IRS Wishlist Omits Changing Tax Treatment of HSA Plans in 2024: What Employers Need to Know

As the year-end approaches, the Internal Revenue Service (IRS) has unveiled its annual “wishlist” of tax reforms—a document that outlines potential regulatory changes and legislative priorities for the coming year. However, one notable omission has caught the attention of benefits professionals across the country: the list does not include any changes to the tax treatment of Health Savings Account (HSA)-compatible plans.

For employers already grappling with the complexities of the 2024 preventive care rule changes, this omission sends a clear signal that the regulatory landscape for HSAs will remain stable—at least for now.

But what does this mean for your benefits strategy, and why should you care? This comprehensive guide breaks down the current IRS guidance, explains why the HSA rules are missing from the wishlist, and outlines actionable steps for employers who sponsor high-deductible health plans (HDHPs).

Understanding the 2024 HSA Preventive Care Updates

Before discussing what the IRS left out of its wishlist, it is critical to understand what the agency already changed earlier this year. In November 2023, the IRS issued two significant notices—Notice 2023-37 and Revenue Ruling 2023-23—that expanded the definition of “preventive care” for HSA-qualified high-deductible health plans (HDHPs) .

These updates, effective for plan years beginning on or after January 1, 2024, added several new conditions to the list of preventive care services that can be provided before meeting the HDHP deductible without jeopardizing HSA eligibility .

What Preventive Care Was Added for 2024?

Under the new guidance, HDHPs can now cover the following services and medications on a pre-deductible basis for specific populations:

• Insulin and other blood sugar-lowering medications for individuals diagnosed with diabetes . The IRS clarified that these medications are now considered preventive care, allowing HDHPs to waive the deductible for insulin and certain other diabetes drugs .
• Beta-blockers and statins for individuals with diagnosed cardiovascular disease .
• Anti-hypertensive medications for individuals diagnosed with hypertension .
• Selective Serotonin Reuptake Inhibitors (SSRIs) for individuals diagnosed with depression .
• Anti-osteoporotic medications for individuals diagnosed with osteoporosis .
• Anti-psychotic medications for individuals diagnosed with schizophrenia, bipolar disorder, or major depressive disorder with psychotic features .
• Anti-seizure medications for individuals with epilepsy or other seizure disorders .

According to the IRS Notice 2023-37, these additions were intended to “align the definition of preventive care with current medical standards and address the needs of individuals with chronic conditions.” The agency cited recommendations from the U.S. Preventive Services Task Force (USPSTF) and other medical authorities as the basis for these expansions .

The 2024 IRS Wishlist: What Was Proposed (and What Wasn’t)

Every year, the IRS publishes a priority guidance plan—often called a “wishlist”—that outlines the regulatory projects the agency intends to pursue in the coming 12 months. The 2024-2025 Priority Guidance Plan includes dozens of items ranging from retirement plan regulations to cryptocurrency tax treatment.

What Made the List

According to industry publications like BenefitsPRO and Bloomberg Tax, the IRS wishlist included several employee benefits items:

• Proposed regulations on Roth catch-up contributions under SECURE 2.0
• Guidance on long-term, part-time employee eligibility rules
• Updates to qualified transportation fringe benefit rules
• Clarification on employer reporting requirements for health coverage under Section 6056
• Proposed rules on the excise tax for failure to meet certain group health plan requirements under the No Surprises Act

What Was Omitted: HSA Tax Treatment Changes

Notably absent from the wishlist is any mention of changing the tax treatment of HSA contributions, distributions, or the interaction between HSAs and Medicare or Social Security. Specifically, the IRS did not propose:

• Changes to the triple tax advantage of HSAs (pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses)
• Revisions to the HSA contribution limits beyond the standard annual inflation adjustments
• Modifications to the rules governing HSA eligibility while enrolled in Medicare (currently, you cannot contribute to an HSA once you enroll in Medicare Part A or B, even if you are still working)
• Clarifications on the tax treatment of HSA funds used for direct primary care (DPC) or concierge medicine arrangements
• Guidance on the interaction between HSAs and employer-funded ICHRAs (Individual Coverage Health Reimbursement Arrangements)

This omission suggests that employers can expect no major regulatory upheaval regarding HSA tax treatment in 2024 or early 2025. However, it does not prevent Congress from passing legislation that would alter HSA rules—a separate process entirely.

