II 

113TH CONGRESS 

1ST SESSION S. 1031 

To amend the Internal Revenue Code of 1986 to improve access to health 

care through expanded health savings accounts, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 23, 2013 

Mr. HATCH (for himself, Mr. RUBIO, Mr. BARRASSO, and Mr. INHOFE) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to improve 

access to health care through expanded health savings 

accounts, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Family and Retirement Health Investment Act of 2013’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 


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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

3 (c) TABLE OF CONTENTS.—The table of contents is 

4 as follows: 

Sec. 1. Short title, etc. 

TITLE I—PROVISIONS RELATING TO TAX-PREFERRED HEALTH 

ACCOUNTS 

Sec. 101. Allow both spouses to make catch-up contributions to the same HSA 

account. 

Sec. 102. Provisions relating to Medicare. 

Sec. 103. Individuals eligible for veterans benefits for a service-connected disability. 

Sec. 104. Individuals eligible for Indian Health Service assistance. 

Sec. 105. Individuals eligible for TRICARE coverage. 

Sec. 106. FSA and HRA interaction with HSAs. 

Sec. 107. Allowance of distributions for prescription and over-the-counter medicines and drugs. 

Sec. 108. Purchase of health insurance from HSA account. 

Sec. 109. Special rule for certain medical expenses incurred before establishment of account. 

Sec. 110. Preventive care prescription drug clarification. 

Sec. 111. Equivalent bankruptcy protections for health savings accounts as retirement funds. 

Sec. 112. Administrative error correction before due date of return. 

Sec. 113. Reauthorization of medicaid health opportunity accounts. 

Sec. 114. Members of health care sharing ministries eligible to establish health 

savings accounts. 

Sec. 115. High deductible health plans renamed HSA qualified plans. 

Sec. 116. Treatment of direct primary care service arrangements. 

Sec. 117. High deductible health plans with HSAs treated as qualified health 

plans. 

Sec. 118. Certain stand-alone HRAs not subject to prohibition on annual limits. 

TITLE II—OTHER PROVISIONS 

Sec. 121. Certain exercise equipment and physical fitness programs treated as 

medical care. 

Sec. 122. Certain nutritional and dietary supplements to be treated as medical 

care. 

Sec. 123. Certain provider fees to be treated as medical care. 

Sec. 124. Repeal of annual limitations on deductibles for employer-sponsored 

plans offered in small group market. 


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1 TITLE I—PROVISIONS RELATING 

2 TO TAX-PREFERRED HEALTH 

3 ACCOUNTS 

4 SEC. 101. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON5 TRIBUTIONS TO THE SAME HSA ACCOUNT. 

6 (a) IN GENERAL.—Paragraph (3) of section 223(b) 

7 is amended by adding at the end the following new sub8 paragraph: 

9 ‘‘(C) SPECIAL RULE WHERE BOTH

10 SPOUSES ARE ELIGIBLE INDIVIDUALS WITH 1

11 ACCOUNT.—If— 

12 ‘‘(i) an individual and the individual’s 

13 spouse have both attained age 55 before 

14 the close of the taxable year, and 

15 ‘‘(ii) the spouse is not an account ben16 eficiary of a health savings account as of 

17 the close of such year, 

18 the additional contribution amount shall be 200 

19 percent of the amount otherwise determined 

20 under subparagraph (B).’’. 

21 (b) EFFECTIVE DATE.—The amendment made by 

22 this section shall apply to taxable years beginning after 

23 the date of the enactment of this Act. 


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1 SEC. 102. PROVISIONS RELATING TO MEDICARE. 

2 (a) INDIVIDUALS OVER AGE 65 ONLY ENROLLED IN

3 MEDICARE PART A.—Paragraph (7) of section 223(b) is 

4 amended by adding at the end the following: ‘‘This para5 graph shall not apply to any individual during any period 

6 for which the individual’s only entitlement to such benefits 

7 is an entitlement to hospital insurance benefits under part 

8 A of title XVIII of such Act pursuant to an enrollment 

9 for such hospital insurance benefits under section 

10 226(a)(1) of such Act.’’. 

11 (b) MEDICARE BENEFICIARIES PARTICIPATING IN

12 MEDICARE ADVANTAGE MSA MAY CONTRIBUTE THEIR

13 OWN MONEY TO THEIR MSA.— 

14 (1) IN GENERAL.—Subsection (b) of section 

15 138 is amended by striking paragraph (2) and by re16 designating paragraphs (3) and (4) as paragraphs 

17 (2) and (3), respectively. 

