79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–846 

THE ‘‘PERSONAL HEALTH INVESTMENT TODAY ACT’’ OR 

THE ‘‘PHIT ACT’’ 

JULY 19, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. BRADY of Texas, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

[To accompany H.R. 6312] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 6312) to amend the Internal Revenue Code of 1986 to 

treat qualified sports and fitness expenses as amounts paid for 

medical care, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

2 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–846 

PERSONAL HEALTH INVESTMENT TODAY ACT 

JULY 19, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. BRADY of Texas, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 6312] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 6312) to amend the Internal Revenue Code of 1986 to 

treat certain amounts paid for physical activity, fitness, and exercise as amounts paid for medical care, having considered the same, 

report favorably thereon with an amendment and recommend that 

the bill as amended do pass. 

CONTENTS 

Page 

I. SUMMARY AND BACKGROUND ................................................................. 4 

II. EXPLANATION OF THE BILL ...................................................................... 5 

A. Certain Amounts Paid for Physical Activity, Fitness and Exercise 

Treated as Amounts Paid for Medical Care ..................................... 5 

III. VOTES OF THE COMMITTEE ...................................................................... 9 

IV. BUDGET EFFECTS OF THE BILL ............................................................... 10 

A. Committee Estimate of Budgetary Effects ......................................... 10 

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority ...................................................................... 12 

C. Cost Estimate Prepared by the Congressional Budget Office ........... 12 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE 

HOUSE .......................................................................................................... 12 

A. Committee Oversight Findings and Recommendations .................... 12 

B. Statement of General Performance Goals and Objectives ................ 12 

C. Information Relating to Unfunded Mandates .................................... 12 

D. Applicability of House Rule XXI 5(b) .................................................. 13 

E. Tax Complexity Analysis ..................................................................... 13 

F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 

Benefits ............................................................................................... 13 

G. Duplication of Federal Programs ........................................................ 13 

H. Disclosure of Directed Rule Makings ................................................. 13 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 14 

B. Changes in Existing Law Proposed by the Bill, as Reported ........... 14 

3 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Personal Health Investment Today Act’’ or the 

‘‘PHIT Act.’’ 

SEC. 2. CERTAIN AMOUNTS PAID FOR PHYSICAL ACTIVITY, FITNESS, AND EXERCISE TREATED 

AS AMOUNTS PAID FOR MEDICAL CARE. 

(a) IN GENERAL.—Section 213(d)(1) of the Internal Revenue Code of 1986 is 

amended by striking ‘‘or’’ at the end of subparagraph (C), by striking the period at 

the end of subparagraph (D) and inserting ‘‘, or’’, and by adding at the end the following new subparagraph: 

‘‘(E) for qualified sports and fitness expenses.’’. 

(b) QUALIFIED SPORTS AND FITNESS EXPENSES.—Section 213(d) of such Code is 

amended by adding at the end the following paragraph: 

‘‘(12) QUALIFIED SPORTS AND FITNESS EXPENSES.— ‘‘(A) IN GENERAL.—The term ‘qualified sports and fitness expenses’ means 

amounts paid for— 

‘‘(i) membership at a fitness facility, 

‘‘(ii) participation or instruction in a program of physical exercise or 

physical activity, or 

‘‘(iii) safety equipment for use in a program (including a self-directed 

program) of physical exercise or physical activity. 

‘‘(B) DOLLAR LIMITATIONS.— ‘‘(i) OVERALL LIMITATION.—The aggregate amount treated as qualified 

sports and fitness expenses with respect to any taxpayer for any taxable year shall not exceed $500 (twice such amount in the case of a 

joint return or a head of household (as defined in section 2(b))). 

‘‘(ii) SAFETY EQUIPMENT.—The amount treated as qualified sports and 

fitness expenses with respect to any item of safety equipment described 

in subparagraph (A)(iii) shall not exceed $250. 

‘‘(C) CERTAIN EXCLUSIONS.— 

‘‘(i) IN GENERAL.—Golf, hunting, sailing, and horseback riding shall 

not be treated as a physical exercise or physical activity. 

‘‘(ii) EXERCISE VIDEOS, ETC.—Qualified sports and fitness expenses 

shall not include videos, books, or similar materials. 

‘‘(D) FITNESS FACILITY DEFINED.—For purposes of subparagraph (A)(i), the 

term ‘fitness facility’ means a facility— 

‘‘(i) providing instruction in a program of physical exercise or physical 

activity, offering facilities for the preservation, maintenance, encouragement, or development of physical fitness, or serving as the site of 

such a program of a State or local government, 

‘‘(ii) which is not a private club owned and operated by its members, 

‘‘(iii) which does not offer facilities for any activity described in subparagraph (C)(i), 

‘‘(iv) whose health or fitness facility is not incidental to its overall 

function and purpose, and 

‘‘(v) which is fully compliant with applicable State and Federal antidiscrimination laws. 

‘‘(E) PROGRAMS WHICH INCLUDE COMPONENTS OTHER THAN PHYSICAL EXERCISE AND PHYSICAL ACTIVITY.—Rules similar to the rules of paragraph (6) 

shall apply in the case of any program that includes physical exercise or 

physical activity and also other components. For purposes of the preceding 

sentence, travel and accommodations shall be treated as an other component. 

