[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 955 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 955
To amend the Internal Revenue Code of 1986 to reform health provisions,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 4, 2025
Mr. Moore of Utah (for himself, Mr. Panetta, Mr. Fitzpatrick, Mr.
Schneider, Mr. Smith of Nebraska, Mr. Ruiz, Mr. Valadao, Mrs. Dingell,
Mr. Moolenaar, and Mr. Davis of North Carolina) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reform health provisions,
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 ``Health Out-of-Pocket Expense Act of
2025'' or the ``HOPE Act of 2025''.
SEC. 2. HOPE ACCOUNTS.
(a) Accounts Established.--
(1) In general.--Part VIII of subchapter F of chapter 1 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new section:
``SEC. 530A. HOPE ACCOUNTS.
``(a) In General.--A HOPE Account shall be exempt from taxation
under this subtitle. Notwithstanding the preceding sentence, the Hope
Account shall be subject to the taxes imposed by section 511 (relating
to the imposition of tax on unrelated business income of charitable
organizations).
``(b) Definitions and Special Rules.--For purposes of this
section--
``(1) HOPE account.--The term `HOPE Account' means a trust
created or organized in the United States as a HOPE Account
exclusively for the purpose of paying the qualified medical
expenses of the account beneficiary, but only if the written
governing instrument creating the trust meets the following
requirements:
``(A) Except in the case of a rollover contribution
described in subsection (d)(4) of this section, no
contribution will be accepted--
``(i) unless it is in cash, or
``(ii) to the extent such contribution,
when added to previous contributions to the
trust for the calendar year, exceeds the
contribution limitations in subsection (c).
``(B) The trustee is a bank (as defined in section
408(n)), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
in the individual's account is nonforfeitable.
``(F) No more than reasonable fees are paid in
connection with the administration of the account.
``(G) The trust includes procedures for the trustee
to reasonably assure that distributions are limited to
payment or reimbursement for qualified medical expenses
incurred after the establishment of the trust.
Procedures shall be considered reasonable that meet the
substantiation requirements contained in Proposed
Treasury Regulation section 1.125-6 (as in effect on
January 1, 2025) or under any superseding guidance
prescribed by the Secretary.
``(H) The trust follows all reporting requirements
as may be prescribed by the Secretary with respect to
distributions that are not substantiated as qualified
medical expenses pursuant to this section.
``(I) The trust follows any other guidance with
respect to HOPE Accounts prescribed by the Secretary.
``(J) Except as provided in subsection (d)(2)(B),
amounts held by the trust may not be distributable
other than exclusively to pay the qualified medical
expenses of the account beneficiary, spouse or
dependents.
``(K) The trust reports all contributions on Form
5498-A, or such other form as is required by the
Secretary. The trust annually must also--
``(i) request each account owner to provide
the trust with the amount if any, the account
owner contributed to an FSA for the year, and
``(ii) report such amount on Form 5498-A or
such other form as is required by the
Secretary.
``(2) Eligible individual.--
``(A) In general.--The term `eligible individual'
means, with respect to any month, any individual if for
such month such individual meets the requirements of
subparagraphs (B) and (C).
``(B) Coverage requirement.--An individual meets
the requirements of this subparagraph for a month if
such individual is covered under one of the following
types of coverage as of the 1st day of such month:
``(i) Minimum essential coverage (as
defined in section 5000A(f)).
``(ii) With respect to members of federally
recognized American Indian and Alaska Native
Tribes and their descendants, the Indian Health
Service.
``(C) Other coverage.--
``(i) In general.--An individual meets the
requirements of this subparagraph for a month
if during such month no amounts are contributed
by or on behalf of the individual to any of the
following accounts of such individual:
``(I) A health flexible spending
arrangement.
``(II) A health savings account (as
defined in section 223(d)).
``(III) A health reimbursement
arrangement which is treated as
employer-provided coverage under an
accident or health plan for purposes of
section 106.
``(IV) An Archer MSA (as defined in
section 220(d)).
``(ii) Exception for certain disregarded
coverage.--Clause (i) shall not apply in the
case of an account described therein if for the
month such account constitutes coverage
described in section 223(c)(1)(B).
