HR6577-119

What This Bill Does

The Stop Penalizing Working Seniors Act changes the Health Savings Account rule in Internal Revenue Code section 223 so Medicare entitlement does not automatically block HSA contributions when a person over 65 is enrolled only in Medicare Part A hospital insurance. Current HSA law generally disqualifies people once they are entitled to Medicare benefits, even if they keep working and remain covered by a high-deductible health plan. The bill carves out the Part A-only situation, effective for taxable years beginning after December 31, 2024, so older workers can keep the tax-preferred HSA while taking hospital coverage.

Who Benefits and How

Working seniors, self-employed older workers, and other taxpayers over 65 with high-deductible health plans benefit because they can keep making deductible HSA contributions while retaining premium-free Medicare Part A. HSA administrators and financial firms could see more account balances remain open after age 65. Employers with older workers may also face less friction explaining why Part A enrollment no longer ends HSA eligibility for those workers.

Who Bears the Burden and How

Federal taxpayers and the Treasury bear the fiscal burden because continued deductible HSA contributions reduce taxable income and federal revenue. Tax administrators and HSA custodians must apply a narrower Medicare-disqualification rule, and workers still need to confirm they are enrolled only in Part A, not broader Medicare coverage that remains incompatible with HSA contributions.

Key Provisions

• Amends Internal Revenue Code section 223(b)(7) so Medicare Part A-only enrollment does not bar HSA contributions for people over age 65.
• Extends HSA contribution eligibility to older workers whose only Medicare entitlement is Part A hospital insurance.
• Requires the new HSA eligibility rule to apply to taxable years beginning after December 31, 2024.