S. 3386 — Health Care Freedom for Patients Act of 2025

This section establishes Exchange plan health savings accounts (HSAs) under section 223 of the Internal Revenue Code of 1986. It prohibits rollovers from an Exchange plan HSA except to another Exchange plan HSA and excludes from qualified medical expenses amounts paid for abortion (except in cases of rape, incest, or life endangerment) or sex trait modification procedures (as defined in 45 C.F.R. 156.400). This section also excludes from gross income governmental contributions made to an Exchange plan HSA under section 102(a) of the Health Care Freedom for Patients Act of 2025. The amendments apply to taxable years beginning after December 31, 2025.

This section establishes the Exchange plan HSA contribution program, under which the Secretary of Health and Human Services makes monthly payments to the health savings accounts of eligible enrollees in bronze-level qualified health plans or catastrophic plans offered through an Exchange in calendar years 2026 and 2027. Payments equal one-twelfth of $1,000 for individuals who have attained age 18 but not age 50, or one-twelfth of $1,500 for individuals who have attained age 50 but not age 65, as of the first day of the calendar year. Eligible enrollees must be HSA-eligible individuals under age 65 with household income not exceeding 700 percent of the poverty line (and, if applicable, must be eligible aliens). The section appropriates $10 billion for each of fiscal years 2026 and 2027 to carry out the program and amends Internal Revenue Code information-sharing rules to facilitate administration.

This section appropriates such sums as may be necessary to fund cost-sharing reduction payments under section 1402 of the Patient Protection and Affordable Care Act for plan years beginning on or after January 1, 2027. The funds may not be used for any qualified health plan that covers abortion, except when necessary to save the life of the mother or when the pregnancy results from rape or incest.

This section expands eligibility for catastrophic plans under the Patient Protection and Affordable Care Act to all individuals purchasing coverage in the individual market (from only those under age 30 or qualifying for a hardship exemption). It also includes catastrophic plan enrollees in the single risk pool for purposes of setting premiums and removes prior restrictions limiting enrollment in such plans. The amendments apply to plan years beginning on or after January 1, 2027.

This section increases the Federal Medical Assistance Percentage (FMAP) to 80 percent for calendar quarters beginning on or after October 1, 2027, for a specified State that provides financial assistance from its general fund or comprehensive health benefits coverage (other than coverage required by Federal law) to an alien who is not a qualified alien and is not a child or pregnant woman lawfully residing in the United States and eligible for Medicaid or CHIP. As background, FMAP is the federal matching rate for state Medicaid expenditures. The section defines a specified State to include any State meeting the coverage criteria regardless of whether the assistance is provided under the Medicaid State plan (or waiver) or another State program, and it updates related quarter-based calculations in the existing FMAP adjustment formula.

This section prohibits federal financial participation under Medicaid and the Children's Health Insurance Program (CHIP) for medical assistance or child health assistance furnished during reasonable opportunity periods for verifying citizenship, nationality, or satisfactory immigration status, unless the individual's status is verified by the end of the period. The section eliminates the prior requirement that states furnish such assistance during these periods (i.e., the period for presenting documentary evidence of citizenship or nationality, the 90-day period following a Social Security data match, or the period for submitting evidence of satisfactory immigration status) unless the state elects an option to continue coverage. States may elect to provide assistance during any of these periods. The amendments take effect October 1, 2026.

This section prohibits the inclusion of gender transition procedures in the essential health benefits that must be covered by qualified health plans offered through Exchanges for plan years beginning on or after January 1, 2027. The provision defines the term to encompass specified surgeries (including castration, hysterectomy, mastectomy, phalloplasty, vaginoplasty, and facial feminization or masculinization procedures), placement of implants (including chest, testicular, or gluteal), and medications (including GnRH analogues or puberty blockers and supraphysiologic doses of testosterone or estrogen) when performed to intentionally alter an individual’s body to no longer correspond to the individual’s biological sex (defined as male or female based on reproductive system characteristics). Exceptions apply for puberty suppression to treat precocious puberty, correction of specified disorders of sex development, treatment of complications from prior procedures, and reconstruction to align with biological sex.

This section prohibits federal Medicaid and CHIP funding for specified gender transition procedures furnished to enrollees. It adds a new definition of such procedures to include surgeries (e.g., mastectomy, hysterectomy, phalloplasty, vaginoplasty, and facial feminization or masculinization procedures), placement of implants (e.g., chest or gluteal), and medications (e.g., GnRH analogues or other puberty blockers, and supraphysiologic doses of testosterone or estrogen). The prohibition applies except for treatments to address precocious puberty, specified disorders of sex development, complications from prior procedures, or reconstruction to align with biological sex, when provided to a minor with parental or guardian consent.