To amend the Internal Revenue Code of 1986 to reform certain rules related to health savings accounts.
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
The bill repeals the exception (subparagraph C of Section 223(f)(4)) that allowed penalty-free HSA distributions for non-medical expenses after age 65. After repeal, all non-medical HSA distributions face the 20% penalty, adds an income-based phase-out for HSA deductible contributions, and requires substantiation of HSA distributions as qualified medical expenses. It relies on reporting requirements, exemptions, tax rate changes, and tax deductions. The main policy areas are Health Care, Finance, Trade, and Healthcare.
Who Benefits and How
HSA account holders (fee reduction) could see lower costs, HSA account holders could see lower costs, and Employers making HSA contributions could see lower costs.
Who Bears the Burden and How
Financial institutions serving as HSA trustees could lose revenue opportunities, High-income HSA holders (above income thresholds) could face higher costs, and HSA holders age 65 and over using accounts for non-medical expenses could face higher costs.
Key Provisions
- Repeals the exception (subparagraph C of Section 223(f)(4)) that allowed penalty-free HSA distributions for non-medical expenses after age 65. After repeal, all non-medical HSA distributions face the 20% penalty...
- Adds an income-based phase-out for HSA deductible contributions.
- Requires substantiation of HSA distributions as qualified medical expenses.
- Exempts excludes spa and beauty treatments from qualifying as medical care for HSA purposes. Caps exercise equipment reimbursement at 500 dollars per taxable year.
- Amends Subtitle D of the IRC to add a new excise tax on HSA trustees who charge excessive fees.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill repeals the exception (subparagraph C of Section 223(f)(4)) that allowed penalty-free HSA distributions for non-medical expenses after age 65. After repeal, all non-medical HSA distributions face the 20% penalty, adds an income-based phase-out for HSA deductible contributions, and requires substantiation of HSA distributions as qualified medical expenses.
Key Policy Areas
Health Care, Finance, Trade, Healthcare
Primary Purpose
The bill repeals the exception (subparagraph C of Section 223(f)(4)) that allowed penalty-free HSA distributions for non-medical expenses after age 65. After repeal, all non-medical HSA distributions face the 20% penalty, adds an income-based phase-out for HSA deductible contributions, and requires substantiation of HSA distributions as qualified medical expenses.
Policy Domains
HSA Reform Act
Identified Gains
- HSA account holders (fee reduction)
- HSA account holders
- Employers making HSA contributions
Identified Costs
- Financial institutions serving as HSA trustees
- High-income HSA holders (above income thresholds)
- HSA holders age 65 and over using accounts for non-medical expenses
- HSA account holders
- Spa and beauty treatment providers
Sponsors
Legislative Progress
IntroducedMr. Doggett introduced the following bill; which was referred to …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
HSA account holders, HSA account holders (fee reduction), HSA holders age 65 and over using accounts for non-medical expenses
HSA account holders faces effects in multiple directions
Positive-direction: HSA account holders (fee reduction)
Negative-direction: HSA holders age 65 and over using accounts for non-medical expenses, HSA holders who use accounts for spa/beauty/exercise expenses, High-income HSA holders (above income thresholds)
Financial institutions serving as HSA trustees, HSA trustees and financial institutions
Telehealth-only medical providers for HSA substantiation
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury
Key Definitions
Terms defined in this bill
,000 for joint filers, ,000 for head of household, ,000 for married filing separately, ,000 for all others.
Adjusted gross income determined without regard to section 223 and sections 911, 931, and 933 of the IRC.
Maintenance fees, transfer fees, paper statement/check/card replacement fees, withdrawal fees, insufficient funds fees, fees to ensure fees do not exceed earnings, and other fees identified by the Secretary.
Any covered HSA fee that exceeds the reasonable amount as determined by the Secretary.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology