ICHRA and HSA in 2026: The New IRS Bronze Rule

Can you combine an ICHRA and an HSA?

Yes, and as of the 2026 plan year, it is easier to qualify for than it used to be. An Individual Coverage HRA (ICHRA) can sit alongside a Health Savings Account (HSA) for the same employee, as long as two things are both true: the ICHRA reimburses insurance premiums only, with no other medical expenses, and the employee is enrolled in a plan that counts as a high-deductible health plan (HDHP) under Internal Revenue Code Section 223.

That second condition used to be the sticking point. Most of the individual-market bronze and catastrophic plans that pair naturally with a modest ICHRA contribution did not reliably meet the federal deductible and cost-sharing structure that defines an HDHP. IRS Notice 2026-5, issued by the Treasury Department and the IRS to implement part of the One Big Beautiful Bill Act (OBBBA), changed that. For months beginning after December 31, 2025, every bronze plan and every catastrophic plan sold as individual coverage through an Exchange counts as an HDHP, regardless of whether its actual deductible and out-of-pocket design would otherwise qualify. That is a real, dated regulatory change, not a workaround, and it is the reason this question is worth a fresh answer for 2026.

Why this question keeps coming up

You want to give employees a fixed monthly budget so your benefit line item stops moving around every renewal. You also do not want to take away something an employee already values: a Health Savings Account they have been quietly building for a few years, using it to pay for orthodontia, a new pair of glasses, or just a cushion against a bad year. Most of the plain-English explainers an employer finds when researching ICHRA say some version of "pick one," as if the two benefits were mutually exclusive by design. They are not, and they never fully were, but the practical odds of an individual-market plan actually qualifying as an HDHP used to be lower than most people realized.

The confusion is understandable. An ICHRA and an HSA solve different problems and are governed by different sections of the tax code: the ICHRA is an employer-funded arrangement created by the 2020 ICHRA final rule from the IRS, the Department of Labor and HHS, while HSA eligibility is a personal tax status governed by Internal Revenue Code Section 223 and tied to whether the employee's health plan meets the HDHP definition. Whether those two things can coexist for a given employee comes down to plan design, not employer intent, and the plan-design math changed materially on January 1, 2026. If you are still deciding between an ICHRA and a QSEHRA before you even get to the HSA question, our ICHRA vs QSEHRA comparison covers that first choice.

The people who ask this question are usually not asking out of idle curiosity. An HR lead who already runs payroll for a small team has typically heard two competing pieces of advice from two different sources: a broker who says ICHRA and HSA "don't mix," and an employee, often one who has had an HSA at a previous job, who assumes their new benefit should work the same way. Both are half right. The broker is describing the older, general rule correctly for a plan that does not meet the standard HDHP test. The employee is describing what they want, which the 2026 rule change now makes achievable for a specific, identifiable slice of individual-market plans.

There is also a version of this question that comes from the employer side of a rollout that has already started. A company sets up an ICHRA, employees start shopping the individual market, and partway through open enrollment someone asks whether the bronze plan they are eyeing, the one with the lowest premium on the list, will let them keep contributing to the HSA they have used for years. Getting that answer wrong, in either direction, either telling an employee no when the answer is now yes, or telling them yes without confirming the ICHRA itself is premium-only, creates a cleanup problem after the fact that is considerably more expensive than getting the plan design right before the notice goes out.

What actually changed on January 1, 2026

A quick round of definitions, since the rest of this article leans on them. A high-deductible health plan (HDHP) is a health plan that meets specific minimum-deductible and maximum-out-of-pocket thresholds set annually by the IRS; enrollment in an HDHP, with no other disqualifying coverage, is the gateway requirement for HSA eligibility. A bronze plan is one of the four ACA metal tiers, defined in ACA Section 1302(d)(1)(A), designed to cover roughly 60% of an average enrollee's costs, which typically means a high deductible and lower monthly premium. A catastrophic plan, under ACA Section 1302(e), is a stripped-down, typically lower-premium plan generally limited to enrollees under 30 or those who qualify for a hardship or affordability exemption.

IRS Notice 2026-5 states that, for months beginning after December 31, 2025, bronze and catastrophic plans available as individual coverage through an Exchange "are treated as HDHPs," regardless of whether they independently satisfy the general Section 223 deductible and cost-sharing requirements. In plain terms: an employee enrolled in a qualifying bronze or catastrophic plan through the marketplace is now HSA-eligible on the plan-design side of the test, even if that specific plan's deductible or first-dollar coverage would not have cleared the bar under the older, general HDHP rule. The notice also directly addresses ICHRA: using an ICHRA to purchase a qualifying bronze or catastrophic plan does not, on its own, disqualify that plan from HDHP status.

This did not happen in isolation. It is one piece of a broader set of HSA expansions under the One Big Beautiful Bill Act that Notice 2026-5 implements, including a separate, previously finalized rule permanently allowing telehealth and other remote-care services to be covered before the deductible is met without breaking HSA eligibility, effective for plan years beginning on or after January 1, 2025.

