Healthy Savings Act of 2009 - Amends Internal Revenue Code provisions relating to health savings accounts (HSAs) to allow: (1) spouses to make increased catch-up contributions to a single HSA; (2) Medicare Part A beneficiaries to establish and contribute to an HSA; (3) veterans eligible for service-connected disability benefits and individuals eligible for Indian health service assistance to establish an HSA; (4) HSAs to incorporate flexible spending and health reimbursement arrangements; (5) the use of HSAs to purchase health insurance; (6) payment of certain medical expenses incurred before the establishment of an HSA; and (7) payments from an HSA for prescription and over-the-counter drugs that aid in the prevention and management of chronic diseases.
Allows Medicare beneficiaries participating in a Medicare Advantage medical savings account (MSA) to exclude from gross income payments made to their MSAs.
Treats as medical care for purposes of the tax deduction for medical expenses certain exercise equipment and physical fitness programs and certain nutritional and dietary supplements.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3508 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 3508
To amend the Internal Revenue Code of 1986 to provide for improved
treatment of HSA account provisions, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 31, 2009
Mr. Paulsen (for himself, Mr. Akin, Mr. Boustany, Mr. Brown of South
Carolina, Mrs. McMorris Rodgers, Mr. Ryan of Wisconsin, Mr. Brady of
Texas, Mr. Conaway, Mr. Franks of Arizona, Mr. Price of Georgia, Mr.
Kirk, Mr. Roskam, Mrs. Biggert, Mr. McCarthy of California, Mr.
Cassidy, Mrs. Lummis, Mr. Rooney, Mr. Davis of Kentucky, Mr. Lance, Mr.
Pence, and Mrs. Bachmann) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for improved
treatment of HSA account provisions, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Healthy Savings Act of 2009''.
SEC. 2. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME
HSA ACCOUNT.
(a) In General.--Paragraph (3) of section 223(b) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Special rule where both spouses are eligible
individuals with 1 account.--If--
``(i) an individual and the individual's
spouse have both attained age 55 before the
close of the taxable year, and
``(ii) the spouse is not an account
beneficiary of a health savings account as of
the close of such year,
the additional contribution amount shall be 200 percent
of the amount otherwise determined under subparagraph
(B).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 3. PROVISIONS RELATING TO MEDICARE.
(a) Individuals Over Age 65 Only Enrolled in Medicare Part A.--
Section 223(b)(7) of the Internal Revenue Code of 1986 (relating to
contribution limitation on Medicare eligible individuals) is amended by
adding at the end the following new sentence: ``This paragraph shall
not apply to any individual during any period the individual's only
entitlement to such benefits is an entitlement to hospital insurance
benefits under part A of title XVIII of such Act pursuant to an
enrollment for such hospital insurance benefits under section 226(a)(1)
of such Act.''.
(b) Medicare Beneficiaries Participating in Medicare Advantage MSA
May Contribute Their Own Money to Their MSA.--Subsection (b) of section
138 of such Code is amended by striking paragraph (2) and by
redesignating paragraphs (3) and (4) as paragraphs (2) and (3),
respectively.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 4. INDIVIDUALS ELIGIBLE FOR VETERANS BENEFITS FOR A SERVICE-
CONNECTED DISABILITY.
(a) In General.--Section 223(c)(1) of the Internal Revenue Code of
1986 (defining eligible individual) is amended by adding at the end the
following new subparagraph:
``(C) Special rule for individuals eligible for
certain veterans benefits.--For purposes of
subparagraph (A)(ii), an individual shall not be
treated as covered under a health plan described in
such subparagraph merely because the individual
receives periodic hospital care or medical services for
a service-connected disability under any law
administered by the Secretary of Veterans Affairs but
only if the individual is not eligible to receive such
care or services for any condition other than a
service-connected disability.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 5. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH SERVICE ASSISTANCE.
(a) In General.--Section 223(c)(1) of the Internal Revenue Code of
1986, as amended by this Act, is amended by adding at the end the
following new subparagraph:
``(D) Special rule for individuals eligible for
assistance under indian health service programs.--For
purposes of subparagraph (A)(ii), an individual shall
not be treated as covered under a health plan described
in such subparagraph merely because the individual
receives hospital care or medical services under a
medical care program of the Indian Health Service or of
a tribal organization.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 6. FSA AND HRA TERMINATION TO FUND HSAS.
