H.R. 6512 — Putting Patients First Healthcare Freedom Act

This section establishes a new Health Freedom Waiver Program (under a new ACA section 1335) authorizing the Secretary of Health and Human Services (HHS), for plan years beginning on or after January 1, 2026, to waive specified Affordable Care Act (ACA) requirements—including ACA Exchanges (part 1 of subtitle D), qualified health plan standards (part 2 of subtitle D), cost-sharing reductions (sec. 1402), premium tax credits (IRC sec. 36B), and the individual mandate (IRC sec. 5000A)—for any state that notifies HHS at least 90 days in advance via its governor or a majority vote of its legislature and maintains an invisible high-risk insurance pool or equivalent risk-mitigation program. (1) For states where the waiver structure causes individuals and small employers to forgo premium tax credits, cost-sharing reductions, or small business credits, HHS must redirect the aggregate forgone amounts—calculated using the national average silver benchmark premium among non-waiver states—into Trump Health Freedom Accounts (under new IRC sec. 223(i)) for eligible state residents who enroll in exchange plans, with payments made monthly, quarterly, or annually at the resident's option. (2) HHS must coordinate this waiver process with ACA sec. 1332 waivers and those under Medicare, Medicaid, and CHIP to allow single state applications. In states with approved waivers, the state may operate its own ACA Exchange, authorize private entities to run state-approved commercial platforms (with HHS providing its Exchange application program interface), or default to a federal Exchange operated under applicable state laws in place of waived ACA provisions. An eligible resident is a state resident who would qualify for premium tax credits or cost-sharing reductions absent the waiver and enrolls in an exchange plan. (Thus, the program enables states to replace core ACA market regulations and subsidies with high-risk pools and individual health freedom accounts while retaining exchange functionality through public, private, or federal means.)

This section establishes Trump Health Freedom Accounts as a type of health savings account (HSA)—tax-advantaged accounts available to individuals with high-deductible health plans for qualified medical expenses—for eligible individuals residing in a state with a waiver under section 1335 of the Patient Protection and Affordable Care Act (ACA) and covered by a health plan authorized on an Exchange under such waiver. The accounts are funded exclusively by amounts transferred to the individual under ACA section 1335(a)(5), which are excluded from the HSA deduction limit; individuals may roll over balances from existing HSAs but must designate the Trump Health Freedom Account as their sole HSA, with no outbound rollovers permitted. Amounts in the accounts may not be used to pay premiums for, or directly for, health plans or services covering gender transition procedures (i.e., specified hormonal or surgical interventions for gender transition, with limited exclusions for disorders of sex development, infections, injuries, or imminent physical dangers) or abortion.

This section allows individuals entitled to hospital insurance benefits under Medicare Part A by reason of age (i.e., section 226(a) of the Social Security Act, generally age 65 and older) to contribute to health savings accounts (HSAs), effective for months beginning after December 31, 2025. (Previously, any Medicare entitlement disqualified individuals from making HSA contributions; this section makes conforming amendments to the treatment of certain health insurance, penalties on nonqualified distributions, and general Medicare disqualifiers.)

This section revises the annual contribution limit rules under IRC §223 for married couples where both spouses are eligible individuals (i.e., covered by a high-deductible health plan) and at least one has family coverage, to (1) disregard the other spouse's high-deductible health plan coverage (or count only one if both have family coverage), (2) reduce the limit by combined Archer MSA contributions, and (3) divide the resulting limit equally between spouses (or as they agree). If both spouses are age 55 or older, their combined catch-up contribution amounts (currently $1,000 each) are included in the divisible limit, allowing both to contribute to the same health savings account (HSA). The changes apply to taxable years beginning after December 31, 2025.

This section establishes a new "qualified HSA distribution" from a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) directly to an employee's health savings account (HSA) when the employee enrolls in a high deductible health plan (HDHP) after not being covered by one during the prior four years, subject to a dollar limit equal to the annual FSA contribution limit under IRC §125(i)(1) (doubled for family coverage under IRC §223(b)(2)(B)); permits the FSA or HRA to become HSA-compatible (i.e., limited to permitted coverage such as dental, vision, and preventive care) for the remainder of the plan year; and excludes such distributions (up to the net increase in the FSA/HRA balance before the distribution) from the annual HSA contribution limit. (Thus, employees switching to an HDHP can roll over unused FSA/HRA funds into an HSA tax-free, avoiding forfeiture of balances.) The section also requires employers to report qualified HSA distributions on Form W-2. The amendments apply to distributions made after December 31, 2025.

