Health Savings Act of 2014

Summary: Health Savings Act of 2014 - Amends the Internal Revenue Code, with respect to health savings accounts (HSAs), to: (1) allow an additional tax deduction for amounts paid to the HSA of a taxpayer's child or grandchild; (2) allow a rollover of HSA funds to the child, parent, or grandparent of an account holder; (3) increase the maximum HSA contribution limit; (4) allow mandatory distributions from an individual retirement account (IRA) to be paid into an HSA; (5) exempt HSAs from creditor claims in bankruptcy; and (6) expand the definition of an HSA compatible plan to include bronze, silver, and catastrophic plans on an insurance exchange.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Savings Act of 2014''.

SEC. 2. HEALTH SAVINGS ACCOUNTS FOR CHILDREN.

    (a) In General.--Section 223 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(h) Child Health Savings Accounts.--
            ``(1) In general.--In the case of an individual, in 
        addition to any deduction allowed under subsection (a) for any 
        taxable year, there shall be allowed as a deduction under this 
        section an amount equal to the aggregate amount paid in cash by 
        the taxpayer during the taxable year to a child health savings 
        account of a child or grandchild of the taxpayer.
            ``(2) Limitations.--
                    ``(A) Deduction limitation.--The amount taken into 
                account under paragraph (1) with respect to each child 
                or grandchild of the taxpayer, as the case may be, for 
                the taxable year shall not exceed the sum of the 
                monthly limitations with respect to such child for 
                months during the taxable year that the child is an 
                eligible individual.
                    ``(B) Limit on accounts with respect to 
                individual.--The aggregate amount of contributions 
                which may be made for any taxable year to all child 
                health savings accounts established and maintained on 
                behalf of a child shall not exceed the sum of the 
                monthly limitations for months during the taxable year 
                that the child is an eligible individual.
                    ``(C) Monthly limitation.--The monthly limitation 
                for any month with respect to a child is \1/12\ of the 
                amount in effect for the taxable year under subsection 
                (c)(2)(A)(ii)(I).
            ``(3) Treatment of account while a dependent.--For purposes 
        of this section, except as otherwise provided in this 
        subsection, a child health savings account established for the 
        benefit of the child of a taxpayer shall be treated as a health 
        savings account of the taxpayer until the first taxable year 
        (and each taxable year thereafter) for which no deduction under 
        section 151 is allowable to any taxpayer with respect to such 
        child, after which such account shall be treated as a health 
        savings account of the child.
            ``(4) Child health savings account.--For purposes of this 
        subsection, the term `child health savings account' means a 
        health savings account designated as a child health savings 
        account and established for the benefit of a child of a 
        taxpayer.
            ``(5) Qualified medical expenses.--For purposes of this 
        section, the term `qualified medical expenses' shall, with 
        respect to any child health savings account, not include any 
        amounts paid for medical care (as defined in section 213(d)) 
        for any individual other than the child for whose benefit the 
        account is maintained.
            ``(6) Exceptions for disability or death of child.--If the 
        child becomes disabled within the meaning of section 72(m)(7) 
        or dies--
                    ``(A) subsection (f)(4)(A) shall not apply to any 
                subsequent payment or distribution, and
                    ``(B) the taxpayer may rollover the amount in such 
                account to any health savings account of the taxpayer 
                or grandparent of the child or to any child health 
                savings account of any other child of the taxpayer.
            ``(7) Guardians.--Any legal guardian of a child shall be 
        treated as the parent of such child for purposes of this 
        section.
            ``(8) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection, including rules for determining application of 
        this subsection in the case of legal guardians and in the case 
        of parents of a child who file separately, are separated, or 
        are not married.''.
    (b) Coordination With Means-Tested Programs.--Amounts in a child 
health savings account shall not be taken into account in determining 
resources for purposes of title XIX of the Social Security Act.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. ALLOWING HSA ROLLOVER TO CHILD OR PARENT OF ACCOUNT HOLDER.

