[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6857 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 6857
To amend the Internal Revenue Code of 1986 to modernize health savings
accounts, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 19, 2023
Mr. Gallagher 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 modernize 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.
This Act may be cited as the ``Simplify and Expand Health Savings
Accounts Act''.
SEC. 2. MODERNIZATION OF HEALTH SAVINGS ACCOUNTS.
(a) In General.--Section 223 of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 223. HEALTH SAVINGS ACCOUNTS.
``(a) Deduction Allowed.--In the case of an individual who is an
eligible individual for any month during the taxable year, there shall
be allowed as a deduction for the taxable year an amount equal to the
aggregate amount paid in cash during such taxable year by or on behalf
of such individual to a health savings account of such individual.
``(b) Limitations.--
``(1) In general.--The amount allowable as a deduction
under subsection (a) to an individual for the taxable year
shall not exceed the sum of the monthly limitations for months
during such taxable year that the individual is an eligible
individual.
``(2) Monthly limitation.--The monthly limitation for any
month is \1/12\ of--
``(A) in the case of an eligible individual who has
self-only coverage under a qualified plan as of the
first day of such month, the annual limitation
determined under the following table:
----------------------------------------------------------------------------------------------------------------
``In the case of a plan with an actuarial
value of: The annual limitation is:
----------------------------------------------------------------------------------------------------------------
Less than 55 percent......................... $10,000
At least 55 percent and less than 65 percent. $8,600
At least 65 percent.......................... $7,200
----------------------------------------------------------------------------------------------------------------
``(B) in the case of an eligible individual who has
family coverage under a qualified plan as of the first
day of such month, the annual limitation determined
under the following table:
----------------------------------------------------------------------------------------------------------------
``In the case of a plan with an actuarial
value of: The annual limitation is:
----------------------------------------------------------------------------------------------------------------
Less than 55 percent......................... $20,000
At least 55 percent and less than 65 percent. $17,200
At least 65 percent.......................... $14,400.
----------------------------------------------------------------------------------------------------------------
``(3) Additional contributions for individuals 55 or
older.--In the case of an individual who has attained age 55
before the close of the taxable year, the applicable limitation
under subparagraphs (A) and (B) of paragraph (2) shall be
increased by $1,000.
``(4) Coordination with other contributions.--The
limitation which would (but for this paragraph) apply under
this subsection to an individual for any taxable year shall be
reduced (but not below zero) by the sum of--
``(A) the aggregate amount contributed to health
savings accounts of such individual which is excludable
from the taxpayer's gross income for such taxable year
under section 106(d) (and such amount shall not be
allowed as a deduction under subsection (a)), and
``(B) the aggregate amount contributed to health
savings accounts of such individual for such taxable
year under section 408(d)(9) (and such amount shall not
be allowed as a deduction under subsection (a)).
``(5) Special rule for married individuals.--In the case of
individuals who are married to each other, if either spouse has
family coverage--
``(A) both spouses shall be treated as having only
such family coverage (and if such spouses each have
family coverage under different plans, as being covered
under the plan with the highest actuarial value), and
``(B) the limitation under paragraph (1) (after the
application of subparagraph (A) and without regard to
any additional contribution amount under paragraph (3))
shall be divided equally between them unless they agree
on a different division.
``(6) Denial of deduction to dependents.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
``(7) Increase in limit for individuals becoming eligible
individuals after the beginning of the year.--
``(A) In general.--For purposes of computing the
limitation under paragraph (1) for any taxable year, an
individual who is an eligible individual during the
last month of such taxable year shall be treated--
``(i) as having been an eligible individual
during each of the months in such taxable year,
and
``(ii) as having been enrolled, during each
of the months such individual is treated as an
eligible individual solely by reason of clause
(i), in the same qualified plan in which the
individual was enrolled for the last month of
such taxable year.
