I

104TH CONGRESS

1ST SESSION H. R. 2051

To amend the Internal Revenue Code of 1986 to restore the deduction

for the health insurance costs of self-employed individuals, to provide

incentives for certain medical practitioners to practice in rural areas,

to provide for the creation of medical savings accounts, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 18, 1995

Mr. BAKER of Louisiana introduced the following bill; which was referred to

the Committee on Ways and Means, and in addition to the Committees

on Commerce and the Judiciary, for a period to be subseqently 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 restore

the deduction for the health insurance costs of self-employed individuals, to provide incentives for certain medical practitioners to practice in rural areas, to provide

for the creation of 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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Health Care Accessibil3 ity Expansion Act of 1993’’.

4 SEC. 2. FULL DEDUCTION FOR HEALTH INSURANCE COSTS

5 OF SELF-EMPLOYED INDIVIDUALS.

6 (a) DEDUCTION MADE PERMANENT.—

7 (1) IN GENERAL.—Subsection (l) of section 162

8 of the Internal Revenue Code of 1986 (relating to

9 special rules for health insurance costs of self-em10 ployed individuals) is amended by striking paragraph

11 (6).

12 (2) CONFORMING AMENDMENT.—Subsection (a)

13 of section 110 of the Tax Extension Act of 1991 is

14 amended by striking paragraph (2).

15 (3) EFFECTIVE DATE.—The amendments made

16 by this subsection shall apply to taxable years begin17 ning after December 31, 1991.

18 (b) DEDUCTION INCREASED TO 100 PERCENT.—

19 (1) IN GENERAL.—Paragraph (1) of section

20 162(l) of such Code is amended by striking ‘‘25 per21 cent’’ and inserting ‘‘100 percent’’.

22 (2) EFFECTIVE DATE.—The amendment made

23 by paragraph (1) shall apply to taxable years begin24 ning after December 31, 1993.
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1 SEC. 3. CREDIT FOR MEDICAL PRACTITIONERS COMMENC2 ING MEDICAL PRACTICE IN RURAL AREAS.

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to nonrefundable personal credits) is

6 amended by inserting after section 22 the following new

7 section:

8 ‘‘SEC. 23. CERTAIN MEDICAL PRACTITIONERS COMMENC9 ING MEDICAL PRACTICE IN RURAL AREAS.

10 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli11 gible medical practitioner who commences a medical prac12 tice in a rural area, there is allowed as a credit against

13 the tax imposed by this subtitle for the taxable year during

14 which such commencement occurs, and for each of the 4

15 succeeding taxable years, an amount equal to $5,000.

16 ‘‘(b) LIMITATION.—No credit shall be allowed under

17 subsection (a) with respect to any taxable year in which

18 the taxpayer practices a medical practice in the rural area

19 for less than 9 months or ceases to practice a medical

20 practice in the rural area.

21 ‘‘(c) DEFINITIONS.—For purposes of this section—

22 ‘‘(1) ELIGIBLE MEDICAL PRACTITIONER.—The

23 term ‘eligible medical practitioner’ means any physi24 cian, nurse practitioner, or certified physician assist25 ant.
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1 ‘‘(2) PHYSICIAN.—The term ‘physician’ means

2 a doctor of medicine or osteopathy legally authorized

3 to practice medicine and surgery by the State in

4 which such individual performs such function or ac5 tion.

6 ‘‘(3) COMMENCES PRACTICE.—The term ‘com7 mences practice’ means the location or relocation of

8 an eligible medical practitioner’s principal place of

9 medical practice to a rural area. Such term does not

10 include the relocation of a practitioner’s medical

11 practice from 1 rural area to another rural area.

12 ‘‘(4) RURAL AREA.—The term ‘rural area’

13 means any area that is not within any metropolitan

14 statistical area (as defined by the Secretary of Com15 merce).

16 ‘‘(d) RECAPTURE OF CREDIT.—

17 ‘‘(1) IN GENERAL.—If, a taxpayer who is al18 lowed a credit under subsection (a) ceases medical

19 practice in a rural area during any taxable year,

20 then the tax of the taxpayer under this chapter for

21 such taxable year shall be increased by an amount

22 equal to the sum of the credits allowed under sub23 section (a) for the 5 preceding taxable years.

24 ‘‘(2) NO CREDITS AGAINST TAX.—Any increase

25 in tax under this subsection shall not be treated as
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1 a tax imposed by this chapter for purposes of deter2 mining—

3 ‘‘(A) the amount of any credit under this

4 part, or

5 ‘‘(B) the amount of the tax under section

6 55.’’

7 (b) CLERICAL AMENDMENT.—The table of sections

8 for subpart A of part IV of subchapter A of chapter 1

9 of such Code is amended by inserting after the item relat10 ing to section 22 the following new item:

‘‘Sec. 23. Certain medical practitioners commencing medical practice in rural areas.’’

