PEEPS Act

I 116TH CONGRESS 2D SESSION H. R. 7825 To amend the Internal Revenue Code of 1986 to create increased opportuni- ties for savings to HSA, MSA, and FSA plans, to mitigate the financial strain on families caused by COVID–19, to provide for child nutrition, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 29, 2020 Mr. BUCK 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 create increased opportunities for savings to HSA, MSA, and FSA plans, to mitigate the financial strain on families caused by COVID–19, to provide for child nutrition, 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 ‘‘Pandemic Eradication 4 and Enhanced Prevention through Savings Act’’ or the 5 ‘‘PEEPS Act’’. 6 VerDate Sep 11 2014 02:10 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 2 •HR 7825 IH SEC. 2. MODIFICATIONS OF HSAS, ARCHER MSAS, AND 1 FSAS. 2 (a) COBRA COVERAGE.— 3 (1) HSA.—Section 223(d)(2) of the Internal 4 Revenue Code of 1986 is amended by adding at the 5 end the following: 6 ‘‘(E) COBRA COVERAGE.—Subparagraph 7 (B) shall not apply to amounts paid during cal- 8 endar year 2020 for premiums for coverage 9 under a group health plan pursuant to section 10 4980B(f).’’. 11 (2) FSA.—Section 106 of such Code is amend- 12 ed by adding at the end the following: 13 ‘‘(h) FSA PAYMENTS FOR COBRA COVERAGE.—A 14 plan shall not fail to be treated as a health flexible spend- 15 ing arrangement under this section merely because such 16 plan provides for a distribution during calendar year 2020 17 to make payments for premiums for coverage under a 18 group health plan pursuant to section 4980B(f).’’. 19 (b) HEALTH INSURANCE PREMIUMS FOR THOSE 20 NOT COVERED BY EMPLOYER-SPONSORED HEALTH 21 PLAN DURING 2020.— 22 (1) HSA.—Section 223(d)(2) of such Code, as 23 amended by subsection (a), is amended by adding at 24 the end the following: 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 3 •HR 7825 IH ‘‘(F) HEALTH INSURANCE PREMIUMS FOR 1 THOSE NOT COVERED BY EMPLOYER-SPON- 2 SORED COVERAGE IN 2020.—Subparagraph (B) 3 shall not apply to amounts paid during calendar 4 year 2020 for premiums for coverage under a 5 health plan for any month for which the health 6 plan of the individual— 7 ‘‘(i) is not an employer-sponsored 8 health plan, and 9 ‘‘(ii) does not include coverage for 10 abortions (other than any abortion nec- 11 essary to save the life of the mother or any 12 abortion with respect to a pregnancy that 13 is the result of an act of rape or incest).’’. 14 (2) ARCHER MSA.—Section 220(d)(2) of such 15 Code is amended by adding at the end the following: 16 ‘‘(D) HEALTH INSURANCE PREMIUMS FOR 17 THOSE NOT COVERED BY EMPLOYER-SPON- 18 SORED COVERAGE IN 2020.—Subparagraph (B) 19 shall not apply to amounts paid during calendar 20 year 2020 for premiums for coverage under a 21 high deductible health plan for any month for 22 which the health plan of the individual— 23 ‘‘(i) is not an employer-sponsored 24 health plan, and 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 4 •HR 7825 IH ‘‘(ii) does not include coverage for 1 abortions (other than any abortion nec- 2 essary to save the life of the mother or any 3 abortion with respect to a pregnancy that 4 is the result of an act of rape or incest).’’. 5 (3) FSA.—Section 106 of such Code, as 6 amended by subsection (a), is amended by adding at 7 the end the following: 8 ‘‘(i) HEALTH INSURANCE PREMIUMS FOR THOSE 9 NOT ELIGIBLE FOR EMPLOYER-SPONSORED COVERAGE 10 IN 2020 AND 2021.—A plan shall not fail to be treated 11 as a health flexible spending arrangement under this sec- 12 tion merely because such plan provides for a distribution 13 during calendar year 2020 or 2021 for premiums for cov- 14 erage for medical expenses under an accident or health 15 plan of a plan beneficiary if the beneficiary is not eligible 16 for coverage by an employer-sponsored health plan. The 17 preceding sentence shall only apply if the coverage does 18 not include coverage for abortions (other than any abor- 19 tion necessary to save the life of the mother or any abor- 20 tion with respect to a pregnancy that is the result of an 21 act of rape or incest).’’. 22 (c) HSAS WITHOUT HIGH DEDUCTIBLE HEALTH 23 PLANS FOR 2020 AND 2021.—Section 223 of such Code 24 is amended by adding at the end the following: 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 5 •HR 7825 IH ‘‘(i) SPECIAL RULE FOR CALENDAR YEARS 2020 1 AND 2021.— 2 ‘‘(1) IN GENERAL.