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[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7825 Introduced in House (IH)]

<DOC>

116th CONGRESS
  2d Session
                                H. R. 7825

    To amend the Internal Revenue Code of 1986 to create increased 
 opportunities for savings to HSA, MSA, and FSA plans, to mitigate the 
 financial strain on families caused by COVID-19, to provide for child 
                   nutrition, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 2020

   Mr. Buck introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
    To amend the Internal Revenue Code of 1986 to create increased 
 opportunities for savings to HSA, MSA, and FSA plans, to mitigate the 
 financial strain on families caused by COVID-19, to provide for child 
                   nutrition, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pandemic Eradication and Enhanced 
Prevention through Savings Act'' or the ``PEEPS Act''.

SEC. 2. MODIFICATIONS OF HSAS, ARCHER MSAS, AND FSAS.

    (a) COBRA Coverage.--
            (1) HSA.--Section 223(d)(2) of the Internal Revenue Code of 
        1986 is amended by adding at the end the following:
                    ``(E) COBRA coverage.--Subparagraph (B) shall not 
                apply to amounts paid during calendar year 2020 for 
                premiums for coverage under a group health plan 
                pursuant to section 4980B(f).''.
            (2) FSA.--Section 106 of such Code is amended by adding at 
        the end the following:
    ``(h) FSA Payments for Cobra Coverage.--A plan shall not fail to be 
treated as a health flexible spending arrangement under this section 
merely because such plan provides for a distribution during calendar 
year 2020 to make payments for premiums for coverage under a group 
health plan pursuant to section 4980B(f).''.
    (b) Health Insurance Premiums for Those Not Covered by Employer-
Sponsored Health Plan During 2020.--
            (1) HSA.--Section 223(d)(2) of such Code, as amended by 
        subsection (a), is amended by adding at the end the following:
                    ``(F) Health insurance premiums for those not 
                covered by employer-sponsored coverage in 2020.--
                Subparagraph (B) shall not apply to amounts paid during 
                calendar year 2020 for premiums for coverage under a 
                health plan for any month for which the health plan of 
                the individual--
                            ``(i) is not an employer-sponsored health 
                        plan, and
                            ``(ii) does not include coverage for 
                        abortions (other than any abortion necessary to 
                        save the life of the mother or any abortion 
                        with respect to a pregnancy that is the result 
                        of an act of rape or incest).''.
            (2) Archer msa.--Section 220(d)(2) of such Code is amended 
        by adding at the end the following:
                    ``(D) Health insurance premiums for those not 
                covered by employer-sponsored coverage in 2020.--
                Subparagraph (B) shall not apply to amounts paid during 
                calendar year 2020 for premiums for coverage under a 
                high deductible health plan for any month for which the 
                health plan of the individual--
                            ``(i) is not an employer-sponsored health 
                        plan, and
                            ``(ii) does not include coverage for 
                        abortions (other than any abortion necessary to 
                        save the life of the mother or any abortion 
                        with respect to a pregnancy that is the result 
                        of an act of rape or incest).''.
            (3) FSA.--Section 106 of such Code, as amended by 
        subsection (a), is amended by adding at the end the following:
    ``(i) Health Insurance Premiums for Those Not Eligible for 
Employer-Sponsored Coverage in 2020 and 2021.--A plan shall not fail to 
be treated as a health flexible spending arrangement under this section 
merely because such plan provides for a distribution during calendar 
year 2020 or 2021 for premiums for coverage for medical expenses under 
an accident or health plan of a plan beneficiary if the beneficiary is 
not eligible for coverage by an employer-sponsored health plan. The 
preceding sentence shall only apply if the coverage does not include 
coverage for abortions (other than any abortion necessary to save the 
life of the mother or any abortion with respect to a pregnancy that is 
the result of an act of rape or incest).''.
    (c) HSAs Without High Deductible Health Plans for 2020 and 2021.--
Section 223 of such Code is amended by adding at the end the following:
    ``(i) Special Rule for Calendar Years 2020 and 2021.--
            ``(1) In general.--Notwithstanding subsection (c)(1)(A) and 
        subject to paragraph (2), for calendar years 2020 and 2021, the 
        term `eligible individual' means, with respect to any month, 
        any individual if the individual is covered under any health 
        plan, including any the following:
                    ``(A) Government sponsored programs.--Coverage 
                under--
                            ``(i) The Medicare program under part A of 
                        title XVIII of the Social Security Act.
