S3248-119

1. Short title This Act may be cited as the Health Savings Accounts For All Act of 2025.

2. Increase in contribution limitations Subsection (b) of section 223 of the Internal Revenue Code of 1986 is amended— in paragraph (1), by striking the sum of and all that follows through the period and inserting an amount equal to the applicable dollar amount under paragraph (1)(B) of section 402(g) (as adjusted pursuant to paragraph (4) of such section) with respect to such taxable year., by striking paragraphs (2), (3), (5), (7), and (8), by inserting after paragraph (1) the following: In the case of an individual who has attained age 50 before the close of the taxable year, the amount of the limitation under paragraph (1) shall be increased by an amount equal to the applicable dollar amount under subparagraph (B)(i) of section 414(v)(2) (as adjusted pursuant to subparagraph (C) of such section). in paragraph (4), by striking the flush matter following subparagraph (C), and by redesignating paragraphs (4) and (6) as paragraphs (3) and (4), respectively. Subparagraph (A) of section 223(d)(1) of the Internal Revenue Code of 1986 is amended by striking the sum of— and all that follows through the period and inserting the amount determined under subsection (b)(1).. Subsection (g)(1) of section 223 of such Code is amended— by striking (b)(2), (c)(2)(A), and and inserting (c)(2)(A) and,, by amending subparagraph (B) to read as follows: the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins determined by substituting calendar year 2003 for calendar year 2016 in subparagraph (A)(ii) thereof. by striking (b)(2), (c)(1)(E)(ii)(II), and inserting (c)(1)(E)(ii)(II). Section 26(b)(2)(S) of such Code is amended by striking , 223(b)(8)(B)(i)(II),. Section 408(d)(9)(C)(i)(I) of such Code is amended by striking computed on the basis of the type of coverage under the high deductible health plan covering the individual. The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. (2)Additional contributions for individuals 50 or olderIn the case of an individual who has attained age 50 before the close of the taxable year, the amount of the limitation under paragraph (1) shall be increased by an amount equal to the applicable dollar amount under subparagraph (B)(i) of section 414(v)(2) (as adjusted pursuant to subparagraph (C) of such section)., (B)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins determined by substituting calendar year 2003 for calendar year 2016 in subparagraph (A)(ii) thereof., and

