Health Savings Account Expansion Act

Summary

Makes multiple changes to tax rules for Health Savings Accounts (HSAs), Archer MSAs, and the medical expense deduction starting in taxable years after Dec 31, 2026. It narrows which health plans count as qualifying high-deductible health plans, adds new disqualifying coverage categories for HSA eligibility (including many government plans and participation in health care sharing ministries), restricts HSA/MSA reimbursement of over-the-counter medicines to prescribed drugs or insulin, and explicitly allows payments to health care sharing ministries to be treated as deductible medical expenses under the itemized medical deduction.

• Disqualifies coverage under many government plans and participation in health care sharing ministries from HSA eligibility.
• Rewrites and narrows the statutory HDHP (high‑deductible health plan) definition that HSA eligibility depends on.
• Explicitly says health care sharing ministries are not health insurance for HSA rules, but allows HCSM payments to be deductible medical expenses for itemized deductions.
• Expands qualified medical expense rules to allow certain periodic physician access fees and prepaid medical services to be paid from HSAs.
• Restricts HSA/MSA reimbursement of medicines/drugs to prescribed drugs or insulin, excluding most OTC drugs unless prescribed.
• Most changes apply to taxable years beginning after December 31, 2026.
• Does not create new spending programs or appropriations; it amends tax law definitions and deductions.
• Will require IRS, employers, insurers, and tax preparers to revise guidance and plan designs to comply with the new definitions and eligibility tests.