                            ``(ii) The Medicaid program under title XIX 
                        of the Social Security Act.
                            ``(iii) The CHIP program under title XXI of 
                        the Social Security Act or under a qualified 
                        CHIP look-alike program (as defined in section 
                        2107(g) of the Social Security Act).
                            ``(iv) Medical coverage under chapter 55 of 
                        title 10, United States Code, including 
                        coverage under the TRICARE program.
                            ``(v) A health care program under chapter 
                        17 or 18 of title 38, United States Code, as 
                        determined by the Secretary of Veterans 
                        Affairs, in coordination with the Secretary of 
                        Health and Human Services and the Secretary.
                            ``(vi) A health plan under section 2504(e) 
                        of title 22, United States Code (relating to 
                        Peace Corps volunteers).
                            ``(vii) The Non-appropriated Fund Health 
                        Benefits Program of the Department of Defense, 
                        established under section 349 of the National 
                        Defense Authorization Act for Fiscal Year 1995 
                        (Public Law 103-337; 10 U.S.C. 1587 note).
                    ``(B) Employer-sponsored plan.--Coverage under an 
                eligible employer-sponsored plan.
                    ``(C) Plans in the individual market.--Coverage 
                under a health plan offered in the individual market 
                within a State.
                    ``(D) Grandfathered health plan.--Coverage under a 
                grandfathered health plan.
                    ``(E) Coverage.--Such other health benefits 
                coverage, such as a State health benefits risk pool, as 
                the Secretary of Health and Human Services, in 
                coordination with the Secretary, recognizes for 
                purposes of this subsection.
            ``(2) Modifications.--For purposes of paragraph (1), 
        subsection (b)(8) shall be applied by substituting `health 
        plan' for `high deductible health plan' each place it appears 
        and subsection (c)(1)(B) shall not apply.''.
    (d) Waiver of Carryover Limitation on FSA 2020 Funds.--Section 106 
of such Code, as amended by the preceding provisions of this section, 
is amended by adding at the end the following:
    ``(j) FSA Carryover Without Limitation on 2020 Contributions.--
There shall be no limitation on the amount of funds contributed during 
2020 to a health flexible spending arrangement under this section that 
may be carried over to the succeeding plan year.''.
    (e) Premium for Benefits Under Medicare for 2020.--
            (1) HSA.--Section 223(d)(2) of such Code, as amended by the 
        preceding provisions of this section, is amended by adding at 
        the end the following:
                    ``(G) Premiums for benefits under medicare for 
                2020.--Subparagraph (B) shall not apply to amounts paid 
                during calendar year 2020 for any monthly premium for 
                benefits under part A of title XVIII of the Social 
                Security Act, any monthly premium for benefits under 
                part B of such title, any monthly premium under a 
                Medicare Advantage plan under part C of such title, or 
                any monthly premium under a prescription drug plan 
                under part D of such title.''.
            (2) Archer msa.--Section 220(d)(2) of such Code, as amended 
        by the preceding provisions of this section, is amended by 
        adding at the end the following:
                    ``(F) Premiums for benefits under medicare for 
                2020.--Subparagraph (B) shall not apply to amounts paid 
                during calendar year 2020 for any monthly premium for 
                benefits under part A of title XVIII of the Social 
                Security Act, any monthly premium for benefits under 
                part B of such title, any monthly premium under a 
                Medicare Advantage plan under part C of such title, or 
                any monthly premium under a prescription drug plan 
                under part D of such title.''.
            (3) FSA.--Section 106 of such Code, as amended by the 
        preceding provisions of this section, is amended by adding at 
        the end the following:
    ``(k) FSA Payments for Benefits Under Medicare for 2020.--A plan 
shall not fail to be treated as a health flexible spending arrangement 
under this section merely because such plan provides for a distribution 
during calendar year 2020 for any monthly premium for benefits under 
part A of title XVIII of the Social Security Act, any monthly premium 
for benefits under part B of such title, any monthly premium under a 
Medicare Advantage plan under part C of such title, or any monthly 
premium under a prescription drug plan under part D of such title.''.
