I 

110TH CONGRESS 

1ST SESSION H. R. 2639 

To amend the Internal Revenue Code of 1986 to modify the rules with 

respect to health savings accounts and medical savings accounts, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 11, 2007 

Mr. BOUSTANY introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy 

and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the rules with respect to health savings accounts and 

medical 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 This Act may be cited as the ‘‘Promoting Health for 

5 Future Generations Act of 2007’’. 


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1 SEC. 2. INCREASE IN HSA CONTRIBUTION LIMITATION. 

2 (a) IN GENERAL.—Subsection (b) of section 223 of 

3 the Internal Revenue Code of 1986 (relating to monthly 

4 limitation) is amended— 

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

6 and inserting ‘‘the amount in effect under subsection 

7 (c)(2)(A)(ii)(I)’’, and 

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

9 and inserting ‘‘the amount in effect under subsection 

10 (c)(2)(A)(ii)(II)’’. 

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

12 section 223(g) of such Code is amended by striking ‘‘sub13 sections (b)(2)’’ and inserting ‘‘subsection’’. 

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

15 this section shall apply to contributions in taxable years 

16 beginning after December 31, 2007. 

17 SEC. 3. MEDICARE AND VA HEALTHCARE ENROLLEES ELI18 GIBLE TO CONTRIBUTE TO HSA. 

19 (a) IN GENERAL.—(1) Subsection (b) of section 223 

20 of the Internal Revenue Code of 1986 is amended by strik21 ing paragraph (7). 

22 (2) Subsection (c) of section 223 of such Code (relat23 ing to definitions and special rules) is amended by adding 

24 at the end to following new paragraph: 

25 ‘‘(6) SPECIAL RULE FOR INDIVIDUALS ENTI26 TLED TO BENEFITS UNDER MEDICARE OR ENVerDate Aug 31 2005 04:24 Jun 12, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2639.IH H2639

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1 ROLLED FOR HEALTH BENEFITS FROM VA.—In the 

2 case of an individual— 

3 ‘‘(A)(i) who is entitled to benefits under 

4 title XVIII of the Social Security Act, and 

5 ‘‘(ii) with respect to whom a health savings 

6 account is established in a month before the 

7 first month such individual is entitled to such 

8 benefits, or 

9 ‘‘(B)(i) who is enrolled in the patient en10 rollment system established by the Secretary of 

11 Veterans Affairs pursuant to section 1705 of 

12 title 38, United States Code, and 

13 ‘‘(ii) with respect to whom a health savings 

14 account is established in a month before the 

15 first month such individual is enrolled in such 

16 system, 

17 such individual shall be deemed to be an eligible in18 dividual.’’. 

19 (b) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2007. 

22 SEC. 4. EXPANDING ADDITIONAL CONTRIBUTIONS LIMITA23 TION. 

24 (a) IN GENERAL.— 


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1 (1) AGE LIMITATION.—Subparagraph (A) of 

2 section 223(b)(3) of the Internal Revenue Code of 

3 1986 (relating to additional contributions for indi4 viduals 55 or older) is amended by striking ‘‘age 55’’ 

5 and inserting ‘‘age 50’’. 

6 (2) CONTRIBUTION LIMITATION.—The table 

7 contained in section 223(b)(3) of such Code is 

8 amended— 

9 (A) by striking ‘‘$900’’ and inserting 

10 ‘‘$2,000’’, and 

11 (B) by striking ‘‘$1,000’’ and inserting 

12 ‘‘$2,000’’. 

13 (3) CONFORMING AMENDMENT.—Paragraph (3) 

14 of section 223(b) of such Code is amended in the 

15 heading by striking ‘‘55’’ and inserting ‘‘50’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2007. 

19 SEC. 5. ELIGIBILITY TO CONTRIBUTE TO HSA. 

20 (a) INDIVIDUALS ELIGIBLE FOR REIMBURSEMENT

21 UNDER SPOUSE’S FLEXIBLE SPENDING ARRANGE22 MENT.—Section 223(c)(1) of the Internal Revenue Code 

23 of 1986 (defining eligible individual) is amended by adding 

24 at the end the following new subparagraph: 


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1 ‘‘(C) SPECIAL RULE FOR CERTAIN FLEXI2 BLE SPENDING ARRANGEMENTS.—For purposes 

3 of subparagraph (A)(ii), an individual shall not 

4 be treated as covered under a health plan de5 scribed in such subparagraph merely because 

6 the individual is covered under a flexible spend7 ing arrangement (within the meaning of section 

8 106(c)(2)) which is maintained by an employer 

9 of the spouse of the individual, but only if— 

10 ‘‘(i) the employer is not also the em11 ployer of the individual, and 

12 ‘‘(ii) the individual certifies to the em13 ployer and to the Secretary (in such form 

14 and manner as the Secretary may pre15 scribe) that the individual and the individ16 ual’s spouse will not accept reimbursement 

17 under the arrangement for any expenses 

18 for medical care provided to the indi19 vidual.’’. 

