I 

115TH CONGRESS 

1ST SESSION H. R. 1175 

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 HOUSE OF REPRESENTATIVES 

FEBRUARY 16, 2017 

Mr. PAULSEN (for himself, Mr. KELLY of Pennsylvania, and Ms. JENKINS of 

Kansas) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on the 

Judiciary, and Energy and Commerce, for a period to be subsequently 

determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

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 ‘‘Health Savings Act of 2017’’. 

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 


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

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

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

5 as follows: 

Sec. 1. Short title, etc. 

TITLE I—RENAMING HIGH DEDUCTIBLE HEALTH PLANS 

Sec. 101. High deductible health plans renamed HSA-qualified health plans. 

TITLE II—ENHANCING ACCESS TO TAX-PREFERRED HEALTH 

ACCOUNTS 

Sec. 201. Allow both spouses to make catch-up contributions to the same HSA 

account. 

Sec. 202. Provisions relating to Medicare. 

Sec. 203. Individuals eligible for Indian Health Service assistance. 

Sec. 204. Members of health care sharing ministries eligible to establish health 

savings accounts. 

Sec. 205. Treatment of direct primary care service arrangements. 

Sec. 206. Individuals eligible for on-site medical clinic coverage. 

Sec. 207. Treatment of embedded deductibles. 

TITLE III—IMPROVING COVERAGE UNDER TAX-PREFERRED 

HEALTH ACCOUNTS 

Sec. 301. Allowance of distributions for prescription and over-the-counter medicines and drugs. 

Sec. 302. Purchase of health insurance from HSA account. 

Sec. 303. Special rule for certain medical expenses incurred before establishment of account. 

Sec. 304. Preventive care prescription drug clarification. 

TITLE IV—MISCELLANEOUS PROVISIONS RELATING TO TAXPREFERRED HEALTH ACCOUNTS 

Sec. 401. FSA and HRA interaction with HSAs. 

Sec. 402. Equivalent bankruptcy protections for health savings accounts as retirement funds. 

Sec. 403. Administrative error correction before due date of return. 

Sec. 404. Reauthorization of Medicaid health opportunity accounts. 

Sec. 405. Maximum contribution limit to health savings account increased to 

amount of deductible and out-of-pocket limitation. 

TITLE V—OTHER PROVISIONS 

Sec. 501. Certain exercise equipment and physical fitness programs treated as 

medical care. 

Sec. 502. Certain nutritional and dietary supplements to be treated as medical 

care. 

Sec. 503. Certain provider fees to be treated as medical care. 


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1 TITLE I—RENAMING HIGH 

2 DEDUCTIBLE HEALTH PLANS 

3 SEC. 101. HIGH DEDUCTIBLE HEALTH PLANS RENAMED 

4 HSA-QUALIFIED HEALTH PLANS. 

5 (a) IN GENERAL.—Section 223 is amended by strik6 ing ‘‘high deductible health plan’’ each place it appears 

7 and inserting ‘‘HSA-qualified health plan’’. 

8 (b) CONFORMING AMENDMENTS.— 

9 (1) The heading for paragraph (2) of section 

10 223(c) is amended by striking ‘‘HIGH DEDUCTIBLE

11 HEALTH PLAN’’ and inserting ‘‘HSA-QUALIFIED

12 HEALTH PLAN’’. 

13 (2) Section 408(d)(9) is amended— 

14 (A) by striking ‘‘high deductible health 

15 plan’’ each place it appears in subparagraph 

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

17 and 

18 (B) by striking ‘‘HIGH DEDUCTIBLE

19 HEALTH PLAN’’ in the heading of subparagraph 

20 (D) and inserting ‘‘HSA-QUALIFIED HEALTH

21 PLAN’’. 


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1 TITLE II—ENHANCING ACCESS 

2 TO TAX-PREFERRED HEALTH 

3 ACCOUNTS 

4 SEC. 201. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON5 TRIBUTIONS TO THE SAME HSA ACCOUNT. 

6 (a) IN GENERAL.—Paragraph (5) of section 223(b) 

7 is amended to read as follows: 

8 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS

9 WITH FAMILY COVERAGE.— 

10 ‘‘(A) IN GENERAL.—In the case of individ11 uals who are married to each other, if both 

12 spouses are eligible individuals and either 

13 spouse has family coverage under an HSA14 qualified health plan as of the first day of any 

15 month— 

16 ‘‘(i) the limitation under paragraph 

17 (1) shall be applied by not taking into ac18 count any other HSA-qualified health plan 

19 coverage of either spouse (and if such 

20 spouses both have family coverage under 

21 separate HSA-qualified health plans, only 

22 one such coverage shall be taken into ac23 count), 

24 ‘‘(ii) such limitation (after application 

25 of clause (i)) shall be reduced by the agVerDate Sep 11 2014 23:26 Feb 24, 2017 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1175.IH H1175

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1 gregate amount paid to Archer MSAs of 

2 such spouses for the taxable year, and 

3 ‘‘(iii) such limitation (after application 

4 of clauses (i) and (ii)) shall be divided 

5 equally between such spouses unless they 

6 agree on a different division. 