``(B) Failure to maintain qualified plan
coverage.--
``(i) In general.--If, at any time during
the testing period, the individual is not an
eligible individual, then--
``(I) gross income of the
individual for the taxable year in
which occurs the first month in the
testing period for which such
individual is not an eligible
individual is increased by the
aggregate amount of all contributions
to the health savings account of the
individual which could not have been
made but for subparagraph (A), and
``(II) the tax imposed by this
chapter for any taxable year on the
individual shall be increased by 10
percent of the amount of such increase.
``(ii) Exception for disability or death.--
Subclauses (I) and (II) of clause (i) shall not
apply if the individual ceased to be an
eligible individual by reason of the death of
the individual or the individual becoming
disabled (within the meaning of section
72(m)(7)).
``(iii) Testing period.--The term `testing
period' means the period beginning with the
last month of the taxable year referred to in
subparagraph (A) and ending on the last day of
the 12th month following such month.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Eligible individual.--The term `eligible individual'
means, with respect to any month, any individual if such
individual is covered under a qualified plan as of the 1st day
of such month.
``(2) Qualified plan.--
``(A) In general.--The term `qualified health plan'
means any health plan, including employer plans,
individual plans, short term plans, Medicare, Medicaid,
VA health care, TRICARE, health care sharing
ministries, and association health plans.
``(B) Exclusion of certain plans.--Such term does
not include a health plan if substantially all of its
coverage is--
``(i) coverage for any benefit provided by
permitted insurance, or
``(ii) coverage (whether through insurance
or otherwise) for accidents, disability, dental
care, vision care, or long-term care.
``(3) Permitted insurance.--The term `permitted insurance'
means--
``(A) insurance if substantially all of the
coverage provided under such insurance relates to--
``(i) liabilities incurred under workers'
compensation laws,
``(ii) tort liabilities,
``(iii) liabilities relating to ownership
or use of property, or
``(iv) such other similar liabilities as
the Secretary may specify by regulations,
``(B) insurance for a specified disease or illness,
and
``(C) insurance paying a fixed amount per day (or
other period) of hospitalization.
``(4) Family coverage.--The term `family coverage' means
any coverage other than self-only coverage.
``(d) Health Savings Account.--For purposes of this section--
``(1) In general.--The term `health savings account' means
a trust created or organized in the United States as a health
savings account exclusively for the purpose of paying the
qualified medical expenses of the account beneficiary, but only
if the written governing instrument creating the trust meets
the following requirements:
``(A) Except in the case of a rollover contribution
described in subsection (f)(5) or section 220(f)(5), no
contribution will be accepted--
``(i) unless it is in cash, or
``(ii) to the extent such contribution,
when added to previous contributions to the
trust for the calendar year, exceeds the sum of
the dollar amounts in effect under paragraphs
(2) and (3) of subsection (b) or are excludible
from gross income under section 106(d).
``(B) The trustee is a bank (as defined in section
408(n)), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
in his account is nonforfeitable.
``(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 such
individual, the spouse of such individual, 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, but only to the
extent such amounts are not compensated for by
insurance or otherwise. For purposes of this
subparagraph, amounts paid for menstrual care products
shall be treated as paid for medical care.
``(B) Health insurance may not be purchased from
account.--
``(i) In general.--Subparagraph (A) shall
not apply to any payment for insurance.
``(ii) Exceptions.--Claue (i) 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 a
period in which the individual is
receiving unemployment compensation
under any Federal or State law, or
``(IV) in the case of an account
beneficiary who has attained the age
specified in section 1811 of the Social
Security Act, any health insurance
other than a medicare supplemental
policy (as defined in section 1882 of
the Social Security Act).
``(iii) Exception for integrated health
plans.--Clause (i) shall not apply to any
expense for coverage under an integration
eligible health plan which is integrated with
the health savings account within the meaning
of section 106(d).
``(iv) Exception for direct primary care
service arrangements.--
``(I) In general.--A direct primary
care service arrangement shall not be
treated as insurance for purposes of
clause (i)).