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

12 this section shall apply to taxable years beginning after

13 December 31, 1993.

14 SEC. 4. DEDUCTION FOR MEDICAL SCHOOL EDUCATION

15 LOAN INTEREST INCURRED BY CERTAIN

16 MEDICAL PRACTITIONERS SERVING IN

17 RURAL AREAS.

18 (a) IN GENERAL.—Paragraph (1) of section 163(h)

19 of the Internal Revenue Code of 1986 (relating to dis20 allowance of deduction for personal interest) is amended

21 by striking ‘‘and’’ at the end of subparagraph (D), by re22 designating subparagraph (E) as subparagraph (F), and

23 by inserting after subparagraph (D) the following new

24 subparagraph:
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1 ‘‘(E) any qualified medical education loan

2 interest (within the meaning of paragraph (5)),

3 and’’.

4 (b) QUALIFIED MEDICAL EDUCATION LOAN INTER5 EST DEFINED.—Subsection (h) of section 163 of such

6 Code is amended by redesignating paragraph (5) as para7 graph (6) and by inserting after paragraph (4) the follow8 ing new paragraph:

9 ‘‘(5) QUALIFIED MEDICAL EDUCATION LOAN IN10 TEREST.—

11 ‘‘(A) IN GENERAL.—The term ‘qualified

12 medical education loan interest’ means inter13 est—

14 ‘‘(i) which is on a medical education

15 loan of an eligible medical practitioner (as

16 defined in section 23(c)),

17 ‘‘(ii) which is paid or accrued by such

18 practitioner, and

19 ‘‘(iii) which accrues during the period

20 during which the practitioner is eligible to

21 receive a credit under section 23(c).

22 ‘‘(B) MEDICAL EDUCATION LOAN.—The

23 term ‘medical education loan’ means indebted24 ness incurred to pay the individual’s—
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1 ‘‘(i) qualified tuition and related ex2 penses (as defined in section 117(b)) in3 curred for the medical education of such

4 individual, or

5 ‘‘(ii) reasonable living expenses while

6 away from home in order to attend an edu7 cational institution described in section

8 170(b)(1)(A)(ii) for the medical education

9 of such individual.

10 ‘‘(C) RURAL AREA.—The term ‘rural area’

11 means any area that is not within any metro12 politan statistical area (as defined by the Sec13 retary of Commerce).’’

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

15 this section shall apply to taxable years ending after the

16 date of the enactment of this Act.

17 SEC. 5. MEDICAL SAVINGS ACCOUNTS.

18 (a) IN GENERAL.—Part VII of subchapter B of chap19 ter 1 of the Internal Revenue Code of 1986 (relating to

20 additional itemized deductions for individuals) is amended

21 by redesignating section 220 as section 221 and by insert22 ing after section 219 the following new section:

23 ‘‘SEC. 220. MEDICAL SAVINGS ACCOUNTS.

24 ‘‘(a) DEDUCTION ALLOWED.—In the case of an eligi25 ble individual, there shall be allowed as a deduction
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1 amounts paid in cash during the taxable year by or on

2 behalf of such individual to a medical savings account.

3 ‘‘(b) LIMITATION.—

4 ‘‘(1) IN GENERAL.—The amount allowable as a

5 deduction under subsection (a) to an individual for

6 the taxable year shall not exceed the excess (if any)

7 of—

8 ‘‘(A) the lesser of—

9 ‘‘(i) the applicable limit, or

10 ‘‘(ii) the compensation (as defined in

11 section 219(f)) includible in the individ12 ual’s gross income for the taxable year,

13 over

14 ‘‘(B) the sum of—

15 ‘‘(i) the value of employer-provided

16 coverage for the medical expenses of such

17 individual, plus

18 ‘‘(ii) the aggregate amount contrib19 uted to such account during the taxable

20 year pursuant to section 125(d)(3).

21 ‘‘(2) APPLICABLE LIMIT.—For purposes of

22 paragraph (1), the applicable limit is the sum of—

23 ‘‘(A) $4,800, plus

24 ‘‘(B) $1,000 for each individual who is a

25 dependent (as defined in section 152) of the in-
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1 dividual for whose benefit the account is estab2 lished.

3 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section—

5 ‘‘(1) MEDICAL SAVINGS ACCOUNT.—The term

6 ‘medical savings account’ means a trust created or

7 organized in the United States exclusively for the

8 purpose of paying the qualified medical expenses of

9 the individual for whose benefit the trust is estab10 lished, but only if the written governing instrument

11 creating the trust meets the following requirements:

12 ‘‘(A) No contribution will be accepted un13 less it is in cash and contributions will not be

14 accepted for any taxable year in excess of the

15 applicable limit (as defined in subsection

16 (b)(2)).

