Benefits Bulletin: Fringe and Account-Based Benefits Plan Updates for 2026

Federal Law Alert
OCTOBER 28, 2025
Benefits Bulletin: Fringe and Account-Based Benefits Plan Updates for 2026
 
 
Provisions from the budget reconciliation bill (HR 1: One Big Beautiful Bill Act), affecting benefits provisions in 2026, are described below.
Bicycle Commuter Reimbursement Exclusion
Tax-free reimbursements to employees for qualified commuting expenses for bicycles, previously excluded for tax years 2018 through 2025, is indefinitely excluded. As a result, employers can’t reinstate bicycle commuter expenses as a tax-free benefit again in 2026 and need to amend their fringe benefits documents if they included the previous temporary exclusion dates.
Dependent Care Flexible Spending Account Limit
The dependent care flexible sending account (DCFSA) annual contribution limit will increase to $7,500 for plan years beginning in 2026.
Increasing the limit is optional for employers; however, employers offering a DCFSA that want to take advantage of the increase should update their cafeteria and benefits plan documents and notify employees prior to the start of their 2026 plan year.
Direct Primary Care Service Arrangements
Beginning January 1, 2026, certain direct primary care service arrangements (a contract between an individual and primary care physicians for care for a monthly fee) will not prohibit an employee from contributing to a health savings account (HSA). Employees may use their HSA to pay the monthly cost of direct primary care service arrangements that meet certain qualifications (e.g., a monthly fee of $150 or less for one person).
HR 1 was signed by the President on July 4, 2025.
 
 
 
 
 
 
 
 
 
 
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