Health Savings Account Expansion Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 603 To amend the Internal Revenue Code of 1986 to expand the permissible use of health savings accounts to include health insurance payments and to increase the dollar limitation for contributions to health savings accounts, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 16, 2019 Mr. GALLAGHER (for himself, Mr. MEADOWS, Mr. TIPTON, and Mr. PALMER) 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 expand the permissible use of health savings accounts to include health insurance payments and to increase the dollar limitation for contributions to health savings accounts, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Health Savings Ac- 4 count Expansion Act of 2019’’. 5 VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS 2 •HR 603 IH SEC. 2. ADEQUATE FUNDS FOR HEALTH INSURANCE PLANS. 1 (a) IN GENERAL.—Section 223(b)(1) of the Internal 2 Revenue Code of 1986 is amended by striking ‘‘the sum 3 of the monthly’’ and all that follows through ‘‘eligible indi- 4 vidual’’ and inserting ‘‘$9,000 (twice such amount in the 5 case of a joint return)’’. 6 (b) CONFORMING AMENDMENTS.— 7 (1) Subsection (b) of such Code is amended by 8 striking paragraphs (2), (3), and (5) and by redesig- 9 nating paragraphs (4), (6), (7), and (8) as para- 10 graphs (2), (3), (4), and (5), respectively. 11 (2) Section 223(b)(2) of such Code (as redesig- 12 nated by paragraph (1)) is amended by striking the 13 last sentence. 14 (3) Section 223(b)(4) of such Code (as redesig- 15 nated by paragraph (1)) is amended to read as fol- 16 lows: 17 ‘‘(4) MEDICARE ELIGIBLE INDIVIDUALS.—The 18 limitation under this subsection for any taxable year 19 with respect to an individual shall— 20 ‘‘(A) in the case of the first taxable year 21 in which such individual is entitled to benefits 22 under title XVIII of the Social Security Act, be 23 the amount which bears the same proportion to 24 the amount in effect under paragraph (1) with 25 respect to such individual as— 26 VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS 3 •HR 603 IH ‘‘(i) the number of months in the tax- 1 able year during which such individual was 2 not so entitled, bears to 3 ‘‘(ii) 12, and 4 ‘‘(B) be zero for any taxable year there- 5 after.’’. 6 (4) Section 223(g)(1) of such Code is amend- 7 ed— 8 (A) in the matter preceding subparagraph 9 (A) by striking ‘‘Each dollar amount in sub- 10 section (b)(2)’’ and inserting ‘‘In the case of 11 taxable years beginning after December 31, 12 2019, the dollar amount in subsection (b)(1)’’; 13 and 14 (B) by amending subparagraph (B) to read 15 as follows: 16 ‘‘(B) the cost-of-living adjustment deter- 17 mined under section 1(f)(3) for the calendar 18 year in which such taxable year begins deter- 19 mined by substituting ‘calendar year 2018’ for 20 ‘calendar year 2016’ in subparagraph (A)(ii) 21 thereof.’’. 22 (c) EFFECTIVE DATE.—The amendments made by 23 this section shall apply to taxable years beginning after 24 December 31, 2019. 25 VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS 4 •HR 603 IH SEC. 3. PARITY WITH EMPLOYER-PROVIDED HEALTH IN- 1 SURANCE; DIRECT PRIMARY CARE. 2 (a) IN GENERAL.—Section 223(d)(2) of the Internal 3 Revenue Code of 1986 is amended to read as follows: 4 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 5 ‘‘(A) IN GENERAL.—The term ‘qualified 6 medical expenses’ means, with respect to an ac- 7 count beneficiary, amounts paid by such bene- 8 ficiary for medical care (as defined in section 9 213(d)) for such individual, the spouse of such 10 individual, and any dependent (as defined in 11 section 152, determined without regard to sub- 12 sections (b)(1), (b)(2), and (d)(1)(B) thereof) 13 of such individual, but only to the extent such 14 amounts are not compensated for by insurance 15 or otherwise. 16 ‘‘(B) DIRECT PRIMARY CARE.— 17 ‘‘(i) IN GENERAL.—Such term in- 18 cludes expenses for direct primary care 19 service arrangements. 20 ‘‘(ii) DIRECT PRIMARY CARE SERVICE 21 ARRANGEMENTS.—For purposes of clause 22 (i), the term ‘direct primary care service 23 arrangements’ means an arrangement 24 under which an individual is provided cov- 25 erage restricted to primary care services in 26 VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS 5 •HR 603 IH exchange for a fixed periodic fee or pay- 1 ment for primary care services.’’