‘‘(F) INFLATION ADJUSTMENT.—In the case of any taxable year beginning 

in a calendar year after 2019, the $500 amount in subparagraph (B)(i) and 

the $250 amount in subparagraph (B)(ii) shall each be increased by an 

amount equal to— 

‘‘(i) such dollar amount, multiplied by 

‘‘(ii) the cost-of-living adjustment determined under section 1(f)(3) for 

the calendar year in which such taxable year begins, determined by 

substituting ‘calendar year 2018’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof. 

If any increase determined under the preceding sentence is not a multiple 

of $10, such increase shall be rounded to the next lowest multiple of $10.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2018. 

4 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

The bill H.R. 6312, as reported by the Committee on Ways and 

Means, adds qualified sports and fitness expenses to the definition 

of qualified medical expenses. 

B. BACKGROUND AND NEED FOR LEGISLATION

Qualified medical expenses generally are defined in law and include expenses for diagnosis, cure, mitigation, treatment, or prevention of disease, including prescription drugs, transportation primarily for and essential to such care, and qualified long-term care 

expenses. The list of qualified medical expenses generally determines what services and items are eligible for a tax deduction either through the medical expense deduction or through existing 

tax-favored health care accounts. 

Under present law, sports and fitness expenses such as memberships at a fitness facility or participation or instruction in a program of physical exercise are not treated as medical care expenses. 

The Personal Health Investment Today Act (PHIT) expands the 

definition of a medical expense to include expenses for certain 

sports and fitness activities in the tax code with the intention of 

improving health and preventing illness through promoting physical activity and related safety equipment. Under the bill, allowable 

expenditures from existing tax-favored health care accounts, such 

as flexible spending accounts, health savings accounts, and health 

reimbursement arrangements, would be expanded to include certain physical activity expenses. 

While the Committee believes numerous activities, including golfing, hunting, sailing and horseback riding are physical activities, 

these activities do not qualify for the purposes of a qualified medical expense under H.R. 6312. 

C. LEGISLATIVE HISTORY

Background 

H.R. 6312 was introduced on July 6, 2018, and was referred to 

the Committee on Ways and Means. 

Committee action 

The Committee on Ways and Means marked up H.R. 6312, the 

‘‘Personal Health Investment Today Act’’ or the ‘‘PHIT Act’’, on 

July 12, 2018, and ordered the bill, as amended, favorably reported 

(with a quorum being present). 

Committee hearings 

The policy issues associated with Health Savings Accounts 

(HSAs) and need for legislative response were discussed at the following Ways and Means hearings during the 114th and 115th Congresses: 

• Full Committee Hearing on the Tax Treatment of Health 

Care (April 14, 2016) 

• Subcommittee on Health Member Day Hearing on Tax-Related Proposals to Improve Health Care (May 17, 2016) 

5 

1For 2018, the basic limit on annual contributions that can be made to an HSA is $3,450 in 

the case of self-only coverage and $6,900 in the case of family coverage. (The 2018 limitation 

for family coverage was revised by the IRS to permit taxpayers to disregard the $6,850 limitation under the modified inflation adjustment of Pub. L. No. 115–97. Rev. Rul. 2018–27, 2018– 

20 I.R.B. 591, May 14, 2018.) The basic annual contributions limits are increased by $1,000 for 

individuals who have attained age 55 by the end of the taxable year (referred to as ‘‘catch-up’’ 

contributions). 2Sec. 223(c)(2). 

3Sec. 223(g). 

• Subcommittee on Health Hearing on Rising Health Insurance Premiums Under the Affordable Care Act (July 12, 2016) 

• Subcommittee on Health Hearing on Lowering Costs and 

Expanding Access to Health Care through Consumer-Directed 

Health Plans (June 6, 2018) 

II. EXPLANATION OF THE BILL 

A. CERTAIN AMOUNTS PAID FOR PHYSICAL ACTIVITY, FITNESS AND

EXERCISE TREATED AS AMOUNTS PAID FOR MEDICAL CARE

PRESENT LAW

Health savings accounts 

An individual may establish a health savings account (‘‘HSA’’) 

only if the individual is covered under a plan that meets the requirements for a high deductible health plan, as described below. 

In general, HSAs provide tax-favored treatment for current medical 

expenses as well as the ability to save on a tax-favored basis for 

future medical expenses. In general, an HSA is a tax-exempt trust 

or custodial account created exclusively to pay for the qualified 

medical expenses of the account holder and his or her spouse and 

dependents. 

Within limits,1 contributions to an HSA made by or on behalf of 

an eligible individual are deductible by the individual. Contributions to an HSA are excludible from income and employment taxes 

if made by the employer. Earnings in HSAs are not taxable. Distributions from an HSA for qualified medical expenses are not includible in gross income. Distributions from an HSA that are not 

used for qualified medical expenses are includible in gross income 

and are subject to an additional tax of 20 percent. The 20-percent 

additional tax does not apply if the distribution is made after death 

or disability, or after the individual attains the age of Medicare eligibility (age 65). Unlike reimbursements from a flexible spending 

arrangement or health reimbursement arrangement, distributions 

from an HSA are not required to be substantiated by the employer 

or a third party for the distributions to be excludible from income. 

