Sponsors (19)
The bill creates a new tax-advantaged HOPE Account to help people and employers pay qualified medical expenses, improving affordability for many, but its after-tax contribution rules, contribution caps, high misuse penalties, and added administrative complexity limit benefits for some—particularly low-income individuals and small employers.
Middle-class families and lower-income individuals can save tax-exempt dollars in HOPE Accounts (within monthly limits) and distributions used for qualified medical expenses are excluded from gross income, increasing ability to pay healthcare costs and lowering taxable income when used correctly.
Employers can contribute to employees' HOPE Accounts and treat those contributions as employer-provided coverage (reported on W-2), enabling employer-sponsored pre-tax assistance for employees' medical costs.
Trust/trustee rules, approved administrators, required reporting, and limits on fees aim to protect account owners from mismanagement and excessive charges.
Non‑qualified distributions incur a high 30% additional tax, creating substantial financial risk if funds are used incorrectly or substantiation fails.
Complex eligibility rules (monthly coverage tests, limits on concurrent FSA/HSA/HRA/Archer MSA contributions) and new reporting obligations increase administrative burden and compliance costs for employers and individuals, especially small employers.
Aggregate limits that cap employer and state Medicaid contributions (not exceeding 50% of the account limit) may reduce the amount of support low-income individuals receive, limiting the program's help for those with the greatest need.
Based on analysis of 2 sections of legislative text.
Adds a new tax-exempt trust called a HOPE Account for paying qualified medical expenses, with eligibility, contribution, distribution, trustee, and reporting rules.
Official title: To amend the Internal Revenue Code of 1986 to reform health provisions, and for other purposes.
Introduced February 4, 2025 by Blake D. Moore · Last progress February 4, 2025
Creates a new federally tax-preferred account called a HOPE Account: a U.S. trust whose sole purpose is paying a beneficiary’s qualified medical expenses. The account is tax-exempt under the Subtitle of the Internal Revenue Code but subject to unrelated business income tax; it sets who may establish and manage accounts, what contributions and distributions are allowed, reporting requirements, and eligibility rules tied to other tax-advantaged health accounts and minimum coverage. The text provided adds the account rules to the Internal Revenue Code but does not include program funding, agency assignments, or effective dates in the excerpt provided.