[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5688 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 5688
To amend the Internal Revenue Code of 1986 to improve health savings
accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 26, 2023
Mr. Smucker (for himself and Mr. Blumenauer) 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 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
2023''.
SEC. 2. TREATMENT OF DIRECT PRIMARY CARE SERVICE ARRANGEMENTS.
(a) In General.--Section 223(c)(1) of the Internal Revenue Code of
1986 is amended by adding at the end the following new subparagraph:
``(E) Treatment of direct primary care service
arrangements.--
``(i) In general.--A direct primary care
service arrangement shall not be treated as a
health plan for purposes of subparagraph
(A)(ii).
``(ii) Direct primary care service
arrangement.--For purposes of this paragraph--
``(I) In general.--The term `direct
primary care service arrangement'
means, with respect to any individual,
an arrangement under which such
individual is provided medical care (as
defined in section 213(d)) consisting
solely of primary care services
provided by primary care practitioners
(as defined in section 1833(x)(2)(A) of
the Social Security Act, determined
without regard to clause (ii) thereof),
if the sole compensation for such care
is a fixed periodic fee.
``(II) Limitation.--With respect to
any individual for any month, such term
shall not include any arrangement if
the aggregate fees for all direct
primary care service arrangements
(determined without regard to this
subclause) with respect to such
individual for such month exceed $150
(twice such dollar amount in the case
of an individual with any direct
primary care service arrangement (as so
determined) that covers more than one
individual).
``(iii) Certain services specifically
excluded from treatment as primary care
services.--For purposes of this paragraph, the
term `primary care services' shall not
include--
``(I) procedures that require the
use of general anesthesia,
``(II) prescription drugs (other
than vaccines), and
``(III) laboratory services not
typically administered in an ambulatory
primary care setting.
The Secretary, after consultation with the
Secretary of Health and Human Services, shall
issue regulations or other guidance regarding
the application of this clause.''.
(b) Direct Primary Care Service Arrangement Fees Treated as Medical
Expenses.--Section 223(d)(2)(C) of such Code is amended by striking
``or'' at the end of clause (iii), by striking the period at the end of
clause (iv) and inserting ``, or'', and by adding at the end the
following new clause:
``(v) any direct primary care service
arrangement.''.
(c) Inflation Adjustment.--Section 223(g)(1) of such Code is
amended--
(1) by inserting ``, (c)(1)(E)(ii)(II),'' after ``(b)(2)''
each place it appears, and
(2) in subparagraph (B), by inserting ``and (iii)'' after
``clause (ii)'' in clause (i), by striking ``and'' at the end
of clause (i), by striking the period at the end of clause (ii)
and inserting ``, and'', and by inserting after clause (ii) the
following new clause:
``(iii) in the case of the dollar amount in
subsection (c)(1)(E)(ii)(II) for taxable years
beginning in calendar years after 2026,
`calendar year 2025'.''.
(d) Reporting of Direct Primary Care Service Arrangement Fees on W-
2.--Section 6051(a) of such Code is amended by striking ``and'' at the
end of paragraph (16), by striking the period at the end of paragraph
(17) and inserting ``, and'', and by inserting after paragraph (17) the
following new paragraph:
``(18) in the case of a direct primary care service
arrangement (as defined in section 223(c)(1)(E)(ii)) which is
provided in connection with employment, the aggregate fees for
such arrangement for such employee.''.
(e) Effective Date.--The amendments made by this section shall
apply to months beginning after December 31, 2025, in taxable years
ending after such date.
SEC. 3. ON-SITE EMPLOYEE CLINICS.
(a) In General.--Section 223(c)(1) of the Internal Revenue Code of
1986, as amended by the preceding provisions of this Act, is amended by
adding at the end the following new subparagraph:
``(F) 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
described in subclauses (I) and (II) of such
subparagraph merely because the individual is
eligible to receive, or receives, qualified
items and services--
``(I) at a healthcare facility
located at a facility owned or leased
by the employer of the individual (or
of the individual's spouse), or
``(II) at a healthcare facility
operated primarily for the benefit of
employees of the employer of the
individual (or of the individual's
spouse).
``(ii) Qualified items and services
defined.--For purposes of this subparagraph,
the term `qualified items and services' means
the following:
``(I) 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) Preventive care for chronic
conditions (as defined in clause (iv)).
``(VI) Drug testing.
``(VII) Hearing or vision
screenings and related services.
``(iii) 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.
