Sponsors (23)
The bill makes it easier and clearer for many Americans to use tax‑favored health accounts (HSAs, Archer MSAs, FSAs/HRAs) for more family medical expenses, but it risks modest federal revenue loss and creates transitional uncertainty and administrative burdens until Treasury/IRS guidance and plan updates are complete.
People who use tax-advantaged health accounts (HSAs and Archer MSAs) will get clearer rules and—potentially—broader contribution or benefit treatment for amounts paid after Dec 31, 2024, making it easier to save tax‑preferentially for medical costs.
Employees with FSAs/HRAs can pay for medical expenses of parents and parents‑in‑law tax‑free for expenses after Dec 31, 2024, reducing their taxable income and out‑of‑pocket cost for family care.
Plan administrators and taxpayers gain a clearer statutory definition of 'medical care' (by adopting §213(d) with a specific exclusion), which reduces ambiguity about covered expenses.
Taxpayers, payors, and the IRS will face uncertainty and transitional burdens because the bill inserts unspecified or new statutory language that will require Treasury/IRS guidance before rules are fully clear.
Expanding tax‑free uses or contribution eligibility for HSAs, FSAs, and HRAs could modestly reduce federal income tax revenue compared with current law, with budgetary implications.
Some taxpayers may lose the ability to make tax‑advantaged contributions or face unexpected tax consequences if qualifying rules are narrowed or become more complex under the new language.
Based on analysis of 4 sections of legislative text.
Allows FSAs and HRAs to pay for a taxpayer's or spouse's parent's medical care tax-free and inserts new language into HSA and Archer MSA rules (effective after Dec 31, 2024).
Introduced January 3, 2025 by Vernon G. Buchanan · Last progress January 3, 2025
Expands tax-advantaged health accounts so caregivers can use employer-sponsored accounts to pay for medical care of a taxpayer’s or spouse’s parent without triggering taxable income, and makes additional changes to rules for health savings accounts (HSAs) and Archer medical savings accounts (MSAs). The bill amends multiple Internal Revenue Code provisions to insert new language into the HSA eligibility rules, clarifies that FSAs/HRAs can cover parent medical care (with a specific definition tweak), and adds unspecified changes to Archer MSA law; the changes apply to expenses or amounts paid after December 31, 2024.