Health Savings Accounts (HSAs) allow employees to save money tax-free to pay for medical expenses. Employees don’t pay taxes on their contributions, when it grows, or when it’s used for qualified health costs, making it a powerful tool for both current and future health care savings.

The 2025 House-passed version of the HSA reconciliation bill included a number of changes that would have expanded HSAs, including increasing the HSA contribution limits for many individuals, couples, and families, based on income thresholds. It would have also doubled the annual contribution limits for individuals from $4,300 to $8,600 and for families from $8,550 to $17,100. The House also intended to expand eligibility to those who were eligible for Medicare A by reason of age, include certain sports and fitness expenses as HSA-eligible, and allow contributions even if the employee’s spouse had their own flexible spending account.

Supporters argue these reforms would have made HSAs a more powerful savings tool for managing health care costs and planning for retirement. Other proponents say that expanding HSA access and limits would ease benefits administration for employers, enhance recruitment and retention, and significantly boost employees’ long-term financial wellness. Sometimes HSAs are a primary retirement savings vehicle for many Americans, even rivaling 401(k) plans.

WHIPLASH!

However, on June 16, 2025, the Senate Finance Committee released its version of the House-passed budget reconciliation bill, notably excluding the increased HSA contribution limits. The Senate’s decision to remove the HSA reforms was reportedly driven largely by cost-cutting concerns. It appears that the Senate hopes to move its version to the President for signature by July 4, 2025 without the reforms at this time.

Stay tuned for more information from RKW Law Group about changes to employee benefits that you may offer to your employees.