New health savings account creates tax break—but only for the insured and employed
H.R. 955 — HOPE Act of 2025 · Filed by Blake Moore (R-UT) · 18 cosponsors · Introduced Feb 4, 2025 · Referred to committee
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What it does
This bill creates a new tax-advantaged savings account called a HOPE Account (Health Out-of-Pocket Expense Account) that allows individuals to set aside pre-tax money to pay for qualified medical expenses. Eligible individuals can contribute up to $4,000 per year (or $8,000 for family coverage), and withdrawals used for medical expenses are tax-free; withdrawals for other purposes are taxed as income plus a 30% penalty. The accounts are restricted to people with minimum essential health coverage and cannot be held alongside health savings accounts or flexible spending arrangements.
Why we flagged it
The bill's core mechanism is the creation of a new tax-deferred savings vehicle for medical expenses, modeled on existing HSAs and FSAs but with distinct eligibility and contribution rules. It is a straightforward tax policy instrument, not a deregulation, subsidy, or rider.
What the text implies
- The income exclusion for employer contributions (capped at $100,000 AGI) creates a cliff effect where higher-income workers lose the tax benefit entirely, potentially incentivizing income-shifting strategies or employer benefit design workarounds.
- The prohibition on holding HOPE Accounts alongside HSAs or FSAs may force workers to choose between account types, potentially disadvantaging those whose employers offer FSAs but not HOPE Accounts, fragmenting the health savings landscape.
The full analysis lists 4 implications of this text.
Who stands to gain
banks and insurance companies serving as trustees; financial services firms managing HOPE Account investments; employers offering HOPE Accounts as employee benefits