On July 4, 2025, President Donald Trump signed the long-awaited — and debated — One Big Beautiful Bill (OBBB), a sweeping piece of legislation that touches everything from taxes to health policy. While headlines have focused on politics and spending, the bill carries significant implications for the Affordable Care Act (ACA) and the future of individual coverage health reimbursement arrangements (ICHRAs).

Here’s what changed, what didn’t, and what to expect in 2026 and beyond.

What was included 

Following a dramatic back-and-forth that resulted in significant changes to the initially proposed bill, the OBBB includes several polarizing pieces of legislation around Medicaid and the ACA, as well as changes to health savings account (HSA) usage and eligibility guidelines.

ACA tightening and eligibility reforms

The Senate version of the bill included a series of reforms aimed at reducing fraud and tightening access to ACA subsidies:

  • Stricter eligibility verification: Individuals applying for marketplace subsidies will now face tougher income and citizenship verification standards.
  • End of auto-renewal: Enrollees will no longer be automatically re-enrolled in ACA coverage. Everyone will need to actively reapply each year.
  • Shortened open enrollment window: The federal marketplace (and all state exchanges) will be limited to a 6-week period — from November 1 through December 15 — removing flexibility for states to extend the deadline and shortening the federal open enrollment period by a month. This begins for the 2027 calendar year.
  • Community engagement requirements (modeled after Medicaid): Some adults may need to meet work, school, or volunteer requirements to maintain subsidy eligibility.

While these provisions are intended to reduce federal spending and improve integrity, they’re also likely to increase administrative burdens and thus create friction for low-income enrollees, potentially leading to coverage gaps and long-term repercussions for patients, providers and facilities.

Medicaid cuts: Indirect shock waves across the market

While not directly related to ICHRA or ACA subsidy structures, the bill introduces substantial cuts to Medicaid: tightening eligibility, adding work requirements, and reducing federal funding to states. These changes are expected to increase the number of uninsured individuals, particularly among low-income adults in non-expansion states.

As more people lose access to Medicaid, hospitals will face higher uncompensated care burdens, and the cost of that care often gets passed on to commercial insurers. The result: upward pressure on premiums across the board, especially in employer-sponsored group plans.

This ripple effect underscores the importance of defined-contribution models like ICHRA, which shield employers from the financial volatility of traditional group coverage.

Updated HSA guidelines

The bill included a few long-awaited updates to HSA guidelines, broadening eligibility and expanding how the funds can be used:

  • More ACA enrollees can now participate. Starting in 2026, individuals enrolled in Bronze or Catastrophic ACA marketplace plans will become HSA-eligible for the first time, removing a major barrier to tax-advantaged savings for lower-premium plan holders.
  • Direct primary care (DPC) gets the green light. DPC memberships are now considered HSA-qualified medical expenses.
  • Telehealth coverage made permanent. First-dollar coverage for virtual care is now permanently compatible with HSA-qualified high-deductible health plans (HDHPs), cementing telemedicine’s role in accessible modern care.
What was excluded: ICHRA expansion and enhanced ACA subsidies

Several key provisions that would have transformed the ACA and ICHRA landscape were stripped from the final bill:

  • No rebranding of ICHRA to “CHOICE Arrangements”: The Senate removed the House’s language to codify and rename ICHRAs, leaving them in regulatory limbo.
  • No ICHRA reporting on W-2s: Employers still aren’t required to report ICHRA contributions on W-2s — good news for compliance simplicity.
  • No Section 125 expansion: Employees can still use pre-tax payroll deductions for off-exchange plans, but not for coverage purchased through the ACA marketplace.
  • No extension of enhanced ACA subsidies: The enhanced premium tax credits (APTCs) introduced through the American Rescue Plan and furthered through the Inflation Reduction Act are currently set to expire at the end of 2025 (though an extension may still be on the table before year’s end). Without them, marketplace coverage will become less affordable, prompting more individuals to look to their employers for health insurance. If employers can’t offer viable, affordable coverage, many workers may seek jobs elsewhere, accelerating turnover and putting added pressure on hiring and retention.
What’s more, premiums for both employer-sponsored (group) health insurance and ACA marketplace are expected to rise.

Why group insurance premiums may increase even more

In some cases, employer-sponsored health insurance costs will increase more than ACA marketplace premiums because of ripple effects triggered by the One Big Beautiful Bill Act. Here’s why:

1. Hospitals will shift costs to group plans. Medicaid cuts and rising uninsurance rates mean hospitals are delivering more uncompensated care. To recover lost revenue, they raise prices on commercial insurers — and employer-sponsored plans will end up footing the bill.

2. Shrinking ACA enrollment pushes higher-risk individuals into group plans. If ACA subsidies expire or enrollment becomes harder due to red tape (as proposed in the One Big Beautiful Bill), more people, including those with chronic conditions, may return to group plans, worsening the employer risk pool and driving up costs.

3. Employer plans lack the subsidy buffer. Unlike ACA coverage, which is (for now) subsidized by federal premium tax credits, employer-sponsored insurance has no external support. So when premiums rise, employers and employees absorb the full increase, making group plans more financially exposed.ICHRA momentum continues — but with strategic shifts

As a result of the One Big Beautiful Bill Act and ongoing market conditions, we expect ICHRA adoption to continue to surge:

  • Adoption has risen ~30% year-over-year from 2024 to 2025.
  • Forecasts show up to 5.8 million covered lives by 2026, and potentially 15 million by 2032.
  • Growth is strongest among mid-sized employers (50–500 employees) seeking budget control and flexibility.

In a landscape of rising premiums and declining public subsidies, ICHRA gives employers a rare edge: budget control without sacrificing access to coverage. The model doesn’t rely on government subsidies or insurer negotiations — just a defined contribution and an open market.

What employers and brokers should do next

In the face of sweeping change, it can be difficult to know what to do next. Here are a few steps employers and benefits advisors can take to stay one step ahead:

  • Allowance adjustments: As marketplace premiums rise, flat dollar ICHRA contributions may no longer meet affordability thresholds.
  • Segmented class design: Tailoring ICHRA classes (e.g., by geography, job function, or status) will become even more valuable to optimize spending and coverage outcomes.Reductions in federal support for Medicaid and ACA marketplaces may cause more people to seek coverage through their employers.
  • Proactive communication: Ensure employees are aware of new guidelines regarding re-enrollment, plan shopping, and potentially subsidy changes.

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