The "Healthcare Freedom Act of 2025" expands health savings accounts, now called "health freedom accounts," to allow more individuals to contribute and use them for a broader range of healthcare expenses, while also excluding employer contributions to these accounts for employees hired 5 years after the law is enacted.
Chip Roy
Representative
TX-21
The Healthcare Freedom Act of 2025 expands health savings accounts, renaming them "health freedom accounts," and broadens their accessibility and usage. It allows all individuals to deduct contributions, increases contribution limits, and includes direct primary care and healthcare sharing ministries as qualified medical expenses. Additionally, employer contributions to health freedom accounts are excluded from employee gross income for employees hired five years after the law's enactment.
Healthcare Freedom Act of 2025: HSAs Get a Major Makeover, but Future Hires Could Miss Out
The Healthcare Freedom Act of 2025 proposes some big changes to how you can save and spend on healthcare. The bill essentially rebrands Health Savings Accounts (HSAs) as "Health Freedom Accounts" (HFAs) and opens them up to everyone, regardless of their health insurance plan. It also significantly bumps up the amount you can contribute. (SEC. 2)
Remaking HSAs into Health Freedom Accounts
The core of the bill is a revamp of the existing HSA system. Currently, only people with high-deductible health plans can use HSAs. This bill throws that requirement out the window. Anyone can open and contribute to an HFA, and you'll be able to deduct those contributions from your taxes. The bill also expands what you can use HFA money for, adding things like direct primary care services and membership fees for healthcare sharing ministries. (SEC. 2)
Contribution Limits: Going Big
Under current law, there are limits to how much you can stash away in an HSA each year. The Healthcare Freedom Act significantly increases these limits. We're talking $12,000 per year, with an extra $5,000 allowed for folks 55 and older. For those who can max it out, that's a sizeable tax break. They also change the way inflation adjustments are calculated, using 1997 as the new base year. (SEC. 2)
The Five-Year Cliff: A Potential Game-Changer for New Employees
Here's where things get interesting, and potentially tricky. The bill says that any employee hired five years or more after this law is enacted will not be eligible for employer contributions to their HFAs. That's a big deal. It essentially creates two classes of employees: those who get employer help with healthcare costs and those who don't. This could mean a significant shift in how companies structure their benefits packages down the road, and it could leave future employees footing a larger portion of their healthcare bills. (SEC. 3)
Real-World Implications
Let's say you're a small business owner. Under this bill, you could potentially offer HFAs to your current employees, and contribute to their accounts. But, in five years, new hires wouldn't get that benefit. Or, imagine you're a software developer. If you're hired before the five-year cutoff, your employer might contribute to your HFA. But if you switch jobs after that deadline, you could be on your own. For a construction worker with a fluctuating income, the higher contribution limits could be a boon in good years, allowing for greater tax savings. However, the lack of employer contributions down the line could be a significant financial burden. (SEC. 2, SEC. 3)
The Big Picture
The Healthcare Freedom Act aims to give individuals more control over their healthcare spending. The increased contribution limits and expanded use of funds could be attractive to many. However, the five-year exclusion for employer contributions raises serious questions about long-term equity and the potential for a two-tiered system of healthcare benefits. It's a mixed bag, with potential upsides and significant downsides, depending on your individual circumstances and when you happen to be looking for a job.