Sponsor
Rand Paul
Senator · R-KY
Senator · R-KY
Official title: Amend the Internal Revenue Code of 1986 to increase the limitations on contributions to health savings accounts, and for other purposes.
Introduced December 4, 2025 by Rand Paul · Last progress December 4, 2025
The bill expands options and flexibility for health coverage and HSA use—potentially increasing coverage access, lowering costs, and making health savings more usable—while widening tax-favored benefits, adding administrative and regulatory burdens, and raising risks that some consumers choose inadequate coverage or that risk pools and federal revenue are destabilized.
Uninsured and underinsured individuals, families, and small employers can join or form marketplace pools to access group health plans (including enrolling dependents) and buy lower-cost drug-only/OTC coverage, expanding coverage options and potentially lowering premiums and out-of-pocket drug costs.
Individuals with HSAs—especially those nearing retirement—can make larger catch-up contributions starting at age 50 and benefit from HSA contribution limits indexed to an existing 'applicable dollar amount' formula, increasing retirement health savings and making annual limit adjustments more predictable.
HSA account holders get greater administrative flexibility — corrective distributions for payroll/administrative errors (if fixed by the tax deadline), rollovers treated as permitted distributions, and an expanded list of permitted qualified expenses — reducing inadvertent tax penalties and making HSAs easier to use for health needs.
Allowing drug-only (including OTC) plans may encourage individuals—especially low-income or chronically ill people—to choose limited coverage instead of comprehensive plans, leaving them exposed to major medical costs.
Lowering the HSA catch-up age and expanding eligible HSA expenses (e.g., vitamins, gym memberships, wearables) broadens tax-favored spending and likely reduces near-term federal revenue.
Permitting multiple pools per area, uniform enrollment rules with allowed rate variations, and other pool design choices could fragment risk pools and produce adverse selection or premium instability that makes coverage unaffordable for some people.
Based on analysis of 4 sections of legislative text.
Lowers HSA catch-up age to 50 and ties contribution limits to an indexed amount, and creates 'health marketplace pools' that can offer group and drug-only coverage as employers for that limited purpose.
Makes several changes to Health Savings Accounts (HSAs) and creates a new legal category for nonprofit or state-authorized "health marketplace pools" that can act like employers to offer group health plans, including drug-only coverage. For HSAs it changes how the annual contribution limit is calculated, lowers the age at which catch-up contributions are allowed from 55 to 50, and updates cross-references across the tax code. For employer/plan law it treats properly organized health marketplace pools as employers only for the limited purpose of offering group coverage, sets membership and nondiscrimination rules, permits drug-only benefit offerings (including OTC drugs), and clarifies that participation does not create broader employer or fiduciary status.