Health Savings Accounts For All Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 8032 To amend the Internal Revenue Code of 1986 to eliminate limitations on contributions to health savings accounts. IN THE HOUSE OF REPRESENTATIVES AUGUST 14, 2020 Mr. BIGGS (for himself, Mr. FULCHER, Mr. PERRY, Mr. BALDERSON, Mrs. LESKO, Mr. GOSAR, Mr. HICE of Georgia, Mr. STEWART, Mr. HARRIS, Mr. YOHO, and Mr. ROY) introduced the following bill; which was re- ferred to the Committee on Ways and Means, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to eliminate limitations on contributions to health savings accounts. 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 counts For All Act of 2020’’. 5 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 8032 IH SEC. 2. REPEAL OF CONTRIBUTION LIMITATIONS. 1 (a) IN GENERAL.—Subsection (b) of section 223 of 2 the Internal Revenue Code of 1986 is amended to read 3 as follows: 4 ‘‘(b) DENIAL OF DEDUCTION TO DEPENDENTS.—No 5 deduction shall be allowed under this section to any indi- 6 vidual with respect to whom a deduction under section 151 7 is allowable to another taxpayer for a taxable year begin- 8 ning in the calendar year in which such individual’s tax- 9 able year begins.’’. 10 (b) CONFORMING AMENDMENTS.— 11 (1) Subparagraph (A) of section 223(d)(1) of 12 the Internal Revenue Code of 1986 is amended— 13 (A) by striking ‘‘subsection (f)(5)’’ and in- 14 serting ‘‘subsection (f)(4)’’, and 15 (B) by striking ‘‘accepted—’’ and all that 16 follows and inserting ‘‘accepted unless it is in 17 cash.’’. 18 (2) Subsection (f) of section 223 of such Code 19 is amended by striking paragraph (3) and by redes- 20 ignating paragraphs (4) through (8) as paragraphs 21 (3) through (7), respectively. 22 (3) Subsection (g) of section 223 of such Code 23 is amended— 24 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 8032 IH (A) by striking ‘‘subsections (b)(2) and 1 (c)(2)(A)’’ both places it appears and inserting 2 ‘‘subsection (c)(2)(A)’’, and 3 (B) by amending subparagraph (B) to read 4 as follows: 5 ‘‘(B) the cost-of-living adjustment deter- 6 mined under section 1(f)(3) for the calendar 7 year in which such taxable year begins deter- 8 mined by substituting ‘calendar year 2003’ for 9 ‘calendar year 2016’ in subparagraph (A)(ii) 10 thereof.’’. 11 (4) Section 26(b)(2) of such Code is amended— 12 (A) by striking ‘‘, 223(b)(8)(B)(i)(II),’’ in 13 subparagraph (S), and 14 (B) by striking ‘‘223(f)(4)’’ in subpara- 15 graph (U) and inserting ‘‘223(f)(3)’’. 16 (5) Paragraph (1) of section 106(d) of such 17 Code is amended by striking ‘‘under an accident or 18 health plan’’ and all that follows and inserting 19 ‘‘under an accident or health plan.’’. 20 (6) Subparagraph (C) of section 106(e)(4) of 21 such Code is amended by striking ‘‘223(f)(5)’’ and 22 inserting ‘‘223(f)(4)’’. 23 (7) Subparagraph (C) of section 408(d)(9) of 24 such Code is amended— 25 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 8032 IH (A) by striking ‘‘LIMITATIONS.—’’ in the 1 heading and all that follows through ‘‘(ii) ONE- 2 TIME TRANSFER.—’’ in clause (ii), and insert- 3 ing ‘‘ONE-TIME TRANSFER.—’’, 4 (B) by redesignating subclauses (I) and 5 (II) as clauses (i) and (ii) and moving such 6 clauses 2 ems to the left, and 7 (C) by striking ‘‘subclause (II)’’ in clause 8 (i), as so redesignated, and inserting ‘‘clause 9 (ii)’’. 10 (8) Section 4973 of such Code is amended by 11 striking subsection (g) and by redesignating sub- 12 section (h) as subsection (g). 13 (c) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to taxable years beginning after 15 the date of the enactment of this Act. 16 SEC. 3. FREEDOM FROM MANDATE. 17 (a) IN GENERAL.—Section 223 of the Internal Rev- 18 enue Code of 1986, as amended by section 2, is further 19 amended by striking subsections (c) and (g) and by redes- 20 ignating subsections (d), (e), (f), and (h) as subsections 21 (c), (d), (e), and (f), respectively. 22 (b) CONFORMING AMENDMENTS.— 23 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 8032 IH (1) Subsection (a) of section 223 of the Inter- 1 nal Revenue Code of 1986 is amended to read as fol- 2 lows: 3 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi- 4 vidual, there shall be allowed as a deduction for the tax- 5 able year an amount equal to the aggregate amount paid 6 in cash during such taxable year by or on behalf of such 7 individual to a health savings account of such individual.’’