HB810, the Personalized Care Act of 2025, revises the rules governing health savings accounts by expanding who can participate and how HSAs can be used. It broadens eligibility to include individuals covered by more government health programs and health care sharing ministries, and it raises annual contribution caps substantially.
It also expands the ways HSA funds can be used, permitting premium payments and recognizing new forms of medical service arrangements as eligible medical expenses. The bill additionally adjusts penalties on nonqualified distributions and aligns treatment of health care sharing ministries with medical expenses in the tax code.
If enacted, these changes would significantly widen the scope and use of HSAs and related funding mechanisms for health care.
At a Glance
What It Does
Expands HSA eligibility to include more government plans and health care sharing ministries; raises contribution limits; allows premium payments from HSAs; and broadens eligible medical expenses to include medical service arrangements and periodic provider fees.
Who It Affects
Individuals with HSAs or who could open one, HDHP participants, employers offering HSAs, HSA custodians, health care sharing ministries, and providers administering new medical-service payment models.
Why It Matters
Represents a fundamental shift in how health care is financed through tax-advantaged accounts, potentially increasing savings for medical expenses while introducing new categories for expenses and new players in the funding landscape.
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What This Bill Actually Does
The bill rewrites several core HSAs provisions. It expands who can be considered an eligible individual by adding many government health programs and health care sharing ministries to the list of coverages that qualify a person for an HSA.
It also increases the annual contribution limits, allowing much larger contributions for individuals and families. In addition, the bill broadens the permissible uses of HSA funds by permitting payment of health plan premiums and by creating categories of medical expenses beyond traditional out-of-pocket care, including arrangements that involve periodic provider fees.
The legislation clarifies that some new arrangements—while facilitating access to care—are not to be treated as insurance. It also treats health care sharing ministries as qualified medical expenses, not as health insurance, and modifies penalties for nonqualified distributions to lower the rate.
The net effect is a broader, more flexible framework for using tax-advantaged funds to pay for a wider array of health-related expenses, while raising questions about revenue impact and oversight. These changes apply to taxable years beginning after 2024, creating a shift in how households and employers plan for medical costs.
The Five Things You Need to Know
Contributions: Self-only HSA limits rise to $10,800 and family limits to $29,500.
Expanded eligibility: Government programs and health care sharing ministries become eligible for HSA participation.
Premium payments: HSAs may be used to pay for health plan premiums and related coverage.
Non-traditional expenses: Medical care service arrangements and periodic provider fees count as medical care.
Health care sharing ministries: Treated as medical expenses, not insurance, under the code.
Section-by-Section Breakdown
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Health Savings Account Eligibility Expanded
The bill redefines eligible individuals to include people enrolled in a broader set of government health programs and those participating in health care sharing ministries. It also extends coordination with federal departments to determine eligibility. The practical effect is to widen who can open and fund HSAs, potentially increasing the pool of tax-advantaged savings for medical costs.
Increase in HSA Contribution Limits
Annual contribution limits for HSAs are dramatically increased: self-only coverage can fund up to $10,800, and family coverage up to $29,500. The cost-of-living adjustments referenced in the bill are updated to reflect more recent years. These changes apply to taxable years beginning after 2024 and expand the tax-advantaged funding available for medical expenses.
Premiums from HSA Payments
The bill allows a broader set of premium payments to be made from HSA funds by reorganizing the text to permit premium payments for health plan coverage and other qualifying insurance described in the amended subsection. This expands the use of HSAs beyond out-of-pocket medical costs and into regular insurance-related expenditures.
Medical Care Service Arrangements
It adds defined medical care service arrangements to the list of qualified medical expenses and clarifies that periodic fees for medical services count toward medical care expenses. It also specifies that these arrangements are not to be treated as traditional health insurance, maintaining a distinction between fee-for-service style arrangements and insured plans.
Periodic Provider Fees
The bill explicitly treats periodic provider fees for defined medical services as eligible medical care expenses. This complements the broader medical expense category and creates a recognizable model for ongoing access to care through paid service arrangements rather than conventional insurance products.
Nonqualified Distributions Penalty
The 20 percent penalty for nonqualified distributions is reduced, reflecting a policy choice to broaden permissible uses of HSAs and reduce the disincentive for early or alternative spending of HSA funds.
Health Care Sharing Ministries Recognized
Health care sharing ministries are included as eligible medical expenses and are not treated as health insurance for purposes of the tax code. This harmonizes treatment with other medical expense categories and expands the set of expenditures that HSAs can cover, including membership fees associated with these ministries.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Individuals with HSAs who can contribute more and use funds for a wider set of expenses
- Employers and employees in HDHP plans who may see improved affordability and flexibility in health care funding
- Health care providers who engage in medical care service arrangements and periodic provider-fee models
- Members of health care sharing ministries and their participating households
Who Bears the Cost
- Federal and state treasuries due to higher deduction limits and expanded eligibility affecting revenue
- HSA administrators and custodians who will face expanded compliance and reporting requirements
- Health plans and insurers that may experience shifts in the mix of covered vs. non-covered services
- Health care sharing ministries and related organizations that must align with new tax treatment and reporting rules
Key Issues
The Core Tension
The central tension is between widening access to tax-advantaged health financing (and potentially lowering out-of-pocket costs for many) and preserving the integrity and revenue protection of the tax code, while ensuring new arrangements do not undermine insurance protections or create enforcement gaps.
The bill’s broad reach raises several policy tensions. Expanding eligibility and toy-boxing HSAs with new payment mechanisms could reduce near-term tax revenue while increasing the attractiveness of HSAs as a primary vehicle for paying medical costs.
The inclusion of government programs and health care sharing ministries as eligible for HSA participation may blur the line between traditional insurance products and alternative funding arrangements, creating oversight challenges for the IRS and Treasury. Moreover, the introduction of medical care service arrangements and periodic provider fees as medical expenses—without reclassifying them as health insurance—could invite new administrative complexity and potential for misclassification if not carefully defined.
The effective dates tied to taxable years beginning after 2024 mean banks, employers, and tax filing systems will need to adapt quickly, raising implementation risk for the first full year under the new regime.
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