Lowering Costs for Caregivers Act of 2025
- Sponsor
- Rep. Buchanan, Vern [R-FL-16]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jan 3, 2025
Bottom line
The bill expands the eligible uses of tax-advantaged health accounts to include medical expenses for parents and parents-in-law, aiming to ease the financial burden on caregivers.
What it actually does
This bill amends the Internal Revenue Code of 1986 to allow individuals to use funds from Health Savings Accounts (HSAs), Flexible Spending Arrangements (FSAs), Health Reimbursement Arrangements (HRAs), and Archer Medical Savings Accounts (MSAs) for the medical expenses of their parents or their spouse's parents. Currently, these tax-advantaged accounts are generally limited to covering the medical expenses of the account holder, their spouse, and dependents.
Proponents argue
Supporters argue that the bill provides much-needed financial relief to millions of Americans who are balancing their own healthcare needs with the increasing costs of caring for aging parents. They contend that it recognizes the reality of modern family structures and the significant role adult children play in supporting their parents' health, aligning tax policy with family caregiving responsibilities and promoting intergenerational support.
Opponents contend
Critics might argue that while well-intentioned, the bill primarily benefits higher-income individuals who are more likely to have and contribute to these tax-advantaged accounts, potentially exacerbating existing inequities in the tax code. They may also contend that it represents a further expansion of tax expenditures, reducing federal revenue without addressing the broader structural issues of healthcare costs or comprehensive elder care funding.
The bill is very short and clearly written, making it highly accessible for a reader to understand its provisions quickly.
Section 2(a)
Health Savings Accounts (HSAs) for Parents' Medical Expenses
This provision amends the Internal Revenue Code to allow individuals to use their Health Savings Account (HSA) funds to pay for the medical expenses of their parents or their spouse's parents. Previously, HSA funds could only be used for the account holder, their spouse, and their dependents. This change broadens the scope of eligible expenses, enabling caregivers to leverage their pre-tax savings for elder care.
Supporters argue
Supporters argue this provision directly addresses a major financial strain on caregivers by allowing them to use their tax-advantaged savings for essential parental medical care. It acknowledges the growing demographic of adult children supporting aging parents and provides a practical, immediate financial tool.
Critics contend
Critics might suggest that while helpful, this provision primarily benefits those already able to save in HSAs, which tend to be higher-income individuals. They may argue it's a targeted tax break rather than a universal solution for caregiving costs.
Tradeoffs
The provision balances the goal of supporting caregivers with the potential for reduced federal tax revenue and the question of equitable access to such tax benefits across different income levels.
Section 3(a)
Flexible Spending and Health Reimbursement Arrangements (FSAs/HRAs) for Parents' Medical Expenses
This section clarifies that Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs) will not lose their tax-preferred status if they permit funds to be used for the medical care of a taxpayer's parent or spouse's parent. This ensures that employers can offer plans allowing employees to use these pre-tax funds for elder care without jeopardizing the tax benefits of the arrangement itself.
Section 4(a)
Archer MSAs for Parents' Medical Expenses
This provision amends the Internal Revenue Code to allow individuals to use funds from their Archer Medical Savings Accounts (MSAs) for the medical expenses of their parents or their spouse's parents. Archer MSAs are a predecessor to HSAs and are no longer widely available for new enrollment, but this ensures consistent treatment for existing account holders.
The bill specifies that for Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs), 'medical care' is defined 'as defined in section 213(d), without regard to paragraph (1)(D) thereof'.
Section 3(a)
Why it matters:This is standard legislative practice for referencing existing definitions in the tax code to ensure consistency and avoid redundancy. The exclusion of paragraph (1)(D) is a specific technical carve-out.
Case for: Including this specific reference ensures that the definition of 'medical care' for parents under FSAs/HRAs aligns with the broader tax code, preventing ambiguity. The exclusion of paragraph (1)(D) means that certain long-term care insurance premiums, which are eligible for deduction under 213(d)(1)(D), would not be covered by FSA/HRA funds for parents, maintaining a specific boundary.
Case against: A casual reader might miss this specific exclusion, leading to potential confusion or misunderstanding about what types of parental medical expenses are *not* covered by FSA/HRA funds, particularly regarding long-term care insurance premiums.
Estimated impact: This technical detail clarifies the precise scope of eligible expenses, potentially excluding certain long-term care insurance premiums from being covered by FSA/HRA funds for parents. The financial impact is limited to those specific types of premiums.