Sponsors (11)
The bill preserves tax‑favored account coverage for a narrow set of abortions (rape, incest, life‑threatening conditions) and clarifies tax rules, but broadly prohibits tax‑free use of those accounts for most abortions—shifting costs onto many women (especially low‑income people), raising employer/plan administrative burdens, and creating tax‑planning impacts.
Women who obtain abortions because of rape, incest, or to save their life can still use HSAs, FSAs, HRAs, MSAs, and retiree health accounts for tax‑favored reimbursement.
Taxpayers and the IRS get clearer rules about which medical-account expenses for abortion are covered versus noncovered, which could simplify tax administration and compliance.
Women who obtain abortions for reasons other than rape, incest, or life‑threatening conditions can no longer use HSAs, FSAs, HRAs, MSAs, or retiree health accounts tax‑free, increasing their after‑tax cost of care.
Low‑income people are disproportionately harmed because they are less able to pay out of pocket when tax‑favored accounts cannot be used for most abortions, making care less affordable.
Employees and employers lose tax advantages for covering most abortion care through FSAs/HRAs, raising out‑of‑pocket costs for workers and administrative burdens and potential costs for plan sponsors (including small businesses).
Based on analysis of 2 sections of legislative text.
Removes tax-favored coverage/reimbursement for most abortions in HSAs, MSAs, FSAs, HRAs, and certain retiree accounts, except for rape, incest, or life‑endangering cases.
Introduced January 24, 2025 by Josh Brecheen · Last progress January 24, 2025
Removes tax-favored coverage or reimbursement for most abortions from health savings accounts (HSAs), Archer medical savings accounts (MSAs), health flexible spending arrangements (FSAs), health reimbursement arrangements (HRAs), and certain retiree health accounts, while preserving tax-favored treatment only for abortions that result from rape or incest or that a physician certifies are necessary to prevent the woman’s death or to treat a life‑endangering physical condition caused by the pregnancy. The change takes effect for taxable years beginning after December 31, 2025, and the FSA/HRA reimbursement prohibition applies to expenses incurred for taxable years beginning after that date. The amendment changes the Internal Revenue Code definitions and permissible reimbursements/contributions so that non‑excluded abortions are not qualifying medical distributions or tax‑free reimbursements; plan administrators, employers, account holders, and the IRS will need to adjust administration and tax reporting to reflect the new exclusions.