What This Bill Does
This bill makes changes to health savings accounts (accounts where people can set aside pre-tax money to pay for medical expenses). The bill renames "high deductible health plans" to "HSA-qualified health plans" and allows more types of people and expenses to use these accounts.
##
Who It Affects
People with health savings accounts or who want to open one; married couples with family health coverage; Medicare beneficiaries; Native Americans receiving Indian Health Service care; members of health care sharing ministries; employees with on-site medical clinics; people in flexible spending arrangements or health reimbursement arrangements; people in bankruptcy; people using fitness programs or dietary supplements for health; Medicaid recipients.
##
Key Provisions
* Both spouses in a marriage can make extra catch-up contributions (additional money set aside for older workers) to the same health savings account if both are eligible and have family coverage (Sec. 201)
* People over 65 who are only enrolled in Medicare Part A (hospital insurance) can keep and contribute to their health savings accounts (Sec. 202)
* Native Americans who receive hospital or medical care through Indian Health Service programs are allowed to have health savings accounts (Sec. 203)
* Members of health care sharing ministries (religious or ethical organizations that share medical costs) can open health savings accounts (Sec. 204)
* Employees who have access to direct primary care arrangements (a doctor you pay a fixed fee to for regular care) can still have health savings accounts (Sec. 205)
* People can use health savings account money to buy health insurance, including Medicare coverage (Sec. 301)
* Health savings accounts receive the same bankruptcy protection as retirement accounts (Sec. 402)
* Exercise equipment, fitness programs, nutritional supplements, and primary care doctor fees become allowable medical expenses from health savings accounts, but with annual limits of $1,000 per person for fitness and supplements (Sec. 501, 502, 503)
* The maximum amount people can put into health savings accounts each year increases from set dollar amounts to match the deductible and out-of-pocket limits of their health plan (Sec. 405)
##
What Changes
If this bill becomes law, the term "high deductible health plan" will be replaced throughout tax law with "HSA-qualified health plan." Married couples can split contribution limits more flexibly. More people become eligible to use health savings accounts, including those in health care sharing ministries and people only on Medicare Part A. People can use these accounts to purchase health insurance directly. Health savings accounts will have bankruptcy protections equal to retirement accounts. Fitness equipment, gym memberships, vitamins, supplements, and direct primary care doctor fees become covered expenses (within annual dollar limits). The annual contribution limits will no longer be fixed dollar amounts but will match what the health plan requires people to pay out of pocket before insurance kicks in.
##
Important Definitions
* HSA-qualified health plan: A health insurance plan that allows people to open health savings accounts (renamed from "high deductible health plan")
* Health savings account: A tax-advantaged account where people can save money to pay for qualified medical expenses
* Qualified medical expense: Money spent on health care that can be paid from a health savings account using pre-tax dollars
* Health care sharing ministry: An organization of people who share medical costs based on shared values, beliefs, or principles
* Direct primary care service arrangement: An agreement where a person pays a fixed fee directly to a doctor for routine primary care services
* Catch-up contribution: Extra money older workers (age 55 and up) can add to savings accounts
* Embedded deductible: The amount a family member must pay out of their own pocket before the family's health insurance coverage begins
##
Effective Date
Most provisions apply to taxable years (calendar year or fiscal year used for tax purposes) beginning after the bill is signed into law. Section 303 (preventive care prescription drugs) applies to taxable years beginning after December 31, 2023. Section 405 (contribution limit increases) applies to taxable years beginning after December 31, 2023. Section 402 (bankruptcy protections) applies to bankruptcy cases filed after the bill is signed into law.
II
118TH CONGRESS
1ST SESSION
S. 1158
To amend the Internal Revenue Code of 1986 to improve access to health
care through expanded health savings accounts, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 30, 2023
Mr. RUBIO (for himself and Mr. SCOTT of South Carolina) introduced the
following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to improve
access to health care through expanded 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, ETC.
3
(a) SHORT TITLE.—This Act may be cited as the
4
‘‘Health Savings Act of 2023’’.
5
(b) AMENDMENT OF 1986 CODE.—Except as other-
6
wise expressly provided, whenever in this Act an amend-
7
ment or repeal is expressed in terms of an amendment
8
to, or repeal of, a section or other provision, the reference
9
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•S 1158 IS
shall be considered to be made to a section or other provi-
1
sion of the Internal Revenue Code of 1986.
2
(c) TABLE OF CONTENTS.—The table of contents is
3
as follows:
4
Sec. 1. Short title, etc.
TITLE I—RENAMING HIGH DEDUCTIBLE HEALTH PLANS
Sec. 101. High deductible health plans renamed HSA-qualified health plans.
