Selerix Compliance Corner Update! 

The IRS has released Notice 2026-05, providing guidance on recent changes to Health Savings Account (HSA) eligibility enacted under the Reconciliation Act earlier this year. The notice addresses telehealth coverage, direct primary care arrangements, and the treatment of certain ACA plans as HSA-compatible. 

Below is a summary of what employers and HR teams need to know. 

Telehealth and Remote Care Services 

The Reconciliation Act permanently extends prior COVID-19 relief allowing first-dollar coverage of telehealth and other remote care services under a qualified HDHP without affecting HSA eligibility. 

• This relief applies to plan years beginning after December 31, 2024. 

• HDHPs may cover telehealth services before the deductible is met, even if the services are not preventive. 

IRS Clarifications 

• Employees who received first-dollar telehealth coverage during the lapse between prior COVID relief and enactment of the Reconciliation Act remain eligible to contribute to an HSA for the entire 2025 plan year, provided the plan is otherwise a qualified HDHP. 

• Telehealth services eligible for first-dollar coverage are those listed on Medicare’s annual list of telehealth services under the Social Security Act §1834(m). 

• If a service is not included on the Medicare list, it must meet HHS guidance defining telehealth services. 

• In-person services, medical equipment, and prescription drugs provided in connection with telehealth generally may not be covered pre-deductible unless they independently qualify as telehealth services. 

Bronze and Catastrophic ACA Plans 

Beginning January 1, 2026, all Bronze and Catastrophic plans offered through the individual Marketplace or Exchange are treated as qualified HDHPs for HSA purposes—even if they do not meet standard HDHP deductible or out-of-pocket requirements. 

IRS Clarifications 

• These plans are treated as HDHPs regardless of actuarial value. 
• Employer-provided ICHRA or QSEHRA benefits are not disqualifying coverage, as long as the underlying individual coverage is a qualified HDHP. 
• Bronze or Catastrophic plans purchased outside the Exchange may still qualify as HDHPs if: 
  • The same plan is available on the Exchange, or 
  • The individual has no reason to believe the plan is unavailable through the Exchange. 

• Bronze plans offered through the SHOP Marketplace are not individual plans and must independently meet HDHP requirements to qualify. 
• Individuals who received services at an Indian Health Services (IHS) facility within the three months prior to enrolling in a Bronze or Catastrophic plan are generally not HSA-eligible, unless enrolled in certain American Indians (AI) and Alaska Natives (AN) Bronze plan variants that include IHS services under the terms of the plan. 

Direct Primary Care Service Arrangements (DPCSAs) 

Effective January 1, 2026, certain Direct Primary Care Service Arrangements (DPCSAs) will not be treated as disqualifying coverage for HSA purposes. 

To qualify: 

• Fees must be fixed and periodic, not exceeding: 

• $150 per month for an individual, or 
• $300 per month if more than one individual is covered 
  (indexed for inflation). 
• The arrangement must be limited to primary care services. 
• The arrangement may not include: 
  • Procedures requiring general anesthesia 
  • Prescription drugs (other than vaccines) 
  • Laboratory services not typically provided in an ambulatory primary care setting 

IRS Clarifications 

• DPCSAs cannot function as health plans.
• Providers may serve non-members if those services are billed separately. 
• HDHPs may not pay DPC fees pre-deductible. 
• Employers may pay DPC fees outside the HDHP without affecting employees’ HSA eligibility. 
• DPC fees: 
  • Are excluded from employees’ income when paid by the employer under Code §106 
  • May be reimbursed from an individual’s HSA, subject to timing rules 
  • Are not eligible for salary reduction under a Section 125 plan 
• If DPC fees exceed the monthly limits, they may still be reimbursed by an HSA, but the individual will be ineligible to make HSA contributions while enrolled. 

What Employers Should Do Now 

• Review telehealth offerings to ensure first-dollar services align with Medicare and HHS definitions. 
• Confirm that HDHPs do not pay or reimburse DPC fees before the deductible is met. 
• Understand how Bronze and Catastrophic plan rules may affect employees using ICHRA or QSEHRA arrangements. 
• Be prepared to answer employee questions regarding HSA eligibility, particularly for individual market coverage. 

These updates provide additional flexibility for plan design while maintaining clear compliance boundaries for HSA eligibility. 

Disclaimer: 
Selerix does not provide legal, regulatory, or tax advice. The information in this post is intended to provide a general overview and may not reflect all legal requirements applicable to specific situations. Employers should consult legal counsel for guidance on compliance matters.