This section establishes a special rule under which a health savings account (HSA) is treated as established on the date high deductible health plan (HDHP) coverage begins if the HSA is established within the following 60 days, solely for purposes of determining qualified medical expenses. (Thus, this permits HSA reimbursement for medical expenses incurred after HDHP coverage begins but before the HSA is established.) The rule applies to HDHP coverage beginning after December 31, 2025.

This section permits contributions to a Health Savings Account (HSA) by an individual with high-deductible health plan coverage despite the spouse's coverage under a health flexible spending arrangement (health FSA), provided the aggregate reimbursements under the spouse's health FSA for the plan year do not exceed the aggregate expenses eligible for reimbursement disregarding any expenses of the individual. (As background, HSAs provide tax-favored savings and reimbursements for qualified medical expenses but generally prohibit contributions if the account holder or spouse has disqualifying coverage such as a general-purpose health FSA; thus, this exception expands HSA eligibility for married individuals where the spouse's health FSA is not used for the individual's medical expenses.) The change applies to plan years beginning after December 31, 2025.

This section increases the annual contribution limit for health savings accounts (HSAs)—tax-advantaged savings accounts for unreimbursed medical expenses available to enrollees in high-deductible health plans—by $4,300 for self-only coverage and $8,550 for family coverage for taxable years beginning after December 31, 2025. The increase phases out (but not below zero) for taxpayers with modified adjusted gross income exceeding $75,000 ($150,000 for joint returns with family coverage), ratably over the next $25,000 ($50,000 for such joint returns), and applies only to employee contributions (not employer contributions). Inflation adjustments to the new dollar amounts apply for taxable years beginning after December 31, 2026 (base year 2025).

This section expands the types of health insurance premiums treated as qualified medical expenses for tax-free distributions from health savings accounts by striking subparagraphs (B) and (C) of IRC §223(d)(2) and redesignating subparagraph (D) as subparagraph (C). The change applies to plan years beginning after December 31, 2025.

This section includes amounts paid by members of a health care sharing ministry—defined as in IRC §5000A(d)(2)(B)(ii) without regard to subclause (IV), thus encompassing newer ministries—for cost-sharing among members and administrative fees as qualified medical expenses under Health Savings Accounts (HSAs), effective for taxable years beginning after enactment. (HSAs are tax-advantaged accounts that reimburse individuals for unreimbursed qualified medical expenses.)

This section expands the definition of medical care under the medical expense deduction (IRC §213) to include amounts paid by members of a health care sharing ministry—nonprofit organizations in which members share each other's eligible medical expenses, often on a faith basis (as defined in IRC §5000A(d)(2)(B)(ii) without regard to subclause (IV))—for (1) sharing medical expenses among members and (2) the ministry's administrative fees. The change applies to taxable years beginning after the date of enactment.

This section establishes that a health care sharing ministry (as defined in IRC §5000A(d)(2)(B)(ii) without regard to subclause (IV)) is not a health plan or insurance for purposes of the Internal Revenue Code. (Health care sharing ministries are nonprofit organizations through which members pool funds to share medical expenses, typically based on shared ethical or religious beliefs.) The provision applies to taxable years beginning after the date of enactment.

This section expands the definition of "employer" under ERISA to treat a group or association of employers as a single employer for purposes of sponsoring an employee welfare benefit plan that is a group health plan, provided it (1) has established and maintains such a plan providing coverage to at least 51 employees (aggregated across all employer members), (2) has been actively in existence for at least 2 years, (3) was formed and maintained in good faith for purposes other than providing medical care, (4) does not condition membership or coverage on health status-related factors, (5) limits coverage to employees of employer members, (6) has a governing board with bylaws where at least 75% of members are elected employer participants, and (7) is not a health insurance issuer (or owned/controlled by one, except as a member). It further (1) treats qualifying self-employed individuals (i.e., no common law employees, bona fide business owner earning wages or self-employment income, working at least 10 hours per week or 40 hours per month) as both employers eligible to join such groups and employees eligible for plan coverage, subject to initial and ongoing board eligibility determinations and monitoring; (2) aggregates all employees (including self-employed individuals) across members as participants in a single multiple employer welfare arrangement for regulatory purposes; and (3) specifies that providing such plan coverage does not establish an employer or joint employer relationship under federal or state law. (Thus, qualifying associations—previously limited under ERISA—may sponsor ERISA-governed group health plans akin to single-employer plans, potentially easing access and regulatory burdens for small employers and self-employed individuals.)