TITLE II—ENHANCING ACCESS TO TAX-PREFERRED HEALTH
ACCOUNTS
Sec. 201. Allow both spouses to make catch-up contributions to the same HSA
account.
Sec. 202. Provisions relating to Medicare.
Sec. 203. Individuals eligible for Indian Health Service assistance.
Sec. 204. Members of health care sharing ministries eligible to establish health
savings accounts.
Sec. 205. Treatment of direct primary care service arrangements.
Sec. 206. Individuals eligible for on-site medical clinic coverage.
Sec. 207. Treatment of embedded deductibles.
TITLE III—IMPROVING COVERAGE UNDER TAX-PREFERRED
HEALTH ACCOUNTS
Sec. 301. Purchase of health insurance from HSA account.
Sec. 302. Special rule for certain medical expenses incurred before establish-
ment of account.
Sec. 303. Preventive care prescription drug clarification.
TITLE IV—MISCELLANEOUS PROVISIONS RELATING TO TAX-
PREFERRED HEALTH ACCOUNTS
Sec. 401. FSA and HRA interaction with HSAs.
Sec. 402. Equivalent bankruptcy protections for health savings accounts as re-
tirement funds.
Sec. 403. Administrative error correction before due date of return.
Sec. 404. Reauthorization of Medicaid health opportunity accounts.
Sec. 405. Maximum contribution limit to health savings account increased to
amount of deductible and out-of-pocket limitation.
TITLE V—OTHER PROVISIONS
Sec. 501. Certain exercise equipment and physical fitness programs treated as
medical care.
Sec. 502. Certain nutritional and dietary supplements to be treated as medical
care.
Sec. 503. Certain provider fees to be treated as medical care.
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•S 1158 IS
TITLE I—RENAMING HIGH
1
DEDUCTIBLE HEALTH PLANS
2
SEC. 101. HIGH DEDUCTIBLE HEALTH PLANS RENAMED
3
HSA-QUALIFIED HEALTH PLANS.
4
(a) IN GENERAL.—Section 223 is amended by strik-
5
ing ‘‘high deductible health plan’’ each place it appears
6
and inserting ‘‘HSA-qualified health plan’’.
7
(b) CONFORMING AMENDMENTS.—
8
(1) The heading for paragraph (2) of section
9
223(c) is amended by striking ‘‘HIGH DEDUCTIBLE
10
HEALTH
PLAN’’ and inserting ‘‘HSA-QUALIFIED
11
HEALTH PLAN’’.
12
(2) Section 408(d)(9) is amended—
13
(A) by striking ‘‘high deductible health
14
plan’’ each place it appears in subparagraph
15
(C) and inserting ‘‘HSA-qualified health plan’’;
16
and
17
(B)
by
striking
‘‘HIGH
DEDUCTIBLE
18
HEALTH PLAN’’ in the heading of subparagraph
19
(D) and inserting ‘‘HSA-QUALIFIED
HEALTH
20
PLAN’’.
21
(3) Section 106(e) is amended—
22
(A)
by
striking
‘‘HIGH
DEDUCTIBLE
23
HEALTH PLAN’’ in the heading of paragraph (3)
24
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•S 1158 IS
and
inserting
‘‘HSA-QUALIFIED
HEALTH
1
PLAN’’; and
2
(B) by striking ‘‘high deductible health
3
plan’’ in paragraph (5)(B)(ii) and inserting
4
‘‘HSA-qualified health plan’’.
5
TITLE II—ENHANCING ACCESS
6
TO TAX-PREFERRED HEALTH
7
ACCOUNTS
8
SEC. 201. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON-
9
TRIBUTIONS TO THE SAME HSA ACCOUNT.
10
(a) IN GENERAL.—Paragraph (5) of section 223(b)
11
is amended to read as follows:
12
‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS
13
WITH FAMILY COVERAGE.—
14
‘‘(A) IN GENERAL.—In the case of individ-
15
uals who are married to each other, if both
16
spouses are eligible individuals and either
17
spouse has family coverage under an HSA-
18
qualified health plan as of the first day of any
19
month—
20
‘‘(i) the limitation under paragraph
21
(1) shall be applied by not taking into ac-
22
count any other HSA-qualified health plan
23
coverage of either spouse (and if such
24
spouses both have family coverage under
25
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•S 1158 IS
separate HSA-qualified health plans, only
1
one such coverage shall be taken into ac-
2
count),
3
‘‘(ii) such limitation (after application
4
of clause (i)) shall be reduced by the ag-
5
gregate amount paid to Archer MSAs of
6
such spouses for the taxable year, and
7
‘‘(iii) such limitation (after application
8
of clauses (i) and (ii)) shall be divided
9
equally between such spouses unless they
10
agree on a different division.
