Native American Health Savings Improvement Act

Bill Number

H.R. 444

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-01-15: Referred to the House Committee on Ways and Means.

Last Updated

2025-02-18T12:48:09Z

AI-Generated Summary

Purpose

The Native American Health Savings Improvement Act (H.R. 444) aims to expand access to Health Savings Accounts (HSAs) for individuals eligible for assistance from the Indian Health Service (IHS). HSAs are tax-advantaged savings accounts that allow people to set aside money for qualified medical expenses. Currently, eligibility for HSAs is restricted if someone is covered by certain government health plans, and this bill changes that rule specifically for IHS programs.

Key Provisions

• Amendment to the Internal Revenue Code (IRC): Adds a new subparagraph (E) to Section 223(c)(1) of the IRC, creating a special rule.
• Special Rule Details: Individuals receiving hospital care or medical services through IHS programs or tribal organizations will not be considered "covered under a health plan" that disqualifies them from HSA eligibility. This applies only for the purpose of determining HSA qualification under existing IRC rules.
• Effective Date: The change applies to taxable years beginning after December 31, 2024, meaning it takes effect for the 2025 tax year onward.

Significant Changes to Existing Law

• Under current IRC Section 223, individuals enrolled in government-provided health coverage (like Medicare) cannot contribute to an HSA, as it is treated as disqualifying coverage.
• This bill introduces an exception for IHS and tribal health programs, treating them as non-disqualifying. This is the first such carve-out specifically for Native American health services, promoting parity with other high-deductible health plans that qualify for HSAs.

Potential Impacts

• On Citizens: Native American individuals eligible for IHS assistance (estimated at over 2.5 million people) can now open or contribute to HSAs, potentially saving pre-tax dollars for out-of-pocket medical costs not covered by IHS. This could improve financial flexibility and long-term health planning for underserved communities.
• On Government Agencies: The Internal Revenue Service (IRS) will need to update tax forms, guidance, and enforcement to implement the rule, with minimal additional administrative burden. The IHS and tribal health organizations may see indirect benefits through reduced financial strain on patients but no direct operational changes.
• On International Relations: No impacts, as the bill focuses on domestic U.S. tax and health policy for Native American populations.

Main Stakeholders Affected

• Primary Beneficiaries: Native American individuals and families eligible for IHS or tribal health services, who gain new options for tax-advantaged health savings.
• Organizations Involved: Tribal governments and organizations providing health services, which may encourage greater use of HSAs among members.
• Government Entities: IRS (for tax administration) and Department of Health and Human Services (including IHS) for coordination on eligibility.
• Broader Groups: Financial institutions offering HSAs, which could see increased accounts from this population.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: The amendment aligns HSA rules with federal treaty obligations and laws like the Indian Health Care Improvement Act, ensuring IHS benefits do not inadvertently block tax benefits. It requires no new regulations but may prompt IRS clarification through notices or rulings.
• Constitutional Implications: Supports equal protection under the law by addressing disparities in health financing for Native Americans, a sovereign-recognized group, without raising Fifth Amendment concerns.
• Political Implications: Bipartisan sponsorship (by Reps. Moolenaar and Ruiz) highlights cross-aisle support for Native American equity. If enacted, it could set a precedent for similar exemptions in other federal health programs, influencing future tax policy debates on inclusivity.

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

Sponsor

Rep. Moolenaar, John R. [R-MI-2]

Cosponsors (3)

Rep. Ruiz, Raul [D-CA-25], Rep. McDonald Rivet, Kristen [D-MI-8], Rep. Smith, Adrian [R-NE-3]

Recent Actions

• 2025-01-15: Referred to the House Committee on Ways and Means.
• 2025-01-15: Introduced in House
• 2025-01-15: Introduced in House

Bill Versions

• Native American Health Savings Improvement Act — issued 2025-01-15 — PDF (2 pages)