This section establishes rules for employee welfare benefit plans maintained by a group or association of employers under ERISA section 3(5)(B) (i.e., association health plans). Specifically, it (1) authorizes such plans, to the extent not prohibited by state law, to set base premium rates using an actuarially sound modified community rating that pools all participant claims and to actuarially adjust each employer member's contribution rate above or below the base rate based on the employer's risk profile—where an employer member is an employer with at least one common law employee or a group of at least 20 self-employed individuals aggregated as a single employer member group; (2) requires plans consisting solely of self-employed individuals to treat all members as a single risk pool, pool all claims, and charge uniform premium rates; and (3) prohibits such plans from discriminating in eligibility or continued eligibility based on health status-related factors (consistent with ERISA section 702(a)(1)), imposing higher premiums or contributions based on health status (consistent with ERISA section 702(b)(1)), or denying coverage based on preexisting conditions (consistent with Public Health Service Act section 2704).

This section provides a rule of construction stating that nothing in this Act exempts a group health plan that is an employee welfare benefit plan offered through a group or association of employers from the requirements of part 7 of subtitle B of title I of ERISA (29 U.S.C. 1181 et seq.), including limitations on preexisting condition exclusions (i.e., not more than 12 months, or 18 months for late enrollees, reduced by creditable prior coverage) and related provisions of part A of title XXVII of the Public Health Service Act incorporated via ERISA section 715.

This section establishes an exception from certain Affordable Care Act (ACA) group health plan requirements—including nondiscrimination, preventive services, premium adjustments, and cost-sharing limits—for custom health option and individual care expense arrangements, which are employer-funded health reimbursement arrangements (HRAs) with a fixed annual maximum dollar amount that reimburse only medical expenses incurred while the participant is covered by individual health insurance coverage (other than excepted benefits) or Medicare Parts A, B, or C. To qualify, such arrangements must (1) satisfy nondiscrimination rules by offering identical terms to all employees in a specified class (e.g., full-time employees, part-time employees, seasonal employees, or new hires after a set date) without offering other non-excepted, non-account-based group health plans to that class (with permitted age- and dependent-based variations up to 300% of the base amount); (2) include reasonable procedures to substantiate initial and ongoing qualifying coverage and eligible expenses; and (3) provide notice to eligible employees at least 60 days before the plan year begins. (Thus, these HRAs enable employers to reimburse individual market premiums and other medical costs for targeted employee classes without violating ACA group market rules.)

This section establishes an exception under cafeteria plan rules (IRC §125(f)(3)) for employees participating in a custom health option and individual care expense arrangement (as defined in IRC §9815(b)(2)), allowing them to purchase individual health insurance through an Affordable Care Act exchange on a pre-tax basis. The amendment applies to taxable years beginning after December 31, 2025.

This section establishes a new general business credit (IRC §45BB), available to eligible employers (i.e., not applicable large employers under IRC §4980H(c)) for employees enrolled in a CHOICE arrangement—a custom health option and individual care expense arrangement (IRC §9815(b)(2)(B)) that qualifies as minimum essential coverage under IRC §36B(c)(2)—during the employer's first two one-year credit periods beginning with the month of initial establishment. The credit equals $100 per month per enrolled employee in the first credit year and $50 ($100 / 2) per month in the second credit year, with amounts adjusted for inflation after 2026; the credit is included in the general business credit under IRC §38(b), allowed against the alternative minimum tax, and applies to taxable years beginning after December 31, 2025.

This section states congressional findings concerning self-funded employer-sponsored health benefit plans, including (1) employers' use of company assets, funds, or fully-insured premiums for coverage; (2) self-funding employers' purchase of stop-loss insurance to protect against excess or catastrophic claims; (3) stop-loss insurance's protection of the employer (not the plan or providers); (4) regulation of plans under the Employee Retirement Income Security Act of 1974 and of stop-loss insurance by states; and (5) the need for states to reasonably regulate stop-loss insurance to ensure its availability to both large and small employers.

This section excludes stop-loss insurance policies—obtained by a self-insured group health plan or a plan sponsor of a group health plan that self-insures its participants' health risks—from the definition of health insurance coverage. (Stop-loss insurance reimburses self-insured plans for participant medical benefit costs exceeding a predetermined attachment point; thus, such policies are not subject to the requirements applicable to health insurance coverage under ERISA subtitle B, part 7.)