11
‘‘(B) TREATMENT
OF
ADDITIONAL
CON-
12
TRIBUTION AMOUNTS.—If both spouses referred
13
to in subparagraph (A) have attained age 55
14
before the close of the taxable year, the limita-
15
tion referred to in subparagraph (A)(iii) which
16
is subject to division between the spouses shall
17
include the additional contribution amounts de-
18
termined under paragraph (3) for both spouses.
19
In any other case, any additional contribution
20
amount determined under paragraph (3) shall
21
not be taken into account under subparagraph
22
(A)(iii) and shall not be subject to division be-
23
tween the spouses.’’.
24
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•S 1158 IS
(b) EFFECTIVE DATE.—The amendment made by
1
this section shall apply to taxable years beginning after
2
the date of the enactment of this Act.
3
SEC. 202. PROVISIONS RELATING TO MEDICARE.
4
(a) INDIVIDUALS OVER AGE 65 ONLY ENROLLED IN
5
MEDICARE PART A.—Paragraph (7) of section 223(b) is
6
amended by adding at the end the following: ‘‘This para-
7
graph shall not apply to any individual during any period
8
for which the individual’s only entitlement to such benefits
9
is an entitlement to hospital insurance benefits under part
10
A of title XVIII of such Act pursuant to an enrollment
11
for such hospital insurance benefits under section 226(a)
12
of such Act.’’.
13
(b) MEDICARE BENEFICIARIES PARTICIPATING
IN
14
MEDICARE ADVANTAGE MSA MAY CONTRIBUTE THEIR
15
OWN MONEY TO THEIR MSA.—Subsection (b) of section
16
138 is amended by striking paragraph (2) and by redesig-
17
nating paragraphs (3) and (4) as paragraphs (2) and (3),
18
respectively.
19
(c) EFFECTIVE DATE.—The amendments made by
20
this section shall apply to taxable years beginning after
21
the date of the enactment of this Act.
22
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•S 1158 IS
SEC. 203. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH
1
SERVICE ASSISTANCE.
2
(a) IN GENERAL.—Paragraph (1) of section 223(c)
3
is amended by adding at the end the following new sub-
4
paragraph:
5
‘‘(E) SPECIAL RULE FOR INDIVIDUALS EL-
6
IGIBLE
FOR
ASSISTANCE
UNDER
INDIAN
7
HEALTH SERVICE PROGRAMS.—For purposes of
8
subparagraph (A)(ii), an individual shall not be
9
treated as covered under a health plan de-
10
scribed in such subparagraph merely because
11
the individual receives hospital care or medical
12
services under a medical care program of the
13
Indian Health Service or of a tribal organiza-
14
tion.’’.
15
(b) EFFECTIVE DATE.—The amendment made by
16
this section shall apply to taxable years beginning after
17
the date of the enactment of this Act.
18
SEC. 204. MEMBERS OF HEALTH CARE SHARING MIN-
19
ISTRIES ELIGIBLE TO ESTABLISH HEALTH
20
SAVINGS ACCOUNTS.
21
(a) IN GENERAL.—Section 223 is amended by adding
22
at the end the following new subsection:
23
‘‘(i) APPLICATION TO HEALTH CARE SHARING MIN-
24
ISTRIES.—For purposes of this section, membership in a
25
health care sharing ministry (as defined in section
26
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•S 1158 IS
5000A(d)(2)(B)(ii)) shall be treated as coverage under an
1
HSA-qualified health plan.’’.
2
(b) EFFECTIVE DATE.—The amendment made by
3
this section shall apply to taxable years beginning after
4
the date of the enactment of this Act.
5
SEC. 205. TREATMENT OF DIRECT PRIMARY CARE SERVICE
6
ARRANGEMENTS.
7
(a) IN GENERAL.—Section 223(c) is amended by
8
adding at the end the following new paragraph:
9
‘‘(6) TREATMENT
OF
DIRECT
PRIMARY
CARE
10
SERVICE ARRANGEMENTS.—An arrangement under
11
which an individual is provided coverage restricted to
12
primary care services in exchange for a fixed peri-
13
odic fee or payment for primary care services—
14
‘‘(A) shall not be treated as a health plan
15
for purposes of paragraph (1)(A)(ii), and
16
‘‘(B) shall not be treated as insurance for
17
purposes of subsection (d)(2)(B).’’.
18
(b) EFFECTIVE DATE.—The amendment made by
19
this section shall apply to taxable years beginning after
20
the date of the enactment of this Act.
