HR 369
112th CONGRESS
1st Session
H. R. 369
To amend the Internal Revenue Code of 1986 to improve access to health
care by allowing a deduction for the health insurance costs of individuals,
expanding health savings accounts, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
January 20, 2011
Mr. AUSTRIA (for himself, Mr. PENCE, Mrs. BACHMANN, Mr. SESSIONS, Mr. AKIN,
Mr. BURTON of Indiana, Mr. COFFMAN of Colorado, Mr. PAUL, Mr. ROSS of Florida,
Mr. THOMPSON of Pennsylvania, Mr. WESTMORELAND, Mr. CASSIDY, Mr. LONG, and
Mr. TIBERI) 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 by allowing a deduction for the health insurance costs of individuals,
expanding 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.
(a) Short Title- This Act may be cited as the `Health Savings and Affordability
Act of 2011'.
(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms of an amendment to,
or repeal of, a section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal Revenue Code of
1986.
SEC. 2. DEDUCTION FOR QUALIFIED HEALTH INSURANCE COSTS OF INDIVIDUALS.
(a) In General- Part VII of subchapter B of chapter 1 (relating to additional
itemized deductions) is amended by redesignating section 224 as section 225
and by inserting after section 223 the following new section:
`SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE.
`(a) In General- In the case of an individual, there shall be allowed as a
deduction an amount equal to the amount paid during the taxable year for coverage
for the taxpayer, his spouse, and dependents under qualified health insurance.
`(b) Qualified Health Insurance- For purposes of this section, the term `qualified
health insurance' means insurance which constitutes medical care; except that
such term shall not include any insurance if substantially all of its coverage
is of excepted benefits described in section 9832(c).
`(1) COORDINATION WITH MEDICAL DEDUCTION, ETC- Any amount paid by a taxpayer
for insurance to which subsection (a) applies shall not be taken into account
in computing the amount allowable to the taxpayer as a deduction under section
162(l) or 213(a). Any amount taken into account in determining the credit
allowed under section 35 or 36B shall not be taken into account for purposes
of this section.
`(2) DEDUCTION NOT ALLOWED FOR SELF-EMPLOYMENT TAX PURPOSES- The deduction
allowable by reason of this section shall not be taken into account in determining
an individual's net earnings from self-employment (within the meaning of
section 1402(a)) for purposes of chapter 2.'.
(b) Deduction Allowed in Computing Adjusted Gross Income- Subsection (a) of
section 62 is amended by inserting before the last sentence the following
new paragraph:
`(22) COSTS OF QUALIFIED HEALTH INSURANCE- The deduction allowed by section
224.'.
(c) Clerical Amendment- The table of sections for part VII of subchapter B
of chapter 1 is amended by redesignating the item relating to section 224
as an item relating to section 225 and inserting before such item the following
new item:
`Sec. 224. Costs of qualified health insurance.'.
(d) Effective Date- The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.
SEC. 3. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME HSA
ACCOUNT.
(a) In General- Paragraph (3) of section 223(b) is amended by adding at the
end the following new subparagraph:
`(C) SPECIAL RULE WHERE BOTH SPOUSES ARE ELIGIBLE INDIVIDUALS WITH 1 ACCOUNT-
If--
`(i) an individual and the individual's spouse have both attained age
55 before the close of the taxable year, and
`(ii) the spouse is not an account beneficiary of a health savings account
as of the close of such year,
the additional contribution amount shall be 200 percent of the amount
otherwise determined under subparagraph (B).'.
(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. 4. INCREASE IN HSA CONTRIBUTION LIMITATION.
(a) In General- Subsection (b) of section 223 (relating to monthly limitation)
is amended--
(1) by striking `$2,250' in paragraph (2)(A) and inserting `the amount in
effect under subsection (c)(2)(A)(ii)(I)', and
(2) by striking `$4,500' in paragraph (2)(B) and inserting `the amount in
effect under subsection (c)(2)(A)(ii)(II)'.
(b) Conforming Amendment- Paragraph (1) of section 223(g) is amended by striking
`subsections (b)(2) and' and inserting `subsection'.
(c) Effective Date- The amendments made by this section shall apply to contributions
for taxable years beginning after the date of the enactment of this Act.
SEC. 5. TREATMENT OF FAMILY COVERAGE PLANS HAVING BOTH INDIVIDUAL AND FAMILY
DEDUCTIBLES.
(a) In General- Paragraph (2) of section 223(c) (defining high deductible
plan) is amended by adding at the end the following new subparagraph:
`(E) FAMILY COVERAGE PLANS HAVING BOTH INDIVIDUAL AND FAMILY DEDUCTIBLES-
In the case of a family coverage plan having a deductible (and the same
deductible) for each covered individual and a deductible for the family
as a whole, the requirement of subparagraph (A)(i) shall be treated as
met if (without regard to this subparagraph)--
`(i) the individual deductible meets the requirement of subparagraph
(A)(i)(I), or
`(ii) the family deductible meets the requirement of subparagraph (A)(i)(II).'.
(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. 6. FSA AND HRA TERMINATION TO FUND HSAS.
