II 

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. 

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

3 SECTION 1. INCREASE IN CONTRIBUTION LIMITS FOR 

4 HEALTH SAVINGS ACCOUNTS. 

5 (a) INCREASE IN MONTHLY LIMIT.— 

6 (1) IN GENERAL.—Paragraph (2) of section 

7 223(b) of the Internal Revenue Code of 1986 (relat8 ing to monthly limitation) is amended to read as fol9 lows: 

10 ‘‘(2) MONTHLY LIMITATION.— 


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1 ‘‘(A) IN GENERAL.—In the case of an eligi2 ble individual who has coverage under a high 

3 deductible health plan, the monthly limitation 

for any month of such coverage is 1 4 ⁄12 of the 

5 lesser of— 

6 ‘‘(i) the sum of the annual deductible 

7 and the other annual out-of-pocket ex8 penses (other than for premiums) required 

9 to be paid under the plan by the eligible 

10 individual for covered benefits, or 

11 ‘‘(ii) in the case of an eligible indi12 vidual with— 

13 ‘‘(I) self-only coverage, the dollar 

14 amount in effect under subclause (I) 

15 of subsection (c)(2)(A)(ii), or 

16 ‘‘(II) family coverage, the dollar 

17 amount in effect under subclause (II) 

18 of subsection (c)(2)(A)(ii). 

19 ‘‘(B) SPECIAL RULES RELATING TO OUT20 OF-POCKET EXPENSES.— 

21 ‘‘(i) REDUCTION FOR SEPARATE

22 PLAN.—The annual out-of-pocket expenses 

23 taken into account under subparagraph 

24 (A)(i) with respect to any eligible indi25 vidual shall be reduced by any out-of-pockVerDate Aug 31 2005 05:40 Mar 16, 2006 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2424.IS S2424

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1 et expense payable under a separate plan 

2 covering the individual. 

3 ‘‘(ii) SECRETARIAL AUTHORITY.—The 

4 Secretary may by regulations provide that 

5 annual out-of-pocket expenses will not be 

6 taken into account under subparagraph 

7 (A)(i) to the extent that there is only a re8 mote likelihood that such amounts will be 

9 required to be paid.’’ 

10 (2) CONFORMING AMENDMENTS.— 

11 (A) Section 223(b)(3)(A) of such Code is 

12 amended by striking ‘‘subparagraphs (A) and 

13 (B) of’’. 

14 (B) Section 223(d)(1)(A)(ii)(I) of such 

15 Code is amended by striking ‘‘subsection 

16 (b)(2)(B)(ii)’’ and inserting ‘‘subsection 

17 (c)(2)(A)(ii)(II)’’. 

18 (C) Section 223(c)(2)(D)(ii) of such Code 

19 is amended to read as follows: 

20 ‘‘(ii) CERTAIN ITEMS DISREGARDED

21 IN COMPUTING MONTHLY LIMITATION.— 

22 Such plan’s annual deductible, and such 

23 plan’s annual out-of-pocket limitation, for 

24 services provided outside of such network 


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1 shall not be taken into account for pur2 poses of subsection (b)(2).’’. 

3 (b) APPLICATION OF SPECIAL RULES FOR MARRIED

4 INDIVIDUALS.—Paragraph (5) of section 223(b) of the In5 ternal Revenue Code of 1986 (relating to special rule for 

6 married individuals) is amended to read as follows: 

7 ‘‘(5) SPECIAL RULES FOR MARRIED INDIVID8 UALS.— 

9 ‘‘(A) IN GENERAL.—In the case of individ10 uals who are married to each other and who are 

11 both eligible individuals, the limitation under 

12 paragraph (1) for each spouse shall be equal to 

13 the spouse’s applicable share of the combined 

14 marital limit. 

15 ‘‘(B) COMBINED MARITAL LIMIT.—For 

16 purposes of subparagraph (A), the combined 

17 marital limit is the excess (if any) of— 

18 ‘‘(i) the lesser of— 

19 ‘‘(I) subject to subparagraph (C), 

20 the sum of the limitations computed 

21 separately under paragraph (1) for 

22 each spouse (including any additional 

23 contribution amount under paragraph 

24 (3)), or 


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1 ‘‘(II) the dollar amount in effect 

2 under subsection (c)(2)(A)(ii)(II), 

3 over 

4 ‘‘(ii) the aggregate amount paid to 

5 Archer MSAs of such spouses for the tax6 able year. 

7 ‘‘(C) SPECIAL RULE WHERE BOTH

8 SPOUSES HAVE FAMILY COVERAGE UNDER

9 SAME PLAN.—For purposes of subparagraph 

10 (B)(i)(I), if either spouse has family coverage 

11 which covers both spouses, both spouses shall 

12 be treated as having only such coverage (and if 

13 both spouses each have such coverage under 

14 different plans, shall be treated as having only 

15 family coverage with the plan with respect to 

16 which the lowest amount is determined under 

17 paragraph (2)(A)(i)). 

18 ‘‘(D) APPLICABLE SHARE.—For purposes 

19 of subparagraph (A), a spouse’s applicable 

20 share is one-half of the combined marital limit 

21 unless both spouses agree on a different divi22 sion. 

23 ‘‘(E) COUPLES NOT MARRIED ENTIRE

24 YEAR.—The Secretary shall prescribe rules for 

25 the application of this paragraph in the case of 


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1 any taxable year for which the individuals were 

2 not married to each other during all months in3 cluded in the taxable year, including rules 

4 which allow individuals in appropriate cases to 

5 take into account coverage prior to marriage in 

6 computing the combined marital limit for pur7 poses of this paragraph.’’. 

8 (c) SELF-ONLY COVERAGE.—Section 223(c)(4) of 

9 the Internal Revenue Code of 1986 (defining family cov10 erage) is amended to read as follows: 

11 ‘‘(4) COVERAGE.— 

12 ‘‘(A) FAMILY COVERAGE.—The term ‘fam13 ily coverage’ means any coverage other than 

14 self-only coverage. 

15 ‘‘(B) SELF-ONLY COVERAGE.—If more 

16 than 1 individual is covered by a high deduct17 ible health plan but only 1 of the individuals is 

18 an eligible individual, the coverage shall be 

19 treated as self-only coverage.’’. 

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

21 this section shall apply to taxable years beginning after 

22 December 31, 2006. 

Æ 


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