17 ‘‘(B) The trustee is a bank (as defined in

18 section 408(n)) or another person who dem19 onstrates to the satisfaction of the Secretary

20 that the manner in which such person will ad21 minister the trust will be consistent with the re22 quirements of this section.

23 ‘‘(C) No part of the trust assets will be in24 vested in life insurance contracts.
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1 ‘‘(D) The assets of the trust will not be

2 commingled with other property except in a

3 common trust fund or common investment

4 fund.

5 ‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible

6 individual’ means any individual if—

7 ‘‘(A) such individual is not covered by any

8 employer-provided group health plan, or

9 ‘‘(B) such individual is covered by an em10 ployer-provided group health plan which is a

11 qualified catastrophic coverage health plan and

12 is not covered by any other health plan.

13 ‘‘(3) QUALIFIED MEDICAL EXPENSES.—

14 ‘‘(A) IN GENERAL.—The term ‘qualified

15 medical expenses’ means—

16 ‘‘(i) medical expenses, and

17 ‘‘(ii) amounts paid for qualified long18 term care insurance.

19 ‘‘(B) MEDICAL EXPENSES.—The term

20 ‘medical expenses’ means amounts paid by the

21 individual for whose benefit the account was es22 tablished for medical care (as defined in section

23 213) of such individual, the spouse of such indi24 vidual, and any dependent (as defined in section

25 152) of such individual, but only to the extent
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1 such amounts are not compensated for by in2 surance or otherwise.

3 ‘‘(C) QUALIFIED LONG-TERM CARE INSUR4 ANCE.—

5 ‘‘(i) IN GENERAL.—Subject to clauses

6 (i) and (ii), the term ‘qualified long-term

7 care insurance’ means insurance under a

8 policy or rider, which is issued by a quali9 fied issuer, which meets standards at least

10 as stringent as those set forth in the Janu11 ary 1990 Long-Term Care Insurance

12 Model Regulation of the National Associa13 tion of Insurance Commissioners, and

14 which is certified by the Secretary of

15 Health and Human Services (in accord16 ance with procedures similar to the proce17 dures prescribed in section 1882 of the So18 cial Security Act (42 U.S.C. 1385ss) used

19 in the certification of medicare supple20 mental policies (as defined in subsection

21 (g)(1) of such section)) to be advertised,

22 marketed, offered, or designed to provide

23 coverage—
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1 ‘‘(I) for not less than 12 consecu2 tive months for each covered person

3 who has attained age 50,

4 ‘‘(II) on an expense incurred, in5 demnity, or prepaid basis,

6 ‘‘(III) for 1 or more medically

7 necessary, diagnostic services, preven8 tive services, therapeutic services, re9 habilitation services, maintenance

10 services, or personal care services, and

11 ‘‘(IV) provided in a setting other

12 than an acute care unit of a hospital.

13 The requirement of subclause (IV) shall be

14 met only if at least 1 of the settings in

15 which such coverage is provided is the pa16 tient’s home.

17 ‘‘(ii) COVERAGE SPECIFICALLY EX18 CLUDED.—Such term does not include any

19 insurance under any policy or rider which

20 is offered primarily to provide any com21 bination of the following kinds of coverage:

22 ‘‘(I) Basic Medicare supplement

23 coverage.

24 ‘‘(II) Basic hospital-based acute

25 care expense coverage.
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1 ‘‘(III) Basic medical-surgical ex2 pense coverage.

3 ‘‘(IV) Hospital confinement in4 demnity coverage.

5 ‘‘(V) Major medical expense cov6 erage.

7 ‘‘(VI) Disability income protec8 tion coverage.

9 ‘‘(VII) Accident only coverage.

10 ‘‘(VIII) Specified disease cov11 erage.

12 ‘‘(IX) Specified accident cov13 erage.

14 ‘‘(X) Limited benefit health cov15 erage.

16 ‘‘(iii) QUALIFIED ISSUER.—For pur17 poses of clause (i), the term ‘qualified is18 suer’ means any of the following:

19 ‘‘(I) Private insurance company.

20 ‘‘(II) Fraternal benefit society.

21 ‘‘(III) Nonprofit health corpora22 tion.

23 ‘‘(IV) Nonprofit hospital corpora24 tion.
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1 ‘‘(V) Nonprofit medical service

2 corporation.

3 ‘‘(VI) Prepaid health plan.

4 ‘‘(4) QUALIFIED CATASTROPHIC COVERAGE

5 HEALTH PLAN.—The term ‘qualified catastrophic

6 coverage health plan’ means any health plan which

7 is certified by the Secretary of Health and Human

8 Services as a plan—

9 ‘‘(A) which provides no compensation for

10 medical expenses not exceeding $3,000 during

11 any year,

12 ‘‘(B) which requires the individual to pay

13 15 percent of such individual’s medical expenses

14 to the extent they exceed $3,000 but not

15 $9,000 during any year, and

16 ‘‘(C) which provides full reimbursement for

17 medical expenses exceeding $9,000.

