II 

115TH CONGRESS 

2D SESSION S. 2496 

To amend the Internal Revenue Code of 1986 to establish Small Business 

Health Accounts. 

IN THE SENATE OF THE UNITED STATES 

MARCH 5, 2018 

Mr. ENZI 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 establish 

Small Business Health Accounts. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Health 

5 Account Act of 2018’’. 

6 SEC. 2. SMALL BUSINESS HEALTH ACCOUNTS. 

7 (a) IN GENERAL.—Part VIII of subchapter B of 

8 chapter 1 of the Internal Revenue Code of 1986 is amend9 ed by redesignating section 224 as section 225 and insert10 ing after section 223 the following new section: 


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1 ‘‘SEC. 224. SMALL BUSINESS HEALTH ACCOUNTS. 

2 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi3 vidual who is an eligible individual for any month during 

4 the taxable year, there shall be allowed as a deduction for 

5 the taxable year an amount equal to the aggregate amount 

6 paid in cash during such taxable year by or on behalf of 

7 such individual to a small business health account of such 

8 individual. 

9 ‘‘(b) LIMITATIONS.— 

10 ‘‘(1) IN GENERAL.—The amount allowable as a 

11 deduction under subsection (a) to an individual for 

12 the taxable year shall not exceed the sum of the 

13 monthly limitations for months during such taxable 

14 year that the individual is an eligible individual. 

15 ‘‘(2) MONTHLY LIMITATION.—The monthly limitation for any month is 1 16 ⁄12 of— 

17 ‘‘(A) in the case of an eligible individual 

18 who is not described in subparagraph (B), 

19 $3,400, or 

20 ‘‘(B) in the case of an eligible individual 

21 who is a head of a household or married (within 

22 the meaning of section 7703) and filing a joint 

23 return under section 6013 for the taxable year, 

24 $6,750. 

25 ‘‘(3) ADDITIONAL CONTRIBUTIONS FOR INDI26 VIDUALS 55 OR OLDER.—In the case of an individual 


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1 who has attained age 55 before the close of the tax2 able year, the applicable limitation under subpara3 graphs (A) and (B) of paragraph (2) shall be in4 creased by $1,000. 

5 ‘‘(4) COORDINATION WITH OTHER CONTRIBU6 TIONS.— 

7 ‘‘(A) IN GENERAL.—The limitation which 

8 would (but for this paragraph) apply under this 

9 subsection to an individual for any taxable year 

10 shall be reduced (but not below zero) by the 

11 sum of— 

12 ‘‘(i) the aggregate amount paid for 

13 such taxable year to Archer MSAs of such 

14 individual, 

15 ‘‘(ii) the aggregate amount contrib16 uted to small business health accounts of 

17 such individual which is excludable from 

18 the taxpayer’s gross income for such tax19 able year under section 106(d) (and such 

20 amount shall not be allowed as a deduction 

21 under subsection (a)), and 

22 ‘‘(iii) the aggregate amount contrib23 uted to small business health accounts of 

24 such individual for such taxable year under 

25 section 408(d)(10) (and such amount shall 


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1 not be allowed as a deduction under sub2 section (a)). 

3 ‘‘(B) EXCEPTION.—Subparagraph (A)(i) 

4 shall not apply with respect to any individual to 

5 whom paragraph (5) applies. 

6 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID7 UALS.—In the case of individuals who are married 

8 to each other, the limitation under paragraph (1) 

9 (without regard to any additional contribution 

10 amount under paragraph (3))— 

11 ‘‘(A) shall be reduced by the aggregate 

12 amount paid to Archer MSAs of such spouses 

13 for the taxable year, and 

14 ‘‘(B) after such reduction, shall be divided 

15 equally between them unless they agree on a 

16 different division. 

17 ‘‘(6) DENIAL OF DEDUCTIONS TO DEPEND18 ENTS.—No deduction shall be allowed under this 

19 section to any individual with respect to whom a de20 duction under section 151 is allowable to another 

21 taxpayer for a taxable year beginning in the cal22 endar year in which such individual’s taxable year 

23 begins. 

24 ‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The 

25 limitation under this subsection for any month with 


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1 respect to an individual shall be zero for the first 

2 month such individual is entitled to benefits under 

3 title XVIII of the Social Security Act and for each 

4 month thereafter. 

