Text: S.2424 — 109th Congress (2005-2006)All Information (Except Text)

There is one version of the bill.

Text available as:

Shown Here:
Introduced in Senate (03/15/2006)


109th CONGRESS
2d Session
S. 2424


To amend the Internal Revenue Code of 1986 to increase the contribution limits for health savings accounts, and for other purposes.


IN THE SENATE OF THE UNITED STATES

March 15, 2006

Mr. Allen introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to increase the contribution limits for 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. Increase in contribution limits for health savings accounts.

(a) Increase in monthly limit.—

(1) IN GENERAL.—Paragraph (2) of section 223(b) of the Internal Revenue Code of 1986 (relating to monthly limitation) is amended to read as follows:

“(2) MONTHLY LIMITATION.—

“(A) IN GENERAL.—In the case of an eligible individual who has coverage under a high deductible health plan, the monthly limitation for any month of such coverage is 112 of the lesser of—

“(i) the sum of the annual deductible and the other annual out-of-pocket expenses (other than for premiums) required to be paid under the plan by the eligible individual for covered benefits, or

“(ii) in the case of an eligible individual with—

“(I) self-only coverage, the dollar amount in effect under subclause (I) of subsection (c)(2)(A)(ii), or

“(II) family coverage, the dollar amount in effect under subclause (II) of subsection (c)(2)(A)(ii).

“(B) SPECIAL RULES RELATING TO OUT-OF-POCKET EXPENSES.—

“(i) REDUCTION FOR SEPARATE PLAN.—The annual out-of-pocket expenses taken into account under subparagraph (A)(i) with respect to any eligible individual shall be reduced by any out-of-pocket expense payable under a separate plan covering the individual.

“(ii) SECRETARIAL AUTHORITY.—The Secretary may by regulations provide that annual out-of-pocket expenses will not be taken into account under subparagraph (A)(i) to the extent that there is only a remote likelihood that such amounts will be required to be paid.”

(2) CONFORMING AMENDMENTS.—

(A) Section 223(b)(3)(A) of such Code is amended by striking “subparagraphs (A) and (B) of”.

(B) Section 223(d)(1)(A)(ii)(I) of such Code is amended by striking “subsection (b)(2)(B)(ii)” and inserting “subsection (c)(2)(A)(ii)(II)”.

(C) Section 223(c)(2)(D)(ii) of such Code is amended to read as follows:

“(ii) CERTAIN ITEMS DISREGARDED IN COMPUTING MONTHLY LIMITATION.—Such plan's annual deductible, and such plan's annual out-of-pocket limitation, for services provided outside of such network shall not be taken into account for purposes of subsection (b)(2).”.

(b) Application of special rules for married individuals.—Paragraph (5) of section 223(b) of the Internal Revenue Code of 1986 (relating to special rule for married individuals) is amended to read as follows:

“(5) SPECIAL RULES FOR MARRIED INDIVIDUALS.—

“(A) IN GENERAL.—In the case of individuals who are married to each other and who are both eligible individuals, the limitation under paragraph (1) for each spouse shall be equal to the spouse's applicable share of the combined marital limit.

“(B) COMBINED MARITAL LIMIT.—For purposes of subparagraph (A), the combined marital limit is the excess (if any) of—

“(i) the lesser of—

“(I) subject to subparagraph (C), the sum of the limitations computed separately under paragraph (1) for each spouse (including any additional contribution amount under paragraph (3)), or

“(II) the dollar amount in effect under subsection (c)(2)(A)(ii)(II), over

“(ii) the aggregate amount paid to Archer MSAs of such spouses for the taxable year.

“(C) SPECIAL RULE WHERE BOTH SPOUSES HAVE FAMILY COVERAGE UNDER SAME PLAN.—For purposes of subparagraph (B)(i)(I), if either spouse has family coverage which covers both spouses, both spouses shall be treated as having only such coverage (and if both spouses each have such coverage under different plans, shall be treated as having only family coverage with the plan with respect to which the lowest amount is determined under paragraph (2)(A)(i)).

“(D) APPLICABLE SHARE.—For purposes of subparagraph (A), a spouse's applicable share is one-half of the combined marital limit unless both spouses agree on a different division.

“(E) COUPLES NOT MARRIED ENTIRE YEAR.—The Secretary shall prescribe rules for the application of this paragraph in the case of any taxable year for which the individuals were not married to each other during all months included in the taxable year, including rules which allow individuals in appropriate cases to take into account coverage prior to marriage in computing the combined marital limit for purposes of this paragraph.”.

(c) Self-only coverage.—Section 223(c)(4) of the Internal Revenue Code of 1986 (defining family coverage) is amended to read as follows:

“(4) COVERAGE.—

“(A) FAMILY COVERAGE.—The term ‘family coverage’ means any coverage other than self-only coverage.

“(B) SELF-ONLY COVERAGE.—If more than 1 individual is covered by a high deductible health plan but only 1 of the individuals is an eligible individual, the coverage shall be treated as self-only coverage.”.

(d) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2006.