—Notwithstanding subsection 3 (c)(1)(A) and subject to paragraph (2), for calendar 4 years 2020 and 2021, the term ‘eligible individual’ 5 means, with respect to any month, any individual if 6 the individual is covered under any health plan, in- 7 cluding any the following: 8 ‘‘(A) GOVERNMENT SPONSORED PRO- 9 GRAMS.—Coverage under— 10 ‘‘(i) The Medicare program under 11 part A of title XVIII of the Social Security 12 Act. 13 ‘‘(ii) The Medicaid program under 14 title XIX of the Social Security Act. 15 ‘‘(iii) The CHIP program under title 16 XXI of the Social Security Act or under a 17 qualified CHIP look-alike program (as de- 18 fined in section 2107(g) of the Social Secu- 19 rity Act). 20 ‘‘(iv) Medical coverage under chapter 21 55 of title 10, United States Code, includ- 22 ing coverage under the TRICARE pro- 23 gram. 24 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 6 •HR 7825 IH ‘‘(v) A health care program under 1 chapter 17 or 18 of title 38, United States 2 Code, as determined by the Secretary of 3 Veterans Affairs, in coordination with the 4 Secretary of Health and Human Services 5 and the Secretary. 6 ‘‘(vi) A health plan under section 7 2504(e) of title 22, United States Code 8 (relating to Peace Corps volunteers). 9 ‘‘(vii) The Non-appropriated Fund 10 Health Benefits Program of the Depart- 11 ment of Defense, established under section 12 349 of the National Defense Authorization 13 Act for Fiscal Year 1995 (Public Law 14 103–337; 10 U.S.C. 1587 note). 15 ‘‘(B) EMPLOYER-SPONSORED PLAN.—Cov- 16 erage under an eligible employer-sponsored 17 plan. 18 ‘‘(C) PLANS IN THE INDIVIDUAL MAR- 19 KET.—Coverage under a health plan offered in 20 the individual market within a State. 21 ‘‘(D) GRANDFATHERED HEALTH PLAN.— 22 Coverage under a grandfathered health plan. 23 ‘‘(E) COVERAGE.—Such other health bene- 24 fits coverage, such as a State health benefits 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 7 •HR 7825 IH risk pool, as the Secretary of Health and 1 Human Services, in coordination with the Sec- 2 retary, recognizes for purposes of this sub- 3 section. 4 ‘‘(2) MODIFICATIONS.—For purposes of para- 5 graph (1), subsection (b)(8) shall be applied by sub- 6 stituting ‘health plan’ for ‘high deductible health 7 plan’ each place it appears and subsection (c)(1)(B) 8 shall not apply.’’. 9 (d) WAIVER OF CARRYOVER LIMITATION ON FSA 10 2020 FUNDS.—Section 106 of such Code, as amended by 11 the preceding provisions of this section, is amended by 12 adding at the end the following: 13 ‘‘(j) FSA CARRYOVER WITHOUT LIMITATION ON 14 2020 CONTRIBUTIONS.—There shall be no limitation on 15 the amount of funds contributed during 2020 to a health 16 flexible spending arrangement under this section that may 17 be carried over to the succeeding plan year.’’. 18 (e) PREMIUM FOR BENEFITS UNDER MEDICARE FOR 19 2020.— 20 (1) HSA.—Section 223(d)(2) of such Code, as 21 amended by the preceding provisions of this section, 22 is amended by adding at the end the following: 23 ‘‘(G) PREMIUMS FOR BENEFITS UNDER 24 MEDICARE FOR 2020.—Subparagraph (B) shall 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 8 •HR 7825 IH not apply to amounts paid during calendar year 1 2020 for any monthly premium for benefits 2 under part A of title XVIII of the Social Secu- 3 rity Act, any monthly premium for benefits 4 under part B of such title, any monthly pre- 5 mium under a Medicare Advantage plan under 6 part C of such title, or any monthly premium 7 under a prescription drug plan under part D of 8 such title.’’. 9 (2) ARCHER MSA.—Section 220(d)(2) of such 10 Code, as amended by the preceding provisions of this 11 section, is amended by adding at the end the fol- 12 lowing: 13 ‘‘(F) PREMIUMS FOR BENEFITS UNDER 14 MEDICARE FOR 2020.—Subparagraph (B) shall 15 not apply to amounts paid during calendar year 16 2020 for any monthly premium for benefits 17 under part A of title XVIII of the Social Secu- 18 rity Act, any monthly premium for benefits 19 under part B of such title, any monthly pre- 20 mium under a Medicare Advantage plan under 21 part C of such title, or any monthly premium 22 under a prescription drug plan under part D of 23 such title.’’. 24 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 9 •HR 7825 IH (3) FSA.—Section 106 of such Code, as 1 amended by the preceding provisions of this section, 2 is amended by adding at the end the following: 3 ‘‘(k) FSA PAYMENTS FOR BENEFITS UNDER MEDI- 4 CARE FOR 2020.