The IRS has released an updated version of Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, which provides guidance for various health-related savings accounts and tax-advantaged plans. This publication serves as one of the primary reference guides for employers, administrators, and employees who manage or use tax-advantaged Health Savings Accounts (HSAs), Flexible Spending Arrangements (FSAs), Health Reimbursement Arrangements (HRAs), and Medical Savings Accounts (MSAs), outlining how each account works, their tax benefits, and eligibility requirements.
Publication 969
Publication 969 explains how tax rules apply to common consumer-directed health accounts, including:
- Health Savings Accounts (HSAs)
- Health Flexible Spending Arrangements (FSAs)
- Health Reimbursement Arrangements (HRAs)
- Archer Medical Savings Accounts (MSAs)
While the Internal Revenue Code establishes the law, Publication 969 provides practical guidance on how those rules are interpreted and applied. Employers and administrators often rely on it when determining eligibility, contributions, reimbursements, and substantiation standards.
Why the IRS Updates It Each Year
The IRS revises Publication 969 whenever Congress changes the tax law or when the IRS issues new administrative guidance. Annual updates ensure that plan sponsors and administrators apply the correct rules for eligibility, reimbursement, and contribution limits when processing claims and preparing tax reporting.
Because these accounts receive favorable tax treatment, small rule changes can significantly affect compliance. Updated guidance helps employers avoid disqualifying coverage arrangements or incorrect reimbursements.
What’s New in the Latest Update
A legislative change enacted July 4, 2025 (Public Law 119-21) modified the HSA eligibility rules under Internal Revenue Code section 223.
Beginning with plan years after 2024:
- Individuals may receive telehealth or other remote care services before meeting the deductible without losing HSA eligibility.
- A health plan will still qualify as a high deductible health plan even if telehealth services are covered before the deductible.
Previously, first-dollar telehealth coverage could disqualify participants from contributing to an HSA. The new rule allows plans to offer convenient remote care access while preserving HSA eligibility.
2025 Health FSA Contribution and Carryover Limits
The IRS also confirmed updated limits for health FSAs based on Revenue Procedure 2024-40:
- Maximum employee salary reduction contribution for 2025: $3,300
- Maximum permitted carryover (if the plan allows carryovers): $660
These limits affect plan documents, enrollment communications, and payroll deduction settings. Employers should ensure election caps and rollover provisions match the updated amounts for the 2025 plan year.
What Employers Should Do
- Review telehealth plan provisions to confirm they align with HSA eligibility rules
- Update FSA election limits and carryover amounts in enrollment systems
- Confirm employee communications reflect the new limits
- Coordinate updates with administrators and payroll vendors
Bottom Line
Publication 969 is a key operational guide for administering tax-favored health accounts. The latest update allows more flexibility in telehealth coverage while increasing FSA contribution and carryover limits. Employers should review plan administration practices now to ensure they remain aligned with current IRS guidance.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
