HSA Eligibility Decoupled from High-Deductible Plans, Contribution Limit Set to $9,000, and Veterans Get Expanded Access

If you’ve ever felt like your ability to save for future medical costs was tied up in bureaucratic red tape—specifically, the requirement to have a High Deductible Health Plan (HDHP)—then the HSAs For Heroes Act is about to turn that system on its head. This bill makes sweeping changes to Health Savings Accounts (HSAs), primarily by blowing up the HDHP requirement and opening the door to millions more people, including a specific focus on veterans.

The $9,000 Game Changer: No HDHP, No Problem

The biggest headline here, found in Section 4, is the removal of the requirement that you must be covered by an HDHP to contribute to an HSA. For years, the HSA was shackled to the HDHP, meaning if you preferred a traditional health plan with lower deductibles and copays, you couldn't access the triple tax advantage of an HSA (contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free).

This bill changes that completely. If this passes, anyone can open and contribute to an HSA, regardless of their health insurance plan. Think about that: you could have a low-deductible PPO through work and still stash away tax-free cash for future healthcare needs. The bill also sets the maximum annual contribution limit to a fixed $9,000. That’s a significant jump and a clear signal that lawmakers want people saving more for healthcare. The downside? This fixed amount isn't tied to inflation or cost of living, which means that $9,000 ceiling could feel a lot lower a decade from now.

Opening the Door for Veterans

Section 2 specifically addresses veterans. Currently, veterans who receive benefits are often blocked from contributing to an HSA unless their benefits are limited or they have a service-connected disability. This bill expands eligibility to any person who served in the active military and was discharged honorably, regardless of their service-connected disability status. This is a huge win for financial flexibility. For example, if a veteran uses VA benefits for most care but needs specialized dental work or a specific device the VA doesn't fully cover, they can now use their HSA funds for those expenses without worrying about losing their VA eligibility.

Crucially, the bill clarifies that contributing to an HSA does not reduce or limit existing veterans benefits, nor does it cause a duplication of benefits. This ensures veterans can use HSA funds for cost-sharing or supplementary items not covered by their primary VA program. This change applies to distributions made for taxable years beginning after December 31, 2025.

The Caregiver Clause: Tax-Free FMLA Support

Section 3 provides a much-needed break for those juggling work, family, and medical crises. It allows for tax-free distributions from an HSA during a “period of qualified caregiving.” This period is defined by existing Family and Medical Leave Act (FMLA) provisions, covering things like caring for a spouse, child, or parent with a serious health condition.

What this means in practice: If you have to take unpaid leave to care for a sick parent under FMLA, you can now pull money from your HSA to cover living expenses during that time without having to pay income tax on the distribution. This is a massive relief valve for people who often face a double whammy—lost income and increased expenses—while providing critical family care. The Treasury Department will need to issue clear rules to prevent abuse, but the intent is clear: supporting caregivers financially during tough times.

What’s the Catch? The Fiscal Unknown

While the expansion of HSAs sounds great for individual savers, we have to look at the bigger picture. The original purpose of linking HSAs to HDHPs was to encourage people to shop around for healthcare and be more cost-conscious. Removing the HDHP requirement (Section 4) fundamentally changes the nature of the HSA from a healthcare cost-control tool to a general-purpose, tax-advantaged savings vehicle.

This broad expansion, coupled with the new $9,000 contribution limit, is likely to be expensive for the federal government. HSAs are essentially a tax subsidy, and when you open that subsidy up to millions more people, the amount of lost tax revenue (the “budgetary effect”) could be substantial. The bill acknowledges this by requiring the Treasury to report on the revenue effects, but for taxpayers, this means a significant shift in how healthcare savings are subsidized, potentially adding pressure on federal budgets down the line. It's a trade-off: greater individual saving flexibility versus the cost to the federal purse.