    (f) Payment of Non-Dependent Medical Expenses in 2020.--
            (1) HSA.--
                    (A) Medical expenses.--Section 223(d)(2) of such 
                Code, as amended by the preceding provisions of this 
                section, is amended by adding at the end the following:
                    ``(F) Non-dependent medical expenses in 2020.--
                During calendar year 2020, subparagraph (A) shall be 
                applied without regard to the requirement that medical 
                care be for the individual, the spouse of such 
                individual, and any dependent (as defined in section 
                152, determined without regard to subsections (b)(1), 
                (b)(2), and (d)(1)(B) thereof) of such individual.''.
                    (B) Rollover.--Section 223(f)(5) of such Code is 
                amended by adding at the end the following:
                    ``(C) Rollover gifts.--Notwithstanding the 
                preceding provisions of this paragraph, an amount is 
                described in this paragraph as a rollover contribution 
                in the case of a taxable year beginning in 2020 and 
                paragraph (2) shall not apply to any amount paid or 
                distributed from a health savings account of a 
                beneficiary to a health savings account of an 
                individual who is not such beneficiary, the spouse of 
                such beneficiary, or any dependent (as defined in 
                section 152, determined without regard to subsections 
                (b)(1), (b)(2), and (d)(1)(B) thereof) of such 
                beneficiary, to the extent--
                            ``(i) the amount received is paid into the 
                        health savings account for the benefit of such 
                        individual not later than the 60th day after 
                        the day on which the account beneficiary 
                        receives the payment or distribution, and
                            ``(ii) the aggregate amount of such 
                        transfers to all other individuals does not 
                        exceed $2,020 in 2020.''.
                    (C) Donations to qualified charity.--Section 223(f) 
                of such Code is amended by adding at the end the 
                following:
            ``(9) Donations to qualified charity.--
                    ``(A) Donations allowable.--Paragraph (2) shall not 
                apply to any amount paid or distributed from a health 
                savings account to the extent the amount (not to exceed 
                $10,000) is a qualified charitable contribution made by 
                the account beneficiary during the taxable year.
                    ``(B) Qualified charitable contribution.--For 
                purposes of subparagraph (A), the term `qualified 
                charitable contribution' means a charitable 
                contribution (as defined in section 170(c))--
                            ``(i) which is made in cash,
                            ``(ii) for which a deduction is allowable 
                        under section 170 (determined without regard to 
                        subsection (b) thereof and to subparagraph (C) 
                        of this paragraph), and
                            ``(iii) which is--
                                    ``(I) made to an organization 
                                described in section 170(b)(1)(A), and
                                    ``(II) not--
                                            ``(aa) to an organization 
                                        described in section 509(a)(3), 
                                        or
                                            ``(bb) for the 
                                        establishment of a new, or 
                                        maintenance of an existing, 
                                        donor advised fund (as defined 
                                        in section 4966(d)(2)).
                    ``(C) Denial of deduction.--No deduction shall be 
                allowed for a distribution which is a contribution made 
                pursuant to this paragraph.''.
            (2) Archer msa.--
                    (A) Non-dependent medical expenses in 2020.--
                Section 220(d)(2) of such Code, as amended by the 
                preceding provisions of this section, is amended by 
                adding at the end the following:
                    ``(E) Non-dependent medical expenses in 2020.--
                During calendar year 2020, subparagraph (A) shall be 
                applied without regard to the requirement that medical 
                care be for the individual, the spouse of such 
                individual, and any dependent (as defined in section 
                152, determined without regard to subsections (b)(1), 
                (b)(2), and (d)(1)(B) thereof) of such individual.''.
                    (B) Rollover.--Section 220(f)(5) of such Code is 
                amended by adding at the end the following:
                    ``(C) Rollover gifts.--Notwithstanding the 
                preceding provisions of this paragraph, an amount is 
                described in this paragraph as a rollover contribution 
                in the case of a taxable year beginning in 2020 and 
                paragraph (2) shall not apply to any amount paid or 
                distributed from a health savings account of a 
                beneficiary to a health savings account of an 
                individual who is not such beneficiary, the spouse of 
                such beneficiary, or any dependent (as defined in 
                section 152, determined without regard to subsections 
                (b)(1), (b)(2), and (d)(1)(B) thereof) of such 
                beneficiary, to the extent--
                            ``(i) the amount received is paid into the 
                        health savings account for the benefit of such 
                        individual not later than the 60th day after 
                        the day on which the account beneficiary 
                        receives the payment or distribution, and
                            ``(ii) the aggregate amount of such 
                        transfers to all other individuals does not 
                        exceed $2,020 in 2020.''.