21
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•S 1158 IS
SEC. 206. INDIVIDUALS ELIGIBLE FOR ON-SITE MEDICAL
1
CLINIC COVERAGE.
2
(a) IN GENERAL.—Paragraph (1) of section 223(c),
3
as amended by sections 203, is amended by adding at the
4
end the following new subparagraph:
5
‘‘(F) SPECIAL RULE FOR INDIVIDUALS EL-
6
IGIBLE
FOR
ON-SITE
MEDICAL
CLINIC
COV-
7
ERAGE.—
8
‘‘(i) IN
GENERAL.—For purposes of
9
subparagraph (A)(ii), an individual shall
10
not be treated as covered under a health
11
plan described in such subparagraph mere-
12
ly because the individual is eligible to re-
13
ceive health care benefits from an on-site
14
medical clinic of employer of the individual
15
or the individual’s spouse if such health
16
care benefits are not significant benefits.
17
‘‘(ii) INCLUDED BENEFITS.—For pur-
18
poses of clause (i), the following health
19
care benefits shall be considered to be ben-
20
efits which are not significant benefits:
21
‘‘(I) Physicals and immuniza-
22
tions.
23
‘‘(II) Injecting antigens provided
24
by employees.
25
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•S 1158 IS
‘‘(III) Medications available with-
1
out a prescription, such as pain reliev-
2
ers and antihistamines.
3
‘‘(IV) Treatment for injuries oc-
4
curring at the employer’s place of em-
5
ployment or otherwise in the course of
6
employment.
7
‘‘(V) Tests for infectious diseases
8
and conditions, such as streptococcal
9
sore throat.
10
‘‘(VI) Monitoring of chronic con-
11
ditions, such as diabetes.
12
‘‘(VII) Drug testing.
13
‘‘(VIII)
Hearing
or
vision
14
screenings and related services.
15
‘‘(IX) Other services and treat-
16
ments of a similar nature to the serv-
17
ices
described
in
subclauses
(I)
18
through (VIII).
19
‘‘(iii)
AGGREGATION
RULES.—For
20
purposes of clause (i), all persons treated
21
as a single employer under subsection (b),
22
(c), (m), or (o) of section 414 shall be
23
treated as a single employer.’’.
24
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•S 1158 IS
(b) EFFECTIVE DATE.—The amendment made by
1
this section shall apply to taxable years beginning after
2
the date of the enactment of this Act.
3
SEC. 207. TREATMENT OF EMBEDDED DEDUCTIBLES.
4
(a) IN GENERAL.—Paragraph (2) of section 223(c)
5
is amended by adding at the end the following new sub-
6
paragraph:
7
‘‘(H) TREATMENT
OF
EMBEDDED
DE-
8
DUCTIBLE.—A health plan providing family
9
coverage that has an annual deductible for all
10
covered individuals under the plan of at least
11
the
amount
described
in
subparagraph
12
(A)(i)(II) shall not fail to be treated as an
13
HSA-qualified health plan solely because it cov-
14
ers expenses with respect to an individual under
15
that plan that exceed an embedded deductible
16
which is equal to or in excess of the amount de-
17
scribed in subparagraph (A)(i)(I).’’.
18
(b) EFFECTIVE DATE.—The amendment made by
19
this section shall apply to taxable years beginning after
20
the date of the enactment of this Act.
21
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•S 1158 IS
TITLE
III—IMPROVING
COV-
1
ERAGE
UNDER
TAX-PRE-
2
FERRED HEALTH ACCOUNTS
3
SEC. 301. PURCHASE OF HEALTH INSURANCE FROM HSA
4
ACCOUNT.
5
(a) IN GENERAL.—Paragraph (2) of section 223(d)
6
is amended—
7
(1) by striking ‘‘and any dependent (as defined
8
in section 152, determined without regard to sub-
9
sections (b)(1), (b)(2), and (d)(1)(B) thereof) of
10
such individual’’ in subparagraph (A) and inserting
11
‘‘any dependent (as defined in section 152, deter-
12
mined without regard to subsections (b)(1), (b)(2),
13
and (d)(1)(B) thereof) of such individual, and any
14
child (as defined in section 152(f)(1)) of such indi-
15
vidual who has not attained the age of 27 before the
16
end of such individual’s taxable year’’;
17
(2) by striking subparagraph (B) and inserting
18
the following:
19
‘‘(B) HEALTH
INSURANCE
MAY
NOT
BE
20
PURCHASED FROM ACCOUNT.—Except as pro-
21
vided in subparagraph (C), subparagraph (A)
22
shall not apply to any payment for insurance.’’;
23
and
24
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[Text truncated for display. Full text available on Congress.gov.]