High deductible health plans 

A high deductible health plan is a health plan that has a minimum annual deductible of $1,350 (for 2018) for self-only coverage 

and twice this amount for family coverage, and for which the sum 

of the annual deductible and other annual out-of-pocket expenses 

(other than premiums) for covered benefits does not exceed $6,650 

(for 2018) for self-only coverage and twice this amount for family 

coverage.2 These dollar thresholds are subject to inflation adjustment, based on chained CPI.3

6 

4Sec. 223(c)(1). 

5Sec. 223(c)(1)(B). 

6Sec. 223(c)(3). 

7Sec. 220. 

An individual who is covered under a high deductible health plan 

is eligible to establish an HSA, provided that while such individual 

is covered under the high deductible health plan, the individual is 

not covered under any health plan that (1) is not a high deductible 

health plan and (2) provides coverage for any benefit (subject to 

certain exceptions) covered under the high deductible health plan.4

Various types of coverage are disregarded for this purpose, including coverage of any benefit provided by permitted insurance, 

coverage (whether through insurance or otherwise) for accidents, 

disability, dental care, vision care, or long-term care, as well as certain limited coverage through health flexible savings accounts.5

Permitted insurance means insurance under which substantially 

all of the coverage provided relates to liabilities incurred under 

workers’ compensation laws, tort liabilities, liabilities relating to 

ownership or use of property, or such other similar liabilities as 

specified by the Secretary under regulations. Permitted insurance 

also means insurance for a specified disease or illness, and insurance paying a fixed amount per day (or other period) of hospitalization.6

Archer medical savings accounts 

Like an HSA, an Archer medical savings account (‘‘Archer MSA’’) 

is a tax-exempt trust or custodial account to which tax-deductible 

contributions may be made by individuals with a high deductible 

health plan.7 Only self-employed individuals and employees of 

small employers are eligible to have an Archer MSA. Archer MSAs 

provide tax benefits similar to those provided by HSAs for individuals covered by high deductible health plans. Distributions from an 

Archer MSA for qualified medical expenses are excludible from 

gross income. Distributions from an Archer MSA that are not used 

for qualified medical expenses are includible in gross income and 

are subject to an additional tax of 20 percent. The 20 percent additional tax does not apply if the distribution is made after death or 

disability, or after the individual attains the age of Medicare eligibility (i.e., age 65). 

Qualified medical expenses 

Qualified medical expenses generally are defined under Code section 213(d) and include expenses for diagnosis, cure, mitigation, 

treatment, or prevention of disease, including prescription drugs, 

transportation primarily for and essential to such care, and qualified long-term care expenses. Qualified medical expenses do not include expenses for insurance other than for (1) certain premiums 

paid for long-term care insurance, (2) premiums for health coverage 

during any period of continuation coverage required by Federal 

law, (3) premiums for health care coverage while an individual is 

receiving unemployment compensation under Federal or State law, 

and (4) premiums for individuals who have attained the age of 

Medicare eligibility, other than premiums for Medigap policies. 

7 

8Generally as defined in sec. 152. 

9See sec. 125(d)(2). Subsequent IRS guidance has provided a grace period for the carryover 

of excess benefits or contributions in a health FSA. See, e.g., Notice 2005–42, 2005–23 I.R.B. 

1204 (June 6, 2005). As an alternative to a grace period, Notice 2013–71 permits employers to 

amend the cafeteria plan document to provide for up to $500 of any unused amount as of the 

end of the plan year in a health FSA to be carried over to the following year. 2013–47 I.R.B. 

532 (November 18, 2013). 10 As defined in sec. 152. 

Qualified medical expenses may be incurred by the account 

owner, the spouse of such individual and any dependent 8 including 

qualifying children, or a qualifying relative including (1) a child or 

descendant of a child, (2) a brother, sister, stepbrother or stepsister, (3) the father or mother, or an ancestor of either, (4) a stepfather or stepmother, (5) a son or daughter of a brother or sister 

of the taxpayer, (6) a brother or sister of the father or mother of 

the taxpayer, (7) a son-in-law, daughter-in-law, father-in-law, 

mother-in-law, brother-in-law, or sister-in-law, or (8) an individual 

who, for the taxable year of the taxpayer, has the same principal 

place of abode as the taxpayer and is a member of the taxpayer’s 

household. 

Health flexible spending accounts and health reimbursement arrangements 

In addition to offering health insurance, employers often agree to 

reimburse medical expenses of their employees (and their spouses 

and dependents). These arrangements are commonly used by employers to pay or reimburse employees for medical expenses that 

are not covered by health insurance. These arrangements include 

health flexible spending accounts (‘‘health FSAs’’) and health reimbursement arrangements (‘‘HRAs’’). 

Health FSAs 

Health FSAs typically are funded on a salary reduction basis 

under a cafeteria plan, meaning that employees are given the option to reduce their current cash compensation and instead have 

the amount made available for use in reimbursing the employee for 

his or her medical expenses. If the health FSA meets certain requirements, the compensation that is forgone is not includible in 

gross income or wages for payroll tax purposes. 

Health FSAs that are funded on a salary reduction basis are subject to the requirements for cafeteria plans, including a requirement that amounts remaining in a health FSA at the end of a plan 

year must be forfeited by the employee (referred to as the ‘‘use-itor-lose-it’’ rule).9

HRAs 

HRAs operate in a manner similar to health FSAs, in that they 

are employer-maintained arrangements that reimburse employees 

and their dependents 10 for medical expenses. Some of the rules applicable to HRAs and health FSAs are similar (e.g., the amounts 

in the arrangements can be used only to reimburse medical expenses and not for other purposes), but the rules are not identical. 

