II

107TH CONGRESS

1ST SESSION S. 1067

To amend the Internal Revenue Code of 1986 to expand the availability

of Archer medical savings accounts.

IN THE SENATE OF THE UNITED STATES

JUNE 20, 2001

Mr. GRASSLEY (for himself, Mr. TORRICELLI, and Mr. CRAIG) 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 expand

the availability of Archer medical 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 ‘‘Medical Savings Ac5 count Availability Act of 2001’’.

6 SEC. 2. EXPANSION OF AVAILABILITY OF ARCHER MEDICAL

7 SAVINGS ACCOUNTS.

8 (a) REPEAL OF LIMITATIONS ON NUMBER OF MED9 ICAL SAVINGS ACCOUNTS.—
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1 (1) IN GENERAL.—Subsections (i) and (j) of

2 section 220 of the Internal Revenue Code of 1986

3 are hereby repealed.

4 (2) CONFORMING AMENDMENTS.—

5 (A) Paragraph (1) of section 220(c) of

6 such Code is amended by striking subparagraph

7 (D).

8 (B) Section 138 of such Code is amended

9 by striking subsection (f).

10 (b) AVAILABILITY NOT LIMITED TO ACCOUNTS FOR

11 EMPLOYEES OF SMALL EMPLOYERS AND SELF-EM12 PLOYED INDIVIDUALS.—

13 (1) IN GENERAL.—Subparagraph (A) of section

14 220(c)(1) of such Code (relating to eligible indi15 vidual) is amended to read as follows:

16 ‘‘(A) IN GENERAL.—The term ‘eligible in17 dividual’ means, with respect to any month, any

18 individual if—

19 ‘‘(i) such individual is covered under a

20 high deductible health plan as of the 1st

21 day of such month, and

22 ‘‘(ii) such individual is not, while cov23 ered under a high deductible health plan,

24 covered under any health plan—
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1 ‘‘(I) which is not a high deduct2 ible health plan, and

3 ‘‘(II) which provides coverage for

4 any benefit which is covered under the

5 high deductible health plan.’’.

6 (2) CONFORMING AMENDMENTS.—

7 (A) Section 220(c)(1) of such Code is

8 amended by striking subparagraph (C).

9 (B) Section 220(c) of such Code is amend10 ed by striking paragraph (4) (defining small

11 employer) and by redesignating paragraph (5)

12 as paragraph (4).

13 (C) Section 220(b) of such Code is amend14 ed by striking paragraph (4) (relating to deduc15 tion limited by compensation) and by redesig16 nating paragraphs (5), (6), and (7) as para17 graphs (4), (5), and (6), respectively.

18 (c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED

19 FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.—

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

21 220(b) of such Code is amended to read as follows:

22 ‘‘(2) MONTHLY LIMITATION.—The monthly limitation for any month is the amount equal to 1 23 ⁄12 of

24 the annual deductible (as of the first day of such
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1 month) of the individual’s coverage under the high

2 deductible health plan.’’.

3 (2) CONFORMING AMENDMENT.—Clause (ii) of

4 section 220(d)(1)(A) of such Code is amended by

5 striking ‘‘75 percent of’’.

6 (d) BOTH EMPLOYERS AND EMPLOYEES MAY CON7 TRIBUTE TO MEDICAL SAVINGS ACCOUNTS.—Paragraph

8 (4) of section 220(b) of such Code (as redesignated by

9 subsection (b)(2)(C)) is amended to read as follows:

10 ‘‘(4) COORDINATION WITH EXCLUSION FOR EM11 PLOYER CONTRIBUTIONS.—The limitation which

12 would (but for this paragraph) apply under this sub13 section to the taxpayer for any taxable year shall be

14 reduced (but not below zero) by the amount which

15 would (but for section 106(b)) be includible in the

16 taxpayer’s gross income for such taxable year.’’.

17 (e) REDUCTION OF PERMITTED DEDUCTIBLES

18 UNDER HIGH DEDUCTIBLE HEALTH PLANS.—

19 (1) IN GENERAL.—Subparagraph (A) of section

20 220(c)(2) of such Code (defining high deductible

21 health plan) is amended—

22 (A) by striking ‘‘$1,500’’ in clause (i) and

23 inserting ‘‘$1,000’’; and

24 (B) by striking ‘‘$3,000’’ in clause (ii) and

25 inserting ‘‘$2,000’’.
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1 (2) CONFORMING AMENDMENT.—Subsection (g)

2 of section 220 of such Code is amended to read as

3 follows:

4 ‘‘(g) COST-OF-LIVING ADJUSTMENT.—

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

6 year beginning in a calendar year after 1998, each

7 dollar amount in subsection (c)(2) shall be increased

8 by an amount equal to—

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

10 ‘‘(B) the cost-of-living adjustment deter11 mined under section 1(f)(3) for the calendar

12 year in which such taxable year begins by sub13 stituting ‘calendar year 1997’ for ‘calendar year

14 1992’ in subparagraph (B) thereof.

15 ‘‘(2) SPECIAL RULES.—In the case of the

16 $1,000 amount in subsection (c)(2)(A)(i) and the

17 $2,000 amount in subsection (c)(2)(A)(ii), para18 graph (1)(B) shall be applied by substituting ‘cal19 endar year 2000’ for ‘calendar year 1997’.

20 ‘‘(3) ROUNDING.—If any increase under para21 graph (1) or (2) is not a multiple of $50, such in22 crease shall be rounded to the nearest multiple of

23 $50.’’.

24 (f) PROVIDING INCENTIVES FOR PREFERRED PRO25 VIDER ORGANIZATIONS TO OFFER MEDICAL SAVINGS AC-
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1 COUNTS.—Clause (ii) of section 220(c)(2)(B) of such Code

2 is amended by striking ‘‘preventive care if’’ and all that

3 follows and inserting ‘‘preventive care.’’

4 (g) MEDICAL SAVINGS ACCOUNTS MAY BE OFFERED

5 UNDER CAFETERIA PLANS.—Subsection (f) of section

6 125 of such Code is amended by striking ‘‘106(b),’’.

7 (h) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to taxable years beginning after

9 December 31, 2001.

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