HSA Options Expand for Bronze and Catastrophic Plans

Starting January 1, 2026, all Bronze and Catastrophic plans on the ACA marketplace became eligible for pairing with Health Savings Accounts (HSAs), significantly expanding options for Long Island employers considering high-deductible health plans. This change removes previous restrictions and opens new pathways for cost-conscious small businesses seeking tax-advantaged benefits.

What Changed for Employers

Previously, only certain high-deductible health plans qualified for HSA pairing. Now, the expanded eligibility means employers can offer Bronze plans—which feature the lowest premiums but higher out-of-pocket costs—alongside HSA benefits. These plans typically cover some services before the deductible, such as three primary care visits annually.

Catastrophic plans also gained broader access through expanded hardship exemptions, allowing enrollment for individuals ineligible for premium tax credits due to income levels, provided these plans are offered in their area.

The Numbers Behind HSA Contributions

HSAs offer triple tax advantages: contributions reduce taxable income, funds grow tax-free, and withdrawals for qualified medical expenses aren't taxed. Both employers and employees can contribute up to annual IRS limits, with unused funds rolling over year to year and earning potential interest.

For employers, contributions are tax-free and flexible based on budget constraints. There's no minimum contribution requirement, giving businesses complete control over their investment level. This flexibility becomes particularly valuable as recent subsidy changes drive more employees back to group plans.

Long Island Implementation

Nassau and Suffolk County employers using the federal ACA marketplace through Healthcare.gov can immediately access these expanded options. The change affects businesses across Long Island's key industries—from medical practices in Westbury to accounting firms in Melville—all of whom must navigate federal marketplace rules.

This expansion provides an alternative to Professional Employer Organization (PEO) arrangements, which often bundle benefits opaquely and limit employer control over contribution decisions. With direct HDHP/HSA setup through experienced brokers, businesses retain full control over their benefits strategy without PEO fees or restrictive contracts that can be difficult to exit.

Strategic Considerations

The timing proves crucial as small group insurance faces upward pressure nationally. While Bronze plans offer lower premiums, employers should evaluate whether the higher deductibles align with their workforce's healthcare usage patterns and financial capacity.

Consider employee demographics carefully. Younger, healthier workforces often benefit most from HDHP/HSA combinations, using lower premiums and tax-advantaged savings for routine care while maintaining catastrophic protection. Practices with older employee bases might find traditional coverage more cost-effective despite higher premiums.

Open Enrollment Deadline

The January 15, 2026 open enrollment deadline has passed for immediate coverage, but businesses can still plan for mid-year qualifying events or prepare for next year's enrollment. Recent hospital price transparency rules can help employees make informed decisions about high-deductible plan usage.

Small business owners should compare total cost scenarios: lower premiums plus potential HSA contributions versus traditional plan premiums. Factor in administrative complexity, as HSAs require additional setup and ongoing management compared to standard group coverage.

Next Steps

Review your current plan's performance metrics—claims usage, employee satisfaction, and total costs including employer contributions. If your workforce demonstrates low routine healthcare utilization but values comprehensive catastrophic protection, expanded HDHP/HSA options might reduce total benefits spend while increasing employee satisfaction through tax advantages.

Working with an experienced benefits broker ensures you maintain control over plan design and contribution strategies while navigating expanded marketplace options. Unlike PEO arrangements that bundle multiple services, independent broker relationships preserve your ability to customize benefits packages specifically for your Long Island operation.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.

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