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The bill increases flexibility and access—by expanding HSA uses and catch-up contributions and by creating marketplace pools that broaden coverage options—but does so at the cost of reduced near‑term federal revenue, greater regulatory and employer compliance complexity, and risks of limited coverage choices or destabilized risk pools for some consumers.
Individuals aged 50 and older can make larger HSA catch-up contributions starting at age 50, allowing older workers and middle-class families to build more retirement health savings sooner.
Taxpayers benefit from HSA contribution limits being indexed to the existing 'applicable dollar amount' formula, simplifying annual limit adjustments and aligning HSA caps with other tax rules.
Taxpayers and employers can correct payroll/administrative HSA contribution errors via corrective distributions if fixed by the tax filing deadline, reducing inadvertent tax penalties and disputes.
Federal revenues could fall because lowering the HSA catch-up age to 50 and expanding eligible HSA expenses (wellness items, OTC, wearables) accelerate and broaden tax-favored contributions and withdrawals.
Expanding HSA-eligible expenses to include wellness and non-prescription items widens tax-preferred spending beyond core medical care, potentially diluting the program's targeting.
Employers—especially small businesses—face new administrative obligations (comparable contribution rules, defined part-time treatment), increasing compliance costs and HR complexity.
Based on analysis of 4 sections of legislative text.
Restructures HSA contribution and catch-up rules (ties limits to an "applicable dollar amount" and lowers catch-up age from 55 to 50) and creates "health marketplace pools" that can offer group and drug-only coverage as limited-purpose employers.
Introduced December 4, 2025 by Rand Paul · Last progress December 4, 2025
Amends federal tax law to change how health savings account (HSA) contribution limits and catch-up contributions are calculated and who can make them, tying limits to the ‘‘applicable dollar amount’’ used for retirement deferrals and lowering the age that allows an HSA catch-up from 55 to 50. Creates a new federal legal status for “health marketplace pools” so they can act as employers for the limited purpose of offering group health plans (including drug-only coverage and over-the-counter drugs), sets membership, nondiscrimination and enrollment rules, and updates ERISA definitions so these pools and the plans they offer are treated consistently under employee benefit law. The HSA changes take effect for taxable years beginning after enactment; the marketplace-pool rules add a new statutory option for organizing and offering group coverage and change ERISA definitions and fiduciary treatment for participants and plan sponsors for that narrow offering purpose.