. 8 (2) Subsection (c)(1)(A) of section 223 of such 9 Code, as amended by section 2 and redesignated by 10 subsection (a), is further amended by striking ‘‘sub- 11 section (f)(4)’’ and inserting ‘‘subsection (e)(4)’’. 12 (3) Subparagraph (U) of section 26(b)(2) of 13 such Code, as amended by section 2, is further 14 amended by striking ‘‘section 223(f)(3)’’ and insert- 15 ing ‘‘section 223(e)(3)’’. 16 (4) Sections 35(g)(3), 220(f)(5)(A), 17 848(e)(1)(B)(v), 4973(a)(5), and 6051(a)(12) of 18 such Code are each amended by striking ‘‘section 19 223(d)’’ each place it appears and inserting ‘‘section 20 223(c)’’. 21 (5) Section 106(d)(1) of such Code is amend- 22 ed— 23 (A) by striking ‘‘who is an eligible indi- 24 vidual (as defined in section 223(c)(1))’’, and 25 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 8032 IH (B) by striking ‘‘section 223(d)’’ and in- 1 serting ‘‘section 223(c)’’. 2 (6) Section 106(e) of such Code is amended— 3 (A) by striking paragraphs (3) and (4) and 4 by redesignating paragraph (5) as paragraph 5 (4), 6 (B) by inserting after paragraph (2) the 7 following new paragraph: 8 ‘‘(3) TREATMENT AS ROLLOVER CONTRIBU- 9 TION.—A qualified HSA distribution shall be treated 10 as a rollover contribution described in section 11 223(e)(4).’’, and 12 (C) by striking ‘‘to any eligible individual 13 covered under a high deductible health plan of 14 the employer’’ in paragraph (4)(B)(ii) (as so re- 15 designated) and inserting ‘‘to any employee 16 with respect to whom a health savings account 17 has been established’’. 18 (7) Section 408(d)(9)(A) of such Code is 19 amended by striking ‘‘who is an eligible individual 20 (as defined in section 223(c)) and’’. 21 (8) Section 877A(g)(6) of such Code is amend- 22 ed by striking ‘‘223(f)(4)’’ and inserting 23 ‘‘223(e)(4)’’. 24 (9) Section 4975 of such Code is amended— 25 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 8032 IH (A) in subsection (c)(6)— 1 (i) by striking ‘‘section 223(d)’’ and 2 inserting ‘‘section 223(c)’’, and 3 (ii) by striking ‘‘section 223(e)(2)’’ 4 and inserting ‘‘section 223(d)(2)’’, and 5 (B) in subsection (e)(1)(E), by striking 6 ‘‘section 223(d)’’ and inserting ‘‘section 7 223(c)’’. 8 (10) Subsection (b) of section 4980G of such 9 Code is amended to read as follows: 10 ‘‘(b) RULES AND REQUIREMENTS.— 11 ‘‘(1) IN GENERAL.—An employer meets the re- 12 quirements of this subsection for any calendar year 13 if the employer makes available comparable con- 14 tributions to the health savings accounts of all com- 15 parable participating employees for each coverage 16 period during such calendar year. 17 ‘‘(2) COMPARABLE CONTRIBUTIONS.— 18 ‘‘(A) IN GENERAL.—For purposes of para- 19 graph (1), the term ‘comparable contributions’ 20 means contributions— 21 ‘‘(i) which are the same amount, or 22 ‘‘(ii) if the employees are covered by a 23 health plan, which are the same percentage 24 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 8032 IH of the annual deductible limit under the 1 plan covering the employees. 2 ‘‘(B) PART-YEAR EMPLOYEES.—In the 3 case of an employee who is employed by the em- 4 ployer for only a portion of the calendar year, 5 a contribution to the health savings account of 6 such employee shall be treated as comparable if 7 it is an amount which bears the same ratio to 8 the comparable amount (determined without re- 9 gard to this subparagraph) as such portion 10 bears to the entire calendar year. 11 ‘‘(3) COMPARABLE PARTICIPATING EMPLOY- 12 EES.—For purposes of paragraph (1), the term 13 ‘comparable participating employees’ means all em- 14 ployees who are covered (if at all) under the same 15 health plan of the employer and have the same cat- 16 egory of coverage. For purposes of the preceding 17 sentence, the categories of coverage are self-only and 18 family coverage. 19 ‘‘(4) PART-TIME EMPLOYEES.— 20 ‘‘(A) IN GENERAL.—Paragraph (3) shall 21 be applied separately with respect to part-time 22 employees and other employees. 23 ‘‘(B) PART-TIME EMPLOYEE.—For pur- 24 poses of subparagraph (A), the term ‘part-time 25 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 8032 IH employee’ means any employee who is custom- 1 arily employed for fewer than 30 hours per 2 week.’’. 3 (11) Section 4980G(d) of such Code is amended 4 by striking ‘‘section 4980E’’ and inserting ‘‘this sec- 5 tion’’. 6 (12) Section 6693(a)(2)(C) of such Code is 7 amended by striking ‘‘section 223(h)’’ and inserting 8 ‘‘section 223(f)’’. 