In particular, HRAs cannot be funded on a salary reduction basis 

and the use-it-or-lose-it rule does not apply. Thus, amounts remaining at the end of the year may be carried forward to be used to reVerDate Sep 11 2014 06:44 Jul 20, 2018 Jkt 079006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR846.XXX HR846
8 

11Guidance with respect to HRAs, including the interaction of health FSAs and HRAs in the 

case of an individual covered by both, is provided in Notice 2002–45, 2002–2 C.B. 93 (July 15, 

2002). 12See, e.g., Chief Counsel Advice Memorandum 201622031 (May 27, 2016). Under guidance, 

certain expenses may be treated as medical care. For example, taxpayers may deduct the cost 

of a weight loss program if the individual is diagnosed as obese or is directed by a doctor to 

lose weight as treatment for a specific disease. See Rev. Rul. 2002–19, 2002–16 I.R.B. 778 (April 

22, 2002). 

imburse medical expenses in following years.11 Unlike a health 

FSA, an HRA is permitted to reimburse an employee for health insurance premiums. 

Physical activity, fitness, and exercise 

Sports and fitness expenses, such as membership fees at a fitness 

facility or costs associated with participation or instruction in a 

program of physical exercise or physical activity, generally are not 

treated as medical care.12

REASONS FOR CHANGE

The Committee believes that HSAs, Archer MSAs, health FSAs, 

and HRAs are important tools that provide consumers with funds 

set aside (either through their own contributions and/or employer 

contributions, depending on the particular account) for the payment of medical expenses. These tools provide consumers the ability to choose how to spend those funds to pay for medical care. 

Although medical care currently includes amounts paid for the 

prevention of disease, amounts paid for membership at a fitness facility, participation or instruction in a program of physical exercise 

or physical activity, or safety equipment for use in a program of 

physical exercise or physical activity that are widely available and 

contribute to the health of individuals and prevention of disease 

are not treated as medical care. The Committee believes that such 

sports and fitness expenses (except for those related to certain activities that have limited availability) up to certain dollar caps, 

should be treated as medical care that may be paid from any of the 

aforementioned accounts. 

EXPLANATION OF PROVISION

Under the provision, qualified sports and fitness expenses are 

treated as medical care. The term qualified sports and fitness expenses means amounts paid for membership at a fitness facility, 

participation or instruction in a program of physical exercise or 

physical activity, or safety equipment for use in a program (including a self-directed program) of physical exercise or physical activity. The aggregate amount treated as qualified sports and fitness 

expenses with respect to any taxpayer for any taxable year is limited to $500 (twice that amount in the case of a joint return or a 

head of household), and the amount treated as qualified sports and 

fitness expenses with respect to any single item of safety equipment is limited to $250 with respect to any taxpayer for any taxable year. These amounts are adjusted for inflation. Golf, hunting, 

sailing, and horseback riding are not treated as a physical exercise 

or physical activity for purposes of determining qualified sports and 

fitness expenses. Qualified sports and fitness expenses also do not 

include videos, books, or similar materials. 

9 

A fitness facility means a facility providing instruction in a program of physical exercise or physical activity, offering facilities for 

the preservation, maintenance, encouragement, or development of 

physical fitness, or serving as the site of such a program of a State 

or local government, (1) which is not a private club owned and operated by its members, (2) which does not offer facilities for golf, 

hunting, sailing or horseback riding, (3) whose health or fitness facility is not incidental to its overall function and purpose, and (4) 

which is fully compliant with applicable State and Federal anti-discrimination laws. In the case of any program that includes physical 

exercise or physical activity and also other components (such as 

travel and accommodations), special rules apply. 

EFFECTIVE DATE

The provision is effective for taxable years beginning after December 31, 2018. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the House of Representatives, the following statement is made concerning the vote 

of the Committee on Ways and Means during the markup consideration of H.R. 6312, the ‘‘Personal Health Investment Today Act,’’ or 

the ‘‘PHIT Act’’ on July 12, 2018. 

H.R. 6312 was ordered favorably reported to the House of Representatives as amended by an amendment in the nature of a substitute offered by Mr. Roskam by a roll call vote of 28 yeas to 7 

nays. The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Brady .............................. ........... ........... ............. Mr. Neal ............................... ........... X .............

Mr. Johnson ........................... X ........... ............. Mr. Levin .............................. ........... X .............

Mr. Nunes ............................. X ........... ............. Mr. Lewis .............................. ........... X .............

Mr. Reichert .......................... X ........... ............. Mr. Doggett .......................... ........... X .............

Mr. Roskam ........................... X ........... ............. Mr. Thompson ...................... X ........... .............

Mr. Buchanan ....................... X ........... ............. Mr. Larson ............................ ........... X .............

Mr. Smith (NE) ...................... X ........... ............. Mr. Blumenauer ................... ........... ........... .............

Ms. Jenkins ........................... X ........... ............. Mr. Kind ............................... X ........... .............

Mr. Paulsen ........................... X ........... ............. Mr. Pascrell .......................... X ........... .............

