is your best strategy for navigating what’s ahead. We’re here to guide you every step of the way. Stay tuned for more updates and start thinking about how your organization can seize these new opportunities.