Summary

Prohibits use of tax-advantaged health savings accounts and employer-funded pretax arrangements to pay for most abortions, with narrow exceptions for pregnancies resulting from rape or incest or when the pregnant person faces a certified life‑threatening physical condition. The rule applies to Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs), flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and related retiree health account arrangements. Changes are made by amending Internal Revenue Code provisions to exclude abortion payments from qualifying medical expenses for tax-favored treatment, except for the specified "excluded abortions." The prohibition becomes effective for amounts paid or expenses incurred in taxable years beginning after December 31, 2025, and will affect account holders, plan sponsors, employers, and IRS administration of these accounts.

Key Points

• Stops use of HSAs, Archer MSAs, FSAs, HRAs, and similar pretax/employer-funded arrangements to pay for abortions except in narrowly defined cases.
• Allows exceptions only for pregnancies resulting from rape or incest or where a certified physical condition creates a life‑threatening risk.
• Amends multiple Internal Revenue Code sections to reclassify abortion payments as nonqualified expenses for tax-advantaged accounts.
• Applies to account distributions and reimbursements for amounts paid or expenses incurred in taxable years starting after Dec 31, 2025.
• Affects account holders, employees and employers offering FSAs/HRAs, plan administrators, and IRS tax administration.
• Requires plan and tax-reporting changes by employers and administrators to prevent reimbursements for non-exempt abortions.
• Does not directly change criminal law or state abortion regulations; it changes federal tax treatment of payments.
• May raise operational, compliance, and potential legal challenges related to enforcement, certification, and confidentiality procedures.

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