3. Freedom from mandate Section 223 of the Internal Revenue Code of 1986, as amended by section 2, is further amended by striking subsections (c) and (g) and by redesignating subsections (d), (e), (f), and (h) as subsections (c), (d), (e), and (f), respectively. Subsection (a) of section 223 of the Internal Revenue Code of 1986 is amended to read as follows: In the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a health savings account of such individual. Subsection (c)(1)(A) of section 223 of such Code, as amended by section 2 and redesignated by subsection (a), is further amended by striking subsection (f)(4) and inserting subsection (e)(4). Subparagraph (U) of section 26(b)(2) of such Code, as amended by section 2, is further amended by striking section 223(f)(3) and inserting section 223(e)(3). Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(B)(v), 4973(a)(5), and 6051(a)(12) of such Code are each amended by striking section 223(d) each place it appears and inserting section 223(c). Section 106(d)(1) of such Code is amended— by striking who is an eligible individual (as defined in section 223(c)(1)), and by striking section 223(d) and inserting section 223(c). Section 106(e) of such Code is amended— by striking paragraphs (3) and (4) and by redesignating paragraph (5) as paragraph (4), by inserting after paragraph (2) the following new paragraph: A qualified HSA distribution shall be treated as a rollover contribution described in section 223(e)(4). by striking to any eligible individual covered under a high deductible health plan of the employer in paragraph (4)(B)(ii) (as so redesignated) and inserting to any employee with respect to whom a health savings account has been established. Section 408(d)(9)(A) of such Code is amended by striking who is an eligible individual (as defined in section 223(c)) and. Section 877A(g)(6) of such Code is amended by striking 223(f)(4) and inserting 223(e)(4). Section 4973(g) of such Code is amended— by striking section 223(d) and inserting section 223(c), in paragraph (1), by striking or 223(f)(5) and inserting or 223(e)(5), in paragraph (2)(A), by striking section 223(f)(2) and inserting section 223(e)(2), and in the flush matter at the end, by striking section 223(f)(3) and inserting section 223(e)(3). Section 4975 of such Code is amended— in subsection (c)(6)— by striking section 223(d) and inserting section 223(c), and by striking section 223(e)(2) and inserting section 223(d)(2), and in subsection (e)(1)(E), by striking section 223(d) and inserting section 223(c). Subsection (b) of section 4980G of such Code is amended to read as follows: An employer meets the requirements of this subsection for any calendar year if the employer makes available comparable contributions to the health savings accounts of all comparable participating employees for each coverage period during such calendar year. For purposes of paragraph (1), the term comparable contributions means contributions— which are the same amount, or if the employees are covered by a health plan, which are the same percentage of the annual deductible limit under the plan covering the employees. In the case of an employee who is employed by the employer for only a portion of the calendar year, a contribution to the health savings account of such employee shall be treated as comparable if it is an amount which bears the same ratio to the comparable amount (determined without regard to this subparagraph) as such portion bears to the entire calendar year. For purposes of paragraph (1), the term comparable participating employees means all employees who are covered (if at all) under the same health plan of the employer and have the same category of coverage. For purposes of the preceding sentence, the categories of coverage are self-only and family coverage. Paragraph (3) shall be applied separately with respect to part-time employees and other employees. For purposes of subparagraph (A), the term part-time employee means any employee who is customarily employed for fewer than 30 hours per week. Section 4980G(d) of such Code is amended by striking section 4980E and inserting this section. Section 6693(a)(2)(C) of such Code is amended by striking section 223(h) and inserting section 223(f). The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. (a)Deduction allowedIn the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a health savings account of such individual.. (3)Treatment as rollover contributionA qualified HSA distribution shall be treated as a rollover contribution described in section 223(e)(4)., and (b)Rules and requirements(1)In generalAn employer meets the requirements of this subsection for any calendar year if the employer makes available comparable contributions to the health savings accounts of all comparable participating employees for each coverage period during such calendar year.(2)Comparable contributions(A)In generalFor purposes of paragraph (1), the term comparable contributions means contributions—(i)which are the same amount, or(ii)if the employees are covered by a health plan, which are the same percentage of the annual deductible limit under the plan covering the employees.(B)Part-year employeesIn the case of an employee who is employed by the employer for only a portion of the calendar year, a contribution to the health savings account of such employee shall be treated as comparable if it is an amount which bears the same ratio to the comparable amount (determined without regard to this subparagraph) as such portion bears to the entire calendar year.(3)Comparable participating employeesFor purposes of paragraph (1), the term comparable participating employees means all employees who are covered (if at all) under the same health plan of the employer and have the same category of coverage. For purposes of the preceding sentence, the categories of coverage are self-only and family coverage.(4)Part-time employees(A)In generalParagraph (3) shall be applied separately with respect to part-time employees and other employees.(B)Part-time employeeFor purposes of subparagraph (A), the term part-time employee means any employee who is customarily employed for fewer than 30 hours per week..

4. Amounts paid for health insurance or direct primary care service arrangement Paragraph (2) of section 223(c) of the Internal Revenue Code of 1986, as redesignated by section 3, is amended— in subparagraph (A), by inserting or pursuant to an arrangement under which an individual is provided coverage restricted to primary care services in exchange for a fixed periodic fee or payment for primary care services after menstrual care products, by striking subparagraphs (B) and (C), and by redesignating subparagraph (D) as subparagraph (B). Paragraph (2) of section 223(c) of the Internal Revenue Code of 1986, as amended by the preceding sections of this Act, is further amended by striking and any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual and inserting any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, and any child (as defined in section 152(f)(1)) of such individual who has not attained the age of 27 before the end of such individual's taxable year. Section 220(d)(2)(A) of the Internal Revenue Code of 1986 is amended by striking section 223(d)(2)(D) and inserting section 223(c)(2)(B). Subsection (f) of section 106 of the Internal Revenue Code of 1986 is amended by striking section 223(d)(2)(D) and inserting section 223(c)(2)(B). The amendments made by subsections (a) and (b) shall apply with respect to amounts paid after the date of the enactment of this Act in taxable years beginning after such date. The amendments made by subsection (c) shall apply with respect to taxable years beginning after the date of enactment of this Act.

