S-1565-119
Read twice and referred to the Committee on Finance.
Sponsored by Jacky Rosen (D-NV)
What it does
This bill would amend the Internal Revenue Code 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) to pay for qualifying medical expenses of their parents or their spouse's parents. Currently, these tax-advantaged accounts can only be used for the account holder, their spouse, and their dependents. The changes would take effect for expenses incurred after December 31, 2025.
Who benefits
Adult children who financially support aging parents but do not claim them as tax dependents — a common situation. Working-age employees with employer-sponsored FSAs or HRAs who help cover a parent's medical bills. Self-employed individuals with HSAs caring for aging parents. Parents who receive financial help with medical costs from their adult children. Employers who offer these benefit plans, as expanded eligibility may increase employee participation and plan contributions. Indirectly, healthcare providers who may see more consistent payment for services rendered to elderly patients.
Who is hurt
The federal government would collect less tax revenue, as more pre-tax dollars would flow into and out of these accounts for a broader set of qualifying expenses. Taxpayers broadly may bear the indirect cost of the reduced revenue. Competing long-term care policy approaches — such as expanding Medicaid or creating a federal paid family and medical leave program — may face reduced political urgency if this narrower measure is seen as addressing caregiver costs.
Supporters argue
Supporters argue that millions of Americans provide financial support for aging parents who do not qualify as tax dependents under current law, leaving caregivers unable to use pre-tax dollars for a real and growing expense. They contend that as the U.S. population ages — with the number of Americans over 65 projected to reach 80 million by 2040 — expanding these accounts is a targeted, low-cost way to ease the financial burden on family caregivers without creating a new federal program. They also note the bill has bipartisan sponsorship, reflecting broad recognition of the caregiving challenge.
Opponents argue
Opponents argue that this bill primarily benefits higher-income workers who have the financial capacity to contribute to HSAs and FSAs in the first place, since lower-income workers are less likely to have access to or fully fund these accounts. They contend that the tax benefit is therefore regressive — delivering the largest dollar advantage to those in higher tax brackets — and that the same revenue cost could be better directed toward programs like Medicaid that serve lower-income elderly individuals more directly. They may also argue the bill does not address the structural affordability of elder care.
Constitutional context
This bill modifies existing tax provisions under Congress's broad taxing and spending authority (Art. I, §8, cl. 1). No significant constitutional tension is present; Congress has well-established authority to define the scope of tax-advantaged accounts. The Origination Clause (Art. I, §7, cl. 1) requires revenue bills to originate in the House, which is relevant since this bill was introduced in the Senate — though the Senate routinely introduces tax-related bills that are later reconciled with House-originated measures.
Checks and balances
Congress expands the eligible use of tax-advantaged accounts; the IRS and Treasury Department implement and enforce the changes through guidance and regulation; no significant shift in inter-branch power occurs.
Historical precedent
The CARES Act of 2020 similarly expanded HSA and FSA eligible expenses to include over-the-counter medications and menstrual care products, demonstrating Congress's precedent for broadening the scope of qualifying expenses in these accounts.