I 

111TH CONGRESS 

1ST SESSION H. R. 3971 

To amend the Internal Revenue Code of 1986 to expand the permissible 

use of health savings accounts to include health insurance payments 

and to increase the dollar limitation for contributions to health savings 

accounts, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 29, 2009 

Mr. FLAKE introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to expand 

the permissible use of health savings accounts to include 

health insurance payments and to increase the dollar 

limitation for contributions to 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 Account Expansion Act of 2009’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
2 

•HR 3971 IH

Sec. 1. Short title, etc. 

TITLE I—EXPANSION OF HEALTH SAVINGS ACCOUNTS 

Sec. 101. Repeal of high deductible health plan requirement. 

Sec. 102. Health insurance may be purchased from account. 

Sec. 103. Increase in dollar limitation. 

Sec. 104. Effective date. 

TITLE II—TERMINATION OF EXISTING HEALTH-RELATED TAX 

PREFERENCES FOR MEDICAL COVERAGE, MEDICAL CARE, ETC 

Sec. 201. Termination of existing health-related tax preferences for medical 

coverage, medical care, etc. 

Sec. 202. Termination of employer deduction for health coverage. 

1 TITLE I—EXPANSION OF HEALTH 

2 SAVINGS ACCOUNTS 

3 SEC. 101. REPEAL OF HIGH DEDUCTIBLE HEALTH PLAN RE4 QUIREMENT. 

5 (a) IN GENERAL.—Section 223 of the Internal Rev6 enue Code of 1986 is amended by striking subsection (c) 

7 and redesignating subsections (d) through (h) as sub8 sections (c) through (g), respectively. 

9 (b) CONFORMING AMENDMENTS.— 

10 (1) Subsection (a) of section 223 of such Code 

11 is amended to read as follows: 

12 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi13 vidual, there shall be allowed as a deduction for a taxable 

14 year an amount equal to the aggregate amount paid in 

15 cash during such taxable year by or on behalf of such indi16 vidual to a health savings account of such individual.’’. 

17 (2) Subsection (b) of section 223 of such Code 

18 is amended by striking paragraph (8). 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
3 

•HR 3971 IH

1 (3) Subparagraph (A) of section 223(c)(1) of 

2 the Internal Revenue Code of 1986 (as redesignated 

3 by subsection (a)) is amended— 

4 (A) by striking ‘‘subsection (f)(5)’’ and in5 serting ‘‘subsection (e)(5)’’, and 

6 (B) in clause (ii)— 

7 (i) by striking ‘‘the sum of—’’ and all 

8 that follows and inserting ‘‘the dollar 

9 amount in effect under subsection (b)(1).’’. 

10 (4) Section 223(f)(1) of such Code (as redesig11 nated by subsection (a)) is amended by striking 

12 ‘‘Each dollar amount in subsections (b)(2) and 

13 (c)(2)(A)’’ and inserting ‘‘In the case of a taxable 

14 year beginning after December 31, 2010, each dollar 

15 amount in subsection (b)(1)’’. 

16 (5) Section 26(b)(U) of such Code is amended 

17 by striking ‘‘section 223(f)(4)’’ and inserting ‘‘sec18 tion 223(e)(4)’’. 

19 (6) Sections 35(g)(3), 220(f)(5)(A), 

20 848(e)(1)(v), 4973(a)(5), and 6051(a)(12) of such 

21 Code are each amended by striking ‘‘section 223(d)’’ 

22 each place it appears and inserting ‘‘section 223(c)’’. 

23 (7) Section 106(d)(1) of such Code is amend24 ed— 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
4 

•HR 3971 IH

1 (A) by striking ‘‘who is an eligible indi2 vidual (as defined in section 223(c)(1))’’, and 

3 (B) by striking ‘‘section 223(d)’’ and in4 serting ‘‘section 223(c)’’. 

5 (8) Section 408(d)(9) of such Code is amend6 ed— 

7 (A) in subparagraph (A) by striking ‘‘who 

8 is an eligible individual (as defined in section 

9 223(c)) and’’, and 

10 (B) in subparagraph (C) by striking ‘‘com11 puted on the basis of the type of coverage under 

12 the high deductible health plan covering the in13 dividual at the time of the qualified HSA fund14 ing distribution’’. 

