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A bill to amend the Internal Revenue Code of 1986 to expand and improve health savings accounts, and for other purposes.
1/29/2025, 11:56 AM
Summary of Bill S 276
The bill proposes several key provisions, including increasing the annual contribution limits for HSAs, allowing individuals to use HSA funds to pay for over-the-counter medications without a prescription, and permitting spouses who are both eligible for HSAs to make catch-up contributions to the same account.
Additionally, the bill seeks to expand the types of health insurance plans that are eligible for HSA contributions, such as high deductible health plans and catastrophic health plans. It also includes provisions to allow individuals to use HSA funds to pay for certain medical expenses before meeting their deductible. Overall, the Health Savings Account Expansion Act aims to provide individuals with more flexibility and options when it comes to managing their healthcare expenses. It is designed to promote savings for future medical costs and encourage individuals to take control of their healthcare decisions.
Congressional Summary of S 276
Personalized Care Act of 2025
This bill expands health saving account (HSA) eligibility, increases HSA contribution limits, and makes other HSA-related changes. The bill also expands the definition of medical care for purposes of the itemized tax deduction for unreimbursed medical expenses.
The bill eliminates the requirement that an individual must be covered by a high-deductible health plan to establish and contribute to an HSA. Under the bill, an eligible individual is defined as (1) a health care sharing ministry participant, or (2) individual covered under
- a group or individual health plan;
- health insurance (including a short-term limited duration and medical indemnity plan); or
- a government plan (including Medicare Part A and B, Medicaid, the Children’s Health Insurance Program, certain military and government employee health benefit programs, and the Indian Health Service and tribal organization programs).
The bill increases annual HSA contribution limits to $10,800 (from $4,300 in 2025) for self-only coverage and $29,500 (from $8,550 in 2025) for family coverage, adjusted annually for inflation.
The bill expands the qualified medical expenses that may be paid for with HSA distributions to include health insurance payments (e.g., premiums), direct care fees, and certain amounts paid by health care sharing ministry participants.
The bill decreases the penalty to 10% (from 20%) for nonqualified HSA distributions.
Finally, under the bill, direct care fees and fees paid for membership in a health care sharing ministry qualify as medical care for purposes of the itemized tax deduction for unreimbursed medical expenses.
