I 

118TH CONGRESS 

1ST SESSION H. R. 6857 

To amend the Internal Revenue Code of 1986 to modernize health savings 

accounts, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 19, 2023 

Mr. GALLAGHER 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 modernize 

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. 

4 This Act may be cited as the ‘‘Simplify and Expand 

5 Health Savings Accounts Act’’. 

6 SEC. 2. MODERNIZATION OF HEALTH SAVINGS ACCOUNTS. 

7 (a) IN GENERAL.—Section 223 of the Internal Rev8 enue Code of 1986 is amended to read as follows: 


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1 ‘‘SEC. 223. HEALTH SAVINGS 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 health savings account of such indi8 vidual. 

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 has self-only coverage under a qualified 

19 plan as of the first day of such month, the an20 nual limitation determined under the following 

21 table: 

‘‘In the case of a plan with an actuarial value of: The annual limitation is: 

Less than 55 percent ........................... $10,000 

At least 55 percent and less than 65 

percent.

$8,600 

At least 65 percent ............................... $7,200 


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

2 who has family coverage under a qualified plan 

3 as of the first day of such month, the annual 

4 limitation determined under the following table: 

‘‘In the case of a plan with an actuarial value of: The annual limitation is: 

Less than 55 percent ........................... $20,000 

At least 55 percent and less than 65 

percent.

$17,200 

At least 65 percent ............................... $14,400. 

5 ‘‘(3) ADDITIONAL CONTRIBUTIONS FOR INDI6 VIDUALS 55 OR OLDER.—In the case of an individual 

7 who has attained age 55 before the close of the tax8 able year, the applicable limitation under subpara9 graphs (A) and (B) of paragraph (2) shall be in10 creased by $1,000. 

11 ‘‘(4) COORDINATION WITH OTHER CONTRIBU12 TIONS.—The limitation which would (but for this 

13 paragraph) apply under this subsection to an indi14 vidual for any taxable year shall be reduced (but not 

15 below zero) by the sum of— 

16 ‘‘(A) the aggregate amount contributed to 

17 health savings accounts of such individual 

18 which is excludable from the taxpayer’s gross 

19 income for such taxable year under section 

20 106(d) (and such amount shall not be allowed 

21 as a deduction under subsection (a)), and 


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1 ‘‘(B) the aggregate amount contributed to 

2 health savings accounts of such individual for 

3 such taxable year under section 408(d)(9) (and 

4 such amount shall not be allowed as a deduc5 tion under subsection (a)). 

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

8 to each other, if either spouse has family coverage— 

9 ‘‘(A) both spouses shall be treated as hav10 ing only such family coverage (and if such 

11 spouses each have family coverage under dif12 ferent plans, as being covered under the plan 

13 with the highest actuarial value), and 

14 ‘‘(B) the limitation under paragraph (1) 

15 (after the application of subparagraph (A) and 

16 without regard to any additional contribution 

17 amount under paragraph (3)) shall be divided 

18 equally between them unless they agree on a 

19 different division. 

20 ‘‘(6) DENIAL OF DEDUCTION TO DEPEND21 ENTS.—No deduction shall be allowed under this 

22 section to any individual with respect to whom a de23 duction under section 151 is allowable to another 

24 taxpayer for a taxable year beginning in the calVerDate Sep 11 2014 22:51 Jan 08, 2024 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6857.IH H6857

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1 endar year in which such individual’s taxable year 

2 begins. 

3 ‘‘(7) INCREASE IN LIMIT FOR INDIVIDUALS BE4 COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN5 NING OF THE YEAR.— 

6 ‘‘(A) IN GENERAL.—For purposes of com7 puting the limitation under paragraph (1) for 

8 any taxable year, an individual who is an eligi9 ble individual during the last month of such 

10 taxable year shall be treated— 

11 ‘‘(i) as having been an eligible indi12 vidual during each of the months in such 

13 taxable year, and 

14 ‘‘(ii) as having been enrolled, during 

15 each of the months such individual is 

16 treated as an eligible individual solely by 

17 reason of clause (i), in the same qualified 

18 plan in which the individual was enrolled 

19 for the last month of such taxable year. 

20 ‘‘(B) FAILURE TO MAINTAIN QUALIFIED

21 PLAN COVERAGE.— 

22 ‘‘(i) IN GENERAL.—If, at any time 

23 during the testing period, the individual is 

24 not an eligible individual, then— 


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1 ‘‘(I) gross income of the indi2 vidual for the taxable year in which 

3 occurs the first month in the testing 

4 period for which such individual is not 

5 an eligible individual is increased by 

6 the aggregate amount of all contribu7 tions to the health savings account of 

8 the individual which could not have 

9 been made but for subparagraph (A), 

10 and 

11 ‘‘(II) the tax imposed by this 

12 chapter for any taxable year on the 

13 individual shall be increased by 10 

14 percent of the amount of such in15 crease. 

16 ‘‘(ii) EXCEPTION FOR DISABILITY OR

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

18 (i) shall not apply if the individual ceased 

19 to be an eligible individual by reason of the 

20 death of the individual or the individual 

21 becoming disabled (within the meaning of 

22 section 72(m)(7)). 

