Sponsors (11)
The bill preserves tax‑favored payment for a narrow set of abortion exceptions and clarifies tax treatment, but it removes tax‑advantaged coverage for most abortions—shifting costs onto individuals (especially low‑income people) and increasing compliance burdens for employers and plan administrators.
Women obtaining abortions for rape, incest, or to save their life can continue to use HSAs, FSAs, HRAs, MSAs, and retiree health accounts for tax‑favored reimbursement of those procedures.
The bill clarifies which abortion‑related expenses are treated as eligible or ineligible for tax‑favored medical accounts, which should simplify IRS guidance and tax administration.
People who obtain abortions for reasons other than rape, incest, or life‑threatening conditions cannot use HSAs, FSAs, HRAs, MSAs, or retiree health accounts tax‑free, increasing out‑of‑pocket costs and likely reducing access to care for many.
Employees and employers lose tax advantages for covering most abortion care through FSAs/HRAs (and similar accounts), leading to higher net costs for employees, increased administrative burden for employers, and potential reductions in employer‑provided coverage.
Low‑income people will be disproportionately harmed because they are less able to pay out of pocket when tax‑favored account reimbursement is unavailable, worsening financial and health inequities.
Based on analysis of 2 sections of legislative text.
Eliminates tax‑favored treatment for most abortions in HSAs, MSAs, FSAs, HRAs, and certain retiree health accounts, except for rape, incest, or life‑threatening-pregnancy cases.
Official title: To amend the Internal Revenue Code of 1986 to prohibit treatment of certain distributions and reimbursements for certain abortions as qualified medical expenses.
Introduced January 24, 2025 by Josh Brecheen · Last progress January 24, 2025
Prohibits tax-favored treatment for most abortions in Health Savings Accounts (HSAs), Archer MSAs, Health Flexible Spending Arrangements (FSAs), Health Reimbursement Arrangements (HRAs), and certain retiree health accounts, while allowing tax-free treatment only for abortions that result from rape or incest or that are certified as necessary to prevent the woman’s death or to treat a life‑endangering physical condition caused by the pregnancy. The change applies for taxable years beginning after December 31, 2025, and stops reimbursements from FSAs/HRAs for non‑excluded abortions for expenses incurred in those taxable years. The bill amends the Internal Revenue Code to redefine qualifying medical distributions/contributions and reimbursement rules so that non‑excluded abortions are not eligible for tax‑favored treatment; it preserves tax benefits only for narrowly defined exceptions (rape, incest, life‑threatening conditions).