To amend the Internal Revenue Code of 1986 to modify the rules with respect to health savings accounts and medical savings accounts, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Promoting Health for Future 
Generations Act of 2007''.

SEC. 2. INCREASE IN HSA CONTRIBUTION LIMITATION.

    (a) In General.--Subsection (b) of section 223 of the Internal 
Revenue Code of 1986 (relating to monthly limitation) is amended--
            (1) by striking ``$2,250'' in paragraph (2)(A) and 
        inserting ``the amount in effect under subsection 
        (c)(2)(A)(ii)(I)'', and
            (2) by striking ``$4,500'' in paragraph (2)(B) and 
        inserting ``the amount in effect under subsection 
        (c)(2)(A)(ii)(II)''.
    (b) Conforming Amendment.--Paragraph (1) of section 223(g) of such 
Code is amended by striking ``subsections (b)(2)'' and inserting 
``subsection''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions in taxable years beginning after December 31, 
2007.

SEC. 3. MEDICARE AND VA HEALTHCARE ENROLLEES ELIGIBLE TO CONTRIBUTE TO 
              HSA.

    (a) In General.--(1) Subsection (b) of section 223 of the Internal 
Revenue Code of 1986 is amended by striking paragraph (7).
    (2) Subsection (c) of section 223 of such Code (relating to 
definitions and special rules) is amended by adding at the end to 
following new paragraph:
            ``(6) Special rule for individuals entitled to benefits 
        under medicare or enrolled for health benefits from va.--In the 
        case of an individual--
                    ``(A)(i) who is entitled to benefits under title 
                XVIII of the Social Security Act, and
                    ``(ii) with respect to whom a health savings 
                account is established in a month before the first 
                month such individual is entitled to such benefits, or
                    ``(B)(i) who is enrolled in the patient enrollment 
                system established by the Secretary of Veterans Affairs 
                pursuant to section 1705 of title 38, United States 
                Code, and
                    ``(ii) with respect to whom a health savings 
                account is established in a month before the first 
                month such individual is enrolled in such system,
        such individual shall be deemed to be an eligible 
        individual.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 4. EXPANDING ADDITIONAL CONTRIBUTIONS LIMITATION.

    (a) In General.--
            (1) Age limitation.--Subparagraph (A) of section 223(b)(3) 
        of the Internal Revenue Code of 1986 (relating to additional 
        contributions for individuals 55 or older) is amended by 
        striking ``age 55'' and inserting ``age 50''.
            (2) Contribution limitation.--The table contained in 
        section 223(b)(3) of such Code is amended--
                    (A) by striking ``$900'' and inserting ``$2,000'', 
                and
                    (B) by striking ``$1,000'' and inserting 
                ``$2,000''.
            (3) Conforming amendment.--Paragraph (3) of section 223(b) 
        of such Code is amended in the heading by striking ``55'' and 
        inserting ``50''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 5. ELIGIBILITY TO CONTRIBUTE TO HSA.

    (a) Individuals Eligible for Reimbursement Under Spouse's Flexible 
Spending Arrangement.--Section 223(c)(1) of the Internal Revenue Code 
of 1986 (defining eligible individual) is amended by adding at the end 
the following new subparagraph:
                    ``(C) Special rule for certain flexible spending 
                arrangements.--For purposes of subparagraph (A)(ii), an 
                individual shall not be treated as covered under a 
                health plan described in such subparagraph merely 
                because the individual is covered under a flexible 
                spending arrangement (within the meaning of section 
                106(c)(2)) which is maintained by an employer of the 
                spouse of the individual, but only if--
                            ``(i) the employer is not also the employer 
                        of the individual, and
                            ``(ii) the individual certifies to the 
                        employer and to the Secretary (in such form and 
                        manner as the Secretary may prescribe) that the 
                        individual and the individual's spouse will not 
                        accept reimbursement under the arrangement for 
                        any expenses for medical care provided to the 
                        individual.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 6. PERMITTING MEDICARE SUPPLEMENTAL POLICY AS QUALIFIED MEDICAL 
              EXPENSE.

    (a) In General.--Clause (iv) of section 223(d)(2)(C) of the 
Internal Revenue Code of 1986 (relating to qualified medical expenses) 
is amended by striking ``other than a medicare supplemental policy'' 
and all that follows through ``Social Security Act)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 7. DEDUCTION OF PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 224 as 
section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.

