19–006 

112TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 112–517 

HEALTH SAVINGS ACCOUNTS IMPROVEMENTS ACT OF 

2012 

JUNE 5, 2012.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. CAMP, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 5858] 

[Including cost estimate of the Congressional Budget Office] 

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

bill (H.R. 5858) to amend the Internal Revenue Code of 1986 to improve health savings accounts, and for other purposes, 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 ........................................................................... 3 

II. Explanation of Provision ............................................................................... 5 

A. Saver’s Credit for Contributions to Health Savings Accounts 

(sec. 2 of the bill and sec. 25B of the Code) .................................. 5 

B. Special Rule for Certain Medical Expenses Incurred Before Establishment of Health Savings Account (sec. 3 of the bill and 

sec. 223 of the Code) ....................................................................... 8 

C. Allow Both Spouses to Make Catch-Up Contributions to the 

Same HSA (sec. 4 of the bill and sec. 223 of the Code) ............... 9 

D. Individuals Eligible for Veterans Benefits for a Service-Connected Disability (sec. 5 of the bill and sec. 223 of the Code) ..... 11 

E. Distributions by Certain Early Retirees for Health Coverage 

Treated as Qualified Medical Expense (sec. 6 of the bill and 

sec. 223 of the Code) ....................................................................... 12 

III. Votes of the Committee ................................................................................. 13 

IV. Budget Effects of the Provision .................................................................... 14 

V. Other Matters To Be Discussed Under the Rules of the House ................ 21 


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VI. Changes in Existing Law Made by the Bill, as Reported ........................... 22 

VII. Dissenting Views ........................................................................................... 27 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE, ETC. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Health Savings Accounts Improvements Act of 2012’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title, etc. 

Sec. 2. Saver’s credit for contributions to health savings accounts. 

Sec. 3. Special rule for certain medical expenses incurred before establishment of account. 

Sec. 4. Allow both spouses to make catch-up contributions to the same health savings account. 

Sec. 5. Individuals eligible for veterans benefits for a service-connected disability. 

Sec. 6. Distributions by certain early retirees for health coverage treated as qualified medical expense. 

SEC. 2. SAVER’S CREDIT FOR CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNTS. 

(a) ALLOWANCE OF CREDIT.—Subsection (a) of section 25B of the Internal Revenue 

Code of 1986 is amended by inserting ‘‘aggregate qualified HSA contributions and’’ 

after ‘‘so much of the’’. 

(b) QUALIFIED HSA CONTRIBUTIONS.—Subsection (d) of section 25B of such Code 

is amended by redesignating paragraph (2) as paragraph (3) and by inserting after 

paragraph (1) the following new paragraph: 

‘‘(2) QUALIFIED HSA CONTRIBUTIONS.—The term ‘qualified HSA contribution’ 

means, with respect to any taxable year, any contribution to a health savings 

account (as defined in section 223(d)(1)) if— 

‘‘(A) such contribution is allowable as a deduction to the taxpayer under 

section 223(a) for such taxable year, or 

‘‘(B) such contribution is made by an employer of the taxpayer at the election of the taxpayer under a cafeteria plan (as defined in section 125(d)) 

and is not includible in the gross income of the taxpayer by reason of section 125.’’. 

(c) REPORTING OF HSA ELECTIVE CONTRIBUTIONS.—Paragraph (12) of section 

6051(a) of such Code is amended to read as follows: 

‘‘(12) the total amount contributed to health savings accounts (as defined in 

section 223(d)) of the employee or the employee’s spouse and the portion of such 

total amount contributed at the election of the employee under any cafeteria 

plan (as defined in section 125(d)),’’. 

(d) CONFORMING AMENDMENTS.—Section 25B(d)(3) of such Code, as redesignated 

by subsection (b), is amended— 

(1) by striking the first sentence of subparagraph (A) and inserting the following: ‘‘The aggregate qualified retirement savings contributions determined 

under paragraph (1) and qualified HSA contributions determined under paragraph (2) shall be reduced (but not below zero) by the aggregate distributions 

received by the individual during the testing period from any entity of a type 

to which contributions under paragraph (1) or paragraph (2) (as the case may 

be) may be made.’’, and 

(2) by inserting ‘‘223(f)(1) or (3),’’ after ‘‘section 72(p),’’ in subparagraph (C)(i). 

(e) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2012. 

SEC. 3. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT. 

(a) IN GENERAL.—Paragraph (2) of section 223(d) of the Internal Revenue Code 

of 1986 is amended by adding at the end the following new subparagraph: 

‘‘(D) TREATMENT OF CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT.—If a health savings account is established during 

the 60-day period beginning on the date that coverage of the account beneficiary under a high deductible health plan begins, then, solely for purposes 

of determining whether an amount paid is used for a qualified medical expense, such account shall be treated as having been established on the date 

that such coverage begins.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall apply with respect to coverage beginning after the date of the enactment of this Act. 

SEC. 4. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME HEALTH 

SAVINGS ACCOUNT. 

(a) IN GENERAL.—Paragraph (5) of section 223(b) of the Internal Revenue Code 

of 1986 is amended to read as follows: 

‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS WITH FAMILY COVERAGE.— 


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‘‘(A) IN GENERAL.—In the case of individuals who are married to each 

other, if both spouses are eligible individuals and either spouse has family 

coverage under a high deductible health plan as of the first day of any 

month— 

‘‘(i) the limitation under paragraph (1) shall be applied by not taking 

into account any other high deductible health plan coverage of either 

spouse (and if such spouses both have family coverage under separate 

high deductible health plans, only one such coverage shall be taken into 

account), 

‘‘(ii) such limitation (after application of clause (i)) shall be reduced 

by the aggregate amount paid to Archer MSAs of such spouses for the 

taxable year, and 

‘‘(iii) such limitation (after application of clauses (i) and (ii)) shall be 

divided equally between such spouses unless they agree on a different 

division. 

‘‘(B) TREATMENT OF ADDITIONAL CONTRIBUTION AMOUNTS.—If both spouses 

referred to in subparagraph (A) have attained age 55 before the close of the 

taxable year, the limitation referred to in subparagraph (A)(iii) which is 

subject to division between the spouses shall include the additional contribution amounts determined under paragraph (3) for both spouses. In any 

other case, any additional contribution amount determined under paragraph (3) shall not be taken into account under subparagraph (A)(iii) and 

shall not be subject to division between the spouses.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable 

years beginning after December 31, 2012. 