18 ‘‘(5) TIME WHEN CONTRIBUTIONS DEEMED

19 MADE.—A taxpayer shall be deemed to have made a

20 contribution on the last day of the preceding taxable

21 year if the contribution is made on account of such

22 taxable year and is made not later than the time

23 prescribed by law for filing the return for such tax24 able year (not including extensions thereof).

25 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—
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1 ‘‘(1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, any amount paid or distrib3 uted out of a medical savings account shall be in4 cluded in the gross income of the individual for

5 whose benefit such account was established unless

6 such amount is used exclusively to pay the qualified

7 medical expenses of such individual.

8 ‘‘(2) EXCESS CONTRIBUTIONS RETURNED BE9 FORE DUE DATE OF RETURN.—Paragraph (1) shall

10 not apply to the distribution of any contribution paid

11 during a taxable year to a medical savings account

12 to the extent that such contribution exceeds the

13 amount allowable as a deduction under subsection

14 (a) if—

15 ‘‘(A) such distribution is received on or be16 fore the day prescribed by law (including exten17 sions of time) for filing such individual’s return

18 for such taxable year,

19 ‘‘(B) no deduction is allowed under sub20 section (a) with respect to such excess contribu21 tion, and

22 ‘‘(C) such distribution is accompanied by

23 the amount of net income attributable to such

24 excess contribution.
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1 Any net income described in subparagraph (C) shall

2 be included in the gross income of the individual for

3 the taxable year in which it is received.

4 ‘‘(e) TAX TREATMENT OF ACCOUNTS.—

5 ‘‘(1) EXEMPTION FROM TAX.—A medical sav6 ings account is exempt from taxation under this sub7 title unless such account has ceased to be an invest8 ment savings account by reason of paragraph (2).

9 Notwithstanding the preceding sentence, any such

10 account is subject to the taxes imposed by section

11 511 (relating to imposition of tax on unrelated busi12 ness income of charitable, etc. organizations).

13 ‘‘(2) LOSS OF EXEMPTION OF ACCOUNT WHERE

14 INDIVIDUAL ENGAGES IN PROHIBITED TRANS15 ACTION.—

16 ‘‘(A) IN GENERAL.—If, during any taxable

17 year of the individual for whose benefit the

18 medical savings account was established, such

19 individual engages in any transaction prohibited

20 by section 4975 with respect to the account, the

21 account ceases to be a medical savings account

22 as of the first day of that taxable year.

23 ‘‘(B) ACCOUNT TREATED AS DISTRIBUTING

24 ALL ITS ASSETS.—In any case in which any ac25 count ceases to be a medical savings account by
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1 reason of subparagraph (A) on the first day of

2 any taxable year, paragraph (1) of subsection

3 (d) applies as if there were a distribution on

4 such first day in an amount equal to the fair

5 market value (on such first day) of all assets in

6 the account (on such first day).

7 ‘‘(3) EFFECT OF PLEDGING ACCOUNT AS SECU8 RITY.—If, during any taxable year, the individual for

9 whose benefit a medical savings account was estab10 lished uses the account or any portion thereof as se11 curity for a loan, the portion so used is treated as

12 distributed to that individual.

13 ‘‘(f) ADDITIONAL TAX ON CERTAIN AMOUNTS IN14 CLUDED IN GROSS INCOME.—

15 ‘‘(1) DISTRIBUTION NOT USED FOR QUALIFIED

16 MEDICAL EXPENSES.—If a distribution from a medi17 cal savings account is made, and not used to pay the

18 qualified medical expenses of the individual for

19 whose benefit the account was established, the tax li20 ability of such individual for the taxable year in

21 which such distribution is received shall be increased

22 by an amount equal to 10 percent of the amount of

23 the distribution which is includible in gross income

24 for such taxable year.
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1 ‘‘(2) DISQUALIFICATION CASES.—If an amount

2 is includible in the gross income of an individual for

3 a taxable year under subsection (e), his tax under

4 this chapter for such taxable year shall be increased

5 by an amount equal to 10 percent of such amount

6 includible in his gross income.

7 ‘‘(3) DISABILITY OR DEATH CASES.—Para8 graphs (1) and (2) do not apply if the payment or

9 distribution is made after the individual for whose

10 benefit the medical savings account was established

11 becomes disabled within the meaning of section

12 72(m)(7) or dies.

13 ‘‘(g) SPECIAL RULES.—

14 ‘‘(1) COMMUNITY PROPERTY LAWS.—This sec15 tion shall be applied without regard to any commu16 nity property laws.