    ``(a) Deduction Allowed.--In the case of an individual, there shall 
be allowed as a deduction for the taxable year the aggregate amount 
paid by the taxpayer as premiums under a high deductible health plan 
with respect to months during such year for which such individual is an 
eligible individual with respect to such health plan.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Eligible individual.--The term `eligible individual' 
        means an individual who--
                    ``(A) is described in section 223(c)(1), and
                    ``(B) is the taxpayer or the taxpayer's spouse and 
                dependents.
            ``(2) High deductible health plan.--The term `high 
        deductible health plan' has the meaning given such term by 
        section 223(c)(2).
    ``(c) Special Rules.--
            ``(1) Deduction limits.--
                    ``(A) Deduction allowable for only 1 plan.--For 
                purposes of this section, in the case of an individual 
                covered by more than 1 high deductible health plan for 
                any month, the individual may only take into account 
                amounts paid for such month for the plan with the 
                lowest premium .
                    ``(B) Plans covering ineligible individuals.--If 2 
                or more individuals are covered by a high deductible 
                health plan for any month but only 1 of such 
                individuals is an eligible individual for such month, 
                only 50 percent of the aggregate amount paid by such 
                eligible individual as premiums under the plan with 
                respect to such month shall be taken into account for 
                purposes of this section.
            ``(2) Group health plan coverage.--
                    ``(A) In general.--No deduction shall be allowed 
                for an individual under subsection (a) for any amount 
                paid for coverage under a high deductible health plan 
                for a month if that individual participates in any 
                coverage under a group health plan (within the meaning 
                of section 5000 without regard to section 5000(d)). For 
                purposes of the preceding sentence, an arrangement 
                which constitutes individual health insurance shall not 
                be treated as a group health plan if such arrangement 
                is a high deductible health plan (as defined in section 
                223(c)(2)), or is a payment by an employer or employee 
                organization with respect to such high deductible 
                health plan , notwithstanding that an employer or 
                employee organization negotiates the cost or benefits 
                of such arrangement.
                    ``(B) Exception for plans only providing 
                contributions to health savings accounts.--Subparagraph 
                (A) shall not apply to an individual if the 
                individual's only coverage under a group health plan 
                for a month consists of contributions by an employer to 
                a health savings account with respect to which the 
                individual is the account beneficiary.
                    ``(C) Exception for certain permitted coverage.--
                Subparagraph (A) shall not apply to an individual if 
                the individual's only coverage under a group health 
                plan for a month is coverage described in clause (i) or 
                (ii) of section 223(c)(1)(B).
            ``(3) Medical and health savings accounts.--Subsection (a) 
        shall not apply with respect to any amount which is paid or 
        distributed out of an Archer MSA or a health savings account 
        which is not included in gross income under section 220(f) or 
        223(f), as the case may be.
            ``(4) Coordination with deduction for health insurance of 
        self-employed individuals.--Any amount taken into account by 
        the taxpayer in computing the deduction under section 162(l) 
        shall not be taken into account under this section.
            ``(5) Coordination with medical expense deduction.--Any 
        amount taken into account by the taxpayer in computing the 
        deduction under this section shall not be taken into account 
        under section 213.''.
    (b) Deduction Allowed Whether or Not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62 of such Code is amended by 
inserting before the last sentence at the end the following new 
paragraph:
            ``(22) Premiums for high deductible health plans.--The 
        deduction allowed by section 224.''.
    (c) Coordination With Section 35 Health Insurance Costs Credit.--
Section 35(g)(2) of such Code (relating to coordination with other 
deductions) is amended by striking ``or 213'' and inserting ``, 213, or 
224''.
    (d) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by redesignating the 
item relating to section 224 as an item relating to section 225 and by 
inserting before such item the following new item:

``Sec. 224. Premiums for high deductible health plans.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 8. MODIFYING SAFE HARBOR RULES FOR DEDUCTIBLES FOR HIGH DEDUCTIBLE 
              HEALTH PLANS.

    (a) In General.--
            (1) Deductible for prescribed drugs.--Subparagraph (C) of 
        section 223(c)(2) of the Internal Revenue Code of 1986 
        (defining high deductible health plan) is amended by striking 
        ``a deductible for preventative care'' and all that follows and 
        inserting the following: ``a deductible for--
                            ``(i) preventive care (within the meaning 
                        of section 1861 of the Social Security Act, 
                        except as otherwise provided by the Secretary), 
                        or
                            ``(ii) a prescribed drug (as defined in 
                        section 213).''.
            (2) Individual deductible limit for family plans.--Section 
        223(c)(2) of such Code is amended by adding at the end the 
        following new subparagraph:
                    ``(E) Special rule for family coverage.--A health 
                plan providing family coverage shall not fail to meet 
                the requirements of subparagraph (A)(i)(II) merely 
                because the plan elects to provide both--
                            ``(i) an aggregate annual deductible limit 
                        for all individuals covered by the plan which 
                        is not less than the amount in effect under 
                        subparagraph (A)(i)(II), and
                            ``(ii) an annual deductible limit for each 
                        individual covered by the plan which is not 
                        less than the amount in effect under 
                        subparagraph (A)(i)(I).''.
            (3) Conforming amendment.--Subparagraph (C) of section 
        223(c)(2) of such Code is amended in the heading by inserting 
        ``or prescribed drug'' after ``preventive care''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 9. MSA PLAN DEDUCTIBLE EXCEPTION FOR PREVENTIVE CARE.