(a) Eligible Individuals Include FSA and HRA Participants.--Section
223(c)(1)(B) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``and'' at the end of clause (ii),
(2) by striking the period at the end of clause (iii) and
inserting ``, and'', and
(3) by inserting after clause (iii) the following new
clause:
``(iv) coverage under a health flexible
spending arrangement or a health reimbursement
arrangement in the plan year a qualified HSA
distribution as described in section 106(e) is
made on behalf of the individual if after the
qualified HSA distribution is made and for the
remaining duration of the plan year, the
coverage provided under the health flexible
spending arrangement or health reimbursement
arrangement is converted to--
``(I) coverage that does not pay or
reimburse any medical expense incurred
before the minimum annual deductible
under section 223(c)(2)(A)(i) (prorated
for the period occurring after the
qualified HSA distribution is made) is
satisfied,
``(II) coverage that, after the
qualified HSA distribution is made,
does not pay or reimburse any medical
expense incurred after the qualified
HSA distribution is made other than
preventive care as defined in section
223(c)(2)(3),
``(III) coverage that, after the
qualified HSA distribution is made,
pays or reimburses benefits for
coverage described in section
223(c)(1)(B)(ii) (but not through
insurance or for long-term care
services),
``(IV) coverage that, after the
qualified HSA distribution is made,
pays or reimburses benefits for
permitted insurance as defined in
section 223(c)(1)(B)(i) or coverage
described in section 223(c)(1)(B)(ii)
(but not for long-term care services),
``(V) coverage that, after the
qualified HSA distribution is made,
pays or reimburses only those medical
expenses incurred after an individual's
retirement (and no expenses incurred
before retirement), or
``(VI) coverage that, after the
qualified HSA distribution is made, is
suspended, pursuant to an election made
on or before the date the individual
elects a qualified HSA distribution or,
if later, on the date of the individual
enrolls in a high deductible health
plan (as defined in section 223(c)(2)),
that does not pay or reimburse, at any
time, any medical expense incurred
during the suspension period except as
defined in subclauses (I) through (V)
above.''.
(b) Qualified HSA Distribution Shall Not Affect Flexible Spending
Arrangement.--Section 106(e)(1) of such Code is amended to read as
follows:
``(1) In general.--A plan shall not fail to be treated as a
health flexible spending arrangement under this section,
section 105, or section 125, or as a health reimbursement
arrangement under this section or section 105, merely because
such plan provides for a qualified HSA distribution.''.
(c) FSA Balances at Year End Shall Not Forfeit.--Section 125(d)(2)
of such Code is amended by adding at the end the following new
subparagraph:
``(E) Exception for qualified hsa distributions.--
Subparagraph (A) shall not apply to the extent that
there is an amount remaining in a health flexible
spending account at the end of a plan year that an
individual elects to contribute to a health savings
account pursuant to a qualified HSA distribution (as
defined in section 106(e)(2)).''.
(d) Simplification of Limitations on FSA and HRA Rollovers.--
Section 106(e)(2) of such Code (relating to qualified HSA distribution)
is amended to read as follows:
``(2) Qualified hsa distribution.--
``(A) In general.--The term `qualified HSA
distribution' means a distribution from a health
flexible spending arrangement or health reimbursement
arrangement to the extent that such distribution does
not exceed the lesser of--
``(i) the balance in such arrangement as of
the date of such distribution, or
``(ii) the amount determined under
subparagraph (B).
Such term shall not include more than 1 distribution
with respect to any arrangement.
``(B) Dollar limitations.--
``(i) Distributions from a health flexible
spending arrangement.--A qualified HSA
distribution from a health flexible spending
arrangement shall not exceed the applicable
amount.
``(ii) Distributions from a health
reimbursement arrangement.--A qualified HSA
distribution from a health reimbursement
arrangement shall not exceed--
``(I) the applicable amount divided
by 12, multiplied by
``(II) the number of months during
which the individual is a participant
in the health reimbursement
arrangement.
``(iii) Applicable amount.--For purposes of
this subparagraph, the applicable amount is--
``(I) $2,250 in the case of an
eligible individual who has self-only
coverage under a high deductible health
plan at the time of such distribution,
and
``(II) $4,500 in the case of an
eligible individual who has family
coverage under a high deductible health
plan at the time of such
distribution.''.
(e) Elimination of Additional Tax for Failure To Maintain High
Deductible Health Plan Coverage.--Section 106(e) of such Code is
amended--
(1) by striking paragraph (3) and redesignating paragraphs
(4) and (5) as paragraphs (3) and (4), respectively, and
(2) by striking subparagraph (A) of paragraph (3), as so
redesignated, and redesignating subparagraphs (B) and (C) of
such paragraph as subparagraphs (A) and (B) thereof,
respectively.
(f) Limited Purpose FSAs and HRAs.--Section 106(e) of such Code, as
amended by this section, is amended by adding at the end the following
new paragraph:
``(5) Limited purpose fsas and hras.--A plan shall not fail
to be a health flexible spending arrangement or health
reimbursement arrangement under this section or section 105
merely because the plan converts coverage for individuals who
enroll in a high deductible health plan described in section
223(c)(2) to coverage described in section 223(c)(1)(B)(iv).
Coverage for such individuals may be converted as of the date
of enrollment in the high deductible health plan, without
regard to the period of coverage under the health flexible
spending arrangement or health reimbursement arrangement, and
without requiring any change in coverage to individuals who do
not enroll in a high deductible health plan.''.
