Newly proposed HOPE Act would help Americans save for health care costs

A newly proposed bipartisan bill on Capitol Hill aims to create a tax-advantaged account that enables millions of Americans with most types of insurance coverage to save for health care costs through both individual and employer contributions.

U.S. Rep. Blake Moore (R-UT) on Aug. 23 sponsored the Health Out-of-Pocket Expense (HOPE) Act of 2024, H.R. 9394, alongside cosponsors U.S. Reps. Jimmy Panetta (D-CA), Brian Fitzpatrick (R-PA), Brad Schneider (D-IL), Adrian Smith (R-NE), and Raul Ruiz (D-CA) to reform health provisions under the Internal Revenue Code of 1986.

“One of the biggest issues I hear about from Utah patients, providers, and employers alike is the cost of health care, and addressing this pressing challenge remains a top priority for me in Washington,” said Moore. “The HOPE Act is a step in the right direction in making health care more affordable for Utahns and Americans across the country.”

If enacted, the HOPE Act aims to help families manage their out-of-pocket costs and save for future medical care by making a HOPE Account similar to a Roth savings account in that it would provide certain tax advantages and investment options for individuals and families to save for future healthcare expenses, according to the lawmakers.

For example, under the bill, anyone with qualifying coverage, including in the commercial market, Medicare, Medicaid, the Indian Health Service, and other sources of healthcare coverage would be eligible to contribute to a HOPE Account.

“Working families need additional ways to plan and save for unexpected out-of-pocket health expenses,” said Rep. Panetta. “Through common-sense, straightforward action we can ensure that individuals and working families around our country are planning for their financial well-being and future health needs.”

Under the bill, an individual’s contributions would not be tax deductible, though employer contributions are deductible to the employer and would be excluded from income and employment tax for individuals with an adjusted gross income of $100,000 or less or $200,000 or less for a family, according to the text of the bill.

Likewise, employers and state programs could annually make contributions to a HOPE Account of up to 50 percent of the annual limit. The maximum annual contribution from all sources to a HOPE Account would be $4,000 for those with self-only coverage, or for married individuals with separate HOPE Accounts.

For those with family coverage, that amount is $8,000 for a head of household or married individuals filing jointly who elect to set up a family account. Any contributions to an HSA, FSA, or HRA reduce the maximum contribution to a HOPE Account that year, the text says.

And as the account grows, the earnings would remain tax-free if the funds are used for qualified medical expenses.

Congressman Fitzpatrick noted that the HOPE Act would directly help individuals who are battling soaring medical costs.

“Through this bipartisan legislation, HOPE Accounts will deliver an alternative option that lets our hard-working families take control of their health expenses — free from the crushing weight of the high cost of healthcare in our country,” he said.

Schneider also pointed out that HOPE Accounts are compatible with any type of comprehensive health insurance plan, allowing account holders to maintain robust coverage while they save.

“As healthcare costs continue to rise,” he said, “enabling families to efficiently save for future expenses via HOPE Accounts will promote both financial and physical well-being.”

“Unexpected healthcare bills can be devastating for hard-working families, but most health coverage options don’t come with built-in ways to help families prepare for an emergency,” added Smith. “HOPE Accounts would give American families a new tool to protect themselves and their household finances from a surprise illness or injury.”

Ruiz said that the HOPE Act is “a crucial advancement” in assisting families with the increasing costs of medical care and provide them with a new way to save for health expenses, independent of costly high-deductible plans.

The measure has been referred to the U.S. House Ways and Means Committee for consideration.

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