This section amends ERISA's state law preemption provision (29 U.S.C. 1144(b)) by adding paragraph (10), which directs that ERISA preempts state laws that prevent a group health plan from insuring against the risk of excess or unexpected health claims losses. (Thus, self-insured group health plans may purchase stop-loss insurance notwithstanding state restrictions purporting to regulate it as insurance.)

This section directs the Secretary of the Treasury, not later than one year after enactment, to notify employers (as defined in ERISA §3(5)) of the availability of tax-advantaged flexible health insurance benefits—individual coverage health reimbursement arrangements, qualified small employer health reimbursement arrangements (QSEHRAs), and the small employer health insurance tax credit under IRC §45R—with an initial focus on small businesses, particularly in rural areas.

This section establishes a statutory definition of short-term limited duration insurance as health insurance coverage provided pursuant to a contract that has an initial expiration date less than 12 months after the original effective date and a total duration of not more than 10 years (including renewals or extensions). (Short-term limited duration insurance is typically exempt from Affordable Care Act market reforms, including guaranteed issue, essential health benefits, and premium rating limits under 42 U.S.C. 300gg.)

This section expands eligibility for catastrophic health plans—ACA Exchange plans with lower premiums but high deductibles and limited benefits—to individuals determined ineligible (or reasonably expecting ineligibility) for premium tax credits under IRC §36B or cost-sharing reductions under ACA §1402 due to household income (previously limited to those under age 30 or with a hardship exemption), for plan years beginning on or after January 1, 2026. (Thus, this generally includes individuals with household incomes above 400% of the federal poverty level or below 100% if not Medicaid-eligible.)

This section establishes a Reinsurance Program, administered by the Secretary of Health and Human Services, to make payments to health insurance issuers for claims above an attachment point of $110,000 (90% payment proportion, up to a $300,000 cap per eligible individual) for individuals enrolled in certain off-Exchange individual health insurance plans during 2026-2030, funded by an annual appropriation of $50 per member month (capped at $6 billion per year). (Covered plans are those with respect to which the issuer elects under amended ACA sec. 1312(c)(1)(A) to opt out of the single risk pool—previously limited to grandfathered plans—and that exclude abortion services; unexpended funds carry forward, with parameters set within 120 days of enactment.) The section further (1) permits issuers to elect to exclude non-grandfathered individual market plans (other than qualified health plans) from the single risk pool—treating enrollees in such opted-out plans as a separate single risk pool; (2) prohibits qualified health plans from making that election and requires them to maintain the existing 3-to-1 age rating limit (consistent with PHS Act sec. 2707(c)); and (3) removes the 3-to-1 age rating limit for opted-out plans, permitting actuarially justified variation. All amendments apply to plan years beginning on or after January 1, 2026. (Thus, the changes enable a new risk pool for off-Exchange plans with reinsurance support and flexible age rating to potentially lower premiums, separate from Exchange qualified health plans.)

This section establishes a new requirement under the Public Health Service Act (PHS Act) for group health plans and health insurance issuers offering group or individual health insurance coverage. In cases where an enrollee receives items or services from an out-of-network provider or facility (i.e., no contractual relationship with the plan or issuer) for which benefits are available under the plan, the enrollee may elect to apply any resulting out-of-pocket costs toward the plan's in-network deductible or out-of-pocket maximum if the provider's or facility's charge does not exceed (1) the plan's lowest recognized in-network payment rate for that item or service in the same rating area or (2) the 25th percentile of charges for that item or service in the same state. Plans and issuers must disclose these lowest in-network amounts and 25th percentile charges for covered items and services to enrollees. The requirement applies to plan years beginning on or after January 1, 2026.

This section requires each health care provider and health care facility, beginning January 1, 2026, to disclose to enrolled patients and prospective patients in a group health plan, group or individual health insurance coverage, or Federal health care program (as defined in 42 U.S.C. 1320a-7b(f), including the Federal Employees Health Benefits program under 5 U.S.C. ch. 89) whether the individual's cost-sharing amount (i.e., deductibles, copayments, or coinsurance) for an item or service exceeds the cash price charged to uninsured individuals. It further establishes a private right of action for harmed individuals against violating providers or facilities in federal district court for injunctive relief and damages equal to those available under the law of the state where the provider or facility is located.