18 (2) CONFORMING AMENDMENT.—Paragraph (4) 

19 of section 138(c) is amended by striking ‘‘and para20 graph (2)’’. 

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

22 this section shall apply to taxable years beginning after 

23 the date of the enactment of this Act. 


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1 SEC. 103. INDIVIDUALS ELIGIBLE FOR VETERANS BENE2 FITS FOR A SERVICE-CONNECTED DIS3 ABILITY. 

4 (a) IN GENERAL.—Paragraph (1) of section 223(c) 

5 is amended by adding at the end the following new sub6 paragraph: 

7 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI8 GIBLE FOR CERTAIN VETERANS BENEFITS.— 

9 For purposes of subparagraph (A)(ii), an indi10 vidual shall not be treated as covered under a 

11 health plan described in such subparagraph 

12 merely because the individual receives periodic 

13 hospital care or medical services for a service14 connected disability under any law administered 

15 by the Secretary of Veterans Affairs but only if 

16 the individual is not eligible to receive such care 

17 or services for any condition other than a serv18 ice-connected disability.’’. 

19 (b) EFFECTIVE DATE.—The amendment made by 

20 this section shall apply to taxable years beginning after 

21 the date of the enactment of this Act. 

22 SEC. 104. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH 

23 SERVICE ASSISTANCE. 

24 (a) IN GENERAL.—Paragraph (1) of section 223(c), 

25 as amended by section 103, is amended by adding at the 

26 end the following new subparagraph: 


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1 ‘‘(D) SPECIAL RULE FOR INDIVIDUALS EL2 IGIBLE FOR ASSISTANCE UNDER INDIAN

3 HEALTH SERVICE PROGRAMS.—For purposes of 

4 subparagraph (A)(ii), an individual shall not be 

5 treated as covered under a health plan de6 scribed in such subparagraph merely because 

7 the individual receives hospital care or medical 

8 services under a medical care program of the 

9 Indian Health Service or of a tribal organiza10 tion.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 SEC. 105. INDIVIDUALS ELIGIBLE FOR TRICARE COVERAGE. 

15 (a) IN GENERAL.—Paragraph (1) of section 223(c), 

16 as amended by sections 103 and 104, is amended by add17 ing at the end the following new subparagraph: 

18 ‘‘(E) SPECIAL RULE FOR INDIVIDUALS EL19 IGIBLE FOR ASSISTANCE UNDER TRICARE.—For 

20 purposes of subparagraph (A)(ii), an individual 

21 shall not be treated as covered under a health 

22 plan described in such subparagraph merely be23 cause the individual is eligible to receive hos24 pital care, medical services, or prescription 

25 drugs under TRICARE Extra or TRICARE 


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1 Standard and such individual is not enrolled in 

2 TRICARE Prime.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 106. FSA AND HRA INTERACTION WITH HSAS. 

7 (a) ELIGIBLE INDIVIDUALS INCLUDE FSA AND HRA 

8 PARTICIPANTS.—Subparagraph (B) of section 223(c)(1) 

9 is amended— 

10 (1) by striking ‘‘and’’ at the end of clause (ii), 

11 (2) by striking the period at the end of clause 

12 (iii) and inserting ‘‘, and’’, and 

13 (3) by inserting after clause (iii) the following 

14 new clause: 

15 ‘‘(iv) coverage under a health flexible 

16 spending arrangement or a health reim17 bursement arrangement in the plan year a 

18 qualified HSA distribution as described in 

19 section 106(e) is made on behalf of the in20 dividual if after the qualified HSA dis21 tribution is made and for the remaining 

22 duration of the plan year, the coverage 

23 provided under the health flexible spending 

24 arrangement or health reimbursement ar25 rangement is converted to— 


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1 ‘‘(I) coverage that does not pay 

2 or reimburse any medical expense in3 curred before the minimum annual de4 ductible under paragraph (2)(A)(i) 

5 (prorated for the period occurring 

6 after the qualified HSA distribution is 

7 made) is satisfied, 

8 ‘‘(II) coverage that, after the 

9 qualified HSA distribution is made, 

10 does not pay or reimburse any med11 ical expense incurred after the quali12 fied HSA distribution is made other 

