Freedom for Families Act

Bill: 119-hr-74
Sponsor: full_name: Rep. Biggs, Andy [R-AZ-5]
Introduced: 2025-01-03
Policy area: Taxation
Subjects: Bank accounts, deposits, capital

Health care costs and insurance

Income tax deductions

Income tax exclusion
Latest action: action_date: 2025-01-03
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2025-01-03
action_desc: Introduced in House
text: <p><strong>Freedom for Families Act</strong></p><p>This bill allows individuals to establish and contribute to a health savings account (HSA) without being enrolled in a high-deductible health plan (HDHP), increases HSA contribution limits, and allows tax-free distributions from an HSA during a period of qualified caregiving.</p><p>Under current law, individuals may establish and contribute to an HSA if they are covered under an HSA-eligible HDHP. For 2025, HSA contributions are limited to $4,300 for self-only coverage or $8,550 for family coverage (adjusted annually). Individuals who are at least&nbsp;55 years&nbsp;old may make an additional HSA contribution of up to $1,000 per year. Further, under current law, HSA distributions are tax-free if used to pay for qualified medical expenses.&nbsp;</p><p>The bill eliminates the HDHP coverage requirement for purposes of an HSA.</p><p>The bill also increases the HSA annual contribution limit to $9,000 for individuals or $18,000 for joint filers&nbsp;(adjusted annually)&nbsp;and eliminates the additional contribution for individuals&nbsp;who are at least 55 years old.</p><p>Finally, the bill excludes HSA distributions during a period of qualified caregiving from gross income. The bill defines <em>period of qualified caregiving</em> as any period during which an individual is on leave or not employed due to</p><ul><li>the birth or adoption of a child;</li><li>placement of a foster child;</li><li>caring for a family member with a serious health condition;</li><li>an inability to work due to a serious health condition; or</li><li>certain emergencies related to a spouse, child, or parent on covered active duty with the Armed Forces.&nbsp;</li></ul>

tv_txt: I 119th CONGRESS 1st Session H. R. 74 IN THE HOUSE OF REPRESENTATIVES January 3, 2025 Mr. Biggs of Arizona (for himself and Mr. Burlison ) 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 allow for tax-advantaged distributions from health savings accounts during family or medical leave, and for other purposes.

1. Short title This Act may be cited as the Freedom for Families Act . 2. Distributions from health savings accounts during periods of qualified caregiving (a) In general Paragraphs (1) and (2) of section 223(f) of the Internal Revenue Code of 1986 are amended to read as follows: (1) Exclusion of amounts used for qualified medical expenses or distributed during periods of qualified caregiving Any amount paid or distributed out of a health savings account shall not be includible in gross income if it is— (A) used exclusively to pay qualified medical expenses of any account beneficiary, or (B) paid or distributed during a period of qualified caregiving. (2) Inclusion of amounts neither used for qualified medical expenses nor distributed during periods of qualified caregiving Any amount paid or distributed out of a health savings account shall be included in the gross income of the account beneficiary if it is not described in paragraph (1). . (b) Definition of period of qualified caregiving Section 223(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (9) Period of qualified caregiving For purposes of this section, the term period of qualified caregiving means any period during which an individual is on leave or not employed by reason of a situation described in subparagraphs (A) through (E) of section 102(a)(1) of the Family and Medical Leave Act of 1993. . (c) Conforming amendments (1) Section 223(d)(1) of such Code is amended by inserting or the expenses incurred during a period of qualified caregiving of the account beneficiary after paying the qualified medical expenses of the account beneficiary . (2) Section 223(f)(4) of such Code is amended in the heading by striking distributions not used for qualified medical expenses and inserting certain distributions . (d) Effective date The amendments made by this section shall apply with respect to taxable years beginning after the date of the enactment of this Act. 3. No high deductible health plan required for health savings accounts (a) In general Section 223(a) of the Internal Revenue Code of 1986 is amended by striking who is an eligible individual for any month during the taxable year . (b) Conforming amendments (1) Section 223(b) of such Code is amended by striking paragraphs (7) and (8). (2) Section 223 of such Code is amended by striking subsection (c). (c) Increase in contribution limit for health savings accounts (1) In general Section 223(b)(1) of the Internal Revenue Code of 1986 is amended by striking the sum of the monthly and all that follows through eligible individual and inserting $9,000 (twice such amount in the case of a joint return) . (2) Conforming amendments (A) Section 223(b) of such Code is amended by striking paragraphs (2), (3), and (5) and by redesignating paragraphs (4) and (6) as paragraphs (2) and (3), respectively. (B) Section 223(b)(2) of such Code (as redesignated by subparagraph (A)) is amended by striking the last sentence. (C) Section 223(d)(1)(A)(ii) is amended by striking the sum of and all that follows through the period at the end and inserting the dollar amount in effect under subsection (b)(1). . (D) Section 223(g)(1) of such Code is amended— (i) by striking Each dollar amount in subsections (b)(2) and (c)(2)(A) and inserting The dollar amount in subsection (b)(1) ; (ii) by striking thereof and all that follows through calendar year 2003 . and inserting calendar year 1997 . ; and (iii) by striking under subsections (b)(2) and (c)(2)(A) and inserting under subsection (b)(1) . (d) Effective date The amendments made by this section shall apply with respect to months in taxable years beginning after the date of the enactment of this Act.