# Personalized Care Act of 2025 - Plain Language Summary

## What This Bill Does

The Personalized Care Act of 2025 significantly expands Health Savings Accounts (HSAs), which are tax-advantaged savings accounts designed to help people pay for medical expenses. The bill makes three major changes: it broadens who can open an HSA, dramatically increases how much money people can contribute annually, and allows HSA funds to be used to pay health insurance premiums—something currently restricted or prohibited.

## Key Changes

**Expanded Eligibility:** Currently, HSAs are only available to people with high-deductible health plans. This bill opens HSAs to anyone with virtually any type of health coverage, including short-term plans, government programs (Medicare, Medicaid, TRICARE, VA benefits), and health care sharing ministries. This could allow millions more Americans to access HSAs.

**Higher Contribution Limits:** The bill quadruples individual contribution limits from $2,250 to $10,800 annually and increases family coverage limits from $4,500 to $29,500 annually. These new limits would adjust for inflation in future years.

**Premium Payments Allowed:** HSA funds could now be used to pay health insurance premiums directly, whereas current rules severely restrict this use. This gives account holders more flexibility in how they spend their savings.

## Who Benefits

This bill primarily benefits individuals and families seeking tax-advantaged ways to save for healthcare costs, particularly those who want more control over their health spending. It may appeal to people who prefer consumer-directed health plans and those with non-traditional insurance arrangements. However, critics might argue it could reduce funding for traditional health insurance pools.

Personalized Care Act of 2025

Roy, Chip

Personalized Care Act of 2025This bill expands health saving account (HSA) eligibility, increases HSA contribution limits, and makes other HSA-related changes. The bill also expands the definition of medical care for purposes of the itemized tax deduction for unreimbursed medical expenses.The bill eliminates the requirement that an individual must be covered by a high-deductible health plan to establish and contribute to an&nbsp;HSA. Under the bill, an eligible individual is defined as (1) a health care sharing ministry participant, or (2) individual covered under<ul><li>a group or individual health plan;</li><li>health insurance (including a short-term limited duration and medical indemnity plan); or</li><li>a government plan (including Medicare Part A and B, Medicaid, the Children’s Health Insurance Program, certain military and government employee health benefit programs, and the Indian Health Service and tribal organization programs).</li></ul>The bill increases annual&nbsp;HSA contribution limits to $10,800 (from $4,300 in 2025) for self-only coverage and $29,500 (from $8,550 in 2025) for family coverage, adjusted annually for inflation.The bill expands the qualified medical expenses that may be paid for with&nbsp;HSA distributions to include health insurance payments (e.g., premiums), direct care fees, and certain amounts paid by health care sharing ministry participants.The bill decreases the penalty to 10% (from 20%) for&nbsp;nonqualified HSA distributions.&nbsp;Finally, under the bill, direct care fees and fees paid for membership in a health care sharing ministry qualify as medical care for purposes of the itemized tax deduction for&nbsp;unreimbursed medical expenses.