Details of Public Law 119-21, section 71308 , One Big Beautiful Bill Act

Under federal law, eligible individuals may establish a Health Savings Account (HSA), which provides tax-favored treatment for current medical expenses, as well as the ability to save on a tax-favored basis for future medical expenses. Generally, individuals are eligible to establish an HSA when they are covered by a high-deductible health plan and have no other health coverage (with the exception of plans providing certain permitted benefits/coverage). This provision provides an exception to this general rule and states that having a direct primary care service arrangement does not make an individual ineligible to establish an HSA and specifies eligible medical expenses.

This provision defines a “direct primary care service arrangement"" as an arrangement for defined medical care costs, for primary care services provided by an eligible primary care practitioner. For this provision, eligible HSA medical expenses are limited to a fixed amount of $150 per month, indexed annually for inflation, and specifically excludes procedures that require general anesthesia, prescription drugs (other than vaccines), and certain laboratory services.

California specifically does not conform to federal HSAs and does not conform to the treatment of direct primary care service arrangements. As a result, California does not conform to the changes made by this provision.