I 

112TH CONGRESS 

1ST SESSION H. R. 369 

To amend the Internal Revenue Code of 1986 to improve access to health 

care by allowing a deduction for the health insurance costs of individuals, 

expanding health savings accounts, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 20, 2011 

Mr. AUSTRIA (for himself, Mr. PENCE, Mrs. BACHMANN, Mr. SESSIONS, Mr. 

AKIN, Mr. BURTON of Indiana, Mr. COFFMAN of Colorado, Mr. PAUL, 

Mr. ROSS of Florida, Mr. THOMPSON of Pennsylvania, Mr. WESTMORELAND, Mr. CASSIDY, Mr. LONG, and Mr. TIBERI) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to improve 

access to health care by allowing a deduction for the 

health insurance costs of individuals, expanding health 

savings accounts, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Health Savings and Affordability Act of 2011’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amendVerDate Mar 15 2010 02:08 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H369.IH H369

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1 ment or repeal is expressed in terms of an amendment 

2 to, or repeal of, a section or other provision, the reference 

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986. 

5 SEC. 2. DEDUCTION FOR QUALIFIED HEALTH INSURANCE 

6 COSTS OF INDIVIDUALS. 

7 (a) IN GENERAL.—Part VII of subchapter B of chap8 ter 1 (relating to additional itemized deductions) is 

9 amended by redesignating section 224 as section 225 and 

10 by inserting after section 223 the following new section: 

11 ‘‘SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE. 

12 ‘‘(a) IN GENERAL.—In the case of an individual, 

13 there shall be allowed as a deduction an amount equal to 

14 the amount paid during the taxable year for coverage for 

15 the taxpayer, his spouse, and dependents under qualified 

16 health insurance. 

17 ‘‘(b) QUALIFIED HEALTH INSURANCE.—For pur18 poses of this section, the term ‘qualified health insurance’ 

19 means insurance which constitutes medical care; except 

20 that such term shall not include any insurance if substan21 tially all of its coverage is of excepted benefits described 

22 in section 9832(c). 

23 ‘‘(c) SPECIAL RULES.— 

24 ‘‘(1) COORDINATION WITH MEDICAL DEDUC25 TION, ETC.—Any amount paid by a taxpayer for inVerDate Mar 15 2010 02:08 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H369.IH H369

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1 surance to which subsection (a) applies shall not be 

2 taken into account in computing the amount allow3 able to the taxpayer as a deduction under section 

4 162(l) or 213(a). Any amount taken into account in 

5 determining the credit allowed under section 35 or 

6 36B shall not be taken into account for purposes of 

7 this section. 

8 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM9 PLOYMENT TAX PURPOSES.—The deduction allow10 able by reason of this section shall not be taken into 

11 account in determining an individual’s net earnings 

12 from self-employment (within the meaning of section 

13 1402(a)) for purposes of chapter 2.’’. 

14 (b) DEDUCTION ALLOWED IN COMPUTING AD15 JUSTED GROSS INCOME.—Subsection (a) of section 62 is 

16 amended by inserting before the last sentence the fol17 lowing new paragraph: 

18 ‘‘(22) COSTS OF QUALIFIED HEALTH INSUR19 ANCE.—The deduction allowed by section 224.’’. 

20 (c) CLERICAL AMENDMENT.—The table of sections 

21 for part VII of subchapter B of chapter 1 is amended by 

22 redesignating the item relating to section 224 as an item 

23 relating to section 225 and inserting before such item the 

24 following new item: 

‘‘Sec. 224. Costs of qualified health insurance.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 3. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON5 TRIBUTIONS TO THE SAME HSA ACCOUNT. 

6 (a) IN GENERAL.—Paragraph (3) of section 223(b) 

7 is amended by adding at the end the following new sub8 paragraph: 

9 ‘‘(C) SPECIAL RULE WHERE BOTH

10 SPOUSES ARE ELIGIBLE INDIVIDUALS WITH 1

11 ACCOUNT.—If— 

12 ‘‘(i) an individual and the individual’s 

13 spouse have both attained age 55 before 

14 the close of the taxable year, and 

15 ‘‘(ii) the spouse is not an account ben16 eficiary of a health savings account as of 

17 the close of such year, 

18 the additional contribution amount shall be 200 

19 percent of the amount otherwise determined 

20 under subparagraph (B).’’. 

21 (b) EFFECTIVE DATE.—The amendment made by 

22 this section shall apply to taxable years beginning after 

23 the date of the enactment of this Act. 


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1 SEC. 4. INCREASE IN HSA CONTRIBUTION LIMITATION. 

