Sponsors (5)
The bill expands who can use HSAs and what HSA funds can cover—giving millions greater tax-advantaged ability to save for medical and long-term care—at the cost of reduced federal revenue, added administrative complexity, and some increased financial risk for lower-income consumers.
Millions of additional Americans — including Medicare Part A enrollees (seniors), many veterans, members of federally recognized tribes who use IHS/tribal care, and people covered by ACA bronze/catastrophic plans — can contribute to HSAs, expanding access to tax-advantaged medical savings.
Taxpayers can save more pre-tax for healthcare over time because HSA contribution limits will track an indexed reference, increasing long-term tax-advantaged savings capacity for families and individuals.
People who pay for qualified long-term care services can treat those payments as qualified medical expenses for HSAs, improving affordability of long-term care for seniors and those with chronic conditions.
Expanded HSA eligibility, broader qualified distributions, and higher indexed contribution limits will reduce federal income tax receipts, potentially increasing deficits or pressuring funding for other programs.
The IRS, employers, insurers, and plan administrators will face administrative and compliance costs to update rules, systems, and plan documents, and taxpayers may face short-term confusion as guidance is developed.
Allowing HSA use alongside lower-premium bronze/catastrophic plans and other design changes may encourage selection of plans with higher out-of-pocket costs, increasing financial risk for low-income and cost-sensitive enrollees.
Based on analysis of 10 sections of legislative text.
Modernizes HSA rules: broadens qualified expenses, expands contributor eligibility (including some veterans and Medicare Part A enrollees), widens HDHP definitions, and updates contribution limits.
Makes multiple changes to Health Savings Account (HSA) rules to expand what counts as qualified medical expenses, broaden who may contribute, update what counts as a high-deductible health plan (HDHP), allow limited deductible waivers for mental health benefits, permit certain timing rules for opening HSAs, revise how married couples split family HSA limits, and tie HSA contribution caps to updated indexed amounts. Most changes take effect for months or taxable years beginning after December 31, 2025.
Introduced January 16, 2025 by Beth Van Duyne · Last progress January 16, 2025