Sponsors (19)
The bill creates tax-advantaged HOPE Accounts to lower individuals' out-of-pocket medical costs and encourage employer contributions, but it does so with strict contribution rules, investment limits, penalties, and new administrative burdens that limit flexibility and raise compliance costs.
People with eligible medical needs (e.g., chronic conditions) can save pre-tax dollars in HOPE Accounts to pay qualified medical expenses, reducing their out-of-pocket healthcare costs.
Employees (including those at small businesses) can receive employer contributions to HOPE Accounts as employer-provided coverage, expanding employer-sponsored help for medical costs.
Built-in account rules (trustee standards, nonforfeitability, and reporting requirements) are intended to protect account assets and increase transparency and oversight for holders and the public.
Account holders who make non‑qualified withdrawals face taxation plus a steep 30% penalty, creating a risk of large, unexpected tax bills for misuse of funds.
New eligibility tests, reporting, coordination rules with FSAs/HSAs, and employer requirements create administrative complexity and compliance costs for employers and taxpayers (particularly small businesses).
Restrictions on third‑party contributions — a statutory ≤50% limit plus exclusion from income only for individuals below AGI thresholds — constrain funding flexibility and reduce the usefulness of third‑party support for some people.
Based on analysis of 2 sections of legislative text.
Creates tax-exempt HOPE Accounts for qualified medical expenses with rules on contributions, trustees, distributions, prohibited investments, substantiation, and reporting.
Creates a new, tax-exempt savings vehicle called a HOPE Account to pay a beneficiary’s qualified medical expenses, with rules on who may open and contribute, how funds must be held and spent, allowed investments, reporting, and coordination with existing accounts (HSAs, FSAs, HRAs). The text sets basic trust, trustee, contribution-type, distribution, substantiation, and reporting rules but does not include specific dollar limits, many definitions, or implementation mechanics in the provided text. HOPE Accounts are generally excluded from taxation under the Internal Revenue Code but remain subject to unrelated business taxable income rules; trustees and account administrators must follow Treasury/IRS guidance (including substantiation tied to proposed regs) and file account reporting (Form 5498-A). Eligibility requires minimum essential coverage (or Indian Health Service for certain tribal members) and a monthly test that limits simultaneous contributions to other tax-advantaged accounts in most months.
Introduced February 4, 2025 by Blake D. Moore · Last progress February 4, 2025