SEC. 5. INDIVIDUALS ELIGIBLE FOR VETERANS BENEFITS FOR A SERVICE-CONNECTED DISABILITY. 

(a) IN GENERAL.—Paragraph (1) of section 223(c) of the Internal Revenue Code of 

1986 is amended by adding at the end the following new subparagraph: 

‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR CERTAIN VETERANS BEN- EFITS.—An individual shall not fail to be treated as an eligible individual 

for any period merely because the individual receives hospital care or medical services under any law administered by the Secretary of Veterans Affairs for a service-connected disability (within the meaning of section 

101(16) of title 38, United States Code).’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall apply to months 

beginning after December 31, 2012. 

SEC. 6. DISTRIBUTIONS BY CERTAIN EARLY RETIREES FOR HEALTH COVERAGE TREATED AS 

QUALIFIED MEDICAL EXPENSE. 

(a) IN GENERAL.—Subparagraph (C) of section 223(d)(2) of the Internal Revenue 

Code of 1986 is amended by striking ‘‘or’’ at the end of clause (iii), by striking the 

period at the end of clause (iv) and inserting ‘‘, or’’, and by adding at the end the 

following new clause: 

‘‘(v) in the case of an account beneficiary who has attained age 55 but 

not the age specified in section 1811 of the Social Security Act, any 

group health plan (as defined in section 5000(b)(1)) in which such account beneficiary is enrolled by reason of being a former employee or 

a surviving spouse of a former employee.’’. 

(b) EFFECTIVE DATE.—The amendments made by this section shall apply to 

amounts paid for coverage for periods after December 31, 2012. 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

The bill, H.R. 5858, as reported by the Committee on Ways and 

Means, provides for various improvements to Health Savings Accounts (‘‘HSAs’’) in order to make them more attractive to various 

populations of consumers. 

B. BACKGROUND AND NEED FOR LEGISLATION

In 2011, 13.5 million Americans maintained a Health Savings 

Account (‘‘HSA’’), and the number of such accounts has been growing by over 10 percent annually for several years. According to The 

Mercer National Survey of Employer Sponsored Plans 2011 report: 


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‘‘This was the biggest one-year increase for CDHPs [Consumer Directed Health Plans] since 2007. . . . With a 40 percent increase 

in the number of large employers offering CDHPs in 2012, it seems 

safe to say that the future of CDHPs has arrived.’’ The strong, 

steady growth of HSAs indicates that consumers value these accounts and CDHPs. 

HSAs and CDHPs encourage good health and health care policy. 

By encouraging individuals to plan, shop, and save for their own 

health care needs, patients have more control over their own health 

care. According to the Employee Benefits Research Institute, individuals utilizing CDHPs are more likely to use wellness programs. 

A recent study published in the May 2012 edition of Health Affairs 

estimated that CDHPs and HSAs have the potential to save $57 

billion in annual health care costs. The authors of the Health Affairs article, ‘‘Growth of Consumer-Directed Health Plans to OneHalf of All Employer-Sponsored Insurance Could Save $57 Billion 

Annually,’’ concluded that ‘‘[o]ur findings that reductions in spending occur through lower spending per episode, more use of generic 

versus brand-name drugs, less use of specialists, and lower inpatient hospitalization suggest that these plans do induce changes in 

treatment choices and not just access.’’ 

To support continued HSA growth, legislation is needed to make 

these accounts more attractive to populations that, for various reasons, receive limited benefits from existing incentives. 

C. LEGISLATIVE HISTORY

Background 

H.R. 5858 was introduced on May 29, 2012, and was referred to 

the Committee on Ways and Means. 

Committee action 

The Committee on Ways and Means marked up H.R. 5858 on 

May 31, 2012, and ordered the bill, as amended, favorably reported 

(with a quorum being present). 

Committee hearings 

The impact of HSAs on health care and policy issues surrounding 

health savings accounts have been discussed at six committee hearings during the 112th Congress. 

• Full Committee Hearing on the Health Care Law’s Impact on 

Jobs, Employers, and the Economy (January 26, 2011) 

• Full Committee Hearing on the President’s Fiscal Year 2012 

Budget Proposal with U.S. Department of Health and Human Services Secretary Kathleen Sebelius (February 16, 2011) 

• Subcommittee on Select Revenue Measures Hearing on the 

Tax-Related Provision of H.R. 3 (March 16, 2011) 

• Subcommittee on Oversight Hearing on Internal Revenue Service Operations and the 2011 Tax Return Filing Season (March 31, 

2011) 

• Full Committee Hearing on How the Tax Code’s Burdens on 

Individuals and Families Demonstrate the Need for Comprehensive 

Tax Reform (April 13, 2011) 


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1Sec. 223(a). 

• Subcommittee on Health Hearing on The Individual and Employer Mandates in the Democrats’ Health Care Law (March 29, 

2012) 

II. EXPLANATION OF PROVISION 

A. SAVER’S CREDIT FOR CONTRIBUTIONS TO HEALTH SAVINGS

ACCOUNTS (sec. 2 of the bill and sec. 25B of the Code) 

PRESENT LAW

Health savings accounts 

General rules 

An individual with a high deductible health plan (and no other 

health plan other than a plan that provides certain permitted insurance or permitted coverage) may establish a health savings account (‘‘HSA’’). In general, HSAs provide tax-favored treatment for 

current medical expenses as well as the ability to save on a taxfavored basis for future medical expenses. In general, HSAs are 

tax-exempt trusts or custodial accounts created exclusively to pay 

for the qualified medical expenses of the account holder and his or 

her spouse and dependents. Thus, earnings on amounts in HSAs 

are not taxable. 

Subject to limits, contributions to an HSA made by or on behalf 

of an eligible individual are deductible by the individual.1 Contributions made by an employer to an HSA are excludible from income and wages for employment tax purposes. For 2012, the maximum aggregate annual contribution that can be made to an HSA 

is $3,100 in the case of self-only coverage and $6,250 in the case 

of family coverage. The annual contribution 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’’). An excise tax 

applies to contributions in excess of the maximum contribution 

amount for the HSA unless the excess contributions (and earnings 

allocable thereto) are distributed no later than the due date for the 

individual’s Federal income tax return for the year. 

