HSA Modernization Act

Key Points

• This bill, introduced by Congresswoman Van Duyne, would allow more people to use Health Savings Accounts (HSAs), which are tax-free accounts for medical costs. It opens these accounts to seniors on Medicare Part A, veterans using VA benefits, and people using Indian Health Service programs who were previously blocked from contributing.
• The plan would significantly raise the amount of money people can put into their HSAs each year. Instead of the current limits, people could contribute up to the full amount of their insurance plan's out-of-pocket maximum. This change helps families save more tax-free money to cover their highest possible medical costs.
• It makes it easier to use HSA money for more types of care. It clarifies that funds can be used for long-term care services and allows insurance plans to cover up to $500 in mental health visits before a person hits their deductible. It also allows 'Bronze' and 'Catastrophic' insurance plans to qualify for HSAs for the first time.
• The bill provides a 60-day grace period for new accounts. If you start a new health plan, you would have 60 days to set up your HSA and still use it to pay for medical bills you received during those first two months. This prevents people from being penalized if they don't open the account on their very first day of coverage.
• For married couples where both spouses are 55 or older, the bill allows them to put both of their 'catch-up' contributions into the same account. This simplifies savings for older Americans by letting them manage their extra retirement health savings in one place rather than two separate accounts.
• Most of these changes would take effect on January 1, 2026. By expanding who can use these accounts and how much they can save, the policy aims to give Americans more control over their healthcare spending and reduce their overall tax burden.