DESCRIPTION OF H.R. 5452, A BILL TO AMEND 

THE INTERNAL REVENUE CODE OF 1986 TO PERMIT 

INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH SERVICE 

ASSISTANCE TO QUALIFY FOR HEALTH SAVINGS ACCOUNTS 

Scheduled for Markup 

by the 

HOUSE COMMITTEE ON WAYS AND MEANS 

on June 15, 2016 

Prepared by the Staff 

of the 

JOINT COMMITTEE ON TAXATION 

 

June 14, 2016 

JCX-51-16
i 

CONTENTS 

Page

INTRODUCTION .......................................................................................................................... 1

A. Individuals Eligible for Indian Health Service Assistance ................................................. 2

B. Estimated Revenue Effect of the Proposal .......................................................................... 3
1 

INTRODUCTION 

The House Committee on Ways and Means has scheduled a committee markup of 

H.R. 5452, a bill to amend the Internal Revenue Code of 1986 to permit individuals eligible for 

Indian Health Service assistance to qualify for health savings accounts, on June 15, 2016. This 

document,1

 prepared by the staff of the Joint Committee on Taxation, provides a description of 

the bill. 

 

 1

 This document may be cited as follows: Joint Committee on Taxation, Description of H.R. 5452, a Bill to 

Amend the Internal Revenue Code of 1986 to Permit Individuals Eligible for Indian Health Service Assistance to 

Qualify for Health Savings Accounts (JCX-51-16), June 14, 2016. This document can also be found on the Joint 

Committee on Taxation website at www.jct.gov. All section references herein are to the Internal Revenue Code of 

1986, as amended, unless otherwise stated. 
2 

A. Individuals Eligible for Indian Health Service Assistance 

Present Law

An individual with a high deductible health plan and no other health plan (other than a 

plan that provides certain permitted insurance or permitted coverage) is generally eligible to 

make deductible contributions to a health savings account (“HSA”), subject to certain limits (an 

“eligible individual”).2

 HSA contributions made on behalf of an eligible individual by an 

employer are excludible from income and wages for employment tax purposes. Eligibility for 

HSA contributions is generally determined monthly, based on the individual’s status and health 

plan coverage as of the first day of the month. 

An individual with other coverage in addition to a high deductible health plan is still 

eligible to make HSA contributions if such other coverage is permitted insurance or permitted 

coverage. Permitted insurance is: (1) insurance if substantially all of the coverage provided 

under such insurance relates to (a) liabilities incurred under worker’s compensation law, (b) tort 

liabilities, (c) liabilities relating to ownership or use of property (e.g., auto insurance), or (d) such 

other similar liabilities as the Secretary of the Treasury may prescribe by regulations; (2) 

insurance for a specified disease or illness; and (3) insurance that provides a fixed payment per 

day (or other period) for hospitalization. Permitted coverage is coverage (whether provided 

through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term 

care. Coverage under certain health flexible spending arrangements or health reimbursement 

arrangements is also permitted. 

Under IRS guidance, an individual who is eligible to receive medical services at an 

Indian Health Service (“IHS”) facility, but who has not actually received such services during 

the previous three months, is an eligible individual for purposes of making contributions to an 

HSA.3

 However, an individual generally is not an eligible individual if the individual has 

received medical services at an IHS facility at any time during the previous three months. 

Description of Proposal

Under the proposal, an individual is not treated as covered under a health plan other than 

a high deductible health plan merely because the individual receives hospital care or medical 

services under a medical care program of the IHS or of a tribal organization. Thus, an individual 

who is otherwise an eligible individual for purposes of making HSA contributions does not 

become ineligible merely because of receiving hospital care or medical services under a medical 

care program of the IHS or of a tribal organization. 

Effective Date

The provision applies to taxable years beginning after December 31, 2016. 

 2

 Sec. 223. 

3

 Notice 2012-14, 2012-1 C.B. 411. 
3 

B. Estimated Revenue Effect of the Proposal [1] 

Fiscal Years 

[Millions of Dollars] 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26

 

-1 -8 -12 -17 -19 -20 -22 -24 -26 -28 -57 -178

NOTE: Details do not add to totals due to rounding. 

[1] Estimate includes the following off-budget effects: 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26

 

[2] -3 -4 -5 -6 -7 -7 -8 -8 -9 -18 -57

[2] Loss of less than $500,000.