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

21 this section shall apply to taxable years beginning after 

22 December 31, 2007. 


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1 SEC. 6. PERMITTING MEDICARE SUPPLEMENTAL POLICY 

2 AS QUALIFIED MEDICAL EXPENSE. 

3 (a) IN GENERAL.—Clause (iv) of section 

4 223(d)(2)(C) of the Internal Revenue Code of 1986 (relat5 ing to qualified medical expenses) is amended by striking 

6 ‘‘other than a medicare supplemental policy’’ and all that 

7 follows through ‘‘Social Security Act)’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2007. 

11 SEC. 7. DEDUCTION OF PREMIUMS FOR HIGH DEDUCTIBLE 

12 HEALTH PLANS. 

13 (a) IN GENERAL.—Part VII of subchapter B of chap14 ter 1 of the Internal Revenue Code of 1986 (relating to 

15 additional itemized deductions for individuals) is amended 

16 by redesignating section 224 as section 225 and by insert17 ing after section 223 the following new section: 

18 ‘‘SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH 

19 PLANS. 

20 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi21 vidual, there shall be allowed as a deduction for the tax22 able year the aggregate amount paid by the taxpayer as 

23 premiums under a high deductible health plan with respect 

24 to months during such year for which such individual is 

25 an eligible individual with respect to such health plan. 

26 ‘‘(b) DEFINITIONS.—For purposes of this section— 


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1 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

2 individual’ means an individual who— 

3 ‘‘(A) is described in section 223(c)(1), and 

4 ‘‘(B) is the taxpayer or the taxpayer’s 

5 spouse and dependents. 

6 ‘‘(2) HIGH DEDUCTIBLE HEALTH PLAN.—The 

7 term ‘high deductible health plan’ has the meaning 

8 given such term by section 223(c)(2). 

9 ‘‘(c) SPECIAL RULES.— 

10 ‘‘(1) DEDUCTION LIMITS.— 

11 ‘‘(A) DEDUCTION ALLOWABLE FOR ONLY 1

12 PLAN.—For purposes of this section, in the 

13 case of an individual covered by more than 1 

14 high deductible health plan for any month, the 

15 individual may only take into account amounts 

16 paid for such month for the plan with the low17 est premium . 

18 ‘‘(B) PLANS COVERING INELIGIBLE INDI19 VIDUALS.—If 2 or more individuals are covered 

20 by a high deductible health plan for any month 

21 but only 1 of such individuals is an eligible indi22 vidual for such month, only 50 percent of the 

23 aggregate amount paid by such eligible indi24 vidual as premiums under the plan with respect 


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1 to such month shall be taken into account for 

2 purposes of this section. 

3 ‘‘(2) GROUP HEALTH PLAN COVERAGE.— 

4 ‘‘(A) IN GENERAL.—No deduction shall be 

5 allowed for an individual under subsection (a) 

6 for any amount paid for coverage under a high 

7 deductible health plan for a month if that indi8 vidual participates in any coverage under a 

9 group health plan (within the meaning of sec10 tion 5000 without regard to section 5000(d)). 

11 For purposes of the preceding sentence, an ar12 rangement which constitutes individual health 

13 insurance shall not be treated as a group health 

14 plan if such arrangement is a high deductible 

15 health plan (as defined in section 223(c)(2)), or 

16 is a payment by an employer or employee orga17 nization with respect to such high deductible 

18 health plan , notwithstanding that an employer 

19 or employee organization negotiates the cost or 

20 benefits of such arrangement. 

21 ‘‘(B) EXCEPTION FOR PLANS ONLY PRO22 VIDING CONTRIBUTIONS TO HEALTH SAVINGS

23 ACCOUNTS.—Subparagraph (A) shall not apply 

24 to an individual if the individual’s only coverage 

25 under a group health plan for a month consists 


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1 of contributions by an employer to a health sav2 ings account with respect to which the indi3 vidual is the account beneficiary. 

