How the “Big Beautiful Bill” will impact HR strategy in 2025 and beyond

Major legislation rarely reshapes employee benefits strategy overnight, but the “Big Beautiful Bill” is poised to do just that. As HR leaders, you’re not just tasked with compliance. You’re also expected to lead with clarity, design equitable benefit strategies, and foster trust with your workforce. This bill brings sweeping changes that impact all of those areas, from what benefits you offer to how you talk about them.

To help you cut through the noise, we spoke with our partners at Kutak Rock LLP, a leading ERISA law firm, to get the low-down on what HR leaders should know and plan for. This guide breaks down what’s in the “Big Beautiful Bill” (BBB), what it means for you and your employees, and what you should do right now to prepare.

What’s in the “Big Beautiful Bill”?

The “Big Beautiful Bill” is a sweeping federal reform that introduces major changes to employer-sponsored benefits, Medicaid, individual coverage access, and tax-advantaged savings accounts like HSAs and FSAs. While some provisions aim to improve flexibility or reduce costs, the legislation is also expected to significantly reduce healthcare coverage for many Americans—particularly those enrolled in Medicaid or relying on subsidized marketplace plans.

Key elements include deep cuts to Medicaid funding, stricter eligibility requirements (such as work reporting mandates), reduced support for services like reproductive care, and the most substantial expansion of HSA flexibility since the accounts were created. It also introduces significant changes to fringe benefits, premium assistance tax credits, and employer responsibilities related to executive compensation and dependent care.

For HR leaders, these changes raise urgent questions about how to support employees who may lose coverage, face new barriers to care, or become more reliant on employer-provided benefits. While the final rules are still evolving, some of the major changes include:

• Stricter Medicaid eligibility rules may increase uninsured rates, impacting employee dependents and new hires
• Reduced ACA subsidies and plan access could shift more pressure onto employer plans as safety nets shrink
• Ban on federal funds for certain reproductive health providers may affect coverage access for services like contraception and STI testing
• Capped funding for state Medicaid programs may strain local healthcare systems, especially in rural areas
• Expanded HSA flexibility, including eligibility for ACA Bronze/Catastrophic plans, tax-free use for Direct Primary Care, and permanent pre-deductible telemedicine coverage
• Higher Dependent Care FSA limits, increasing from $5,000 to $7,500 beginning in the 2026 tax year
• Fringe benefit and tax credit changes, including modifications to transportation and child care tax benefits
• Creation of new “Trump Accounts,” which are tax-advantaged savings vehicles for children that employers can fund

These changes have broad implications across industries, especially for mid-sized employers who may need to adjust benefit strategies, plan documentation, and employee education efforts in the coming years.

Key areas of impact for you as an HR leader

HR professionals sit at the center of implementing the “Big Beautiful Bill.” Key areas to pay attention to include:

Benefits plan compliance

The “Big Beautiful Bill” introduces several regulatory updates that may require changes to employer-sponsored health plans. While full guidance is still unfolding, some areas that could be affected include:

• Coverage design: Employers may need to review how they handle services that are restricted or excluded from federal funding, such as certain reproductive health services.
• Eligibility criteria: The bill introduces updated definitions for Medicaid and subsidized coverage, which could indirectly influence employers.

These changes signal a broader shift in how healthcare access and affordability are regulated, which may affect the role employer-sponsored insurance plays in the overall system.

Budget planning

The “Big Beautiful Bill” is expected to increase the number of uninsured individuals by millions, which may drive up uncompensated care and put financial pressure on healthcare providers. In response, providers could raise service costs, potentially leading to higher premiums for employer-sponsored plans. Analysts estimate annual premium increases of up to $485 per enrollee. Employers may also see greater enrollment in their plans as ACA subsidies decline and Medicaid eligibility narrows.

Vendor and carrier coordination

Some vendors may delay updates or charge additional fees to align with new requirements under the “Big Beautiful Bill.” This is especially likely in areas like reproductive health, gender-affirming care, or pharmacy benefits, where regulatory shifts could impact coverage design. HR leaders should proactively check with carriers and point-solution partners to understand their timelines, cost implications, and any required plan changes. Early coordination can help avoid disruption during open enrollment.

Internal alignment

You’ll need legal, finance, and executive alignment to move forward with updates, especially for high-impact changes like fertility coverage or new mental health networks.