                    (C) Donations to qualified charity.--Section 220(f) 
                of such Code is amended by adding at the end the 
                following:
            ``(9) Donations to qualified charity.--
                    ``(A) Donations allowable.--Paragraph (2) shall not 
                apply to any amount paid or distributed from a health 
                savings account to the extent the amount (not to exceed 
                $10,000) is a qualified charitable contribution made by 
                the account beneficiary during the taxable year.
                    ``(B) Qualified charitable contribution.--For 
                purposes of subparagraph (A), the term `qualified 
                charitable contribution' means a charitable 
                contribution (as defined in section 170(c))--
                            ``(i) which is made in cash,
                            ``(ii) for which a deduction is allowable 
                        under section 170 (determined without regard to 
                        subsection (b) thereof and to subparagraph (C) 
                        of this paragraph), and
                            ``(iii) which is--
                                    ``(I) made to an organization 
                                described in section 170(b)(1)(A), and
                                    ``(II) not--
                                            ``(aa) to an organization 
                                        described in section 509(a)(3), 
                                        or
                                            ``(bb) for the 
                                        establishment of a new, or 
                                        maintenance of an existing, 
                                        donor advised fund (as defined 
                                        in section 4966(d)(2)).
                    ``(C) Denial of deduction.--No deduction shall be 
                allowed for a distribution which is a contribution made 
                pursuant to this paragraph.''.
    (g) Cafeteria Plans.--Section 125 of such Code is amended by 
redesignating subsections (k) and (l) as subsections (l) and (m), 
respectively, and by inserting after subsection (j) the following new 
subsection:
    ``(k) Additional Employer Contributions.--
            ``(1) In general.--A plan shall not fail to be treated as a 
        cafeteria plan under this section merely because the employer 
        makes contributions to employee health savings accounts during 
        plan years beginning in 2020 or 2021 without regard to choices 
        made by participants.
            ``(2) Applicable rules.--For purposes of paragraph (1)--
                    ``(A) subsections (b) and (c) shall apply with 
                respect to such contributions,
                    ``(B) the dollar limitation in subsection (i)(1) 
                shall not apply with respect to such contributions, and
                    ``(C) in the case of an eligible employer (as 
                defined in subsection (j)(5)), the requirements of 
                subsection (j) shall apply, except that such 
                contributions shall be treated as in addition to 
                contributions required under subsection (j)(3)(A).''.
    (h) Expansion of Allowable Medical Expenses for 2020.--
            (1) HSA.--Section 223(d)(2) of such Code, as amended by the 
        preceding provisions of this section, is amended by adding at 
        the end the following:
                    ``(H) Additional allowable medical expenses for 
                2020.--For calendar year 2020, amounts paid for masks, 
                testing supplies, pain relievers and fever reducing OTC 
                products, and for child nutrition shall be treated as 
                paid for medical care.''.
            (2) Archer msa.--Section 220(d)(2) of such Code, as amended 
        by the preceding provisions of this section, is amended by 
        adding at the end the following:
                    ``(G) Additional allowable medical expenses for 
                2020.--For calendar year 2020, amounts paid for masks, 
                testing supplies, pain relievers and fever reducing OTC 
                products, and for child nutrition shall be treated as 
                paid for medical care.''.
            (3) FSA.--Section 106 of such Code, as amended by the 
        preceding provisions of this section, is amended by adding at 
        the end the following:
    ``(k) Additional Allowable Medical Expenses for 2020.--For calendar 
year 2020, amounts paid for masks, testing supplies, pain relievers and 
fever reducing OTC products, and for child nutrition shall be treated 
as paid for medical care.''.
    (i) Increase HSA and MSA Contribution Limits for 2020.--
            (1) HSA.--Section 223(b) of such Code is amended by adding 
        at the end the following:
            ``(9) Increase in contribution limits for 2020.--In the 
        case of any taxable year beginning in calendar year 2020, the 
        amount allowed as a deduction under subsection (a) shall be 120 
        percent of the amount allowed as a deduction under subsection 
        (a) without regard to this paragraph.''.
