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Freedom for Families Act
1/31/2025, 4:14 PM
Summary of Bill HR 74
The purpose of this legislation is to provide financial support to individuals who need to take time off work to care for a sick family member, bond with a new child, or attend to their own medical needs. By allowing tax-advantaged distributions from HSAs, this bill aims to alleviate some of the financial burden that often comes with taking unpaid leave from work.
The bill does not specify the exact amount that individuals would be allowed to withdraw from their HSAs, but it does outline the qualifying reasons for taking such distributions. These reasons include the birth or adoption of a child, caring for a spouse, child, or parent with a serious health condition, or dealing with a serious health condition of one's own. Overall, the Family and Medical Leave Enhancement Act seeks to provide additional support to individuals facing family or medical emergencies by allowing them to access funds from their HSAs without incurring penalties. This legislation aims to make it easier for individuals to take the time off work that they need without worrying about the financial consequences.
Congressional Summary of HR 74
Freedom for Families Act
This bill allows individuals to establish and contribute to a health savings account (HSA) without being enrolled in a high-deductible health plan (HDHP), increases HSA contribution limits, and allows tax-free distributions from an HSA during a period of qualified caregiving.
Under current law, individuals may establish and contribute to an HSA if they are covered under an HSA-eligible HDHP. For 2025, HSA contributions are limited to $4,300 for self-only coverage or $8,550 for family coverage (adjusted annually). Individuals who are at least 55 years old may make an additional HSA contribution of up to $1,000 per year. Further, under current law, HSA distributions are tax-free if used to pay for qualified medical expenses.
The bill eliminates the HDHP coverage requirement for purposes of an HSA.
The bill also increases the HSA annual contribution limit to $9,000 for individuals or $18,000 for joint filers (adjusted annually) and eliminates the additional contribution for individuals who are at least 55 years old.
Finally, the bill excludes HSA distributions during a period of qualified caregiving from gross income. The bill defines period of qualified caregiving as any period during which an individual is on leave or not employed due to
- the birth or adoption of a child;
- placement of a foster child;
- caring for a family member with a serious health condition;
- an inability to work due to a serious health condition; or
- certain emergencies related to a spouse, child, or parent on covered active duty with the Armed Forces.
