The Senate's December 12 rejection of competing healthcare proposals guarantees that enhanced ACA premium tax credits expire December 31, 2025, affecting over 20 million Americans. While both Republican and Democratic plans failed to achieve the 60 votes needed, tax practitioners must simultaneously advise clients on new health savings account opportunities under the One Big Beautiful Bill Act.
Immediate Impact: Premium Tax Credits Revert
Enhanced premium subsidies revert to pre-pandemic levels starting January 2026. Families can expect premium increases of $1,000 or more annually depending on income and coverage level. The advance premium tax credit reconciliation on 2026 returns will reflect lower subsidy amounts, potentially creating unexpected tax liability if clients fail to adjust advance payments through the marketplace.
Clients currently receiving marketplace coverage must review 2026 premium quotes and adjust advance credit elections immediately. The automatic enrollment process will not adequately account for subsidy reductions, creating reconciliation problems on returns.
House GOP Framework Still in Play
House Republicans released alternative legislation December 12, though passage before year-end adjournment appears unlikely. Key provisions include CHOICE accounts allowing employers to offer tax-advantaged funds for individual marketplace coverage, association health plans permitting self-employed individuals to join multi-employer arrangements, and expanded stop-loss policies for self-insured employers.
The framework also addresses cost-sharing reduction funding, potentially ending "silver loading" that has inflated premium tax credit amounts since 2017. If enacted, this technical change would lower silver plan premiums and consequently reduce tax credits across all metal tiers.
New HSA Opportunities Under OBBB Act
The Treasury and IRS released Notice 2026-05 detailing expanded HSA eligibility. Three critical changes affect client planning:
The OBBB Act makes permanent the telehealth exception, effective for plan years beginning January 1, 2025. Clients can receive telehealth and remote care services before meeting HDHP deductibles while remaining HSA-eligible.
Most significantly, bronze and catastrophic marketplace plans qualify as HSA-compatible HDHPs effective January 1, 2026. Notice 2026-05 clarifies these plans need not be purchased through exchanges. This substantially expands HSA eligibility to clients previously excluded.
The legislation also permits HSA contributions for individuals in direct primary care arrangements beginning January 1, 2026, with tax-free distributions allowed for periodic DPC fees.
Strategic Planning Opportunities
The bronze plan HSA combination creates important planning opportunities for clients losing enhanced subsidies. Bronze plans have the lowest premiums and highest deductibles. Combined with HSA contributions—$4,300 for self-only coverage, $8,550 for family coverage in 2026, plus $1,000 catch-up for age 55 and older—the triple tax advantage can partially offset reduced premium subsidies for healthy clients who can adequately fund the HSA.
Practitioners should evaluate whether association health plans or direct primary care arrangements serve self-employed clients once available. Tax treatment and eligibility requirements differ significantly from marketplace coverage, requiring careful individual analysis.
Action Items
The Treasury and IRS accept comments on Notice 2026-05 through March 6, 2026, via the federal e-rulemaking portal using identifier IRS-2025-0335. Monitor the IRS OBBB Act provisions webpage for additional guidance.
Establish communication channels with marketplace-enrolled clients immediately to address January coverage changes and 2026 return reconciliation implications. The intersection of expiring subsidies and expanding HSA eligibility requires careful navigation throughout the filing season.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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