            (2) Archer msa.--Section 220(b) of such Code is amended by 
        adding at the end the following:
            ``(8) Increase in contribution limits for 2020.--In the 
        case of any taxable year beginning in calendar year 2020, the 
        amount allowed as a deduction under subsection (a) shall be 120 
        percent of the amount allowed as a deduction under subsection 
        (a) without regard to this paragraph.''.
    (j) Increase HSA and MSA Contribution Limits for Beneficiaries 
Hospitalized or Testing Positive for COVID-19.--
            (1) HSA.--Section 223(b) of such Code, as amended by the 
        preceding provisions of this section, is amended by adding at 
        the end the following:
            ``(10) Increase in contribution limits hospitalized or 
        testing positive for covid-19.--In the case of any taxable year 
        beginning in calendar year 2020 or 2021 in which the account 
        beneficiary or any individual described in paragraph (2)(A) is 
        hospitalized or tests positive for COVID-19, the amount allowed 
        as a deduction under subsection (a) shall, be 300 percent of 
        the amount allowed as a deduction under subsection (a) without 
        regard to this paragraph and paragraph (9).''.
            (2) Archer msa.--Section 220(b) of such Code is amended by 
        adding at the end the following:
            ``(9) Increase in contribution limits for beneficiaries 
        hospitalized or testing positive for covid-19.--In the case of 
        any taxable year beginning in calendar year 2020 or 2021 in 
        which the account beneficiary or any individual described in 
        paragraph (2)(A) is hospitalized or tests positive for COVID-
        19, the amount allowed as a deduction under subsection (a) 
        shall, be 300 percent of the amount allowed as a deduction 
        under subsection (a) without regard to this paragraph and 
        paragraph (8).''.
    (k) Effective Date.--The amendments made by this Act shall apply to 
years ending after the date of the enactment of this Act.

SEC. 3. DISALLOWANCE OF COSTS FOR ABORTION.

    (a) HSA.--Paragraph (2) of section 223(d) of the Internal Revenue 
Code of 1986, as amended by the preceding provisions of this Act, is 
amended by adding at the end the following new subparagraph:
                    ``(I) Disallowance of costs for abortion.--Such 
                term shall not include any amounts paid for any 
                abortion or premiums of any health insurance that 
                includes coverage of abortion, other than--
                            ``(i) in the case of a physical disorder, 
                        physical injury, or physical illness which 
                        would, as certified by a physician, place the 
                        pregnant individual in danger of death unless 
                        an abortion is performed, including a life-
                        endangering physical condition caused by or 
                        arising from the pregnancy itself, and
                            ``(ii) in the case of a pregnancy resulting 
                        from an act of rape or incest.''.
    (b) Archer MSA.--Paragraph (2) of section 220(d) of such, as 
amended by the preceding provisions of this Act, is amended by adding 
at the end the following new subparagraph:
                    ``(H) Disallowance of costs for abortion.--Such 
                term shall not include any amounts paid for any 
                abortion or premiums of any health insurance that 
                includes coverage of abortion, other than--
                            ``(i) in the case of a physical disorder, 
                        physical injury, or physical illness which 
                        would, as certified by a physician, place the 
                        pregnant individual in danger of death unless 
                        an abortion is performed, including a life-
                        endangering physical condition caused by or 
                        arising from the pregnancy itself, and
                            ``(ii) in the case of a pregnancy resulting 
                        from an act of rape or incest.''.
    (c) FSA.--Section 106 of such Code, as amended by the preceding 
provisions of this section, is amended by adding at the end the 
following:
    ``(l) Disallowance of Costs for Abortion.--A plan shall not be 
treated as a health flexible spending arrangement under this section if 
such plan provides for any reimbursement of amounts paid for any 
abortion or premiums of any health insurance that includes coverage of 
abortion, other than--
            ``(1) in the case of a physical disorder, physical injury, 
        or physical illness which would, as certified by a physician, 
        place the pregnant individual in danger of death unless an 
        abortion is performed, including a life-endangering physical 
        condition caused by or arising from the pregnancy itself, and
            ``(2) in the case of a pregnancy resulting from an act of 
        rape or incest.''.
    (d) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2020.
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