13 than preventive care as defined in 

14 paragraph (2)(C), 

15 ‘‘(III) coverage that, after the 

16 qualified HSA distribution is made, 

17 pays or reimburses benefits for cov18 erage described in clause (ii) (but not 

19 through insurance or for long-term 

20 care services), 

21 ‘‘(IV) coverage that, after the 

22 qualified HSA distribution is made, 

23 pays or reimburses benefits for per24 mitted insurance or coverage deVerDate Mar 15 2010 03:32 May 30, 2013 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1031.IS S1031

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1 scribed in clause (ii) (but not for long2 term care services), 

3 ‘‘(V) coverage that, after the 

4 qualified HSA distribution is made, 

5 pays or reimburses only those medical 

6 expenses incurred after an individual’s 

7 retirement (and no expenses incurred 

8 before retirement), or 

9 ‘‘(VI) coverage that, after the 

10 qualified HSA distribution is made, is 

11 suspended, pursuant to an election 

12 made on or before the date the indi13 vidual elects a qualified HSA distribu14 tion or, if later, on the date of the in15 dividual enrolls in a high deductible 

16 health plan, that does not pay or re17 imburse, at any time, any medical ex18 pense incurred during the suspension 

19 period except as defined in the pre20 ceding subclauses of this clause.’’. 

21 (b) QUALIFIED HSA DISTRIBUTION SHALL NOT AF22 FECT FLEXIBLE SPENDING ARRANGEMENT.—Paragraph 

23 (1) of section 106(e) is amended to read as follows: 

24 ‘‘(1) IN GENERAL.—A plan shall not fail to be 

25 treated as a health flexible spending arrangement 


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1 under this section, section 105, or section 125, or as 

2 a health reimbursement arrangement under this sec3 tion or section 105, merely because such plan pro4 vides for a qualified HSA distribution.’’. 

5 (c) FSA BALANCES AT YEAR END SHALL NOT FOR6 FEIT.—Paragraph (2) of section 125(d) is amended by 

7 adding at the end the following new subparagraph: 

8 ‘‘(E) EXCEPTION FOR QUALIFIED HSA DIS9 TRIBUTIONS.—Subparagraph (A) shall not 

10 apply to the extent that there is an amount re11 maining in a health flexible spending account at 

12 the end of a plan year that an individual elects 

13 to contribute to a health savings account pursu14 ant to a qualified HSA distribution (as defined 

15 in section 106(e)(2)).’’. 

16 (d) SIMPLIFICATION OF LIMITATIONS ON FSA AND

17 HRA ROLLOVERS.—Paragraph (2) of section 106(e) is 

18 amended to read as follows: 

19 ‘‘(2) QUALIFIED HSA DISTRIBUTION.— 

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

21 HSA distribution’ means a distribution from a 

22 health flexible spending arrangement or health 

23 reimbursement arrangement to the extent that 

24 such distribution does not exceed the lesser 

25 of— 


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1 ‘‘(i) the balance in such arrangement 

2 as of the date of such distribution, or 

3 ‘‘(ii) the amount determined under 

4 subparagraph (B). 

5 Such term shall not include more than 1 dis6 tribution with respect to any arrangement. 

7 ‘‘(B) DOLLAR LIMITATIONS.— 

8 ‘‘(i) DISTRIBUTIONS FROM A HEALTH

9 FLEXIBLE SPENDING ARRANGEMENT.—A 

10 qualified HSA distribution from a health 

11 flexible spending arrangement shall not ex12 ceed the applicable amount. 

13 ‘‘(ii) DISTRIBUTIONS FROM A HEALTH

14 REIMBURSEMENT ARRANGEMENT.—A 

15 qualified HSA distribution from a health 

16 reimbursement arrangement shall not ex17 ceed— 

18 ‘‘(I) the applicable amount di19 vided by 12, multiplied by 

20 ‘‘(II) the number of months dur21 ing which the individual is a partici22 pant in the health reimbursement ar23 rangement. 


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1 ‘‘(iii) APPLICABLE AMOUNT.—For 

2 purposes of this subparagraph, the applica3 ble amount is— 

4 ‘‘(I) $2,250 in the case of an eli5 gible individual who has self-only cov6 erage under a high deductible health 

7 plan at the time of such distribution, 

8 and 

9 ‘‘(II) $4,500 in the case of an eli10 gible individual who has family cov11 erage under a high deductible health 

12 plan at the time of such distribu13 tion.’’. 

