Family Savings Flexibility Act

I 116TH CONGRESS 2D SESSION H. R. 7008 To amend the Internal Revenue Code of 1986 to provide flexibility for families with health flexible spending arrangements and dependent care flexible spending arrangements, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 22, 2020 Mr. WENSTRUP (for himself, Mrs. AXNE, and Mr. KELLY of Pennsylvania) 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 provide flexibility for families with health flexible spending ar- rangements and dependent care flexible spending ar- rangements, 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 ‘‘Family Savings Flexi- 4 bility Act’’. 5 VerDate Sep 11 2014 18:54 Jun 17, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7008.IH H7008 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 7008 IH SEC. 2. INCREASE IN CARRYOVER FOR HEALTH FLEXIBLE 1 SPENDING ARRANGEMENTS. 2 (a) IN GENERAL.—A plan or other arrangement that 3 otherwise satisfies all of the applicable requirements of 4 sections 106 and 125 of the Internal Revenue Code of 5 1986 (including any rules or regulations thereunder) shall 6 not fail to be treated as a cafeteria plan or health flexible 7 spending arrangement merely because such plan or ar- 8 rangement permits participants to carry over an amount 9 not in excess of $2,750 of unused benefits or contributions 10 remaining in a health flexible spending arrangement from 11 the plan year ending in 2020 to the plan year ending in 12 2021. 13 (b) DEFINITIONS.—Any term used in this section 14 which is also used in section 106 or 125 of the Internal 15 Revenue Code of 1986 or the rules or regulations there 16 under shall have the same meaning as when used in such 17 section or rules or regulations. 18 SEC. 3. CARRYOVER FOR DEPENDENT CARE FLEXIBLE 19 SPENDING ARRANGEMENTS. 20 (a) IN GENERAL.—A plan or other arrangement that 21 otherwise satisfies all applicable requirements of sections 22 106, 125, and 129 of the Internal Revenue Code of 1986 23 (including any rules or regulations thereunder) shall not 24 fail to be treated as a cafeteria plan or dependent care 25 flexible spending arrangement merely because such plan 26 VerDate Sep 11 2014 18:54 Jun 17, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7008.IH H7008 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 7008 IH or arrangement permits participants to carry over (under 1 rules similar to the rules applicable to health flexible 2 spending arrangements) an amount, not in excess of the 3 amount in effect under section 129(a)(2)(A) of such Code, 4 of unused benefits or contributions remaining in a depend- 5 ent care flexible spending arrangement from the plan year 6 ending in 2020 to the plan year ending in 2021. 7 (b) DEFINITIONS.—Any term used in this section 8 which is also used in section 106, 125, or 129 of the Inter- 9 nal Revenue Code of 1986 or the rules or regulations 10 thereunder shall have the same meaning as when used in 11 such section or rules or regulations. 12 SEC. 4. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV- 13 INGS ACCOUNT INCREASED TO AMOUNT OF 14 DEDUCTIBLE AND OUT-OF-POCKET LIMITA- 15 TION. 16 (a) SELF-ONLY COVERAGE.—Section 223(b)(2)(A) 17 of the Internal Revenue Code of 1986 is amended by strik- 18 ing ‘‘$2,250’’ and inserting ‘‘the amount in effect under 19 subsection (c)(2)(A)(ii)(I)’’. 20 (b) FAMILY COVERAGE.—Section 223(b)(2)(B) of 21 such Code is amended by striking ‘‘$4,500’’ and inserting 22 ‘‘the amount in effect under subsection (c)(2)(A)(ii)(II)’’. 23 VerDate Sep 11 2014 18:54 Jun 17, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7008.IH H7008 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 7008 IH (c) CONFORMING AMENDMENT.—Section 223(g)(1) 1 of such Code is amended by striking ‘‘subsections (b)(2) 2 and’’ both places it appears and inserting ‘‘subsection’’. 3 (d) EFFECTIVE DATE.—The amendments made by 4 this section shall apply to taxable years beginning after 5 December 31, 2019. 6 SEC. 5. INCREASE IN EXCLUSION FOR EMPLOYER-PRO- 7 VIDED DEPENDENT CARE ASSISTANCE. 8 (a) IN GENERAL.—Section 129(a)(2) of the Internal 9 Revenue Code of 1986 is amended by adding at the end 10 the following new subparagraph: 11 ‘‘(D) SPECIAL RULE FOR 2020.—In the 12 case of any taxable year beginning during 2020, 13 subparagraph (A) shall be applied by sub- 14 stituting ‘$10,000 (half such dollar amount’ for 15 ‘$5,000 ($2,500’.’’. 16 (b) EFFECTIVE DATE.—The amendment made by 17 this section shall apply to taxable years beginning after 18 December 31, 2019. 19 (c) RETROACTIVE PLAN AMENDMENTS.—A plan or 20 other arrangement that otherwise satisfies all applicable 21 requirements of sections 106, 125, and 129 of the Internal 22 Revenue Code of 1986 (including any rules or regulations 23 thereunder) shall not fail to be treated as a cafeteria plan 24 or dependent care flexible spending arrangement merely 25 VerDate Sep 11 2014 18:16 Jun 19, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7008.IH H7008 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 7008 IH because such plan or arrangement is amended pursuant 1 to a provision under this section and such amendment is 2 retroactive, if— 3 (1) such amendment is adopted no later than 4 the last day of the plan year in which the amend- 5 ment is effective, and 6 (2) the plan or arrangement is operated con- 7 sistent with the terms of such amendment during 8 the period beginning on the effective date of the 9 amendment and ending on the date the amendment 10 is adopted. 11 Æ VerDate Sep 11 2014 18:54 Jun 17, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H7008.IH H7008 pamtmann on DSKBC07HB2PROD with BILLS