Helping Wounded Warriors Cover Medical Expenses Act

Helping Wounded Warriors Cover Medical Expenses Act - Amends the Internal Revenue Code to: (1) allow tax-free distributions from a qualified tuition program account (529 tuition plans) for payment of the medical expenses of veterans with disability ratings of more than 50%; and (2) exclude such distributions from gross income, for income tax purposes.

[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5554 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 5554

To amend the Internal Revenue Code of 1986 to permit distributions from 
 529 accounts for medical expenses of account owners who are veterans 
          with disability ratings of greater than 50 percent.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 18, 2014

  Mr. Bishop of New York (for himself and Mr. Rangel) 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 permit distributions from 
 529 accounts for medical expenses of account owners who are veterans 
          with disability ratings of greater than 50 percent.

    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 ``Helping Wounded Warriors Cover 
Medical Expenses Act''.

SEC. 2. DISTRIBUTIONS FROM 529 ACCOUNTS FOR MEDICAL EXPENSES OF ACCOUNT 
              OWNERS WHO ARE VETERANS WITH DISABILITY RATINGS OF 
              GREATER THAN 50 PERCENT.

    (a) Exemption From 529 Penalty.--Section 529(c)(6) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(6) Additional tax.--
                    ``(A) In general.--The tax imposed by section 
                530(d)(4) shall apply to any payment or distribution 
                from a qualified tuition program in the same manner as 
                such tax applies to a payment or distribution from a 
                Coverdell education savings account. This paragraph 
                shall not apply to any payment or distribution in any 
                taxable year beginning before January 1, 2004, which is 
                includible in gross income but used for qualified 
                higher education expenses of the designated 
                beneficiary.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to any payment or distribution from a qualified tuition 
                program to the owner of an account under such program 
                if--
                            ``(i) at the time of such payment or 
                        distribution, the owner of such account is a 
                        veteran whom the Secretary of Veterans Affairs 
                        determines has a service-connected disability 
                        rated at 50 percent or more, and
                            ``(ii) in lieu of using such payment or 
                        distribution for qualified higher education 
                        expenses, such payment or distribution is used 
                        for medical care (as defined in section 213(d)) 
                        for such owner.
                    ``(C) Coordination with medical expense 
                deduction.--For purposes of determining the amount of 
                the deduction under section 213, any payment or 
                distribution to which subparagraph (B) applies shall 
                not be treated as an expense paid for medical care.''.
    (b) Exclusion From Income.--Section 72(e)(6) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(6) Extension of paragraph (2)(B) to qualified tuition 
        programs and coverdell education savings accounts.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, paragraph (2)(B) shall 
                apply to amounts received under a qualified tuition 
                program (as defined in section 529(b)) or under a 
                Coverdell education savings account (as defined in 
                section 530(b)). The rule of paragraph (8)(B) shall 
                apply for purposes of this paragraph.
                    ``(B) Exception.--In the case of an amount received 
                under a qualified tuition program (as defined in 
                section 529(b)) which is not subject to the penalty 
                under subparagraph (A) of section 529(c)(6) by reason 
                of subparagraph (B) thereof--
                            ``(i) subparagraph (A) of this paragraph 
                        shall not apply, and
                            ``(ii) the amount received which, but for 
                        this subparagraph, would be treated as income 
                        on the contract shall be treated as investment 
                        in the contract.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments and distributions after the date of the enactment of 
this Act.
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