5 ‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE6 COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN7 NING OF THE YEAR.— 

8 ‘‘(A) IN GENERAL.—For purposes of com9 puting the limitation under paragraph (1) for 

10 any taxable year, an individual who is an eligi11 ble individual during the last month of such 

12 taxable year shall be treated as having been an 

13 eligible individual during each of the months in 

14 such taxable year. 

15 ‘‘(B) FAILURE TO MAINTAIN ELIGI16 BILITY.— 

17 ‘‘(i) IN GENERAL.—If, at any time 

18 during the testing period, the individual is 

19 not an eligible individual, then— 

20 ‘‘(I) gross income of the indi21 vidual for the taxable year in which 

22 occurs the first month in the testing 

23 period for which such individual is not 

24 an eligible individual is increased by 

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1 tions to the small business health ac2 count of the individual which could 

3 not have been made but for subpara4 graph (A), and 

5 ‘‘(II) the tax imposed by this 

6 chapter for any taxable year on the 

7 individual shall be increased by 10 

8 percent of the amount of such in9 crease. 

10 ‘‘(ii) EXCEPTION FOR DISABILITY OR

11 DEATH.—Subclauses (I) and (II) of clause 

12 (i) shall not apply if the individual ceased 

13 to be an eligible individual by reason of the 

14 death of the individual or the individual 

15 becoming disabled (within the meaning of 

16 section 72(m)(7)). 

17 ‘‘(iii) TESTING PERIOD.—The term 

18 ‘testing period’ means the period beginning 

19 with the last month of the taxable year re20 ferred to in subparagraph (A) and ending 

21 on the last day of the twelfth month fol22 lowing such month. 

23 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur24 poses of this section— 


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1 ‘‘(1) ARCHER MSA.—The term ‘Archer MSA’ 

2 has the meaning given such term in section 220(d). 

3 ‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

4 individual’ means, with respect to any month, any 

5 individual if— 

6 ‘‘(A) such individual is employed by a 

7 small business, and 

8 ‘‘(B) except as provided under subsection 

9 (f)(5)(B), no cash has been paid during such 

10 month by or on behalf of such individual to a 

11 health savings account under section 223. 

12 ‘‘(3) SMALL BUSINESS.—The term ‘small busi13 ness’ means a small business concern (as defined 

14 under section 3 of the Small Business Act (15 

15 U.S.C. 632)). 

16 ‘‘(d) SMALL BUSINESS HEALTH ACCOUNT.—For 

17 purposes of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘small business 

19 health account’ means a trust created or organized 

20 in the United States as a small business health ac21 count exclusively for the purpose of paying the quali22 fied medical expenses of the account beneficiary, but 

23 only if the written governing instrument creating the 

24 trust meets the following requirements: 


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1 ‘‘(A) Except in the case of a rollover con2 tribution described in subsection (f)(5) or sec3 tion 220(f)(5), no contribution will be accept4 ed— 

5 ‘‘(i) unless it is in cash, or 

6 ‘‘(ii) to the extent such contribution, 

7 when added to previous contributions to 

8 the trust for the calendar year, exceeds the 

9 sum of— 

10 ‘‘(I) the dollar amount in effect 

11 under subsection (b)(2), and 

12 ‘‘(II) the dollar amount in effect 

13 under subsection (b)(3). 

14 ‘‘(B) The trustee is a bank (as defined in 

15 section 408(n)), an insurance company (as de16 fined in section 816), or another person who 

17 demonstrates to the satisfaction of the Sec18 retary that the manner in which such person 

19 will administer the trust will be consistent with 

20 the requirements of this section. 

21 ‘‘(C) No part of the trust assets will be in22 vested in life insurance contracts. 

23 ‘‘(D) The assets of the trust will not be 

24 commingled with other property except in a 


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1 common trust fund or common investment 

2 fund. 

3 ‘‘(E) The interest of an individual in the 

4 balance in their account is nonforfeitable. 

5 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 

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

7 medical expenses’ means, with respect to an ac8 count beneficiary, amounts paid by such bene9 ficiary for— 

10 ‘‘(i) medical care (as defined in sec11 tion 213(d)) for such individual, the spouse 

12 of such individual, and any dependent (as 

13 defined in section 152, determined without 

14 regard to subsections (b)(1), (b)(2), and 

15 (d)(1)(B) thereof) of such individual, but 

16 only to the extent such amounts are not 

17 compensated for by insurance or otherwise, 

18 and 

19 ‘‘(ii) coverage under a health plan. 

