To amend the Internal Revenue Code of 1986 to allow individuals only enrolled in Medicare Part A to contribute to health savings accounts.
Sponsors
Legislative Progress
IntroducedMr. Latta (for himself, Mrs. Hinson, and Mrs. Bice) introduced …
Summary
What This Bill Does
The "Stop Penalizing Working Seniors Act" removes a tax penalty that currently forces Americans over 65 to choose between contributing to a Health Savings Account (HSA) and enrolling in Medicare Part A (hospital insurance). Under current law, anyone entitled to Medicare benefits cannot make HSA contributions, which penalizes seniors who want to keep working and maintain their HSA while also having hospital coverage.
Who Benefits and How
Working seniors age 65+ who have Health Savings Accounts benefit the most. They can now enroll in Medicare Part A (free hospital coverage) without losing the ability to make tax-deductible HSA contributions. This saves them money through continued tax deductions and allows them to build their HSA balances for future healthcare expenses.
Self-employed seniors benefit particularly, as they often rely on high-deductible health plans with HSAs and face difficult choices at age 65.
Financial services firms that administer HSA accounts may see increased business from seniors who no longer need to close their HSAs at 65.
Who Bears the Burden and How
Federal taxpayers bear the cost through reduced tax revenue. When seniors continue making HSA contributions (which are tax-deductible), the government collects less in income taxes.
Medicare may see a marginal impact if this provision encourages some seniors to delay enrolling in Medicare Part B (doctor visits) in favor of continuing with their high-deductible plans.
Key Provisions
- Amends Section 223(b)(7) of the Internal Revenue Code to create an exception for individuals enrolled ONLY in Medicare Part A
- Allows continued HSA contributions for those whose only Medicare coverage is Part A hospital insurance under section 226(a)
- Takes effect for taxable years beginning after December 31, 2024
- Does NOT apply to those enrolled in Medicare Part B, Part C, or Part D
Evidence Chain:
This summary is derived from the structured analysis below. See "Detailed Analysis" for per-title beneficiaries/burden bearers with clause-level evidence links.
Primary Purpose
Allows individuals over age 65 who are enrolled only in Medicare Part A (hospital insurance) to continue contributing to Health Savings Accounts (HSAs), removing the current penalty that prevents working seniors with HSAs from enrolling in any Medicare coverage.
Policy Domains
Legislative Strategy
"Remove tax penalty barrier that forces seniors to choose between continuing HSA contributions and enrolling in Medicare Part A hospital coverage"
Likely Beneficiaries
- Working seniors over 65 with Health Savings Accounts
- Seniors who want to delay full Medicare enrollment while maintaining HSA eligibility
- Self-employed individuals over 65 with high-deductible health plans
Likely Burden Bearers
- Federal government (reduced tax revenue from continued HSA tax deductions)
- Medicare trust fund (marginal impact from encouraging delayed full enrollment)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
Key Definitions
Terms defined in this bill
Current law (Section 223(b)(7) of IRC 1986) prohibits HSA contributions for individuals entitled to Medicare benefits. This bill creates an exception for those enrolled only in Medicare Part A under section 226(a) of the Social Security Act.
Medicare Part A covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Enrollment under section 226(a) refers to automatic enrollment at age 65 for those entitled to Social Security benefits.
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