Health Savings Account Expansion Act

Bill Number

S. 4353

Origin Chamber

Senate

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-04-21: Read twice and referred to the Committee on Finance.

Last Updated

2026-05-14T18:43:05Z

AI-Generated Summary

Health Savings Account Expansion Act (S. 4353)

Purpose

To broaden access to Health Savings Accounts (HSAs)—tax-advantaged accounts for saving and paying for medical expenses—by expanding who qualifies, what plans pair with them, and allowable uses of funds. This includes integrating government health programs and health care sharing ministries (HCSMs, faith-based cost-sharing groups).

Key Provisions

• Expanded HSA Eligibility (Sec. 2): Allows HSA eligibility for individuals covered by government plans (Medicare Parts A/B/C, Medicaid, CHIP, or federal employee health benefits) or participating in an HCSM, even without a high-deductible health plan (HDHP).
• Relaxed HDHP Requirements (Sec. 3): Redefines HDHPs to focus only on having a minimum annual deductible (removes prior limits on pre-deductible benefits except preventive care), making more health plans qualify as HDHPs.
• HSA Payments for Premiums and New Expenses (Sec. 4): Permits HSA funds for premiums of government plans or HCSMs; adds "medical care service arrangements" (e.g., direct primary care fees or prepaid wellness services) as qualified medical expenses.
• HCSM Treatment (Sec. 5): Explicitly states HCSMs are not "health plans" or "insurance" under HSA rules, preserving eligibility.
• HCSM Expenses as Deductible Medical Care (Sec. 6): Treats HCSM membership fees, shared medical costs, and admin fees as medical expenses eligible for itemized tax deductions (under IRC Section 213).
• Limits on Over-the-Counter (OTC) Drugs (Sec. 7): Restricts HSA and Archer MSA (similar accounts) reimbursements for medicines/drugs to prescribed items (even if OTC) or insulin only.
• Effective Date: All changes apply to tax years beginning after December 31, 2026.

Significant Changes to Existing Law

• Removes barriers for ~150 million on government programs (e.g., Medicare, Medicaid) to open HSAs.
• Simplifies HDHP definition, potentially qualifying plans with more pre-deductible coverage.
• Integrates HCSMs into tax-favored health savings, previously ineligible as "coverage."
• Reverses prior expansions allowing all OTC drugs without prescriptions in HSAs/Archer MSAs.
• All amendments target Internal Revenue Code Sections 223 (HSAs), 220 (Archer MSAs), and 213 (medical deductions).

Potential Impacts

• Citizens: Increases tax-free health savings options for millions, encouraging personal responsibility for costs; may lower taxable income but reduce IRS revenue (estimated billions long-term).
• Government Agencies: IRS administers changes; could indirectly cut federal health spending if more use tax-advantaged private options alongside public programs.
• No direct international relations impact.

Main Stakeholders Affected

• Individuals/Families: Those on Medicare, Medicaid, CHIP, federal employee plans, or HCSMs (tens of millions); HSA/Archer MSA users.
• Health Providers: Direct primary care doctors and HCSM operators benefit from tax-qualified payments.
• Insurers/Employers: More plans qualify as HDHPs, expanding HSA-compatible offerings.
• U.S. Treasury/IRS: Manages expanded tax benefits and deductions.

Notable Legal, Constitutional, or Political Implications

• Legal: Clarifies ambiguities around HCSMs and government coverage in tax code; no challenges to IRS authority anticipated.
• Constitutional: Neutral; promotes tax policy without infringing rights.
• Political: Advances consumer-driven health care; may spark debate on subsidizing faith-based HCSMs or public program users via tax breaks. Introduced by Sen. Marshall (R), referred to Senate Finance Committee.

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

Sponsor

Sen. Marshall, Roger [R-KS]

Recent Actions

• 2026-04-21: Read twice and referred to the Committee on Finance.
• 2026-04-21: Introduced in Senate

Bill Versions

• Health Savings Account Expansion Act — issued 2026-04-21 — PDF (8 pages)