Sponsors (24)
Official title: To amend the Internal Revenue Code of 1986 to allow expenses for parents to be taken into account as medical expenses, and for other purposes.
Introduced January 3, 2025 by Vernon G. Buchanan · Last progress January 3, 2025
The bill expands and clarifies tax‑favored ways for people to pay or save for family and personal medical expenses—giving many workers and patients greater tax savings and flexibility—while increasing administrative burdens, creating short‑term uncertainty, and likely modestly reducing federal revenue.
Parents and families / employees: Starting for amounts after Dec 31, 2024, employees can use FSAs/HRAs to pay parents' medical expenses tax‑free, letting affected workers cover more family care with pre‑tax dollars and reducing their taxable income.
Taxpayers who use HSAs and Archer MSAs: The bill provides clearer or expanded statutory language on HSA/Archer MSA treatment for amounts after Dec 31, 2024, which may allow larger tax‑preferred contributions or more certain tax treatment for savers.
People with chronic health conditions: If HSA eligibility or limits are broadened, these individuals may be able to make larger HSA contributions and better accumulate tax‑advantaged savings for ongoing care.
Broad taxpayer base / federal budget: Expanding tax‑favored uses of HSAs, FSAs/HRAs, and MSAs is likely to modestly reduce federal income tax revenue compared with current law.
Employers, plan administrators, the IRS, and taxpayers: The changes will require updates to plan documents and systems and will force the IRS/Department of the Treasury to issue guidance, creating administrative costs and transitional burdens.
Taxpayers and financial institutions: Unspecified insertions and new statutory language create short‑term uncertainty for taxpayers and payors (notably for 2025 contributions) until regulations or guidance are provided.
Based on analysis of 4 sections of legislative text.
Expands tax-preferred HSAs, FSAs/HRAs, and Archer MSAs so they may be used for medical care of a taxpayer’s or spouse’s parent without causing taxable income.
Amends federal tax rules for health-savings and similar accounts so money used to pay for medical care of a taxpayer’s or their spouse’s parent remains tax-preferred. It changes HSA, FSA/HRA, and Archer MSA rules (by inserting new statutory text into sections of the Internal Revenue Code) so those accounts can cover parent-of-taxpayer medical expenses without triggering income inclusion; the changes apply to amounts or expenses after December 31, 2024. The text of the bill shows substantive insertions into the tax code but does not display the exact inserted language in two places.