This section revises enrollment periods and income verification requirements for Affordable Care Act (ACA) exchanges (i.e., Health Insurance Marketplaces), effective for plan years beginning on or after January 1, 2027, to address waste, fraud, and abuse. Specifically, it (1) limits the annual open enrollment period to November 1 through December 15 (from periods as determined by the Secretary); (2) prohibits special enrollment periods based on an individual's income relative to the poverty line, other than for a change in circumstances or specific event; (3) bars exchanges from providing any other annual open enrollment periods or the prohibited special enrollment periods; and (4) requires exchanges to verify eligibility prior to enrollment for selected special enrollment periods covering at least 75% of all special enrollment period enrollees in a plan year. It further amends income verification processes by (1) prohibiting verification of household income and family size solely based on an individual's attestation when Treasury data is unavailable (requiring alternative actions such as denial of premium tax credits); and (2) treating attested projected annual household income as unverified—and requiring such actions—if it qualifies the applicant for the premium tax credit under IRC §36B but third-party data shows income lower by at least 10% (or an Exchange-approved dollar threshold), unless the applicant is eligible for Medicaid or CHIP.

This section appropriates such sums as necessary from the Treasury for cost-sharing reduction (CSR) payments under ACA section 1402 for plan years beginning on or after January 1, 2027. Such funding may not be used for qualified health plans providing abortion coverage, except when necessary to save the life of the mother or resulting from rape or incest. (As background, CSRs reduce out-of-pocket costs such as deductibles and copayments for eligible enrollees with household incomes between 100% and 400% of the federal poverty level who select silver-level coverage on ACA Exchanges.)

This section provides that, notwithstanding any other provision of law, the prohibitions and limitations of this title—including amendments made by this title—apply to all funds authorized or appropriated under this Act (including under title I, title II, and every subtitle thereof) and to any trust fund to which such funds are contributed. This section takes effect on the date of enactment.

This section establishes a new Chapter 4 in Title 1, United States Code, prohibiting the use of any federal funds—including those in trust funds—for abortions (§301), health benefits coverage that includes abortions (§302), or abortions furnished by or in federal facilities or by federal employees (§303). The prohibitions include constructions permitting separate non-federal coverage (§304-§305), non-preemption of stricter federal laws (§306), inapplicability to abortion complications (§307), and exceptions for pregnancies from rape or incest or to preserve the life of the mother (§308); the chapter also applies to District of Columbia funds approved by Congress (§309).

This section disallows the premium tax credit under IRC §36B for individuals enrolled in qualified health plans (QHPs) that provide coverage for abortions other than those necessary to save the life of the mother or in cases of rape or incest (i.e., as excepted under 1 U.S.C. §§307, 308), while permitting separate abortion coverage or plans ineligible for the credit. It similarly excludes such QHPs from the small employer health insurance expense deduction credit under IRC §45R, subject to the same separate coverage exception. The section strikes ACA §1303(b)(2) and (3) (42 U.S.C. 18023(b)(2)-(3)), which previously prohibited the use of federal premium credits or cost-sharing reductions to pay for non-Hyde abortions in QHPs and required issuers to establish separate allocation accounts for such payments (thus eliminating the prior segregation option for plans receiving federal subsidies); and requires multi-state QHPs to exclude coverage prohibited by federal abortion funding restrictions under 1 U.S.C. ch. 4. The amendments apply to plan years beginning after December 31, 2025.

This section revises notice requirements under ACA §1303(b)(3) (42 U.S.C. 18023(b)(3)) for qualified health plans (QHPs) offered through an Exchange. It requires disclosure of the extent of coverage (if any) of abortions for which federal funding is prohibited or permitted—at enrollment and prominently in marketing materials, comparison tools, summaries of benefits and coverage, and Exchange internet portals—and separate disclosure and identification of any premium surcharge attributable to coverage of abortions for which federal funding is prohibited (i.e., beyond rape, incest, or life of the mother). The requirements apply to such materials made available more than 30 days after enactment.

This section prohibits the use of federal funds—including through grants, contracts, insurance, or other means—to pay for, reimburse, or support specified sex-trait modification procedures, defined as pharmaceutical or surgical interventions to align an individual's physical appearance or body with an asserted identity different from the individual's sex by (1) disrupting or suppressing normal biological functions or sex-based traits or (2) altering physical appearance or sex-based traits such as sexual or reproductive organs (excluding procedures to treat disorders of sexual development or for other purposes). The prohibition takes effect on the date of enactment and applies to payments, reimbursements, and services provided on or after such date.