20 ‘‘(B) PRESCRIBED DRUG.—The term 

21 ‘qualified medical expenses’ shall include an 

22 amount paid for medicine or a drug only if such 

23 medicine or drug is a prescribed drug (deter24 mined without regard to whether such drug is 

25 available without a prescription) or is insulin. 


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1 ‘‘(C) PROHIBITION.— 

2 ‘‘(i) IN GENERAL.—The term ‘quali3 fied medical expenses’ shall not include any 

4 amount paid for— 

5 ‘‘(I) an abortion, 

6 ‘‘(II) any health plan coverage 

7 described in clause (ii) of subpara8 graph (A) which includes coverage for 

9 abortion, or 

10 ‘‘(III) any prescribed drug, as de11 scribed in subparagraph (B), for an 

12 abortion. 

13 ‘‘(ii) EXCEPTION.—This subpara14 graph shall not apply in the case of— 

15 ‘‘(I) a pregnancy which is the re16 sult of an act of rape or incest, or 

17 ‘‘(II) a woman who suffers from 

18 a physical disorder, physical injury, or 

19 physical illness that would, as certified 

20 by a physician, place the woman in 

21 danger of death unless an abortion is 

22 performed, including a life-endan23 gering physical condition caused by or 

24 arising from the pregnancy itself. 


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1 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac2 count beneficiary’ means the individual on whose be3 half the small business health account was estab4 lished. 

5 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 

6 to the rules described in section 223(d)(4) shall 

7 apply for purposes of this section. 

8 ‘‘(e) TAX TREATMENT OF ACCOUNTS.—Rules similar 

9 to the rules described in section 223(e) shall apply for pur10 poses of this section. 

11 ‘‘(f) TAX TREATMENTS OF DISTRIBUTIONS.— 

12 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

13 EXPENSES.—Any amount paid or distributed out of 

14 a small business health account which is used exclu15 sively to pay qualified medical expenses of any ac16 count beneficiary shall not be includible in gross in17 come. 

18 ‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR

19 QUALIFIED MEDICAL EXPENSES.—Any amount paid 

20 or distributed out of a small business health account 

21 which is not used exclusively to pay the qualified 

22 medical expenses of the account beneficiary shall be 

23 included in the gross income of such beneficiary. 

24 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE25 FORE DUE DATE OF RETURN.— 


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1 ‘‘(A) IN GENERAL.—If any excess con2 tribution is contributed for a taxable year to 

3 any small business health account of an indi4 vidual, paragraph (2) shall not apply to dis5 tributions from the small business health ac6 counts of such individual (to the extent such 

7 distributions do not exceed the aggregate excess 

8 contributions to all such accounts of such indi9 vidual for such year) if— 

10 ‘‘(i) such distribution is received by 

11 the individual on or before the last day 

12 prescribed by law (including extensions of 

13 time) for filing such individual’s return for 

14 such taxable year, and 

15 ‘‘(ii) such distribution is accompanied 

16 by the amount of net income attributable 

17 to such excess contribution. 

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

19 included in the gross income of the individual 

20 for the taxable year in which it is received. 

21 ‘‘(B) EXCESS CONTRIBUTION.—For pur22 poses of subparagraph (A), the term ‘excess 

23 contribution’ means any contribution (other 

24 than a rollover contribution described in para25 graph (5) or section 220(f)(5)) which is neither 


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1 excludable from gross income under section 

2 106(d) nor deductible under this section. 

3 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

4 USED FOR QUALIFIED MEDICAL EXPENSES.— 

5 ‘‘(A) IN GENERAL.—The tax imposed by 

6 this chapter on the account beneficiary for any 

7 taxable year in which there is a payment or dis8 tribution from a small business health account 

9 of such beneficiary which is includible in gross 

10 income under paragraph (2) shall be increased 

11 by 20 percent of the amount which is so includ12 ible. 

13 ‘‘(B) EXCEPTION FOR DISABILITY OR

14 DEATH.—Subparagraph (A) shall not apply if 

15 the payment or distribution is made after the 

16 account beneficiary becomes disabled within the 

17 meaning of section 72(m)(7) or dies. 

