Health Savings and Affordability Act of 2011- Amends the Internal Revenue Code to: (1) allow a tax deduction from gross income for the cost of health insurance coverage for individual taxpayers, their spouses, and dependents; (2) permit holders of health savings accounts (HSAs) and their spouses who are age 55 or older to make additional (catch-up) contributions to a joint HSA; (3) increase the allowable amount of the tax deduction for contributions to HSAs; (4) combine individual and family deductibles under high deductible health insurance plans; (5) allow for increased rollovers from flexible spending arrangements (FSAs) or health reimbursement arrangements (HRAs) into HSAs; (6) allow the payment of premiums from HSAs for high deductible health plans; and (7) treat as medical care for purposes of the tax deduction for medical expenses certain exercise equipment and fees for physical fitness programs.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 369 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 369
To amend the Internal Revenue Code of 1986 to improve access to health
care by allowing a deduction for the health insurance costs of
individuals, expanding health savings accounts, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 20, 2011
Mr. Austria (for himself, Mr. Pence, Mrs. Bachmann, Mr. Sessions, Mr.
Akin, Mr. Burton of Indiana, Mr. Coffman of Colorado, Mr. Paul, Mr.
Ross of Florida, Mr. Thompson of Pennsylvania, Mr. Westmoreland, Mr.
Cassidy, Mr. Long, and Mr. Tiberi) 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 improve access to health
care by allowing a deduction for the health insurance costs of
individuals, expanding health savings accounts, 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.
(a) Short Title.--This Act may be cited as the ``Health Savings and
Affordability Act of 2011''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. DEDUCTION FOR QUALIFIED HEALTH INSURANCE COSTS OF INDIVIDUALS.
(a) In General.--Part VII of subchapter B of chapter 1 (relating to
additional itemized deductions) is amended by redesignating section 224
as section 225 and by inserting after section 223 the following new
section:
``SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE.
``(a) In General.--In the case of an individual, there shall be
allowed as a deduction an amount equal to the amount paid during the
taxable year for coverage for the taxpayer, his spouse, and dependents
under qualified health insurance.
``(b) Qualified Health Insurance.--For purposes of this section,
the term `qualified health insurance' means insurance which constitutes
medical care; except that such term shall not include any insurance if
substantially all of its coverage is of excepted benefits described in
section 9832(c).
``(c) Special Rules.--
``(1) Coordination with medical deduction, etc.--Any amount
paid by a taxpayer for insurance to which subsection (a)
applies shall not be taken into account in computing the amount
allowable to the taxpayer as a deduction under section 162(l)
or 213(a). Any amount taken into account in determining the
credit allowed under section 35 or 36B shall not be taken into
account for purposes of this section.
``(2) Deduction not allowed for self-employment tax
purposes.--The deduction allowable by reason of this section
shall not be taken into account in determining an individual's
net earnings from self-employment (within the meaning of
section 1402(a)) for purposes of chapter 2.''.
(b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 is amended by inserting before the last
sentence the following new paragraph:
``(22) Costs of qualified health insurance.--The deduction
allowed by section 224.''.
(c) Clerical Amendment.--The table of sections for part VII of
subchapter B of chapter 1 is amended by redesignating the item relating
to section 224 as an item relating to section 225 and inserting before
such item the following new item:
``Sec. 224. Costs of qualified health insurance.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 3. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME
HSA ACCOUNT.
(a) In General.--Paragraph (3) of section 223(b) 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. 4. INCREASE IN HSA CONTRIBUTION LIMITATION.
(a) In General.--Subsection (b) of section 223 (relating to monthly
limitation) is amended--
(1) by striking ``$2,250'' in paragraph (2)(A) and
inserting ``the amount in effect under subsection
(c)(2)(A)(ii)(I)'', and
(2) by striking ``$4,500'' in paragraph (2)(B) and
inserting ``the amount in effect under subsection
(c)(2)(A)(ii)(II)''.
(b) Conforming Amendment.--Paragraph (1) of section 223(g) is
amended by striking ``subsections (b)(2) and'' and inserting
``subsection''.
(c) Effective Date.--The amendments made by this section shall
apply to contributions for taxable years beginning after the date of
the enactment of this Act.
SEC. 5. TREATMENT OF FAMILY COVERAGE PLANS HAVING BOTH INDIVIDUAL AND
FAMILY DEDUCTIBLES.
(a) In General.--Paragraph (2) of section 223(c) (defining high
deductible plan) is amended by adding at the end the following new
subparagraph:
``(E) Family coverage plans having both individual
and family deductibles.--In the case of a family
coverage plan having a deductible (and the same
deductible) for each covered individual and a
deductible for the family as a whole, the requirement
of subparagraph (A)(i) shall be treated as met if
(without regard to this subparagraph)--
``(i) the individual deductible meets the
requirement of subparagraph (A)(i)(I), or
``(ii) the family deductible meets the
requirement of subparagraph (A)(i)(II).''.
(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) 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)(C),
``(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) 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)
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) (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) 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), 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), 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, 2011, 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 2010' for
`calendar year 1992' in subparagraph (B) thereof.
``(B) Rounding.--If any increase under subparagraph
(A) 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), 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) (defining
qualified medical expenses) is amended to read as follows:
``(2) Qualified medical expenses.--
``(A) In general.--The term `qualified medical
expenses' means, with respect to an account
beneficiary, amounts paid by such beneficiary for
medical care (as defined in section 213(d)) for any
individual covered by a high deductible health plan of
the account beneficiary, but only to the extent such
amounts are not compensated for by insurance or
otherwise.
``(B) Health insurance may not be purchased from
account.--Except as provided in subparagraph (C),
subparagraph (A) shall not apply to any payment for
insurance.
``(C) Exceptions.--Subparagraph (B) shall not apply
to any expense for coverage under--
``(i) a health plan during any period of
continuation coverage required under any
Federal law,
``(ii) a qualified long-term care insurance
contract (as defined in section 7702B(b)),
``(iii) a health plan during any period in
which the individual is receiving unemployment
compensation under any Federal or State law,
``(iv) a high deductible health plan, or
``(v) any health insurance under title
XVIII of the Social Security Act, other than a
Medicare supplemental policy (as defined in
section 1882 of such Act).''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to insurance purchased after the date of the enactment of
this Act in taxable years beginning after such date.
SEC. 8. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL FITNESS PROGRAMS
TREATED AS MEDICAL CARE.
(a) In General.--Subsection (d) of section 213 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 $1,200 with
respect to any individual for any taxable year.''.
(b) Effective Date.--The amendment made by this section 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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