What’s in the Final Law That Matters to Employers

1. Major Medicaid Reductions & Work Requirements

• ~12% Medicaid spending cut targeted at the poorest, with work mandates requiring 80 hours/month of employment for most adults.
• Estimated 10.9 million fewer insured individuals by 2034.

Employer Impact:
Fewer public plan enrollees are likely to seek coverage through employers, shifting costs and risk pools. Expect enrollment and utilization within your plan to fluctuate.

2. ACA and Marketplace Changes

• Shrinking premium tax credits + tighter Medicaid eligibility remove affordable alternatives.
• Marketplace unpredictability will likely increase open enrollment complexity and enrollment churn.

Employer Impact:
Workers that are ineligible for public coverage may return to employer plans—altering demographics and increasing per-member costs. Employers will need to enhance decision support tools and communication campaigns.

3. Tax Incentives: HSAs, ICHRAs, and Tip Deductions

• Permanent tax breaks for HSAs; new “Trump Accounts” for newborns; and a $6,000 senior deduction through 2028.
• Federal deduction for tips and overtime pay for tipped employees under $150k.

Employer Impact:
Maximize tax-smart offerings like HSAs and ICHRAs. The changes may boost adoption—but will require employers to provide greater education and potentially increased contribution levels.

4. Telehealth and Primary Care Support

Lawmakers opted not to dismantle employer plan tax benefits and preserved the telehealth and primary care incentives.

Employer Opportunity:
Continue leveraging telehealth and primary care access as cost-effective benefit pillars to mitigate downstream claims while supporting employees unavailable for in-person care.

What Employers Should Be Doing Now

1. Reassess Workforce Health Profile

Do you understand the health risk profile of your employee base? Run scenario models to identify lower-wage and part-time population shifts. Estimate enrollment increases, utilization changes, and cost per member.

• Questions to ask:
  • How many current part-time or seasonal workers will lose Medicaid or marketplace access?
  • What does this mean for stop-loss exposure?

2. Boost and Optimize HSAs / ICHRAs

With tax incentives enhanced, employers can:

• Increase HSA contributions
• Roll out ICHRAs for defined contribution flexibility
• Provide clear enrollment support tools—especially for lower-income employees
  Educate around benefits functionality and tax implications.

3. Double Down on Enrollment & Communication

Regardless of your plan’s renewal month, now is the time to revisit how you engage employees with their benefits. The impact of H.R. 1 means more employees may be looking to their employer for coverage options—many for the first time in years.

• Here's how to adapt your enrollment and communication strategy:
• Start planning 90–120 days before your next renewal—not just for open enrollment, but for strategic messaging leading up to it.
• Tailor communication for workers newly reliant on employer plans, especially those previously covered by Medicaid or exchange plans.
• Highlight benefits that match today’s needs—telehealth, primary care access, HSA-eligible plans, and financial wellness resources.
• Use culturally relevant and literacy-friendly materials, especially for lower-income and part-time populations who may be navigating complex plan options.
• Whether you renew in January, July, or October, the clock starts now for aligning your communication efforts to new federal realities.

4. Watch Regulatory & Compliance Guidance

IRS is expected to issue guidance on implementation (including retroactive provisions from Jan 1, 2025). Employers should:

• Track IRS and Treasury updates
• Ensure plan changes align with compliance deadlines
• Engage benefits counsel proactively

Risk, Resilience & Employer Strategy

RiskMitigation StrategyRising Plan CostsAudit networks, telehealth utilization, chronic care managementEnrollment ShiftsMonitor weekly trends post-implementation; adjust forecastingCompliance GapsAlign HSA/ICHRAs with requirements; update plan documentsWorkforce StrainProvide financial wellness and health decision tools

🌟 The Bottom Line

With H.R. 1 now law, change is no longer speculative—it’s here. Employers face a reshaped benefits landscape: fewer public options, more employees in plans, and shifting tax incentives. But with proactive modeling, strategic communication, and smart use of HSAs, ICHRAs, and telehealth, employers can turn disruption into advantage.

At OVD, we're partnering with clients to:

• Perform 2026 modeling under multiple scenarios
• Right-size HSA/ICHRAs to reflect new tax benefits
• Enhance enrollment toolkits for a diverse workforce
• Leverage telehealth and primary care to control costs

📆 Act Now: Your Roadmap (No Matter Your Renewal Date)

This roadmap provides a general framework for timing your strategy development based on your unique plan year. Adjust accordingly:

Timeline (relative to your next renewal)Key Actions6 months outBegin population health and cost impact modeling under new law.4–5 months outRefine plan design options, engage vendor partners, assess HSA/ICHRA viability.3 months outLaunch early-stage communication strategy, finalize benefit documents.2 months outBegin enrollment education, open financial wellness campaigns.1 month outMonitor early engagement, course-correct based on employee questions and usage.Post-renewalConduct plan performance monitoring; reforecast for Q1/Q2 changes under new law.

This flexible framework ensures that even off-calendar renewals remain compliant, competitive, and communication-ready.

Need help navigating the new law? Reach out to your OVD advisor or our Employee Benefits Strategy team today. Let’s turn disruption into a strategic advantage—together.

Posted 7.14.25