``(iv) Preventive care for chronic
conditions.--For purposes of this subparagraph,
the term `preventive care for chronic
conditions' means any item or service specified
in the Appendix of Internal Revenue Service
Notice 2019-45 which is prescribed to treat an
individual diagnosed with the associated
chronic condition specified in such Appendix
for the purpose of preventing the exacerbation
of such chronic condition or the development of
a secondary condition, including any amendment,
addition, removal, or other modification made
by the Secretary (pursuant to the authority
granted to the Secretary under paragraph
(2)(C)) to the items or services specified in
such Appendix subsequent to the date of
enactment of this subparagraph.''.
(b) Effective Date.--The amendments made by this section shall
apply to months in taxable years beginning after December 31, 2025.
SEC. 4. CONTRIBUTIONS PERMITTED IF SPOUSE HAS HEALTH FLEXIBLE SPENDING
ARRANGEMENT.
(a) Contributions Permitted if Spouse Has a Health Flexible
Spending Arrangement.--Section 223(c)(1)(B) 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 adding at the end the following new clause:
``(iv) coverage under a health flexible
spending arrangement of the spouse of the
individual for any plan year of such
arrangement if the aggregate reimbursements
under such arrangement for such year do not
exceed the aggregate expenses which would be
eligible for reimbursement under such
arrangement if such expenses were determined
without regard to any expenses paid or incurred
with respect to such individual.''.
(b) Effective Date.--The amendment made by this section shall apply
to plan years beginning after December 31, 2025.
SEC. 5. FSA AND HRA TERMINATIONS OR CONVERSIONS TO FUND HSAS.
(a) In General.--Section 106(e)(2) of the Internal Revenue Code of
1986 is amended to read as follows:
``(2) Qualified hsa distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified HSA
distribution' means, with respect to any employee, a
distribution from a health flexible spending
arrangement or health reimbursement arrangement of such
employee contributed directly to a health savings
account of such employee if--
``(i) such distribution is made in
connection with such employee establishing
coverage under a high deductible health plan
(as defined in section 223(c)(2)) if during the
4-year period preceding the date the employee
so establishes coverage the employee was not
covered under such a high deductible health
plan, and
``(ii) such arrangement is described in
section 223(c)(1)(B)(vi) with respect to any
portion of the plan year remaining after such
distribution is made, if such employee remains
enrolled in such arrangement.
``(B) Dollar limitation.--The aggregate amount of
distributions from health flexible spending
arrangements and health reimbursement arrangements of
any employee which may be treated as qualified HSA
distributions in connection with an establishment of
coverage described in subparagraph (A)(i) shall not
exceed the dollar amount in effect under section
125(i)(1) (twice such amount in the case of coverage
which is described in section 223(b)(2)(B)).''.
(b) Partial Reduction of Limitation on Deductible HSA
Contributions.--Section 223(b)(4) of such Code is amended by striking
``and'' at the end of subparagraph (B), by striking the period at the
end of subparagraph (C) and inserting ``, and'', and by inserting after
subparagraph (C) the following new subparagraph:
``(D) so much of any qualified HSA distribution (as
defined in section 106(e)(2)) made to a health savings
account of such individual during the taxable year as
does not exceed the aggregate increases in the balance
of the arrangement from which such distribution is made
which occur during the portion of the plan year which
precedes such distribution (other than any balance
carried over to such plan year and determined without
regard to any decrease in such balance during such
portion of the plan year).''.
(c) Conversion to HSA-Compatible Arrangement for Remainder of Plan
Year.--Section 223(c)(1)(B) of such Code, as amended by this preceding
provisions of 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 adding at the end the following new clause:
``(v) coverage under a health flexible
spending arrangement or health reimbursement
arrangement for the portion of the plan year
after a qualified HSA distribution (as defined
in section 106(e)(2) determined without regard
to subparagraph (A)(ii) thereof) is made, if
the terms of such arrangement which apply for
such portion of the plan year are such that, if
such terms applied for the entire plan year,
then such arrangement would not be taken into
account under subparagraph (A)(ii) of this
paragraph for such plan year.''.
(d) Inclusion of Qualified HSA Distributions on W-2.--
(1) In general.--Section 6051(a) of such Code, as amended
by this preceding provisions of this Act, is amended by
striking ``and'' at the end of paragraph (17), by striking the
period at the end of paragraph (18) and inserting ``, and'',
and by inserting after paragraph (18) the following new
paragraph:
``(19) the amount of any qualified HSA distribution (as
defined in section 106(e)(2)) with respect to such employee.''.
(2) Conforming amendment.--Section 6051(a)(12) of such Code
is amended by inserting ``(other than any qualified HSA
distribution, as defined in section 106(e)(2))'' before the
comma at the end.
(e) Effective Date.--The amendments made by this subsection shall
apply to distributions made after December 31, 2025, in taxable years
ending after such date.
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