The Health Out-of-Pocket Expense (HOPE) Act of 2025 creates a new tax-advantaged savings account called HOPE Accounts designed to help individuals and families pay for qualified medical expenses. These accounts function as tax-exempt trusts with annual contribution limits of $4,000 for individual coverage or $8,000 for family coverage (adjusted annually after 2026), and enrollees must have minimum essential health coverage while prohibited from simultaneously using flexible spending arrangements or health savings accounts. Employers can make tax-free contributions to employees' HOPE Accounts up to specified limits, with phase-outs for higher earners, and must report these contributions on W-2 forms. Account holders can roll over funds between accounts and withdraw excess contributions tax-free before the filing deadline, though distributions for medical expenses cannot also be claimed as tax deductions. The accounts take effect on January 1, 2026, with the IRS required to enforce compliance through penalties for excess contributions and employer reporting violations.
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