The one rule that has not changed

None of this changes the older, separate rule that actually protects HSA eligibility on the employer's side of the arrangement: the HRA itself has to reimburse insurance premiums only. Notice 2026-5 is explicit that an ICHRA still has to comply with existing guidance, specifically IRS Notice 2008-59, to avoid constituting disqualifying coverage. An HRA that reimburses copays, coinsurance, prescriptions, or any other first-dollar medical expense generally counts as its own form of health coverage, and having that coverage disqualifies the employee from contributing to an HSA for that period, regardless of what plan they are enrolled in or how the plan itself is treated for HDHP purposes.

That means an employer choosing to preserve employee HSA eligibility has to make an explicit, affirmative plan-design decision: build the ICHRA as a premium-reimbursement-only arrangement for that employee class. It is not the default configuration many payroll or benefits administration platforms ship with, and it is worth confirming in writing with whichever third-party administrator sets up the plan documents, since the plan document language is what actually controls the outcome, not the employer's intent.

The 2026 numbers you need

Three separate sets of figures govern this design, and it is easy to conflate them. The first is the HSA contribution limit and the HDHP thresholds, set annually by the IRS under Section 223. The second is the ICHRA affordability percentage, set annually under Section 36B, which is a completely different calculation that decides whether your contribution amount counts as "affordable" for premium-tax-credit purposes. The third is your own county's benchmark premium spread, which decides whether the whole exercise saves you money in the first place.

Source: IRS Revenue Procedure 2025-19, Internal Revenue Bulletin 2025-21 (May 19, 2025). National figures, calendar/plan year 2026. Bronze and catastrophic Exchange plans qualifying under Notice 2026-5 are not required to independently meet the deductible and out-of-pocket figures in this table.

Separately, the ICHRA affordability test uses the required contribution percentage under Section 36B, which the IRS set at 9.96% for plan years beginning in calendar year 2026, up from 9.02% in 2025, per Revenue Procedure 2025-25. An ICHRA offer is considered affordable for a given employee when the monthly premium for the lowest-cost silver plan in that employee's rating area, minus the monthly ICHRA contribution, does not exceed 9.96% of that employee's household income for the year. This percentage has nothing to do with HSA eligibility; it only determines whether the employee keeps or loses premium-tax-credit eligibility. We cover the tax-credit trade-off itself, including the FPL thresholds by household size, in our separate ACA subsidy cliff guide, rather than repeating that table here.

Sources: IRS Revenue Procedure 2025-19 (HSA limits); IRS Revenue Procedure 2025-25 (affordability percentage); KFF, "2025 Employer Health Benefits Survey" (HDHP/SO enrollment share, national, group coverage, 2025 survey year).

That last figure is worth sitting with. According to KFF's 2025 Employer Health Benefits Survey, 33% of covered workers nationally are already enrolled in a high-deductible plan with a savings option, ahead of HMOs and POS plans combined. A meaningful share of the workforce an employer is trying to serve with an ICHRA is already comfortable with, or actively wants, an HSA-linked plan. Before Notice 2026-5, an employer funding a low-premium bronze plan through an ICHRA could easily be putting that same employee into a plan that did not actually support the HSA contributions they were counting on.

Two more 2026 changes: telehealth and direct primary care

Notice 2026-5 does more than the bronze and catastrophic plan change, and the other two pieces are worth knowing if your workforce uses either benefit. First, the OBBBA made permanent a rule that had previously existed only as a temporary, expired provision: an HDHP can cover telehealth and other remote-care services before the deductible is met, with no cost-sharing requirement, without disqualifying the enrollee from HSA eligibility. That treatment applies for plan years beginning on or after January 1, 2025, so it was already in effect before the bronze-plan change and remains in effect for 2026.

Second, starting January 1, 2026, an otherwise HSA-eligible individual enrolled in certain direct primary care service arrangements (DPCSAs) may still contribute to an HSA, reversing the older rule that treated most DPC memberships as disqualifying coverage on their own. There is a wrinkle worth flagging for employers: if the employer pays the DPCSA fee directly, including through salary reduction in a cafeteria plan, that payment is excludable compensation under Internal Revenue Code Section 106, and it cannot also be treated as a qualified medical expense reimbursed through the HSA. In practice, that means an employer deciding to fund a DPC membership alongside a premium-only ICHRA needs to keep the two funding streams separate and documented, rather than letting one arrangement quietly reimburse what the other already paid for.

Neither of these two changes is the headline of this article, but both matter for the same reason the bronze-plan rule does: OBBBA is actively widening what an employee can pair with an HSA, in ways that were not true even twelve months ago, and an employer designing a 2026 benefit around last year's assumptions is designing around a rulebook that has since moved.

