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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2424 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 2424

To amend the Internal Revenue Code of 1986 to increase the contribution 
      limits for health savings accounts, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             March 15, 2006

   Mr. Allen introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to increase the contribution 
      limits for health savings accounts, and for other purposes.

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

SECTION 1. INCREASE IN CONTRIBUTION LIMITS FOR HEALTH SAVINGS ACCOUNTS.

    (a) Increase in Monthly Limit.--
            (1) In general.--Paragraph (2) of section 223(b) of the 
        Internal Revenue Code of 1986 (relating to monthly limitation) 
        is amended to read as follows:
            ``(2) Monthly limitation.--
                    ``(A) In general.--In the case of an eligible 
                individual who has coverage under a high deductible 
                health plan, the monthly limitation for any month of 
                such coverage is \1/12 \of the lesser of--
                            ``(i) the sum of the annual deductible and 
                        the other annual out-of-pocket expenses (other 
                        than for premiums) required to be paid under 
                        the plan by the eligible individual for covered 
                        benefits, or
                            ``(ii) in the case of an eligible 
                        individual with--
                                    ``(I) self-only coverage, the 
                                dollar amount in effect under subclause 
                                (I) of subsection (c)(2)(A)(ii), or
                                    ``(II) family coverage, the dollar 
                                amount in effect under subclause (II) 
                                of subsection (c)(2)(A)(ii).
                    ``(B) Special rules relating to out-of-pocket 
                expenses.--
                            ``(i) Reduction for separate plan.--The 
                        annual out-of-pocket expenses taken into 
                        account under subparagraph (A)(i) with respect 
                        to any eligible individual shall be reduced by 
                        any out-of-pocket expense payable under a 
                        separate plan covering the individual.
                            ``(ii) Secretarial authority.--The 
                        Secretary may by regulations provide that 
                        annual out-of-pocket expenses will not be taken 
                        into account under subparagraph (A)(i) to the 
                        extent that there is only a remote likelihood 
                        that such amounts will be required to be 
                        paid.''
            (2) Conforming amendments.--
                    (A) Section 223(b)(3)(A) of such Code is amended by 
                striking ``subparagraphs (A) and (B) of''.
                    (B) Section 223(d)(1)(A)(ii)(I) of such Code is 
                amended by striking ``subsection (b)(2)(B)(ii)'' and 
                inserting ``subsection (c)(2)(A)(ii)(II)''.
                    (C) Section 223(c)(2)(D)(ii) of such Code is 
                amended to read as follows:
                            ``(ii) Certain items disregarded in 
                        computing monthly limitation.--Such plan's 
                        annual deductible, and such plan's annual out-
                        of-pocket limitation, for services provided 
                        outside of such network shall not be taken into 
                        account for purposes of subsection (b)(2).''.
    (b) Application of Special Rules for Married Individuals.--
Paragraph (5) of section 223(b) of the Internal Revenue Code of 1986 
(relating to special rule for married individuals) is amended to read 
as follows:
            ``(5) Special rules for married individuals.--
                    ``(A) In general.--In the case of individuals who 
                are married to each other and who are both eligible 
                individuals, the limitation under paragraph (1) for 
                each spouse shall be equal to the spouse's applicable 
                share of the combined marital limit.
                    ``(B) Combined marital limit.--For purposes of 
                subparagraph (A), the combined marital limit is the 
                excess (if any) of--
                            ``(i) the lesser of--
                                    ``(I) subject to subparagraph (C), 
                                the sum of the limitations computed 
                                separately under paragraph (1) for each 
                                spouse (including any additional 
                                contribution amount under paragraph 
                                (3)), or
                                    ``(II) the dollar amount in effect 
                                under subsection (c)(2)(A)(ii)(II), 
                                over
                            ``(ii) the aggregate amount paid to Archer 
                        MSAs of such spouses for the taxable year.
                    ``(C) Special rule where both spouses have family 
                coverage under same plan.--For purposes of subparagraph 
                (B)(i)(I), if either spouse has family coverage which 
                covers both spouses, both spouses shall be treated as 
                having only such coverage (and if both spouses each 
                have such coverage under different plans, shall be 
                treated as having only family coverage with the plan 
                with respect to which the lowest amount is determined 
                under paragraph (2)(A)(i)).
                    ``(D) Applicable share.--For purposes of 
                subparagraph (A), a spouse's applicable share is one-
                half of the combined marital limit unless both spouses 
                agree on a different division.
                    ``(E) Couples not married entire year.--The 
                Secretary shall prescribe rules for the application of 
                this paragraph in the case of any taxable year for 
                which the individuals were not married to each other 
                during all months included in the taxable year, 
                including rules which allow individuals in appropriate 
                cases to take into account coverage prior to marriage 
                in computing the combined marital limit for purposes of 
                this paragraph.''.
    (c) Self-Only Coverage.--Section 223(c)(4) of the Internal Revenue 
Code of 1986 (defining family coverage) is amended to read as follows:
            ``(4) Coverage.--
                    ``(A) Family coverage.--The term `family coverage' 
                means any coverage other than self-only coverage.
                    ``(B) Self-only coverage.--If more than 1 
                individual is covered by a high deductible health plan 
                but only 1 of the individuals is an eligible 
                individual, the coverage shall be treated as self-only 
                coverage.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.
                                 <all>
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