    (a) In General.--Subparagraph (A) of section 223(f)(8) of the 
Internal Revenue Code of 1986 is amended--
            (1) by inserting ``child, parent, or grandparent'' after 
        ``surviving spouse'',
            (2) by inserting ``child, parent, or grandparent, as the 
        case may be,'' after ``the spouse'',
            (3) by inserting ``, child, parent, or grandparent'' after 
        ``spouse'' in the heading thereof, and
            (4) by adding at the end the following: ``In the case of a 
        child who acquires such beneficiary's interest and with respect 
        to whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins, such health 
        savings account shall be treated as a child health savings 
        account of the child.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 4. MAXIMUM CONTRIBUTION LIMIT TO HSA INCREASED TO AMOUNT OF 
              DEDUCTIBLE AND OUT-OF-POCKET LIMITATION.

    (a) Self-Only Coverage.--Subparagraph (A) of section 223(b)(2) of 
the Internal Revenue Code of 1986 is amended by striking ``$2,250'' and 
inserting ``the amount in effect under subsection (c)(2)(A)(ii)(I)''.
    (b) Family Coverage.--Subparagraph (B) of section 223(b)(2) of such 
Code is amended by striking ``$4,500'' and inserting ``the amount in 
effect under subsection (c)(2)(A)(ii)(II)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 5. TRANSFER OF REQUIRED MINIMUM DISTRIBUTION FROM RETIREMENT PLAN 
              TO HEALTH SAVINGS ACCOUNT.

    (a) Transfer From Retirement Plan.--
            (1) Individual retirement accounts.--Section 408(d) of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new paragraph:
            ``(10) Required minimum distribution transferred to health 
        savings account.--
                    ``(A) In general.--In the case of an individual who 
                has attained the age of 70\1/2\ and who elects the 
                application of this paragraph for a taxable year, gross 
                income of the individual for the taxable year does not 
                include a qualified HSA transfer to the extent such 
                transfer is otherwise includible in gross income.
                    ``(B) Qualified hsa transfer.--For purposes of this 
                paragraph, the term `qualified HSA transfer' means any 
                distribution from an individual retirement plan--
                            ``(i) to a health savings account of the 
                        individual in a direct trustee-to-trustee 
                        transfer,
                            ``(ii) to the extent such distribution does 
                        not exceed the required minimum distribution 
                        determined under section 401(a)(9) for the 
                        distribution calendar year ending during the 
                        taxable year.
                    ``(C) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as otherwise includible in gross for 
                purposes of subparagraph (A), the aggregate amount 
                distributed from an individual retirement plan shall be 
                treated as includible in gross income to the extent 
                that such amount does not exceed the aggregate amount 
                which would have been so includible if all amounts from 
                all individual retirement plans were distributed. 
                Proper adjustments shall be made in applying section 72 
                to other distributions in such taxable year and 
                subsequent taxable years.
                    ``(D) Coordination.--An election may not be made 
                under subparagraph (A) for a taxable year for which an 
                election is in effect under paragraph (9).''.
            (2) Other retirement plans.--Section 402 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new subsection:
    ``(m) Required Minimum Distribution Transferred to Health Savings 
Account.--
            ``(1) In general.--In the case of an individual who has 
        attained the age of 70\1/2\ and who elects the application of 
        this subsection for a taxable year, gross income of the 
        individual for the taxable year does not include a qualified 
        HSA transfer to the extent such transfer is otherwise 
        includible in gross income.
            ``(2) Qualified hsa transfer.--For purposes of this 
        subsection, the term `qualified HSA transfer' means any 
        distribution from a retirement plan--
                    ``(A) to a health savings account of the individual 
                in a direct trustee-to-trustee transfer,
                    ``(B) to the extent such distribution does not 
                exceed the required minimum distribution determined 
                under section 401(a)(9) for the distribution calendar 
                year ending during the taxable year.
            ``(3) Application of section 72.--Notwithstanding section 
        72, in determining the extent to which an amount is treated as 
        otherwise includible in gross for purposes of paragraph (1), 
        the aggregate amount distributed from an individual retirement 
        plan shall be treated as includible in gross income to the 
        extent that such amount does not exceed the aggregate amount 
        which would have been so includible if all amounts from all 
        individual retirement plans were distributed. Proper 
        adjustments shall be made in applying section 72 to other 
        distributions in such taxable year and subsequent taxable 
        years.
            ``(4) Eligible retirement plan.--For purposes of this 
        subsection, the term `eligible retirement plan' has the meaning 
        given such term by subsection (c)(8)(B) (determined without 
        regard to clauses (i) and (ii) thereof).''.
    (b) Transfer to Health Savings Account.--
            (1) In general.--Subparagraph (A) of section 223(d)(1) of 
        such Code is amended by striking ``or'' at the end of clause 
        (i), by striking the period at the end of clause (ii)(II) and 
        inserting ``, or'', and by adding at the end the following new 
        clause:
                            ``(iii) unless it is in a qualified HSA 
                        transfer described in section 408(d)(10) or 
                        402(m).''.
            (2) Excise tax inapplicable to qualified hsa transfer.--
        Paragraph (1) of section 4973(g) of such Code is amended by 
        inserting ``or in a qualified HSA transfer described in section 
        408(d)(10) or 402(m)'' after ``or 223(f)(5)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after the date of the enactment of this 
Act.