23 ‘‘(iii) TESTING PERIOD.—The term 

24 ‘testing period’ means the period beginning 

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1 ferred to in subparagraph (A) and ending 

2 on the last day of the 12th month fol3 lowing such month. 

4 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur5 poses of this section— 

6 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

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

8 individual if such individual is covered under a quali9 fied plan as of the 1st day of such month. 

10 ‘‘(2) QUALIFIED PLAN.— 

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

12 health plan’ means any health plan, including 

13 employer plans, individual plans, short term 

14 plans, Medicare, Medicaid, VA health care, 

15 TRICARE, health care sharing ministries, and 

16 association health plans. 

17 ‘‘(B) EXCLUSION OF CERTAIN PLANS.— 

18 Such term does not include a health plan if 

19 substantially all of its coverage is— 

20 ‘‘(i) coverage for any benefit provided 

21 by permitted insurance, or 

22 ‘‘(ii) coverage (whether through insur23 ance or otherwise) for accidents, disability, 

24 dental care, vision care, or long-term care. 


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1 ‘‘(3) PERMITTED INSURANCE.—The term ‘per2 mitted insurance’ means— 

3 ‘‘(A) insurance if substantially all of the 

4 coverage provided under such insurance relates 

5 to— 

6 ‘‘(i) liabilities incurred under workers’ 

7 compensation laws, 

8 ‘‘(ii) tort liabilities, 

9 ‘‘(iii) liabilities relating to ownership 

10 or use of property, or 

11 ‘‘(iv) such other similar liabilities as 

12 the Secretary may specify by regulations, 

13 ‘‘(B) insurance for a specified disease or 

14 illness, and 

15 ‘‘(C) insurance paying a fixed amount per 

16 day (or other period) of hospitalization. 

17 ‘‘(4) FAMILY COVERAGE.—The term ‘family 

18 coverage’ means any coverage other than self-only 

19 coverage. 

20 ‘‘(d) HEALTH SAVINGS ACCOUNT.—For purposes of 

21 this section— 

22 ‘‘(1) IN GENERAL.—The term ‘health savings 

23 account’ means a trust created or organized in the 

24 United States as a health savings account exclusively 

25 for the purpose of paying the qualified medical exVerDate Sep 11 2014 22:51 Jan 08, 2024 Jkt 049200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H6857.IH H6857

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1 penses of the account beneficiary, but only if the 

2 written governing instrument creating the trust 

3 meets the following requirements: 

4 ‘‘(A) Except in the case of a rollover con5 tribution described in subsection (f)(5) or sec6 tion 220(f)(5), no contribution will be accept7 ed— 

8 ‘‘(i) unless it is in cash, or 

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

10 when added to previous contributions to 

11 the trust for the calendar year, exceeds the 

12 sum of the dollar amounts in effect under 

13 paragraphs (2) and (3) of subsection (b) or 

14 are excludible from gross income under 

15 section 106(d). 

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

17 section 408(n)), an insurance company (as de18 fined in section 816), or another person who 

19 demonstrates to the satisfaction of the Sec20 retary that the manner in which such person 

21 will administer the trust will be consistent with 

22 the requirements of this section. 

23 ‘‘(C) No part of the trust assets will be in24 vested in life insurance contracts. 


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

2 commingled with other property except in a 

3 common trust fund or common investment 

4 fund. 

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

6 balance in his account is nonforfeitable. 

7 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 

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

9 medical expenses’ means, with respect to an ac10 count beneficiary, amounts paid by such bene11 ficiary for medical care (as defined in section 

12 213(d)) for such individual, the spouse of such 

13 individual, and any dependent (as defined in 

14 section 152, determined without regard to sub15 sections (b)(1), (b)(2), and (d)(1)(B) thereof) 

16 of such individual, but only to the extent such 

17 amounts are not compensated for by insurance 

18 or otherwise. For purposes of this subpara19 graph, amounts paid for menstrual care prod20 ucts shall be treated as paid for medical care. 

21 ‘‘(B) HEALTH INSURANCE MAY NOT BE

22 PURCHASED FROM ACCOUNT.— 

23 ‘‘(i) IN GENERAL.—Subparagraph (A) 

24 shall not apply to any payment for insur25 ance. 


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1 ‘‘(ii) EXCEPTIONS.—Claue (i) shall 

2 not apply to any expense for coverage 

3 under— 

4 ‘‘(I) a health plan during any pe5 riod of continuation coverage required 

6 under any Federal law, 

7 ‘‘(II) a qualified long-term care 

8 insurance contract (as defined in sec9 tion 7702B(b)), 

10 ‘‘(III) a health plan during a pe11 riod in which the individual is receiv12 ing unemployment compensation 

13 under any Federal or State law, or 

14 ‘‘(IV) in the case of an account 

15 beneficiary who has attained the age 

16 specified in section 1811 of the Social 

17 Security Act, any health insurance 

18 other than a medicare supplemental 

19 policy (as defined in section 1882 of 

20 the Social Security Act). 