4 ‘‘(C) EXCEPTION FOR CERTAIN PER5 MITTED COVERAGE.—Subparagraph (A) shall 

6 not apply to an individual if the individual’s 

7 only coverage under a group health plan for a 

8 month is coverage described in clause (i) or (ii) 

9 of section 223(c)(1)(B). 

10 ‘‘(3) MEDICAL AND HEALTH SAVINGS AC11 COUNTS.—Subsection (a) shall not apply with re12 spect to any amount which is paid or distributed out 

13 of an Archer MSA or a health savings account which 

14 is not included in gross income under section 220(f) 

15 or 223(f), as the case may be. 

16 ‘‘(4) COORDINATION WITH DEDUCTION FOR

17 HEALTH INSURANCE OF SELF-EMPLOYED INDIVID18 UALS.—Any amount taken into account by the tax19 payer in computing the deduction under section 

20 162(l) shall not be taken into account under this 

21 section. 

22 ‘‘(5) COORDINATION WITH MEDICAL EXPENSE

23 DEDUCTION.—Any amount taken into account by 

24 the taxpayer in computing the deduction under this 


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1 section shall not be taken into account under section 

2 213.’’. 

3 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI4 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

5 of section 62 of such Code is amended by inserting before 

6 the last sentence at the end the following new paragraph: 

7 ‘‘(22) PREMIUMS FOR HIGH DEDUCTIBLE

8 HEALTH PLANS.—The deduction allowed by section 

9 224.’’. 

10 (c) COORDINATION WITH SECTION 35 HEALTH IN11 SURANCE COSTS CREDIT.—Section 35(g)(2) of such Code 

12 (relating to coordination with other deductions) is amend13 ed by striking ‘‘or 213’’ and inserting ‘‘, 213, or 224’’. 

14 (d) CLERICAL AMENDMENT.—The table of sections 

15 for part VII of subchapter B of chapter 1 of such Code 

16 is amended by redesignating the item relating to section 

17 224 as an item relating to section 225 and by inserting 

18 before such item the following new item: 

‘‘Sec. 224. Premiums for high deductible health plans.’’. 

19 (e) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2007. 

22 SEC. 8. MODIFYING SAFE HARBOR RULES FOR 

23 DEDUCTIBLES FOR HIGH DEDUCTIBLE 

24 HEALTH PLANS. 

25 (a) IN GENERAL.— 


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1 (1) DEDUCTIBLE FOR PRESCRIBED DRUGS.— 

2 Subparagraph (C) of section 223(c)(2) of the Inter3 nal Revenue Code of 1986 (defining high deductible 

4 health plan) is amended by striking ‘‘a deductible 

5 for preventative care’’ and all that follows and in6 serting the following: ‘‘a deductible for— 

7 ‘‘(i) preventive care (within the mean8 ing of section 1861 of the Social Security 

9 Act, except as otherwise provided by the 

10 Secretary), or 

11 ‘‘(ii) a prescribed drug (as defined in 

12 section 213).’’. 

13 (2) INDIVIDUAL DEDUCTIBLE LIMIT FOR FAM14 ILY PLANS.—Section 223(c)(2) of such Code is 

15 amended by adding at the end the following new 

16 subparagraph: 

17 ‘‘(E) SPECIAL RULE FOR FAMILY COV18 ERAGE.—A health plan providing family cov19 erage shall not fail to meet the requirements of 

20 subparagraph (A)(i)(II) merely because the 

21 plan elects to provide both— 

22 ‘‘(i) an aggregate annual deductible 

23 limit for all individuals covered by the plan 

24 which is not less than the amount in effect 

25 under subparagraph (A)(i)(II), and 


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1 ‘‘(ii) an annual deductible limit for 

2 each individual covered by the plan which 

3 is not less than the amount in effect under 

4 subparagraph (A)(i)(I).’’. 

5 (3) CONFORMING AMENDMENT.—Subparagraph 

6 (C) of section 223(c)(2) of such Code is amended in 

7 the heading by inserting ‘‘OR PRESCRIBED DRUG’’ 

8 after ‘‘PREVENTIVE CARE’’. 

9 (b) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to taxable years beginning after 

11 December 31, 2007. 

12 SEC. 9. MSA PLAN DEDUCTIBLE EXCEPTION FOR PREVEN13 TIVE CARE. 

14 (a) IN GENERAL.—Paragraph (3) of section 1859(b) 

15 of the Social Security Act (42 U.S.C. 1359w–28(b)) is 

16 amended by adding at the end the following new subpara17 graph: 

18 ‘‘(C) EXCEPTION FOR ABSENCE OF PRE19 VENTIVE CARE DEDUCTIBLE.—A plan shall not 

20 fail to be treated as a MSA plan by reason of 

21 failing to have a deductible for preventive care 

22 (within the meaning of such term as applied for 

23 purposes of section 223(c)(2)(C) of the Internal 

24 Revenue Code of 1986).’’. 


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

2 this section shall take effect on January 1, 2008. 

