January 28, 2025
Mr. Cruz (for himself and Mr. Marshall) introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to expand and improve health savings accounts, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Section 1. Short title
This Act may be cited as the Personalized Care Act of 2025
.
Sec. 2. Health savings account eligibility
(a) In general
Paragraph (1) of section 223(c) of the Internal Revenue Code of 1986 is amended to read as follows:
(1) Eligible individual
The term eligible individual means, with respect to any month, any individual if such individual is—
(A)
covered under—
(i)
a group or individual health plan,
(ii)
health insurance coverage, including a short term limited duration plan or medical indemnity plan, or
(iii)
a government plan, including coverage under the Medicare program under part A or part B of title XVIII of the Social Security Act, the Medicaid program under title XIX of such Act, the CHIP program under title XXI of such Act or a qualified CHIP look-alike program (as defined in section 2107(g) of such Act), medical coverage under chapter 55 of title 10, United States Code (including coverage under the TRICARE program), a health care program under chapter 17 or 18 of title 38, United States Code, as determined by the Secretary of Veterans Affairs in coordination with the Secretary of Health and Human Services and the Secretary, a medical care program of the Indian Health Service or a tribal organization, or coverage under chapter 89 of title 5, United States Code, or
(B)
a participant in a health care sharing ministry (as defined in section 5000A(d)(2)(B)(ii) without regard to subclause (IV) thereof),
as of the 1st day of such month.
(b) Conforming amendments
(1)
Subsection (c) of section 223 of the Internal Revenue Code of 1986 is amended by striking paragraphs (2) and (3) and by redesignating paragraphs (4) and (5) as paragraphs (2) and (3), respectively.
(2)
Paragraphs (2)(A) and (2)(B) of section 223(b) of such Code are each amended by striking a high deductible health plan
and inserting a health plan, insurance, or ministry described in subsection (c)(1)
.
(3)
Paragraph (8)(A)(ii) of section 223(b) of such Code is amended by striking high deductible health plan
and inserting health plan, insurance, or ministry described in subsection (c)(1)
.
(4)
Section 223(g)(1) of such Code is amended—
(A)
by striking subsections (b)(2) and (c)(2)(A)
both places it appears and inserting subsection (b)(2)
, and
(B)
by striking for
in subparagraph (B) and all that follows through calendar year 2016
and inserting calendar year 2003
.
.calendar year 1997
for calendar year 2016
in subparagraph (A)(ii) thereof.
(5)
The heading of subparagraph (B) of section 223(b)(8) of such Code is amended by striking high deductible health plan
.
(6)
Section 26(b)(2)(S) of such Code is amended by striking high deductible health plan
.
(7)
The heading of paragraph (3) of section 106(e) of such Code is amended by striking high deductible health plan
.
(8)
Clause (ii) of section 106(e)(5)(B) of such Code is amended by striking a high deductible health plan
and inserting a health plan
.
(9)
Paragraph (9) of section 408(d) of such Code is amended—
(A)
by striking the high deductible health plan covering
in subparagraph (C)(i)(I) and inserting health plan, insurance, or ministry of
,
(B)
by striking a high deductible health plan
the first place it appears in subparagraph (C)(ii)(II) and inserting a health plan, insurance, or ministry described in section 223(c)(1)
,
(C)
by striking a high deductible health plan
the second place it appears in subparagraph (C)(ii)(II) and inserting any such plan, insurance, or ministry
, and
(D)
by striking high deductible health plan
in the heading of subparagraph (D).
(c) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Sec. 3. Increase in HSA contribution limits
(a) In general
Paragraph (2) of section 223(b) of the Internal Revenue Code of 1986 is amended—
(1)
by striking $2,250
in subparagraph (A) and inserting $10,800
, and
(2)
by striking $4,500
in subparagraph (B) and inserting $29,500
.