18 ‘‘(C) EXCEPTIONS FOR DISTRIBUTIONS

19 AFTER MEDICARE ELIGIBILITY.—Subparagraph 

20 (A) shall not apply to any payment or distribu21 tion after the date on which the account bene22 ficiary attains the age specified in section 1811 

23 of the Social Security Act. 

24 ‘‘(5) ROLLOVER CONTRIBUTION.— 


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1 ‘‘(A) IN GENERAL.—An amount is de2 scribed in this paragraph as a rollover contribu3 tion if it meets the requirements of subpara4 graph (B). 

5 ‘‘(B) ROLLOVER CONTRIBUTION RULES.— 

6 ‘‘(i) IN GENERAL.—Paragraph (2) 

7 shall not apply to any amount paid or dis8 tributed from— 

9 ‘‘(I) a health savings account (as 

10 described in section 223(d)) to the ac11 count beneficiary to the extent the 

12 amount received is paid into a small 

13 business health account, or 

14 ‘‘(II) a small business health ac15 count to the account beneficiary to the 

16 extent the amount received is paid 

17 into a small business health account 

18 or a health savings account, 

19 for the benefit of such beneficiary not later 

20 than the sixtieth day after the day on 

21 which the beneficiary receives the payment 

22 or distribution. 

23 ‘‘(ii) LIMITATION.—This paragraph 

24 shall not apply to any amount described in 

25 subparagraph (A) received by an individual 


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1 from a health savings account or a small 

2 business health account if, at any time 

3 during the 1-year period ending on the day 

4 of such receipt, such individual received 

5 any other amount described in subpara6 graph (A) from a health savings account or 

7 a small business account which was not in8 cludible in the individual’s gross income 

9 because of the application of this para10 graph. 

11 ‘‘(6) ADDITIONAL RULES.—Rules similar to the 

12 rules described in paragraphs (6) through (8) of sec13 tion 223(e) shall apply for purposes of this section. 

14 ‘‘(g) COST-OF-LIVING ADJUSTMENT.— 

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

16 year beginning after 2019, each dollar amount in 

17 subsection (b)(2) shall be increased by an amount 

18 equal to— 

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

20 ‘‘(B) the cost-of-living adjustment deter21 mined under section 1(f)(3) for the calendar 

22 year in which such taxable year begins deter23 mined by substituting ‘calendar year 2018’ for 

24 ‘calendar year 2016’ in subparagraph (A)(ii) 

25 thereof. 


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1 ‘‘(2) ROUNDING.—If any increase under para2 graph (1) is not a multiple of $50, such increase 

3 shall be rounded to the nearest multiple of $50. 

4 ‘‘(h) REPORTS.— 

5 ‘‘(1) IN GENERAL.—The Secretary may require 

6 the trustee of a small business health account to 

7 make such reports regarding such account to the 

8 Secretary and to the account beneficiary with re9 spect to contributions, distributions, the return of 

10 excess contributions, and such other matters as the 

11 Secretary determines appropriate. 

12 ‘‘(2) TIME AND MANNER.—The reports required 

13 by this subsection shall be filed at such time and in 

14 such manner and furnished to such individuals at 

15 such time and in such manner as may be required 

16 by the Secretary.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Paragraph (2) of section 26(b) of the Inter19 nal Revenue Code of 1986 is amended— 

20 (A) in subparagraph (S), by inserting 

21 ‘‘224(b)(8)(i)(II),’’ after ‘‘223(b)(8)(i)(II),’’; 

22 and 

23 (B) by striking subparagraph (U) and in24 serting the following: 


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1 ‘‘(U) sections 223(f)(4) and 224(f)(4) (re2 lating to additional tax on health savings ac3 count distributions and small business heath ac4 count distributions not used for qualified med5 ical expenses),’’. 

6 (2) Paragraph (3) of section 35(g) of such Code 

7 is amended by striking ‘‘or from a health savings ac8 count (as defined in section 223(d))’’ and inserting 

9 ‘‘, a health savings account (as defined in section 

10 223(d)), or a small business health account (as de11 fined in section 224(d))’’. 

