by Amanda O'Brien | Accounting News, News, Newsletter
Health savings accounts (HSAs) are one of the best tools for saving on healthcare costs. And beginning this year, more Americans than ever will qualify for HSAs, thanks to the One Big Beautiful Bill (OBBB), which was passed last July. Read on to learn what’s changing, who qualifies, and how these updates could offer savings on healthcare costs.
What Is an HSA?
An HSA is a special type of savings account Americans can use to pay for qualified medical expenses. Contributions are tax-deductible, the money grows tax-free, and withdrawals are tax-free for qualified medical expenses. Unlike flexible spending accounts (FSAs), HSAs don’t have a “use it or lose it” rule, so your funds roll over each year. And you keep the account even if you change jobs or retire. Until now, HSAs have been available only to people enrolled in high-deductible health plans (HDHPs), but the OBBB changed that.
Bronze and Catastrophic ACA Health Plans Now Qualify
As of January 1, 2026, anyone enrolled in a bronze or catastrophic health plan sold through the Affordable Care Act (ACA) marketplace now qualifies for an HSA plan. Before, these plans didn’t meet the IRS’s strict HDHP requirements. This update opens the door for millions more people, especially younger adults and people who choose lower-premium coverage, to start saving for healthcare expenses.
Direct Primary Care Now Covered
Under the OBBB, people using Direct Primary Care (DPC) can now pair it with an HSA. DPC is a subscription model where patients pay a monthly fee to a doctor or practice for unlimited primary care visits. Now, as long as the fee stays under $150 per month for individuals (under $300 for families), HSA funds can be used to pay for those services. This gives patients more flexibility and control over their healthcare budgets.
Telehealth Services No Longer Disqualify Patients for HSA Eligibility
In the past, if a patient’s HDHP covered telehealth visits before they met the deductible, it could wipe out their HSA eligibility for the year. However, the OBBB allows HDHPs to cover telehealth visits before the deductible is met. That means a patient’s health plan can cover virtual doctor visits upfront (or with a small copay), and they can still contribute to their HSA. Patients are no longer forced to choose between the convenience of telehealth and their savings goals.
These updates make HSAs more accessible, especially at a time when healthcare costs are on the rise, and more patients are using telemedicine. An HSA can build a cushion for future costs, making it an often overlooked retirement savings vehicle.
by Daniel Kittell | Accounting News, IRS, News, Tax, Tax Planning - Individual
On August 16, 2022, President Biden signed into law the Inflation Reduction Act. It’s a wide-sweeping bill that addresses climate, health care, and some mix of tax breaks and tax hikes, as well as additional funding for the IRS. Below you’ll find a summary of how the Inflation Reduction Act could affect you.
Health Care
Funding for the Affordable Care Act (ACA) was due to expire at the end of 2022, but the Inflation Reduction Act extends funding through 2025. This will allow eligible individuals to continue to purchase insurance with lower premiums through the federal Health Insurance Marketplace.
The Inflation Reduction Act also extends the temporary exception from the American Rescue Plan Act (ARPA) that allows taxpayers with incomes above 400 percent of the Federal Poverty Level to qualify for the Premium Tax Credit (PTC). The PTC makes health insurance more affordable by helping eligible consumers pay premiums for coverage purchased through the Health Insurance Marketplace. To get this credit, you can claim the PTC on your tax return, or you can choose to have amounts paid directly to the insurance provider as long as you qualify for advance payments of the premium tax credit.
Energy Efficient Home Improvement Credit
Previously known as the Nonbusiness Energy Property Credit, the renamed Energy Efficient Home Improvement credit was extended through 2032. Beginning next year, the credit will be equal to 30 percent of the costs of all qualified home improvements made during the year. Furthermore:
- A $1,200 annual limit on the total credit amount will replace the current $500 lifetime limit.
- Annual limits for particular types of qualifying home improvements will be as follows:
- $150 for home energy audits;
- $250 for any exterior door ($500 total for all exterior doors) that satisfy appropriate Energy Star requirements;
- $600 for exterior windows and skylights that meet Energy Star most efficient certification requirements;
- $600 for other eligible energy property, including central air conditioners; electric panels and various similar equipment; natural gas, propane, or oil water heaters; oil furnaces; water boilers;
- $2,000 for heat pump and heat pump water heaters; biomass stoves and boilers. This group of upgrades is not restricted by the $1,200 annual limit on total credits or the $600 limit on qualified energy property; and
- Roofing and air circulating fans will no longer be eligible for the credit.
So, if you stretch your qualifying home projects over a few years, you can claim the maximum credit each year.
Electric Vehicle Tax Credits
The Inflation Reduction Act extends the Clean Vehicle Credit for ten years — until December 2032 — and creates new credits for previously-owned clean vehicles and qualified commercial clean vehicles. Taxpayers can qualify for a credit of up to $7,500 for a new electric car or $4,000 for a used one. However, in order to qualify for the tax credit, electric vehicles must be assembled in North America, and the Biden administration has already prepared a list of 20 EVs that qualify.
IRS Funding
The Inflation Reduction Act also includes about $80 billion of additional funding over ten years for the IRS. The exact plans for those funds aren’t clear yet, but we know that $25 billion is intended to improve IRS operations. Additionally, law makers anticipate that the IRS would use $45 billion of the funds to improve tax enforcement. This could include expanding staff and modernizing outdated processing systems.
