As of January 2023, a new bill has been introduced that will drastically expand who has access to an HSA and it's use as a savings vehicle. Sponsored by Rep. Andy Biggs, this bill is known as the "Freedom for Families Act." Trust me, you'll want to keep an eye on this one.
As of January 9th, 2023, a new bill was introduced in the House of Representatives that drastically affects HSAs and who has access to them. This bill is sponsored by Rep. Andy Biggs from Arizona and is known as the “Freedom for Families Act.”
Get excited folks because this is HUGE.
The purpose of this bill is to open the pool of individuals that can use HSAs to save for future health costs. It will no longer require contributors to be enrolled in a high deductible health plan to participate in an HSA. In addition, the contribution limit will increase from $3,850 for an individual to $9,000, and from $7,750 for a family to $18,000.
It will also allow for tax-advantaged distributions from an HSA during family or medical leave. This means that during a period of childbirth, adoption, or family illness, a person can make qualified distributions and will not be subject to income tax on those funds.
In reference to this bill, Rep. Biggs stated:
“Families already use health savings accounts to save for healthcare expenses. There is no reason why families should not have the freedom to access those funds to pay expenses during family leave for a child’s birth, adoption, or a family illness.”
He continues, “This proposal provides financial security for families during family leave without new taxes or new federal burdens on employers.”
In order to become law, this bill still has a long journey ahead of it.
It was originally introduced in congress in April of 2019, but it did not make it far and died. Now that it has been reintroduced, it must once more try and make it through the House of Representatives, then through the Senate, and finally obtain a signature from the president before it becomes law.
You can read the full details and find updates on congress.gov.
How exciting is that? This could be the beginning of making HSA history! Aren't familiar with HSAs? That's alright! Read all about the sweet tax benefits in my post Why Should I Get an HSA?
As always, give me a hoot down below! How has your HSA helped you out?
P.S. Be sure to tune in next week as we dive into the HSA origin story!