``(3) Qualified medical expenses.--The term `qualified
medical expenses' has the meaning given such term in section
223(d)(2).
``(4) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the HOPE Account was
established.
``(5) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to HOPE
Accounts, and any amount treated as distributed under such
rules shall be treated as not used to pay qualified medical
expenses.
``(6) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(f)(3) (relating to time when
contributions deemed made).
``(B) Except as provided in section 106(h), section
219(f)(5) (relating to employer payments).
``(C) Section 408(g) (relating to community
property laws).
``(D) Section 408(h) (relating to custodial
accounts).
``(E) Section 223(f)(7) (relating to transfer of
account incident of divorce).
``(F) Section 223(f)(8) (relating to treatment
after death of account beneficiary).
``(c) Contribution Limitations.--
``(1) In general.--The aggregate amount of contributions
from all sources to all HOPE Accounts maintained for the
benefit of an eligible individual for any taxable year shall
not exceed the sum of the monthly limitations for months during
such taxable year that the individual is an eligible
individual.
``(2) Monthly limitation.--The monthly limitation for any
month is \1/12\ of--
``(A) in the case of an eligible individual who has
self-only coverage, or an eligible individual that is
married filing separately or married filing jointly
that has family coverage, $4,000, or
``(B) in the case of an eligible individual who has
family coverage and is head of household, $8,000.
``(3) Limitation on third party contributions.--A trust
shall not be treated as a Hope Account under this section
unless the aggregate of contributions on behalf of the
individual from all employers of the individual and from any
Medicaid program established and administered by a State or
subdivision thereof, if approved by the Secretary of Health and
Human Services under Section 1115 of the Social Security Act or
Section 1332 of the Patient Protection and Affordable Care Act,
will not be accepted in excess of 50 percent of the limit with
respect to such individual.
``(4) No deduction.--No deduction shall be allowed for a
contribution made by an eligible individual to a HOPE Account
maintained for the benefit of such individual for any taxable
year.
``(5) Exclusion from gross income limited.--Any
contribution under paragraph (c)(3) to the HOPE account of an
individual whose adjusted gross income for the prior taxable
year does not exceed $100,000 ($200,000 in the case of a
married individual filing a joint return) shall be excluded
from the individual's adjusted gross income.
``(6) Coordination with other contributions.--The
limitation which would (but for this paragraph) apply under
this subsection to an individual for any taxable year shall be
reduced (but not below zero) by the sum of--
``(A) the aggregate amount determined with respect
to the individual for the taxable year under section
223(b)(4),
``(B) the aggregate amount contributed by the
individual to health savings accounts of the individual
for such taxable year and not taken into account under
subparagraph (A),
``(C) the aggregate amount contributed to a HOPE
Account of such individual by the individual's
employer, and
``(D) the aggregate amount contributed to a HOPE
Account of such individual for such taxable year by a
program established and administered by a State or
subdivision thereof with respect to converted cost-
sharing reduction payments.
``(7) Cost-of-living adjustment.--In the case of any
taxable year beginning in a calendar year after 2026, each
dollar amount in paragraph (2) shall be increased by an amount
equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
such taxable year begins determined--
``(i) by substituting `calendar year 2025'
for `calendar year 2016' in subparagraph
(A)(ii) thereof, and
``(ii) by substituting `March 31' for
`August 31' in section 1(f)(4).
The Secretary shall publish the adjusted amounts under
paragraph (2) for taxable years beginning in any
calendar year no later than June 1 of the preceding
calendar year. If any increase under this paragraph is
not a multiple of $50, such increase shall be rounded
to the nearest multiple of $50.
``(d) Tax Treatment of Distributions.--
``(1) Amounts used for qualified medical expenses.--Any
amount paid or distributed out of a HOPE Account which is used
exclusively to pay qualified medical expenses of any account
beneficiary shall not be includible in gross income.
``(2) Distribution and taxation of amounts not used for
qualified medical expenses.--
``(A) In general.--Except as provided in
subparagraph (B), no amount may be paid or distributed
out of a HOPE Account which is not used exclusively to
pay the qualified medical expenses of the account
beneficiary.