2 (a) IN GENERAL.—Subsection (b) of section 223 (re3 lating to monthly limitation) is amended— 

4 (1) by striking ‘‘$2,250’’ in paragraph (2)(A) 

5 and inserting ‘‘the amount in effect under subsection 

6 (c)(2)(A)(ii)(I)’’, and 

7 (2) by striking ‘‘$4,500’’ in paragraph (2)(B) 

8 and inserting ‘‘the amount in effect under subsection 

9 (c)(2)(A)(ii)(II)’’. 

10 (b) CONFORMING AMENDMENT.—Paragraph (1) of 

11 section 223(g) is amended by striking ‘‘subsections (b)(2) 

12 and’’ and inserting ‘‘subsection’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to contributions for taxable years 

15 beginning after the date of the enactment of this Act. 

16 SEC. 5. TREATMENT OF FAMILY COVERAGE PLANS HAVING 

17 BOTH INDIVIDUAL AND FAMILY 

18 DEDUCTIBLES. 

19 (a) IN GENERAL.—Paragraph (2) of section 223(c) 

20 (defining high deductible plan) is amended by adding at 

21 the end the following new subparagraph: 

22 ‘‘(E) FAMILY COVERAGE PLANS HAVING

23 BOTH INDIVIDUAL AND FAMILY

24 DEDUCTIBLES.—In the case of a family cov25 erage plan having a deductible (and the same 

26 deductible) for each covered individual and a 


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1 deductible for the family as a whole, the re2 quirement of subparagraph (A)(i) shall be 

3 treated as met if (without regard to this sub4 paragraph)— 

5 ‘‘(i) the individual deductible meets 

6 the requirement of subparagraph (A)(i)(I), 

7 or 

8 ‘‘(ii) the family deductible meets the 

9 requirement of subparagraph (A)(i)(II).’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

13 SEC. 6. FSA AND HRA TERMINATION TO FUND HSAS. 

14 (a) ELIGIBLE INDIVIDUALS INCLUDE FSA AND HRA 

15 PARTICIPANTS.—Section 223(c)(1)(B) is amended— 

16 (1) by striking ‘‘and’’ at the end of clause (ii), 

17 (2) by striking the period at the end of clause 

18 (iii) and inserting ‘‘, and’’, and 

19 (3) by inserting after clause (iii) the following 

20 new clause: 

21 ‘‘(iv) coverage under a health flexible 

22 spending arrangement or a health reim23 bursement arrangement in the plan year a 

24 qualified HSA distribution as described in 

25 section 106(e) is made on behalf of the inVerDate Mar 15 2010 02:08 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H369.IH H369

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1 dividual if after the qualified HSA dis2 tribution is made and for the remaining 

3 duration of the plan year, the coverage 

4 provided under the health flexible spending 

5 arrangement or health reimbursement ar6 rangement is converted to— 

7 ‘‘(I) coverage that does not pay 

8 or reimburse any medical expense in9 curred before the minimum annual de10 ductible under section 223(c)(2)(A)(i) 

11 (prorated for the period occurring 

12 after the qualified HSA distribution is 

13 made) is satisfied, 

14 ‘‘(II) coverage that, after the 

15 qualified HSA distribution is made, 

16 does not pay or reimburse any med17 ical expense incurred after the quali18 fied HSA distribution is made other 

19 than preventive care as defined in sec20 tion 223(c)(2)(C), 

21 ‘‘(III) coverage that, after the 

22 qualified HSA distribution is made, 

23 pays or reimburses benefits for cov24 erage described in section 

25 223(c)(1)(B)(ii) (but not through inVerDate Mar 15 2010 02:08 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H369.IH H369

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1 surance or for long-term care serv2 ices), 

3 ‘‘(IV) coverage that, after the 

4 qualified HSA distribution is made, 

5 pays or reimburses benefits for per6 mitted insurance as defined in section 

7 223(c)(1)(B)(i) or coverage described 

8 in section 223(c)(1)(B)(ii) (but not 

9 for long-term care services), 

10 ‘‘(V) coverage that, after the 

11 qualified HSA distribution is made, 

12 pays or reimburses only those medical 

13 expenses incurred after an individual’s 

14 retirement (and no expenses incurred 

15 before retirement), or 

16 ‘‘(VI) coverage that, after the 

17 qualified HSA distribution is made, is 

18 suspended, pursuant to an election 

19 made on or before the date the indi20 vidual elects a qualified HSA distribu21 tion or, if later, on the date of the in22 dividual enrolls in a high deductible 

23 health plan (as defined in section 

24 223(c)(2)), that does not pay or reim25 burse, at any time, any medical exVerDate Mar 15 2010 02:08 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H369.IH H369

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1 pense incurred during the suspension 

2 period except as defined in subclauses 

3 (I) through (V) above.’’. 

