HSAs for Heroes Act

Overview: The bill expands the flexibility of Health Savings Accounts (HSAs) for veterans and caregivers during periods of qualified caregiving. Individuals eligible for veterans’ benefits can take tax-free distributions from their HSA during a period of qualified caregiving. They also can establish an HSA without enrollment in a high-deductible health plan (HDHP) and can increase HSA contribution limits.

Eligibility: This bill allows individuals eligible for veteran benefits, to contribute to an HSA, regardless of disability status.

HSA Distributions During Periods of Qualified Caregiving: Funds from an HSA used for qualified medical expenses during a period of qualified caregiving will not be included in gross income calculations. A period of qualified caregiving is a period during which an individual is unemployed or on leave for reasons consistent with the provisions in the Family and Medical Leave Act of 1993, including to care for a spouse, child, or parent with a serious health condition.

HSA Contribution Restrictions: The bill removes the requirement that one must enroll in a HDHP in order to access to an HSA. It also increases the HSA contribution limit to $9,000 for individuals and to $18,000 for joint returns.

Regulatory Authority and Reporting: The Department of Veterans Affairs will issue necessary regulations and a report annually to Congress. The report will summarize veterans’ use of these provisions and make recommendations for improving policies. The Department of the Treasury will estimate the revenue effects of this bill and report to the Congressional Budget Office (CBO).