(b) Cost-of-Living adjustment
Paragraph (1) of section 223(g) of the Internal Revenue Code of 1986, as amended by section 2, is amended—
(1)
by striking Each
and inserting In the case of a taxable year beginning after 2026, each
, and
(2)
by striking calendar year 1997
and inserting calendar year 2025
.
(c) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Sec. 4. Payment of health plan and health insurance premiums from HSA
(a) In general
Paragraph (2) of section 223(d) of the Internal Revenue Code of 1986 is amended—
(1)
by striking subparagraph (B),
(2)
by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively,
(3)
by striking Subparagraph (B) shall not apply to any expense for coverage under
in subparagraph (B), as so redesignated, and inserting Subparagraph (A) shall not apply to any payment for insurance other than
, and
(4)
in subparagraph (B), as so redesignated—
(A)
by striking or
at the end of clause (iii),
(B)
by striking the period at the end of clause (iv) and inserting , or
, and
(C)
by adding at the end the following new clause:
(v)
a health plan or health insurance coverage described in subsection (c)(1)(A).
(b) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Sec. 5. Treatment of medical care service arrangements
(a) Inclusion as medical expenses
Paragraph (2) of section 223(d) of the Internal Revenue Code of 1986, as amended by section 4, is further amended by adding at the end the following new subparagraph:
(D) Inclusion of medical care service arrangements
The term qualified medical expenses shall include—
(i)
periodic fees paid to a physician for a defined set of medical services or for the right to receive medical services on an as-needed basis, and
(ii)
amounts prepaid for medical services designed to screen for, diagnose, cure, mitigate, treat, or prevent disease and promote wellness.
(b) Arrangement not To be treated as health insurance
Subsection (c) of section 223 of the Internal Revenue Code of 1986, as amended by section 2(b), is further amended by adding at the end the following new paragraph:
(4) Treatment of medical care service arrangements
An arrangement under which an individual is provided medical services in exchange for a fixed periodic fee or payment for such services shall not be treated as a health plan, insurance, or arrangement described in paragraph (1).
(c) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Sec. 6. Periodic provider fees treated as medical care
(a) In general
Section 213(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
(12) Periodic provider fees
Periodic fees paid for a defined set of medical services provided on an as-needed basis shall be treated as amounts paid for medical care.
(b) Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2025.
Sec. 7. Restoring lower penalty for nonqualified distributions
(a) In general
Section 223(e)(4)(A) of the Internal Revenue Code of 1986 is amended by striking 20 percent
and inserting 10 percent
.
(b) Effective date
The amendments made by this section shall apply to distributions made in taxable years beginning after December 31, 2025.
Sec. 8. Treatment of health care sharing ministries
(a) Inclusion as medical expenses
Paragraph (2) of section 223(d) of the Internal Revenue Code of 1986, as amended by sections 4 and 5, is further amended by adding at the end the following new subparagraph:
(E) Inclusion of health care sharing ministries
The term qualified medical expenses shall include amounts paid by a member of a health care sharing ministry (as defined in section 5000A(d)(2)(B)(ii) without regard to subclause (IV) thereof) for—
(i)
the sharing of medical expenses among members, and
(ii)
administrative fees of the ministry.
(b) Health care sharing ministry not To Be treated as health insurance
Subsection (c) of section 223 of the Internal Revenue Code of 1986, as amended by sections 2 and 5, is further amended by adding at the end the following new paragraph:
(5) Treatment of health care sharing ministries
A health care sharing ministry (as defined in section 5000A(d)(2)(B)(ii) without regard to subclause (IV) thereof) shall not be treated as a health plan or insurance for purposes of this title.
(c) Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Sec. 9. Health care sharing ministry fees treated as medical care
(a) In general
Section 213(d) of the Internal Revenue Code of 1986, as amended by section 6, is further amended by adding at the end the following new paragraph:
(13) Health care sharing ministries
Amounts paid for membership in a health care sharing ministry (as defined in section 5000A(d)(2)(B)(ii) without regard to subclause (IV) thereof) shall be treated as amounts paid for medical care.
(b) Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2025.