Lowering Costs for Caregivers Act of 2025
- Bill Number
- H.R. 138
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-01-03: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-07-10T08:06:15Z
AI-Generated Summary
Purpose
The "Lowering Costs for Caregivers Act of 2025" (H.R. 138) aims to reduce financial burdens on family caregivers by expanding the definition of qualified medical expenses under the U.S. tax code. It allows taxpayers to use certain tax-advantaged health accounts to cover medical costs for their parents, making caregiving more affordable through tax savings.
Key Provisions
- Health Savings Accounts (HSAs): Amends the Internal Revenue Code (IRC) Section 223 to include medical expenses for a taxpayer's parent (or their spouse's parent) as eligible distributions from HSAs. HSAs are tax-free savings accounts for medical expenses paired with high-deductible health plans.
- Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs): Adds to IRC Section 105 to permit use of pre-tax funds from employer-sponsored FSAs (use-it-or-lose-it accounts for medical costs) or HRAs (employer-funded reimbursement plans) for parents' medical care without triggering income taxes.
- Archer Medical Savings Accounts (MSAs): Updates IRC Section 220 to treat medical expenses for parents as qualified for these older, less common tax-advantaged accounts (similar to HSAs but phased out for new enrollments).
- Effective Dates: Changes apply to payments or expenses after December 31, 2024, ensuring prospective implementation.
Significant Changes to Existing Law
- Previously, tax-advantaged accounts like HSAs, FSAs, HRAs, and Archer MSAs only covered medical expenses for the account holder, their spouse, and dependents (typically children or other qualifying relatives). This bill broadens eligibility to include parents of the account holder or spouse, without requiring them to be claimed as dependents on tax returns.
- It excludes a specific IRC provision (Section 213(d)(1)(D)) that limits certain long-term care services, potentially allowing more types of parental care expenses to qualify.
- No changes to overall tax deduction rules for medical expenses (under IRC Section 213); this targets only pre-tax account distributions.
Potential Impacts
- On Citizens: Lowers out-of-pocket costs for middle-aged taxpayers caring for aging parents, potentially saving thousands in taxes annually on expenses like doctor visits, prescriptions, or home health care. This could encourage more family-based caregiving and reduce reliance on public programs like Medicaid.
- On Government Agencies: The IRS will need to update guidance, forms, and enforcement for these accounts, with minimal administrative burden but possible short-term revenue loss from increased tax-free distributions (estimated impacts not specified in the bill).
- On International Relations: None directly affected, as this is a domestic tax policy change.
Main Stakeholders Affected
- Taxpayers and Caregivers: Primarily adult children or spouses supporting elderly parents, including middle-income families facing rising healthcare costs.
- Employers: Sponsors of FSAs and HRAs may see higher utilization but no direct cost increase, as funds are employee-contributed or reimbursed.
- Healthcare Providers and Insurers: Indirect benefits from increased access to care funding, potentially boosting service demand.
- U.S. Treasury and IRS: Handles implementation and any resulting federal tax revenue adjustments.
Notable Legal, Constitutional, or Political Implications
- Legal: Aligns with existing tax code frameworks for family support but expands "qualified medical expenses" (defined in IRC Section 213(d) as costs for diagnosis, cure, or treatment of disease). No conflicts with constitutional limits on federal taxing power.
- Constitutional: Supports Congress's authority under Article I to regulate taxes and spending, promoting welfare without raising equal protection concerns.
- Political: Reflects bipartisan interest in aging population issues (introduced by Reps. Buchanan (R) and Thompson (D)), potentially influencing broader caregiver tax relief debates. Could face scrutiny over federal revenue impacts in deficit-conscious budgets, but encourages private caregiving over public entitlements.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (26)
Rep. Thompson, Mike [D-CA-4], Rep. Lawler, Michael [R-NY-17], Rep. Van Drew, Jefferson [R-NJ-2], Rep. De La Cruz, Monica [R-TX-15], Rep. Moran, Nathaniel [R-TX-1], Rep. Amodei, Mark E. [R-NV-2], Rep. Kim, Young [R-CA-40], Rep. Magaziner, Seth [D-RI-2], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Bresnahan, Robert P. [R-PA-8], Rep. Nunn, Zachary [R-IA-3], Rep. Gooden, Lance [R-TX-5], Rep. Neguse, Joe [D-CO-2], Rep. Tonko, Paul [D-NY-20], Rep. Bacon, Don [R-NE-2], Rep. Wittman, Robert J. [R-VA-1], Rep. Tenney, Claudia [R-NY-24], Rep. Thompson, Glenn [R-PA-15], Rep. Pfluger, August [R-TX-11], Rep. Riley, Josh [D-NY-19], Rep. Kiggans, Jennifer A. [R-VA-2], Rescom. Hernández, Pablo Jose [D-PR-At Large], Rep. Goodlander, Maggie [D-NH-2], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Hoyle, Val T. [D-OR-4], Rep. Calvert, Ken [R-CA-41]
Recent Actions
- 2025-01-03: Referred to the House Committee on Ways and Means.
- 2025-01-03: Introduced in House
- 2025-01-03: Introduced in House
Bill Versions
- Lowering Costs for Caregivers Act of 2025 — issued 2025-01-03 — PDF (3 pages)