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

Cafeteria plan 

A cafeteria plan is a separate written plan of an employer under 

which all participants are employees, and participants are permitted to choose among at least one permitted taxable benefit (for 

example, current cash compensation) and at least one qualified 

benefit (generally an employer-provided benefit excludible from 

gross income, such as employer-provided health coverage). If an 

employee receives a qualified benefit based on his or her election 

between the qualified benefit and a taxable benefit under a cafeVerDate Mar 15 2010 03:23 Jun 08, 2012 Jkt 019006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR517.XXX HR517

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2Sec. 125(a). 

3Sec. 6051(a)(12). 

4Sec. 25B. 

teria plan, the qualified benefit generally is not includible in gross 

income.2 The amount of the cash compensation forgone pursuant to 

an election under a cafeteria plan is generally referred to as a salary reduction contribution. One of the choices that may be offered 

under a cafeteria plan is the choice between cash compensation and 

the employer making salary reduction contributions to an HSA. 

W–2 reporting requirements 

An employer must include the amount of any contributions made 

to an employee’s HSA on the employee’s Form W–2.3 There is no 

requirement to separate on the Form W–2 the amount of any salary reduction contribution to an HSA under a cafeteria plan from 

any other contribution made by an employer to an HSA. 

Saver’s credit 

Present law provides a nonrefundable tax credit for eligible taxpayers who make qualified retirement savings contributions.4 Subject to AGI limits, the credit is available to individuals who are 18 

or older, other than individuals who are full-time students or 

claimed as a dependent on another taxpayer’s return. The AGI limits for 2012 (as indexed for inflation) are $57,500 for married taxpayers filing joint returns, $43,125 for head of household taxpayers, 

and $28,750 for single taxpayers and married taxpayers filing separate returns. 

For purposes of the credit, qualified retirement savings contributions include (1) elective deferrals to a section 401(k) plan, a section 403(b) plan, a governmental section 457 plan, a SIMPLE IRA, 

or a SEP; (2) contributions to a traditional or Roth IRA; and (3) 

voluntary after-tax employee contributions to a qualified retirement plan or annuity or a section 403(b) plan. The maximum 

amount of qualified retirement savings contributions taken into account for purposes of the credit is $2,000. The amount of any contribution eligible for the credit is reduced by distributions received 

by the taxpayer (or by the taxpayer’s spouse if the taxpayer files 

a joint return) from any plan or IRA to which eligible contributions 

can be made during the taxable year for which the credit is 

claimed, the two taxable years prior to the year the credit is 

claimed, and during the period after the end of the taxable year for 

which the credit is claimed and prior to the due date for filing the 

taxpayer’s return for the year. Certain distributions are disregarded for purposes of this rule, such as corrective distributions 

of qualified retirement savings contributions. Distributions that are 

rolled over to another retirement plan do not affect the credit. 

The credit is a percentage of the taxpayer’s qualified retirement 

savings contributions up to $2,000. The credit percentage depends 

on the AGI of the taxpayer, varying from 10 percent to 50 percent, 

as shown in the table below. The credit is in addition to any deduction or exclusion that would otherwise apply with respect to the 

contribution. The credit offsets minimum tax liability as well as 

regular tax liability. 


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TABLE 1.—CREDIT RATES FOR SAVER’S CREDIT (FOR 2012) 

Joint filers Heads of households All other filers Credit rate 

$0–$34,500 ............................ $0–$25,875 .......................... $0–$17,250 .......................... 50 percent. 

$34,501–$37,500 ................... $25,876–$28,125 ................. $17,251–$18,750 ................. 20 percent. 

$37,501–$57,500 ................... $28,126–$43,125 ................. $18,751–$28,750 ................. 10 percent. 

REASONS FOR CHANGE

The Committee believes that more should be done to encourage 

low-income taxpayers to take advantage of HSAs. To provide an additional tax benefit for contributions to HSAs for low-income taxpayers, the bill makes contributions to HSAs eligible contributions 

for the saver’s credit. 

EXPLANATION OF PROVISION

Under the provision, deductible contributions to an HSA made by 

a taxpayer and salary reduction contributions under a cafeteria 

plan made by an employer to an HSA for the taxpayer qualify for 

the saver’s credit. These HSA contributions are aggregated with 

qualified retirement savings contributions to determine the amount 

of credit to which a taxpayer is entitled. Thus, the present law 

limit of $2,000 applies to aggregate contributions (both HSA contributions and qualified retirement savings contributions) taken 

into account in determining the amount of the credit. 

HSA contributions are generally subject to the same rules as 

apply to qualified retirement savings contributions including the 

reduction in the amount of qualified contributions due to distributions received by the taxpayer (or by the taxpayer’s spouse if the 

taxpayer files a joint return with the spouse) during certain periods. However, distributions from an HSA used for qualified medical 

expenses are disregarded in determining the amount by which 

qualified contributions are reduced for distributions. Further, as in 

the case of corrective distributions of qualified retirement savings 

contributions, distributions of excess HSA contributions plus allocable earnings (made before the due date of the taxpayer’s Federal 

income tax return) are also disregarded in determining the amount 

by which qualified contributions are reduced for distributions. 

In order to identify salary reduction contributions to an HSA 

under a cafeteria plan for purposes of the saver’s credit, the provision also includes a requirement that the employer separately state 

on an employee’s Form W–2 the amount of salary reduction contributions made to an HSA under a cafeteria plan. 

EFFECTIVE DATE

The provision applies for taxable years beginning after December 

31, 2012. 


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5Sec. 223. Generally, a high deductible health plan is a health plan that, for 2012, has an annual deductible that is at least $1,200 for self-only coverage or $2,400 for family coverage and 

that has an out-of-pocket expense limit that is no more than $6,050 in the case of self-only coverage and $12,100 in the case of family coverage. Out-of-pocket expenses include deductibles, 

co-payments, and other amounts (other than premiums) that the individual must pay for covered benefits under the plan. A plan does not fail to be a high deductible health plan by reason 

of failing to have a deductible for preventive care. 6Q&A–26 of Notice 2004–2, 2004–1 C.B. 269. 

B. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT (sec. 3 of the 

bill and sec. 223 of the Code) 

PRESENT LAW

Health savings accounts 

An individual with a high deductible health plan (and no other 

health plan other than a plan that provides certain permitted insurance or permitted coverage) may establish a health savings account (‘‘HSA’’).5 In general, HSAs provide tax-favored treatment for 

current medical expenses as well as the ability to save on a taxfavored basis for future medical expenses. In general, HSAs are 

tax-exempt trusts or custodial accounts created exclusively to pay 

for the qualified medical expenses of the account holder and his or 

her spouse and dependents. Thus, earnings on amounts in HSAs 

are not taxable. 