HSA and FSA considerations

The “Big Beautiful Bill” brings the most significant expansion of Health Savings Account (HSA) flexibility in decades, along with updates to Dependent Care FSAs that may affect how you design and communicate benefit offerings.

HSA provisions (effective 2026)

• HSA eligibility expands to ACA Bronze and Catastrophic plans, making these options more attractive and tax-advantaged for a broader population
• Direct Primary Care (DPC) no longer disqualifies HSA eligibility, and HSA funds can now be used tax-free to pay DPC fees (up to $150/month for individuals or $300/month for families, indexed for inflation)
• Permanent pre-deductible telemedicine coverage is now allowed under HDHPs, retroactive to plan years beginning after December 31, 2024

FSA provision (effective 2026)

• Dependent Care FSA limits will increase from $5,000 to $7,500 annually (or $2,500 to $3,750 for married individuals filing separately). These limits are not indexed for inflation

New: fringe benefits, student loans & Trump Accounts

In addition to health plan changes, the “Big Beautiful Bill” introduces several updates to fringe benefits and a new type of tax-advantaged savings vehicle for families.

Fringe benefits

• Student loan repayment assistance is now permanently excluded from taxable income when provided through employer educational assistance programs
• Educational assistance exclusion ($5,250) is now indexed for inflation
• Bicycle commuting reimbursements are no longer excluded from income
• The employer-provided child care tax credit increases up to $500,000 ($600,000 for eligible small businesses) on up to 40–50% of qualified expenses

Trump Accounts

A brand-new benefit option, Trump Accounts are tax-deferred savings accounts for children under 18:

• Employers can contribute up to $2,500 annually per account (indexed for inflation)
• Contributions are treated similarly to employer-funded IRAs
• A separate written plan is required to establish and manage these accounts
• A federal pilot program will provide a one-time $1,000 credit to Trump Accounts for U.S. children born between 2025–2028

Key areas of impact for your employees

The “Big Beautiful Bill” introduces significant changes to federal healthcare programs, which may affect your employees in various ways:

• Reduced access to public coverage: The bill includes substantial cuts to Medicaid and modifications to the Affordable Care Act (ACA), leading to an estimated increase of 16 million uninsured individuals by 2034
• Increased reliance on employer-sponsored insurance: As public coverage options diminish, employees may depend more heavily on employer-sponsored health plans to access essential care
• Limited access to certain services: Provisions in the bill restrict federal funding for specific reproductive health services, potentially affecting access to contraception, STI testing, and cancer screenings for employees who rely on Medicaid-funded clinics
• Cultural and workplace implications: Given the bill’s high-profile nature and its impact on sensitive health services, employees may have questions or concerns influenced by personal, political, or cultural beliefs

Actions to take now

Don’t wait for a compliance deadline. HR leaders can take meaningful action today:

1. Audit your current benefits against the bill’s requirements
2. Schedule a meeting with your benefits broker or consultant to outline next steps and ensure they are up to speed
3. Update internal documents and policies that may be affected, including employee handbooks, open enrollment materials, and intranet FAQs
4. Forecast budget scenarios to understand your exposure if plan costs increase
5. Stay connected with legal counsel or ERISA experts for help interpreting specific provisions

How to communicate with your employees

HR’s role is not just to implement the “Big Beautiful Bill”—it’s to translate it into clear, accessible, and inclusive language for employees. Here’s how to do it:

• Build a communications plan now for upcoming changes. Even if some changes won’t go into effect immediately, early education helps build trust
• Avoid jargon. Use simple, plain language in all materials
• Leverage multiple channels: emails, intranet announcements, manager talking points, live Q&As
• Anticipate employee concerns, especially around cost changes, political implications, or deeply personal topics

Join the conversation

Want to hear how other HR leaders are tackling these challenges in real time? Join our Change Agents HR Community on Slack, where channels dedicated to things like politics in the workplace and HR tech offer space for practical insights, shared resources, and support.

Looking ahead: what to watch for

As with all major legislation, expect changes and clarifications in the months ahead. HR leaders should stay alert to:

• Regulatory updates or clarifying guidance from the Department of Labor or HHS
• State-level adaptations or conflicts
• Shifts in the vendor landscape, particularly in point solutions addressing mental health, reproductive care, and health equity

Don’t navigate this alone

The “Big Beautiful Bill” is big, bold, and complex. But you don’t have to navigate it in isolation. With the right strategy, partners, and community, HR leaders can not only stay compliant but use this moment to advance more inclusive, responsive, and modern employee benefit strategies.