21 ‘‘(iii) EXCEPTION FOR INTEGRATED

22 HEALTH PLANS.—Clause (i) shall not 

23 apply to any expense for coverage under an 

24 integration eligible health plan which is inVerDate Sep 11 2014 22:51 Jan 08, 2024 Jkt 049200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H6857.IH H6857

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1 tegrated with the health savings account 

2 within the meaning of section 106(d). 

3 ‘‘(iv) EXCEPTION FOR DIRECT PRI4 MARY CARE SERVICE ARRANGEMENTS.— 

5 ‘‘(I) IN GENERAL.—A direct pri6 mary care service arrangement shall 

7 not be treated as insurance for pur8 poses of clause (i)). 

9 ‘‘(II) DIRECT PRIMARY CARE

10 SERVICE ARRANGEMENT DEFINED.— 

11 For purposes of this clause, the term 

12 ‘direct primary care service arrange13 ment’ means an arrangement under 

14 which an individual is provided med15 ical care (as defined in section 

16 213(d)(1), determined without regard 

17 to subparagraph (E) thereof) con18 sisting solely of primary care services 

19 provided by primary care practitioners 

20 (as defined in section 1833(x)(2)(A) 

21 of the Social Security Act, determined 

22 without regard to clause (ii) thereof), 

23 if the sole compensation for such care 

24 is a fixed periodic fee. 


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1 ‘‘(C) MENSTRUAL CARE PRODUCT.—For 

2 purposes of this paragraph, the term ‘menstrual 

3 care product’ means a tampon, pad, liner, cup, 

4 sponge, or similar product used by individuals 

5 with respect to menstruation or other genital6 tract secretions. 

7 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac8 count beneficiary’ means the individual on whose be9 half the health savings account was established. 

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

11 to the following rules shall apply for purposes of this 

12 section: 

13 ‘‘(A) Section 219(d)(2) (relating to no de14 duction for rollovers). 

15 ‘‘(B) Section 219(f)(3) (relating to time 

16 when contributions deemed made). 

17 ‘‘(C) Except as provided in section 106(d), 

18 section 219(f)(5) (relating to employer pay19 ments). 

20 ‘‘(D) Section 408(g) (relating to commu21 nity property laws). 

22 ‘‘(E) Section 408(h) (relating to custodial 

23 accounts). 

24 ‘‘(e) TAX TREATMENT OF ACCOUNTS.— 


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1 ‘‘(1) IN GENERAL.—A health savings account is 

2 exempt from taxation under this subtitle unless such 

3 account has ceased to be a health savings account. 

4 Notwithstanding the preceding sentence, any such 

5 account is subject to the taxes imposed by section 

6 511 (relating to imposition of tax on unrelated busi7 ness income of charitable, etc. organizations). 

8 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

9 to the rules of paragraphs (2) and (4) of section 

10 408(e) shall apply to health savings accounts, and 

11 any amount treated as distributed under such rules 

12 shall be treated as not used to pay qualified medical 

13 expenses. 

14 ‘‘(f) TAX TREATMENT OF DISTRIBUTIONS.— 

15 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

16 EXPENSES.—Any amount paid or distributed out of 

17 a health savings account which is used exclusively to 

18 pay qualified medical expenses of any account bene19 ficiary shall not be includible in gross income. 

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

21 QUALIFIED MEDICAL EXPENSES.—Any amount paid 

22 or distributed out of a health savings account which 

23 is not used exclusively to pay the qualified medical 

24 expenses of the account beneficiary shall be included 

25 in the gross income of such beneficiary. 


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1 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE2 FORE DUE DATE OF RETURN.— 

3 ‘‘(A) IN GENERAL.—If any excess con4 tribution is contributed for a taxable year to 

5 any health savings account of an individual, 

6 paragraph (2) shall not apply to distributions 

7 from the health savings accounts of such indi8 vidual (to the extent such distributions do not 

9 exceed the aggregate excess contributions to all 

10 such accounts of such individual for such year) 

11 if— 

12 ‘‘(i) such distribution is received by 

13 the individual on or before the last day 

14 prescribed by law (including extensions of 

15 time) for filing such individual’s return for 

16 such taxable year, and 

17 ‘‘(ii) such distribution is accompanied 

18 by the amount of net income attributable 

19 to such excess contribution. 

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

21 included in the gross income of the individual 

22 for the taxable year in which it is received. 

23 ‘‘(B) EXCESS CONTRIBUTION.—For pur24 poses of subparagraph (A), the term ‘excess 

25 contribution’ means any contribution (other 


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1 than a rollover contribution described in para2 graph (5) or section 220(f)(5)) which is neither 

3 excludable from gross income under section 

4 106(d) nor deductible under this section. 

5 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

6 USED FOR QUALIFIED MEDICAL EXPENSES.— 

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

8 this chapter on the account beneficiary for any 

9 taxable year in which there is a payment or dis10 tribution from a health savings account of such 

11 beneficiary which is includible in gross income 

12 under paragraph (2) shall be increased by 20 

13 percent of the amount which is so includible. 