4 (b) QUALIFIED HSA DISTRIBUTION SHALL NOT AF5 FECT FLEXIBLE SPENDING ARRANGEMENT.—Section 

6 106(e)(1) is amended to read as follows: 

7 ‘‘(1) IN GENERAL.—A plan shall not fail to be 

8 treated as a health flexible spending arrangement 

9 under this section, section 105, or section 125, or as 

10 a health reimbursement arrangement under this sec11 tion or section 105, merely because such plan pro12 vides for a qualified HSA distribution.’’. 

13 (c) FSA BALANCES AT YEAR END SHALL NOT FOR14 FEIT.—Section 125(d)(2) is amended by adding at the end 

15 the following new subparagraph: 

16 ‘‘(E) EXCEPTION FOR QUALIFIED HSA DIS17 TRIBUTIONS.—Subparagraph (A) shall not 

18 apply to the extent that there is an amount re19 maining in a health flexible spending account at 

20 the end of a plan year that an individual elects 

21 to contribute to a health savings account pursu22 ant to a qualified HSA distribution (as defined 

23 in section 106(e)(2)).’’. 


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1 (d) SIMPLIFICATION OF LIMITATIONS ON FSA AND

2 HRA ROLLOVERS.—Section 106(e)(2) (relating to quali3 fied HSA distribution) is amended to read as follows: 

4 ‘‘(2) QUALIFIED HSA DISTRIBUTION.— 

5 ‘‘(A) IN GENERAL.—The term ‘qualified 

6 HSA distribution’ means a distribution from a 

7 health flexible spending arrangement or health 

8 reimbursement arrangement to the extent that 

9 such distribution does not exceed the lesser 

10 of— 

11 ‘‘(i) the balance in such arrangement 

12 as of the date of such distribution, or 

13 ‘‘(ii) the amount determined under 

14 subparagraph (B). 

15 Such term shall not include more than 1 dis16 tribution with respect to any arrangement. 

17 ‘‘(B) DOLLAR LIMITATIONS.— 

18 ‘‘(i) DISTRIBUTIONS FROM A HEALTH

19 FLEXIBLE SPENDING ARRANGEMENT.—A 

20 qualified HSA distribution from a health 

21 flexible spending arrangement shall not ex22 ceed the applicable amount. 

23 ‘‘(ii) DISTRIBUTIONS FROM A HEALTH

24 REIMBURSEMENT ARRANGEMENT.—A 

25 qualified HSA distribution from a health 


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1 reimbursement arrangement shall not ex2 ceed— 

3 ‘‘(I) the applicable amount di4 vided by 12, multiplied by 

5 ‘‘(II) the number of months dur6 ing which the individual is a partici7 pant in the health reimbursement ar8 rangement. 

9 ‘‘(iii) APPLICABLE AMOUNT.—For 

10 purposes of this subparagraph, the applica11 ble amount is— 

12 ‘‘(I) $2,250 in the case of an eli13 gible individual who has self-only cov14 erage under a high deductible health 

15 plan at the time of such distribution, 

16 and 

17 ‘‘(II) $4,500 in the case of an eli18 gible individual who has family cov19 erage under a high deductible health 

20 plan at the time of such distribu21 tion.’’. 

22 (e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE

23 TO MAINTAIN HIGH DEDUCTIBLE HEALTH PLAN COV24 ERAGE.—Section 106(e) is amended— 


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1 (1) by striking paragraph (3) and redesignating 

2 paragraphs (4) and (5) as paragraphs (3) and (4), 

3 respectively, and 

4 (2) by striking subparagraph (A) of paragraph 

5 (3), as so redesignated, and redesignating subpara6 graphs (B) and (C) of such paragraph as subpara7 graphs (A) and (B) thereof, respectively. 

8 (f) LIMITED PURPOSE FSAS AND HRAS.—Section 

9 106(e), as amended by this section, is amended by adding 

10 at the end the following new paragraph: 

11 ‘‘(5) LIMITED PURPOSE FSAS AND HRAS.—A 

12 plan shall not fail to be a health flexible spending 

13 arrangement or health reimbursement arrangement 

14 under this section or section 105 merely because the 

15 plan converts coverage for individuals who enroll in 

16 a high deductible health plan described in section 

17 223(c)(2) to coverage described in section 

18 223(c)(1)(B)(iv). Coverage for such individuals may 

19 be converted as of the date of enrollment in the high 

20 deductible health plan, without regard to the period 

21 of coverage under the health flexible spending ar22 rangement or health reimbursement arrangement, 

23 and without requiring any change in coverage to in24 dividuals who do not enroll in a high deductible 

25 health plan.’’. 


