FEHBP-Medical Savings Account Promotion Act of 1995

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``FEHBP-Medical Savings Account 
Promotion Act of 1995''.

SEC. 2. PERMITTING CONTRIBUTION TOWARDS MEDICAL SAVINGS ACCOUNT THROUGH 
              FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM (FEHBP).

    (a) Government Contribution to Medical Savings Account.--
            (1) In general.--Section 8906 of title 5, United States 
        Code, is amended by adding at the end the following new 
        subsection:
    ``(j)(1) In the case of an employee or annuitant who is enrolled in 
a catastrophic plan described by section 8903(5), there shall be a 
Government contribution under this subsection to a medical savings 
account established or maintained for the benefit of the individual. 
The contribution under this subsection shall be in addition to the 
Government contribution under subsection (b).
    ``(2) The amount of the Government contribution under this 
subsection with respect to an individual is equal to the amount by 
which--
            ``(A) the maximum contribution allowed under subsection 
        (b)(1) with respect to any employee or annuitant, exceeds
            ``(B) the amount of the Government contribution actually 
        made with respect to the individual under subsection (b) for 
        coverage under the catastrophic plan.
    ``(3) The Government contributions under this subsection shall be 
paid into a medical savings account (designated by the individual 
involved) in a manner that is specified by the Office and consistent 
with the timing of contributions under subsection (b).
    ``(4) Subsections (f) and (g) shall apply to contributions under 
this section in the same manner as they apply to contributions under 
subsection (b).
    ``(5) For the purpose of this subsection, the term `medical savings 
account' has the meaning given such term by section 220(d) of the 
Internal Revenue Code of 1986 (as inserted by section 2(a) of the 
Family Medical Savings and Investment Act of 1995 (H.R. 1818)).''.
            (2) Allowing payment of full amount of charge for 
        catastrophic plan.--Section 8906(b)(2) of such title is amended 
        by inserting ``(or 100 percent of the subscription charge in 
        the case of a catastrophic plan)'' after ``75 percent of the 
        subscription charge''.
    (b) Offering of Catastrophic Plans.--
            (1) In general.--Section 8903 of such title is amended by 
        adding at the end the following new paragraph:
            ``(5) Catastrophic plans.--One or more plans described in 
        paragraph (1), (2), or (3), but
         which provide benefits of the types referred to by paragraph 
(5) of section 8904(a), instead of the types referred to in paragraphs 
(1), (2), and (3) of such section.''.
            (2) Types of benefits.--Section 8904(a) of such title is 
        amended by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Catastrophic plans.--Benefits of the types named 
        under paragraph (1) or (2) of this subsection or both, to the 
        extent expenses covered by the plan exceed $3,000.''.
            (3) Disregarding catastrophic plans in determining level of 
        government contributions.--Section 8906(a)(3) of such title is 
        amended by inserting ``described by section 8903(3)'' after 
        ``plans''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contract terms beginning on or after January 1, 1997.
    (d) Medical Savings Account.--For purposes of this section:
            (1) Medical savings account.--The term ``medical savings 
        account'' means a trust created or organized in the United 
        States exclusively for the purpose of paying the qualified 
        medical expenses of the account holder, but only if the written 
        governing instrument creating the trust meets the following 
        requirements:
                    (A) Except in the case of a rollover contribution 
                described in subsection (f)(3), no contribution will be 
                accepted unless it is in cash.
                    (B) The trustee is a bank (as defined in section 
                408(n)), an insurance (as defined in section 816), or 
                another person who demonstrates to the satisfaction of 
                the Secretary that the manner in which such person will 
                administer the trust will be consistent with the 
                requirements of this section.
                    (C) No part of the trust assets will be invested in 
                life insurance contracts.
                    (D) The assets of the trust will not be commingled 
                with other property except in a common trust fund or 
                common investment fund.
                    (E) The interest of an individual in the balance in 
                his account is nonforfeitable.
            (2) Qualified medical expenses.--
                    (A) In general.--The term ``qualified medical 
                expenses'' means, with respect to an account holder, 
                amounts paid by such holder--
                            (i) for medical care (as defined in section 
                        213(d)) for such individual, the spouse of such 
                        individual, and any dependent (as defined in 
                        section 152) of such individual, but only to 
                        the extent such amounts are not compensated for 
                        by insurance or otherwise, or
                            (ii) for long-term care insurance for such 
                        individual, spouse, or dependent.
                    (B) Health plan coverage may not be purchased from 
                account.--
                            (i) In general.--Such term shall not 
                        include any amount paid for coverage under a 
                        health plan unless such plan is a catastrophic 
                        health plan.
                            (ii) Exception.--Clause (i) shall not apply 
                        to any amount paid for long-term care 
                        insurance.
            (3) Account holder.--The term ``account holder'' means the 
        individual on whose behalf the medical savings account was 
        established.
            (4) Certain rules to apply.--Rules similar to the following 
        rules shall apply for purposes of this section:
                    (A) Section 219(d)(2) (relating to no deduction for 
                rollovers).
                    (B) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                    (C) Except as provided in section 106(b), section 
                219(f)(5) (relating to employer payments).
                    (D) Section 408(h) (relating to custodial 
                accounts).

Summary: FEHBP-Medical Savings Account Promotion Act of 1995 - Amends Federal civil service law to permit Federal employees and annuitants enrolled in a catastrophic plan to elect to receive Government contributions into medical savings accounts provided for by this Act under the Federal Employees Health Benefits Program (FEHBP) to cover qualified medical expenses: (1) to the extent such amounts are not compensated for by insurance or otherwise. Or (2) for long-term care insurance for the individual, spouse, or dependent. Prohibits the use of account funds to pay for coverage under any kind of health plan except a catastrophic or long-term care insurance plan.