II 

116TH CONGRESS 

2D SESSION S. 4367 

To amend the Internal Revenue Code of 1986 to eliminate limitations on 

contributions to health savings accounts. 

IN THE SENATE OF THE UNITED STATES 

JULY 29, 2020 

Mr. PAUL 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 eliminate 

limitations on contributions to health savings accounts. 

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 ‘‘Health Savings Ac5 counts For All Act of 2020’’. 

6 SEC. 2. REPEAL OF CONTRIBUTION LIMITATIONS. 

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

8 the Internal Revenue Code of 1986 is amended to read 

9 as follows: 


pamtmann on DSKBC07HB2PROD with BILLS
2 

•S 4367 IS

1 ‘‘(b) DENIAL OF DEDUCTION TO DEPENDENTS.—No 

2 deduction shall be allowed under this section to any indi3 vidual with respect to whom a deduction under section 151 

4 is allowable to another taxpayer for a taxable year begin5 ning in the calendar year in which such individual’s tax6 able year begins.’’. 

7 (b) CONFORMING AMENDMENTS.— 

8 (1) Subparagraph (A) of section 223(d)(1) of 

9 the Internal Revenue Code of 1986 is amended— 

10 (A) by striking ‘‘subsection (f)(5)’’ and in11 serting ‘‘subsection (f)(4)’’, and 

12 (B) by striking ‘‘accepted—’’ and all that 

13 follows and inserting ‘‘accepted unless it is in 

14 cash.’’. 

15 (2) Subsection (f) of section 223 of such Code 

16 is amended by striking paragraph (3) and by redes17 ignating paragraphs (4) through (8) as paragraphs 

18 (3) through (7), respectively. 

19 (3) Subsection (g) of section 223 of such Code 

20 is amended— 

21 (A) by striking ‘‘subsections (b)(2) and 

22 (c)(2)(A)’’ both places it appears and inserting 

23 ‘‘subsection (c)(2)(A)’’, and 

24 (B) by amending subparagraph (B) to read 

25 as follows: 


pamtmann on DSKBC07HB2PROD with BILLS
3 

•S 4367 IS

1 ‘‘(B) the cost-of-living adjustment deter2 mined under section 1(f)(3) for the calendar 

3 year in which such taxable year begins deter4 mined by substituting ‘calendar year 2003’ for 

5 ‘calendar year 2016’ in subparagraph (A)(ii) 

6 thereof.’’. 

7 (4) Section 26(b)(2) of such Code is amended— 

8 (A) by striking ‘‘, 223(b)(8)(B)(i)(II),’’ in 

9 subparagraph (S), and 

10 (B) by striking ‘‘223(f)(4)’’ in subpara11 graph (U) and inserting ‘‘223(f)(3)’’. 

12 (5) Paragraph (1) of section 106(d) of such 

13 Code is amended by striking ‘‘under an accident or 

14 health plan’’ and all that follows and inserting 

15 ‘‘under an accident or health plan.’’. 

16 (6) Subparagraph (C) of section 106(e)(4) of 

17 such Code is amended by striking ‘‘223(f)(5)’’ and 

18 inserting ‘‘223(f)(4)’’. 

19 (7) Subparagraph (C) of section 408(d)(9) of 

20 such Code is amended— 

21 (A) by striking ‘‘LIMITATIONS.—’’ in the 

22 heading and all that follows through ‘‘(ii) ONE23 TIME TRANSFER.—’’ in clause (ii), and insert24 ing ‘‘ONE-TIME TRANSFER.—’’, 


pamtmann on DSKBC07HB2PROD with BILLS
4 

•S 4367 IS

1 (B) by redesignating subclauses (I) and 

2 (II) as clauses (i) and (ii) and moving such 

3 clauses 2 ems to the left, and 

4 (C) by striking ‘‘subclause (II)’’ in clause 

5 (i), as so redesignated, and inserting ‘‘clause 

6 (ii)’’. 

7 (8) Section 4973 of such Code is amended by 

8 striking subsection (g) and by redesignating sub9 section (h) as subsection (g). 

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

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

13 SEC. 3. FREEDOM FROM MANDATE. 

14 (a) IN GENERAL.—Section 223 of the Internal Rev15 enue Code of 1986, as amended by section 2, is further 

16 amended by striking subsections (c) and (g) and by redes17 ignating subsections (d), (e), (f), and (h) as subsections 

18 (c), (d), (e), and (f), respectively. 

19 (b) CONFORMING AMENDMENTS.— 

20 (1) Subsection (a) of section 223 of the Inter21 nal Revenue Code of 1986 is amended to read as fol22 lows: 

23 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi24 vidual, there shall be allowed as a deduction for the tax25 able year an amount equal to the aggregate amount paid 


pamtmann on DSKBC07HB2PROD with BILLS
5 

•S 4367 IS

1 in cash during such taxable year by or on behalf of such 

2 individual to a health savings account of such individual.’’. 

