HSAs and FSAs could cover parents' medical bills

What does this do?

This bill lets people use money from tax-advantaged health accounts — HSAs, FSAs, HRAs, and Archer Medical Savings Accounts — to pay medical expenses for a parent or parent-in-law. Right now, those accounts can only be used tax-free for yourself, your spouse, and your dependents. Parents are generally not included unless they qualify as tax dependents, and this bill removes that restriction.

Who does it affect?

This affects working adults who help pay healthcare costs for a parent or parent-in-law and want to use pre-tax dollars from their health accounts to do so. The change applies to medical costs paid or incurred after December 31, 2024.

Why does it matter?

People who cover a parent's medical bills would be able to use pre-tax dollars from these accounts, which reduces the portion of that spending subject to income tax. Parents who are not tax dependents would now be included, which is a broader group than current law allows.

Where does it stand?