3 SEC. 10. PERMITTING INDIVIDUAL CONTRIBUTIONS TO 

4 MEDICARE ADVANTAGE MSA. 

5 (a) IN GENERAL.—Paragraph (2) of section 138(b) 

6 of the Internal Revenue Code of 1986 (defining Medicare 

7 Advantage MSA) is amended by striking ‘‘or’’ at the end 

8 of subparagraph (A), by inserting ‘‘or’’ at the end of sub9 paragraph (B), and by adding at the end the following 

10 new subparagraph: 

11 ‘‘(C) any contributions by or for the ben12 efit of the account holder (other than a con13 tribution described in subparagraph (A)) for 

14 the taxable year, the sum of which do not ex15 ceed the difference of— 

16 ‘‘(i) the amount of the annual deduct17 ible (described in section 1859(b)(3)(B) of 

18 the Social Security Act) for the MSA plan 

19 in which the individual is enrolled, over 

20 ‘‘(ii) the amount of contributions de21 scribed in subparagraph (A) for the tax22 able year,’’. 

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

24 this section shall apply to taxable years beginning after 

25 December 31, 2007. 


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1 SEC. 11. ALLOWING MSA AND HSA ROLLOVER TO ADULT 

2 CHILD OF ACCOUNT HOLDER. 

3 (a) MSAS.—(1) Subparagraph (A) of section 

4 220(f)(8) of the Internal Revenue Code of 1986 (relating 

5 to treatment after death of account holder) is amended— 

6 (A) by inserting ‘‘or adult child’’ after ‘‘sur7 viving spouse’’, 

8 (B) by inserting ‘‘or adult child, as the case 

9 may be,’’ after ‘‘the spouse’’, and 

10 (C) by inserting ‘‘OR ADULT CHILD’’ after 

11 ‘‘SPOUSE’’ in the heading thereof. 

12 (2) Paragraph (8) of section 220(f) of such Code is 

13 amended by adding at the end the following new subpara14 graph: 

15 ‘‘(C) ADULT CHILD.—For purposes of this 

16 paragraph, the term ‘adult child’ means an in17 dividual— 

18 ‘‘(i) who is a child of the deceased in19 dividual, and 

20 ‘‘(ii) with respect to whom a deduc21 tion under section 151 would not be allow22 able to another taxpayer for a taxable year 

23 beginning in the calendar year in which 

24 such individual’s taxable year begins.’’. 


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1 (b) HSAS.—(1) Subparagraph (A) of section 

2 223(f)(8) of such Code (relating to treatment after death 

3 of account beneficiary) is amended— 

4 (A) by inserting ‘‘or adult child’’ after ‘‘sur5 viving spouse’’, 

6 (B) by inserting ‘‘or adult child, as the case 

7 may be,’’ after ‘‘the spouse’’, and 

8 (C) by inserting ‘‘OR ADULT CHILD’’ after 

9 ‘‘SPOUSE’’ in the heading thereof. 

10 (2) Paragraph (8) of section 223(f) of such Code is 

11 amended by adding at the end the following new subpara12 graph: 

13 ‘‘(C) ADULT CHILD.—For purposes of this 

14 paragraph, the term ‘adult child’ has the mean15 ing given to such term by section 

16 220(f)(8)(C).’’. 

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2007. 

20 SEC. 12. PERMITTING MEDICARE ADVANTAGE MSA FUNDS 

21 TO BE USED FOR WELLNESS AND FITNESS 

22 PROGRAMS. 

23 (a) IN GENERAL.—Paragraph (1) of section 138(c) 

24 of the Internal Revenue Code of 1986 (relating to special 

25 rules for distributions) is amended by striking ‘‘and’’ at 


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1 the end of subparagraph (A), by striking the period at 

2 the end of subparagraph (B) and inserting ‘‘, and’’, and 

3 by adding at the end the following new subparagraph: 

4 ‘‘(C) qualified medical expenses shall in5 clude amounts paid to a gym for enrollment in 

6 a wellness or fitness program.’’. 

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

8 this section shall apply to taxable years beginning after 

9 December 31, 2007. 

Æ 


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