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1 (g) DISTRIBUTION AMOUNTS ADJUSTED FOR COST2 OF-LIVING.—Section 106(e), as amended by this section, 

3 is amended by adding at the end the following new para4 graph: 

5 ‘‘(6) COST-OF-LIVING ADJUSTMENT.— 

6 ‘‘(A) IN GENERAL.—In the case of any 

7 taxable year beginning after December 31, 

8 2011, each of the dollar amounts in paragraph 

9 (2)(B)(iii) shall be increased by an amount 

10 equal to such dollar amount, multiplied by the 

11 cost-of-living adjustment determined under sec12 tion 1(f)(3) for the calendar year in which such 

13 taxable year begins by substituting ‘calendar 

14 year 2010’ for ‘calendar year 1992’ in subpara15 graph (B) thereof. 

16 ‘‘(B) ROUNDING.—If any increase under 

17 subparagraph (A) is not a multiple of $50, such 

18 increase shall be rounded to the nearest mul19 tiple of $50.’’. 

20 (h) DISCLAIMER OF DISQUALIFYING COVERAGE.— 

21 Section 223(c)(1)(B), as amended by this section, is 

22 amended— 

23 (1) by striking ‘‘and’’ at the end of clause (iii), 

24 (2) by striking the period at the end of clause 

25 (iv) and inserting ‘‘, and’’, and 


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1 (3) by inserting after clause (iv) the following 

2 new clause: 

3 ‘‘(v) any coverage (including prospec4 tive coverage) under a health plan that is 

5 not a high deductible health plan which is 

6 disclaimed in writing, at the time of the 

7 creation or organization of the health sav8 ings account, including by execution of a 

9 trust described in subsection (d)(1) 

10 through a governing instrument that in11 cludes such a disclaimer, or by acceptance 

12 of an amendment to such a trust that in13 cludes such a disclaimer.’’. 

14 (i) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

17 SEC. 7. PURCHASE OF HEALTH INSURANCE FROM HSA AC18 COUNT. 

19 (a) IN GENERAL.—Paragraph (2) of section 223(d) 

20 (defining qualified medical expenses) is amended to read 

21 as follows: 

22 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 

23 ‘‘(A) IN GENERAL.—The term ‘qualified 

24 medical expenses’ means, with respect to an ac25 count beneficiary, amounts paid by such beneVerDate Mar 15 2010 02:08 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H369.IH H369

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1 ficiary for medical care (as defined in section 

2 213(d)) for any individual covered by a high de3 ductible health plan of the account beneficiary, 

4 but only to the extent such amounts are not 

5 compensated for by insurance or otherwise. 

6 ‘‘(B) HEALTH INSURANCE MAY NOT BE

7 PURCHASED FROM ACCOUNT.—Except as pro8 vided in subparagraph (C), subparagraph (A) 

9 shall not apply to any payment for insurance. 

10 ‘‘(C) EXCEPTIONS.—Subparagraph (B) 

11 shall not apply to any expense for coverage 

12 under— 

13 ‘‘(i) a health plan during any period 

14 of continuation coverage required under 

15 any Federal law, 

16 ‘‘(ii) a qualified long-term care insur17 ance contract (as defined in section 

18 7702B(b)), 

19 ‘‘(iii) a health plan during any period 

20 in which the individual is receiving unem21 ployment compensation under any Federal 

22 or State law, 

23 ‘‘(iv) a high deductible health plan, or 

24 ‘‘(v) any health insurance under title 

25 XVIII of the Social Security Act, other 


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1 than a Medicare supplemental policy (as 

2 defined in section 1882 of such Act).’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply with respect to insurance pur5 chased after the date of the enactment of this Act in tax6 able years beginning after such date. 

7 SEC. 8. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL 

8 FITNESS PROGRAMS TREATED AS MEDICAL 

9 CARE. 

10 (a) IN GENERAL.—Subsection (d) of section 213 is 

11 amended by adding at the end the following new para12 graph: 

13 ‘‘(12) EXERCISE EQUIPMENT AND PHYSICAL

14 FITNESS PROGRAMS.— 

15 ‘‘(A) IN GENERAL.—The term ‘medical 

16 care’ shall include amounts paid— 

17 ‘‘(i) to purchase or use equipment 

18 used in a program (including a self-di19 rected program) of physical exercise, 

20 ‘‘(ii) to participate, or receive instruc21 tion, in a program of physical exercise, and 

22 ‘‘(iii) for membership dues in a fitness 

23 club the primary purpose of which is to 

24 provide access to equipment and facilities 

25 for physical exercise. 


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1 ‘‘(B) LIMITATION.—Amounts treated as 

2 medical care under subparagraph (A) shall not 

3 exceed $1,200 with respect to any individual for 

4 any taxable year.’’. 

5 (b) EFFECTIVE DATE.—The amendment made by 

6 this section shall apply to taxable years beginning after 

7 the date of the enactment of this Act. 

Æ 


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