Health Savings Accounts (HSAs) have long been one of the most powerful tools for managing health care costs and building long-term savings. Until now, however, not every Affordable Care Act (ACA) plan qualified. That’s changing.

Beginning this year, ACA Bronze and Catastrophic health plans are eligible for Health Savings Accounts under new federal legislation. For small businesses and their employees, this creates an opportunity to pair lower-premium health plans with one of the most tax-advantaged savings vehicles available. According to CalMatters, more California enrollees are already opting for Bronze level plans. In 2026, one in three are choosing Bronze, as compared to one in four last year.

Why Are More California Employees Choosing Bronze Health Plans?

Health care affordability remains a top concern for many workers. Traditionally, Bronze plans have attracted enrollment because of lower premiums. While Bronze plans have the lowest premium (of the four ACA metal tiers), they also have higher deductibles and out-of-pocket costs. Members must cover 30% of the costs for in-network care. (The plan pays 70% of costs for covered in-network care.) With that in mind, Bronze plans may not be the most efficient choice if an employee has chronic health conditions. For relatively healthy employees who primarily want protection against unexpected medical events, Bronze plan gets the job done. It’s a practical choice. Now, with HSA eligibility added to the equation, these plans become even more compelling.

How Does an HSA Help Employees Pay for Health Care Costs?

An HSA is a personal savings account that employees can use to pay for qualified medical expenses. Funds can typically be used for:

• Deductibles
• Copays
• Prescription medications
• Dental care
• Vision care
• Many other eligible health expenses

Employees can contribute throughout the year and use the money whenever needed for qualified expenses. Employers can also choose to contribute to employee HSAs as an additional benefit.

How to Set Up an HSA With a Bronze Plan

Now that Bronze-tier health plans are considered HDHPs, employees can set up an HSA to help them pay for eligible health care expenses. The amount that can go into an HSA depends on the selected coverage, as shown below.

Individuals aged 55 and older can contribute $1,000 additional each year, if they are not enrolled in Medicare. For a married couple both age 55+, both can make this catch-up contribution (in separate HSAs).

If you contribute to your employees’ HSAs, the amount you contribute counts toward the annual maximum.

Your employees can use an HSA to pay for a variety of medical, dental, and other health care-related services. Over-the-counter medications and other expenses may even qualify. Visit the IRS website for additional information.

The Triple Tax Advantage Employees Love

One reason financial advisors frequently recommend HSAs is their unique tax treatment. HSAs offer what many call a “triple tax advantage”:

Tax-Free Contributions
Employee contributions are generally made pre-tax through payroll deductions or are tax-deductible if made directly.

Tax-Free Growth
Funds inside the account grow tax-free year after year.

Tax-Free Withdrawals
When used for qualified medical expenses, withdrawals are also tax-free.

Few financial accounts offer all three benefits.

Unlike FSAs, HSA Funds Never Expire

Unlike Flexible Spending Accounts (FSAs), HSAs don’t come with a “use-it-or-lose-it” rule. Any unused funds remain in the account indefinitely. That means employees can:

• Save for future medical expenses
• Build a larger emergency health fund
• Accumulate savings year after year

For many workers, an HSA becomes more than a spending account. It becomes a long-term financial asset.

Employees Own Their HSA — Even After They Leave

Another major advantage is portability. The account belongs to the employee, not the employer. Their HSA stays when them when employees:

• Change jobs
• Switch health plans
• Retire

This ownership can make HSAs especially appealing to younger workers who value flexibility and long-term financial planning.

Can an HSA Double as a Retirement Savings Account?

Many employees don’t realize that HSAs can also play a role in retirement planning. HSA administrators allow account holders to invest their balances in:

• Mutual funds
• Stocks
• Exchange Traded Funds (ETFs)
• Other investment options

Over time, those investments may grow alongside traditional retirement accounts. After age 65, employees can also withdraw HSA funds for non-medical expenses without penalty (though ordinary income taxes apply). Qualified medical expenses remain tax-free at any age. For employees thinking about retirement, that flexibility can add significant value.

What Bronze Plan HSA Eligibility Means for Small Business Employers

For small businesses, expanded HSA eligibility creates another opportunity to offer meaningful benefits while helping employees manage costs. Programs like CaliforniaChoice allow employers to pair HSA-qualified plans with a defined contribution approach that gives employees more choice and employers more budget control.

Employers can:

• Set a predictable contribution amount
• Offer multiple plan options
• Give employees greater flexibility
• Support long-term financial wellness

And because CaliforniaChoice includes a 12-month rate lock, employers can avoid unexpected mid-year carrier increases while maintaining predictable health benefits costs throughout the year. That combination of employee choice and budget stability is increasingly important in today’s benefits environment.

More Choice Can Lead to Better Benefits Decisions

Every employee’s situation is different. Some may prefer the lower premiums and HSA savings opportunities offered by Bronze plans. Others may need richer coverage because of ongoing medical needs. The key is giving employees options.

By offering multiple plan choices — including HMO, PPO, and HSA-qualified plans — businesses can help employees select coverage that aligns with both their health care needs and financial goals.

Talk to a Broker About HSA-Eligible Health Plans

The expansion of HSA eligibility for Bronze plans creates new opportunities for employees to save money, build financial security, and take greater control of their health care spending. An employee benefits broker can help you evaluate plan options, understand HSA strategies, and build a benefits package that works for both your business and your employees. To learn more about flexible health plan options and Defined Contribution strategies, contact your broker for guidance. If you don’t have a broker, we make it easy to find one.