3 (2) Subsection (c)(1)(A) of section 223 of such 

4 Code, as amended by section 2 and redesignated by 

5 subsection (a), is further amended by striking ‘‘sub6 section (f)(4)’’ and inserting ‘‘subsection (e)(4)’’. 

7 (3) Subparagraph (U) of section 26(b)(2) of 

8 such Code, as amended by section 2, is further 

9 amended by striking ‘‘section 223(f)(3)’’ and insert10 ing ‘‘section 223(e)(3)’’. 

11 (4) Sections 35(g)(3), 220(f)(5)(A), 

12 848(e)(1)(B)(v), 4973(a)(5), and 6051(a)(12) of 

13 such Code are each amended by striking ‘‘section 

14 223(d)’’ each place it appears and inserting ‘‘section 

15 223(c)’’. 

16 (5) Section 106(d)(1) of such Code is amend17 ed— 

18 (A) by striking ‘‘who is an eligible indi19 vidual (as defined in section 223(c)(1))’’, and 

20 (B) by striking ‘‘section 223(d)’’ and in21 serting ‘‘section 223(c)’’. 

22 (6) Section 106(e) of such Code is amended— 

23 (A) by striking paragraphs (3) and (4) and 

24 by redesignating paragraph (5) as paragraph 

25 (4), 


pamtmann on DSKBC07HB2PROD with BILLS
6 

•S 4367 IS

1 (B) by inserting after paragraph (2) the 

2 following new paragraph: 

3 ‘‘(3) TREATMENT AS ROLLOVER CONTRIBU4 TION.—A qualified HSA distribution shall be treated 

5 as a rollover contribution described in section 

6 223(e)(4).’’, and 

7 (C) by striking ‘‘to any eligible individual 

8 covered under a high deductible health plan of 

9 the employer’’ in paragraph (4)(B)(ii) (as so re10 designated) and inserting ‘‘to any employee 

11 with respect to whom a health savings account 

12 has been established’’. 

13 (7) Section 408(d)(9)(A) of such Code is 

14 amended by striking ‘‘who is an eligible individual 

15 (as defined in section 223(c)) and’’. 

16 (8) Section 877A(g)(6) of such Code is amend17 ed by striking ‘‘223(f)(4)’’ and inserting 

18 ‘‘223(e)(4)’’. 

19 (9) Section 4975 of such Code is amended— 

20 (A) in subsection (c)(6)— 

21 (i) by striking ‘‘section 223(d)’’ and 

22 inserting ‘‘section 223(c)’’, and 

23 (ii) by striking ‘‘section 223(e)(2)’’ 

24 and inserting ‘‘section 223(d)(2)’’, and 


pamtmann on DSKBC07HB2PROD with BILLS
7 

•S 4367 IS

1 (B) in subsection (e)(1)(E), by striking 

2 ‘‘section 223(d)’’ and inserting ‘‘section 

3 223(c)’’. 

4 (10) Subsection (b) of section 4980G of such 

5 Code is amended to read as follows: 

6 ‘‘(b) RULES AND REQUIREMENTS.— 

7 ‘‘(1) IN GENERAL.—An employer meets the re8 quirements of this subsection for any calendar year 

9 if the employer makes available comparable con10 tributions to the health savings accounts of all com11 parable participating employees for each coverage 

12 period during such calendar year. 

13 ‘‘(2) COMPARABLE CONTRIBUTIONS.— 

14 ‘‘(A) IN GENERAL.—For purposes of para15 graph (1), the term ‘comparable contributions’ 

16 means contributions— 

17 ‘‘(i) which are the same amount, or 

18 ‘‘(ii) if the employees are covered by a 

19 health plan, which are the same percentage 

20 of the annual deductible limit under the 

21 plan covering the employees. 

22 ‘‘(B) PART-YEAR EMPLOYEES.—In the 

23 case of an employee who is employed by the em24 ployer for only a portion of the calendar year, 

25 a contribution to the health savings account of 


pamtmann on DSKBC07HB2PROD with BILLS
8 

•S 4367 IS

1 such employee shall be treated as comparable if 

2 it is an amount which bears the same ratio to 

3 the comparable amount (determined without re4 gard to this subparagraph) as such portion 

5 bears to the entire calendar year. 

6 ‘‘(3) COMPARABLE PARTICIPATING EMPLOY7 EES.—For purposes of paragraph (1), the term 

8 ‘comparable participating employees’ means all em9 ployees who are covered (if at all) under the same 

10 health plan of the employer and have the same cat11 egory of coverage. For purposes of the preceding 

12 sentence, the categories of coverage are self-only and 

13 family coverage. 