14 ‘‘(B) EXCEPTION FOR DISABILITY OR

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

16 the payment or distribution is made after the 

17 account beneficiary becomes disabled within the 

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

19 ‘‘(C) EXCEPTION FOR DISTRIBUTIONS

20 AFTER MEDICARE ELIGIBILITY.—Subparagraph 

21 (A) shall not apply to any payment or distribu22 tion after the date on which the account bene23 ficiary attains the age specified in section 1811 

24 of the Social Security Act. 


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1 ‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 

2 described in this paragraph as a rollover contribu3 tion if it meets the requirements of subparagraphs 

4 (A) and (B). 

5 ‘‘(A) IN GENERAL.—Paragraph (2) shall 

6 not apply to any amount paid or distributed 

7 from a health savings account to the account 

8 beneficiary to the extent the amount received is 

9 paid into a health savings account for the ben10 efit of such beneficiary not later than the 60th 

11 day after the day on which the beneficiary re12 ceives the payment or distribution. 

13 ‘‘(B) LIMITATION.—This paragraph shall 

14 not apply to any amount described in subpara15 graph (A) received by an individual from a 

16 health savings account if, at any time during 

17 the 1-year period ending on the day of such re18 ceipt, such individual received any other amount 

19 described in subparagraph (A) from a health 

20 savings account which was not includible in the 

21 individual’s gross income because of the appli22 cation of this paragraph. 

23 ‘‘(C) ROLLOVER FROM FSA, ARCHER MSA, 

24 AND HRA.—An amount is described in this sub25 paragraph for a calendar year as a rollover conVerDate Sep 11 2014 22:51 Jan 08, 2024 Jkt 049200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H6857.IH H6857

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1 tribution if the amount is the remaining balance 

2 in a health flexible spending account, Archer 

3 MSA, or health reimbursement arrangement 

4 that is contributed to the health savings ac5 count for a taxable year ending on or before 

6 one year after the date of the enactment of this 

7 subparagraph. 

8 ‘‘(6) COORDINATION WITH MEDICAL EXPENSE

9 DEDUCTION.—For purposes of determining the 

10 amount of the deduction under section 213, any pay11 ment or distribution out of a health savings account 

12 for qualified medical expenses shall not be treated as 

13 an expense paid for medical care. 

14 ‘‘(7) TRANSFER OF ACCOUNT INCIDENT TO DI15 VORCE.—The transfer of an individual’s interest in 

16 a health savings account to an individual’s spouse or 

17 former spouse under a divorce or separation instru18 ment described in clause (i) of section 121(d)(3)(C) 

19 shall not be considered a taxable transfer made by 

20 such individual notwithstanding any other provision 

21 of this subtitle, and such interest shall, after such 

22 transfer, be treated as a health savings account with 

23 respect to which such spouse is the account bene24 ficiary. 


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1 ‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT

2 BENEFICIARY.— 

3 ‘‘(A) TREATMENT IF DESIGNATED BENE4 FICIARY IS SPOUSE.—If the account bene5 ficiary’s surviving spouse acquires such bene6 ficiary’s interest in a health savings account by 

7 reason of being the designated beneficiary of 

8 such account at the death of the account bene9 ficiary, such health savings account shall be 

10 treated as if the spouse were the account bene11 ficiary. 

12 ‘‘(B) OTHER CASES.— 

13 ‘‘(i) IN GENERAL.—If, by reason of 

14 the death of the account beneficiary, any 

15 person acquires the account beneficiary’s 

16 interest in a health savings account in a 

17 case to which subparagraph (A) does not 

18 apply— 

19 ‘‘(I) such account shall cease to 

20 be a health savings account as of the 

21 date of death, and 

22 ‘‘(II) an amount equal to the fair 

23 market value of the assets in such ac24 count on such date shall be includible 

25 if such person is not the estate of 


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1 such beneficiary, in such person’s 

2 gross income for the taxable year 

3 which includes such date, or if such 

4 person is the estate of such bene5 ficiary, in such beneficiary’s gross in6 come for the last taxable year of such 

7 beneficiary. 

8 ‘‘(ii) SPECIAL RULES.— 

9 ‘‘(I) REDUCTION OF INCLUSION

10 FOR PREDEATH EXPENSES.—The 

11 amount includible in gross income 

12 under clause (i) by any person (other 

13 than the estate) shall be reduced by 

14 the amount of qualified medical ex15 penses which were incurred by the de16 cedent before the date of the dece17 dent’s death and paid by such person 

18 within 1 year after such date. 

19 ‘‘(II) DEDUCTION FOR ESTATE

20 TAXES.—An appropriate deduction 

21 shall be allowed under section 691(c) 

22 to any person (other than the dece23 dent or the decedent’s spouse) with 

24 respect to amounts included in gross 


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1 income under clause (i) by such per2 son. 