``(II) Direct primary care service
arrangement defined.--For purposes of
this clause, the term `direct primary
care service arrangement' means an
arrangement under which an individual
is provided medical care (as defined in
section 213(d)(1), determined without
regard to subparagraph (E) thereof)
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.
``(C) Menstrual care product.--For purposes of this
paragraph, the term `menstrual care product' means a
tampon, pad, liner, cup, sponge, or similar product
used by individuals with respect to menstruation or
other genital-tract secretions.
``(3) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the health savings account
was established.
``(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction
for rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Except as provided in section 106(d), section
219(f)(5) (relating to employer payments).
``(D) Section 408(g) (relating to community
property laws).
``(E) Section 408(h) (relating to custodial
accounts).
``(e) Tax Treatment of Accounts.--
``(1) In general.--A health savings account is exempt from
taxation under this subtitle unless such account has ceased to
be a health savings account. Notwithstanding the preceding
sentence, any such account is subject to the taxes imposed by
section 511 (relating to imposition of tax on unrelated
business income of charitable, etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to health
savings accounts, and any amount treated as distributed under
such rules shall be treated as not used to pay qualified
medical expenses.
``(f) Tax Treatment of Distributions.--
``(1) Amounts used for qualified medical expenses.--Any
amount paid or distributed out of a health savings account
which is used exclusively to pay qualified medical expenses of
any account beneficiary shall not be includible in gross
income.
``(2) Inclusion of amounts not used for qualified medical
expenses.--Any amount paid or distributed out of a health
savings account which is not used exclusively to pay the
qualified medical expenses of the account beneficiary shall be
included in the gross income of such beneficiary.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any health savings
account of an individual, paragraph (2) shall not apply
to distributions from the health savings accounts of
such individual (to the extent such distributions do
not exceed the aggregate excess contributions to all
such accounts of such individual for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution
described in paragraph (5) or section 220(f)(5)) which
is neither excludable from gross income under section
106(d) nor deductible under this section.
``(4) Additional tax on distributions not used for
qualified medical expenses.--
``(A) In general.--The tax imposed by this chapter
on the account beneficiary for any taxable year in
which there is a payment or distribution from a health
savings account of such beneficiary which is includible
in gross income under paragraph (2) shall be increased
by 20 percent of the amount which is so includible.
``(B) Exception for disability or death.--
Subparagraph (A) shall not apply if the payment or
distribution is made after the account beneficiary
becomes disabled within the meaning of section 72(m)(7)
or dies.
``(C) Exception for distributions after medicare
eligibility.--Subparagraph (A) shall not apply to any
payment or distribution after the date on which the
account beneficiary attains the age specified in
section 1811 of the Social Security Act.
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from a health savings
account to the account beneficiary to the extent the
amount received is paid into a health savings account
for the benefit of such beneficiary not later than the
60th day after the day on which the beneficiary
receives the payment or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from a health savings account if, at any
time during the 1-year period ending on the day of such
receipt, such individual received any other amount
described in subparagraph (A) from a health savings
account which was not includible in the individual's
gross income because of the application of this
paragraph.
``(C) Rollover from fsa, archer msa, and hra.--An
amount is described in this subparagraph for a calendar
year as a rollover contribution if the amount is the
remaining balance in a health flexible spending
account, Archer MSA, or health reimbursement
arrangement that is contributed to the health savings
account for a taxable year ending on or before one year
after the date of the enactment of this subparagraph.
``(6) Coordination with medical expense deduction.--For
purposes of determining the amount of the deduction under
section 213, any payment or distribution out of a health
savings account for qualified medical expenses shall not be
treated as an expense paid for medical care.
``(7) Transfer of account incident to divorce.--The
transfer of an individual's interest in a health savings
account to an individual's spouse or former spouse under a
divorce or separation instrument described in clause (i) of
section 121(d)(3)(C) shall not be considered a taxable transfer
made by such individual notwithstanding any other provision of
this subtitle, and such interest shall, after such transfer, be
treated as a health savings account with respect to which such
spouse is the account beneficiary.