Mr. Marchant ........................ X ........... ............. Mr. Crowley .......................... ........... ........... .............

Ms. Black .............................. ........... ........... ............. Mr. Davis .............................. ........... X .............

Mr. Reed ............................... X ........... ............. Ms. Sanchez ......................... ........... ........... .............

Mr. Kelly ................................ X ........... ............. Mr. Higgins .......................... X ........... .............

Mr. Renacci ........................... X ........... ............. Ms. Sewell ............................ X ........... .............

Ms. Noem .............................. X ........... ............. Ms. DelBene ......................... X ........... .............

Mr. Holding ........................... X ........... ............. Ms. Chu ................................ ........... X .............

Mr. Smith (MO) ..................... X ........... .............

Mr. Rice ................................ X ........... .............

Mr. Schweikert ...................... X ........... .............

Ms. Walorski ......................... X ........... .............

Mr. Curbelo ........................... X ........... .............

Mr. Bishop ............................ X ........... .............

Mr. LaHood ............................ X ........... .............

Mr. Wenstrup ........................ X ........... .............

10 

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 6312, as reported. 

The bill, as reported, is estimated to have the following effect on 

Federal fiscal year budget receipts for the period 2019–2028: 

11 

Fiscal Years 

[Millions of Dollars] 

Item 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019–23 2019–28 

Certain Amounts Paid for Physical Activity, Fitness, and Exercise Treated 

as Amounts Paid for Medical Care[1] .................................................... ¥226 ¥335 ¥345 ¥350 ¥355 ¥360 ¥365 ¥382 ¥403 ¥412 ¥1,611 ¥3,533 

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019–23 2019–28 

[1] Estimate includes the following off-budget effects ............................... ¥92 ¥98 ¥99 ¥101 ¥102 ¥104 ¥105 ¥107 ¥108 ¥110 ¥493 ¥1,026 

12 

Pursuant to clause 8 of rule XIII of the Rules of the House of 

Representatives, the following statement is made by the Joint Committee on Taxation with respect to the provisions of the bill amending the Internal Revenue Code of 1986: The gross budgetary effect 

(before incorporating macroeconomic effects) in any fiscal year is 

less than 0.25 percent of the current projected gross domestic product of the United States for that fiscal year; therefore, the bill is 

not ‘‘major legislation’’ for purposes of requiring that the estimate 

include the budgetary effects of changes in economic output, employment, capital stock and other macroeconomic variables. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee further states that the revenue-reducing tax provision involves no new 

tax expenditure. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 6138, as reported. 

As of the filing of this report, the Committee had not received an 

estimate prepared by the Congressional Budget Office (CBO). 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee advises that the findings and 

recommendations of the Committee, based on oversight activities 

under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated into the description portions of this 

report. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

C. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

13 

D. APPLICABILITY OF HOUSE RULE XXI 5(b) 

Rule XXI 5(b) of the Rules of the House of Representatives provides, in part, that ‘‘A bill or joint resolution, amendment, or conference report carrying a Federal income tax rate increase may not 

be considered as passed or agreed to unless so determined by a 

vote of not less than three-fifths of the Members voting, a quorum 

being present.’’ The Committee has carefully reviewed the bill and 

states that the bill does not involve any Federal income tax rate 

increases within the meaning of the rule. 

E. TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Restructuring 

and Reform Act of 1998 (‘‘IRS Reform Act’’) requires the staff of the 

Joint Committee on Taxation (in consultation with the Internal 

Revenue Service and the Treasury Department) to provide a tax 

complexity analysis. The complexity analysis is required for all legislation reported by the Senate Committee on Finance, the House 

Committee on Ways and Means, or any committee of conference if 

the legislation includes a provision that directly or indirectly 

amends the Internal Revenue Code of 1986 and has widespread applicability to individuals or small businesses. 

Pursuant to clause 3(h)(1) of rule XIII of the Rules of the House 

of Representatives, the staff of the Joint Committee on Taxation 

has determined that a complexity analysis is not required under 

section 4022(b) of the IRS Reform Act because the bill contains no 

provisions that amend the Internal Revenue Code of 1986 and that 

have ‘‘widespread applicability’’ to individuals or small businesses, 

within the meaning of the rule. 

F. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND

LIMITED TARIFF BENEFITS

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

G. DUPLICATION OF FEDERAL PROGRAMS

In compliance with Sec. 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program, 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139, or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to section 6104 of title 31, United States Code. 

H. DISCLOSURE OF DIRECTED RULE MAKINGS

In compliance with Sec. 3(i) of H. Res. 5 (115th Congress), the 

following statement is made concerning directed rule makings: The 

Committee advises that the bill requires no directed rule makings 

within the meaning of such section. 

14 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

B. CHANGES IN EXISTING LAW PROPOSED BY THE BILL, AS REPORTED

In compliance with clause 3(e)(1)(B) of rule XIII of the Rules of 

the House of Representatives, changes in existing law proposed by 

the bill, as reported, are shown as follows (existing law proposed 

to be omitted is enclosed in black brackets, new matter is printed 

in italic, existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

Subtitle A—Income Taxes 

* * * * * * * 

CHAPTER 1—NORMAL TAXES AND SURTAXES 

* * * * * * * 

Subchapter B—Computation of Taxable Income 

* * * * * * * 

PART VII—ADDITIONAL ITEMIZED DEDUCTIONS FOR 

INDIVIDUALS 

* * * * * * * 

SEC. 213. MEDICAL, DENTAL, ETC., EXPENSES. 