17 ‘‘(2) CUSTODIAL ACCOUNTS.—For purposes of

18 this section, a custodial account shall be treated as

19 a trust if—

20 ‘‘(A) the assets of such account are held by

21 a bank (as defined in section 408(n)) or an22 other person who demonstrates to the satisfac23 tion of the Secretary that the manner in which

24 he will administer the account will be consistent

25 with the requirements of this section, and
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1 ‘‘(B) the custodial account would, except

2 for the fact that it is not a trust, constitute a

3 medical savings account described in subsection

4 (c).

5 For purposes of this title, in the case of a custodial

6 account treated as a trust by reason of the preceding

7 sentence, the custodian of such account shall be

8 treated as the trustee thereof.

9 ‘‘(3) DENIAL OF DEDUCTIONS.—No amount

10 paid or distributed from a medical savings account

11 shall be taken into account in determining the de12 duction provided by section 213.

13 ‘‘(h) INFLATION ADJUSTMENT.—

14 ‘‘(1) IN GENERAL.—In the case of any taxable

15 year beginning in a calendar year after 1994, each

16 applicable dollar amount shall be increased by an

17 amount equal to—

18 ‘‘(A) such dollar amount, multiplied by

19 ‘‘(B) the cost-of-living adjustment for the

20 calendar year in which the taxable year begins.

21 ‘‘(2) COST-OF-LIVING ADJUSTMENT.—For pur22 poses of paragraph (1), the cost-of-living adjustment

23 for any calendar year is the percentage (if any) by

24 which—
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1 ‘‘(A) the deemed average total wages (as

2 defined in section 209(k) of the Social Security

3 Act) for the preceding calendar year, exceeds

4 ‘‘(B) the deemed average total wages (as

5 so defined) for calendar year 1993.

6 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur7 poses of paragraph (1), the term ‘applicable dollar

8 amount’ means—

9 ‘‘(A) the $4,800 and $1,000 amounts in

10 subsection (b), and

11 ‘‘(B) the $3,000 and $9,000 amounts in

12 subsection (c)(4).

13 ‘‘(4) ROUNDING.—If any amount as adjusted

14 under paragraph (1) is not a multiple of $10, such

15 amount shall be rounded to the nearest multiple of

16 $10 (or, if such amount is a multiple of $5 and not

17 of $10, such amount shall be rounded to the next

18 highest multiple of $10).

19 ‘‘(i) REPORTS.—The trustee of a medical savings ac20 count shall make such reports regarding such account to

21 the Secretary and to the individual for whose benefit the

22 account is maintained with respect to contributions, dis23 tributions, and such other matters as the Secretary may

24 require under regulations. The reports required by this

25 subsection shall be filed at such time and in such manner
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1 and furnished to such individuals at such time and in such

2 manner as may be required by those regulations.’’

3 (b) DEDUCTION ALLOWED IN ARRIVING AT AD4 JUSTED GROSS INCOME.—Paragraph (7) of section 62(a)

5 of such Code (relating to retirement savings) is amend6 ed—

7 (1) by inserting ‘‘OR MEDICAL EXPENSE’’ after

8 ‘‘RETIREMENT’’ in the heading of such paragraph,

9 and

10 (2) by inserting before the period at the end

11 thereof the following: ‘‘and the deduction allowed by

12 section 220 (relating to deduction of certain pay13 ments to medical savings accounts)’’.

14 (c) TAX ON EXCESS CONTRIBUTIONS.—Section 4973

15 of such Code (relating to tax on excess contributions to

16 individual retirement accounts, certain section 403(b) con17 tracts, and certain individual retirement annuities) is

18 amended—

19 (1) by inserting ‘‘MEDICAL SAVINGS AC20 COUNTS,’’ after ‘‘ACCOUNTS,’’ in the heading of

21 such section,

22 (2) by redesignating paragraph (2) of sub23 section (a) as paragraph (3) and by inserting after

24 paragraph (1) the following:
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1 ‘‘(2) a medical savings account (within the

2 meaning of section 220(c)),’’,

3 (3) by striking ‘‘or’’ at the end of paragraph

4 (1) of subsection (a), and

5 (4) by adding at the end thereof the following

6 new subsection:

7 ‘‘(d) EXCESS CONTRIBUTIONS TO MEDICAL SAVINGS

8 ACCOUNTS.—For purposes of this section, in the case of

9 a medical savings account, the term ‘excess contributions’

10 means the amount by which the amount contributed for

11 the taxable year to the account exceeds the amount allow12 able as a deduction under section 220 for such taxable

13 year. For purposes of this subsection, any contribution

14 which is distributed out of the medical savings account

15 and a distribution to which section 220(d)(2) applies shall

16 be treated as an amount not contributed.’’

