HSA-qualified high-deductible group health plans

For an employer, an HSA-qualified HDHP is a plan design, not a separate market. It can be built as a PPO, an HMO, or an EPO or POS plan, and it can be fully insured, level-funded, or self-funded, as long as the deductible and out-of-pocket rules are met.

What it is

Under § 223, an HDHP must have an annual deductible at or above the IRS minimum, and annual out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) may not exceed the IRS maximum. The plan generally may not pay benefits, other than preventive care and other coverage the Code allows, before the deductible is met.

IRS Revenue Procedure 2025-19 and Revenue Procedure 2026-24 set the current figures:

An eligible individual who is 55 or older by the end of the tax year may also make the additional catch-up contribution in § 223(b)(3), which the Code sets at $1,000.

Employer and employee contributions share one limit. Amounts in an HSA belong to the employee, can be used for qualified medical expenses, and can be carried forward.

Who it fits

An HSA-qualified HDHP is often a fit when the company wants a group medical plan with a defined deductible, and wants employees to have a portable account they can fund with pre-tax contributions. It can sit inside a small-group or large-group package, and it can be offered next to a Section 125 cafeteria plan for the employee's share of the premium.

A traditional (non-HDHP) group plan, or a defined contribution arrangement such as an ICHRA or a QSEHRA, can be the better match when a different cost-sharing or funding structure fits the group. We will put the designs that actually apply on one proposal.

How it works for employers

You choose an HDHP that meets the IRS limits for the plan year, decide the employer contribution to the premium and, if you wish, to each eligible employee's HSA, and adopt plan and payroll procedures so contributions stay within the annual cap. Employees who are eligible individuals under § 223 may also contribute.

Two recent statutory changes matter for how the plan is designed:

• Telehealth. Section 71306 of Public Law 119-21 (the act commonly called the One, Big, Beautiful Bill Act) made permanent a safe harbor that allows an HDHP to cover telehealth and other remote care services before the deductible. IRS Notice 2026-5 confirms the extension applies retroactively for plan years beginning after December 31, 2024. See telehealth benefits.
• Direct primary care. For months beginning after December 31, 2025, a direct primary care service arrangement that meets the Code's definition and the monthly fee limit is not treated as disqualifying coverage for HSA eligibility, and qualifying fees may be paid from an HSA. See direct primary care for employers.

A separate rule in that same legislation treats certain bronze and catastrophic plans offered as individual coverage through an Exchange as HDHPs, for months beginning after December 31, 2025, even if they would not otherwise meet the deductible or out-of-pocket tests. That rule is about Exchange individual coverage. A small-group bronze plan is not automatically HSA-qualified; it still has to meet the § 223 tests unless a different published rule applies.

How it compares

An HSA-qualified HDHP is a group medical plan with a Code-defined deductible, paired with an account the employee owns. A health FSA is a cafeteria-plan account with a use-it-or-lose-it structure (or a limited carryover) and a different annual cap; it is not a substitute for an HSA, and the two have coordination rules when someone is in an HDHP. A traditional group plan uses a lower deductible and does not open an HSA. Each design is a legitimate fit for some groups. We will not describe an HDHP as cheaper in the abstract.