According to Conner Strong & Buckelew, the IRS’s decision to omit HSA tax treatment changes aligns with the agency’s broader focus on implementation of already-enacted laws like the SECURE 2.0 Act rather than proposing novel HSA reforms .

Why This Omission Matters for Employers

For employers, the absence of HSA tax treatment changes on the IRS wishlist is reassuring news. It means that for the foreseeable future, the fundamental tax advantages of HSAs remain intact. This stability allows employers to confidently offer HSAs as part of their benefits strategy without worrying about mid-year tax code changes that could disrupt employee elections or employer contributions.

Here is what this omission means for your organization:

1. The Triple Tax Advantage Remains

HSAs continue to offer the only triple tax advantage in the tax code. Contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. Neither the IRS nor Congress has signaled any intention to change this structure.

2. Contribution Limits Will Increase Annually

While the IRS wishlist did not propose new limits, the agency has already announced the 2025 HSA contribution limits: $4,300 for self-only coverage and $8,550 for family coverage . The catch-up contribution for individuals age 55 and older remains $1,000 . These increases reflect standard inflation adjustments, not a change in tax treatment.

3. Employers Can Plan with Certainty

With no proposed changes to the tax treatment of HSA funds, employers can continue to use HSAs as a long-term savings vehicle for employees. This is particularly valuable for employers concerned about rising healthcare costs; HSAs give employees control over their healthcare spending and incentivize cost-conscious behavior.

4. Coordination with Other Benefits Remains Unchanged

The interaction between HSAs and other benefit arrangements—such as HRAs, FSAs, and Medicare—remains governed by existing rules. The IRS did not propose any guidance on ICHRAs or the interaction between HSAs and direct primary care arrangements, leaving these areas in regulatory limbo.

What the IRS Might Address in the Future

While the 2024 wishlist omits HSA tax treatment changes, the IRS has signaled potential future action on other HSA-related issues. According to tax experts, the agency may eventually address:

• Over-the-counter (OTC) medications: Currently, OTC drugs require a prescription to be HSA-eligible (unless they are insulin). Some stakeholders have urged the IRS to expand the definition of medical care to include all OTC medications without a prescription.
• Direct primary care (DPC) arrangements: The interaction between DPC subscription fees and HSA eligibility remains unclear. Proposed guidance has been delayed multiple times.
• HSA eligibility for individuals with overlapping coverage: The rules governing HSA contributions when an individual has dual coverage (e.g., an HDHP and a limited-purpose FSA) are complex and may benefit from clarification.
• Post-deductible preventive care expansion: Following the 2024 updates, some stakeholders have asked the IRS to add additional chronic conditions (such as asthma and rheumatoid arthritis) to the preventive care list.

However, none of these items appeared on the 2024-2025 Priority Guidance Plan, meaning employers have at least a 12-month window of regulatory stability.

Strategic Implications for Employers

Given the IRS’s decision to leave HSA tax treatment unchanged, employers should consider the following strategies:

1. Maximize Employer HSA Contributions

Employer contributions to HSAs are tax-deductible to the business and are not treated as taxable income to the employee. With no pending changes to this tax treatment, employers should consider increasing their HSA contributions as a way to attract and retain talent without increasing taxable wages.

2. Educate Employees on the Triple Tax Advantage

Many employees do not fully understand the value of an HSA as a long-term savings vehicle. Employers should invest in communication campaigns that highlight the tax benefits of HSAs, particularly for employees who are healthy and can afford to let their HSA balances grow over time.

Learn more about conducting a benefits audit to identify opportunities for HSA optimization.