17 (d) TAX ON PROHIBITED TRANSACTIONS.—Section

18 4975 of such Code (relating to prohibited transactions)

19 is amended—

20 (1) by adding at the end of subsection (c) the

21 following new paragraph:

22 ‘‘(4) SPECIAL RULE FOR MEDICAL SAVINGS AC23 COUNTS.—An individual for whose benefit a medical

24 savings account is established shall be exempt from

25 the tax imposed by this section with respect to any
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1 transaction concerning such account (which would

2 otherwise be taxable under this section) if, with re3 spect to such transaction, the account ceases to be

4 a medical savings account by reason of the applica5 tion of section 220(e)(2)(A) to such account.’’, and

6 (2) by inserting ‘‘or a medical savings account

7 described in section 220(c)’’ in subsection (e)(1)

8 after ‘‘described in section 408(a)’’.

9 (e) FAILURE TO PROVIDE REPORTS ON MEDICAL

10 SAVINGS ACCOUNTS.—Section 6693 of such Code (relat11 ing to failure to provide reports on individual retirement

12 account or annuities) is amended—

13 (1) by inserting ‘‘OR ON MEDICAL SAVINGS

14 ACCOUNTS’’ after ‘‘ANNUITIES’’ in the heading of

15 such section, and

16 (2) by adding at the end of subsection (a) the

17 following: ‘‘The person required by section 220(i) to

18 file a report regarding a medical savings account at

19 the time and in the manner required by such section

20 shall pay a penalty of $50 for each failure unless it

21 is shown that such failure is due to reasonable

22 cause.’’

23 (f) CLERICAL AMENDMENTS.—

24 (1) The table of sections for part VII of sub25 chapter B of chapter 1 of such Code is amended by
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1 striking the item relating to section 220 and insert2 ing the following:

‘‘Sec. 220. Medical savings accounts.

‘‘Sec. 221. Cross reference.’’

3 (2) The table of sections for chapter 43 of such

4 Code is amended by striking the item relating to sec5 tion 4973 and inserting the following:

‘‘Sec. 4973. Tax on excess contributions to individual retirement

accounts, medical savings accounts, certain 403(b)

contracts, and certain individual retirement annuities.’’

6 (3) The table of sections for subchapter B of

7 chapter 68 of such Code is amended by inserting ‘‘or

8 on medical savings accounts’’ after ‘‘annuities’’ in

9 the item relating to section 6693.

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

11 this section shall apply to taxable years beginning after

12 December 31, 1993.

13 SEC. 6. UNUSED AMOUNTS IN FLEXIBLE SPENDING AC14 COUNTS TRANSFERABLE TO MEDICAL SAV15 INGS ACCOUNTS.

16 (a) IN GENERAL.—Subsection (d) of section 125 of

17 the Internal Revenue Code of 1986 (relating to cafeteria

18 plans) is amended by adding at the end thereof the follow19 ing new paragraph:

20 ‘‘(3) UNUSED AMOUNTS TRANSFERABLE TO

21 MEDICAL SAVINGS ACCOUNTS.—
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1 ‘‘(A) IN GENERAL.—Subsection (a) shall

2 not fail to apply to a participant in a plan, and

3 a plan shall not fail to be treated as a cafeteria

4 plan, solely because under the plan amounts not

5 paid out as reimbursements under a flexible

6 spending arrangement for health and disability

7 for the benefit of an individual are contributed

8 to a medical savings account (as defined in sec9 tion 220(c)) for the benefit of such individual.

10 ‘‘(B) SPECIAL RULES.—

11 ‘‘(i) TIMING OF CONTRIBUTIONS.—

12 Contributions made under this paragraph

13 shall be made on the last day of the plan

14 year of the cafeteria plan.

15 ‘‘(ii) AVAILABILITY REQUIREMENT.—

16 Subparagraph (A) shall apply only if the

17 plan is available to at least 80 percent of

18 the employees of the employer. For pur19 poses of the preceding sentence, there shall

20 be excluded employees who are excluded

21 under section 414(q)(8) or who would be

22 so excluded if ‘30’ were substituted for

‘171 23 ⁄2’ in subparagraph (B) thereof.’’

24 (b) TREATMENT OF AMOUNTS RECEIVED BY QUALI25 FIED CASH OR DEFERRED ARRANGEMENT.—
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1 (1) Paragraph (2) of section 401(k) of such

2 Code is amended by striking ‘‘and’’ at the end of

3 subparagraph (C), by striking the period at the end

4 of subparagraph (D) and inserting ‘‘, and’’, and by

5 adding at the end thereof the following new sub6 paragraph:

7 ‘‘(E) which provides that, with respect to

8 amounts held by the trust which are attrib9 utable to contributions made to the trust pursu10 ant to section 125(d)(3)—

11 ‘‘(i) an employee’s right to such

12 amounts is nonforfeitable, and

13 ‘‘(ii) such amounts may be used only

14 to pay expenses (not compensated for by

15 insurance or otherwise) for the medical

16 care (as defined in section 213) of the em17 ployee, the spouse of the employee, or any

18 dependent (as defined in section 152) of

19 the employee.’’