    (a) In General.--Paragraph (3) of section 1859(b) of the Social 
Security Act (42 U.S.C. 1359w-28(b)) is amended by adding at the end 
the following new subparagraph:
                    ``(C) Exception for absence of preventive care 
                deductible.--A plan shall not fail to be treated as a 
                MSA plan by reason of failing to have a deductible for 
                preventive care (within the meaning of such term as 
                applied for purposes of section 223(c)(2)(C) of the 
                Internal Revenue Code of 1986).''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on January 1, 2008.

SEC. 10. PERMITTING INDIVIDUAL CONTRIBUTIONS TO MEDICARE ADVANTAGE MSA.

    (a) In General.--Paragraph (2) of section 138(b) of the Internal 
Revenue Code of 1986 (defining Medicare Advantage MSA) is amended by 
striking ``or'' at the end of subparagraph (A), by inserting ``or'' at 
the end of subparagraph (B), and by adding at the end the following new 
subparagraph:
                    ``(C) any contributions by or for the benefit of 
                the account holder (other than a contribution described 
                in subparagraph (A)) for the taxable year, the sum of 
                which do not exceed the difference of--
                            ``(i) the amount of the annual deductible 
                        (described in section 1859(b)(3)(B) of the 
                        Social Security Act) for the MSA plan in which 
                        the individual is enrolled, over
                            ``(ii) the amount of contributions 
                        described in subparagraph (A) for the taxable 
                        year,''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 11. ALLOWING MSA AND HSA ROLLOVER TO ADULT CHILD OF ACCOUNT 
              HOLDER.

    (a) MSAs.--(1) Subparagraph (A) of section 220(f)(8) of the 
Internal Revenue Code of 1986 (relating to treatment after death of 
account holder) is amended--
            (A) by inserting ``or adult child'' after ``surviving 
        spouse'',
            (B) by inserting ``or adult child, as the case may be,'' 
        after ``the spouse'', and
            (C) by inserting ``or adult child'' after ``spouse'' in the 
        heading thereof.
    (2) Paragraph (8) of section 220(f) of such Code is amended by 
adding at the end the following new subparagraph:
                    ``(C) Adult child.--For purposes of this paragraph, 
                the term `adult child' means an individual--
                            ``(i) who is a child of the deceased 
                        individual, and
                            ``(ii) with respect to whom a deduction 
                        under section 151 would not be allowable to 
                        another taxpayer for a taxable year beginning 
                        in the calendar year in which such individual's 
                        taxable year begins.''.
    (b) HSAs.--(1) Subparagraph (A) of section 223(f)(8) of such Code 
(relating to treatment after death of account beneficiary) is amended--
            (A) by inserting ``or adult child'' after ``surviving 
        spouse'',
            (B) by inserting ``or adult child, as the case may be,'' 
        after ``the spouse'', and
            (C) by inserting ``or adult child'' after ``spouse'' in the 
        heading thereof.
    (2) Paragraph (8) of section 223(f) of such Code is amended by 
adding at the end the following new subparagraph:
                    ``(C) Adult child.--For purposes of this paragraph, 
                the term `adult child' has the meaning given to such 
                term by section 220(f)(8)(C).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 12. PERMITTING MEDICARE ADVANTAGE MSA FUNDS TO BE USED FOR 
              WELLNESS AND FITNESS PROGRAMS.

    (a) In General.--Paragraph (1) of section 138(c) of the Internal 
Revenue Code of 1986 (relating to special rules for distributions) is 
amended by striking ``and'' at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and inserting ``, and'', and 
by adding at the end the following new subparagraph:
                    ``(C) qualified medical expenses shall include 
                amounts paid to a gym for enrollment in a wellness or 
                fitness program.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

Summary: Promoting Health for Future Generations Act of 2007 - Amends the Internal Revenue Code to: (1) increase the tax deduction for contributions to health savings accounts (HSAs). (2) allow Medicare and veterans health care beneficiaries to establish and contribute to HSAs. (3) allow individuals age 50 or older to make additional HSA contributions and to increase the allowable amount of such contributions. (4) treat Medicare supplemental insurance premiums as a tax deductible medical expense. (5) allow a new tax deduction for high deductible health plan premiums. (6) allow individual contributions to a Medicare Advantage medical savings account (MSA). (7) allow adult children of holders of HSAs and MSAs to inherit such accounts. And (8) allow MSA funds to be used for wellness and fitness programs. Amends title XVIII (Medicare) of the Social Security Act to allow MSAs to provide preventive care without requiring a deductible for expenses related to such care.