Your Guide to Smarter Coverage – June Edition
Health Savings Accounts (HSAs) in the 2025 Federal Budget Reconciliation Bill
Health Savings Accounts (HSAs) in the 2025 Federal Budget Reconciliation Bill
The House of Representatives passed a budget reconciliation bill on May 22, 2025, introducing significant changes to Health Savings Accounts (HSAs). These modifications aim to expand HSA accessibility and flexibility but come with notable fiscal implications.
Key HSA Provisions
Increased Contribution Limits: The bill proposes to double the annual HSA contribution limits, adding $4,300 for individuals and $8,550 for families. These increases would phase out for individuals earning between $75,000 and $100,000, and for joint filers earning between $150,000 and $200,000.
Eligibility Expansion:
Individuals enrolled only in Medicare Part A (not Part B) would be allowed to contribute to HSAs.
Enrollment in direct primary care arrangements or access to on-site employee clinics would no longer disqualify individuals from HSA eligibility, provided certain conditions are met.kff.org
Expanded Qualified Medical Expenses:
Gym memberships and certain fitness expenses would become qualified medical expenses, with annual HSA distributions capped at $500 for single filers and $1,000 for joint or head of household filers.
Fees for direct primary care services, up to $150 per month, would be considered qualified medical expenses.kff.org
Plan Compatibility: Marketplace bronze and catastrophic health plans would be treated as high-deductible health plans (HDHPs), making them compatible with HSAs.kff.org
Fiscal Impact
The Congressional Budget Office estimates that these HSA-related provisions would increase federal deficits by approximately $44.3 billion over the next decade. The most significant costs stem from the expanded contribution limits and the inclusion of fitness expenses as qualified medical expenses.kff.org
Summary Table
| Provision | Description | Estimated Cost (2025–2034) |
|---|---|---|
| Increased Contribution Limits | Additional $4,300 for individuals; $8,550 for families | $8.4 billion |
| Medicare Part A Eligibility | Allows contributions for individuals enrolled only in Medicare Part A | $7.4 billion |
| Fitness Expenses as Qualified Expenses | Includes gym memberships and certain fitness costs | $10.5 billion |
| Direct Primary Care Fees | Up to $150/month considered qualified medical expenses | $2.8 billion |
| On-site Employee Clinics | Access does not disqualify HSA eligibility under certain conditions | $2.4 billion |
| Bronze and Catastrophic Plan Compatibility | Treats these plans as HDHPs for HSA eligibility | $3.6 billion |
These proposed changes aim to enhance the flexibility and accessibility of HSAs, potentially benefiting a broader range of individuals. However, the significant fiscal impact underscores the need for careful consideration as the bill advances through the legislative process.
Upcoming Medicare Changes for 2026: What You Need to Know
Prescription Drug Coverage (Part D)
Out-of-Pocket Cap Increase: The annual out-of-pocket maximum for prescription drugs will rise to $2,100, up from $2,000 in 2025. This cap will be adjusted annually for inflation thereafter. kiplinger.com
Medicare Prescription Payment Plan: Beneficiaries can continue to spread out-of-pocket costs over monthly payments. Starting in 2026, participants will be automatically re-enrolled each year unless they opt out. kiplinger.com
Insulin and Vaccine Cost Caps: Insulin costs will remain capped at $35 per month, and adult vaccines recommended by the Advisory Committee on Immunization Practices will continue to be available at no cost under Part D. kiplinger.com+1federalregister.gov+1
Drug Price Negotiations: Medicare will implement negotiated prices for the first 10 high-cost drugs, including treatments for diabetes and heart conditions, starting January 1, 2026. verywellhealth.com+1en.wikipedia.org+1
Medicare Advantage (MA) Program
Payment Rate Increase: Government payments to MA plans are projected to increase by an average of 5.06% from 2025 to 2026.
Prior Authorization Reforms: MA plans will be restricted from reopening and modifying previously approved inpatient hospital admissions unless there is evidence of fraud or obvious error.
Supplemental Benefits Oversight: CMS will enforce stricter guidelines on Special Supplemental Benefits for the Chronically Ill (SSBCI), disallowing items and services that do not have a reasonable expectation of improving or maintaining health or overall function.
Health Savings Accounts (HSAs) and Medicare
HSA Contributions for Medicare Part A Enrollees: Pending legislation may allow individuals enrolled in Medicare Part A to continue contributing to HSAs, which is currently prohibited. kiplinger.com
Coverage for Anti-Obesity Medications
Potential Expansion: The Biden administration proposed expanding Medicare coverage to include certain anti-obesity medications, such as GLP-1 receptor agonists. This change is under consideration and may take effect in 2026, depending on regulatory decisions.