7 ‘‘(B) TREATMENT OF ADDITIONAL CON8 TRIBUTION AMOUNTS.—If both spouses referred 

9 to in subparagraph (A) have attained age 55 

10 before the close of the taxable year, the limita11 tion referred to in subparagraph (A)(iii) which 

12 is subject to division between the spouses shall 

13 include the additional contribution amounts de14 termined under paragraph (3) for both spouses. 

15 In any other case, any additional contribution 

16 amount determined under paragraph (3) shall 

17 not be taken into account under subparagraph 

18 (A)(iii) and shall not be subject to division be19 tween the spouses.’’. 

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

21 this section shall apply to taxable years beginning after 

22 the date of the enactment of this Act. 

23 SEC. 202. PROVISIONS RELATING TO MEDICARE. 

24 (a) INDIVIDUALS OVER AGE 65 ONLY ENROLLED IN

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


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1 amended by adding at the end the following: ‘‘This para2 graph shall not apply to any individual during any period 

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

4 is an entitlement to hospital insurance benefits under part 

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

6 for such hospital insurance benefits under section 226(a) 

7 of such Act.’’. 

8 (b) MEDICARE BENEFICIARIES PARTICIPATING IN

9 MEDICARE ADVANTAGE MSA MAY CONTRIBUTE THEIR

10 OWN MONEY TO THEIR MSA.— 

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

12 138 is amended by striking paragraph (2) and by re13 designating paragraphs (3) and (4) as paragraphs 

14 (2) and (3), respectively. 

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

16 of section 138(c) is amended by striking ‘‘and para17 graph (2)’’. 

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

19 this section shall apply to taxable years beginning after 

20 the date of the enactment of this Act. 

21 SEC. 203. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH 

22 SERVICE ASSISTANCE. 

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

24 is amended by adding at the end the following new sub25 paragraph: 


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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. 204. MEMBERS OF HEALTH CARE SHARING MIN15 ISTRIES ELIGIBLE TO ESTABLISH HEALTH 

16 SAVINGS ACCOUNTS. 

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

18 at the end the following new subsection: 

19 ‘‘(i) APPLICATION TO HEALTH CARE SHARING MIN20 ISTRIES.—For purposes of this section, membership in a 

21 health care sharing ministry (as defined in section 

22 5000A(d)(2)(B)(ii)) shall be treated as coverage under an 

23 HSA-qualified 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. 205. TREATMENT OF DIRECT PRIMARY CARE SERVICE 

5 ARRANGEMENTS. 

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

7 adding at the end the following new paragraph: 

8 ‘‘(6) TREATMENT OF DIRECT PRIMARY CARE

9 SERVICE ARRANGEMENTS.—An arrangement under 

10 which an individual is provided coverage restricted to 

11 primary care services in exchange for a fixed peri12 odic fee or payment for primary care services— 

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

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

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

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

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

18 this section shall apply to taxable years beginning after 

19 the date of the enactment of this Act. 

20 SEC. 206. INDIVIDUALS ELIGIBLE FOR ON-SITE MEDICAL 

21 CLINIC COVERAGE. 

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

23 as amended by sections 203, is amended by adding at the 

24 end the following new subparagraph: 


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1 ‘‘(E) SPECIAL RULE FOR INDIVIDUALS EL2 IGIBLE FOR ON-SITE MEDICAL CLINIC COV3 ERAGE.— 

4 ‘‘(i) IN GENERAL.—For purposes of 

5 subparagraph (A)(ii), an individual shall 

6 not be treated as covered under a health 

7 plan described in such subparagraph mere8 ly because the individual is eligible to re9 ceive health care benefits from an onsite10 medical clinic of employer of the individual 

11 or the individual’s spouse if such health 

12 care benefits are not significant benefits. 

13 ‘‘(ii) INCLUDED BENEFITS.—For pur14 poses of clause (i), the following health 

15 care benefits shall be considered to be ben16 efits which are not significant benefits: 

17 ‘‘(I) Physicals and immuniza18 tions. 

19 ‘‘(II) Injecting antigens provided 

20 by employees. 

21 ‘‘(III) Medications available with22 out a prescription, such as pain reliev23 ers and antihistamines. 