12 (3) Paragraph (19) of section 62(a) of such 

13 Code is amended to read as follows: 

14 ‘‘(19) HEALTH SAVINGS ACCOUNTS AND SMALL

15 BUSINESS HEALTH ACCOUNTS.—The deductions al16 lowed by sections 223 and 224.’’. 

17 (4) Subsection (d) of section 106 of such Code 

18 of 1986 is amended— 

19 (A) in the heading, by inserting ‘‘AND

20 SMALL BUSINESS HEALTH ACCOUNTS’’; 

21 (B) in paragraph (1), by striking ‘‘IN GEN22 ERAL’’ in the heading and inserting ‘‘HEALTH

23 SAVINGS ACCOUNTS’’; 

24 (C) by redesignating paragraphs (2) and 

25 (3) as paragraphs (3) and (4), respectively; and 


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1 (D) by inserting after paragraph (1) the 

2 following new paragraph: 

3 ‘‘(2) SMALL BUSINESS HEALTH ACCOUNTS.—In 

4 the case of an employee who is an eligible individual 

5 (as defined in section 224(c)(2)), amounts contrib6 uted by such employee’s employer to any small busi7 ness health account (as defined in section 224(d)) of 

8 such employee shall be treated as employer-provided 

9 coverage for medical expenses under an accident or 

10 health plan to the extent such amounts do not ex11 ceed the limitation under section 224(b) (determined 

12 without regard to this subsection) which is applica13 ble to such employee for such taxable year.’’. 

14 (5) Subparagraph (A) of section 220(f)(5) of 

15 such Code is amended by striking ‘‘or a health sav16 ings account (as defined in section 223(d))’’ and in17 serting ‘‘, a health savings account (as defined in 

18 section 223(d)), or a small business health account 

19 (as defined in section 224(d))’’. 

20 (6) Subsection (d) of section 408 of such Code 

21 is amended by adding at the end the following new 

22 paragraph: 

23 ‘‘(10) DISTRIBUTION FOR SMALL BUSINESS

24 HEALTH ACCOUNT FUNDING.— 


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1 ‘‘(A) IN GENERAL.—In the case of an indi2 vidual who is an eligible individual (as defined 

3 in section 224(c)(2)) and who elects the appli4 cation of this paragraph for a taxable year, 

5 gross income of the individual for the taxable 

6 year does not include a qualified SBHA funding 

7 distribution to the extent such distribution is 

8 otherwise includible in gross income. 

9 ‘‘(B) QUALIFIED SBHA FUNDING DIS10 TRIBUTION.—For purposes of this paragraph, 

11 the term ‘qualified SBHA funding distribution’ 

12 means a distribution from an individual retire13 ment plan (other than a plan described in sub14 section (k) or (p)) of the employee to the extent 

15 that such distribution is contributed to the 

16 small business health account of the individual 

17 in a direct trustee-to-trustee transfer. 

18 ‘‘(C) LIMITATIONS.— 

19 ‘‘(i) MAXIMUM DOLLAR LIMITA20 TION.—The amount excluded from gross 

21 income by subparagraph (A) shall not ex22 ceed the applicable annual limitation under 

23 section 224(b) at the time of the qualified 

24 SBHA funding distribution. 


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1 ‘‘(ii) ONE-TIME TRANSFER.—An indi2 vidual may make an election under sub3 paragraph (A) only for one qualified 

4 SBHA funding distribution during the life5 time of the individual. Such an election, 

6 once made, shall be irrevocable. 

7 ‘‘(D) FAILURE TO MAINTAIN ELIGI8 BILITY.— 

9 ‘‘(i) IN GENERAL.—If, at any time 

10 during the testing period, the individual is 

11 not an eligible individual, then the aggre12 gate amount of all contributions to the 

13 small business health account of the indi14 vidual made under subparagraph (A)— 

15 ‘‘(I) shall be includible in the 

16 gross income of the individual for the 

17 taxable year in which occurs the first 

18 month in the testing period for which 

19 such individual is not an eligible indi20 vidual, and 

21 ‘‘(II) the tax imposed by this 

22 chapter for any taxable year on the 

23 individual shall be increased by 10 

24 percent of the amount which is so in25 cludible. 


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1 ‘‘(ii) EXCEPTION FOR DISABILITY OR

2 DEATH.—Subclauses (I) and (II) of clause 

3 (i) shall not apply if the individual ceased 

4 to be an eligible individual by reason of the 

5 death of the individual or the individual 

6 becoming disabled (within the meaning of 

7 section 72(m)(7)). 

