Overview
Title
To amend the Internal Revenue Code of 1986 to allow both spouses to make catch-up contributions to the same health savings account.
ELI5 AI
The bill H. R. 2745 wants to let both a husband and wife put extra money into the same special savings account for health costs, but it will only start working after December 2025. It has some tricky parts about how much they can put in and doesn't really say what happens if they can't agree on the details.
Summary AI
The bill H. R. 2745 proposes changes to the Internal Revenue Code of 1986 to allow both spouses to contribute catch-up amounts to the same health savings account (HSA) if they are eligible and have family coverage. It specifies that certain limitations apply, such as only considering one high deductible health plan coverage if both spouses have separate plans. The bill also addresses how additional contribution amounts for those aged 55 or older are treated between spouses. These amendments would be effective for taxable years starting after December 31, 2025.
Published
Keywords AI
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Bill Statistics
Size
Language
Complexity
AnalysisAI
General Summary of the Bill
This proposed legislation, introduced as H.R. 2745, seeks to modify the Internal Revenue Code of 1986 to facilitate catch-up contributions to Health Savings Accounts (HSAs). Specifically, it aims to allow both spouses the opportunity to make these contributions into the same HSA account if at least one partner is enrolled in a family high deductible health plan. Such amendments would take effect for taxable years beginning after December 31, 2025. The initiative is informally titled the "Catch Up Act."
Summary of Significant Issues
The bill presents several complexities that may pose challenges to the general public:
Complex Language: The bill uses intricate language regarding how the limitations for contributions are divided between spouses. This could potentially lead to confusion for taxpayers, who may struggle to interpret and comply accurately with the tax rules.
Clarification on Contribution Limits: An aspect of the bill allows for the reduction of contribution limits by payments made to Archer MSAs, which might necessitate further clarification. Without clear guidelines, taxpayers could find themselves mismanaging their finances.
Dispute Resolution: The bill does not offer guidance on resolving disputes between spouses over how to divide the contribution limits. This omission could lead to legal and financial disagreements, highlighting a need for a structured resolution mechanism.
Incomplete Coverage Considerations: By not addressing how individuals with diverse coverage types or varied family structures will be affected, the bill presents an incomplete legislative approach. This could unintentionally exclude certain taxpayers from its benefits.
Delayed Implementation: The bill's delayed implementation timeline—several years after its potential enactment—might postpone the bill’s intended benefits, which could be problematic if there's a strong public call for accelerated changes.
Potential Public Impact
Broadly, the bill could impact couples who manage their finances jointly and wish to maximize their contributions to an HSA for retirement or healthcare savings. However, the intricate terms might present initial hurdles for understanding and applying the changes effectively.
Potential Impact on Specific Stakeholders
Married Couples: The most direct beneficiaries would be married couples, particularly those aged 55 and up, who aim to boost their joint retirement or healthcare savings. They could benefit from increased savings potential if they can navigate the bill's complexities.
Taxpayers with MSA Contributions: Individuals contributing to Archer MSAs might face confusion about how these contributions affect their overall savings limitations. They will need clear guidance to manage their contributions effectively.
Legal and Financial Advisors: Such professionals could see increased demand for their services as couples seek to understand and implement the bill’s provisions. They might need to offer additional support in interpreting the new regulations and mediating disputes.
In conclusion, while the "Catch Up Act" holds the potential to enhance financial security for many married couples, its complexities necessitate additional clarification and guidance to ensure equitable and effective implementation.
Issues
The bill's language in Section 2 regarding the division of the limitation between spouses is complex and may be unclear to the general public. This could lead to confusion and misinterpretation, potentially causing compliance issues or unintentional errors in tax filings.
The concept of reducing the contribution limit by the aggregate amount paid to Archer MSAs, as outlined in Section 2, requires further clarification. Taxpayers might struggle to understand how this reduction affects their contributions, leading to potential financial mismanagement.
The absence of guidance on how disputes between spouses over the division of contribution limits will be resolved, as noted in Section 2, could lead to legal and financial disputes, necessitating further clarification or the establishment of a dispute resolution mechanism.
The bill's failure to address the impacts on individuals with different types of coverage or family structures, as mentioned in Section 2, presents an incomplete approach to amending the tax code. This could inadvertently exclude or disadvantage certain taxpayers, making this omission significant.
The effective date specified in Section 2 for the new rules to begin is several years in the future. This delay might postpone the intended benefits of the bill and could be contentious if there is a public demand for immediate changes.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of this Act provides its short title, stating that it can be referred to as the “Catch Up Act.”
2. Allow both spouses to make catch-up contributions to the same health savings account Read Opens in new tab
Summary AI
Congress has proposed a change to the tax law allowing both spouses to make contributions to the same health savings account (HSA) if one of them has family coverage under a high deductible health plan. If both spouses are 55 or older, they can include additional contribution amounts in this shared account. This amendment will be effective for taxable years starting after December 31, 2025.