14 (e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE

15 TO MAINTAIN HIGH DEDUCTIBLE HEALTH PLAN COV16 ERAGE.—Subsection (e) of section 106 is amended— 

17 (1) by striking paragraph (3) and redesignating 

18 paragraphs (4) and (5) as paragraphs (3) and (4), 

19 respectively, and 

20 (2) by striking subparagraph (A) of paragraph 

21 (3), as so redesignated, and redesignating subpara22 graphs (B) and (C) of such paragraph as subpara23 graphs (A) and (B) thereof, respectively. 

24 (f) LIMITED PURPOSE FSAS AND HRAS.—Sub25 section (e) of section 106, as amended by this section, is 


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1 amended by adding at the end the following new para2 graph: 

3 ‘‘(5) LIMITED PURPOSE FSAS AND HRAS.—A 

4 plan shall not fail to be a health flexible spending 

5 arrangement or health reimbursement arrangement 

6 under this section or section 105 merely because the 

7 plan converts coverage for individuals who enroll in 

8 a high deductible health plan described in section 

9 223(c)(2) to coverage described in section 

10 223(c)(1)(B)(iv). Coverage for such individuals may 

11 be converted as of the date of enrollment in the high 

12 deductible health plan, without regard to the period 

13 of coverage under the health flexible spending ar14 rangement or health reimbursement arrangement, 

15 and without requiring any change in coverage to in16 dividuals who do not enroll in a high deductible 

17 health plan.’’. 

18 (g) DISTRIBUTION AMOUNTS ADJUSTED FOR COST19 OF-LIVING.—Subsection (e) of section 106, as amended 

20 by this section, is amended by adding at the end the fol21 lowing new paragraph: 

22 ‘‘(6) COST-OF-LIVING ADJUSTMENT.— 

23 ‘‘(A) IN GENERAL.—In the case of any 

24 taxable year beginning in a calendar year after 

25 2013, each of the dollar amounts in paragraph 


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1 (2)(B)(iii) shall be increased by an amount 

2 equal to such dollar amount, multiplied by the 

3 cost-of-living adjustment determined under sec4 tion 1(f)(3) for the calendar year in which such 

5 taxable year begins by substituting ‘calendar 

6 year 2012’ for ‘calendar year 1992’ in subpara7 graph (B) thereof. 

8 ‘‘(B) ROUNDING.—If any increase under 

9 paragraph (1) is not a multiple of $50, such in10 crease shall be rounded to the nearest multiple 

11 of $50.’’. 

12 (h) DISCLAIMER OF DISQUALIFYING COVERAGE.— 

13 Subparagraph (B) of section 223(c)(1), as amended by 

14 this section, is amended— 

15 (1) by striking ‘‘and’’ at the end of clause (iii), 

16 (2) by striking the period at the end of clause 

17 (iv) and inserting ‘‘, and’’, and 

18 (3) by inserting after clause (iv) the following 

19 new clause: 

20 ‘‘(v) any coverage (including prospec21 tive coverage) under a health plan that is 

22 not a high deductible health plan which is 

23 disclaimed in writing, at the time of the 

24 creation or organization of the health sav25 ings account, including by execution of a 


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1 trust described in subsection (d)(1) 

2 through a governing instrument that in3 cludes such a disclaimer, or by acceptance 

4 of an amendment to such a trust that in5 cludes such a disclaimer.’’. 

6 (i) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to taxable years beginning after 

8 the date of the enactment of this Act. 

9 SEC. 107. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP10 TION AND OVER-THE-COUNTER MEDICINES 

11 AND DRUGS. 

12 (a) HSAS.—Section 223(d)(2)(A) is amended by 

13 striking the last sentence thereof and inserting the fol14 lowing: ‘‘Such term shall include an amount paid for any 

15 prescription or over-the-counter medicine or drug.’’. 

16 (b) ARCHER MSAS.—Section 220(d)(2)(A) is amend17 ed by striking the last sentence thereof and inserting the 

18 following: ‘‘Such term shall include an amount paid for 

19 any prescription or over-the-counter medicine or drug.’’. 

20 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS

21 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sub22 section (f) of section 106 is amended to read as follows: 

23 ‘‘(f) REIMBURSEMENTS FOR ALL MEDICINES AND

24 DRUGS.—For purposes of this section and section 105, 

25 reimbursement for expenses incurred for any prescription 


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1 or over-the-counter medicine or drug shall be treated as 

2 a reimbursement for medical expenses.’’. 