(a) Eligible Individuals Include FSA and HRA Participants- Section 223(c)(1)(B)
is amended--
(1) by striking `and' at the end of clause (ii),
(2) by striking the period at the end of clause (iii) and inserting `, and',
and
(3) by inserting after clause (iii) the following new clause:
`(iv) 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 health flexible spending
arrangement or health reimbursement arrangement is converted to--
`(I) coverage that does not pay or reimburse any medical expense incurred
before the minimum annual deductible under section 223(c)(2)(A)(i)
(prorated for the period occurring after the qualified HSA distribution
is made) is satisfied,
`(II) coverage 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
section 223(c)(2)(C),
`(III) coverage that, after the qualified HSA distribution is made,
pays or reimburses benefits for coverage described in section 223(c)(1)(B)(ii)
(but not through insurance or for long-term care services),
`(IV) coverage that, after the qualified HSA distribution is made,
pays or reimburses benefits for permitted insurance as defined in
section 223(c)(1)(B)(i) or coverage described in section 223(c)(1)(B)(ii)
(but not for long-term care services),
`(V) coverage 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), or
`(VI) coverage 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 a high deductible health plan (as
defined in section 223(c)(2)), that does not pay or reimburse, at
any time, any medical expense incurred during the suspension period
except as defined in subclauses (I) through (V) above.'.
(b) Qualified HSA Distribution Shall Not Affect Flexible Spending Arrangement-
Section 106(e)(1) is amended to read as follows:
`(1) IN GENERAL- A plan shall not fail to be treated as a health flexible
spending arrangement under this section, section 105, or section 125, or
as a health reimbursement arrangement under this section or section 105,
merely because such plan provides for a qualified HSA distribution.'.
(c) FSA Balances at Year End Shall Not Forfeit- Section 125(d)(2) 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- Section 106(e)(2)
(relating to qualified HSA distribution) 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
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.
`(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 a high deductible health plan at the time of such distribution,
and
`(II) $4,500 in the case of an eligible individual who has family
coverage under a high deductible health plan at the time of such distribution.'.
(e) Elimination of Additional Tax for Failure To Maintain High Deductible
Health Plan Coverage- Section 106(e) is amended--
(1) by striking paragraph (3) and redesignating paragraphs (4) and (5) as
paragraphs (3) and (4), respectively, and
(2) by striking subparagraph (A) of paragraph (3), as so redesignated, and
redesignating subparagraphs (B) and (C) of such paragraph as subparagraphs
(A) and (B) thereof, respectively.
(f) Limited Purpose FSAs and HRAs- Section 106(e), 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 or health reimbursement arrangement under
this section or section 105 merely because the plan converts coverage for
individuals who enroll in a high deductible health plan described in section
223(c)(2) to coverage described in section 223(c)(1)(B)(iv). Coverage for
such individuals may be converted as of the date of enrollment in the high
deductible 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 a high deductible health plan.'.
(g) Distribution Amounts Adjusted for Cost-of-Living- Section 106(e), 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 after December
31, 2011, 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
2010' for `calendar year 1992' in subparagraph (B) thereof.
`(B) ROUNDING- If any increase under subparagraph (A) is not a multiple
of $50, such increase shall be rounded to the nearest multiple of $50.'.
(h) Disclaimer of Disqualifying Coverage- Section 223(c)(1)(B), as amended
by this section, is amended--
(1) by striking `and' at the end of clause (iii),
(2) by striking the period at the end of clause (iv) and inserting `, and',
and
(3) by inserting after clause (iv) the following new clause:
`(v) any coverage (including prospective coverage) under a health plan
that is not a high deductible 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. PURCHASE OF HEALTH INSURANCE FROM HSA ACCOUNT.
(a) In General- Paragraph (2) of section 223(d) (defining qualified medical
expenses) is amended to read as follows:
`(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 any individual covered by a high
deductible health plan of the account beneficiary, but only to the extent
such amounts are not compensated for by insurance or otherwise.
`(B) HEALTH INSURANCE MAY NOT BE PURCHASED FROM ACCOUNT- Except as provided
in subparagraph (C), subparagraph (A) shall not apply to any payment for
insurance.
`(C) EXCEPTIONS- Subparagraph (B) 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 any period in which the individual is receiving
unemployment compensation under any Federal or State law,
`(iv) a high deductible health plan, or
`(v) any health insurance under title XVIII of the Social Security Act,
other than a Medicare supplemental policy (as defined in section 1882
of such Act).'.
(b) Effective Date- The amendment made by this section shall apply with respect
to insurance purchased after the date of the enactment of this Act in taxable
years beginning after such date.
SEC. 8. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL FITNESS PROGRAMS TREATED
AS MEDICAL CARE.
(a) In General- Subsection (d) of section 213 is amended by adding at the
end the following new paragraph:
`(12) EXERCISE EQUIPMENT AND PHYSICAL FITNESS PROGRAMS-
`(A) IN GENERAL- The term `medical care' shall include amounts paid--
`(i) to purchase or use equipment used in a program (including a self-directed
program) of physical exercise,
`(ii) to participate, or receive instruction, in a program of physical
exercise, and
`(iii) for membership dues in a fitness club the primary purpose of
which is to provide access to equipment and facilities for physical
exercise.
`(B) LIMITATION- Amounts treated as medical care under subparagraph (A)
shall not exceed $1,200 with respect to any individual for any taxable
year.'.
(b) Effective Date- The amendment made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.
END