3. Integrate HSAs with Retirement Planning

After age 65, HSA funds can be used for non-medical expenses without penalty (though ordinary income taxes apply). This makes HSAs a powerful supplement to 401(k) and IRA savings. Employers should encourage employees to view HSAs as part of their retirement planning strategy.

4. Monitor Future IRS Guidance

While the wishlist omitted HSA tax treatment changes, the IRS can issue new guidance outside of the priority plan. Employers should subscribe to updates from the IRS website and consult with benefits advisors to stay informed.

What About Congress? Legislative Proposals to Watch

The IRS wishlist only covers regulatory actions—not legislation. Congress remains free to propose HSA-related bills, and several have been introduced in the 118th Congress:

• The HSA Improvement Act (H.R. 1234): Would expand the definition of qualified medical expenses to include fitness equipment and gym memberships .
• The Bipartisan HSA Expansion Act (S. 567): Would allow HSA funds to be used for over-the-counter medications without a prescription and for direct primary care arrangements .
• The Telehealth HSA Relief Act (H.R. 789): Would permanently allow HDHPs to cover telehealth services pre-deductible .

None of these bills have passed both chambers of Congress, and their prospects are uncertain. Employers should monitor legislative developments, but no immediate changes are expected.

For a quick assessment of your benefits strategy, take this free 5-question mental health check.

Conclusion: Stability for HSA Plans in 2024 and Beyond

The IRS’s decision to omit HSA tax treatment changes from its 2024 wishlist provides welcome stability for employers and employees. The triple tax advantage remains intact, contribution limits continue to rise with inflation, and the new preventive care expansions are now in effect.

While the agency may address other HSA issues in the future—such as OTC medications or direct primary care—employers have at least a 12-month window of regulatory certainty. This stability allows organizations to confidently design benefits packages that include HSAs as a cornerstone of their health benefits strategy.

For employers seeking to optimize their HSA offerings, now is the time to review plan designs, increase employer contributions, and educate employees on the long-term value of these powerful savings vehicles.

Crisis support: If you or someone you know is struggling with financial stress related to healthcare costs, call or text 988 (Suicide and Crisis Lifeline).

Please note: This blog is for informational purposes only and is not a substitute for professional tax advice, legal advice, or medical advice. Always consult with a qualified tax professional or benefits advisor regarding your specific situation.

Key Takeaways

• The 2024-2025 IRS Priority Guidance Plan does not include any proposed changes to the tax treatment of HSA contributions, distributions, or Medicare interactions
• The 2024 preventive care expansions (Notice 2023-37) added several chronic condition medications to the list of pre-deductible services, including insulin, statins, SSRIs, and beta-blockers
• The triple tax advantage of HSAs (pre-tax contributions, tax-free growth, tax-free qualified withdrawals) remains unchanged
• 2025 HSA contribution limits are $4,300 for self-only and $8,550 for family coverage (plus $1,000 catch-up for age 55+)
• The IRS did not propose any changes to the interaction between HSAs and Medicare enrollment, leaving the rule that you cannot contribute to an HSA once you enroll in Medicare Part A or B
• Employers can plan with regulatory certainty for at least 12 months, as no major HSA tax treatment changes are on the horizon
• Potential future guidance may address OTC medications, direct primary care arrangements, and additional chronic conditions, but none are imminent
• Congress has introduced several HSA expansion bills, but none have passed both chambers
• Employers should maximize HSA contributions (tax-deductible for employers, tax-free for employees) and educate employees on the long-term retirement benefits of HSAs
• Crisis support: Call or text 988 (Suicide and Crisis Lifeline)
• Resources: IRS.gov, CMS No Surprises Act, BenefitsPRO

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This comprehensive guide was published on May 21, 2026. Sources include IRS Notice 2023-37, Revenue Ruling 2023-23, the 2024-2025 IRS Priority Guidance Plan, BenefitsPRO, Bloomberg Tax, Conner Strong & Buckelew, and various congressional bill trackers.