A new bipartisan bill on Capitol Hill aims to create a tax-advantaged account that would allow millions of Americans with most types of insurance to save for the cost of their health care through private and employer contributions.

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On August 23, Republican U.S. Representative Blake Moore (UT), along with co-signers Jimmy Panetta (D-CA), Brian Fitzpatrick (PA), Brad Schneider (D-IL), Adrian Smith (R-NE), and Raul Ruiz (D-CA), introduced the Health Out-of-Pocket Expense (HOPE) Act of 2024 (HR 9394) to reform the health care provisions of the Internal Revenue Code of 1986.

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

If enacted, the HOPE Act would help families manage out-of-pocket costs and save for future medical care by creating a HOPE account similar to a Roth savings account that would provide certain tax benefits and investment opportunities for individuals and families to save for future health care costs, lawmakers said.

For example, the bill would allow anyone with qualifying health insurance (including private market, Medicare, Medicaid, Indian Health Service, and other health insurance providers) to contribute to a HOPE account.

“Working families need additional ways to plan and save for unexpected health care expenses,” said Rep. Panetta. “Through commonsense and straightforward action, we can ensure that individuals and working families across our country plan for their financial well-being and future health care needs.”

Under the bill, individual contributions would not be tax deductible. However, employer contributions would be deductible for the employer and exempt from income and payroll taxes if the adjusted gross income of an individual is $100,000 or less, or $200,000 or less for a family, the bill says.

Similarly, employers and government programs could make annual 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 self-insured individuals 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 couples filing jointly who choose to set up a family account. Any contributions to an HSA, FSA or HRA will reduce the maximum contribution to a HOPE account that year, the text says.

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

Congressman Fitzpatrick pointed out that the HOPE Act would directly assist individuals struggling with rising medical costs.

“With this bipartisan legislation, HOPE Accounts will provide an alternative option that allows our hardworking families to take control of their health care spending – free from the crushing burden of our country’s high health care costs,” he said.

Schneider also noted that HOPE accounts are compatible with any type of comprehensive health insurance plan, allowing account holders to maintain comprehensive insurance coverage while saving.

“As health care costs continue to rise,” he said, “families will benefit both financially and physically if they can efficiently save for future expenses through HOPE accounts.”

“Unexpected medical bills can be devastating for hard-working families, but most health insurance options don’t offer built-in ways to prepare families for an emergency,” Smith added. “HOPE accounts would give American families a new tool to protect themselves and their household finances from an unexpected illness or injury.”

Ruiz said the HOPE Act is a “critical step forward” in helping families with rising health care costs and giving them a new way to save on health care expenses, independent of expensive plans with high deductibles.

The measure was submitted to the U.S. House of Representatives Budget Committee for review.