20 (2) Subsection (k) of section 401 of such Code

21 is amended by adding at the end thereof the follow22 ing new paragraph:

23 ‘‘(11) TREATMENT OF AMOUNTS RECEIVED

24 FROM MEDICAL SAVINGS ARRANGEMENTS.—Con25 tributions made to a trust by reason of section
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1 125(d)(3) shall not be taken into account under

2 paragraph (3)(A)(ii), and subsection (l) shall not

3 apply to such contributions.’’

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

5 this section shall apply to taxable years beginning after

6 December 31, 1993.

7 SEC. 7. VOUCHERS FOR INDIVIDUALS ELIGIBLE TO PAR8 TICIPATE IN MEDICAL SAVINGS ACCOUNTS.

9 (a) IN GENERAL.—

10 (1) ESTABLISHMENT OF PROGRAM.—The Sec11 retary of the Treasury shall establish a program

12 under which eligible individuals may obtain health

13 insurance vouchers to be used during such taxable

14 year to make payments for qualified medical ex15 penses.

16 (2) DEFINITIONS.—In this section, the terms

17 ‘‘eligible individuals’’ and ‘‘qualified medical ex18 penses’’ have the meaning given such terms in sec19 tion 220(c) of the Internal Revenue Code of 1986

20 (as added by section 5(a)).

21 (b) USE OF DESIGNATED STATE AGENCIES.—Under

22 the program established pursuant to subsection (a), each

23 State shall enter into an agreement with the Secretary of

24 the Treasury under which an agency designated by the

25 State shall—
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1 (1) receive applications from individuals resid2 ing in the State for vouchers described in subsection

3 (a);

4 (2) using forms provided by the Secretary, de5 termine whether the individual is likely to be consid6 ered an eligible individual under such subsection;

7 (3) if the agency determines that an individual

8 is likely to be considered such an eligible individual

9 for such taxable year, issue the individual a health

10 insurance voucher the value of which is equal to 50

11 percent of the agency’s best estimate of the total

12 contributions to the individual’s medical savings ac13 count (as described in section 220 of the Internal

14 Revenue Code of 1986) that will be available for

15 payments for qualified medical expenses for such

16 taxable year; and

17 (4) submit regular reports notifying the Sec18 retary of those individuals in the State to whom

19 such health insurance vouchers are issued during the

20 year and the value of such vouchers.

21 (c) APPLICATION PROCESS.—Each individual may

22 apply for 2 health insurance vouchers for a taxable year,

23 at 6-month intervals (or at such other intervals as may

24 be prescribed). In order to obtain a health insurance

25 voucher, an individual shall submit to the designated agen-
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1 cy of the State in which the individual resides an applica2 tion (at such time and in such form as the State and the

3 Secretary may require) containing such information and

4 assurances as the State and the Secretary may require.

5 (d) APPLICATION AGAINST COSTS OF QUALIFIED

6 MEDICAL EXPENSES.—A health insurance voucher issued

7 to an individual pursuant to this section for a year may

8 be presented to an entity in full or partial payment of the

9 entity’s charges for the individual for qualified medical ex10 penses during the year. If an individual presents the entity

11 with such a voucher, the entity shall accept the voucher

12 toward payment of the entity’s charges for the individual

13 for the year.

14 (e) PAYMENT TO PROVIDERS.—

15 (1) AMOUNT.—Except as otherwise provided in

16 this paragraph, an entity providing services for

17 which an eligible individual incurs qualified medical

18 expenses shall be entitled, upon presentation to the

19 Secretary (or his designee) of an individual’s voucher

20 and of information used by the entity to determine

21 the individual’s applicable charges, to payment in

22 the amount of the voucher.

23 (2) CHARGES LESS THAN VOUCHER AMOUNT.—

24 If the amount of a voucher issued to an individual

25 pursuant to this subsection is greater than the
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1 amount of the individual’s applicable charges, the

2 entity shall be entitled to payment under paragraph

3 (1) only in the amount of the individual’s applicable

4 charges.

5 (3) OFFSETTING PAYMENTS.—If an entity has

6 received prepayment of an individual’s applicable

7 charges for any period for which the individual’s

8 voucher is in effect, the amount of the payment to

9 which the entity is otherwise entitled under para10 graph (1) shall be reduced to the extent of such

11 charges paid.

