What’s in the Pipeline?
Maybe you’ve heard about the One Big Beautiful Bill that includes some tax reforms? On May 22, 2025, the U.S. House of Representatives passed “The One Big, Beautiful Bill,” a comprehensive tax reform package. While the federal tax bill has yet to pass, its provisions, if enacted, could significantly impact the benefits landscape for employers and employees alike. The 1,000+ page bill now heads to the Senate, which will have the chance to approve or change provisions of the bill before it reaches the President’s desk. From commuter perks to health savings flexibility, here’s a breakdown of what’s on the table and why it matters.
Commuter Benefits: Biking Incentives
The proposed legislation would permanently eliminate the $20/month tax-free bicycle commuter benefit.
Adoption Tax Credit: More Accessible Support
Currently, the adoption tax credit is nonrefundable but can be carried forward for five years. The new provision would allow up to $5,000 of that credit to be refundable, making it more accessible to families who need it most.
Student Loan Repayment: A Permanent Tax Break
Employer-paid student loan contributions up to $5,250 would be permanently excluded from employees’ taxable income. This cements a popular pandemic-era benefit into long-term policy.
MAGA Accounts: A New Investment Tool for Children
The bill introduces “Money Accounts for Growth and Advancement” (MAGA), which are taxable investment accounts seeded with $1,000 for every child born in 2024 or later.
FSA Flexibility: A Win for ICHRA Plans
Employees could use Flexible Spending Accounts (FSAs) to pay for health premiums on the exchange. This change is especially impactful for those enrolled in Individual Coverage Health Reimbursement Arrangements (ICHRAs), offering a new layer of affordability and flexibility. Along side FSAs, employers could offer a benefit called a CHOICE arrangement (Custom Health Option and Individual Care Expense Arrangement) under their Section 125 cafeteria plan. Employees enrolled in a CHOICE arrangement would be permitted to use pre-tax salary reductions to pay for premiums for individual health insurance coverage purchased through the Exchange. This statutory change provides a new level of affordability and flexibility for small employers and their employees by integrating individual market coverage into traditional cafeteria plan structures.
HSA Enhancements: Expanded Eligibility and Use
Several provisions expand the utility of Health Savings Accounts (HSAs):
- HSAs could now cover direct primary care arrangements.
- Bronze and catastrophic exchange plans would become HSA-eligible. Currently, bronze plans and catastrophic plans offered in the individual market are not considered HDHPs and are therefore ineligible to be paired with an HSA.
- Gym memberships and physical activity expenses, up to $500 for individuals and $1,000 for families, would become eligible for pre-tax treatment through the HSA.
- Couples aged 55+ could contribute a $1,000 catch-up to a single HSA account, rather than having to maintain separate ones to take advantage of the catch-up.
More Portability and Access
- FSA and HRA balances could be rolled into an HSA when switching plans, up to the FSA maximum.
- A 60-day lookback window would allow HSA participants to be reimbursed for expenses incurred before enrollment.
- Spouses could now enroll in an HSA even if the other spouse is enrolled in an FSA.
- Individuals earning under $75,000 (or $150,000 for families) could double their HSA contributions by an additional $4,300 annually for individuals or $9,500 for families.
Why This Matters
If passed, these changes would offer greater flexibility, portability, and tax advantages across a range of reimbursement programs. Employers should start thinking about how these provisions might affect plan design, employee communications, and administrative processes.
We’ll continue to monitor the bill’s progress and provide updates. In the meantime, if you have questions about how to prepare for these potential changes, our team is here to help.