(a) ALLOWANCE OF DEDUCTION.—There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) 

thereof), to the extent that such expenses exceed 10 percent of adjusted gross income. 

(b) LIMITATION WITH RESPECT TO MEDICINE AND DRUGS.—An 

amount paid during the taxable year for medicine or a drug shall 

be taken into account under subsection (a) only if such medicine or 

drug is a prescribed drug or is insulin. 

(c) SPECIAL RULE FOR DECEDENTS.— 

(1) TREATMENT OF EXPENSES PAID AFTER DEATH.—For purposes of subsection (a), expenses for the medical care of the 

15 

taxpayer which are paid out of his estate during the 1-year period beginning with the day after the date of his death shall 

be treated as paid by the taxpayer at the time incurred. 

(2) LIMITATION.—Paragraph (1) shall not apply if the amount 

paid is allowable under section 2053 as a deduction in computing the taxable estate of the decedent, but this paragraph 

shall not apply if (within the time and in the manner and form 

prescribed by the Secretary) there is filed— 

(A) a statement that such amount has not been allowed 

as a deduction under section 2053, and 

(B) a waiver of the right to have such amount allowed 

at any time as a deduction under section 2053. 

(d) DEFINITIONS.—For purposes of this section— 

(1) The term ‘‘medical care’’ means amounts paid— 

(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any 

structure or function of the body, 

(B) for transportation primarily for and essential to medical care referred to in subparagraph (A), 

(C) for qualified long-term care services (as defined in 

section 7702B(c)), øor¿ 

(D) for insurance (including amounts paid as premiums 

under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and 

(B) or for any qualified long- term care insurance contract 

(as defined in section 7702B(b))ø.¿, or 

(E) for qualified sports and fitness expenses. 

In the case of a qualified long-term care insurance contract (as 

defined in section 7702B(b)), only eligible long-term care premiums (as defined in paragraph (10)) shall be taken into account under subparagraph (D). 

(2) Amounts paid for certain lodging away from home treated 

as paid for medical care 

Amounts paid for lodging (not lavish or extravagant under 

the circumstances) while away from home primarily for and essential to medical care referred to in paragraph (1)(A) shall be 

treated as amounts paid for medical care if— 

(A) the medical care referred to in paragraph (1)(A) is 

provided by a physician in a licensed hospital (or in a medical care facility which is related to, or the equivalent of, 

a licensed hospital), and 

(B) there is no significant element of personal pleasure, 

recreation, or vacation in the travel away from home. 

The amount taken into account under the preceding sentence 

shall not exceed $50 for each night for each individual. 

(3) Prescribed drug 

The term ‘‘prescribed drug’’ means a drug or biological which 

requires a prescription of a physician for its use by an individual. 

(4) Physician 

The term ‘‘physician’’ has the meaning given to such term by 

section 1861(r) of the Social Security Act (42 U.S.C. 1395x(r)). 

(5) Special rule in the case of child of divorced parents, etc. 

16 

Any child to whom section 152(e) applies shall be treated as 

a dependent of both parents for purposes of this section. 

(6) In the case of an insurance contract under which 

amounts are payable for other than medical care referred to in 

subparagraphs (A), (B), and (C) of paragraph (1)— 

(A) no amount shall be treated as paid for insurance to 

which paragraph (1)(D) applies unless the charge for such 

insurance is either separately stated in the contract, or 

furnished to the policyholder by the insurance company in 

a separate statement, 

(B) the amount taken into account as the amount paid 

for such insurance shall not exceed such charge, and 

(C) no amount shall be treated as paid for such insurance if the amount specified in the contract (or furnished 

to the policyholder by the insurance company in a separate 

statement) as the charge for such insurance is unreasonably large in relation to the total charges under the contract. 

(7) Subject to the limitations of paragraph (6), premiums 

paid during the taxable year by a taxpayer before he attains 

the age of 65 for insurance covering medical care (within the 

meaning of subparagraphs (A), (B), and (C) of paragraph (1)) 

for the taxpayer, his spouse, or a dependent after the taxpayer 

attains the age of 65 shall be treated as expenses paid during 

the taxable year for insurance which constitutes medical care 

if premiums for such insurance are payable (on a level payment basis) under the contract for a period of 10 years or more 

or until the year in which the taxpayer attains the age of 65 

(but in no case for a period of less than 5 years). 

(8) The determination of whether an individual is married at 

any time during the taxable year shall be made in accordance 

with the provisions of section 6013(d) (relating to determination of status as husband and wife). 

(9) COSMETIC SURGERY.— 

(A) IN GENERAL.—The term ‘‘medical care’’ does not include cosmetic surgery or other similar procedures, unless 

the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or 

trauma, or disfiguring disease. 

(B) COSMETIC SURGERY DEFINED.—For purposes of this 

paragraph, the term ‘‘cosmetic surgery’’ means any procedure which is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. 