15 (9) Section 877A(g)(6) of such Code is amend16 ed by striking ‘‘223(f)(4)’’ and inserting 

17 ‘‘223(e)(4)’’. 

18 (10) Section 4973(g) of such Code is amend19 ed— 

20 (A) by striking ‘‘section 223(d)’’ and in21 serting ‘‘section 223(c)’’, 

22 (B) in paragraph (2), by striking ‘‘section 

23 223(f)(2)’’ and inserting ‘‘section 223(e)(2)’’, 

24 and 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
5 

•HR 3971 IH

1 (C) by striking ‘‘section 223(f)(3)’’ and in2 serting ‘‘section 223(e)(3)’’. 

3 (11) Section 4975 of such Code is amended— 

4 (A) in subsection (c)(6)— 

5 (i) by striking ‘‘section 223(d)’’ and 

6 inserting ‘‘section 223(c)’’, and 

7 (ii) by striking ‘‘section 223(e)(2)’’ 

8 and inserting ‘‘section 223(d)(2)’’, and 

9 (B) in subsection (e)(1)(E), by striking 

10 ‘‘section 223(d)’’ and inserting ‘‘section 

11 223(c)’’. 

12 (12) Section 6693(a)(2)(C) of such Code is 

13 amended by striking ‘‘section 223(h)’’ and inserting 

14 ‘‘section 223(g)’’. 

15 SEC. 102. HEALTH INSURANCE MAY BE PURCHASED FROM 

16 ACCOUNT. 

17 Paragraph (2) of section 223(d) of the Internal Rev18 enue Code of 1986 is amended to read as follows: 

19 ‘‘(2) QUALIFIED MEDICAL EXPENSES.—The 

20 term ‘qualified medical expenses’ means, with re21 spect to an account beneficiary, amounts paid by 

22 such beneficiary for medical care (as defined in sec23 tion 213(d)) for such individual, the spouse of such 

24 individual, and any dependent (as defined in section 

25 152, determined without regard to subsections 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
6 

•HR 3971 IH

1 (b)(1), (b)(2), and (d)(1)(B) thereof) of such indi2 vidual, but only to the extent such amounts are not 

3 compensated for by insurance or otherwise.’’. 

4 SEC. 103. INCREASE IN DOLLAR LIMITATION. 

5 (a) IN GENERAL.—Paragraph (1) of section 223(b) 

6 of the Internal Revenue Code of 1986 is amended by strik7 ing ‘‘the sum of the monthly’’ and all that follows through 

8 ‘‘eligible individual’’ and inserting ‘‘$8,000 ($16,000 in 

9 the case of a joint return)’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Subsection (b) of such Code is amended by 

12 striking paragraphs (2), (3), and (5) and by redesig13 nating paragraphs (4), (6), and (7) as paragraphs 

14 (2), (3), and (4), respectively. 

15 (2) Paragraph (2) of section 223(b) of such 

16 Code (as redesignated by paragraph (1)) is amended 

17 by striking the last sentence. 

18 (3) Paragraph (4) of section 223(b) of such 

19 Code (as redesignated by paragraph (1)) is amended 

20 to read as follows: 

21 ‘‘(4) MEDICARE ELIGIBLE INDIVIDUALS.—The 

22 limitation under this subsection for any taxable year 

23 with respect to an individual shall— 

24 ‘‘(A) in the case of the first taxable year 

25 in which such individual is entitled to benefits 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
7 

•HR 3971 IH

1 under title XVIII of the Social Security Act, be 

2 the amount which bears the same proportion to 

3 the amount in effect under paragraph (1) with 

4 respect to such individual as— 

5 ‘‘(i) the number of months in the tax6 able year during which such individual was 

7 not so entitled, bears 

8 ‘‘(ii) to 12, and 

9 ‘‘(B) be zero for any taxable year there10 after.’’. 

11 (4) Subparagraph (B) of section 223(f)(1) of 

12 such Code (as redesignated by section 101) is 

13 amended to read as follows: 

14 ‘‘(B) the cost-of-living adjustment deter15 mined under section 1(f)(3) for the calendar 

16 year in which such taxable year begins deter17 mined by substituting ‘calendar year 2009’ for 

18 ‘calendar year 1992’.’’. 

