II 

Calendar No. 427 

112TH CONGRESS 

2D SESSION H. R. 436 

IN THE SENATE OF THE UNITED STATES 

JUNE 11, 2012 

Received; read the first time 

JUNE 12, 2012 

Read the second time and placed on the calendar 

AN ACT 

To amend the Internal Revenue Code of 1986 to repeal 

the excise tax on medical devices. 

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; TABLE OF CONTENTS. 

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

5 ‘‘Health Care Cost Reduction Act of 2012’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Repeal of medical device excise tax. 

Sec. 3. Repeal of disqualification of expenses for over-the-counter drugs under 

certain accounts and arrangements. 

Sec. 4. Taxable distributions of unused balances under health flexible spending 

arrangements. 


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Sec. 5. Recapture of overpayments resulting from certain federally-subsidized 

health insurance. 

1 SEC. 2. REPEAL OF MEDICAL DEVICE EXCISE TAX. 

2 (a) IN GENERAL.—Chapter 32 of the Internal Rev3 enue Code of 1986 is amended by striking subchapter E. 

4 (b) CONFORMING AMENDMENTS.— 

5 (1) Subsection (a) of section 4221 of such Code 

6 is amended by striking the last sentence. 

7 (2) Paragraph (2) of section 6416(b) of such 

8 Code is amended by striking the last sentence. 

9 (c) CLERICAL AMENDMENT.—The table of sub10 chapters for chapter 32 of such Code is amended by strik11 ing the item relating to subchapter E. 

12 SEC. 3. REPEAL OF DISQUALIFICATION OF EXPENSES FOR 

13 OVER-THE-COUNTER DRUGS UNDER CERTAIN 

14 ACCOUNTS AND ARRANGEMENTS. 

15 (a) HSAS.—Subparagraph (A) of section 223(d)(2) 

16 of the Internal Revenue Code of 1986 is amended by strik17 ing the last sentence. 

18 (b) ARCHER MSAS.—Subparagraph (A) of section 

19 220(d)(2) of such Code is amended by striking the last 

20 sentence. 

21 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS

22 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sec23 tion 106 of such Code is amended by striking subsection 

24 (f). 


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

2 this section shall apply to expenses incurred after Decem3 ber 31, 2012. 

4 SEC. 4. TAXABLE DISTRIBUTIONS OF UNUSED BALANCES 

5 UNDER HEALTH FLEXIBLE SPENDING AR6 RANGEMENTS. 

7 (a) IN GENERAL.—Section 125 of the Internal Rev8 enue Code of 1986 is amended by redesignating sub9 sections (k) and (l) as subsections (l) and (m), respec10 tively, and by inserting after subsection (j) the following 

11 new subsection: 

12 ‘‘(k) TAXABLE DISTRIBUTIONS OF UNUSED BAL13 ANCES UNDER HEALTH FLEXIBLE SPENDING ARRANGE14 MENTS.— 

15 ‘‘(1) IN GENERAL.—For purposes of this sec16 tion and sections 105(b) and 106, a plan or other 

17 arrangement which (but for any qualified distribu18 tion) would be a health flexible spending arrange19 ment shall not fail to be treated as a cafeteria plan 

20 or health flexible spending arrangement (and shall 

21 not fail to be treated as an accident or health plan) 

22 merely because such arrangement provides for quali23 fied distributions. 

24 ‘‘(2) QUALIFIED DISTRIBUTIONS.—For pur25 poses of this subsection, the term ‘qualified distribuVerDate Mar 15 2010 00:41 Jun 13, 2012 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H436.PCS H436

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1 tion’ means any distribution to an individual under 

2 the arrangement referred to in paragraph (1) with 

3 respect to any plan year if— 

4 ‘‘(A) such distribution is made after the 

5 last date on which requests for reimbursement 

6 under such arrangement for such plan year may 

7 be made and not later than the end of the 7th 

8 month following the close of such plan year, 

9 and 

10 ‘‘(B) such distribution does not exceed the 

11 lesser of— 

12 ‘‘(i) $500, or 

13 ‘‘(ii) the excess of— 

14 ‘‘(I) the salary reduction con15 tributions made under such arrange16 ment for such plan year, over 

17 ‘‘(II) the reimbursements for ex18 penses incurred for medical care made 

19 under such arrangement for such plan 

20 year. 

21 ‘‘(3) TAX TREATMENT OF QUALIFIED DIS22 TRIBUTIONS.—Qualified distributions shall be in23 cludible in the gross income of the employee in the 

24 taxable year in which distributed and shall be taken 

25 into account as wages or compensation under the 


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1 applicable provisions of subtitle C when so distrib2 uted. 

3 ‘‘(4) COORDINATION WITH QUALIFIED RESERV4 IST DISTRIBUTIONS.—A qualified reservist distribu5 tion (as defined in subsection (h)(2)) shall not be 

6 treated as a qualified distribution and shall not be 

7 taken into account in applying the limitation of 

8 paragraph (2)(B)(i).’’. 

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

10 section 409A(d) of such Code is amended by striking 

11 ‘‘and’’ at the end of subparagraph (A), by striking the 

12 period at the end of subparagraph (B) and inserting ‘‘, 

13 and’’, and by adding at the end the following new subpara14 graph: 

15 ‘‘(C) a health flexible spending arrange16 ment to which subsection (h) or (k) of section 

17 125 applies.’’. 

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

19 this section shall apply to plan years beginning after De20 cember 31, 2012. 


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1 SEC. 5. RECAPTURE OF OVERPAYMENTS RESULTING FROM 

2 CERTAIN FEDERALLY-SUBSIDIZED HEALTH 

3 INSURANCE. 

4 (a) IN GENERAL.—Paragraph (2) of section 36B(f) 

5 of the Internal Revenue Code of 1986 is amended by strik6 ing subparagraph (B). 

7 (b) CONFORMING AMENDMENT.—So much of para8 graph (2) of section 36B(f) of such Code, as amended by 

9 subsection (a), as precedes ‘‘advance payments’’ is amend10 ed to read as follows: 

11 ‘‘(2) EXCESS ADVANCE PAYMENTS.—If the’’. 

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

13 this section shall apply to taxable years ending after De14 cember 31, 2013. 

Passed the House of Representatives June 7, 2012. 

Attest: KAREN L. HAAS, 

Clerk. 


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Calendar No. 427 

112TH CONGRESS 

2D SESSION H. R. 436 

AN ACT 

To amend the Internal Revenue Code of 1986 to 

repeal the excise tax on medical devices. 

JUNE 12, 2012 

Read the second time and placed on the calendar 


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