Subject to limits, 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 wages for employment tax purposes if made by the employer. For 2012, the maximum aggregate annual contribution that can be made to an HSA 

is $3,100 in the case of self-only coverage and $6,250 in the case 

of family coverage. The annual contribution 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’’). Contributions, including catch-up contributions, cannot be made once an individual is enrolled in Medicare. 

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

In order for a distribution from as an HSA to be excludible as 

a payment for a qualified medical expense, the medical expense 

must be incurred on or after the date that the HSA is established.6

Thus, a distribution from an HSA is not excludible as payment 

used for a qualified medical expense if the medical expense is incurred after a taxpayer enrolls in a high deductible health plan but 

before the taxpayer establishes an HSA. 

REASONS FOR CHANGE

The Committee continues to believe that high deductible health 

plans and the related HSAs will help reduce health care costs. The 

Committee has identified certain cases where it believes that the 

operation of HSAs can be improved. One such case involves the 


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typical lag between obtaining coverage under a high deductible 

health plan and the establishment of an HSA. 

Recognizing this lag, the Committee believes it is appropriate to 

allow medical expenses incurred after coverage is obtained under 

a HDHP but prior to the establishment of the HSA to be paid for 

from the HSA and to be excludible from income, provided the HSA 

is established within 60 days of obtaining coverage under a HDHP. 

EXPLANATION OF PROVISION

Under the provision, if an HSA is established during the 60-day 

period beginning on the date that an individual’s coverage under 

a high deductible health plan begins, then the HSA is treated as 

having been established on the date that such coverage begins for 

purposes of determining if an expense incurred is a qualified medical expense. Thus, if a taxpayer establishes an HSA within 60 

days of the date that the taxpayer’s coverage under a high deductible health plan begins, any distribution from an HSA used as a 

payment for a medical expense incurred during that 60–day period 

after the high deductible health plan coverage began is excludible 

from gross income as a payment used for a qualified medical expense even though the expense was incurred before the date that 

the HSA was established. 

EFFECTIVE DATE

The provision applies with respect to high deductible health plan 

coverage commencing after the date of enactment. 

C. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO

THE SAME HSA (sec. 4 of the bill and sec. 223 of the Code) 

PRESENT LAW

An individual with a high deductible health plan and no other 

health plan (other than a plan that provides certain permitted insurance or permitted coverage) may establish a health savings account (‘‘HSA’’). In general, HSAs provide tax-favored treatment for 

current medical expenses as well as the ability to save on a taxfavored basis for future medical expenses. In general, HSAs are 

tax-exempt trusts or custodial accounts created exclusively to pay 

for the qualified medical expenses of the account holder and his or 

her spouse and dependents. Thus, earnings on amounts in HSAs 

are not taxable. 

Subject to limits, contributions to an HSA made by or on behalf 

of an eligible individual are deductible in determining adjusted 

gross income of the individual (that is, an ‘‘above-the-line’’ deduction). Contributions to an HSA by an employer for an employee (including salary reduction contributions made through a cafeteria 

plan) are excludible from income and from wages for employment 

tax purposes. 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, disability, or the individual attains the age of 

Medicare eligibility (i.e., age 65). 


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7 Under section 4973, an excise tax applies to contributions in excess of the maximum contribution amount for the HSA. The excise tax generally is equal to six percent of the cumulative 

amount of excess contributions that are not distributed from the HSA. 8 Contributions, including catch-up contributions, cannot be made once an individual is enrolled in Medicare. 9 Under a special rule, an individual who is an eligible individual during the last month of 

a taxable year is treated as having been an eligible individual for every month in the taxable 

year for purposes of computing the amount that may be contributed to the HSA for the year. 

Thus, the individual may contribute the maximum aggregate annual contribution amount. However, if the individual ceases to be an eligible individual within a certain period, contributions 

that could not otherwise have been made are generally includible in income and are subject to 

a 10-percent additional tax. 10 Notice 2004–50, 2004–2 C.B. 196, Q&A–63. 11 Notice 2004–50, Q&A–32. Funds from that HSA can be used to pay qualified medical expenses for either spouse on a tax-free basis. Notice 2004–50, Q&A–36. 12 Notice 2008–59, 2008–2 C.B. 123, Q&A–22. 

For 2012, the maximum aggregate annual contribution that can 

be made to an HSA is $3,100 in the case of self-only coverage and 

$6,250 in the case of family coverage.7 The annual contribution 

limits are increased by $1,000 for an eligible individual who has attained age 55 by the end of the taxable year (referred to as ‘‘catchup contributions’’).8 All HSA contributions are aggregated for purposes of the maximum annual contribution limit, and contributions 

to Archer MSAs reduce the annual HSA contribution limit. The annual HSA contribution limit for an individual is generally the sum 

of the limits determined separately for each month (1/12 of the 

maximum aggregate annual contribution amount), based on the individual’s status and health plan coverage as of the first day of the 

month.9

If eligible individuals are married to each other and either 

spouse has family coverage, both spouses are treated as having 

only family coverage, so that the annual contribution limit for family coverage applies. This annual contribution limit (without regard 

to any catch-up contribution amounts) is reduced by any Archer 

MSA contributions and then divided equally between the spouses 

unless they agree on a different division. 

If both spouses of a married couple are eligible individuals, each 

may contribute to an HSA, but they cannot have a joint HSA.10

Under the rule described above, however, the spouses may divide 

their annual contribution limit by allocating the entire amount to 

one spouse to be contributed to that spouse’s HSA.11 This rule does 

not apply to catch-up contribution amounts, though. Thus, if both 

spouses are at least age 55 and eligible to make catch-up contributions, each must make the catch-up contribution to his or her own 

HSA.12

REASONS FOR CHANGE

The Committee has identified certain cases where it believes that 

the operation of HSAs can be improved. One such case involves the 

present-law obstacle that prevents both otherwise eligible spouses 

from making catch-up contributions if they have only one HSA account. The Committee believes the efficiency of HSAs could be improved by allowing both eligible spouses to make catch up contributions to a single HSA, rather than the present law requirement 

that they each must have their own HSA in order to make catch 

up contributions. 


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13 Notice 2004–50, 2004–2 C.B. 196, Q&A–5. 

