Section 1 Short title
This Act may be cited as the “HSAs For Heroes Act”.
HSAs For Heroes Act
A BILL
To direct the Secretary of Transportation to carry out a grant program to improve highway safety.
Sec. 2 Contribution eligibility
Amend § 223(c)(1)(C) of the Internal Revenue Code of 1986 by striking “for a service-connected disability (within the meaning of section 101(16) of title 38, United States Code)” so that individuals eligible for veterans benefits (even without a service-connected disability) may contribute to a Health Savings Account (HSA). Effective for taxable years beginning after December 31, 2025.
Amend Section 223(c)(1). For purposes of this section, an “eligible individual” any individual who has served in the active military, naval, air, or space service (as defined in section 101(24) of title 38, United States Code) and who was discharged or released therefrom under conditions other than dishonorable.
Amend Section 223(c)(1)(C) of the Internal Revenue Code of 1986 is amended by striking for a service-connected disability (within the meaning of section 101(16) of title 38, United States Code).
Coordination with veterans’ benefits. Nothing in this Act shall be construed to reduce or limit the eligibility of an eligible veteran for veterans benefits under title 38, United States Code, or to cause duplication of benefits. If a device or treatment is already fully covered by the veteran’s benefit program, HSA funds may still be used for cost-sharing or for supplementary items not covered.
Effective date. The amendments made by this section shall apply to distributions from HSAs for taxable years beginning after December 31, 2025.
Sec. 3 Distributions from health savings accounts during periods of qualified caregiving
In general— Paragraphs (1) and (2) of section 223(f) of the Internal Revenue Code of 1986 are amended to read as follows:
“(1) Exclusion of amounts used for qualified medical expenses or distributed during periods of qualified caregiving—Any amount paid or distributed out of a health savings account shall not be includible in gross income if it is—
“(A) used exclusively to pay qualified medical expenses of any account beneficiary, or
“(B) paid or distributed during a period of qualified caregiving.
“(2) Inclusion of amounts neither used for qualified medical expenses nor distributed during periods of qualified caregiving—Any amount paid or distributed out of a health savings account shall be included in the gross income of the account beneficiary if it is not described in paragraph (1).”
Definition of period of qualified caregiving— Section 223(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(9) Period of qualified caregiving—For purposes of this section, the term period of qualified caregiving means any period during which an individual is on leave or not employed by reason of a situation described in subparagraphs (A) through (E) of section 102(a)(1) of the Family and Medical Leave Act of 1993.”
Conforming amendments—
Section 223(d)(1) of such Code is amended by inserting “or the expenses incurred during a period of qualified caregiving of the account beneficiary” after “paying the qualified medical expenses of the account beneficiary”.
Section 223(f)(4) of such Code is amended in the heading by striking “Distributions not used for qualified medical expenses” and inserting “Certain distributions”.
Effective date— The amendments made by this section shall apply with respect to taxable years beginning after the date of the enactment of this Act.
Sec. 4 No high deductible health plan required for health savings accounts
In general— Section 223(a) of the Internal Revenue Code of 1986 is amended by striking “who is an eligible individual for any month during the taxable year”.
Conforming amendments—
Section 223(b) of such Code is amended by striking paragraphs (7) and (8).
Section 223 of such Code is amended by striking subsection (c).
Increase in contribution limit for health savings accounts—
In general— Section 223(b)(1) of the Internal Revenue Code of 1986 is amended by striking “the sum of the monthly” and all that follows through “eligible individual” and inserting “$9,000 (twice such amount in the case of a joint return)”.
Conforming amendments—
Section 223(b) of such Code is amended by striking paragraphs (2), (3), and (5) and by redesignating paragraphs (4) and (6) as paragraphs (2) and (3), respectively.
Section 223(b)(2) of such Code (as redesignated by subparagraph (A)) is amended by striking the last sentence.
Section 223(d)(1)(A)(ii) is amended by striking “the sum of” and all that follows through the period at the end and inserting “the dollar amount in effect under subsection (b)(1).”.
Section 223(g)(1) of such Code is amended—
by striking “Each dollar amount in subsections (b)(2) and (c)(2)(A)” and inserting “The dollar amount in subsection (b)(1)”;
by striking “thereof” and all that follows through “ “calendar year 2003”.” and inserting “ “calendar year 1997”.”; and
by striking “under subsections (b)(2) and (c)(2)(A)” and inserting “under subsection (b)(1)”.
Effective date— The amendments made by this section shall apply with respect to months in taxable years beginning after the date of the enactment of this Act.
Sec. 5 Regulatory authority and reporting
The Secretary of the Treasury, in consultation with the Secretary of Veterans Affairs, shall issue such regulations and guidance as necessary to carry out the amendments made by this Act, including rules to prevent abuse, duplication of benefits, ensure documentation of prescription/medical recommendation, and reporting to Congress on the use of HSAs by eligible veterans.
The Secretary of the Treasury shall include in the annual report to Congress (for each taxable year) a summary of:
the number of eligible veterans making HSA contributions under section 1;
the aggregate amount of HSA contributions and distributions made by eligible veterans under these amendments;
types of devices or treatments for which distributions were made under section 2; and
any issues encountered (fraud, duplication, program overlap) and recommendations for improvement.
Sec. 6 Budgetary effects and revenue offset
Requires Treasury to estimate the revenue effects of these amendments and provide such estimates to CBO within six months of enactment.