H.R. 74 — Freedom for Families Act

This section revises the tax treatment of distributions from health savings accounts (HSAs)—tax-advantaged accounts for paying qualified medical expenses—to exclude from gross income any amounts distributed during a period of qualified caregiving, defined as any period an individual is on leave or not employed due to circumstances eligible for leave under the Family and Medical Leave Act of 1993 (i.e., birth or placement for adoption or foster care; care for a spouse, child, or parent with a serious health condition; the individual's own serious health condition; certain military exigencies; or care for a covered servicemember). (Thus, such distributions avoid income inclusion previously required for non-qualified uses.) The section makes conforming amendments to treat expenses incurred during such periods as qualified medical expenses and applies to taxable years beginning after enactment.

This section eliminates the requirement for coverage under a high-deductible health plan (HDHP) to make contributions to a health savings account (HSA) and sets the annual contribution limit at $9,000 ($18,000 for joint returns). It makes conforming amendments by striking monthly proration rules, catch-up contributions for individuals age 55 or older, and definitions of eligible individuals. The changes apply to taxable years beginning after enactment.