EXPLANATION OF PROVISION

Under the provision, if both spouses of a married couple are eligible for catch-up contributions and either has family coverage, the 

annual contribution limit that can be divided between them includes both catch-up contribution amounts. Thus, for example, they 

can agree that their combined catch-up contribution amount is allocated to one spouse to be contributed to that spouse’s HSA. In 

other cases, as under present law, a spouse’s catch-up contribution 

amount is not eligible for division between the spouses; the catchup contribution must be made to the HSA of that spouse. 

EFFECTIVE DATE

The provision is effective for taxable years beginning after December 31, 2012. 

D. INDIVIDUALS ELIGIBLE FOR VETERANS BENEFITS FOR A SERVICECONNECTED DISABILITY (sec. 5 of the bill and sec. 223 of the Code) 

PRESENT LAW

An individual with a high deductible health plan and no other 

health plan (other than a plan that provides certain permitted insurance or permitted coverage) is generally eligible to make deductible contributions to a health savings account (‘‘HSA’’), subject to 

certain limits (an ‘‘eligible individual’’). HSA contributions made on 

behalf of an eligible individual by an employer are excludible from 

income and wages for employment tax purposes. Eligibility for HSA 

contributions is generally determined monthly, based on the individual’s status and health plan coverage as of the first day of the 

month. Contributions to an HSA cannot be made once an individual is enrolled in Medicare. 

An individual with other coverage in addition to a high deductible health plan is still eligible to make HSA contributions if such 

other coverage is permitted insurance or permitted coverage. Permitted insurance is: (1) insurance if substantially all of the coverage provided under such insurance relates to (a) liabilities incurred under worker’s compensation law, (b) tort liabilities, (c) liabilities relating to ownership or use of property (e.g., auto insurance), or (d) such other similar liabilities as the Secretary of Treasury may prescribe by regulations; (2) insurance for a specified disease or illness; and (3) insurance that provides a fixed payment per 

day (or other period) for hospitalization. Permitted coverage is coverage (whether provided through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care. Coverage under certain health flexible spending arrangements or 

health reimbursement arrangements is also permitted. 

Under IRS guidance, an otherwise eligible individual who is eligible for medical benefits under a program of the Department of 

Veterans Affairs (‘‘VA’’), but who has not actually received such 

benefits during the preceding three months, continues to be an eligible individual.13 However, an individual is not eligible to make 

HSA contributions for any month if the individual has received VA 


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14 Notice 2004–50, Q&A–5; Notice 2008–59, 2008–2 C.B. 123, Q&A–9. 15 Amounts in an HSA can be used for qualified medical expenses even if the individual is 

not currently eligible to make HSA contributions. 

medical benefits at any time during the previous three months unless the benefits are for permissible coverage or preventive care.14

REASONS FOR CHANGE

The Committee believes the present-law HSA eligibility rules inappropriately discriminate against those who avail themselves of 

VA medical benefits for a service-connected disability. The Committee therefore believes it is appropriate to allow otherwise eligible individuals to contribute to an HSA regardless of whether they 

receive VA medical benefits for a service-connected disability. 

EXPLANATION OF PROVISION

Under the provision, an individual does not fail to be treated as 

an eligible individual for any period merely because the individual 

receives VA medical benefits for a service-connected disability. 

The provision does not otherwise change the application of the 

present-law rule for individuals eligible for VA medical benefits. 

Thus, an otherwise eligible individual who is eligible for VA medical benefits, but who has not actually received such benefits during the preceding three months, continues to be an eligible individual. However, an individual is not eligible to make HSA contributions for any month if the individual has received VA medical 

benefits at any time during the previous three months unless the 

benefits are for permissible coverage or preventive care (or for a 

service-connected disability). 

EFFECTIVE DATE

The provision applies to months beginning after December 31, 

2012. 

E. DISTRIBUTIONS BY CERTAIN EARLY RETIREES FOR HEALTH COVERAGE TREATED AS QUALIFIED MEDICAL EXPENSE (sec. 6 of the 

bill and sec. 223 of the Code) 

PRESENT LAW

An individual with a high deductible health plan and no other 

health plan (other than a plan that provides certain permitted insurance or permitted coverage) may establish a health savings account (‘‘HSA’’). In general, HSAs are tax-exempt trusts or custodial 

accounts created exclusively to pay for the qualified medical expenses of the account holder and his or her spouse and dependents. 

Distributions from an HSA for qualified medical expenses are not 

includible in gross income.15 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, disability, or the individual attains the age of Medicare 

eligibility (i.e., age 65). 

Payments for insurance are generally not qualified medical expenses that can be paid from an HSA on a tax-free basis, subject 

to certain exceptions. For example, an exception applies for health 


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insurance expenses, other than for a Medicare supplemental policy, 

of an HSA holder who is at least age 65. 

REASONS FOR CHANGE

The Committee is concerned about the growing medical care 

costs of a growing population of early retirees, some of whom may 

have involuntarily retired early and are unable to find new employment in the current jobs environment. In order to help defray the 

medical insurance costs of these taxpayers, the Committee believes 

that it is appropriate to expand the definition of HSA eligible medical expenses to include expenses for coverage under a group health 

plan in which the HSA holder is enrolled by reason of being a 

former employee or a surviving spouse of a former employee. 

EXPLANATION OF PROVISION

Under the provision, in the case of an HSA holder who is at least 

age 55 but not age 65, qualified medical expenses include expenses 

for coverage under a group health plan (that is, an employer-sponsored health plan) in which the HSA holder is enrolled by reason 

of being a former employee or a surviving spouse of a former employee. Thus, in that case, expenses for such coverage can be paid 

from an HSA on a tax-free basis. 

EFFECTIVE DATE

The provision is effective for amounts paid for coverage for periods after December 31, 2012. 

III. VOTES OF THE COMMITTEE 

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

House of Representatives, the following statement is made concerning the votes of the Committee on Ways and Means in its consideration of H.R. 5858. 

MOTION TO REPORT RECOMMENDATION

The bill H.R. 5858, as amended, was ordered favorably reported 

by a roll call vote of 21 yeas to 7 nays (with a quorum being 

present). The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Camp .............................. X ........... ............. Mr. Levin .............................. ........... ........... .............

Mr. Herger ............................. X ........... ............. Mr. Rangel ........................... ........... ........... .............

Mr. Johnson ........................... ........... ........... ............. Mr. Stark .............................. ........... X .............