3 (d) EFFECTIVE DATE.— 

4 (1) DISTRIBUTIONS FROM SAVINGS AC5 COUNTS.—The amendments made by subsections (a) 

6 and (b) shall apply to amounts paid with respect to 

7 taxable years beginning after December 31, 2012. 

8 (2) REIMBURSEMENTS.—The amendment made 

9 by subsection (c) shall apply to expenses incurred 

10 with respect to taxable years beginning after Decem11 ber 31, 2012. 

12 SEC. 108. PURCHASE OF HEALTH INSURANCE FROM HSA 

13 ACCOUNT. 

14 (a) IN GENERAL.—Paragraph (2) of section 223(d) 

15 is amended to read as follows: 

16 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 

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

18 medical expenses’ means, with respect to an ac19 count beneficiary, amounts paid by such bene20 ficiary for medical care (as defined in section 

21 213(d)) for any individual covered by a high de22 ductible health plan of the account beneficiary, 

23 but only to the extent such amounts are not 

24 compensated for by insurance or otherwise. 


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1 ‘‘(B) HEALTH INSURANCE MAY NOT BE

2 PURCHASED FROM ACCOUNT.—Except as pro3 vided in subparagraph (C), subparagraph (A) 

4 shall not apply to any payment for insurance. 

5 ‘‘(C) EXCEPTIONS.—Subparagraph (B) 

6 shall not apply to any expense for coverage 

7 under— 

8 ‘‘(i) a health plan during any period 

9 of continuation coverage required under 

10 any Federal law, 

11 ‘‘(ii) a qualified long-term care insur12 ance contract (as defined in section 

13 7702B(b)), 

14 ‘‘(iii) a health plan during any period 

15 in which the individual is receiving unem16 ployment compensation under any Federal 

17 or State law, 

18 ‘‘(iv) a high deductible health plan, or 

19 ‘‘(v) any health insurance under title 

20 XVIII of the Social Security Act, other 

21 than a Medicare supplemental policy (as 

22 defined in section 1882 of such Act).’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 this section shall apply with respect to insurance purVerDate Mar 15 2010 03:32 May 30, 2013 Jkt 029200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\S1031.IS S1031

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1 chased after the date of the enactment of this Act in tax2 able years beginning after such date. 

3 SEC. 109. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

4 INCURRED BEFORE ESTABLISHMENT OF AC5 COUNT. 

6 (a) IN GENERAL.—Paragraph (2) of section 223(d), 

7 as amended by section 108, is amended by adding at the 

8 end the following new subparagraph: 

9 ‘‘(D) CERTAIN MEDICAL EXPENSES IN10 CURRED BEFORE ESTABLISHMENT OF ACCOUNT

11 TREATED AS QUALIFIED.—An expense shall not 

12 fail to be treated as a qualified medical expense 

13 solely because such expense was incurred before 

14 the establishment of the health savings account 

15 if such expense was incurred— 

16 ‘‘(i) during either— 

17 ‘‘(I) the taxable year in which the 

18 health savings account was estab19 lished, or 

20 ‘‘(II) the preceding taxable year 

21 in the case of a health savings ac22 count established after the taxable 

23 year in which such expense was in24 curred but before the time prescribed 

25 by law for filing the return for such 


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1 taxable year (not including extensions 

2 thereof), and 

3 ‘‘(ii) for medical care of an individual 

4 during a period that such individual was 

5 covered by a high deductible health plan 

6 and met the requirements of subsection 

7 (c)(1)(A)(ii) (after application of sub8 section (c)(1)(B)).’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 SEC. 110. PREVENTIVE CARE PRESCRIPTION DRUG CLARI13 FICATION. 

14 (a) CLARIFY USE OF DRUGS IN PREVENTIVE

15 CARE.—Subparagraph (C) of section 223(c)(2) is amend16 ed by adding at the end the following: ‘‘Preventive care 

17 shall include prescription and over-the-counter drugs and 

18 medicines which have the primary purpose of preventing 

19 the onset of, further deterioration from, or complications 

20 associated with chronic conditions, illnesses, or diseases.’’. 

