The Personalized Care Act of 2025 makes significant changes to Health Savings Accounts (HSAs), which are special savings accounts that let people set aside pre-tax money to pay for medical expenses. Currently, HSAs are only available to people with high-deductible health plans, but this bill dramatically expands who can use them.

Under this new law, HSAs would become available to almost anyone with any type of health insurance—including people on Medicare, Medicaid, CHIP, TRICARE (military coverage), VA benefits, and even people in health care sharing ministries (religious or community groups that pool medical costs). The bill also roughly quadruples the amount people can contribute to HSAs each year: from $2,250 to $10,800 for individuals and from $4,500 to $29,500 for families.

The bill also expands what counts as a qualified medical expense that can be paid from an HSA. New eligible expenses include monthly fees paid directly to doctors for ongoing care (sometimes called "concierge medicine") and membership fees in health care sharing ministries. Additionally, if someone withdraws money from their HSA for non-medical reasons, the tax penalty drops from 20% to 10%.

These changes take effect for tax years starting after December 31, 2025, meaning they'll first apply to the 2026 tax year. The overall effect is to make HSAs available to far more Americans and allow them to save much larger amounts of money in these tax-advantaged accounts for health care costs.

Personalized Care Act of 2025

Cruz, Ted

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.