``(8) Treatment after death of account beneficiary.--
``(A) Treatment if designated beneficiary is
spouse.--If the account beneficiary's surviving spouse
acquires such beneficiary's interest in a health
savings account by reason of being the designated
beneficiary of such account at the death of the account
beneficiary, such health savings account shall be
treated as if the spouse were the account beneficiary.
``(B) Other cases.--
``(i) In general.--If, by reason of the
death of the account beneficiary, any person
acquires the account beneficiary's interest in
a health savings account in a case to which
subparagraph (A) does not apply--
``(I) such account shall cease to
be a health savings account as of the
date of death, and
``(II) an amount equal to the fair
market value of the assets in such
account on such date shall be
includible if such person is not the
estate of such beneficiary, in such
person's gross income for the taxable
year which includes such date, or if
such person is the estate of such
beneficiary, in such beneficiary's
gross income for the last taxable year
of such beneficiary.
``(ii) Special rules.--
``(I) Reduction of inclusion for
predeath expenses.--The amount
includible in gross income under clause
(i) by any person (other than the
estate) shall be reduced by the amount
of qualified medical expenses which
were incurred by the decedent before
the date of the decedent's death and
paid by such person within 1 year after
such date.
``(II) Deduction for estate
taxes.--An appropriate deduction shall
be allowed under section 691(c) to any
person (other than the decedent or the
decedent's spouse) with respect to
amounts included in gross income under
clause (i) by such person.
``(g) Cost-of-Living Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after December 31, 2024, each dollar amount in
paragraphs (2) and (3) of subsection (c) shall be increased by
an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
such taxable year begins determined by substituting
`2023' for `2016' in subparagraph (A)(ii) thereof.
``(2) 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) Reports.--The Secretary may require--
``(1) the trustee of a health savings account to make such
reports regarding such account to the Secretary and to the
account beneficiary with respect to contributions,
distributions, the return of excess contributions, and such
other matters as the Secretary determines appropriate, and
``(2) any person who provides an individual with a
qualified health plan to make such reports to the Secretary and
to the account beneficiary with respect to such plan as the
Secretary determines appropriate.''.
(b) Employer Contributions to Health Savings Accounts.--
(1) In general.--Section 106(d) is amended to read as
follows:
``(d) Contributions to Health Savings Accounts.--
``(1) In general.--In the case of an employee who is an
eligible individual, amounts contributed by such employee's
employer to any health savings account of such employee shall
be treated as employer-provided coverage for medical expenses
under an accident or health plan to the extent--
``(A) such amounts do not exceed twice the
limitation in effect under section 223(b)(2)
(determined without regard to this subsection) which is
applicable to such employee for such taxable year,
``(B) such amounts are contributed to an account
which is integrated with an integration eligible health
plan,
``(C) such employer does not offer such employee
coverage under any other accident or health plan,
``(D) such employer offers such amounts only to
members of a qualified class of employees and offers
such amounts to all members of any such qualified
class,
``(E) such employer offers employees an opportunity
to elect not to receive such amounts at least once per
year and upon termination from employment, and
``(F) such employee is not covered under any health
insurance offered by an employer of such employee's
spouse.
``(2) Integration eligible health plan.--For purposes of
this subsection, the term `integration eligible health plan'
means--
``(A) any bronze, silver, or gold plan offered
through an Exchange established under the Patient
Protection and Affordable Care Act,
``(B) entitlement to benefits under part A of title
XVIII of the Social Security Act and enrollment under
part B of such title, including enrollment under a
Medicare Advantage plan under part C of such title,
``(C) in the case of any individual who has not
attained age 30 or is determined by the Secretary
(after consultation with the Secretary of Health and
Human Services) to have a hardship, coverage under a
catastrophic plan, and
``(D) in the case of any student, coverage under a
health plan which is conditioned on maintaining status
as being such a student.