24 ‘‘(IV) Treatment for injuries oc25 curring at the employer’s place of emVerDate Sep 11 2014 23:26 Feb 24, 2017 Jkt 069200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1175.IH H1175

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1 ployment or otherwise in the course of 

2 employment. 

3 ‘‘(V) Tests for infectious diseases 

4 and conditions, such as streptococcal 

5 sore throat. 

6 ‘‘(VI) Monitoring of chronic con7 ditions, such as diabetes. 

8 ‘‘(VII) Drug testing. 

9 ‘‘(VIII) Hearing or vision 

10 screenings and related services. 

11 ‘‘(IX) Other services and treat12 ments of a similar nature to the serv13 ices described in subclauses (I) 

14 through (VIII). 

15 ‘‘(iii) AGGREGATION RULES.—For 

16 purposes of clause (i), all persons treated 

17 as a single employer under subsection (b), 

18 (c), (m), or (o) of section 414 shall be 

19 treated as a single employer.’’. 

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

21 this section shall apply to taxable years beginning after 

22 the date of the enactment of this Act. 


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1 SEC. 207. TREATMENT OF EMBEDDED DEDUCTIBLES. 

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

3 is amended by adding at the end the following new sub4 paragraph: 

5 ‘‘(E) TREATMENT OF EMBEDDED DEDUCT6 IBLE.—A health plan providing family coverage 

7 that has an annual deductible for all covered in8 dividuals under the plan of at least the amount 

9 described in subparagraph (A)(i)(II) shall not 

10 fail to be treated as an HSA-qualified health 

11 plan solely because it covers expenses with re12 spect to an individual under that plan that ex13 ceed an embedded deductible which is equal to 

14 or in excess of the amount described in sub15 paragraph (A)(i)(I).’’. 

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 TITLE III—IMPROVING COV20 ERAGE UNDER TAX-PRE21 FERRED HEALTH ACCOUNTS 

22 SEC. 301. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP23 TION AND OVER-THE-COUNTER MEDICINES 

24 AND DRUGS. 

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

26 striking the last sentence thereof and inserting the folVerDate Sep 11 2014 23:26 Feb 24, 2017 Jkt 069200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1175.IH H1175

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1 lowing: ‘‘Such term shall include an amount paid for any 

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

3 (b) ARCHER MSAS.—Section 220(d)(2)(A) is amend4 ed by striking the last sentence thereof and inserting the 

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

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

7 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS

8 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sub9 section (f) of section 106 is amended to read as follows: 

10 ‘‘(f) REIMBURSEMENTS FOR ALL MEDICINES AND

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

12 reimbursement for expenses incurred for any prescription 

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

14 a reimbursement for medical expenses.’’. 

15 (d) EFFECTIVE DATES.— 

16 (1) DISTRIBUTIONS FROM SAVINGS AC17 COUNTS.—The amendments made by subsections (a) 

18 and (b) shall apply to amounts paid in taxable years 

19 beginning after December 31, 2017. 

20 (2) REIMBURSEMENTS.—The amendment made 

21 by subsection (c) shall apply to expenses incurred in 

22 plan years beginning after December 31, 2017. 


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1 SEC. 302. PURCHASE OF HEALTH INSURANCE FROM HSA 

2 ACCOUNT. 

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

4 as amended by section 301, is amended— 

5 (1) by striking ‘‘and any dependent (as defined 

6 in section 152, determined without regard to sub7 sections (b)(1), (b)(2), and (d)(1)(B) thereof) of 

8 such individual’’ in subparagraph (A) and inserting 

9 ‘‘any dependent (as defined in section 152, deter10 mined without regard to subsections (b)(1), (b)(2), 

11 and (d)(1)(B) thereof) of such individual, and any 

12 child (as defined in section 152(f)(1)) of such indi13 vidual who has not attained the age of 27 before the 

14 end of such individual’s taxable year’’, 

15 (2) by striking subparagraph (B) and inserting 

16 the following: 

17 ‘‘(B) HEALTH INSURANCE MAY NOT BE

18 PURCHASED FROM ACCOUNT.—Except as pro19 vided in subparagraph (C), subparagraph (A) 

20 shall not apply to any payment for insurance.’’, 

21 and 

22 (3) by striking ‘‘or’’ at the end of subparagraph 

23 (C)(iii) and by striking subparagraph (C)(iv) and in24 serting the following: 

25 ‘‘(iv) an HSA-qualified health plan, or 


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1 ‘‘(v) any health insurance under title 

2 XVIII of the Social Security Act, other 

3 than a Medicare supplemental policy (as 

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

5 (b) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply with respect to insurance pur7 chased after the date of the enactment of this Act in tax8 able years beginning after such date. 