19 SEC. 104. EFFECTIVE DATE. 

20 The amendments made by this title shall apply to tax21 able years beginning after the date of the enactment of 

22 this Act. 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
8 

•HR 3971 IH

1 TITLE II—TERMINATION OF EX2 ISTING HEALTH-RELATED 

3 TAX PREFERENCES FOR MED4 ICAL COVERAGE, MEDICAL 

5 CARE, ETC 

6 SEC. 201. TERMINATION OF EXISTING HEALTH-RELATED 

7 TAX PREFERENCES FOR MEDICAL COV8 ERAGE, MEDICAL CARE, ETC. 

9 (a) AMOUNTS RECEIVED UNDER ACCIDENT AND

10 HEALTH PLANS.—Section 105 of the Internal Revenue 

11 Code of 1986 is amended by adding at the end the fol12 lowing: 

13 ‘‘(k) TERMINATION.—This section shall not apply to 

14 taxable years beginning after December 31, 2009.’’. 

15 (b) CONTRIBUTIONS BY EMPLOYER TO ACCIDENT

16 AND HEALTH PLANS.— 

17 (1) IN GENERAL.—Section 106 of such Code is 

18 amended by adding at the end the following: 

19 ‘‘(f) TERMINATION.—This section shall not apply to 

20 taxable years beginning after December 31, 2009.’’. 

21 (2) CONFORMING AMENDMENT.—Subparagraph 

22 (B) of section 223(b)(2) of such Code, as amended 

23 by section 103 of this Act, is amended by striking 

24 ‘‘which is excludable from the taxpayer’s gross in25 come for such taxable year under section 106(d)’’ 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
9 

•HR 3971 IH

1 and inserting ‘‘which would have been excludable 

2 from the taxpayer’s gross income for such taxable 

3 year under section 106(d) (determined as if such 

4 section was in effect on the day before the date of 

5 enactment of the Health Savings Account Expansion 

6 Act of 2009)’’. 

7 (c) SPECIAL RULES FOR HEALTH INSURANCE COSTS

8 OF SELF-EMPLOYED INDIVIDUALS.—Paragraph (1) of 

9 section 162(l) of such Code is amended by adding at the 

10 end the following new subparagraph: 

11 ‘‘(C) YEARS AFTER 2009.—In the case of 

12 any taxable year beginning in a calendar year 

13 after 2009, the applicable percentage shall be 

14 zero.’’. 

15 (d) MEDICAL, DENTAL, ETC., EXPENSES.—Section 

16 213 of such Code is amended by adding at the end the 

17 following: 

18 ‘‘(f) TERMINATION.—This section shall not apply to 

19 taxable years beginning after December 31, 2009.’’. 

20 (e) EFFECTIVE DATE.—The amendments made by 

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

22 of this Act. 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS
10 

•HR 3971 IH

1 SEC. 202. TERMINATION OF EMPLOYER DEDUCTION FOR 

2 HEALTH COVERAGE. 

3 (a) IN GENERAL.—Section 162 of the Internal Rev4 enue Code of 1986 is amended by redesignating subsection 

5 (q) as subsection (r) and by inserting after subsection (p) 

6 the following new subsection: 

7 ‘‘(q) DENIAL OF DEDUCTION FOR MEDICAL CARE.— 

8 No deduction shall be allowed under this chapter to an 

9 employer for any amount paid or incurred with respect 

10 to an employee, his spouse, and dependents during the 

11 taxable year— 

12 ‘‘(1) for insurance which constitutes medical 

13 care, 

14 ‘‘(2) under a health flexible spending arrange15 ment or health reimbursement arrangement, 

16 ‘‘(3) to an Archer MSA or a health savings ac17 count, or 

18 ‘‘(4) under any other arrangement under which 

19 the employer provides medical care, directly or indi20 rectly, to the employee, spouse, or dependent.’’. 

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

22 subsection (a) shall apply to taxable years beginning after 

23 December 31, 2009. 

Æ 


CPrice-Sewell on DSKGBLS3C1PROD with BILLS