—A plan shall not fail to be treated as 5 a health flexible spending arrangement under this section 6 merely because such plan provides for a distribution dur- 7 ing calendar year 2020 for any monthly premium for bene- 8 fits under part A of title XVIII of the Social Security Act, 9 any monthly premium for benefits under part B of such 10 title, any monthly premium under a Medicare Advantage 11 plan under part C of such title, or any monthly premium 12 under a prescription drug plan under part D of such 13 title.’’. 14 (f) PAYMENT OF NON-DEPENDENT MEDICAL EX- 15 PENSES IN 2020.— 16 (1) HSA.— 17 (A) MEDICAL EXPENSES.—Section 18 223(d)(2) of such Code, as amended by the pre- 19 ceding provisions of this section, is amended by 20 adding at the end the following: 21 ‘‘(F) NON-DEPENDENT MEDICAL EX- 22 PENSES IN 2020.—During calendar year 2020, 23 subparagraph (A) shall be applied without re- 24 gard to the requirement that medical care be 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 10 •HR 7825 IH for the individual, the spouse of such individual, 1 and any dependent (as defined in section 152, 2 determined without regard to subsections 3 (b)(1), (b)(2), and (d)(1)(B) thereof) of such 4 individual.’’. 5 (B) ROLLOVER.—Section 223(f)(5) of such 6 Code is amended by adding at the end the fol- 7 lowing: 8 ‘‘(C) ROLLOVER GIFTS.—Notwithstanding 9 the preceding provisions of this paragraph, an 10 amount is described in this paragraph as a roll- 11 over contribution in the case of a taxable year 12 beginning in 2020 and paragraph (2) shall not 13 apply to any amount paid or distributed from 14 a health savings account of a beneficiary to a 15 health savings account of an individual who is 16 not such beneficiary, the spouse of such bene- 17 ficiary, or any dependent (as defined in section 18 152, determined without regard to subsections 19 (b)(1), (b)(2), and (d)(1)(B) thereof) of such 20 beneficiary, to the extent— 21 ‘‘(i) the amount received is paid into 22 the health savings account for the benefit 23 of such individual not later than the 60th 24 day after the day on which the account 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 11 •HR 7825 IH beneficiary receives the payment or dis- 1 tribution, and 2 ‘‘(ii) the aggregate amount of such 3 transfers to all other individuals does not 4 exceed $2,020 in 2020.’’. 5 (C) DONATIONS TO QUALIFIED CHARITY.— 6 Section 223(f) of such Code is amended by add- 7 ing at the end the following: 8 ‘‘(9) DONATIONS TO QUALIFIED CHARITY.— 9 ‘‘(A) DONATIONS ALLOWABLE.—Para- 10 graph (2) shall not apply to any amount paid 11 or distributed from a health savings account to 12 the extent the amount (not to exceed $10,000) 13 is a qualified charitable contribution made by 14 the account beneficiary during the taxable year. 15 ‘‘(B) QUALIFIED CHARITABLE CONTRIBU- 16 TION.—For purposes of subparagraph (A), the 17 term ‘qualified charitable contribution’ means a 18 charitable contribution (as defined in section 19 170(c))— 20 ‘‘(i) which is made in cash, 21 ‘‘(ii) for which a deduction is allow- 22 able under section 170 (determined with- 23 out regard to subsection (b) thereof and to 24 subparagraph (C) of this paragraph), and 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 12 •HR 7825 IH ‘‘(iii) which is— 1 ‘‘(I) made to an organization de- 2 scribed in section 170(b)(1)(A), and 3 ‘‘(II) not— 4 ‘‘(aa) to an organization de- 5 scribed in section 509(a)(3), or 6 ‘‘(bb) for the establishment 7 of a new, or maintenance of an 8 existing, donor advised fund (as 9 defined in section 4966(d)(2)). 10 ‘‘(C) DENIAL OF DEDUCTION.—No deduc- 11 tion shall be allowed for a distribution which is 12 a contribution made pursuant to this para- 13 graph.’’. 14 (2) ARCHER MSA.— 15 (A) NON-DEPENDENT MEDICAL EXPENSES 16 IN 2020.—Section 220(d)(2) of such Code, as 17 amended by the preceding provisions of this 18 section, is amended by adding at the end the 19 following: 20 ‘‘(E) NON-DEPENDENT MEDICAL EX- 21 PENSES IN 2020.—During calendar year 2020, 22 subparagraph (A) shall be applied without re- 23 gard to the requirement that medical care be 24 for the individual, the spouse of such individual, 25 VerDate Sep 11 2014 23:11 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H7825.IH H7825 SSpencer on DSK126QN23PROD with BILLS 13 •HR 7825 IH and any dependent (as defined in section 152, 1 determined without regard to subsections 2 (b)(1), (b)(2), and (d)(1)(B) thereof) of such 3 individual.’’. 4 ( [Text truncated for display. 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