21 (b) EFFECTIVE DATE.—The amendment made by 

22 this section shall apply to taxable years beginning after 

23 December 31, 2003. 


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1 SEC. 111. EQUIVALENT BANKRUPTCY PROTECTIONS FOR 

2 HEALTH SAVINGS ACCOUNTS AS RETIRE3 MENT FUNDS. 

4 (a) IN GENERAL.—Section 522 of title 11, United 

5 States Code, is amended by adding at the end the fol6 lowing new subsection: 

7 ‘‘(r) TREATMENT OF HEALTH SAVINGS AC8 COUNTS.—For purposes of this section, any health savings 

9 account (as described in section 223 of the Internal Rev10 enue Code of 1986) shall be treated in the same manner 

11 as an individual retirement account described in section 

12 408 of such Code.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to cases commencing under title 

15 11, United States Code, after the date of the enactment 

16 of this Act. 

17 SEC. 112. ADMINISTRATIVE ERROR CORRECTION BEFORE 

18 DUE DATE OF RETURN. 

19 (a) IN GENERAL.—Paragraph (4) of section 223(f) 

20 is amended by adding at the end the following new sub21 paragraph: 

22 ‘‘(D) EXCEPTION FOR ADMINISTRATIVE

23 ERRORS CORRECTED BEFORE DUE DATE OF RE24 TURN.—Subparagraph (A) shall not apply if 

25 any payment or distribution is made to correct 


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1 an administrative, clerical or payroll contribu2 tion error and if— 

3 ‘‘(i) such distribution is received by 

4 the individual on or before the last day 

5 prescribed by law (including extensions of 

6 time) for filing such individual’s return for 

7 such taxable year, and 

8 ‘‘(ii) such distribution is accompanied 

9 by the amount of net income attributable 

10 to such contribution. 

11 Any net income described in clause (ii) shall be 

12 included in the gross income of the individual 

13 for the taxable year in which it is received.’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall take effect on the date of the enactment 

16 of this Act. 

17 SEC. 113. REAUTHORIZATION OF MEDICAID HEALTH OP18 PORTUNITY ACCOUNTS. 

19 (a) IN GENERAL.—Section 1938 of the Social Secu20 rity Act (42 U.S.C. 1396u–8) is amended— 

21 (1) in subsection (a)— 

22 (A) by striking paragraph (2) and insert23 ing the following: 

24 ‘‘(2) INITIAL DEMONSTRATION.—The dem25 onstration program under this section shall begin on 


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1 January 1, 2007. The Secretary shall approve States 

2 to conduct demonstration programs under this sec3 tion for a 5-year period, with each State demonstra4 tion program covering one or more geographic areas 

5 specified by the State. With respect to a State, after 

6 the initial 5-year period of any demonstration pro7 gram conducted under this section by the State, un8 less the Secretary finds, taking into account cost-ef9 fectiveness and quality of care, that the State dem10 onstration program has been unsuccessful, the dem11 onstration program may be extended or made per12 manent in the State.’’; and 

13 (B) in paragraph (3), in the matter pre14 ceding subparagraph (A)— 

15 (i) by striking ‘‘not’’; and 

16 (ii) by striking ‘‘unless’’ and inserting 

17 ‘‘if’’; 

18 (2) in subsection (b)— 

19 (A) in paragraph (3), by inserting ‘‘clause 

20 (i) through (vii), (viii) (without regard to the 

21 amendment made by section 2004(c)(2) of Pub22 lic Law 111–148), (x), or (xi) of’’ after ‘‘de23 scribed in’’; and 

24 (B) by striking paragraphs (4), (5), and 

25 (6); 


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1 (3) in subsection (c)— 

2 (A) by striking paragraphs (3) and (4); 

3 (B) by redesignating paragraphs (5) 

4 through (8) as paragraphs (3) through (6), re5 spectively; and 

6 (C) in paragraph (4) (as redesignated by 

7 subparagraph (B)), by striking ‘‘Subject to sub8 paragraphs (D) and (E)’’ and inserting ‘‘Sub9 ject to subparagraph (D)’’; and 

10 (4) in subsection (d)— 

11 (A) in paragraph (2), by striking subpara12 graph (E); and 

13 (B) in paragraph (3)— 

14 (i) in subparagraph (A)(ii), by strik15 ing ‘‘Subject to subparagraph (B)(ii), in’’ 

16 and inserting ‘‘In’’; and 

17 (ii) by striking subparagraph (B) and 

18 inserting the following: 