9 SEC. 303. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

10 INCURRED BEFORE ESTABLISHMENT OF AC11 COUNT. 

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

13 is amended by adding at the end the following new sub14 paragraph: 

15 ‘‘(D) TREATMENT OF CERTAIN MEDICAL

16 EXPENSES INCURRED BEFORE ESTABLISHMENT

17 OF ACCOUNT.—If a health savings account is 

18 established during the 60-day period beginning 

19 on the date that coverage of the account bene20 ficiary under an HSA-qualified health plan be21 gins, then, solely for purposes of determining 

22 whether an amount paid is used for a qualified 

23 medical expense, such account shall be treated 

24 as having been established on the date that 

25 such coverage begins.’’. 


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

2 this section shall apply with respect to coverage beginning 

3 after the date of the enactment of this Act. 

4 SEC. 304. PREVENTIVE CARE PRESCRIPTION DRUG CLARI5 FICATION. 

6 (a) CLARIFY USE OF DRUGS IN PREVENTIVE

7 CARE.—Subparagraph (C) of section 223(c)(2) is amend8 ed by adding at the end the following: ‘‘Preventive care 

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

10 medicines which have the primary purpose of preventing 

11 the onset of, further deterioration from, or complications 

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

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2017. 

16 TITLE IV—MISCELLANEOUS 

17 PROVISIONS RELATING TO 

18 TAX-PREFERRED HEALTH AC19 COUNTS 

20 SEC. 401. FSA AND HRA INTERACTION WITH HSAS. 

21 (a) ELIGIBLE INDIVIDUALS INCLUDE FSA AND HRA 

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

23 is amended— 

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


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

2 (iii) and inserting ‘‘, and’’, and 

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

4 new clause: 

5 ‘‘(iv) coverage under a health flexible 

6 spending arrangement or a health reim7 bursement arrangement in the plan year a 

8 qualified HSA distribution as described in 

9 section 106(e) is made on behalf of the in10 dividual if, after the qualified HSA dis11 tribution is made and for the remaining 

12 duration of the plan year, the coverage 

13 provided under the arrangement is con14 verted solely to one or more of the fol15 lowing: 

16 ‘‘(I) POST-DEDUCTIBLE FSA OR

17 HRA.—A health flexible spending ar18 rangement or a health reimbursement 

19 arrangement that does not pay or re20 imburse any medical expense incurred 

21 before the minimum annual deductible 

22 under paragraph (2)(A)(i) (prorated 

23 for the period occurring after the 

24 qualified HSA distribution is made) is 

25 satisfied. 


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1 ‘‘(II) PREVENTATIVE CARE.—A 

2 health flexible spending arrangement 

3 or a health reimbursement arrange4 ment that, after the qualified HSA 

5 distribution is made, does not pay or 

6 reimburse any medical expense in7 curred after the qualified HSA dis8 tribution is made other than preven9 tive care as defined in paragraph 

10 (2)(C). 

11 ‘‘(III) LIMITED PURPOSE

12 HEALTH FSA.—A health flexible 

13 spending arrangement that, after the 

14 qualified HSA distribution is made, 

15 pays or reimburses benefits for cov16 erage described in clause (ii) (but not 

17 through insurance or for long-term 

18 care services). 

19 ‘‘(IV) LIMITED PURPOSE HRA.— 

20 A health reimbursement arrangement 

21 that, after the qualified HSA distribu22 tion is made, pays or reimburses bene23 fits for permitted insurance or cov24 erage described in clause (ii) (but not 

25 for long-term care services). 


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1 ‘‘(V) RETIREMENT HRA.—A 

2 health reimbursement arrangement 

3 that, after the qualified HSA distribu4 tion is made, pays or reimburses only 

5 those medical expenses incurred after 

6 an individual’s retirement (and no ex7 penses incurred before retirement). 

8 ‘‘(VI) SUSPENDED HRA.—A 

9 health reimbursement arrangement 

10 that, after the qualified HSA distribu11 tion is made, is suspended, pursuant 

12 to an election made on or before the 

13 date the individual elects a qualified 

14 HSA distribution or, if later, on the 

15 date of the individual enrolls in an 

16 HSA-qualified health plan, that does 

17 not pay or reimburse, at any time, 

18 any medical expense incurred during 

19 the suspension period except as de20 scribed in the preceding subclauses of 

21 this clause.’’. 