3 ‘‘(g) COST-OF-LIVING ADJUSTMENT.— 

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

5 year beginning after December 31, 2024, each dollar 

6 amount in paragraphs (2) and (3) of subsection (c) 

7 shall be increased by an amount equal to— 

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

9 ‘‘(B) the cost-of-living adjustment deter10 mined under section 1(f)(3) for the calendar 

11 year in which such taxable year begins deter12 mined by substituting ‘2023’ for ‘2016’ in sub13 paragraph (A)(ii) thereof. 

14 ‘‘(2) ROUNDING.—If any increase under para15 graph (1) is not a multiple of $50, such increase 

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

17 ‘‘(h) REPORTS.—The Secretary may require— 

18 ‘‘(1) the trustee of a health savings account to 

19 make such reports regarding such account to the 

20 Secretary and to the account beneficiary with re21 spect to contributions, distributions, the return of 

22 excess contributions, and such other matters as the 

23 Secretary determines appropriate, and 

24 ‘‘(2) any person who provides an individual with 

25 a qualified health plan to make such reports to the 


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1 Secretary and to the account beneficiary with re2 spect to such plan as the Secretary determines ap3 propriate.’’. 

4 (b) EMPLOYER CONTRIBUTIONS TO HEALTH SAV5 INGS ACCOUNTS.— 

6 (1) IN GENERAL.—Section 106(d) is amended 

7 to read as follows: 

8 ‘‘(d) CONTRIBUTIONS TO HEALTH SAVINGS AC9 COUNTS.— 

10 ‘‘(1) IN GENERAL.—In the case of an employee 

11 who is an eligible individual, amounts contributed by 

12 such employee’s employer to any health savings ac13 count of such employee shall be treated as employer14 provided coverage for medical expenses under an ac15 cident or health plan to the extent— 

16 ‘‘(A) such amounts do not exceed twice the 

17 limitation in effect under section 223(b)(2) (de18 termined without regard to this subsection) 

19 which is applicable to such employee for such 

20 taxable year, 

21 ‘‘(B) such amounts are contributed to an 

22 account which is integrated with an integration 

23 eligible health plan, 


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1 ‘‘(C) such employer does not offer such 

2 employee coverage under any other accident or 

3 health plan, 

4 ‘‘(D) such employer offers such amounts 

5 only to members of a qualified class of employ6 ees and offers such amounts to all members of 

7 any such qualified class, 

8 ‘‘(E) such employer offers employees an 

9 opportunity to elect not to receive such amounts 

10 at least once per year and upon termination 

11 from employment, and 

12 ‘‘(F) such employee is not covered under 

13 any health insurance offered by an employer of 

14 such employee’s spouse. 

15 ‘‘(2) INTEGRATION ELIGIBLE HEALTH PLAN.— 

16 For purposes of this subsection, the term ‘integra17 tion eligible health plan’ means— 

18 ‘‘(A) any bronze, silver, or gold plan of19 fered through an Exchange established under 

20 the Patient Protection and Affordable Care Act, 

21 ‘‘(B) entitlement to benefits under part A 

22 of title XVIII of the Social Security Act and en23 rollment under part B of such title, including 

24 enrollment under a Medicare Advantage plan 

25 under part C of such title, 


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1 ‘‘(C) in the case of any individual who has 

2 not attained age 30 or is determined by the 

3 Secretary (after consultation with the Secretary 

4 of Health and Human Services) to have a hard5 ship, coverage under a catastrophic plan, and 

6 ‘‘(D) in the case of any student, coverage 

7 under a health plan which is conditioned on 

8 maintaining status as being such a student. 

9 ‘‘(3) INTEGRATION OF PLANS AND AC10 COUNTS.—For purposes of this subsection, an ac11 count shall be treated as integrated with an integra12 tion eligible health plan (and such plan shall be 

13 treated as integrated with such account) for any 

14 month if— 

15 ‘‘(A) the employee is the account bene16 ficiary of such account and such employee is 

17 covered under an integration eligible health 

18 plan for such month, 

19 ‘‘(B) the employer verifies that the em20 ployee is so covered by requiring the submission 

21 of documentation to such employer, and 

22 ‘‘(C) the employer makes contributions to 

23 such account for such month which are not less 

24 than the excess (if any) of— 


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1 ‘‘(i) the adjusted monthly premiums 

2 for the applicable second lowest cost silver 

3 plan with respect to the taxpayer, over 

‘‘(ii) 1 4 ⁄12 of 9.5 percent of the tax5 payer’s household income (within the 

6 meaning of section 36B). 

7 ‘‘(4) QUALIFIED CLASS.—For purposes of this 

8 subsection— 

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

10 class’ means only the following: All employees; 

11 Full-time employees; Part-time employees; Sea12 sonal employees; Employees covered under a 

13 collective bargaining agreement; Employees in a 

14 waiting period; Foreign employees who work 

15 abroad; Employees working in the same geo16 graphic location (same insurance rating area, 

17 State, or multi-State region); Salaried workers; 

18 Non-Salaried workers (such as hourly workers); 

19 Temporary employees of staffing firms. 

20 ‘‘(B) RULES RELATED TO CLASS SIZE.— 

21 ‘‘(i) MINIMUM CLASS SIZE.—A class 

22 shall not be treated as a qualified class un23 less in consisting of at least the following 

24 number of employees: 


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1 ‘‘(I) In the case of an employer 

2 with fewer than 100 employees, the 

3 lesser of 10 employees or all employ4 ees of the employer. 

