119-s276

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 276 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 276

To amend the Internal Revenue Code of 1986 to expand and improve health 
 savings accounts, and for other purposes.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 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

_______________________________________________________________________

 A BILL

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 `calendar year 2016''' in 
 subparagraph
        (B) and all that follows through 
 ```calendar year 2003'.'' and inserting ```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.
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