Catch Up Act

Bill Number

H.R. 2745

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-04-08: Referred to the House Committee on Ways and Means.

Last Updated

2025-05-30T23:52:06Z

AI-Generated Summary

Purpose

The "Catch Up Act" (H.R. 2745) aims to update tax rules for Health Savings Accounts (HSAs), which are tax-advantaged savings accounts used to pay for qualified medical expenses. Specifically, it seeks to enable both spouses in a married couple to make additional "catch-up" contributions—extra savings amounts allowed for individuals aged 55 or older—to the same HSA, promoting greater flexibility in family health savings.

Key Provisions

• Eligibility and Contribution Limits: Applies to married couples where both spouses qualify as "eligible individuals" (meaning they have coverage under a High Deductible Health Plan, or HDHP, which is a health insurance plan with higher deductibles but lower premiums) and at least one has family coverage.
• Division of Limits: The overall annual HSA contribution limit is divided equally between spouses (or as they agree), ignoring other HDHP coverage each may have. If both have separate family HDHPs, only one is counted toward the limit.
• Catch-Up Contributions: If both spouses are age 55 or older by year-end, each can add their full catch-up amount to the shared HSA limit before dividing it. Otherwise, catch-up amounts are not divided and apply only to the individual.
• Effective Date: Changes apply to tax years starting after December 31, 2025.

Significant Changes to Existing Law

Under current Internal Revenue Code (Section 223), only one spouse can make catch-up contributions to an HSA, even if both are eligible and over 55. This bill revises the "special rule for married individuals with family coverage" to include both spouses' catch-up amounts in the divisible contribution limit, allowing double the catch-up savings in a single family HSA. It also clarifies how multiple HDHP coverages are treated to avoid double-counting.

Potential Impacts

• On Citizens: Married couples aged 55+ with HSAs could save up to an additional $1,000 per person annually in tax-free contributions (based on current catch-up limits, subject to inflation adjustments), helping cover future medical costs in retirement without needing separate HSAs.
• On Government Agencies: The Internal Revenue Service (IRS) may see minor administrative changes in processing HSA contributions and tax returns, but no major new oversight is required. No impacts on international relations.
• Broader Effects: Encourages more HSA usage among older couples, potentially reducing reliance on other retirement or healthcare funding sources.

Main Stakeholders Affected

• Married Couples: Primary beneficiaries, especially those over 55 with family HDHP coverage, who gain more tax-advantaged savings options.
• HSA Providers and Financial Institutions: Banks and investment firms managing HSAs may handle increased contributions and need to update systems for dual catch-up tracking.
• Taxpayers Generally: Indirectly benefits those planning for healthcare in retirement, though only HSA-eligible individuals are directly affected.

Notable Legal, Constitutional, or Political Implications

• Legal: Simplifies HSA rules under the tax code without altering core HSA eligibility or HDHP requirements, reducing potential disputes over spousal contributions. No challenges to tax equity are introduced.
• Constitutional: Neutral; involves standard congressional authority over tax policy under Article I, with no free speech, privacy, or equal protection issues.
• Political: Supports pro-savings and family-oriented tax policies, potentially appealing to bipartisan interests in retirement security. As an introduced bill referred to the House Ways and Means Committee, its passage could influence future healthcare tax incentives, but it remains non-controversial and narrowly focused.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Steube, W. Gregory [R-FL-17]

Cosponsors (1)

Rep. Hill, J. French [R-AR-2]

Recent Actions

• 2025-04-08: Referred to the House Committee on Ways and Means.
• 2025-04-08: Introduced in House
• 2025-04-08: Introduced in House

Bill Versions

• Catch Up Act — issued 2025-04-08 — PDF (3 pages)