5 ‘‘(II) In the case of an employer 

6 with at least 100 and not more than 

7 200 employees, 10 percent of the 

8 number of such employees (if not a 

9 whole number, rounded down to the 

10 next lowest whole number). 

11 ‘‘(III) In the case of an employer 

12 with more than 200 employees, 20 

13 employees. 

14 ‘‘(ii) COMBINATION OF CLASSES.— 

15 Two or more qualified classes described in 

16 subparagraph (A) may be combined if each 

17 such class separately would not satisfy the 

18 requirement of clause (i). 

19 ‘‘(C) PERMITTED VARIATION WITHIN

20 QUALIFIED CLASSES.—An employer shall not 

21 fail to meet the requirements of paragraph 

22 (1)(D) solely because the amounts offered to 

23 members of a qualified class vary on the basis 

24 of— 

25 ‘‘(i) number of dependents, 


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1 ‘‘(ii) age, if such variation based on 

2 age does not exceed a ratio of 3:1, and 

3 ‘‘(iii) chronic health condition, if such 

4 variation based on chronic health condition 

5 does not exceed a ratio of 1.2:1. 

6 ‘‘(5) COORDINATION WITH ACA PROVISIONS.— 

7 In the case of an integration eligible health plan 

8 which is integrated with a health savings account— 

9 ‘‘(A) such plan shall be treated as an eligi10 ble employer-sponsored plan described in sec11 tion 5000A(f)(1)(B), 

12 ‘‘(B) if an individual receives contributions 

13 to such account which are excludible from the 

14 gross income of such individual under this sec15 tion during any taxable year, no credit shall be 

16 allowed under section 36B with respect to such 

17 individual for such taxable year, and 

18 ‘‘(C) for purposes of section 

19 36B(c)(2)(C)(i)(II), the employee’s required 

20 contribution with respect to such plan shall be 

21 treated as being equal to the excess (if any) 

22 of— 

23 ‘‘(i) the adjusted monthly premiums 

24 for the applicable second lowest cost silver 

25 plan with respect to the taxpayer, over 


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1 ‘‘(ii) the contributions made the em2 ployer to such health savings account 

3 which are excludible from the gross income 

4 of the employee under this section. 

5 ‘‘(6) NO CONSTRUCTIVE RECEIPT.—No amount 

6 shall be included in the gross income of any em7 ployee solely because the employee may choose be8 tween the contributions referred to in paragraph (1) 

9 and employer contributions to another health plan of 

10 the employer. 

11 ‘‘(7) SPECIAL RULE FOR DEDUCTION OF EM12 PLOYER CONTRIBUTIONS.—Any employer contribu13 tion to a health savings account, if otherwise allow14 able as a deduction under this chapter, shall be al15 lowed only for the taxable year in which paid. 

16 ‘‘(8) EMPLOYER HEALTH SAVINGS ACCOUNT

17 CONTRIBUTIONS REQUIRED TO BE SHOWN ON RE18 TURN.—Every individual required to file a return 

19 under section 6012 for the taxable year shall include 

20 on such return the aggregate amount contributed by 

21 employers to the health savings accounts of such in22 dividual or such individual’s spouse for such taxable 

23 year. 


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1 ‘‘(9) HEALTH SAVINGS ACCOUNT CONTRIBU2 TIONS NOT PART OF COBRA COVERAGE.—Paragraph 

3 (1) shall not apply for purposes of section 4980B. 

4 ‘‘(10) DEFINITIONS.—Terms used in this sub5 section which are also used in section 223 shall have 

6 the same respective meanings as when used in such 

7 section. 

8 ‘‘(11) REGULATIONS.—The Secretaries of 

9 Treasury, Labor, and Health and Human Services 

10 shall each issue such regulations or other guidance 

11 as may be necessary or appropriate to carry out the 

12 purposes of this subsection, including regulations or 

13 other guidance to— 

14 ‘‘(A) prevent employers from offering plans 

15 integrated with health savings accounts selec16 tively to sicker workers, and 

17 ‘‘(B) establish a safe harbor that helps em18 ployers determine whether contributions to 

19 health savings accounts with respect to which 

20 there is an integrated health plan comply with 

21 affordability requirements under the Patient 

22 Protection and Affordable Care Act and the 

23 amendments made by such Act. 

24 ‘‘(12) CROSS REFERENCE.—For penalty on fail25 ure by employer to make comparable contributions 


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1 to the health savings accounts of comparable em2 ployees, see section 4980G.’’. 