(10) ELIGIBLE LONG-TERM CARE PREMIUMS.— 

(A) IN GENERAL.—For purposes of this section, the term 

‘‘eligible long-term care Premiums’’ means the amount 

paid during a taxable year for any qualified long-term care 

insurance contract (as defined in section 7702B(b)) covering an individual, to the extent such amount does not exceed the limitation determined under the following table: 

17 

In the case of an individual with an attained age before the close of 

the taxable year of: The limitation is: 

40 or less $200

More than 40 but not more than 50 375

More than 50 but not more than 60 750

More than 60 but not more than 70 2,000

More than 70 2,500. 

(B) INDEXING.— (i) IN GENERAL.—In the case of any taxable year beginning in a calendar year after 1997, each dollar 

amount contained in subparagraph (A) shall be increased by the medical care cost adjustment of such 

amount for such calendar year. If any increase determined under the preceding sentence is not a multiple 

of $10, such increase shall be rounded to the nearest 

multiple of $10. 

(ii) MEDICAL CARE COST ADJUSTMENT.—For purposes 

of clause (i), the medical care cost adjustment for any 

calendar year is the percentage (if any) by which— 

(I) the medical care component of the C-CPI-U 

(as defined in section 1(f)(6)) for August of the preceding calendar year, exceeds 

(II) such component of the CPI (as defined in 

section 1(f)(4)) for August of 1996, multiplied by 

the amount determined under section 1(f)(3)(B). 

The Secretary shall, in consultation with the Secretary 

of Health and Human Services, prescribe an adjustment which the Secretary determines is more appropriate for purposes of this paragraph than the adjustment described in the preceding sentence, and the adjustment so prescribed shall apply in lieu of the adjustment described in the preceding sentence. 

(11) Certain payments to relatives treated as not paid for 

medical care --An amount paid for a qualified long-term care 

service (as defined in section 7702B(c)) provided to an individual shall be treated as not paid for medical care if such 

service is provided— 

(A) by the spouse of the individual or by a relative (directly or through a partnership, corporation, or other entity) unless the service is provided by a licensed professional 

with respect to such service, or 

(B) by a corporation or partnership which is related 

(within the meaning of section 267(b) or 707(b)) to the individual. 

For purposes of this paragraph, the term ‘‘relative’’ means an 

individual bearing a relationship to the individual which is described in any of subparagraphs (A) through (G) of section 

152(d)(2). This paragraph shall not apply for purposes of section 105(b) with respect to reimbursements through insurance. 

(12) QUALIFIED SPORTS AND FITNESS EXPENSES.— 

(A) IN GENERAL.—The term ‘‘qualified sports and fitness 

expenses’’ means amounts paid for— 

(i) membership at a fitness facility, 

18 

(ii) participation or instruction in a program of physical exercise or physical activity, or 

(iii) safety equipment for use in a program (including 

a self-directed program) of physical exercise or physical 

activity. 

(B) DOLLAR LIMITATIONS.— (i) OVERALL LIMITATION.—The aggregate amount 

treated as qualified sports and fitness expenses with respect to any taxpayer for any taxable year shall not exceed $500 (twice such amount in the case of a joint return or a head of household (as defined in section 

2(b))). 

(ii) SAFETY EQUIPMENT.—The amount treated as 

qualified sports and fitness expenses with respect to 

any item of safety equipment described in subparagraph (A)(iii) shall not exceed $250. 

(C) CERTAIN EXCLUSIONS.— 

(i) IN GENERAL.—Golf, hunting, sailing, and horseback riding shall not be treated as a physical exercise 

or physical activity. 

(ii) EXERCISE VIDEOS, ETC.—Qualified sports and fitness expenses shall not include videos, books, or similar materials. 

(D) FITNESS FACILITY DEFINED.—For purposes of subparagraph (A)(i), the term ‘‘fitness facility’’ means a facility— 

(i) providing instruction in a program of physical exercise or physical activity, offering facilities for the 

preservation, maintenance, encouragement, or development of physical fitness, or serving as the site of such 

a program of a State or local government, 

(ii) which is not a private club owned and operated 

by its members, 

(iii) which does not offer facilities for any activity described in subparagraph (C)(i), 

(iv) whose health or fitness facility is not incidental 

to its overall function and purpose, and 

(v) which is fully compliant with applicable State 

and Federal anti-discrimination laws. 

(E) PROGRAMS WHICH INCLUDE COMPONENTS OTHER THAN

PHYSICAL EXERCISE AND PHYSICAL ACTIVITY.—Rules similar 

to the rules of paragraph (6) shall apply in the case of any 

program that includes physical exercise or physical activity 

and also other components. For purposes of the preceding 

sentence, travel and accommodations shall be treated as an 

other component. 

(F) INFLATION ADJUSTMENT.—In the case of any taxable 

year beginning in a calendar year after 2019, the $500 

amount in subparagraph (B)(i) and the $250 amount in 

subparagraph (B)(ii) shall each be increased by an amount 

equal to— 

(i) such dollar amount, multiplied by 

(ii) the cost-of-living adjustment determined under 

section 1(f)(3) for the calendar year in which such taxable year begins, determined by substituting ‘‘calendar 

19 

year 2018’’ for ‘‘calendar year 2016’’ in subparagraph 

(A)(ii) thereof. 

If any increase determined under the preceding sentence is 

not a multiple of $10, such increase shall be rounded to the 

next lowest multiple of $10. 

(e) EXCLUSION OF AMOUNTS ALLOWED FOR CARE OF CERTAIN DE- PENDENTS.—Any expense allowed as a credit under section 21 shall 

not be treated as an expense paid for medical care. 