``(3) Integration of plans and accounts.--For purposes of
this subsection, an account shall be treated as integrated with
an integration eligible health plan (and such plan shall be
treated as integrated with such account) for any month if--
``(A) the employee is the account beneficiary of
such account and such employee is covered under an
integration eligible health plan for such month,
``(B) the employer verifies that the employee is so
covered by requiring the submission of documentation to
such employer, and
``(C) the employer makes contributions to such
account for such month which are not less than the
excess (if any) of--
``(i) the adjusted monthly premiums for the
applicable second lowest cost silver plan with
respect to the taxpayer, over
``(ii) \1/12\ of 9.5 percent of the
taxpayer's household income (within the meaning
of section 36B).
``(4) Qualified class.--For purposes of this subsection--
``(A) In general.--The term `qualified class' means
only the following: All employees; Full-time employees;
Part-time employees; Seasonal employees; Employees
covered under a collective bargaining agreement;
Employees in a waiting period; Foreign employees who
work abroad; Employees working in the same geographic
location (same insurance rating area, State, or multi-
State region); Salaried workers; Non-Salaried workers
(such as hourly workers); Temporary employees of
staffing firms.
``(B) Rules related to class size.--
``(i) Minimum class size.--A class shall
not be treated as a qualified class unless in
consisting of at least the following number of
employees:
``(I) In the case of an employer
with fewer than 100 employees, the
lesser of 10 employees or all employees
of the employer.
``(II) In the case of an employer
with at least 100 and not more than 200
employees, 10 percent of the number of
such employees (if not a whole number,
rounded down to the next lowest whole
number).
``(III) In the case of an employer
with more than 200 employees, 20
employees.
``(ii) Combination of classes.--Two or more
qualified classes described in subparagraph (A)
may be combined if each such class separately
would not satisfy the requirement of clause
(i).
``(C) Permitted variation within qualified
classes.--An employer shall not fail to meet the
requirements of paragraph (1)(D) solely because the
amounts offered to members of a qualified class vary on
the basis of--
``(i) number of dependents,
``(ii) age, if such variation based on age
does not exceed a ratio of 3:1, and
``(iii) chronic health condition, if such
variation based on chronic health condition
does not exceed a ratio of 1.2:1.
``(5) Coordination with aca provisions.--In the case of an
integration eligible health plan which is integrated with a
health savings account--
``(A) such plan shall be treated as an eligible
employer-sponsored plan described in section
5000A(f)(1)(B),
``(B) if an individual receives contributions to
such account which are excludible from the gross income
of such individual under this section during any
taxable year, no credit shall be allowed under section
36B with respect to such individual for such taxable
year, and
``(C) for purposes of section 36B(c)(2)(C)(i)(II),
the employee's required contribution with respect to
such plan shall be treated as being equal to the excess
(if any) of--
``(i) the adjusted monthly premiums for the
applicable second lowest cost silver plan with
respect to the taxpayer, over
``(ii) the contributions made the employer
to such health savings account which are
excludible from the gross income of the
employee under this section.
``(6) No constructive receipt.--No amount shall be included
in the gross income of any employee solely because the employee
may choose between the contributions referred to in paragraph
(1) and employer contributions to another health plan of the
employer.
``(7) Special rule for deduction of employer
contributions.--Any employer contribution to a health savings
account, if otherwise allowable as a deduction under this
chapter, shall be allowed only for the taxable year in which
paid.
``(8) Employer health savings account contributions
required to be shown on return.--Every individual required to
file a return under section 6012 for the taxable year shall
include on such return the aggregate amount contributed by
employers to the health savings accounts of such individual or
such individual's spouse for such taxable year.
``(9) Health savings account contributions not part of
cobra coverage.--Paragraph (1) shall not apply for purposes of
section 4980B.
``(10) Definitions.--Terms used in this subsection which
are also used in section 223 shall have the same respective
meanings as when used in such section.
