The Health Out-of-Pocket Expense Act of 2024 (HOPE Act) creates a new type of tax-advantaged savings account called a HOPE Account that allows individuals to set aside money for qualified medical expenses. Eligible individuals can contribute up to $4,000 per year for self-only coverage or $8,000 per year for family coverage (adjusted annually for inflation), and these accounts are exempt from federal taxation as long as funds are used for qualified medical expenses like doctor visits, prescriptions, and other healthcare costs. The legislation affects anyone with minimum essential health insurance coverage who does not already participate in a health savings account, flexible spending arrangement, or similar health benefit account. Employer contributions to employee HOPE Accounts are also permitted under certain income limits and would be treated as tax-free employer-provided coverage. The bill imposes a 30 percent penalty on distributions that are not used for qualified medical expenses, with exceptions for account closures due to death or disability. The legislation is effective for tax years beginning after December 31, 2024.
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