What employers, employees, and brokers should know as Congress enters its final two weeks before the holiday recess.
Later this week, the U.S. Senate is scheduled to vote on a three-year extension of the enhanced ACA premium tax credits – a major headline as we head into the final stretch of the 2025 legislative calendar. At the same time, several new health-policy proposals have been introduced in both chambers with a common theme running through them: an expanded role for Health Savings Accounts (HSAs).
For the millions of Americans enrolled in HSA-compatible coverage today, and for employers who rely on these accounts as a key part of their benefits strategy, this renewed legislative focus is noteworthy.
Below is a high-level look at how HSAs appear across the major, recently release proposals.
Health Care Freedom for Patients Act (S. 3386) Sponsored by Senate Finance Committee Chairman Mike Crapo and Senate Health Committee Chairman Bill Cassidy.
Key HSA-related features include:
- Direct federal contributions into individuals’ HSAs for enrollees who select lower-cost marketplace options such as bronze or catastrophic plans.
- Age-adjusted HSA deposit amounts, designed to give older adults greater support for out-of-pocket and premium-related expenses.
Lowering Healthcare Costs for Americans Act (S. 3380) Sen. Roger Marshall’s legislation also emphasizes individual-directed health spending through account-based models. While framed more broadly around premium relief and marketplace stability, the proposal highlights:
- Enhanced premium tax credits for 2026 and, beginning in 2027, redirects that funding into a new account similar to an HSA, with a 700% income cap (of the federal poverty level) and a five-year phase down.
More Affordable Care Act (S. 3264) Introduced by Sen. Rick Scott, this bill would allow states to pursue waivers enabling them to direct federal assistance into “Health Freedom Accounts,” modeled closely on HSAs.
Notably:
- Flexibility for states to structure account-based assistance in ways that meet local marketplace needs.
- Use of account funds for premiums and qualified medical expenses, depending on the state’s approved design.
Bipartisan Health Insurance Affordability Act (House draft) A bipartisan group of House members has released a discussion draft focused on maintaining affordability and reducing administrative complexity. Although the initial details need to evolve, the current framework addresses:
- HSA-compatibility and flexibility for states/marketplaces to support consumer choice, including HSA-eligible options.
Health Savings Accounts Consumer Protection Act (H.R. 6183) Rep. Lloyd Doggett’s proposal focuses on HSA oversight and consumer protections.
- Removes the exception that HSAs can be used for non-health care services without penalty after an individual turns 65.
- Places income limitations around the payroll tax exemption for HSA contributions…$240,000 (single) or $340,000 (married jointly).
- Limits the window for reimbursement to two years from when a qualified medical expense was paid.
- Requires individuals to substantiate that their distributions from HSAs are for qualified medical expenses.
- Makes HSA contributions subject to the 7.65% FICA tax.
Looking Ahead
With only two weeks left before Congress adjourns for the holidays – and with a high profile vote on ACA tax credits scheduled for Thursday – the legislative landscape is moving quickly. Regardless of which (if any) package ultimately advances, one trend is clear…HSAs are positioned to play a larger, more meaningful role in shaping how Americans pay for healthcare in the years ahead.
As always, Diversified will continue monitoring these developments closely and keep employers, brokers, and partners informed.
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🔔 REGULATORY ALERT: Treasury & IRS Issue Guidance Expanding HSA Eligibility
The Department of the Treasury and the Internal Revenue Service issued Notice 2026-05 yesterday providing guidance on new tax benefits for HSA participants under the One, Big, Beautiful Bill. These changes expand HSA eligibility (thru Telehealth, Bronze/Catastrophic Plans and Direct Primary Care Arrangements) which allows more people to save and to pay for healthcare costs through tax-free HSAs.
👉 We’re in the process of reviewing this new information in detail and assessing its operational impact. More analysis and a full breakdown will be included in an upcoming DBS Digest post.