This bill renames health savings accounts (HSAs) as health freedom accounts (HFAs), modifies the eligibility requirements and contribution limits for such accounts, and expands the definition of qualified medical expenses. The bill also eliminates the exclusion from income of employer contributions to a health plan for certain individuals.

Under current law, individuals may establish and contribute to an HSA if covered under an HSA-eligible high-deductible health plan (HDHP). For 2025, HSA contributions are limited to $4,300 for self-only coverage or $8,550 for family coverage (adjusted annually). Individuals 55 or older may make an additional HSA contribution of up to $1,000 per year. Further, HSA distributions are tax-free if used to pay for qualified medical expenses.

The bill allows individuals to

• establish and contribute to an HFA without being enrolled in an HDHP,
• contribute up to $12,000 ($24,000 for joint filers) per year to an HFA (adjusted annually), and
• contribute an additional $5,000 per year to an HFA if 55 or older.

The bill also expands the definition of qualified medical expenses to include expenses related to direct primary care, health care sharing ministries, and medical cost sharing organizations.

For individuals hired at least five years after the bill's enactment (1) employer contributions to an HFA may be excluded from the employee's income, and (2) the bill eliminates the exclusion from income of employer contributions to other health plans. (Under current law, employer contributions to a health plan generally are not included in the individual’s income.)