(g) Distribution Amounts Adjusted for Cost-of-Living.--Section
106(e) of such Code, as amended by this section, is amended by adding
at the end the following new paragraph:
``(6) Cost-of-living adjustment.--
``(A) In general.--In the case of any taxable year
beginning after December 31, 2010, each of the dollar
amounts in paragraph (2)(B)(iii) shall be increased by
an amount equal to such dollar amount, multiplied by
the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which such taxable
year begins by substituting `calendar year 2009' for
`calendar year 1992' in subparagraph (B) thereof.
``(B) Rounding.--If any increase under paragraph
(1) is not a multiple of $50, such increase shall be
rounded to the nearest multiple of $50.''.
(h) Disclaimer of Disqualifying Coverage.--Section 223(c)(1)(B) of
such Code, as amended by this section, is amended--
(1) by striking ``and'' at the end of clause (iii),
(2) by striking the period at the end of clause (iv) and
inserting ``, and'', and
(3) by inserting after clause (iv) the following new
clause:
``(v) any coverage (including prospective
coverage) under a health plan that is not a
high deductible health plan which is disclaimed
in writing, at the time of the creation or
organization of the health savings account,
including by execution of a trust described in
subsection (d)(1) through a governing
instrument that includes such a disclaimer, or
by acceptance of an amendment to such a trust
that includes such a disclaimer.''.
(i) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 7. PURCHASE OF HEALTH INSURANCE FROM HSA ACCOUNT.
(a) In General.--Paragraph (2) of section 223(d) of the Internal
Revenue Code of 1986 (defining qualified medical expenses) is amended--
(1) by striking subparagraphs (B) and (C),
(2) by inserting `` and including payment for insurance)''
after ``section 213(d)''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 8. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE
ESTABLISHMENT OF ACCOUNT.
(a) In General.--Paragraph (2) of section 223(d) of the Internal
Revenue Code of 1986, as amended by this Act, is amended by adding at
the end the following new subparagraph:
``(B) Certain medical expenses incurred before
establishment of account treated as qualified.--An
expense shall not fail to be treated as a qualified
medical expense solely because such expense was
incurred before the establishment of the health savings
account if such expense was incurred--
``(i) during either--
``(I) the taxable year in which the
health savings account was established,
or
``(II) the preceding taxable year
in the case of a health savings account
established after the taxable year in
which such expense was incurred but
before the time prescribed by law for
filing the return for such taxable year
(not including extensions thereof), and
``(ii) for medical care of an individual
during a period that such individual was
covered by a high deductible health plan and
met the requirements of subsection
(c)(1)(A)(ii) (after application of subsection
(c)(1)(B)).''.
(b) Effective Date.--The amendment made by this section shall apply
to health savings accounts established during taxable years beginning
after the date of the enactment of this Act.
SEC. 9. PREVENTIVE CARE PRESCRIPTION DRUG CLARIFICATION.
(a) Clarify Use of Drugs in Preventive Care.--Subparagraph (C) of
section 223(c)(2) of the Internal Revenue Code of 1986 is amended by
adding at the end the following: ``Preventive care shall include
prescription and over-the-counter drugs and medicines which have the
primary purpose of preventing the onset of, further deterioration from,
or complications associated with chronic conditions, illnesses, or
diseases.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 10. QUALIFIED MEDICAL EXPENSES.
(a) Certain Exercise Equipment and Physical Fitness Programs
Treated as Medical Care.--
(1) In general.--Subsection (d) of section 213 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(12) Exercise equipment and physical fitness programs.--
``(A) In general.--The term `medical care' shall
include amounts paid--
``(i) to purchase or use equipment used in
a program (including a self-directed program)
of physical exercise,
``(ii) to participate, or receive
instruction, in a program of physical exercise,
and
``(iii) for membership dues in a fitness
club the primary purpose of which is to provide
access to equipment and facilities for physical
exercise.
``(B) Limitation.--Amounts treated as medical care
under subparagraph (A) shall not exceed $1,000 with
respect to any individual for any taxable year.''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
(b) Certain Nutritional and Dietary Supplements To Be Treated as
Medical Care.--
(1) In general.--Subsection (d) of section 213 of such
Code, as amended by subsection (a), is amended by adding at the
end the following new paragraph:
``(13) Nutritional and dietary supplements.--
``(A) In general.--The term `medical care' shall
include amounts paid to purchase herbs, vitamins,
minerals, homeopathic remedies, meal replacement
products, and other dietary and nutritional
supplements.
``(B) Limitation.--Amounts treated as medical care
under subparagraph (A) shall not exceed $1,000 with
respect to any individual for any taxable year.
``(C) Meal replacement product.--For purposes of
this paragraph, the term `meal replacement product'
means any product that--
``(i) is permitted to bear labeling making
a claim described in section 403(r)(3) of the
Federal Food, Drug, and Cosmetic Act, and
``(ii) is permitted to claim under such
section that such product is low in fat and is
a good source of protein, fiber, and multiple
essential vitamins and minerals.''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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