SEC. 6. EQUIVALENT BANKRUPTCY PROTECTIONS FOR HEALTH SAVINGS ACCOUNTS 
              AS RETIREMENT FUNDS.

    (a) In General.--Section 522 of title 11, United States Code, is 
amended by adding at the end the following new subsection:
    ``(r) For purposes of this section, any health savings account (as 
described in section 223 of the Internal Revenue Code of 1986) shall be 
treated in the same manner as an individual retirement account 
described in section 408 of such Code.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to cases commencing under title 11, United States Code, after the date 
of the enactment of this Act.

SEC. 7. ALLOWANCE OF SILVER AND BRONZE PLANS IN CONNECTION WITH HEALTH 
              SAVINGS ACCOUNTS.

    (a) In General.--Section 223 of the Internal Revenue Code of 1986 
is amended--
            (1) by striking ``a high deductible health plan'' each 
        place it appears and inserting ``an HSA compatible health 
        plan'',
            (2) by striking ``high deductible health plan'' in 
        subsection (b)(8)(A)(ii) and inserting ``HSA compatible health 
        plan'', and
            (3) by striking ``the high deductible health plan'' in 
        subsection (c)(1)(A)(ii)(II) and inserting ``the HSA compatible 
        health plan''.
    (b) HSA Compatible Health Plan Defined.--Paragraph (2) of section 
223(c) of such Code is amended by redesignating subparagraphs (A), (B), 
(C), and (D) as subparagraphs (B), (C), (D), and (E) and by inserting 
before subparagraph (B), as so redesignated, the following new 
subparagraph:
                    ``(A) In general.--The term `HSA compatible health 
                plan' means--
                            ``(i) any high deductible health plan,
                            ``(ii) any plan described in section 
                        1302(e) of the Patient Protection and 
                        Affordable Care Act (relating to catastrophic 
                        plan), or
                            ``(iii) any silver or bronze plan which was 
                        enrolled in through an Exchange established 
                        under section 1311 of the Patient Protection 
                        and Affordable Care Act.''.
    (c) Clerical Amendments.--Section 223 of such Code is amended--
            (1) by striking ``In general'' in the heading for 
        subsection (c)(2)(B), as redesignated by subsection (b) of this 
        Act, and inserting ``High deductible health plan'',
            (2) by striking ``high deductible health plan'' in the 
        heading for subsection (b)(8)(B) and inserting ``hsa compatible 
        health plan'', and
            (3) by striking ``High deductible health plan'' in the 
        heading for subsection (c)(2) and inserting ``HSA compatible 
        health plan''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2014.

SEC. 8. IDENTIFICATION OF HSA COMPATIBLE PLANS.

    Section 1103(b) of the Patient Protection and Affordable Care Act 
(42 U.S.C. 18003(b)) is amended by adding at the end the following new 
paragraph:
            ``(3) Identification of hsa compatible plans.--Beginning 
        for plan year 2015, the format described in paragraph (1) shall 
        require that information on a coverage option described in 
        subsection (a)(2) that is an HSA compatible health plan (as 
        defined in section 223(c)(2) of the Internal Revenue Code of 
        1986) identifies such plan as a plan that satisfies the 
        requirement of section 223(c)(1)(A)(i) of such Code.''.