Bipartisan HSA Improvement Act of 2018
This bill amends the Internal Revenue Code to modify various requirements for health savings accounts (HSAs).
The bill allows:
The bill also:
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5138 Introduced in House (IH)]
<DOC>
115th CONGRESS
2d Session
H. R. 5138
To amend the Internal Revenue Code of 1986 to improve access to health
care through modernized health savings accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 1, 2018
Mr. Kelly of Pennsylvania (for himself, Mr. Blumenauer, Mr. Paulsen,
Mr. Kind, Ms. Sewell of Alabama, and Mr. Fitzpatrick) 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 through modernized health savings accounts.
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 ``Bipartisan HSA Improvement Act of
2018''.
SEC. 2. EXCEPTED BENEFITS ALLOWED AS PERMITTED INSURANCE.
(a) In General.--Paragraph (3) of section 223(c) of the Internal
Revenue Code of 1986 is amended--
(1) by redesignating subparagraphs (B) and (C) as
subparagraphs (C) and (D), respectively; and
(2) by inserting the following new subparagraph:
``(B) insurance consisting of coverage for any
excepted benefits described in section 9832(c),''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years after the date of the enactment of this Act.
SEC. 3. ON-SITE EMPLOYEE CLINICS AND RETAIL CLINICS.
(a) In General.--Paragraph (1) of section 223(c) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(D) Special rule for qualified items and
services.--
``(i) In general.--For purposes of
subparagraph (A)(ii), an individual shall not
be treated as covered under a health plan for
purposes of subparagraph (A)(ii) merely because
the individual is eligible to receive, or
receives, qualified items and services at--
``(I) a healthcare facility located
at a facility owned or leased by the
employer of the individual (or of the
individual's spouse), or operated
primarily for the benefit of such
employer's employees, or
``(II) a retail health clinic.
``(ii) Qualified items and services
defined.--For purposes of this subparagraph,
the term `qualified items and services' means
the following:
``(I) Primary care including
physical examination.
``(II) Immunizations, including
injections of antigens provided by
employees.
``(III) Drugs or biologicals other
than a prescribed drug (as such term is
defined in section 213(d)(3)).
``(IV) Treatment for injuries
occurring in the course of employment.
``(V) Tests for conditions or
infectious diseases.
``(VI) Management of medically
complex chronic conditions.
``(VII) Drug testing.
``(VIII) Hearing or vision
screenings and related services.
``(IX) Other similar items and
services.
``(iii) Retail health clinic defined.--For
purposes of this subparagraph, the term `retail
health clinic' means a health care facility
located within a supermarket, pharmacy, or
similar retail establishment that offers urgent
care by a licensed healthcare provider.
``(iv) Aggregation.--For purposes of clause
(i), all persons treated as a single employer
under subsection (b), (c), (m), or (o) of
section 414 shall be treated as a single
employer.''.
(b) Effective Date.--The amendments made by this section shall
apply to months in taxable years beginning after the date of enactment
of this Act.
SEC. 4. CONTRIBUTIONS PERMITTED IF SPOUSE HAS A HEALTH FLEXIBLE
SPENDING ACCOUNT.
(a) Contributions Permitted if Spouse Has a Health Flexible
Spending Account.--Subparagraph (B) of section 223(c)(1) of the
Internal Revenue Code of 1986 is amended by striking ``and'' at the end
of clause (ii), by striking the period at the end of clause (iii) and
inserting ``, and'', and by inserting after clause (iii) the following:
``(iv) coverage under a health flexible
spending arrangement of the spouse of the
individual.''.
(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. 5. DEPENDENTS TO INCLUDE CHILDREN UP TO AGE 26.
(a) In General.--Subparagraph (A) of section 223(d)(2) of the
Internal Revenue Code of 1986 is amended by striking ``and any
dependent (as defined in section 152, determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual''
in subparagraph (A) and inserting ``any dependent (as defined in
section 152, determined without regard to subsections (b)(1), (b)(2),
and (d)(1)(B) thereof) of such individual, and any child (as defined in
section 152(f)(A)) of such individual who has not attained the age of
27 before the end of such individual's taxable year''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to qualified medical expenses incurred in taxable
years beginning after the date of the enactment of this Act.