19 ‘‘(B) MAINTENANCE OF HEALTH OPPOR20 TUNITY ACCOUNT AFTER BECOMING INELI21 GIBLE FOR PUBLIC BENEFIT.—Notwithstanding 

22 any other provision of law, if an account holder 

23 of a health opportunity account becomes ineli24 gible for benefits under this title because of an 

25 increase in income or assets— 


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1 ‘‘(i) no additional contribution shall be 

2 made into the account under paragraph 

3 (2)(A)(i); and 

4 ‘‘(ii) the account shall remain avail5 able to the account holder for 3 years after 

6 the date on which the individual becomes 

7 ineligible for such benefits for withdrawals 

8 under the same terms and conditions as if 

9 the account holder remained eligible for 

10 such benefits, and such withdrawals shall 

11 be treated as medical assistance in accord12 ance with subsection (c)(4).’’. 

13 (b) CONFORMING AMENDMENT.—Section 613 of 

14 Public Law 111–3 is repealed. 

15 SEC. 114. MEMBERS OF HEALTH CARE SHARING MIN16 ISTRIES ELIGIBLE TO ESTABLISH HEALTH 

17 SAVINGS ACCOUNTS. 

18 (a) IN GENERAL.—Section 223 is amended by adding 

19 at the end the following new subsection: 

20 ‘‘(i) APPLICATION TO HEALTH CARE SHARING MIN21 ISTRIES.—For purposes of this section, membership in a 

22 health care sharing ministry (as defined in section 

23 5000A(d)(2)(B)(ii)) shall be treated as coverage under a 

24 high deductible health plan.’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 115. HIGH DEDUCTIBLE HEALTH PLANS RENAMED 

5 HSA QUALIFIED PLANS. 

6 (a) IN GENERAL.—Section 223, as amended by this 

7 Act, is amended by striking ‘‘high deductible health plan’’ 

8 each place it appears and inserting ‘‘HSA qualified health 

9 plan’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Section 106(e), as amended by this Act, is 

12 amended by striking ‘‘high deductible health plan’’ 

13 each place it appears and inserting ‘‘HSA qualified 

14 health plan’’. 

15 (2) The heading for paragraph (2) of section 

16 223(c) is amended by striking ‘‘HIGH DEDUCTIBLE

17 HEALTH PLAN’’ and inserting ‘‘HSA QUALIFIED

18 HEALTH PLAN’’. 

19 (3) Section 408(d)(9) is amended— 

20 (A) by striking ‘‘high deductible health 

21 plan’’ each place it appears in subparagraph 

22 (C) and inserting ‘‘HSA qualified health plan’’, 

23 and 

24 (B) by striking ‘‘HIGH DEDUCTIBLE

25 HEALTH PLAN’’ in the heading of subparagraph 


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1 (D) and inserting ‘‘HSA QUALIFIED HEALTH

2 PLAN’’. 

3 SEC. 116. TREATMENT OF DIRECT PRIMARY CARE SERVICE 

4 ARRANGEMENTS. 

5 (a) IN GENERAL.—Section 223(c) is amended by 

6 adding at the end the following new paragraph: 

7 ‘‘(6) TREATMENT OF DIRECT PRIMARY CARE

8 SERVICE ARRANGEMENTS.—An arrangement under 

9 which an individual is provided coverage restricted to 

10 primary care services in exchange for a fixed peri11 odic fee— 

12 ‘‘(A) shall not be treated as a health plan 

13 for purposes of paragraph (1)(A)(ii), and 

14 ‘‘(B) shall not be treated as insurance for 

15 purposes of subsection (d)(2)(B).’’. 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

19 SEC. 117. HIGH DEDUCTIBLE HEALTH PLANS WITH HSAS 

20 TREATED AS QUALIFIED HEALTH PLANS. 

21 Section 1301 of the Patient Protection and Afford22 able Care Act is amended by adding at the end the fol23 lowing new subsection: 

24 ‘‘(e) HIGH DEDUCTIBLE HEALTH PLAN WITH

25 HEALTH SAVINGS ACCOUNT.—A health plan not proVerDate Mar 15 2010 03:32 May 30, 2013 Jkt 029200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S1031.IS S1031

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1 viding a bronze, silver, gold, or platinum level of coverage 

2 shall be treated as meeting the requirements of subsection 

3 (d) with respect to any plan year for any enrollee if the 

4 plan meets the requirements for a high deductible health 

5 plan under section 223(c)(2) of the Internal Revenue Code 

6 of 1986 and such enrollee has established a health savings 

7 account (as defined in section 223(d)(1) of such Code) in 

8 relation to such plan.’’. 

