This bill allows workers to transfer unused money from health flexible spending accounts (FSAs) or health reimbursement arrangements (HRAs) directly into health savings accounts (HSAs) when they enroll in a high-deductible health plan after a gap in coverage. The transfer amount is capped at the annual FSA/HRA limit (or double that for family coverage), and workers must convert their remaining FSA or HRA to an HSA-compatible plan for the rest of the year. The legislation also requires employers to report these transfers on employee W-2 forms. The changes take effect for distributions made after December 31, 2025, and aim to give workers more flexibility in managing their healthcare savings accounts when switching to high-deductible plans.
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