HSA Contribution Limit Jumps to $23,000, Drops HDHP Requirement: What It Means for Your Wallet

If you’ve ever looked at a Health Savings Account (HSA) and thought, “I wish I could put more money in there, and also, why do I need a specific health plan just to use it?” this bill is for you. The Health Savings Accounts For All Act of 2025 is a massive overhaul of the HSA system, essentially turning it into a hyper-charged, tax-free savings vehicle for medical expenses—and then some. The two biggest changes are the elimination of the requirement that you must be enrolled in a High-Deductible Health Plan (HDHP) to contribute, and the explosive increase in contribution limits, which are now tied to the 401(k) limit (currently $23,000, plus a $7,500 catch-up for those 50 and over). This is a game-changer for long-term savers, but it also raises some questions about how healthcare coverage works.

The HDHP Requirement is Gone: Freedom or Financial Risk?

The original idea behind the HSA was to incentivize people to choose high-deductible plans, making them more aware of healthcare costs. This bill, under Section 3, completely scraps that requirement. You can now keep your low-deductible PPO, or whatever plan you currently have, and still contribute the full, massive annual limit to your HSA. For a lot of people, this is great news: you get the triple tax advantage (contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free) without taking on the risk of a high deductible. However, this change fundamentally alters the balance of the system. The HDHP requirement was a guardrail; removing it means more people might use the HSA as a pure savings vehicle, potentially without adequate insurance coverage, leaving them vulnerable if a major medical event occurs. It’s a trade-off between tax optimization and coverage security.

Wellness Expenses and Gym Fees Are Now Qualified

Remember how you could only use your HSA funds for prescriptions, doctor visits, and maybe some specific over-the-counter items? Section 8 blows that open. HSA funds can now be used for “qualified wellness expenses,” which includes vitamins, dietary supplements, gym or fitness facility memberships, and wearable fitness trackers. This is a huge win for preventative health and makes HSAs far more flexible. If you’re a busy professional who relies on a gym membership and supplements to stay healthy, you can now pay for those with pre-tax dollars. The catch? This provision is broad. While it encourages wellness, it also means tax-advantaged funds can now be spent on items that don't have the same medical necessity standards as a prescription, potentially diverting money away from essential medical savings.

What the Fine Print Says About Your Employer

Section 3 also tweaks the rules for how employers contribute to employee HSAs. Instead of the current non-discrimination rules, the bill introduces a requirement for “comparable contributions” for all “comparable participating employees.” This means contributions must be the same dollar amount or the same percentage of the annual deductible for employees on the same plan and coverage category (self-only or family). Crucially, the bill carves out part-time employees (those working fewer than 30 hours a week), allowing employers to treat them separately. While the intent is to ensure fairness, this new rule creates a potential loophole. Employers could structure contributions to minimize their costs, and the separate treatment of part-time employees could lead to significantly lower benefits for that group, requiring workers to pay close attention to their benefits package.

Loosening the Rules for Real-Life Situations

The bill includes several common-sense improvements that simplify life for account holders. Section 5 allows you to pay for medical expenses incurred before your HSA was established, provided the expense was in the same tax year or the prior year (if you set up the account before filing that prior year's return). This is a huge relief if you had a sudden medical bill and then opened an HSA shortly after. Furthermore, Section 9 grants HSAs the same bankruptcy protection as individual retirement accounts (IRAs), securing your medical savings from creditors. Finally, Section 7 simplifies estate planning by allowing tax-free rollovers to a surviving child, parent, or grandparent, not just a spouse, ensuring those savings stay within the family for medical use.