``(11) Regulations.--The Secretaries of Treasury, Labor,
and Health and Human Services shall each issue such regulations
or other guidance as may be necessary or appropriate to carry
out the purposes of this subsection, including regulations or
other guidance to--
``(A) prevent employers from offering plans
integrated with health savings accounts selectively to
sicker workers, and
``(B) establish a safe harbor that helps employers
determine whether contributions to health savings
accounts with respect to which there is an integrated
health plan comply with affordability requirements
under the Patient Protection and Affordable Care Act
and the amendments made by such Act.
``(12) Cross reference.--For penalty on failure by employer
to make comparable contributions to the health savings accounts
of comparable employees, see section 4980G.''.
(2) Nonapplication of erisa.--Contributions by an employer
to a health savings account (as defined in section 223 of the
Internal Revenue Code of 1986), and an integration eligible
health plan which is integrated with such account (within the
meaning of such section), shall not be treated as a plan for
purposes of the Employee Retirement Income Security Act of 1974
if--
(A) receipt of such contributions by the employee
is voluntary,
(B) the employer does not select or endorse the
integration eligible health plan which is integrated
with such account,
(C) no premiums, other than premiums for the
integration eligible health plan which is integrated
with such account, are paid from the account,
(D) the employer receives no consideration (money
or other benefit) in connection with the employee
selecting or renewing a plan, and
(E) each participant is notified annually that such
contributions and such plan are not subject to the
requirements of such Act.
(c) Termination of Certain Other Health Care Related Tax
Benefits.--
(1) Exclusion limited to self-funded major medical plan of
employers.--Section 105(b) of such Code is amended by striking
``paid,'' and inserting ``paid under a self-funded major
medical plan of the employer''.
(2) Exclusion not applicable to health reimbursement
arrangements.--Section 105(h) of such Code is amended to read
as follows:
``(h) Exclusion Not Applicable to Health Reimbursement
Arrangements.--Subsection (b) shall not apply to health reimbursement
arrangements.''.
(3) Repeal of exclusions from income for archer msas and
fsas.--Section 106 of such Code is amended by striking
subsections (b), (e), and (g).
(4) Termination of deduction for contributions to archer
msas.--Section 220(a) of such Code is amended by adding at the
end the following: ``No amount shall be allowed as a deduction
under the preceding sentence for any taxable year beginning
after one year after the date of the enactment of this
sentence.''.
(d) Bankruptcy Protections.--Section 522 of title 11, United States
Code, is amended by adding at the end the following new subsection:
``(r) For purposes of this section, any health savings account (as
described in section 223 of the Internal Revenue Code of 1986) shall be
treated in the same manner as an individual retirement account
described in section 408 of such Code.''.
(e) Rollover of FSA, Archer MSA, HRA to Health Savings Account.--
Notwithstanding any other provision of law, if the remaining balance in
a health flexible spending arrangement, Archer MSA, or health
reimbursement arrangement is transferred to a health savings account
before the end of any taxable year ending on or before one year after
the date of the enactment of this Act, such transfer shall be treated
as a rollover to the health savings account under section 223(f)(5) of
the Internal Revenue Code of 1986 and the distribution from the health
flexible spending arrangement, Archer MSA, or health reimbursement
arrangement shall not be includible in gross income.
(f) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(b) shall apply to taxable years beginning after the date of
the enactment of this Act.
(2) Termination of certain other health care related tax
benefits.--The amendments made by subsection (c) shall apply to
taxable years beginning after the date which is 1 year after
the date of the enactment of this Act.
(3) Bankruptcy protections.--The amendment made by
subsection (d) shall apply to cases commencing under title 11,
United States Code, after the date of the enactment of this
Act.
SEC. 3. UNUSED PREMIUM TAX CREDITS MAY BE DEPOSITED IN HEALTH SAVINGS
ACCOUNTS.
(a) In General.--Section 36B is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g) the
following new subsection:
``(h) Excess Credit May Be Deposited Into a Health Savings
Account.--
``(1) In general.--If the amount described in subparagraph
(B) of subsection (b)(2) exceeds the amount described in
subparagraph (A) of such subsection with respect to any
coverage month and an election under paragraph (2) is in effect
with respect to the applicable taxpayer, the Secretary shall
deposit such excess into a health savings account of such
taxpayer.