5. Special rule for certain medical expenses incurred before establishment of account Paragraph (2) of section 223(c) of the Internal Revenue Code of 1986, as amended and redesignated by the preceding sections of this Act, is further amended by adding at the end the following new subparagraph: An expense shall not fail to be treated as a qualified medical expense solely because such expense was incurred before the establishment of the health savings account if such expense was incurred— during either— the taxable year in which the health savings account was established, or the preceding taxable year, in the case of a health savings account established after the taxable year in which such expense was incurred but before the time prescribed by law for filing the return for such taxable year (not including extensions thereof), and for medical care which (but for the fact that it was incurred before the establishment of the account) otherwise meets the requirements of the preceding subparagraphs. The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act. (C)Certain medical expenses incurred before establishment of account treated as qualifiedAn expense shall not fail to be treated as a qualified medical expense solely because such expense was incurred before the establishment of the health savings account if such expense was incurred—(i)during either—(I)the taxable year in which the health savings account was established, or(II)the preceding taxable year, in the case of a health savings account established after the taxable year in which such expense was incurred but before the time prescribed by law for filing the return for such taxable year (not including extensions thereof), and(ii)for medical care which (but for the fact that it was incurred before the establishment of the account) otherwise meets the requirements of the preceding subparagraphs..

6. Administrative error correction before due date of return Paragraph (4) of section 223(e) of the Internal Revenue Code of 1986, as amended and redesignated by the preceding sections of this Act, is amended by adding at the end the following new subparagraph: Subparagraph (A) shall not apply if any payment or distribution is made to correct an administrative, clerical, or payroll contribution error and if— such distribution is received by the individual on or before the last day prescribed by law (including extensions of time) for filing such individual's return for such taxable year, and such distribution is accompanied by the amount of net income attributable to such contribution. The amendment made by this section shall take effect on the date of the enactment of this Act. (D)Exception for administrative errors corrected before due date of returnSubparagraph (A) shall not apply if any payment or distribution is made to correct an administrative, clerical, or payroll contribution error and if—(i)such distribution is received by the individual on or before the last day prescribed by law (including extensions of time) for filing such individual's return for such taxable year, and(ii)such distribution is accompanied by the amount of net income attributable to such contribution.Any net income described in clause (ii) shall be included in the gross income of the individual for the taxable year in which it is received..

7. Allowing HSA rollover to child or parent of account holder Paragraph (8)(A) of section 223(e) of the Internal Revenue Code of 1986, as redesignated by the preceding sections of this Act, is amended— by inserting , child, parent, or grandparent after surviving spouse, by inserting , child, parent, or grandparent, as the case may be, after the spouse, by inserting , child, parent, or grandparent after spouse in the heading thereof, and by adding at the end the following: In the case of a child who acquires such beneficiary’s interest and with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins, such health savings account shall be treated as a health savings account of such child.. The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

8. Coverage for amounts paid for vitamins, dietary supplements, gym memberships, and wearable fitness trackers Paragraph (2) of section 223(c) of the Internal Revenue Code of 1986, as amended by the preceding provisions of this Act, is amended— in subparagraph (A), by inserting , qualified wellness expenses, after menstrual care products, and by adding at the end the following: For purposes of this paragraph, the term qualified wellness expenses means amounts paid for— vitamins, dietary supplements (as defined in section 201(ff) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(ff))), membership at a gym or fitness facility, or wearable fitness trackers. The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. (C)Qualified wellness expensesFor purposes of this paragraph, the term qualified wellness expenses means amounts paid for—(i)vitamins,(ii)dietary supplements (as defined in section 201(ff) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(ff))),(iii)membership at a gym or fitness facility, or(iv)wearable fitness trackers..

9. Equivalent bankruptcy protections for health savings accounts as retirement funds Section 522 of title 11, United States Code, is amended by adding at the end the following new subsection: For purposes of this section, any health savings account (as described in section 223 of the Internal Revenue Code of 1986) shall be treated in the same manner as an individual retirement account described in section 408 of such Code. The amendment made by this section shall apply to cases commencing under title 11, United States Code, after the date of the enactment of this Act. (r)Treatment of health savings accountsFor purposes of this section, any health savings account (as described in section 223 of the Internal Revenue Code of 1986) shall be treated in the same manner as an individual retirement account described in section 408 of such Code..