HR317-119

What This Bill Does

The Healthcare Freedom Act rewrites the HSA framework as health freedom accounts. It replaces the terms health savings account and health savings accounts throughout section 223, removes the eligible-individual and high-deductible-health-plan structure, adds qualified medical expenses for direct primary care, health care sharing ministries, and medical cost sharing organizations, preserves rollovers within 60 days, sets the annual contribution limit at 12,000 dollars or twice that for a joint return, adds a 5,000 dollar catch-up for individuals age 55 or older, repeals several current HSA contribution and distribution constraints, and updates indexing. It then creates a new section 106A excluding employer contributions to a health freedom account from gross income for employees hired on or after five years after enactment, while terminating the general employer-provided health coverage exclusion for those new hires and treating employer HFA contributions as accident or health plan coverage for medical expenses. The bill shifts tax preference away from traditional employer coverage for future hires and toward larger individual-controlled health accounts.

Who Benefits and How

Individuals using health freedom accounts benefit from higher tax-preferred contribution limits and fewer HSA eligibility constraints. Families filing joint returns benefit from a 24,000 dollar annual contribution limit. Older account holders benefit from a 5,000 dollar catch-up contribution after age 55. Direct primary care practices benefit because account funds may be used for direct primary care costs. Health care sharing ministries and medical cost sharing organizations benefit because their costs become qualified medical expenses.

Who Bears the Burden and How

Employers hiring workers five years after enactment lose the general section 106 exclusion for traditional employer health coverage for those new hires. Employer benefits departments must redesign health benefit tax treatment and account contributions for new employees. IRS guidance staff must rewrite HSA guidance, contribution limits, expense rules, indexing, and employer-contribution rules. Traditional employer-sponsored insurers may face competitive pressure if tax preference shifts toward individual accounts. Treasury revenue accounts bear the cost of larger tax-preferred account contributions.

Key Provisions

• Renames health savings accounts as health freedom accounts throughout section 223.
• Repeals the eligible-individual and high-deductible-health-plan limitations.
• Adds direct primary care, health care sharing ministries, and medical cost sharing organizations as qualified medical expenses.
• Raises contribution limits to 12,000 dollars, or 24,000 dollars for joint returns, plus a 5,000 dollar age-55 catch-up.
• Creates a new section 106A exclusion for employer health freedom account contributions for new hires after five years.
• Terminates the general employer health coverage exclusion for those future new hires.