Congress quietly converts medical savings accounts into tax shelters for the wealthy

What it does

This bill amends tax law to allow people to withdraw money from Health Savings Accounts (HSAs) tax-free during family or medical leave, not just for medical expenses. It also eliminates the requirement that HSA holders be enrolled in a high-deductible health plan, raises the annual contribution limit to $9,000 ($18,000 for joint filers), and removes age and other eligibility restrictions—effectively converting HSAs from medical-expense savings accounts into general-purpose retirement or savings vehicles for anyone.

Why we flagged it

The bill's stated purpose is to help families on leave access HSA funds, but the operative mechanism is a wholesale restructuring of HSA eligibility and contribution rules that transforms the account from a medical-expense vehicle into a general tax-sheltered savings tool. The caregiving provision is the public-facing rationale; the structural changes are the substantive policy.

What the text implies

• Removing the high-deductible health plan requirement decouples HSAs from cost-sharing insurance, allowing HSA holders to carry traditional comprehensive insurance while accumulating tax-free savings—effectively creating a parallel tax-advantaged account for non-medical purposes.
• Raising the contribution limit to $9,000 annually ($18,000 joint) and removing age restrictions creates a new tax shelter for higher-income households; combined with the removal of medical-expense restrictions, this functions as a backdoor retirement account with no income phase-out.
• The caregiving provision may incentivize workers to take unpaid leave (since HSA withdrawals are now tax-free during leave) but does not address income replacement—workers still lose wages, and the tax benefit only applies to pre-existing HSA balances.
• Eliminating the high-deductible plan requirement may reduce enrollment in cost-sharing plans, potentially destabilizing the risk pool and raising premiums for those who remain in traditional HSAs tied to high-deductible plans.
• The bill does not specify whether HSA funds withdrawn during leave must be replenished or whether the account can be drawn down to zero, creating potential for HSAs to function as emergency savings rather than medical reserves.

Who it affects

The bill creates a genuine public benefit for workers on family or medical leave by allowing tax-free HSA access during income loss, addressing a real hardship. However, the broader provisions—eliminating the high-deductible plan requirement, removing age caps, and raising contribution limits—convert HSAs into tax-advantaged savings accounts available to higher-income households regardless of health status, shifting the tax benefit away from medical cost-sharing toward general wealth accumulatio

Who stands to gain

• higher-income households (primary beneficiaries of expanded tax-advantaged savings)
• HSA custodians and financial institutions (increased account balances and fee-generating assets)
• health insurance carriers offering comprehensive plans (potential new market for HSA holders no long

Named in the bill

Internal Revenue Code of 1986, Health Savings Accounts (HSAs), Family and Medical Leave Act of 1993, high-deductible health plans, U.S. House Committee on Ways and Means, Rep. Andy Biggs (Arizona), Rep. Eric Burlison (Missouri)

Where it stands

1 cosponsor: 1 Republicans.

• Jan 3, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jan 3, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.