14 ‘‘(4) PART-TIME EMPLOYEES.— 

15 ‘‘(A) IN GENERAL.—Paragraph (3) shall 

16 be applied separately with respect to part-time 

17 employees and other employees. 

18 ‘‘(B) PART-TIME EMPLOYEE.—For pur19 poses of subparagraph (A), the term ‘part-time 

20 employee’ means any employee who is custom21 arily employed for fewer than 30 hours per 

22 week.’’. 

23 (11) Section 4980G(d) of such Code is amended 

24 by striking ‘‘section 4980E’’ and inserting ‘‘this sec25 tion’’. 


pamtmann on DSKBC07HB2PROD with BILLS
9 

•S 4367 IS

1 (12) Section 6693(a)(2)(C) of such Code is 

2 amended by striking ‘‘section 223(h)’’ and inserting 

3 ‘‘section 223(f)’’. 

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

5 this section shall apply to taxable years beginning after 

6 the date of the enactment of this Act. 

7 SEC. 4. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP8 TION AND OVER-THE-COUNTER MEDICINES 

9 AND DRUGS. 

10 (a) HSAS.—Paragraph (2)(A) of section 223(c) of 

11 the Internal Revenue Code of 1986, as redesignated by 

12 section 3, is amended by adding at the end the following: 

13 ‘‘The term ‘qualified medical expenses’ shall include an 

14 amount paid for any prescription or over-the-counter med15 icine or drug.’’. 

16 (b) ARCHER MSAS.—Section 220(d)(2)(A) of the In17 ternal Revenue Code of 1986 is amended— 

18 (1) by striking ‘‘section 223(d)(2)(D)’’ and in19 serting ‘‘section 223(c)(2)(B)’’, and 

20 (2) by adding at the end the following: ‘‘The 

21 term ‘qualified medical expenses’ shall include an 

22 amount paid for any prescription or over-the-counter 

23 medicine or drug.’’. 

24 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS

25 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—SubVerDate Sep 11 2014 20:07 Aug 13, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4367.IS S4367

pamtmann on DSKBC07HB2PROD with BILLS
10 

•S 4367 IS

1 section (f) of section 106 of the Internal Revenue Code 

2 of 1986 is amended to read as follows: 

3 ‘‘(f) REIMBURSEMENTS FOR ALL MEDICINES, 

4 DRUGS, AND MENSTRUAL CARE PRODUCTS.—For pur5 poses of this section and section 105— 

6 ‘‘(1) reimbursement for expenses incurred for 

7 any prescription or over-the-counter medicine or 

8 drug shall be treated as a reimbursement for med9 ical expenses, and 

10 ‘‘(2) expenses incurred for menstrual care prod11 ucts (as defined in section 223(c)(2)(B)) shall be 

12 treated as incurred for medical care.’’. 

13 (d) EFFECTIVE DATES.— 

14 (1) DISTRIBUTIONS FROM SAVINGS AC15 COUNTS.—The amendments made by subsections (a) 

16 and (b) shall apply to amounts paid in taxable years 

17 beginning after the date of the enactment of this 

18 Act. 

19 (2) REIMBURSEMENTS.—The amendment made 

20 by subsection (c) shall apply to expenses incurred in 

21 plan years beginning after the date of the enactment 

22 of this Act. 


pamtmann on DSKBC07HB2PROD with BILLS
11 

•S 4367 IS

1 SEC. 5. PURCHASE OF HEALTH INSURANCE FROM HSA. 

2 (a) IN GENERAL.—Paragraph (2) of section 223(c) 

3 of the Internal Revenue Code of 1986, as redesignated by 

4 section 3, is amended— 

5 (1) by striking subparagraphs (B) and (C), and 

6 (2) by redesignating subparagraph (D) as sub7 paragraph (B). 

8 (b) CONFORMING AMENDMENT.—Paragraph (2) of 

9 section 223(c) of the Internal Revenue Code of 1986, as 

10 amended by the preceding sections of this Act, is further 

11 amended by striking ‘‘and any dependent (as defined in 

12 section 152, determined without regard to subsections 

13 (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual’’ 

14 and inserting ‘‘any dependent (as defined in section 152, 

15 determined without regard to subsections (b)(1), (b)(2), 

16 and (d)(1)(B) thereof) of such individual, and any child 

17 (as defined in section 152(f)(1)) of such individual who 

18 has not attained the age of 27 before the end of such indi19 vidual’s taxable year’’. 