Mr. Brady .............................. X ........... ............. Mr. McDermott ..................... ........... X .............

Mr. Ryan ............................... X ........... ............. Mr. Lewis .............................. ........... X .............

Mr. Nunes ............................. X ........... ............. Mr. Neal ............................... ........... ........... .............

Mr. Tiberi .............................. X ........... ............. Mr. Becerra .......................... ........... ........... .............

Mr. Davis .............................. X ........... ............. Mr. Doggett .......................... ........... X .............

Mr. Reichert .......................... X ........... ............. Mr. Thompson ...................... ........... X .............

Mr. Boustany ......................... X ........... ............. Mr. Larson ............................ ........... X .............

Mr. Roskam ........................... X ........... ............. Mr. Blumenauer ................... ........... X .............

Mr. Gerlach ........................... X ........... ............. Mr. Kind ............................... X ........... .............

Mr. Price ............................... X ........... ............. Mr. Pascrell .......................... ........... ........... .............

Mr. Buchanan ....................... X ........... ............. Ms. Berkley ........................... X ........... .............

Mr. Smith .............................. X ........... ............. Mr. Crowley .......................... ........... ........... .............

Mr. Schock ............................ X ........... .............

Ms. Jenkins ........................... X ........... .............

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

Mr. Marchant ........................ ........... ........... .............


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Representative Yea Nay Present Representative Yea Nay Present 

Mr. Berg ................................ X ........... .............

Ms. Black .............................. ........... ........... .............

Mr. Reed ............................... X ........... .............

IV. BUDGET EFFECTS OF THE PROVISION 

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 revenue provisions of the 

bill, H.R. 5858, as reported. 

The bill is estimated to have the following effects on Federal 

budget receipts for fiscal years 2013–2022: 


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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 provisions involve increased tax expenditures. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

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

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by the CBO is provided. 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, June 4, 2012. 

Hon. DAVE CAMP, Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 5858, the Health Savings 

Accounts Improvements Act of 2012. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CB0 staff contact is Kalyani Parthasarathy. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 5858—Health Savings Accounts Improvements Act of 2012 

Summary: H.R. 5858 would make several changes to the tax 

treatment of health savings accounts (HSAs). The staff of the Joint 

Committee on Taxation (JCT) estimates that these changes together would decrease revenues by $173 million in 2013, about $1.8 

billion over the 2013–2017 period, and $4.7 billion over the 2013– 

2022 period. Pay-as-you-go procedures apply because enacting the 

legislation would affect revenues. 

The bill would allow certain former employees to use HSA contributions for their health insurance expenses, allow spouses to allocate their catch-up contributions between their HSAs, permit certain deductible HSA contributions to be eligible for a saver’s tax 

credit, allow individuals recently receiving veterans benefits for a 

service-connected disability to make HSA contributions, and allow 

HSA contributions to pay for certain expenses incurred before the 

establishment of the account. 

JCT has determined that the provisions of H.R. 5858 contain no 

intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

Estimated cost to the Federal Government: The estimated budgetary impact of the Health Savings Accounts Improvements Act of 

2012 is shown in the following table. 


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By fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012– 2017 2012– 2022 

CHANGES IN REVENUES 

Distributions by Former Employees ................... 0 ¥96 ¥144 ¥162 ¥179 ¥196 ¥212 ¥228 ¥243 ¥255 ¥266 ¥776 ¥1,981 

Spousal Catch-up Contributions ....................... 0 ¥59 ¥127 ¥144 ¥160 ¥175 ¥190 ¥204 ¥217 ¥229 ¥239 ¥665 ¥1,745 

Saver’s Credit Eligibility .................................... 0 ¥3 ¥29 ¥39 ¥44 ¥54 ¥56 ¥64 ¥70 ¥73 ¥75 ¥169 ¥507 

Veterans’ Eligibility ........................................... 0 ¥11 ¥18 ¥21 ¥25 ¥30 ¥35 ¥41 ¥47 ¥54 ¥61 ¥105 ¥343 

Previous Medical Expenses ............................... 0 ¥4 ¥9 ¥10 ¥11 ¥12 ¥13 ¥14 ¥15 ¥15 ¥16 ¥47 ¥120 

Total Changes ................................................... 0 ¥173 ¥327 ¥376 ¥419 ¥467 ¥506 ¥551 ¥592 ¥626 ¥657 ¥1,762 ¥4,696 

On-budget ................................................. 0 ¥166 ¥317 ¥365 ¥405 ¥451 ¥488 ¥531 ¥570 ¥602 ¥630 ¥1,704 ¥4,527 

Off-budget a .............................................. 0 ¥7 ¥10 ¥11 ¥14 ¥16 ¥18 ¥20 ¥22 ¥24 ¥27 ¥58 ¥169 

Note: Components may not sum to totals because of rounding. a Off-budget revenues result from changes in Social Security payroll tax receipts, which are categorized as off-budget. 

Source: Staff of the Joint Committee on Taxation. 


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Basis of estimate: Under current law, tax-deductible contributions to HSAs generally cannot be used to pay health insurance expenses. H.R. 5858 would allow such use for an HSA account holder 

between the ages of 55 and 64 who is enrolled in an employer-sponsored health plan as a former employee or a surviving spouse of a 

former employee. JCT estimates that this proposal would decrease 

revenues by $96 million in 2013, $776 million over the 2013–2017 

period, and about $2.0 billion over the 2013–2022 period. Some of 

those revenue losses—$53 million over the 2013–2022 period— 

would be off-budget. 

Eligible individuals who are at least age 55 at the end of the taxable year may make catch-up contributions to their HSAs, which 

are amounts above the normal contribution limits, under current 

law. H.R. 5858 would permit catch-up contributions from either 

spouse to be allocable to the HSA of one spouse in the same manner as is allowed for other annual contributions. JCT estimates 

that this change would decrease revenues by $59 million in 2013, 

$665 million over the 2013–2017 period, and about $1.7 billion over 

the 2013–2022 period. 

Current law provides a saver’s tax credit to individuals who 

make qualified retirement savings contributions, and whose annual 

gross income is under certain thresholds. H.R. 5858 would permit 

tax-deductible contributions to an HSA by such individuals to also 

be eligible for this saver’s credit. The sum of such HSA contributions and qualified retirement savings contributions would still be 

subject to the current law limit of $2,000. JCT estimates that the 

provision would result in a revenue loss of $3 million in 2013, $169 

million over the 2013–2017 period, and $507 million over the 2013– 

2022 period. 

