Official Summaries

Personalized Care Act of 2025

This bill expands health saving account (HSA) eligibility, increases HSA contribution limits, and makes other HSA-related changes. The bill also expands the definition of medical care for purposes of the itemized tax deduction for unreimbursed medical expenses.

The bill eliminates the requirement that an individual must be covered by a high-deductible health plan to establish and contribute to an HSA. Under the bill, an eligible individual is defined as (1) a health care sharing ministry participant, or (2) individual covered under

• a group or individual health plan;
• health insurance (including a short-term limited duration and medical indemnity plan); or
• a government plan (including Medicare Part A and B, Medicaid, the Children’s Health Insurance Program, certain military and government employee health benefit programs, and the Indian Health Service and tribal organization programs).

The bill increases annual HSA contribution limits to $10,800 (from $4,300 in 2025) for self-only coverage and $29,500 (from $8,550 in 2025) for family coverage, adjusted annually for inflation.

The bill expands the qualified medical expenses that may be paid for with HSA distributions to include health insurance payments (e.g., premiums), direct care fees, and certain amounts paid by health care sharing ministry participants.

The bill decreases the penalty to 10% (from 20%) for nonqualified HSA distributions. 

Finally, under the bill, direct care fees and fees paid for membership in a health care sharing ministry qualify as medical care for purposes of the itemized tax deduction for unreimbursed medical expenses.

Current Full Text

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 810 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 810

To amend the Internal Revenue Code of 1986 to expand and improve health 
               savings accounts, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 28, 2025

Mr. Roy (for himself, Mr. Crane, Mr. Burlison, Ms. Hageman, Mr. Harris 
  of Maryland, Mr. Moore of Alabama, Mr. Tiffany, Mr. Ogles, and Mr. 
 Weber of Texas) introduced the following bill; which was referred to 
                    the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to expand and improve health 
               savings accounts, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Personalized Care Act of 2025''.

SEC. 2. HEALTH SAVINGS ACCOUNT ELIGIBILITY.

    (a) In General.--Paragraph (1) of section 223(c) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) Eligible individual.--The term `eligible individual' 
        means, with respect to any month, any individual if such 
        individual is--
                    ``(A) covered under--
                            ``(i) a group or individual health plan,
                            ``(ii) health insurance coverage, including 
                        a short term limited duration plan or medical 
                        indemnity plan, or
                            ``(iii) a government plan, including 
                        coverage under the Medicare program under part 
                        A or part B of title XVIII of the Social 
                        Security Act, the Medicaid program under title 
                        XIX of such Act, the CHIP program under title 
                        XXI of such Act or a qualified CHIP look-alike 
                        program (as defined in section 2107(g) of such 
                        Act), medical coverage under chapter 55 of 
                        title 10, United States Code (including 
                        coverage under the TRICARE program), a health 
                        care program under chapter 17 or 18 of title 
                        38, United States Code, as determined by the 
                        Secretary of Veterans Affairs in coordination 
                        with the Secretary of Health and Human Services 
                        and the Secretary, a medical care program of 
                        the Indian Health Service or a tribal 
                        organization, or coverage under chapter 89 of 
                        title 5, United States Code, or
                    ``(B) a participant in a health care sharing 
                ministry (as defined in section 5000A(d)(2)(B)(ii) 
                without regard to subclause (IV) thereof),
        as of the 1st day of such month.''.
    (b) Conforming Amendments.--
            (1) Subsection (c) of section 223 of such Code is amended 
        by striking paragraphs (2) and (3) and by redesignating 
        paragraphs (4) and (5) as paragraphs (2) and (3), respectively.
            (2) Paragraphs (2)(A) and (2)(B) of section 223(b) of such 
        Code are each amended by striking ``a high deductible health 
        plan'' and inserting ``a health plan, insurance, or ministry 
        described in subsection (c)(1)''.
            (3) Paragraph (8)(A)(ii) of section 223(b) of such Code is 
        amended by striking ``high deductible health plan'' and 
        inserting ``health plan, insurance, or ministry described in 
        subsection (c)(1)''.
            (4) Section 223(g)(1) of such Code is amended--
                    (A) by striking ``subsections (b)(2) and 
                (c)(2)(A)'' both places it appears and inserting 
                ``subsection (b)(2)'', and
                    (B) in subparagraph (B), by striking ``for 
                `calendar year 2016''' and all that follows through 
                ```calendar year 2003'.'' and inserting ```calendar 
                year 1997' for `calendar year 2016' in subparagraph 
                (A)(ii) thereof.''.
            (5) The heading of subparagraph (B) of section 223(b)(8) of 
        such Code is amended by striking ``high deductible health 
        plan''.
            (6) Section 26(b)(2)(S) of such Code is amended by striking 
        ``high deductible health plan''.
            (7) The heading of paragraph (3) of section 106(e) of such 
        Code is amended by striking ``high deductible health plan''.
            (8) Clause (ii) of section 106(e)(5)(B) of such Code is 
        amended by striking ``a high deductible health plan'' and 
        inserting ``a health plan''.
            (9) Paragraph (9) of section 408(d) of such Code is 
        amended--
                    (A) by striking ``the high deductible health plan 
                covering'' in subparagraph (C)(i)(I) and inserting 
                ``health plan, insurance, or ministry of'',
                    (B) by striking ``a high deductible health plan'' 
                the first place it appears in subparagraph (C)(ii)(II) 
                and inserting ``a health plan, insurance, or ministry 
                described in section 223(c)(1)'',
                    (C) by striking ``a high deductible health plan'' 
                the second place it appears in subparagraph (C)(ii)(II) 
                and inserting ``any such plan, insurance, or 
                ministry'', and
                    (D) by striking ``high deductible health plan'' in 
                the heading of subparagraph (D).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.