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

21 this section shall apply with respect to insurance pur22 chased after the date of the enactment of this Act in tax23 able years beginning after such date. 


pamtmann on DSKBC07HB2PROD with BILLS
12 

•S 4367 IS

1 SEC. 6. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

2 INCURRED BEFORE ESTABLISHMENT OF AC3 COUNT. 

4 (a) IN GENERAL.—Paragraph (2) of section 223(c) 

5 of the Internal Revenue Code of 1986, as amended and 

6 redesignated by the preceding sections of this Act, is fur7 ther amended by adding at the end the following new sub8 paragraph: 

9 ‘‘(C) CERTAIN MEDICAL EXPENSES IN10 CURRED BEFORE ESTABLISHMENT OF ACCOUNT

11 TREATED AS QUALIFIED.—An expense shall not 

12 fail to be treated as a qualified medical expense 

13 solely because such expense was incurred before 

14 the establishment of the health savings account 

15 if such expense was incurred— 

16 ‘‘(i) during either— 

17 ‘‘(I) the taxable year in which the 

18 health savings account was estab19 lished, or 

20 ‘‘(II) the preceding taxable year, 

21 in the case of a health savings ac22 count established after the taxable 

23 year in which such expense was in24 curred but before the time prescribed 

25 by law for filing the return for such 


pamtmann on DSKBC07HB2PROD with BILLS
13 

•S 4367 IS

1 taxable year (not including extensions 

2 thereof), and 

3 ‘‘(ii) for medical care which (but for 

4 the fact that it was incurred before the es5 tablishment of the account) otherwise 

6 meets the requirements of the preceding 

7 subparagraphs.’’. 

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

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 7. ADMINISTRATIVE ERROR CORRECTION BEFORE 

12 DUE DATE OF RETURN. 

13 (a) IN GENERAL.—Paragraph (3) of section 223(e) 

14 of the Internal Revenue Code of 1986, as amended and 

15 redesignated by the preceding sections of this Act, is 

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

18 ‘‘(D) EXCEPTION FOR ADMINISTRATIVE

19 ERRORS CORRECTED BEFORE DUE DATE OF RE20 TURN.—Subparagraph (A) shall not apply if 

21 any payment or distribution is made to correct 

22 an administrative, clerical, or payroll contribu23 tion error and if— 

24 ‘‘(i) such distribution is received by 

25 the individual on or before the last day 


pamtmann on DSKBC07HB2PROD with BILLS
14 

•S 4367 IS

1 prescribed by law (including extensions of 

2 time) for filing such individual’s return for 

3 such taxable year, and 

4 ‘‘(ii) such distribution is accompanied 

5 by the amount of net income attributable 

6 to such contribution. 

7 Any net income described in clause (ii) shall be 

8 included in the gross income of the individual 

9 for the taxable year in which it is received.’’. 

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

11 this section shall take effect on the date of the enactment 

12 of this Act. 

13 SEC. 8. ALLOWING HSA ROLLOVER TO CHILD OR PARENT 

14 OF ACCOUNT HOLDER. 

15 (a) IN GENERAL.—Paragraph (7)(A) of section 

16 223(e) of the Internal Revenue Code of 1986, as redesig17 nated by the preceding sections of this Act, is amended— 

18 (1) by inserting ‘‘, child, parent, or grand19 parent’’ after ‘‘surviving spouse’’, 

20 (2) by inserting ‘‘, child, parent, or grand21 parent, as the case may be,’’ after ‘‘the spouse’’, 

22 (3) by inserting ‘‘, CHILD, PARENT, OR GRAND23 PARENT’’ after ‘‘SPOUSE’’ in the heading thereof, 

24 and 


pamtmann on DSKBC07HB2PROD with BILLS
15 

•S 4367 IS

1 (4) by adding at the end the following: ‘‘In the 

2 case of a child who acquires such beneficiary’s inter3 est and with respect to whom a deduction under sec4 tion 151 is allowable to another taxpayer for a tax5 able year beginning in the calendar year in which 

6 such individual’s taxable year begins, such health 

7 savings account shall be treated as a health savings 

8 account of such child.’’. 

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

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 SEC. 9. EQUIVALENT BANKRUPTCY PROTECTIONS FOR 

13 HEALTH SAVINGS ACCOUNTS AS RETIRE14 MENT FUNDS. 

15 (a) IN GENERAL.—Section 522 of title 11, United 

16 States Code, is amended by adding at the end the fol17 lowing new subsection: 

18 ‘‘(r) TREATMENT OF HEALTH SAVINGS AC19 COUNTS.—For purposes of this section, any health savings 

20 account (as described in section 223 of the Internal Rev21 enue Code of 1986) shall be treated in the same manner 

22 as an individual retirement account described in section 

23 408 of such Code.’’. 

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

25 this section shall apply to cases commencing under title 


pamtmann on DSKBC07HB2PROD with BILLS
16 

•S 4367 IS

1 11, United States Code, after the date of the enactment 

2 of this Act. 

Æ 


pamtmann on DSKBC07HB2PROD with BILLS