3 (2) NONAPPLICATION OF ERISA.—Contributions 

4 by an employer to a health savings account (as de5 fined in section 223 of the Internal Revenue Code of 

6 1986), and an integration eligible health plan which 

7 is integrated with such account (within the meaning 

8 of such section), shall not be treated as a plan for 

9 purposes of the Employee Retirement Income Secu10 rity Act of 1974 if— 

11 (A) receipt of such contributions by the 

12 employee is voluntary, 

13 (B) the employer does not select or en14 dorse the integration eligible health plan which 

15 is integrated with such account, 

16 (C) no premiums, other than premiums for 

17 the integration eligible health plan which is in18 tegrated with such account, are paid from the 

19 account, 

20 (D) the employer receives no consideration 

21 (money or other benefit) in connection with the 

22 employee selecting or renewing a plan, and 

23 (E) each participant is notified annually 

24 that such contributions and such plan are not 

25 subject to the requirements of such Act. 


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1 (c) TERMINATION OF CERTAIN OTHER HEALTH

2 CARE RELATED TAX BENEFITS.— 

3 (1) EXCLUSION LIMITED TO SELF-FUNDED

4 MAJOR MEDICAL PLAN OF EMPLOYERS.—Section 

5 105(b) of such Code is amended by striking ‘‘paid,’’ 

6 and inserting ‘‘paid under a self-funded major med7 ical plan of the employer’’. 

8 (2) EXCLUSION NOT APPLICABLE TO HEALTH

9 REIMBURSEMENT ARRANGEMENTS.—Section 105(h) 

10 of such Code is amended to read as follows: 

11 ‘‘(h) EXCLUSION NOT APPLICABLE TO HEALTH RE12 IMBURSEMENT ARRANGEMENTS.—Subsection (b) shall 

13 not apply to health reimbursement arrangements.’’. 

14 (3) REPEAL OF EXCLUSIONS FROM INCOME FOR

15 ARCHER MSAS AND FSAS.—Section 106 of such Code 

16 is amended by striking subsections (b), (e), and (g). 

17 (4) TERMINATION OF DEDUCTION FOR CON18 TRIBUTIONS TO ARCHER MSAS.—Section 220(a) of 

19 such Code is amended by adding at the end the fol20 lowing: ‘‘No amount shall be allowed as a deduction 

21 under the preceding sentence for any taxable year 

22 beginning after one year after the date of the enact23 ment of this sentence.’’. 


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1 (d) BANKRUPTCY PROTECTIONS.—Section 522 of 

2 title 11, United States Code, is amended by adding at the 

3 end the following new subsection: 

4 ‘‘(r) For purposes of this section, any health savings 

5 account (as described in section 223 of the Internal Rev6 enue Code of 1986) shall be treated in the same manner 

7 as an individual retirement account described in section 

8 408 of such Code.’’. 

9 (e) ROLLOVER OF FSA, ARCHER MSA, HRA TO

10 HEALTH SAVINGS ACCOUNT.—Notwithstanding any other 

11 provision of law, if the remaining balance in a health flexi12 ble spending arrangement, Archer MSA, or health reim13 bursement arrangement is transferred to a health savings 

14 account before the end of any taxable year ending on or 

15 before one year after the date of the enactment of this 

16 Act, such transfer shall be treated as a rollover to the 

17 health savings account under section 223(f)(5) of the In18 ternal Revenue Code of 1986 and the distribution from 

19 the health flexible spending arrangement, Archer MSA, or 

20 health reimbursement arrangement shall not be includible 

21 in gross income. 

22 (f) EFFECTIVE DATES.— 

23 (1) IN GENERAL.—The amendments made by 

24 subsections (a) and (b) shall apply to taxable years 


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1 beginning after the date of the enactment of this 

2 Act. 

3 (2) TERMINATION OF CERTAIN OTHER HEALTH

4 CARE RELATED TAX BENEFITS.—The amendments 

5 made by subsection (c) shall apply to taxable years 

6 beginning after the date which is 1 year after the 

7 date of the enactment of this Act. 

8 (3) BANKRUPTCY PROTECTIONS.—The amend9 ment made by subsection (d) shall apply to cases 

10 commencing under title 11, United States Code, 

11 after the date of the enactment of this Act. 

12 SEC. 3. UNUSED PREMIUM TAX CREDITS MAY BE DEPOS13 ITED IN HEALTH SAVINGS ACCOUNTS. 

14 (a) IN GENERAL.—Section 36B is amended by redes15 ignating subsection (h) as subsection (i) and by inserting 

16 after subsection (g) the following new subsection: 

17 ‘‘(h) EXCESS CREDIT MAY BE DEPOSITED INTO A

18 HEALTH SAVINGS ACCOUNT.— 

19 ‘‘(1) IN GENERAL.—If the amount described in 

20 subparagraph (B) of subsection (b)(2) exceeds the 

21 amount described in subparagraph (A) of such sub22 section with respect to any coverage month and an 

23 election under paragraph (2) is in effect with respect 

24 to the applicable taxpayer, the Secretary shall deVerDate Sep 11 2014 22:51 Jan 08, 2024 Jkt 049200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\H6857.IH H6857

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1 posit such excess into a health savings account of 

2 such taxpayer. 