SEC. 3. INCREASE IN HSA CONTRIBUTION LIMITS.

    (a) In General.--Paragraph (2) of section 223(b) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``$2,250'' in subparagraph (A) and 
        inserting ``$10,800'', and
            (2) by striking ``$4,500'' in subparagraph (B) and 
        inserting ``$29,500''.
    (b) Cost-of-Living Adjustment.--Paragraph (1) of section 223(g) of 
the Internal Revenue Code of 1986, as amended by section 2, is 
amended--
            (1) by striking ``Each'' and inserting ``In the case of a 
        taxable year beginning after 2024, each'', and
            (2) by striking ``calendar year 1997'' and inserting 
        ``calendar year 2023''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.

SEC. 4. PAYMENT OF HEALTH PLAN AND HEALTH INSURANCE PREMIUMS FROM HSA.

    (a) In General.--Paragraph (2) of section 223(d) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking subparagraph (B),
            (2) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (B) and (C), respectively,
            (3) by striking ``Subparagraph (B) shall not apply to any 
        expense for coverage under'' in subparagraph (B), as so 
        redesignated, and inserting ``Subparagraph (A) shall not apply 
        to any payment for insurance other than'', and
            (4) in subparagraph (B), as so redesignated--
                    (A) by striking ``or'' at the end of clause (iii),
                    (B) by striking the period at the end of clause 
                (iv) and inserting ``, or'', and
                    (C) by adding at the end the following new clause:
                            ``(v) a health plan or health insurance 
                        coverage described in subsection (c)(1)(A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.

SEC. 5. TREATMENT OF MEDICAL CARE SERVICE ARRANGEMENTS.

    (a) Inclusion as Medical Expenses.--Paragraph (2) of section 223(d) 
of the Internal Revenue Code of 1986, as amended by section 4, is 
further amended by adding at the end the following new subparagraph:
                    ``(D) Inclusion of medical care service 
                arrangements.--The term `qualified medical expenses' 
                shall include--
                            ``(i) periodic fees paid to a physician for 
                        a defined set of medical services or for the 
                        right to receive medical services on an as-
                        needed basis, and
                            ``(ii) amounts prepaid for medical services 
                        designed to screen for, diagnose, cure, 
                        mitigate, treat, or prevent disease and promote 
                        wellness.''.
    (b) Arrangement Not To Be Treated as Health Insurance.--Subsection 
(c) of section 223 of the Internal Revenue Code of 1986, as amended by 
section 2(b), is further amended by adding at the end the following new 
paragraph:
            ``(4) Treatment of medical care service arrangements.--An 
        arrangement under which an individual is provided medical 
        services in exchange for a fixed periodic fee or payment for 
        such services shall not be treated as a health plan, insurance, 
        or arrangement described in paragraph (1).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.

SEC. 6. PERIODIC PROVIDER FEES TREATED AS MEDICAL CARE.

    (a) In General.--Section 213(d) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(12) Periodic provider fees.--Periodic fees paid for a 
        defined set of medical services provided on an as-needed basis 
        shall be treated as amounts paid for medical care.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2024.

SEC. 7. RESTORING LOWER PENALTY FOR NONQUALIFIED DISTRIBUTIONS.

    (a) In General.--Section 223(f)(4)(A) of the Internal Revenue Code 
of 1986 is amended by striking ``20 percent'' and inserting ``10 
percent''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions made in taxable years beginning after December 
31, 2024.

SEC. 8. TREATMENT OF HEALTH CARE SHARING MINISTRIES.

    (a) Inclusion as Medical Expenses.--Paragraph (2) of section 223(d) 
of the Internal Revenue Code of 1986, as amended by sections 4 and 5, 
is further amended by adding at the end the following new subparagraph:
                    ``(E) Inclusion of health care sharing 
                ministries.--The term `qualified medical expenses' 
                shall include amounts paid by a member of a health care 
                sharing ministry (as defined in section 
                5000A(d)(2)(B)(ii) without regard to subclause (IV) 
                thereof) for--
                            ``(i) the sharing of medical expenses among 
                        members, and
                            ``(ii) administrative fees of the 
                        ministry.''.
    (b) Health Care Sharing Ministry Not To Be Treated as Health 
Insurance.--Subsection (c) of section 223 of the Internal Revenue Code 
of 1986, as amended by sections 2 and 5, is further amended by adding 
at the end the following new paragraph:
            ``(5) Treatment of health care sharing ministries.--A 
        health care sharing ministry (as defined in section 
        5000A(d)(2)(B)(ii) without regard to subclause (IV) thereof) 
        shall not be treated as a health plan or insurance for purposes 
        of this title.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.

SEC. 9. HEALTH CARE SHARING MINISTRY FEES TREATED AS MEDICAL CARE.

    (a) In General.--Section 213(d) of the Internal Revenue Code of 
1986, as amended by section 6, is further amended by adding at the end 
the following new paragraph:
            ``(13) Health care sharing ministries.--Amounts paid for 
        membership in a health care sharing ministry (as defined in 
        section 5000A(d)(2)(B)(ii) without regard to subclause (IV) 
        thereof) shall be treated as amounts paid for medical care.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2024.
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