SEC. 6. FSA AND HRA INTERACTION WITH HSAS.
(a) Eligible Individuals Include FSA and HRA Participants.--
Subparagraph (B) of section 223(c)(1) of the Internal Revenue Code of
1986, as amended by this Act, is amended by striking ``and'' at the end
of clause (iii), by striking the period at the end of clause (iv) and
inserting ``, and'', and by inserting after clause (iv) the following
new clause:
``(v) 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 arrangement is
converted solely to one or more of the
following:
``(I) Post-deductible fsa or hra.--
A health flexible spending arrangement
or a health reimbursement arrangement
that does not pay or reimburse any
medical expense incurred before the
minimum annual deductible under
paragraph (2)(A)(i) (prorated for the
period occurring after the qualified
HSA distribution is made) is satisfied.
``(II) Preventative care.--A health
flexible spending arrangement or a
health reimbursement arrangement 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 paragraph (2)(C).
``(III) Limited purpose health
fsa.--A health flexible spending
arrangement that, after the qualified
HSA distribution is made, pays or
reimburses benefits for coverage
described in clause (ii) (but not
through insurance or for long-term care
services).
``(IV) Limited purpose hra.--A
health reimbursement arrangement that,
after the qualified HSA distribution is
made, pays or reimburses benefits for
permitted insurance or coverage
described in clause (ii) (but not for
long-term care services).
``(V) Retirement hra.--A health
reimbursement arrangement 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).
``(VI) Suspended hra.--A health
reimbursement arrangement 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 an HSA-
qualified health plan, that does not
pay or reimburse, at any time, any
medical expense incurred during the
suspension period except as described
in the preceding subclauses of this
clause.''.
(b) Qualified HSA Distribution Shall Not Affect Flexible Spending
Arrangement.--Paragraph (1) of section 106(e) of such Code is amended
to read as follows:
``(1) In general.--A plan shall not fail to be treated as--
``(A) a health flexible spending arrangement under
this section, section 105, or section 125,
``(B) a health reimbursement arrangement under this
section or section 105, or
``(C) an accident or health plan,
merely because such plan provides for a qualified HSA
distribution.''.
(c) FSA Balances at Year End Shall Not Forfeit.--Paragraph (2) of
section 125(d) 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.--
Paragraph (2) of section 106(e) of such Code 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 directly to a health savings account of the
employee 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 an HSA-qualified health
plan at the time of such distribution,
and
``(II) $4,500 in the case of an
eligible individual who has family
coverage under an HSA-qualified health
plan at the time of such
distribution.''.
(e) Elimination of Additional Tax for Failure to Maintain HSA-
Qualified Health Plan Coverage.--Subsection (e) of section 106 of such
Code is amended--
(1) by striking subparagraph (A) of paragraph (4) and
redesignating subparagraphs (B) and (C) of such paragraph as
subparagraphs (A) and (B) thereof, respectively; and
(2) by striking paragraph (3) and redesignating paragraphs
(4) (as so amended) and (5) as paragraphs (3) and (4),
respectively.
(f) Limited Purpose FSAs and HRAs.--Subsection (e) of section 106
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, a health
reimbursement arrangement, or an accident or health plan under
this section or section 105 merely because the plan converts
coverage for individuals who enroll in an HSA-qualified health
plan described in section 223(c)(2) to coverage described in
subclause (I), (II), (III), (IV), (V), or (VI) of section
223(c)(1)(B)(iv). Coverage for such individuals may be
converted as of the date of enrollment in the HSA-qualified
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 an HSA-qualified health
plan.''.
