What Is the ‘One Big Beautiful Bill’ and What Does It Mean for Health Benefits?

Something big and beautiful is on the horizon in Washington that could have a major impact on employer-sponsored health benefits. Proposed by Senator Bill Cassidy and Representative Rick Allen, the bipartisan legislation, nicknamed the "One Big Beautiful Bill" (OBBB), is currently gaining traction for its bold attempt to reshape how Americans can access and afford healthcare. On May 18, 2025, the House Budget Committee held a rare Sunday night vote to advance the bill forward, signaling growing support across party lines. If passed, the bill could bring sweeping changes to employer-sponsored healthcare.

So what’s actually in the bill? How close is it to becoming law? And most importantly, how could it affect your business’s healthcare strategy moving forward? Keep reading for all the details!

TL;DR:

• What it is: OBBB is a tax and healthcare piece of legislation that includes major updates to tax policy and employer-sponsored benefits.
• Key healthcare provisions: Expands HSAs to include Direct Primary Care, introduces CHOICE Arrangements (an effort to codify and expand ICHRAs), and proposes new Medicaid work requirements.
• Important dates:
  • May 18, 2025: Advanced by the House Budget Committee
  • May 21, 2025: House Rules Committee scheduled to meet
  • July 4, 2025: White House aims for passage
  • January 1, 2026: If passed, most health benefit changes, including CHOICE Arrangements, would take effect at the beginning of 2026
• Why it matters for healthcare: The bill could create more flexible, affordable ways for employers to offer health benefits, especially for small and mid-sized businesses.
• Next steps: Still moving through Congress. Stay tuned, as provisions may change before the bill becomes law.

What Is the One Big Beautiful Bill?

The "One Big Beautiful Bill" (OBBB) is a proposed piece of legislation, primarily focused on tax policy, but also includes significant healthcare-related changes, that is being discussed and debated by the House of Representatives. While largely framed as a tax package, it also includes important updates to health benefits, such as changes to Medicaid eligibility, Health Reimbursement Arrangements (HRAs), Direct Primary Care (DPC) services, and Health Savings Accounts (HSAs).

A key component of the bill is the inclusion of the CHOICE Arrangement Act (an evolution of the 2023 CHOICE Arrangement Act), which aimed to codify and expand Individual Coverage Health Reimbursement Arrangements (ICHRAs). Though that earlier bill stalled, its ideas now reappear in the OBBB with renewed bipartisan momentum.

If passed, the OBBB represents a major shift in how policymakers are thinking about tax relief and employer-sponsored benefits, particularly those for hourly workers, contractors, and non-traditional employment structures. By expanding HSA usage and making ACA marketplace plans eligible for pre-tax premium payments through CHOICE Arrangements, the bill signals a long-term move toward a defined contribution model in healthcare, where employers provide funds and employees choose how to use them. This structure offers employees more personal control, particularly in industries with part-time or remote workforces.

But some experts believe the bill doesn’t go far enough. If the spirit of the legislation is to empower true consumer choice, then more regulatory barriers must be removed. As it stands, employers offering ICHRAs face limitations such as strict employee class requirements and restrictions on offering group plans alongside ICHRAs. Unlocking these restrictions could radically transform how workers engage with their health coverage.

Read the full bill here.

Key Provisions of the One Big Beautiful Bill Affecting Healthcare and Benefits

Here are some of the most notable elements of the bill that could change the way employers structure health benefits:

1. Medicaid Eligibility Changes

The bill proposes new “community engagement” rules that would require able-bodied adults without dependents to complete 80 hours per month of work, training, or volunteer service to keep Medicaid coverage. It also calls for more frequent eligibility verifications. The date for when it would go into effect is still to be determined. This could lead to more employees relying on employer-sponsored benefits if they lose access to Medicaid.

2. Premium Tax Credit (PTC) Reforms

The OBBB includes changes to how premium tax credits (PTCs) are applied under the Affordable Care Act (ACA). It would tighten eligibility rules and remove current limits on recovering overpaid advance PTCs. For employees who purchase individual health insurance through the ACA marketplace, this could make subsidies less predictable and increase the risk of owing money at tax time if income estimates are off. For employers, this may lead to increased interest in alternative coverage options like CHOICE Arrangements.

3. Expanded Health Savings Account (HSA) Options

This provision would raise HSA contribution limits and broaden what those funds can be used for. The goal is to give both employers and employees more flexibility when it comes to saving and spending on healthcare. It could also encourage more businesses to offer HSA-eligible health plans, giving workers more control over how they manage their medical expenses.

4. Making the Paid Leave Tax Credit Permanent

Currently, a temporary measure, the bill proposes long-term extensions to the paid family and medical leave tax credit, moving closer to a permanent fixture. That means employers would continue receiving tax incentives for offering these benefits long term, making it more attractive to support employees through important life events like the birth of a child or a serious illness.

5. CHOICE Arrangements: A New Take on ICHRAs

One of the biggest updates for employer-sponsored benefits is the introduction of CHOICE Arrangements—an evolved version of ICHRAs. These arrangements would build on the 2020 HRA rules, giving employers more flexibility to reimburse workers for health coverage on the individual market instead of offering a traditional group plan. It’s a modern, tax-advantaged approach that could be especially useful for companies with diverse or distributed workforces.

Other Key Tax and Economic Provisions in the OBBB

While healthcare is a major focus, the bill also includes several broader tax-related proposals that could impact workers and businesses across industries:

1. Permanent Individual and Business Tax Cuts: Over $5 trillion in tax cuts are being proposed, aiming to make the 2017 Tax Cuts and Jobs Act provisions permanent for individuals and businesses.
2. Standard Deduction Increase: Joint filers could see a temporary increase in the standard deduction by $2,000 to help reduce taxable income for middle-class households.
3. Deduction Cap Increase for State and Local Tax: The state and local tax (SALT) deduction limit would rise from $10,000 to $30,000 for families making under $400,000 annually.
4. Expanded Child Tax Credit: The Child Tax Credit would temporarily increase by $500, raising it from $2,000 to $2,500 per child.
5. Auto Loan Interest Deduction: American-made car owners could see temporary relief through a deduction of up to $10,000 for interest paid on loans for vehicles assembled in the United States.
6. Tip, Overtime, and Social Security Tax Exemptions: The bill proposes removing income taxes on tips, overtime pay, and Social Security income, particularly beneficial for service industry workers and seniors.
7. SNAP Program Changes: OBBB would shift more of the cost of Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, to states and expand work requirements for recipients up to age 64.
8. Tax-Advantaged Savings Accounts for Newborns: A pilot program called Money Accounts for Growth and Investment, nicknamed “MAGA accounts,” would create tax-advantaged savings accounts, seeded with $1,000, for babies born between 2025 and 2028.

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