H.R.2745 - Catch Up Act (119th Congress)
Summary
H.R.2745, the Catch Up Act, proposes an amendment to the Internal Revenue Code of 1986, specifically Section 223(b)(5), to allow both spouses to make catch-up contributions to the same health savings account (HSA). This applies to married individuals with family coverage under a high deductible health plan. The bill aims to modify the rules regarding contribution limits and the division of these limits between spouses, especially when both have attained age 55.
Expected Effects
If enacted, the Catch Up Act would change how married couples can contribute to their HSAs, potentially increasing the amount they can save for healthcare expenses. This could lead to greater financial security for older couples managing healthcare costs. The changes would apply to taxable years beginning after December 31, 2025.
Potential Benefits
- Increased Savings: Allows both spouses to maximize catch-up contributions to a single HSA, potentially leading to greater healthcare savings.
- Financial Flexibility: Provides more flexibility in how married couples manage their healthcare funds.
- Simplified Administration: Streamlines the process for married couples contributing to HSAs.
- Benefits Older Americans: Specifically targets individuals aged 55 and older, allowing them to save more for future healthcare needs.
- Encourages HSA Participation: May incentivize more married couples to participate in high-deductible health plans and HSAs.
Most Benefited Areas:
Potential Disadvantages
- Complexity: The new rules for dividing contributions could be complex and require careful planning.
- Potential for Confusion: Some couples may find the new regulations confusing, leading to errors in contribution amounts.
- Limited Impact: The benefits are primarily limited to married couples with high-deductible health plans and the financial means to make catch-up contributions.
- Revenue Impact: There may be a slight decrease in tax revenue due to increased HSA contributions, though this is likely minimal.
- Unequal Benefit: The benefit is not equally distributed across all taxpayers, favoring higher-income married couples.
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The amendment to the Internal Revenue Code is a valid exercise of this power. The bill does not appear to infringe upon any specific constitutional rights or protections.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).