22 (b) QUALIFIED HSA DISTRIBUTION SHALL NOT AF23 FECT FLEXIBLE SPENDING ARRANGEMENT.—Paragraph 

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


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

2 treated as— 

3 ‘‘(A) a health flexible spending arrange4 ment under this section, section 105, or section 

5 125, 

6 ‘‘(B) a health reimbursement arrangement 

7 under this section or section 105, or 

8 ‘‘(C) an accident or health plan, 

9 merely because such plan provides for a qualified 

10 HSA distribution.’’. 

11 (c) FSA BALANCES AT YEAR END SHALL NOT FOR12 FEIT.—Paragraph (2) of section 125(d) is amended by 

13 adding at the end the following new subparagraph: 

14 ‘‘(E) EXCEPTION FOR QUALIFIED HSA DIS15 TRIBUTIONS.—Subparagraph (A) shall not 

16 apply to the extent that there is an amount re17 maining in a health flexible spending account at 

18 the end of a plan year that an individual elects 

19 to contribute to a health savings account pursu20 ant to a qualified HSA distribution (as defined 

21 in section 106(e)(2)).’’. 

22 (d) SIMPLIFICATION OF LIMITATIONS ON FSA AND

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

24 amended to read as follows: 

25 ‘‘(2) QUALIFIED HSA DISTRIBUTION.— 


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

2 HSA distribution’ means a distribution from a 

3 health flexible spending arrangement or health 

4 reimbursement arrangement directly to a health 

5 savings account of the employee to the extent 

6 that such distribution does not exceed the lesser 

7 of— 

8 ‘‘(i) the balance in such arrangement 

9 as of the date of such distribution, or 

10 ‘‘(ii) the amount determined under 

11 subparagraph (B). 

12 Such term shall not include more than 1 dis13 tribution with respect to any arrangement. 

14 ‘‘(B) DOLLAR LIMITATIONS.— 

15 ‘‘(i) DISTRIBUTIONS FROM A HEALTH

16 FLEXIBLE SPENDING ARRANGEMENT.—A 

17 qualified HSA distribution from a health 

18 flexible spending arrangement shall not ex19 ceed the applicable amount. 

20 ‘‘(ii) DISTRIBUTIONS FROM A HEALTH

21 REIMBURSEMENT ARRANGEMENT.—A 

22 qualified HSA distribution from a health 

23 reimbursement arrangement shall not ex24 ceed— 


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1 ‘‘(I) the applicable amount di2 vided by 12, multiplied by 

3 ‘‘(II) the number of months dur4 ing which the individual is a partici5 pant in the health reimbursement ar6 rangement. 

7 ‘‘(iii) APPLICABLE AMOUNT.—For 

8 purposes of this subparagraph, the applica9 ble amount is— 

10 ‘‘(I) $2,250 in the case of an eli11 gible individual who has self-only cov12 erage under an HSA-qualified health 

13 plan at the time of such distribution, 

14 and 

15 ‘‘(II) $4,500 in the case of an eli16 gible individual who has family cov17 erage under an HSA-qualified health 

18 plan at the time of such distribu19 tion.’’. 

20 (e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE

21 TO MAINTAIN HSA-QUALIFIED HEALTH PLAN COV22 ERAGE.—Subsection (e) of section 106 is amended— 

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

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

25 respectively, and 


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

2 (3), as so redesignated, and redesignating subpara3 graphs (B) and (C) of such paragraph as subpara4 graphs (A) and (B) thereof, respectively. 

5 (f) LIMITED PURPOSE FSAS AND HRAS.—Sub6 section (e) of section 106, as amended by this section, is 

7 amended by adding at the end the following new para8 graph: 

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

10 plan shall not fail to be a health flexible spending 

11 arrangement, a health reimbursement arrangement, 

12 or an accident or health plan under this section or 

13 section 105 merely because the plan converts cov14 erage for individuals who enroll in an HSA-qualified 

15 health plan described in section 223(c)(2) to cov16 erage described in subclause (I), (II), (III), (IV), 

17 (V), or (VI) of section 223(c)(1)(B)(iv). Coverage 

18 for such individuals may be converted as of the date 

19 of enrollment in the HSA-qualified health plan, 

20 without regard to the period of coverage under the 

21 health flexible spending arrangement or health reim22 bursement arrangement, and without requiring any 

23 change in coverage to individuals who do not enroll 

24 in an HSA-qualified health plan.’’. 


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1 (g) DISTRIBUTION AMOUNTS ADJUSTED FOR COST2 OF-LIVING.—Subsection (e) of section 106, as amended 

3 by this section, is amended by adding at the end the fol4 lowing new paragraph: 

5 ‘‘(6) COST-OF-LIVING ADJUSTMENT.— 

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

7 taxable year beginning in a calendar year after 

8 2017, each of the dollar amounts in paragraph 

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

10 equal to such dollar amount, multiplied by the 

11 cost-of-living adjustment determined under sec12 tion 1(f)(3) for the calendar year in which such 

13 taxable year begins by substituting ‘calendar 

14 year 2016’ for ‘calendar year 1992’ in subpara15 graph (B) thereof. 

