Bronze plans are now HSA-qualified: IRS Notice 2026-5 explained

More health insurance plans will work with health savings accounts (HSAs) in 2026.

Internal Revenue Service (IRS) Notice 2026-5, which explains how the federal government will handle HSA changes created in the One Big Beautiful Bill Act (OBBBA)¹, now treats bronze and catastrophic policies as HSA-compatible health plans, even if they don’t meet traditional high deductible health plan (HDHP) thresholds.

This change opens the door for more employees, especially those using an individual coverage health reimbursement arrangement (ICHRA), to combine lower premiums with tax-advantaged savings.

In this article, you’ll learn:

• How health savings accounts (HSAs) work.
• How bronze and catastrophic plans compare.
• What this change means for employers offering ICHRAs.

What changed

Under Internal Revenue Code §223, individuals can only contribute to a health savings account (HSA) if they’re enrolled in a qualified HDHP².

For 2026, the IRS defines an HDHP³ as a plan with at least:

1. $1,700 minimum deductible (self-only)
2. $3,400 minimum deductible (family)

However, starting January 1, 2026, IRS Notice 2026-5 allows bronze and catastrophic plans on the individual market to be treated as HDHPs for HSA eligibility, even if their deductibles are below the standard minimums. This is referred to as “deemed HDHP” status.

Bronze vs. catastrophic coverage

While anyone can enroll in a bronze plan, catastrophic plans have had limited eligibility. They were generally available to individuals younger than age 30 or those with a hardship exemption⁴.

For 2026, eligibility expands. Individuals who aren’t eligible for Marketplace premium subsidies due to income may qualify to enroll in catastrophic coverage, if those plans are available in their area.

If you’re considering one of these plan types, here’s how they compare⁵:

On-exchange vs. off-exchange

Notice 2026-5 doesn't limit HSA eligibility⁶ to plans purchased through HealthCare.gov or a state Marketplace.

The IRS states that off-exchange bronze plans may also qualify, provided the coverage is “substantially the same”⁷ as the on-exchange bronze plan version.

This clarification is especially important for:

1. Employees working with insurance brokers
2. Employers reimbursing off-exchange coverage through an ICHRA
3. Individuals who enroll directly through a carrier

If the off-exchange plan mirrors an exchange bronze offering, it may receive the same “deemed HDHP” treatment for HSA purposes.

How an HSA works

A health savings account (HSA) is a tax-advantaged savings account that individuals use to pay for qualified medical expenses.

To contribute, you must have an HSA-compatible health plan and meet IRS eligibility requirements. You, your employer, or both can contribute up to the annual IRS limit.

HSA funds:

1. Roll over year to year
2. Grow tax-free
3. Can be invested once a minimum balance is reached
4. Are withdrawn tax-free when used for qualified medical expenses

Qualified expenses outlined in IRS Publication 502 include⁸:

1. Preventive care
2. Emergency room care
3. Inpatient hospital stay
4. Lab tests
5. Prescription drugs

HSAs offer a triple tax advantage: tax-deductible contributions, tax-free interest earnings, and tax-free withdrawals for IRS-qualified medical expenses.

2026 HSA limits

The IRS released 2026 health savings account (HSA) limits in Revenue Procedure 2025-19.⁹

The IRS adjusts these amounts annually for inflation.

How to open an HSA

After signing up for an HSA-compatible health plan, individuals can open an HSA¹⁰ through a bank, credit union, or other approved financial institution. Many HSA administrators also offer investment options once the account reaches a certain balance threshold. Keep in mind that an employer offering HSA contributions may require employees to open an HSA through a partner institution or vendor.

Why this change matters for employers offering ICHRA

For employers offering an ICHRA, this update is significant. Historically, employees who used their ICHRA allowance to purchase bronze coverage couldn’t contribute to an HSA unless the plan met HDHP requirements on its own. In 2026, employees can now use their ICHRA allowance to buy a bronze plan and still contribute to their own HSA (if the ICHRA plan design allows it).

An ICHRA can work alongside an HRA as long as the employer offers a limited-purpose ICHRA (premium-only) or a post-deductible ICHRA to any individuals participating in an HSA. The ICHRA Final Rules even allow employers to give employees a choice between an HSA-compatible ICHRA and a non-HSA-compatible ICHRA within the same employee class, giving employees the option to participate in an HSA or not.

This creates a powerful combination:

1. Predictable employer costs through ICHRA
2. Lower monthly premiums through bronze coverage
3. Tax-advantaged savings through an HSA

For employers modernizing their benefits strategy, this change increases flexibility without sacrificing tax efficiency.

Conclusion

IRS Notice 2026-5 expands access to health savings accounts (HSAs) in the individual market. By granting deemed HDHP status to bronze and catastrophic plans, including qualifying off-exchange options, the IRS has created new flexibility for employees who want lower monthly premiums without giving up tax-advantaged savings opportunities. For employers offering ICHRAs, this strengthens the value of a defined-contribution health benefit.

References

1. IRS: Expanded Availability of Health Savings Accounts under the One, Big, Beautiful Bill Act (OBBBA)
2. Cornell Law School: 26 U.S. Code § 223 - Health savings accounts
3. IRS: Internal Revenue Bulletin: 2025-21
4. Healthcare.gov: How to pick a health insurance plan
5. Healthcare.gov: New in 2026: More plans now work with Health Savings Accounts
6. IRS: Treasury, IRS provide guidance on new tax benefits for health savings account participants under the One, Big, Beautiful Bill
7. IRS: Internal Revenue Bulletin: 2026-2
8. IRS: Publication 502 (2025), Medical and Dental Expenses
9. IRS: Rev. Proc. 2025-19
10. Healthcare.gov: Understanding Health Savings Account-eligible plans