``(2) Election to deposit excess credit into a health
savings account.--A taxpayer may elect (at such time and in
such manner as the Secretary may provide) to have the Secretary
deposit the excess described in paragraph (1) into a health
savings account of the taxpayer. Any such election shall only
be treated as being in effect if the taxpayer provides the
Secretary with such information as the Secretary may require to
allow the Secretary to make such deposit.
``(3) Coordination with health savings account rules.--Any
amount deposited in a health savings account by the Secretary
under this subsection shall--
``(A) be includible in the gross income of the
applicable taxpayer, and
``(B) be taken into account as an amount paid to
such account for purposes of this section.
``(4) Treatment of deposits.--For purposes of section 1324
of title 31, United States Code, any deposit made under this
subsection shall be treated as a credit allowed under this
section.''.
(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. 4. ONE-TIME APPLICATION OF SAVER'S CREDIT TO CONTRIBUTIONS TO
HEALTH SAVINGS ACCOUNTS.
(a) In General.--In the case of an applicable taxable year,
contributions to any health savings account of the taxpayer during such
taxable year shall be treated as a qualified retirement savings
contribution for purposes of section 25B of the Internal Revenue Code
of 1986.
(b) Applicable Taxable Year.--For purposes of this section, the
term ``applicable taxable year'' means any taxable year elected by the
taxpayer (at such time and in such manner as the Secretary of the
Treasury may provide) which begins during the 3-year period beginning 1
year after the date of the enactment of this Act. A taxpayer may not
elect not more than 1 applicable taxable year under this subsection.
SEC. 5. GRANTS FOR HEALTH SAVINGS ACCOUNT ASSISTANCE AND OUTREACH.
(a) In General.--The Administrator shall establish a grant program
to provide assistance to eligible entities to carry out the activities
described in subsection (c).
(b) Application.--An eligible entity shall submit an application to
the Administrator in such time and in such manner as the Administrator
may require, providing that such application requires a demonstration
of the existence of a relationship with, or the ability to establish a
relationship with, an employer, employee, self-employed individual, or
consumer eligible to enroll in a health savings account.
(c) Use of Funds.--An eligible entity receiving a grant under this
section shall use such funds to--
(1) distribute fair and impartial information to consumers
about health savings accounts, including the availability of
such accounts and how such accounts may be utilized;
(2) conduct activities to raise public awareness of health
savings accounts;
(3) facilitate enrollment in health savings accounts; and
(4) refer individuals enrolled in a health savings account
to the appropriate official, organization, or State agency for
the purpose of addressing a complaint, grievance, or other
question with respect to such health savings account.
(d) Amount.--The Administrator may distribute up to $5,000,000
annually to be divided among grant recipients under this section.
(e) Report.--Not later than one year after the date on which the
last of the grant periods awarded under this section ends, the
Administrator shall submit a report to the Congress on the
effectiveness of the grants provided under this section.
(f) Definitions.--In this section:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Centers for Medicare & Medicaid Services.
(2) Consumer.--The term ``consumer'' means an individual
enrolled in, or seeking to enroll in, a health savings account.
(3) Eligible entity.--The term ``eligible entity'' includes
the following:
(A) A State.
(B) Trade.
(C) Industry.
(D) Professional associations.
(E) Commercial fishing industry organizations.
(F) Ranching and farming organizations.
(G) Community and consumer-focused nonprofit
groups.
(H) Chambers of commerce.
(I) Unions.
(J) Small business development centers (as defined
in section 21 of the Small Business Act (15 U.S.C.
648)).
(K) Other entities capable of carrying out the
activities described under subsection (b).
(4) Health savings account.--The term ``health savings
account'' has the meaning given such term in section 223 of the
Internal Revenue Code of 1986.
(5) State.--The term ``State'' means each of the several
States, the District of Columbia, each territory and possession
of the United States, and each federally recognized Indian
Tribe.
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