Premium-only ICHRA vs. a richer ICHRA, side by side

The decision to make an ICHRA class HSA-compatible is a trade-off, not a strictly better option. Table 2 lays out what an employer is actually choosing between.

Source: IRS Notice 2026-5 and IRS Notice 2008-59, as summarized in this article. Design comparison, not a recommendation for any specific workforce.

A workforce that skews younger and healthier, with employees who already value building an HSA balance, tends to benefit more from the premium-only design. A workforce with predictable, recurring medical costs, an aging team, or several employees managing chronic conditions may get more real value from an ICHRA that also offsets some out-of-pocket cost, even at the price of HSA eligibility. Nothing prevents an employer from offering the premium-only design to one employee class and the broader design to another, provided each class follows the permitted class-definition rules under the federal ICHRA regulation.

Designing a premium-only, HSA-compatible ICHRA

The mechanics are not complicated, but the order of operations matters, and skipping a step is where most first-time rollouts run into trouble.

1. Decide whether HSA compatibility matters for a given employee class. Not every workforce needs it; a younger, healthier group that rarely uses medical care beyond preventive visits may prefer a richer, non-HSA ICHRA that also covers some out-of-pocket costs.
2. Write the ICHRA to reimburse premiums only, for that class. This is the single non-negotiable design choice. Confirm the plan document language explicitly, in writing, with whoever administers the arrangement.
3. Confirm the employee's chosen plan qualifies. A bronze or catastrophic Exchange plan qualifies automatically under Notice 2026-5. A silver, gold, or platinum plan, or an off-Exchange plan, still has to independently meet the standard Section 223 HDHP deductible and out-of-pocket thresholds to count.
4. Set the ICHRA contribution amount and separately test it for affordability. Use the 9.96% required contribution percentage against each employee's household income and county-level benchmark premium.
5. Send the required advance notice. Current participants must receive written notice at least 90 days before the plan year begins; newly eligible employees must receive it no later than the ICHRA's effective date for them, per the Department of Labor's individual coverage HRA model notice guidance.
6. Tell employees, in writing, that they are now eligible to contribute to an HSA. Most employees will not know this changed. If your enrollment materials do not say so plainly, the benefit this design was meant to provide goes unused.

A worked example, Chesterfield County, Virginia

The figures below come directly from this site's county dataset, not a hand-typed example. Chesterfield County, Virginia, part of the Richmond metro area with a population of 366,019 in this dataset, currently shows a 2026 individual-market benchmark premium of $278 a month against a small-group benchmark of $375 a month, an estimated 25.9% spread, or $1,167 a year per employee. See the rest of Virginia's qualifying counties on our Virginia savings page.

Where this still goes wrong

A handful of mistakes account for most of the rollouts that end with an employee losing HSA eligibility they thought they had. Knowing them ahead of time is cheaper than fixing them after the fact.

What this does not guarantee

Checking whether it is worth it for your county

Everything in this article about HSA eligibility is a national rule; it applies the same way whether your team sits in Richmond, Virginia or anywhere else. Whether an ICHRA actually costs less than renewing small-group coverage is not national. It depends on the individual-market and small-group benchmark premiums in each county your employees live in, which is exactly what our savings map and county dataset are built to show, county by county, for the 2026 plan year.

Before writing a premium-only ICHRA into a plan document, it is worth ten minutes checking whether the underlying economics make sense for your specific workforce. If your team is concentrated in a handful of counties, the map will tell you quickly whether you are looking at a genuine cost reduction, a wash, or a county where small-group coverage currently prices lower.

How these numbers are calculated

The regulatory figures in this article, the bronze/catastrophic HDHP treatment, the 2026 HSA contribution and HDHP limits, and the 2026 ICHRA affordability percentage, come directly from IRS Notice 2026-5, Revenue Procedure 2025-19, and Revenue Procedure 2025-25, all fetched directly from irs.gov. The HDHP/SO enrollment share comes from KFF's 2025 Employer Health Benefits Survey, a national survey of employer-sponsored group coverage, not the individual market. The Chesterfield County figures come from the same dataset that powers our savings map: a 2026 individual-market benchmark premium (the second-lowest-cost silver plan available to a representative enrollee, the same benchmark the federal government uses to calculate premium tax credits) compared against a small-group benchmark premium built from comparable small-group filings for that rating area. Both figures come from Ideon, a licensed insurance rate-data provider, cross-verified against CMS public-use marketplace files before publication.

Two limitations are worth stating plainly. First, Notice 2026-5's plain text focuses on bronze and catastrophic plans available through an Exchange; secondary summaries from benefits consultancies describe an extension of that treatment to equivalent off-Exchange plans, but this article treats the Exchange-plan case as the confirmed baseline and recommends confirming off-Exchange treatment with a tax advisor before relying on it. Second, this is new guidance as of the 2026 plan year; it has not yet been tested through a full plan year of employer administration, and further sub-regulatory guidance is possible.

Questions employers actually ask