Congress expands tax breaks for adult children paying parents' medical bills
S. 1565 — Lowering Costs for Caregivers Act of 2025 · Filed by Jacky Rosen (D-NV) · 4 cosponsors · Introduced May 1, 2025 · Referred to committee
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What it does
This bill allows parents' medical expenses to qualify for tax-advantaged savings accounts (Health Savings Accounts, Flexible Spending Arrangements, Health Reimbursement Arrangements, and Archer MSAs) starting in 2026. Currently, these accounts cover only the account holder, their spouse, and their dependents; this bill expands them to include the account holder's parents or their spouse's parents, letting families use pre-tax dollars to pay for parental healthcare costs.
Why we flagged it
The bill's sole operative mechanism is to expand the definition of eligible beneficiaries in three tax-advantaged savings account regimes to include parents, thereby allowing pre-tax treatment of parental medical expenses. This is a straightforward tax relief measure targeting a specific caregiving cost.
What the text implies
- Expands the tax-advantaged savings pool available to middle- and upper-income households with aging parents; lower-income households may benefit less if they lack sufficient income to fund these accounts or do not itemize.
- May increase administrative burden on employers and plan administrators to track and validate parental relationships and medical expenses under existing FSA/HRA/HSA compliance frameworks.
The full analysis lists 3 implications of this text.
Who stands to gain
Taxpayers with aging parents and sufficient income to contribute to HSAs, FSAs, or HRAs; Health insurance carriers and plan administrators (marginal increase in account administration)