8 ‘‘(iii) TESTING PERIOD.—The term 

9 ‘testing period’ means the period beginning 

10 with the month in which the qualified 

11 SBHA funding distribution is contributed 

12 to a small business health account and 

13 ending on the last day of the twelfth 

14 month following such month. 

15 ‘‘(E) APPLICATION OF SECTION 72.—Not16 withstanding section 72, in determining the ex17 tent to which an amount is treated as otherwise 

18 includible in gross income for purposes of sub19 paragraph (A), the aggregate amount distrib20 uted from an individual retirement plan shall be 

21 treated as includible in gross income to the ex22 tent that such amount does not exceed the ag23 gregate amount which would have been so in24 cludible if all amounts from all individual retire25 ment plans were distributed. Proper adjustVerDate Sep 11 2014 00:35 Mar 09, 2018 Jkt 079200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\S2496.IS S2496

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1 ments shall be made in applying section 72 to 

2 other distributions in such taxable year and 

3 subsequent taxable years.’’. 

4 (7) Subparagraph (B) of section 848(e)(1) of 

5 such Code is amended— 

6 (A) in clause (iv), by striking ‘‘and’’ at the 

7 end; 

8 (B) in clause (v), by striking the period at 

9 the end and inserting ‘‘, and’’; and 

10 (C) by adding at the end the following new 

11 clause: 

12 ‘‘(vi) any contract which is a small 

13 business health account (as defined in sec14 tion 224(d)).’’. 

15 (8) Paragraph (2) of section 877A(e) of such 

16 Code is amended by inserting ‘‘a small business 

17 health account (as defined in section 224),’’ after ‘‘a 

18 health savings account (as defined in section 223)’’. 

19 (9) Subsection (a) of section 4973 of such Code 

20 is amended— 

21 (A) in paragraph (5), by striking ‘‘or’’ at 

22 the end; 

23 (B) by redesignating paragraph (6) as 

24 paragraph (7); and 


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1 (C) by inserting after paragraph (5) the 

2 following new paragraph: 

3 ‘‘(6) a small business health account (within the 

4 meaning of section 224(d)), or’’. 

5 (10) Section 4975 of such Code is amended— 

6 (A) in subsection (c), by adding at the end 

7 the following new paragraph: 

8 ‘‘(7) SPECIAL RULE FOR SMALL BUSINESS

9 HEALTH ACCOUNTS.—An individual for whose ben10 efit a small business health account (within the 

11 meaning of section 224(d)) is established shall be ex12 empt from the tax imposed by this section with re13 spect to any transaction concerning such account 

14 (which would otherwise be taxable under this sec15 tion) if, with respect to such transaction, the ac16 count ceases to be a small business health account 

17 by reason of the application of section 224(e) to 

18 such account.’’; and 

19 (B) in paragraph (1) of subsection (e)— 

20 (i) by redesignating subparagraphs 

21 (F) and (G) as subparagraphs (G) and 

22 (H), respectively; and 

23 (ii) by inserting after subparagraph 

24 (E) the following new subparagraph: 


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1 ‘‘(F) a small business health account de2 scribed in section 224(d),’’. 

3 (11) Subsection (a) of section 6051 of such 

4 Code is amended— 

5 (A) by redesignating paragraphs (13) 

6 through (17) as paragraphs (14) through (18), 

7 respectively; and 

8 (B) by inserting after paragraph (12) the 

9 following new paragraph: 

10 ‘‘(13) the amount contributed to any small 

11 business health account (as defined in section 

12 224(d)) of such employee or such employee’s 

13 spouse,’’. 

14 (12) Paragraph (2) of section 6693(a) of such 

15 Code is amended— 

16 (A) by redesignating subparagraphs (D) 

17 through (F) as subparagraphs (E) through (G), 

18 respectively; and 

19 (B) by inserting after subparagraph (C) 

20 the following new subparagraph: 

21 ‘‘(D) section 224(h) (relative to small busi22 ness health accounts),’’. 

23 (13) The table of sections for part VII of sub24 chapter B of chapter 1 of such Code is amended by 

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1 lating to section 225 and by inserting after the item 

2 relating to section 223 the following new item: 

‘‘Sec. 224. Small Business Health Accounts.’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2018. 

Æ 


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