Tax-Free Health Accounts Can't Cover Most Abortions After 2025: New Bill Restricts HSA, FSA, and More

The "Protecting Life in Health Savings Accounts Act" changes how people can use tax-advantaged health accounts like HSAs, FSAs, and others. Starting in 2026, these accounts generally cannot be used to pay for abortion services. This marks a significant shift, directly impacting how individuals budget and pay for reproductive healthcare.

No More Tax Breaks for Most Abortions

This bill amends the Internal Revenue Code, essentially saying that money pulled from HSAs, Archer MSAs, health flexible spending arrangements, health reimbursement arrangements, or retiree health accounts for abortions won't be considered a "qualified medical expense." This means you'll lose the tax benefits of those accounts if used for most abortion procedures. Think of it like this: normally, using your HSA for a doctor's visit is tax-free. After 2025, using it for most abortions means you'll owe taxes on that money.

The Exceptions: Rape, Incest, Life Endangerment

The bill does allow exceptions. If the pregnancy results from rape or incest, or if the woman's life is at risk, the funds can still be used tax-free. But, there's a catch: a physician must certify in writing that one of these conditions applies (Section 2). This certification process introduces a new administrative step and could create delays or barriers to care. For someone working two jobs or managing a family, getting that extra paperwork sorted out adds another layer of stress to an already difficult situation.

Real-World Impact: Who Pays?

This change hits hardest for those who rely on these accounts to manage their healthcare costs. For example, a single mom using an HSA to carefully budget for all her family's medical needs might find herself facing unexpected expenses and tax implications if she needs an abortion. Similarly, someone working a contract job without traditional insurance, who relies on an FSA for predictable healthcare costs, will have one less option for covering this procedure. It also adds a layer of complexity for retirees managing their fixed incomes and healthcare needs through retiree health accounts. The new rules mean carefully reviewing what's covered and potentially facing higher out-of-pocket costs.

Potential Challenges

Beyond the direct financial impact, the bill raises some practical concerns. The need for physician certification, while intended to prevent misuse, could create privacy concerns and potential delays in accessing care. It also opens the door to potential disputes over what qualifies as a life-threatening condition, potentially putting doctors in a difficult position. The law's effectiveness hinges on how these exceptions are interpreted and applied in real-world medical situations.