``(B) Exception for certain distributions.--An
amount may be paid or distributed out of a HOPE Account
which is not used exclusively to pay the qualified
medical expenses of the account beneficiary if such
distribution is reported to the Secretary pursuant to
such regulations or other guidance the Secretary may
prescribe, and the distribution is--
``(i) made to an account beneficiary (or to
the estate of the account beneficiary) on or
after the death of the individual, or
``(ii) attributable to the account
beneficiary being disabled (within the meaning
of section 72(m)(7)).
``(C) Taxation of distributions not used for
qualified medical expenses.--
``(i) In general.--Any amount paid or
distributed out of a HOPE Account which is not
used exclusively to pay qualified medical
expenses of any account beneficiary shall be
includible in gross income, except to the
extent such distribution is allocable to
amounts described in subparagraph (D)(iii).
``(ii) Additional tax.--The tax imposed by
this chapter on the account beneficiary for any
taxable year in which there is a payment or
distribution from a HOPE Account of such
beneficiary which is includible in gross income
under clause (i) shall be increased by 30
percent of the amount which is so includible.
``(D) Ordering of distributions.--Any distributions
out of a HOPE Account pursuant to subparagraph (B)
shall be treated as made from amounts to the extent
that the amount of such distribution, when added to all
previous distributions from the HOPE Account, does not
exceed the aggregate of such amount, and from such
amounts pursuant to the following ordering rules:
``(i) from earnings, if any, on such
amounts described in clauses (ii) and (iii),
``(ii) from contributions described in
subsection (c)(3),
``(iii) from contributions by an eligible
individual to the HOPE Account, and
``(iv) from rollover contributions to the
HOPE Account from another HOPE Account
allocable to contributions by an eligible
individual to such other HOPE Account, on a
first-in, first-out basis.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any HOPE Account of
an individual, paragraph (2) shall not apply to
distributions from the HOPE Accounts of such individual
(to the extent such distributions do not exceed the
aggregate excess contributions to all such accounts of
such individual for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution
described in paragraph (4)) which is neither excludable
from gross income under section 106(h) nor allowable
under this section.
``(4) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from a HOPE Account to
the account beneficiary to the extent the amount
received is paid into a HOPE Account for the benefit of
such beneficiary, the beneficiary's spouse or the
beneficiary's dependent not later than the 60th day
after the day on which the beneficiary receives the
payment or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from a HOPE Account if, at any time
during the 1-year period ending on the day of such
receipt, such individual received any other amount
described in subparagraph (A) from a HOPE Account which
was not includible in the individual's gross income
because of the application of this paragraph.
``(C) Dependent.--The term dependent means any
individual with respect to whom a deduction under
section 151 is allowed to another taxpayer for a
taxable year beginning in the calendar year in which
such individual's taxable year begins.
``(5) Coordination with medical expense deduction.--For
purposes of determining the amount of the deduction under
section 213, any payment or distribution out of a HOPE Account
for qualified medical expenses shall not be treated as an
expense paid for medical care.
``(e) Reports.--The Secretary shall require the trustee of a HOPE
Account to make such reports regarding such account to the Secretary
and to the account beneficiary with respect to contributions,
distributions, the return of excess contributions, and such other
matters as the Secretary determines appropriate. The trustee shall
include in each such report an accounting of the amount contributed by
the account beneficiary, and may, if necessary to determine such
amount, request such information from the account beneficiary.''.
(2) Clerical amendment.--The table of sections for part
VIII of subchapter F of chapter 1 of such Code is amended by
adding at the end the following new item:
``Sec. 530A. HOPE Accounts.''.
(b) Excess Contributions.--
(1) In general.--Section 4973(a) of such Code is amended by
striking ``or'' at the end of paragraph (5), by striking the
period at the end of paragraph (6) and inserting ``, and'', and
by inserting after paragraph (6) (as so amended) the following
new paragraph:
``(7) A HOPE Account (as defined in section 530A(b)).''.