H.R. 5858 also would allow individuals to remain eligible to 

make deductible HSA contributions despite recently receiving medical benefits from the Department of Veterans Affairs for a serviceconnected disability. Under current law, such individuals would not 

be eligible to make contributions to an HSA if they had received 

such benefits in the previous three months. JCT estimates that this 

change would decrease revenues by $11 million in 2013, $105 million over the 2013–2017 period, and $343 million over the 2013– 

2022 period. Some of those revenue losses—$99 million over the 

2013–2022 period—would be off-budget. 

H.R. 5858 would allow certain contributions to an HSA to pay for 

expenses incurred after the taxpayer entered into a high deductible 

health plan but before the establishment of the account. Under current law, the medical expense must be incurred on or after the date 

the HSA is established in order to remain eligible for reimbursement. H.R. 5858 would remove this requirement so long as the expense was incurred within 60 days of the date the taxpayer established the HSA. JCT estimates that this provision would decrease 

revenues by $4 million in 2013, $47 million over the 2013–2017 period, and $120 million over the 2013–2022 period. Some of those 

revenue losses—$17 million over the 2013–2022 period—would be 

off-budget. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asVerDate Mar 15 2010 03:23 Jun 08, 2012 Jkt 019006 PO 00000 Frm 00018 Fmt 6659 Sfmt 6602 E:\HR\OC\HR517.XXX HR517

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you-go procedures are shown in the following table. Only on-budget 

changes to outlays or revenues are subject to pay-as-you-go procedures. 


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CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5858, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MAY 31, 2012 

By fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012–2017 2012–2022 

NET INCREASE OR DECREASE (¥) IN THE ON-BUDGET DEFICIT 

Statutory Pay-As-You-Go Impact ....................... 0 166 317 365 405 451 488 531 570 602 630 1,704 4,527 


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Intergovernmental and private-sector impact: JCT has determined that the provisions of H.R. 5858 contain no intergovernmental or private-sector mandates as defined in UMRA. 

Estimate prepared by: Kalyani Parthasarathy. 

Estimate approved by: Frank Sammartino, Assistant Director for 

Tax Analysis. 

D. MACROECONOMIC IMPACT ANALYSIS

In compliance with clause 3(h)(2) 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 effects of the 

bill on economic activity are so small as to be incalculable within 

the context of a model of the aggregate economy. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee advises that it was as a result of the Committee’s review of 

the provisions of H.R. 5858 that the Committee concluded that it 

is appropriate to report the bill, as amended, favorably to the 

House of Representatives with the recommendation that the bill do 

pass. 

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 any measure that 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). 

This Committee has determined that the reported bill does not 

contain any Federal private sector mandates within the meaning of 

Public Law No. 104–4, the Unfunded Mandates Reform Act of 

1995. The costs required to comply with each Federal private sector 

mandate generally are no greater than the aggregate estimated 

budget effects of the provision. 

The Committee has determined that the bill does not impose a 

private sector mandate, and has determined that the bill does not 

impose a Federal intergovernmental mandate on State, local, or 

tribal governments. 

D. APPLICABILITY OF HOUSE RULE XXI 5(b) 

Clause 5(b) of rule XXI 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 


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

quorum being present.’’ The Committee has carefully reviewed the 

provisions of the bill, and states that the provisions of the bill do 

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

Committee on Taxation (in consultation with the Internal Revenue 

Service and the Department of the Treasury) 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 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 Code 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. 

VI. 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, 

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 

* * * * * * * 


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Subchapter A—Determination of Tax Liability 

* * * * * * * 

PART IV—CREDITS AGAINST TAX 

* * * * * * * 

Subpart A—Nonrefundable Personal Credits 

* * * * * * * 

SEC. 25B. ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS BY CERTAIN INDIVIDUALS. 

(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual, 

there shall be allowed as a credit against the tax imposed by this 

subtitle for the taxable year an amount equal to the applicable percentage of so much of the aggregate qualified HSA contributions 

and qualified retirement savings contributions of the eligible individual for the taxable year as do not exceed $2,000. 

* * * * * * * 

(d) QUALIFIED RETIREMENT SAVINGS CONTRIBUTIONS.—For purposes of this section— 

(1) * * * 

(2) QUALIFIED HSA CONTRIBUTIONS.—The term ‘‘qualified 

HSA contribution’’ means, with respect to any taxable year, any 

contribution to a health savings account (as defined in section 

223(d)(1)) if— 

(A) such contribution is allowable as a deduction to the 

taxpayer under section 223(a) for such taxable year, or 

(B) such contribution is made by an employer of the taxpayer at the election of the taxpayer under a cafeteria plan 

(as defined in section 125(d)) and is not includible in the 

gross income of the taxpayer by reason of section 125. 

ø(2)¿ (3) REDUCTION FOR CERTAIN DISTRIBUTIONS.— (A) IN GENERAL.—øThe qualified retirement savings contributions determined under paragraph (1) shall be reduced (but not below zero) by the aggregate distributions 

received by the individual during the testing period from 

any entity of a type to which contributions under paragraph (1) may be made.¿ The aggregate qualified retirement savings contributions determined under paragraph 

(1) and qualified HSA contributions determined under 

paragraph (2) shall be reduced (but not below zero) by the 

aggregate distributions received by the individual during 

the testing period from any entity of a type to which contributions under paragraph (1) or paragraph (2) (as the 

case may be) may be made. The preceding sentence shall 

not apply to the portion of any distribution which is not includible in gross income by reason of a trustee-to-trustee 

transfer or a rollover distribution. 

* * * * * * * 

(C) EXCEPTED DISTRIBUTIONS.—There shall not be taken 

into account under subparagraph (A)— 


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(i) any distribution referred to in section 72(p), 

223(f)(1) or (3), 401(k)(8), 401(m)(6), 402(g)(2), 404(k), 

or 408(d)(4), and 

* * * * * * * 

Subchapter B—Computation of Taxable Income 

* * * * * * * 

PART VII—ADDITIONAL ITEMIZED DEDUCTIONS FOR 

INDIVIDUALS 

* * * * * * * 

SEC. 223. HEALTH SAVINGS ACCOUNTS. 