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

17 paragraph (1) is not a multiple of $50, such in18 crease shall be rounded to the nearest multiple 

19 of $50.’’. 

20 (h) DISCLAIMER OF DISQUALIFYING COVERAGE.— 

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

22 this section, is amended— 

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

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

25 (iv) and inserting ‘‘, and’’, and 


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

2 new clause: 

3 ‘‘(v) any coverage (including prospec4 tive coverage) under a health plan that is 

5 not an HSA-qualified health plan which is 

6 disclaimed in writing, at the time of the 

7 creation or organization of the health sav8 ings account, including by execution of a 

9 trust described in subsection (d)(1) 

10 through a governing instrument that in11 cludes such a disclaimer, or by acceptance 

12 of an amendment to such a trust that in13 cludes such a disclaimer.’’. 

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

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

17 SEC. 402. EQUIVALENT BANKRUPTCY PROTECTIONS FOR 

18 HEALTH SAVINGS ACCOUNTS AS RETIRE19 MENT FUNDS. 

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

21 States Code, is amended by adding at the end the fol22 lowing new subsection: 

23 ‘‘(r) TREATMENT OF HEALTH SAVINGS AC24 COUNTS.—For purposes of this section, any health savings 

25 account (as described in section 223 of the Internal RevVerDate Sep 11 2014 23:26 Feb 24, 2017 Jkt 069200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\H1175.IH H1175

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1 enue Code of 1986) shall be treated in the same manner 

2 as an individual retirement account described in section 

3 408 of such Code.’’. 

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

5 this section shall apply to cases commencing under title 

6 11, United States Code, after the date of the enactment 

7 of this Act. 

8 SEC. 403. ADMINISTRATIVE ERROR CORRECTION BEFORE 

9 DUE DATE OF RETURN. 

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

11 is amended by adding at the end the following new sub12 paragraph: 

13 ‘‘(D) EXCEPTION FOR ADMINISTRATIVE

14 ERRORS CORRECTED BEFORE DUE DATE OF RE15 TURN.—Subparagraph (A) shall not apply if 

16 any payment or distribution is made to correct 

17 an administrative, clerical, or payroll contribu18 tion error and if— 

19 ‘‘(i) such distribution is received by 

20 the individual on or before the last day 

21 prescribed by law (including extensions of 

22 time) for filing such individual’s return for 

23 such taxable year, and 


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1 ‘‘(ii) such distribution is accompanied 

2 by the amount of net income attributable 

3 to such contribution. 

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

5 included in the gross income of the individual 

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

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

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

9 of this Act. 

10 SEC. 404. REAUTHORIZATION OF MEDICAID HEALTH OP11 PORTUNITY ACCOUNTS. 

12 (a) IN GENERAL.—Section 1938 of the Social Secu13 rity Act (42 U.S.C. 1396u–8) is amended— 

14 (1) in subsection (a)— 

15 (A) by striking paragraph (2) and insert16 ing the following: 

17 ‘‘(2) INITIAL DEMONSTRATION.—The Secretary 

18 shall approve States to conduct demonstration pro19 grams under this section for a 5-year period, with 

20 each State demonstration program covering one or 

21 more geographic areas specified by the State. With 

22 respect to a State, after the initial 5-year period of 

23 any demonstration program conducted under this 

24 section by the State, unless the Secretary finds, tak25 ing into account cost-effectiveness and quality of 


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1 care, that the State demonstration program has 

2 been unsuccessful, the demonstration program may 

3 be extended or made permanent in the State.’’; and 

4 (B) in paragraph (3), in the matter pre5 ceding subparagraph (A)— 

6 (i) by striking ‘‘not’’; and 

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

8 ‘‘if’’; 

9 (2) in subsection (b)— 

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

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

12 amendment made by section 2004(c)(2) of Pub13 lic Law 111–148), (x), or (xi) of’’ after ‘‘de14 scribed in’’; and 

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

16 (6); 

17 (3) in subsection (c)— 

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

19 (B) by redesignating paragraphs (5) 

20 through (8) as paragraphs (3) through (6), re21 spectively; and 

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

23 subparagraph (B)), by striking ‘‘Subject to sub24 paragraphs (D) and (E)’’ and inserting ‘‘Sub25 ject to subparagraph (D)’’; and 


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1 (4) in subsection (d)— 

2 (A) in paragraph (2), by striking subpara3 graph (E); and 

4 (B) in paragraph (3)— 

5 (i) in subparagraph (A)(ii), by strik6 ing ‘‘Subject to subparagraph (B)(ii), in’’ 