(2) Excess contributions defined.--Section 4973 of such
Code is amended by adding at the end the following new
subsection:
``(i) Excess Contributions to HOPE Account.--
``(1) In general.--For purposes of this section, in the
case of HOPE Accounts (within the meaning of section 530A(b)),
the term ``excess contributions'' means the sum of--
``(A) The aggregate amount contributed for the
taxable year to the accounts (other than a rollover
contribution described in section 530A(d)(4)) which
exceeds the contributions limits under section 530A(c),
and
``(B) the amount determined under this subsection
for the preceding taxable year, reduced by the sum of--
``(i) the distributions out of the accounts
which were included in gross income under
section 530A(d)(2)(C), and
``(ii) the excess (if any) of--
``(I) the maximum amount of
allowable contributions under 530A(c)
for the taxable year, over
``(II) the amount contributed to
the accounts for the taxable year.
``(2) Returned excess contributions.--For purposes of this
subsection, any contribution which is distributed out of the
HOPE Account in a distribution to which section 530A(d)(2)(C)
applies shall be treated as an amount not contributed.''.
(c) Employer Contributions.--
(1) In general.--Section 106 of such Code is amended by
adding at the end the following new subsection:
``(h) Contributions to HOPE Accounts.--
``(1) In general.--In the case of an employee who is an
eligible individual, amounts contributed by such employee's
employer to any HOPE account (as defined in section 530A(b)) of
such employee shall be treated as employer-provided coverage
for medical expenses under an accident or health plan to the
extent such amounts do not exceed the limitations applicable to
such individual for such taxable year under section 530A(c)
(determined without regard to this subsection).
``(2) Limitation.--Paragraph (1) shall not apply in the
case of a taxpayer whose adjusted gross income for the taxable
year exceeds $100,000 ($200,000 in the case of a joint return).
``(3) Special rules.--Rules similar to the rules of
paragraphs (2), (3), (4), and (5) of subsection (b) shall apply
for purposes of this subsection.
``(4) Cross reference.--For penalty on failure by employer
to make comparable contributions to the health savings accounts
of comparable employees, see section 4980G.''.
(2) Information reporting for employees.--Section 6051(a)
is amended by striking ``and'' at the end of paragraph (16), by
striking the period at the end of paragraph (17) and inserting
``, and'', and by inserting after paragraph (17) (as so
amended) the following new paragraph:
``(18) the amount contributed to any HOPE Account (as
defined in section 530A(b)) of such employee.''.
(3) Conforming amendment relating to cafeteria plans.--
Section 125(f)(1) of such Code is amended by inserting
``106(h),'' after ``106(b),''.
(d) Failure of Employer To Make Comparable HOPE Account
Contributions.--
(1) In general.--Section 4980G(a) of such Code is amended
by inserting ``or HOPE Account'' after ``health savings
account''.
(2) Conforming amendments.--
(A) Section 4980G(c) of such Code is amended by
striking ``and health savings accounts'' and inserting
``, health savings accounts, or HOPE Accounts''.
(B) Section 4980G(d) of such Code is amended by
inserting ``or HOPE Account'' after ``health savings
account''.
(C) The heading for section 4980G of such Code is
amended by inserting ``or hope account'' after ``health
savings account''.
(D) The table of sections for chapter 43 of such
Code is amended by striking the item relating to
section 4980G and inserting the following new item:
``Sec. 4980G. Failure of employer to make comparable health savings
account or HOPE Account contributions.''.
(e) Application of Prohibited Transaction Rules.--
(1) In general.--Section 4975(e)(1) of such Code is amended
by striking ``or'' at the end of subparagraph (F), by
redesignating subparagraph (G) as subparagraph (H), and by
inserting after subparagraph (F), as so amended, the following
new subparagraph:
``(G) a HOPE Account described in section 530A(b),
or''.
(f) Failure To Report.--Section 6693(a)(2) of such Code is amended
by striking ``and'' at the end of subparagraph (E), by striking the
period at the end of subparagraph (F) and inserting ``, and'', and by
inserting after subparagraph (F) (as so amended) the following new
subparagraph:
``(G) Section 530A(e) (relating to HOPE
Accounts).''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
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