. 2 (b) EFFECTIVE DATE.—The amendments made by 3 this section shall apply to taxable years beginning after 4 December 31, 2019. 5 SEC. 4. FREEDOM FROM MANDATE. 6 (a) IN GENERAL.—Section 223 of the Internal Rev- 7 enue Code of 1986, as amended by sections 2 and 3, is 8 amended by striking subsection (c) and redesignating sub- 9 sections (d) through (h) as subsections (c) through (g), 10 respectively. 11 (b) CONFORMING AMENDMENTS.— 12 (1) Subsection (a) of section 223 of such Code 13 is amended to read as follows: 14 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi- 15 vidual, there shall be allowed as a deduction for a taxable 16 year an amount equal to the aggregate amount paid in 17 cash during such taxable year by or on behalf of such indi- 18 vidual to a health savings account of such individual.’’. 19 (2) Subsection (b) of section 223 of such Code 20 (as amended by section 2) is amended by striking 21 paragraph (5). 22 (3) Section 223(c)(1)(A) of such Code (as re- 23 designated by subsection (a)) is amended— 24 VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS 6 •HR 603 IH (A) by striking ‘‘subsection (f)(5)’’ and in- 1 serting ‘‘subsection (e)(5)’’; and 2 (B) in clause (ii) by striking ‘‘the sum of— 3 ’’ and all that follows and inserting ‘‘the dollar 4 amount in effect under subsection (b)(1).’’. 5 (4) Section 223(f)(1) of such Code (as redesig- 6 nated by subsection (a)) is amended by striking 7 ‘‘subsections (b)(1) and (c)(2)(A)’’ and inserting 8 ‘‘subsection (b)(1)’’. 9 (5) Section 26(b)(2)(U) of such Code is amend- 10 ed by striking ‘‘section 223(f)(4)’’ and inserting 11 ‘‘section 223(e)(4)’’. 12 (6) Sections 35(g)(3), 220(f)(5)(A), 13 848(e)(1)(v), 4973(a)(5), and 6051(a)(12) of such 14 Code are each amended by striking ‘‘section 223(d)’’ 15 each place it appears and inserting ‘‘section 223(c)’’. 16 (7) Section 106(d)(1) of such Code is amend- 17 ed— 18 (A) by striking ‘‘who is an eligible indi- 19 vidual (as defined in section 223(c)(1))’’; and 20 (B) by striking ‘‘section 223(d)’’ and in- 21 serting ‘‘section 223(c)’’. 22 (8) Section 408(d)(9) of such Code is amend- 23 ed— 24 VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS 7 •HR 603 IH (A) in subparagraph (A) by striking ‘‘who 1 is an eligible individual (as defined in section 2 223(c)) and’’; and 3 (B) in subparagraph (C) by striking ‘‘com- 4 puted on the basis of the type of coverage under 5 the high deductible health plan covering the in- 6 dividual at the time of the qualified HSA fund- 7 ing distribution’’. 8 (9) Section 877A(g)(6) of such Code is amend- 9 ed by striking ‘‘223(f)(4)’’ and inserting 10 ‘‘223(e)(4)’’. 11 (10) Section 4973(g) of such Code is amend- 12 ed— 13 (A) by striking ‘‘section 223(d)’’ and in- 14 serting ‘‘section 223(c)’’; 15 (B) in paragraph (2), by striking ‘‘section 16 223(f)(2)’’ and inserting ‘‘section 223(e)(2)’’; 17 and 18 (C) by striking ‘‘section 223(f)(3)’’ and in- 19 serting ‘‘section 223(e)(3)’’. 20 (11) Section 4975 of such Code is amended— 21 (A) in subsection (c)(6)— 22 (i) by striking ‘‘section 223(d)’’ and 23 inserting ‘‘section 223(c)’’; and 24 VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS 8 •HR 603 IH (ii) by striking ‘‘section 223(e)(2)’’ 1 and inserting ‘‘section 223(d)(2)’’; and 2 (B) in subsection (e)(1)(E), by striking 3 ‘‘section 223(d)’’ and inserting ‘‘section 4 223(c)’’. 5 (12) Section 6693(a)(2)(C) of such Code is 6 amended by striking ‘‘section 223(h)’’ and inserting 7 ‘‘section 223(g)’’. 8 (c) EFFECTIVE DATE.—The amendments made by 9 this section shall apply to taxable years beginning after 10 December 31, 2019. 11 SEC. 5. RESTORING LOWER PENALTY FOR NONQUALIFIED 12 DISTRIBUTIONS. 13 (a) HSAS.—Section 223(e)(4)(A) of the Internal 14 Revenue Code of 1986, as amended by section 4, is 15 amended by striking ‘‘20 percent’’ and inserting ‘‘10 per- 16 cent’’. 17 (b) EFFECTIVE DATE.—The amendment made by 18 this section shall apply to distributions made in taxable 19 years beginning after December 31, 2019. 20 Æ VerDate Sep 11 2014 03:07 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H603.IH H603 kjohnson on DSK79L0C42 with BILLS