3 ‘‘(2) ELECTION TO DEPOSIT EXCESS CREDIT

4 INTO A HEALTH SAVINGS ACCOUNT.—A taxpayer 

5 may elect (at such time and in such manner as the 

6 Secretary may provide) to have the Secretary deposit 

7 the excess described in paragraph (1) into a health 

8 savings account of the taxpayer. Any such election 

9 shall only be treated as being in effect if the tax10 payer provides the Secretary with such information 

11 as the Secretary may require to allow the Secretary 

12 to make such deposit. 

13 ‘‘(3) COORDINATION WITH HEALTH SAVINGS

14 ACCOUNT RULES.—Any amount deposited in a 

15 health savings account by the Secretary under this 

16 subsection shall— 

17 ‘‘(A) be includible in the gross income of 

18 the applicable taxpayer, and 

19 ‘‘(B) be taken into account as an amount 

20 paid to such account for purposes of this sec21 tion. 

22 ‘‘(4) TREATMENT OF DEPOSITS.—For purposes 

23 of section 1324 of title 31, United States Code, any 

24 deposit made under this subsection shall be treated 

25 as a credit allowed under this section.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 4. ONE-TIME APPLICATION OF SAVER’S CREDIT TO 

5 CONTRIBUTIONS TO HEALTH SAVINGS AC6 COUNTS. 

7 (a) IN GENERAL.—In the case of an applicable tax8 able year, contributions to any health savings account of 

9 the taxpayer during such taxable year shall be treated as 

10 a qualified retirement savings contribution for purposes 

11 of section 25B of the Internal Revenue Code of 1986. 

12 (b) APPLICABLE TAXABLE YEAR.—For purposes of 

13 this section, the term ‘‘applicable taxable year’’ means any 

14 taxable year elected by the taxpayer (at such time and 

15 in such manner as the Secretary of the Treasury may pro16 vide) which begins during the 3-year period beginning 1 

17 year after the date of the enactment of this Act. A tax18 payer may not elect not more than 1 applicable taxable 

19 year under this subsection. 

20 SEC. 5. GRANTS FOR HEALTH SAVINGS ACCOUNT ASSIST21 ANCE AND OUTREACH. 

22 (a) IN GENERAL.—The Administrator shall establish 

23 a grant program to provide assistance to eligible entities 

24 to carry out the activities described in subsection (c). 


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1 (b) APPLICATION.—An eligible entity shall submit an 

2 application to the Administrator in such time and in such 

3 manner as the Administrator may require, providing that 

4 such application requires a demonstration of the existence 

5 of a relationship with, or the ability to establish a relation6 ship with, an employer, employee, self-employed indi7 vidual, or consumer eligible to enroll in a health savings 

8 account. 

9 (c) USE OF FUNDS.—An eligible entity receiving a 

10 grant under this section shall use such funds to— 

11 (1) distribute fair and impartial information to 

12 consumers about health savings accounts, including 

13 the availability of such accounts and how such ac14 counts may be utilized; 

15 (2) conduct activities to raise public awareness 

16 of health savings accounts; 

17 (3) facilitate enrollment in health savings ac18 counts; and 

19 (4) refer individuals enrolled in a health savings 

20 account to the appropriate official, organization, or 

21 State agency for the purpose of addressing a com22 plaint, grievance, or other question with respect to 

23 such health savings account. 


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1 (d) AMOUNT.—The Administrator may distribute up 

2 to $5,000,000 annually to be divided among grant recipi3 ents under this section. 

4 (e) REPORT.—Not later than one year after the date 

5 on which the last of the grant periods awarded under this 

6 section ends, the Administrator shall submit a report to 

7 the Congress on the effectiveness of the grants provided 

8 under this section. 

9 (f) DEFINITIONS.—In this section: 

10 (1) ADMINISTRATOR.—The term ‘‘Adminis11 trator’’ means the Administrator of the Centers for 

12 Medicare & Medicaid Services. 

13 (2) CONSUMER.—The term ‘‘consumer’’ means 

14 an individual enrolled in, or seeking to enroll in, a 

15 health savings account. 

16 (3) ELIGIBLE ENTITY.—The term ‘‘eligible enti17 ty’’ includes the following: 

18 (A) A State. 

19 (B) Trade. 

20 (C) Industry. 

21 (D) Professional associations. 

22 (E) Commercial fishing industry organiza23 tions. 

24 (F) Ranching and farming organizations. 


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1 (G) Community and consumer-focused 

2 nonprofit groups. 

3 (H) Chambers of commerce. 

4 (I) Unions. 

5 (J) Small business development centers (as 

6 defined in section 21 of the Small Business Act 

7 (15 U.S.C. 648)). 

8 (K) Other entities capable of carrying out 

9 the activities described under subsection (b). 

10 (4) HEALTH SAVINGS ACCOUNT.—The term 

11 ‘‘health savings account’’ has the meaning given 

12 such term in section 223 of the Internal Revenue 

13 Code of 1986. 

14 (5) STATE.—The term ‘‘State’’ means each of 

15 the several States, the District of Columbia, each 

16 territory and possession of the United States, and 

17 each federally recognized Indian Tribe. 

Æ 


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