12 (4) ACCEPTANCE OF CERTAIN IMPROPER

13 VOUCHERS.—The Secretary may not deny payment

14 under paragraph (1) to an entity because a voucher

15 presented for payment was erroneously issued, im16 properly transferred, forged, counterfeited, or other17 wise invalid, unless the entity had knowledge of such

18 invalidity at the time of its acceptance of the vouch19 er.

20 (f) REFUNDABLE CREDIT TO PROVIDERS.—Subpart

21 C of part IV of subchapter A of chapter 1 of such Code

22 (relating to refundable credits) is amended by redesignat23 ing section 35 as section 36 and by inserting after section

24 34 the following new section:
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1 ‘‘SEC. 35. HEALTH INSURANCE VOUCHERS.

2 ‘‘There shall be allowed as a credit against the tax

3 imposed by this subtitle an amount equal to the aggregate

4 amount of vouchers received during the taxable year pur5 suant to section 7(a) of the Health Care Accessibility Ex6 pansion Act of 1993 as payment for providing services for

7 which individuals incur qualified medical expenses (as

8 such terms are defined under such section).’’.

9 SEC. 8. JOINT USE OF HIGH TECHNOLOGY EQUIPMENT AND

10 SERVICES BY HOSPITALS.

11 (a) WAIVER OF ANTITRUST LAWS.—

12 (1) IN GENERAL.—Notwithstanding any provi13 sion of the antitrust laws, it shall not be considered

14 a violation of the antitrust laws for hospitals to

15 jointly undertake, in the provision of care, the pur16 chasing, contracting for, or sharing of high tech17 nology equipment and services.

18 (2) ANTITRUST LAWS DEFINED.—For purposes

19 of this subsection, the term ‘‘antitrust laws’’

20 means—

21 (A) the Act entitled ‘‘An Act to protect

22 trade and commerce against unlawful restraints

23 and monopolies’’, approved July 2, 1890, com24 monly known as the ‘‘Sherman Act’’ (26 Stat.

25 209; chapter 647; 15 U.S.C. 1 et seq.);
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1 (B) the Federal Trade Commission Act,

2 approved September 26, 1914 (38 Stat. 717;

3 chapter 311; 15 U.S.C. 41 et seq.);

4 (C) the Act entitled ‘‘An Act to supple5 ment existing laws against unlawful restraints

6 and monopolies, and for other purposes’’, ap7 proved October 15, 1914, commonly known as

8 the ‘‘Clayton Act’’ (38 Stat. 730; chapter 323;

9 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

10 3285, 3691; 29 U.S.C. 52, 53); and

11 (D) any State antitrust laws that would

12 prohibit the activities described in subsection

13 (a).

14 (b) GRANTS.—Title VI of the Public Health Service

15 Act (42 U.S.C. 291 et seq.) is amended—

16 (1) by redesignating part D as part E; and

17 (2) by inserting after section 633 the following

18 new part:

19 ‘‘PART D—EQUIPMENT AND SERVICES

20 ‘‘SEC. 637. HIGH TECHNOLOGY EQUIPMENT AND SERVICES.

21 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab22 lish and carry out demonstration projects to assist hos23 pitals in acquiring and sharing high technology equipment

24 and services. In carrying out the demonstration projects,

25 the Secretary shall make grants to States for the purpose
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1 of paying the Federal share of the costs of assisting hos2 pitals to jointly purchase, contract for, or share high tech3 nology equipment and services in order to eliminate unnec4 essary duplication of the equipment and services.

5 ‘‘(b) AWARD OF GRANTS.—The Secretary shall allo6 cate grants under this section in accordance with criteria

7 prescribed by the Secretary.

8 ‘‘(c) DURATION OF GRANTS.—Grants made under

9 this section may be made for periods not to exceed 3 years.

10 ‘‘(d) APPLICATION.—To be eligible to receive a grant

11 under this section, a State, acting through the appropriate

12 State health authority, shall submit an application at such

13 time, in such manner, and containing such agreements,

14 assurances, and information as the Secretary determines

15 necessary to carry out this section. At a minimum, the

16 application shall include—

17 ‘‘(1) a State plan that describes the manner in

18 which the State health authority will assist hospitals

19 in undertaking the joint activities described in sub20 section (a);

21 ‘‘(2) a description of the criteria and procedures

22 the State health authority will use to select hospitals

23 to be assisted under this section; and
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1 ‘‘(3) an assurance that the State will provide 50

2 percent of the cost of the demonstration project

3 from non-Federal funds.

4 ‘‘(e) FEDERAL SHARE.—The Federal share of the

5 cost of carrying out any State plan under this section shall

6 be 50 percent.

7 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated to carry out this section

9 such sums as may be necessary for each of the 1993

10 through 1996 fiscal years.’’.

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