7 and inserting ‘‘In’’; and 

8 (ii) by striking subparagraph (B) and 

9 inserting the following: 

10 ‘‘(B) MAINTENANCE OF HEALTH OPPOR11 TUNITY ACCOUNT AFTER BECOMING INELI12 GIBLE FOR PUBLIC BENEFIT.—Notwithstanding 

13 any other provision of law, if an account holder 

14 of a health opportunity account becomes ineli15 gible for benefits under this title because of an 

16 increase in income or assets— 

17 ‘‘(i) no additional contribution shall be 

18 made into the account under paragraph 

19 (2)(A)(i); and 

20 ‘‘(ii) the account shall remain avail21 able to the account holder for 3 years after 

22 the date on which the individual becomes 

23 ineligible for such benefits for withdrawals 

24 under the same terms and conditions as if 

25 the account holder remained eligible for 


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1 such benefits, and such withdrawals shall 

2 be treated as medical assistance in accord3 ance with subsection (c)(4).’’. 

4 (b) CONFORMING AMENDMENT.—Section 613 of 

5 Public Law 111–3 is repealed. 

6 SEC. 405. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV7 INGS ACCOUNT INCREASED TO AMOUNT OF 

8 DEDUCTIBLE AND OUT-OF-POCKET LIMITA9 TION. 

10 (a) SELF-ONLY COVERAGE.—Section 223(b)(2)(A) is 

11 amended by striking ‘‘$2,250’’ and inserting ‘‘the amount 

12 in effect under subsection (c)(2)(A)(ii)(I)’’. 

13 (b) FAMILY COVERAGE.—Section 223(b)(2)(B) is 

14 amended by striking ‘‘$4,500’’ and inserting ‘‘the amount 

15 in effect under subsection (c)(2)(A)(ii)(II)’’. 

16 (c) CONFORMING AMENDMENTS.—Section 223(g)(1) 

17 is amended— 

18 (1) by striking ‘‘subsections (b)(2) and’’ both 

19 places it appears and inserting ‘‘subsection’’, and 

20 (2) by striking ‘‘determined by’’ in subpara21 graph (B) thereof and all that follows through ‘‘cal22 endar year 2003’’.’ and inserting ‘‘determined by 

23 substituting ‘calendar year 2003’ for ‘calendar year 

24 1992’ in subparagraph (B) thereof .’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2017. 

4 TITLE V—OTHER PROVISIONS 

5 SEC. 501. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL 

6 FITNESS PROGRAMS TREATED AS MEDICAL 

7 CARE. 

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

9 amended by adding at the end the following new para10 graph: 

11 ‘‘(12) EXERCISE EQUIPMENT AND PHYSICAL

12 FITNESS ACTIVITY.— 

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

14 care’ shall include amounts paid— 

15 ‘‘(i) for equipment for use in a pro16 gram (including a self-directed program) of 

17 physical exercise or physical activity, 

18 ‘‘(ii) to participate, or receive instruc19 tion, in a program of physical exercise, nu20 trition, or health coaching (including a 

21 self-directed program), and 

22 ‘‘(iii) for membership at a fitness fa23 cility. 

24 ‘‘(B) OVERALL DOLLAR LIMITATION.— 


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1 ‘‘(i) IN GENERAL.—Amounts treated 

2 as medical care under subparagraph (A) 

3 shall not exceed $1,000 with respect to any 

4 individual for any taxable year. 

5 ‘‘(ii) EXCEPTION.—Clause (i) shall 

6 not apply for purposes of determining 

7 whether expenses reimbursed through a 

8 health flexible spending arrangement sub9 ject to section 125(i)(1) are incurred for 

10 medical care. 

11 ‘‘(C) LIMITATIONS RELATED TO SPORTS

12 AND FITNESS EQUIPMENT.—Amounts paid for 

13 equipment described in subparagraph (A)(i) 

14 shall be treated as medical care only— 

15 ‘‘(i) if such equipment is utilized ex16 clusively for participation in fitness, exer17 cise, sport, or other physical activity pro18 grams, 

19 ‘‘(ii) if such equipment is not apparel 

20 or footwear, and 

21 ‘‘(iii) in the case of any item of sports 

22 equipment (other than exercise equip23 ment), with respect to so much of the 

24 amount paid for such item as does not ex25 ceed $250. 


