Personalized Care Act of 2025
Personalized Care Act of 2025
Plain Language Summary
# Personalized Care Act of 2025 - Summary **What the bill would do:** The Personalized Care Act of 2025 would make significant changes to Health Savings Accounts (HSAs), which are tax-advantaged savings accounts used to pay for medical expenses. Currently, people can only contribute to an HSA if they have a high-deductible health plan. This bill would eliminate that requirement, allowing HSAs to be opened by anyone with various types of health coverage, including Medicare, Medicaid, military insurance, and health care sharing ministries.
The bill would also roughly double the annual contribution limit to $10,800 (from the current $4,300) and expand what counts as a qualified medical expense for tax deduction purposes. **Who it affects:** This bill would primarily benefit individuals who want to save for medical expenses but don't have high-deductible health plans, potentially including seniors on Medicare and Medicaid beneficiaries. It would also help those using alternative health coverage arrangements. Anyone saving for future health care costs could take advantage of the higher contribution limits if the bill passes. **Current status:** The bill was introduced by Senator Ted Cruz (R-TX) in the 119th Congress and is currently in committee, meaning it has not yet been debated or voted on by the full Senate.
CRS Official Summary
Personalized Care Act of 2025This 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 undera group or individual health plan;health insurance (including a short-term limited duration and medical indemnity plan); ora 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.
Latest Action
Read twice and referred to the Committee on Finance.