9 (c) EFFECTIVE DATE.—The amendments made by 10 this section shall apply to taxable years beginning after 11 the date of the enactment of this Act. 12 SEC. 4. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP- 13 TION AND OVER-THE-COUNTER MEDICINES 14 AND DRUGS. 15 (a) HSAS.—Paragraph (2)(A) of section 223(c) of 16 the Internal Revenue Code of 1986, as redesignated by 17 section 3, is amended by adding at the end the following: 18 ‘‘The term ‘qualified medical expenses’ shall include an 19 amount paid for any prescription or over-the-counter med- 20 icine or drug.’’. 21 (b) ARCHER MSAS.—Section 220(d)(2)(A) of the In- 22 ternal Revenue Code of 1986 is amended— 23 (1) by striking ‘‘section 223(d)(2)(D)’’ and in- 24 serting ‘‘section 223(c)(2)(B)’’, and 25 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 8032 IH (2) by adding at the end the following: ‘‘The 1 term ‘qualified medical expenses’ shall include an 2 amount paid for any prescription or over-the-counter 3 medicine or drug.’’. 4 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS 5 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sub- 6 section (f) of section 106 of the Internal Revenue Code 7 of 1986 is amended to read as follows: 8 ‘‘(f) REIMBURSEMENTS FOR PRESCRIPTION AND 9 OVER-THE-COUNTER MEDICINES AND DRUGS.—For pur- 10 poses of this section and section 105, reimbursement for 11 expenses incurred for any prescription or over-the-counter 12 medicine or drug shall be treated as a reimbursement for 13 medical expenses.’’. 14 (d) EFFECTIVE DATES.— 15 (1) DISTRIBUTIONS FROM SAVINGS AC- 16 COUNTS.—The amendments made by subsections (a) 17 and (b) shall apply to amounts paid in taxable years 18 beginning after the date of the enactment of this 19 Act. 20 (2) REIMBURSEMENTS.—The amendment made 21 by subsection (c) shall apply to expenses incurred in 22 plan years beginning after the date of the enactment 23 of this Act. 24 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 8032 IH SEC. 5. PURCHASE OF HEALTH INSURANCE FROM HSA. 1 (a) IN GENERAL.—Paragraph (2) of section 223(c) 2 of the Internal Revenue Code of 1986, as redesignated by 3 section 3, is amended— 4 (1) by striking subparagraphs (B) and (C), and 5 (2) by redesignating subparagraph (D) as sub- 6 paragraph (B). 7 (b) CONFORMING AMENDMENT.—Paragraph (2) of 8 section 223(c) of the Internal Revenue Code of 1986, as 9 amended by the preceding sections of this Act, is further 10 amended by striking ‘‘and any dependent (as defined in 11 section 152, determined without regard to subsections 12 (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual’’ 13 and inserting ‘‘any dependent (as defined in section 152, 14 determined without regard to subsections (b)(1), (b)(2), 15 and (d)(1)(B) thereof) of such individual, and any child 16 (as defined in section 152(f)(1)) of such individual who 17 has not attained the age of 27 before the end of such indi- 18 vidual’s taxable year’’. 19 (c) EFFECTIVE DATE.—The amendments made by 20 this section shall apply with respect to insurance pur- 21 chased after the date of the enactment of this Act in tax- 22 able years beginning after such date. 23 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 8032 IH SEC. 6. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 1 INCURRED BEFORE ESTABLISHMENT OF AC- 2 COUNT. 3 (a) IN GENERAL.—Paragraph (2) of section 223(c) 4 of the Internal Revenue Code of 1986, as amended and 5 redesignated by the preceding sections of this Act, is fur- 6 ther amended by adding at the end the following new sub- 7 paragraph: 8 ‘‘(C) CERTAIN MEDICAL EXPENSES IN- 9 CURRED BEFORE ESTABLISHMENT OF ACCOUNT 10 TREATED AS QUALIFIED.—An expense shall not 11 fail to be treated as a qualified medical expense 12 solely because such expense was incurred before 13 the establishment of the health savings account 14 if such expense was incurred— 15 ‘‘(i) during either— 16 ‘‘(I) the taxable year in which the 17 health savings account was estab- 18 lished, or 19 ‘‘(II) the preceding taxable year, 20 in the case of a health savings ac- 21 count established after the taxable 22 year in which such expense was in- 23 curred but before the time prescribed 24 by law for filing the return for such 25 VerDate Sep 11 2014 22:34 Aug 29, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H8032.IH H8032 pamtmann on DSKBC07HB2PROD [Text truncated for display. Full text available on Congress.gov.]