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1 ‘‘(D) FITNESS FACILITY DEFINED.—For 

2 purposes of subparagraph (A)(iii), the term ‘fit3 ness facility’ means a facility— 

4 ‘‘(i) providing instruction in a pro5 gram of physical exercise, offering facilities 

6 for the preservation, maintenance, encour7 agement, or development of physical fit8 ness, or serving as the site of such a pro9 gram of a State or local government, 

10 ‘‘(ii) which is not a private club owned 

11 and operated by its members, 

12 ‘‘(iii) which does not offer golf, hunt13 ing, sailing, or riding facilities, 

14 ‘‘(iv) whose health or fitness facility is 

15 not incidental to its overall function and 

16 purpose, and 

17 ‘‘(v) which is fully compliant with the 

18 State of jurisdiction and Federal anti-dis19 crimination laws.’’. 

20 (b) LIMITATION NOT TO APPLY FOR CERTAIN PUR21 POSES.— 

22 (1) HEALTH SAVINGS ACCOUNTS.—Subpara23 graph (A) of section 223(d)(2) is amended by insert24 ing ‘‘, determined without regard to paragraph 


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1 (12)(B) thereof’’ after ‘‘medical care (as defined in 

2 section 213(d)’’. 

3 (2) ARCHER MSAS.—Subparagraph (A) of sec4 tion 220(d)(2) is amended by inserting ‘‘, deter5 mined without regard to paragraph (12)(B) thereof’’ 

6 after ‘‘medical care (as defined in section 213(d)’’. 

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

8 this section shall apply to taxable years beginning after 

9 the date of the enactment of this Act. 

10 SEC. 502. CERTAIN NUTRITIONAL AND DIETARY SUPPLE11 MENTS TO BE TREATED AS MEDICAL CARE. 

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

13 amended by section 501, is amended by adding at the end 

14 the following new paragraph: 

15 ‘‘(13) NUTRITIONAL AND DIETARY SUPPLE16 MENTS.— 

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

18 care’ shall include amounts paid to purchase 

19 herbs, vitamins, minerals, homeopathic rem20 edies, meal replacement products, and other di21 etary and nutritional supplements. 

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

23 medical care under subparagraph (A) shall not 

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

25 any taxable year. 


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1 ‘‘(C) MEAL REPLACEMENT PRODUCT.— 

2 For purposes of this paragraph, the term ‘meal 

3 replacement product’ means any product that— 

4 ‘‘(i) is permitted to bear labeling mak5 ing a claim described in section 403(r)(3) 

6 of the Federal Food, Drug, and Cosmetic 

7 Act, and 

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

9 section that such product is low in fat and 

10 is a good source of protein, fiber, and mul11 tiple essential vitamins and minerals. 

12 ‘‘(D) EXCEPTION.—Subparagraph (B) 

13 shall not apply for purposes of determining 

14 whether expenses reimbursed through a health 

15 flexible spending arrangement subject to section 

16 125(i)(1) are incurred for medical care.’’. 

17 (b) LIMITATION NOT TO APPLY FOR CERTAIN PUR18 POSES.— 

19 (1) HEALTH SAVINGS ACCOUNTS.—Subpara20 graph (A) of section 223(d)(2), as amended by sec21 tion 501, is amended by striking ‘‘paragraph 

22 (12)(B)’’ and inserting ‘‘paragraphs (12)(B) and 

23 (13)(B)’’. 

24 (2) ARCHER MSAS.—Subparagraph (A) of sec25 tion 220(d)(2), as amended by section 501, is 


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1 amended by striking ‘‘paragraph (12)(B)’’ and in2 serting ‘‘paragraphs (12)(B) and (13)(B)’’. 

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

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 503. CERTAIN PROVIDER FEES TO BE TREATED AS 

7 MEDICAL CARE. 

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

9 amended by sections 501 and 502, is amended by adding 

10 at the end the following new paragraph: 

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

12 ‘medical care’ shall include— 

13 ‘‘(A) periodic fees paid to a primary care 

14 physician for a defined set of medical services 

15 or the right to receive medical services on an 

16 as-needed basis, and 

17 ‘‘(B) pre-paid primary care services de18 signed to screen for, diagnose, cure, mitigate, 

19 treat, or prevent disease and promote 

20 wellness.’’. 

21 (b) EXCEPTION FOR FLEXIBLE SPENDING AC22 COUNTS.—Section 125 is amended by redesignating sub23 sections (k) and (l) as subsections (l) and (m), respec24 tively, and by inserting after subsection (j) the following 

25 new subsection: 


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1 ‘‘(k) SPECIAL RULE WITH RESPECT TO HEALTH

2 FLEXIBLE SPENDING ARRANGEMENTS.—For purposes of 

3 applying this with respect to any health flexible spending 

4 arrangement, amounts described in section 213(d)(14) 

5 shall not be considered insurance.’’. 

6 (c) 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. 

Æ 


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