HOPE Act of 2024

This bill amends the Internal Revenue Code to create HOPE Accounts, tax-exempt trusts for paying qualified medical expenses, and modifies related health provisions.

Sec. 2, HOPE Accounts: Establishes HOPE Accounts as tax-exempt trusts for paying qualified medical expenses of an account beneficiary. Eligible individuals must have minimum essential coverage and cannot contribute to certain other health accounts (like HSAs or FSAs) in the same month. Annual contribution limits are $4,000 for self-only or married filing separately/jointly, and $8,000 for head of household with family coverage, adjusted for inflation. Employer and Medicaid contributions are limited to 50% of the limit. No deduction is allowed for individual contributions, but employer contributions are excluded from gross income for those with adjusted gross income under $100,000 ($200,000 joint). Distributions for qualified medical expenses are tax-free; other distributions are taxable and subject to a 30% additional tax, with exceptions for death or disability. Excess contributions returned by the tax filing deadline are not penalized. Rollovers between HOPE Accounts are allowed within 60 days. Trustees must report contributions, distributions, and other information to the IRS and account beneficiaries.

Sec. 2(b), Excess Contributions: Adds HOPE Accounts to the list of accounts subject to the excise tax on excess contributions, defining excess contributions as amounts exceeding the contribution limits, with rules for carryover and returned contributions.

Sec. 2(c), Employer Contributions: Treats employer contributions to HOPE Accounts as tax-free employer-provided medical coverage, up to the contribution limits, but not for employees with adjusted gross income over $100,000 ($200,000 joint). Employers must report these contributions on employee W-2 forms. Conforming amendments update cafeteria plan rules.

Sec. 2(d), Failure of Employer To Make Comparable HOPE Account Contributions: Extends the existing penalty for employers failing to make comparable health savings account contributions to also cover HOPE Account contributions.

Sec. 2(e), Application of Prohibited Transaction Rules: Includes HOPE Accounts in the list of plans subject to prohibited transaction rules under the Internal Revenue Code.

Sec. 2(f), Failure To Report: Adds HOPE Account reporting requirements to the list of failures subject to penalties under section 6693.

Sec. 2(g), Effective Date: The amendments apply to taxable years beginning after December 31, 2024.