(a) * * * 

(b) LIMITATIONS.— 

(1) * * * 

* * * * * * * 

ø(5) SPECIAL RULE FOR MARRIED INDIVIDUALS.—In the case of 

individuals who are married to each other, if either spouse has 

family coverage— 

ø(A) both spouses shall be treated as having only such 

family coverage (and if such spouses each have family coverage under different plans, as having the family coverage 

with the lowest annual deductible), and 

ø(B) the limitation under paragraph (1) (after the application of subparagraph (A) and without regard to any additional contribution amount under paragraph (3))— 

ø(i) shall be reduced by the aggregate amount paid 

to Archer MSAs of such spouses for the taxable year, 

and 

ø(ii) after such reduction, shall be divided equally 

between them unless they agree on a different division.¿ 

(5) SPECIAL RULE FOR MARRIED INDIVIDUALS WITH FAMILY

COVERAGE.— 

(A) IN GENERAL.—In the case of individuals who are 

married to each other, if both spouses are eligible individuals and either spouse has family coverage under a high 

deductible health plan as of the first day of any month— 

(i) the limitation under paragraph (1) shall be applied by not taking into account any other high deductible health plan coverage of either spouse (and if such 

spouses both have family coverage under separate high 

deductible health plans, only one such coverage shall 

be taken into account), 

(ii) such limitation (after application of clause (i)) 

shall be reduced by the aggregate amount paid to Archer MSAs of such spouses for the taxable year, and 

(iii) such limitation (after application of clauses (i) 

and (ii)) shall be divided equally between such spouses 

unless they agree on a different division. 

(B) TREATMENT OF ADDITIONAL CONTRIBUTION

AMOUNTS.—If both spouses referred to in subparagraph (A) 


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have attained age 55 before the close of the taxable year, the 

limitation referred to in subparagraph (A)(iii) which is subject to division between the spouses shall include the additional contribution amounts determined under paragraph 

(3) for both spouses. In any other case, any additional contribution amount determined under paragraph (3) shall not 

be taken into account under subparagraph (A)(iii) and 

shall not be subject to division between the spouses. 

* * * * * * * 

(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— 

(1) ELIGIBLE INDIVIDUAL.— 

(A) * * * 

* * * * * * * 

(C) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR CERTAIN VETERANS BENEFITS.—An individual shall not fail to 

be treated as an eligible individual for any period merely 

because the individual receives hospital care or medical 

services under any law administered by the Secretary of 

Veterans Affairs for a service-connected disability (within 

the meaning of section 101(16) of title 38, United States 

Code). 

* * * * * * * 

(d) HEALTH SAVINGS ACCOUNT.—For purposes of this section— 

(1) * * * 

(2) QUALIFIED MEDICAL EXPENSES.— 

(A) * * * 

* * * * * * * 

(C) EXCEPTIONS.—Subparagraph (B) shall not apply to 

any expense for coverage under— 

(i) * * * 

* * * * * * * 

(iii) a health plan during a period in which the individual is receiving unemployment compensation under 

any Federal or State law, øor¿ 

(iv) in the case of an account beneficiary who has attained the age specified in section 1811 of the Social 

Security Act, any health insurance other than a medicare supplemental policy (as defined in section 1882 of 

the Social Security Act)ø.¿, or 

(v) in the case of an account beneficiary who has attained age 55 but not the age specified in section 1811 

of the Social Security Act, any group health plan (as 

defined in section 5000(b)(1)) in which such account 

beneficiary is enrolled by reason of being a former employee or a surviving spouse of a former employee. 

(D) TREATMENT OF CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT.—If a health 

savings account is established during the 60-day period beginning on the date that coverage of the account beneficiary 

under a high deductible health plan begins, then, solely for 

purposes of determining whether an amount paid is used 


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for a qualified medical expense, such account shall be treated as having been established on the date that such coverage begins. 

* * * * * * * 

Subtitle F—Procedure and Administration 

* * * * * * * 

CHAPTER 61—INFORMATION AND RETURNS 

* * * * * * * 

Subchapter A—Returns and Records 

* * * * * * * 

PART III—INFORMATION RETURNS 

* * * * * * * 

Subpart C—Information Regarding Wages Paid Employees 

SEC. 6051. RECEIPTS FOR EMPLOYEES. 

(a) REQUIREMENT.—Every person required to deduct and withhold from an employee a tax under section 3101 or 3402, or who 

would have been required to deduct and withhold a tax under section 3402 (determined without regard to subsection (n)) if the employee had claimed no more than one withholding exemption, or 

every employer engaged in a trade or business who pays remuneration for services performed by an employee, including the cash 

value of such remuneration paid in any medium other than cash, 

shall furnish to each such employee in respect of the remuneration 

paid by such person to such employee during the calendar year, on 

or before January 31 of the succeeding year, or, if his employment 

is terminated before the close of such calendar year, within 30 days 

after the date of receipt of a written request from the employee if 

such 30-day period ends before January 31, a written statement 

showing the following: 

(1) * * * 

* * * * * * * 

ø(12) the amount contributed to any health savings account 

(as defined in section 223(d)) of such employee or such employee’s spouse,¿ 

(12) the total amount contributed to health savings accounts 

(as defined in section 223(d)) of the employee or the employee’s 

spouse and the portion of such total amount contributed at the 

election of the employee under any cafeteria plan (as defined in 

section 125(d)), 

* * * * * * * 


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VII. DISSENTING VIEWS 

We voted against this bill because it costs $4.7 billion in lost tax 

revenues and this revenue loss is not offset. When combined with 

the three other health care measures under consideration at the 

Markup, the total cost for all bills is nearly $42 billion and the Majority has not set forth any options to pay for this cost. Not one option was set forth at the Markup. It is simply unacceptable in this 

time of fiscal austerity to not pay the cost of these bills. It is irresponsible to add nearly $42 billion to the deficit. 

This Markup continues the Majority’s attempt to repeal the Affordable Care Act (ACA) without offering a replacement. In January of 2009, the Majority voted to repeal and replace the ACA. If 

their replacement solution is expanded access to Health Flexible 

Spending Accounts and Health Savings Accounts, then it falls far 

short of the needs of American families. Neither Health Flexible 

Spending Accounts nor Health Savings Accounts provide health 

coverage to participants. They only provide tax breaks for certain 

health costs. They are not real solutions to the problems facing our 

nation with respect to health care and insurance coverage. 

SANDER M. LEVIN. 

FORTNEY PETE STARK. 

JIM MCDERMOTT. 

JOHN LEWIS. 

XAVIER BECERRA. 

EARL BLUMENAUER. 

Æ 


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