(g) Distribution Amounts Adjusted for Cost-of-Living.--Subsection
(e) of section 106 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 in a calendar year after 2018, 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
2017' 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.--Subparagraph (B) of
section 223(c)(1) of such Code, as amended by this section, is amended
by striking ``and'' at the end of clause (iv), by striking the period
at the end of clause (v) and inserting ``, and'', and by inserting
after clause (v) the following new clause:
``(iv) any coverage (including prospective
coverage) under a health plan that is not an
HSA-qualified 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. CHRONIC DISEASE PREVENTION.
(a) In General.--Section 223(c)(2) of the Internal Revenue Code of
1986 is amended by redesignating subparagraph (D) as subparagraph (E)
and by inserting after subparagraph (C) the following new subparagraph:
``(D) Safe harbor for absence of deductible for
care related to chronic conditions.--A plan shall not
fail to be treated as a high deductible health plan by
reason of failing to have a deductible for care and
prescription medications related to the treatment of
medically complex chronic conditions which--
``(i) are substantially disabling or life
threatening,
``(ii) have a high risk of hospitalization
or other significant adverse health outcomes,
and
``(iii) require specialized delivery
systems across domains of care.''.
(b) Effective Date.--The amendments made by this section shall
apply to coverage for months beginning after the date of the enactment
of this Act.
SEC. 8. CERTAIN AMOUNTS PAID FOR PHYSICAL ACTIVITY, FITNESS, AND
EXERCISE TREATED AS AMOUNTS PAID FOR MEDICAL CARE.
(a) In General.--Section 213(d)(1) of the Internal Revenue Code of
1986 is amended by striking ``or'' at the end of subparagraph (C), by
striking the period at the end of subparagraph (D) and inserting ``,
or'', and by inserting after subparagraph (D) the following new
subparagraph:
``(E) for qualified sports and fitness expenses.''.
(b) Qualified Sports and Fitness Expenses.--Section 213(d) of such
Code, as amended by this Act, is amended by adding at the end the
following paragraph:
``(13) Qualified sports and fitness expenses.--
``(A) In general.--The term `qualified sports and
fitness expenses' means amounts paid exclusively for
the sole purpose of participating in a physical
activity including--
``(i) for membership at a fitness facility,
``(ii) for participation or instruction in
a program of physical exercise or physical
activity, and
``(iii) for equipment for use in a program
(including a self-directed program) of physical
exercise or physical activity.
``(B) Overall dollar limitation.--The aggregate
amount treated as qualified sports and fitness expenses
with respect to any taxpayer for any taxable year shall
not exceed $1,000 ($2,000 in the case of a joint return
or a head of household (as defined in section 2(b))).
``(C) Fitness facility defined.--For purposes of
subparagraph (A)(i), the term `fitness facility' means
a facility--
``(i) providing instruction in a program of
physical exercise, offering facilities for the
preservation, maintenance, encouragement, or
development of physical fitness, or serving as
the site of such a program of a State or local
government,
``(ii) which is not a private club owned
and operated by its members,
``(iii) which does not offer golf, hunting,
sailing, or riding facilities,
``(iv) whose health or fitness facility is
not incidental to its overall function and
purpose, and
``(v) which is fully compliant with the
State of jurisdiction and Federal anti-
discrimination laws.
``(D) Treatment of exercise videos, etc.--Videos,
books, and similar materials shall be treated as
described in subparagraph (A)(ii) if the content of
such materials constitute instruction in a program of
physical exercise or physical activity.
``(E) Limitations related to sports and fitness
equipment.--Amounts paid for equipment described in
subparagraph (A)(iii) shall be treated as a qualified
sports and fitness expense only--
``(i) if such equipment is utilized
exclusively for participation in fitness,
exercise, sport, or other physical activity
programs,
``(ii) if such equipment is not apparel or
footwear, and
``(iii) in the case of any item of sports
equipment (other than exercise equipment), with
respect to so much of the amount paid for such
item as does not exceed $250.
``(F) Programs which include components other than
physical exercise and physical activity.--Rules similar
to the rules of section 213(d)(6) shall apply in the
case of any program that includes physical exercise or
physical activity and also other components. For
purposes of the preceding sentence, travel and
accommodations shall be treated as an other
component.''.
(c) Effective Date.--The amendments 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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