In the race to pass a budget reconciliation bill by President Donald Trump's self-imposed deadline of July 4, 2025, the House and Senate initially proposed varying provisions in the bill about health savings accounts (HSAs). While the House made major changes to the HSA section, the Senate's version of the bill stripped out those changes. Ultimately, Congress adopted only one major change to HSAs, which involves direct primary care arrangements (DPCAs).
The House's first version of the budget reconciliation bill made major changes to HSAs, which benefits experts largely applauded. The proposed bill included drastically increased contribution levels for some employees based on income thresholds, even doubling the current contribution amounts for some people. Further, added provisions generally would have allowed more people access to HSAs, including individuals who are eligible for Medicare A due to their ages, those participating in DPCA, people covered by bronze and catastrophic plans through the marketplace, individuals receiving care at onsite employee medical clinics, and people whose spouses have flexible spending accounts (FSAs). Additionally, a capped amount of certain sports and fitness expenses would have become HSA-eligible. Finally, the House bill proposed additions to the Trump administration's rule to establish individual coverage health reimbursement arrangements (ICHRAs).
Many saw the changes as long overdue and a way to extensively increase HSA participation, which would have been beneficial for both employees and employers.
However, the Senate's initial version of the budget reconciliation bill was much different. The Senate Finance Committee omitted the changes, largely to cut costs. While the full Senate could have added the changes back in, it was highly unlikely due to the brutal cuts by the Senate Finance Committee. As expected, the final budget reconciliation signed by the President contained almost none of the House's original HSA reforms.
Although HSA usage continued to grow by an estimated $64 billion from 2020 to 2024, few significant changes to HSAs have occurred since 2003. Contribution levels typically increase annually by a few points, mostly due to inflation. Still, HSAs can be a financially smart way to save and pay for medical expenses, based on their triple tax advantages: employees make pre-tax contributions to HSAs, the money in HSAs grows tax-free, and withdrawals to pay qualified medical expenses are also tax-free.
The one HSA-related change included in the final budget reconciliation bill allows individuals to participate in DPCAs and remain HSA-eligible. The provision also allows payment of DPCA fees from HSAs as medical expenses. Under a DPCA, which is often known as a "concierge" medicine practice, a participant pays a periodic fee of up to $150 per month for primary care services from primary care providers without payment of any other fees.
The new law restricts DPCAs from providing lab work that is not typically provided in an ambulatory care setting, furnishing prescription drugs other than vaccines, or performing any procedures requiring general anesthesia. If an arrangement provides any of these prohibited services or items, it is no longer considered a DPCA, and the individual cannot contribute to an HSA.
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