(f) SPECIAL RULES FOR 2013 THROUGH 2018.—In the case of any 

taxable year— 

(1) beginning after December 31, 2012, and ending before 

January 1, 2017, in the case of a taxpayer if such taxpayer or 

such taxpayer’s spouse has attained age 65 before the close of 

such taxable year, and 

(2) beginning after December 31, 2016, and ending before 

January 1, 2019, in the case of any taxpayer, 

subsection (a) shall be applied with respect to a taxpayer by substituting ‘‘7.5 percent’’ for ‘‘10 percent’’. 

* * * * * * * 

(20) 

MINORITY VIEWS 

H.R. 6312 Personal Health Investment Today Act (PHIT) Act 

H.R. 6312 (Smith, R–MO and Kind, D–WI) allows individuals to 

use Health Savings Account (HSA) and Flexible Spending Account 

(FSA) funds up to $500 for an individual ($1000 for a family) to 

pay for certain fitness expenses, including fitness facility membership; participation in a physical activity (such as gym memberships 

or sports leagues); and safety equipment, such as bike helmets. The 

bill excludes certain sports, such as golf and hunting, as well as exercise instruction materials, such as videos and books. 

H.R. 6312 does not undo sabotage, premium hikes, and benefit 

cuts Republicans have caused over the past 18 months. This bill 

was one in a series of 11 bills the Committee marked up that Republicans claim will help lower health care costs for consumers. 

This legislation does not undo the disruption and sabotage the Republicans have continued to inflict on the American health care 

system. Instead of focusing on expansion of HSAs and High-Deductible Health Plans (HDHPs), Democrats encourage the Committee to redirect its attention to legislation that could actually ensure that uninsured, low-income, and vulnerable people have real 

access to care. For example H.R. 5155, sponsored by Reps. Pallone, 

Neal, and Scott would protect people with pre-existing conditions, 

help lower premiums for Americans, and improve affordability of 

health coverage. 

Legislation busts the deficit to benefit the wealthy, again. Altogether the 11 bills the Committee marked up would add another 

$92 billion in unoffset tax cuts to the deficit. Republican attempts 

to expand HSAs (and encourage more enrollment in plans with 

high deductibles, covering very few up-front health costs) are a continuation of their platform of shifting families into health plans 

that provide fewer health benefits and higher out-of-pocket costs— 

while providing greater tax benefits for higher-income individuals 

and corporate-special interests. According to 2014 Treasury data, 

only five percent of families with adjusted gross income of under 

$100,000 held money in an HSA, and those users’ average account 

balances were $1,700. 

HDHPs and HSAs do not promote healthy behavior and this legislation further directs consumers away from care. It is widely acknowledged that HSAs and HDHPs lead consumers to delay care. 

They do not encourage individuals to make better health care decisions, as Republicans’ ‘‘skin in the game’’ talking points assert. 

Decades of research shows that exposure to high out-of-pocket costs 

lead consumers to delay or forgo both necessary and unnecessary 

care. Delaying care and increasing costs run counter to Democratic 

policy goals of better coordinated, high-value affordable care for 

American families. This legislation demonstrates why HDHPs in 

21 

their current format do not allow consumers to see value in their 

health insurance. 

According to the American Hospital Association, ‘‘Hospitals and 

health systems report that increased enrollment in HDHPs over 

the past several years has reduced access to care and subjected patients to costs they cannot afford. In addition, patients enrolled in 

HDHPs appear to delay care until they have reached their deductible or are in an emergency situation, which could lead to poorer 

health outcomes.’’ 

H.R. 6312 allows a tax preference for services that are not directly related to health care. The bill allows an HSA or FSA to be 

used for services that might never be used or might not directly improve an individual’s health. Because this bill allows consumers to 

use tax-preferred services for leisure activities, reducing the 

amount available to address the high deductible that is supposed 

to drive better health purchases, it further undermines the Republican talking point about consumers having ‘‘skin in the game.’’ 

This provision is a tax break—plain and simple. 

HSAs mostly benefit high-income taxpayers while doing little to 

help moderate-income families or the uninsured. High-income individuals can best afford to save for health care expenses and are 

therefore the most likely to contribute to HSAs. Higher income filers are much more likely to establish HSAs than lower income filers—70 percent of HSA contributions come from households with 

incomes over $100,000, according to the Joint Commission on Taxation (JCT)—and they are also likelier to max out their contributions. Additionally, high-income people receive the biggest tax benefit for each dollar contributed to an HSA because the value of a 

tax deduction rises with an individual’s tax bracket. More than 44 

percent of Americans cannot afford a $400 emergency visit. For 

these families, it is unlikely that they have excess income to devote 

to a tax preferred account. JCT estimates the cost of this bill to be $3.5 billion over 10 years. 

With this bill, Republicans are adding more tax cuts and increasing 

the deficit. Republicans are using the deficit, which they keep making larger with cuts for the wealthy, to justify their deep cuts to 

Medicare and Medicaid. Republicans are already proposing to cut 

Medicare and Medicaid by nearly a trillion dollars to try to pay for 

the tax cuts they’ve already enacted. This bill will only add fuel to 

the fire. 

RICHARD E. NEAL, 

Ranking Member. 

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