9 SEC. 118. CERTAIN STAND-ALONE HRAS NOT SUBJECT TO 

10 PROHIBITION ON ANNUAL LIMITS. 

11 Section 2711(a) of the Public Health Service Act (42 

12 U.S.C. 300gg–11(a)) is amended by adding at the end the 

13 following new paragraph: 

14 ‘‘(3) EXCEPTION FOR HEALTH REIMBURSE15 MENT ARRANGEMENTS.—Paragraph (1)(A) shall not 

16 apply to any health reimbursement arrangement 

17 which permits the purchase of a qualified health 

18 plan through an Exchange established under section 

19 1311 of the Patient Protection and Affordable Care 

20 Act.’’. 


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1 TITLE II—OTHER PROVISIONS 

2 SEC. 201. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL 

3 FITNESS PROGRAMS TREATED AS MEDICAL 

4 CARE. 

5 (a) IN GENERAL.—Subsection (d) of section 213 is 

6 amended by adding at the end the following new para7 graph: 

8 ‘‘(12) EXERCISE EQUIPMENT AND PHYSICAL

9 FITNESS PROGRAMS.— 

10 ‘‘(A) IN GENERAL.—The term ‘medical 

11 care’ shall include amounts paid— 

12 ‘‘(i) to purchase or use equipment 

13 used in a program (including a self-di14 rected program) of physical exercise, 

15 ‘‘(ii) to participate, or receive instruc16 tion, in a program of physical exercise, and 

17 ‘‘(iii) for membership dues in a fitness 

18 club the primary purpose of which is to 

19 provide access to equipment and facilities 

20 for physical exercise. 

21 ‘‘(B) LIMITATION.—Amounts treated as 

22 medical care under subparagraph (A) shall not 

23 exceed $1,000 with respect to any individual for 

24 any taxable year.’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 202. CERTAIN NUTRITIONAL AND DIETARY SUPPLE5 MENTS TO BE TREATED AS MEDICAL CARE. 

6 (a) IN GENERAL.—Subsection (d) of section 213, as 

7 amended by section 201, is amended by adding at the end 

8 the following new paragraph: 

9 ‘‘(13) NUTRITIONAL AND DIETARY SUPPLE10 MENTS.— 

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

12 care’ shall include amounts paid to purchase 

13 herbs, vitamins, minerals, homeopathic rem14 edies, meal replacement products, and other di15 etary and nutritional supplements. 

16 ‘‘(B) LIMITATION.—Amounts treated as 

17 medical care under subparagraph (A) shall not 

18 exceed $1,000 with respect to any individual for 

19 any taxable year. 

20 ‘‘(C) MEAL REPLACEMENT PRODUCT.— 

21 For purposes of this paragraph, the term ‘meal 

22 replacement product’ means any product that— 

23 ‘‘(i) is permitted to bear labeling mak24 ing a claim described in section 403(r)(3) 


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1 of the Federal Food, Drug, and Cosmetic 

2 Act, and 

3 ‘‘(ii) is permitted to claim under such 

4 section that such product is low in fat and 

5 is a good source of protein, fiber, and mul6 tiple essential vitamins and minerals.’’. 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to taxable years beginning after 

9 the date of the enactment of this Act. 

10 SEC. 203. CERTAIN PROVIDER FEES TO BE TREATED AS 

11 MEDICAL CARE. 

12 (a) IN GENERAL.—Subsection (d) of section 213, as 

13 amended by sections 201 and 202, is amended by adding 

14 at the end the following new paragraph: 

15 ‘‘(14) PERIODIC PROVIDER FEES.—The term 

16 ‘medical care’ shall include periodic fees paid to a 

17 primary care physician for the right to receive med18 ical services on an as-needed basis.’’. 

19 (b) EFFECTIVE DATE.—The amendment made by 

20 this section shall apply to taxable years beginning after 

21 the date of the enactment of this Act. 


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1 SEC. 204. REPEAL OF ANNUAL LIMITATIONS ON 

2 DEDUCTIBLES FOR EMPLOYER-SPONSORED 

3 PLANS OFFERED IN SMALL GROUP MARKET. 

4 Section 1302(c)(2) of the Patient Protection and Af5 fordable Care Act (Public Law 111–148) is repealed. 

Æ 


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