I 

116TH CONGRESS 

2D SESSION H. R. 8473 

To amend the Internal Revenue Code of 1986 to consolidate health accounts 

into Medisave Accounts, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 1, 2020 

Mr. GONZALEZ of Ohio (for himself and Mr. WESTERMAN) introduced the following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committee on 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 consolidate 

health accounts into Medisave 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 ‘‘Family First Medisave 

5 Empowerment Act’’. 


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1 SEC. 2. MEDISAVE ACCOUNTS. 

2 (a) IN GENERAL.—Part VIII of subchapter F of 

3 chapter 1 of the Internal Revenue Code of 1986 is amend4 ed by adding at the end the following new section: 

5 ‘‘SEC. 530A. MEDISAVE ACCOUNTS. 

6 ‘‘(a) MEDISAVE ACCOUNT.—For purposes of this sec7 tion— 

8 ‘‘(1) IN GENERAL.—The term ‘Medisave ac9 count’ means a trust created or organized in the 

10 United States as a Medisave account exclusively for 

11 the purpose of paying the qualified medical expenses 

12 of the account beneficiary, but only if the written 

13 governing instrument creating the trust meets the 

14 following requirements: 

15 ‘‘(A) Except in the case of a rollover con16 tribution described in subparagraph (A) or (B) 

17 of subsection (e)(5), no contribution will be ac18 cepted— 

19 ‘‘(i) unless it is in cash, 

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

21 when added to previous contributions to 

22 the trust for the calendar year, exceeds the 

23 limitation amount specified in subsection 

24 (b)(1), or 

25 ‘‘(iii) to the extent such contribution, 

26 when added to the balance of the account, 


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1 exceeds the limitation amount specified in 

2 subsection (b)(2). 

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

4 section 408(n)), an insurance company (as de5 fined in section 816), or another person who 

6 demonstrates to the satisfaction of the Sec7 retary that the manner in which such person 

8 will administer the trust will be consistent with 

9 the requirements of this section. 

10 ‘‘(C) No part of the trust assets will be in11 vested in life insurance contracts. 

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

13 commingled with other property except in a 

14 common trust fund or common investment 

15 fund. 

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

17 balance in his account is nonforfeitable. 

18 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 

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

20 medical expenses’ means, with respect to an ac21 count beneficiary, amounts paid by such bene22 ficiary for medical care, but only to the extent 

23 such amounts are not compensated for by in24 surance or otherwise— 

25 ‘‘(i) for— 


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1 ‘‘(I) such individual, 

2 ‘‘(II) the spouse of such indi3 vidual, 

4 ‘‘(III) any dependent (as defined 

5 in section 152, determined without re6 gard to subsections (b)(1), (b)(2), and 

7 (d)(1)(B) thereof) of such individual, 

8 and 

9 ‘‘(IV) any individual who bears a 

10 relationship to the account beneficiary 

11 that is described in subparagraph (C) 

12 or (D) of section 152(d) if the ac13 count beneficiary is or was a depend14 ent of such individual for any taxable 

15 year ending before or with the taxable 

16 year in which the individual attained 

17 18 years of age, and 

18 ‘‘(ii) if, on the date such medical care 

19 was provided, such individual, spouse or 

20 dependent to whom such care was provided 

21 was covered under the qualified health in22 surance of the account beneficiary. 

23 ‘‘(B) MODIFIED DEFINITION OF MEDICAL

24 CARE.—For purposes of subparagraph (A), the 

25 term ‘medical care’ has the meaning given such 


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1 term by section 213(d), except that such term 

2 includes— 

3 ‘‘(i) direct pay arrangements with pri4 mary physicians, and 

5 ‘‘(ii) predetermined level of access to 

6 care from an integrated health plan. 

7 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac8 count beneficiary’ means the individual on whose be9 half the Medisave 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 ‘‘(b) LIMITATIONS.— 

25 ‘‘(1) ANNUAL LIMITATION.— 


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1 ‘‘(A) IN GENERAL.—The limitation amount 

2 specified in this paragraph is— 

3 ‘‘(i) $10,000 in the case of a qualified 

4 health plan with an actuarial value of less 

5 than 55 percent, 

6 ‘‘(ii) $8,600 in the case of a qualified 

7 health plan with an actuarial value that is 

8 55 percent or more and less than 65 per9 cent, and 

10 ‘‘(iii) $7,200 in the case of a qualified 

11 health plan with an actuarial value that is 

12 65 percent or more. 

13 ‘‘(B) ACTUARIAL VALUE OF QUALIFIED

14 HEALTH PLAN.—For purposes of subparagraph 

15 (A), the actuarial value of a qualified health 

16 plan is the percentage of the total average costs 

17 of covered benefits under the health plan. 

18 ‘‘(2) ACCOUNT ACCUMULATION LIMITATION.— 

19 The limitation amount specified in this paragraph is 

20 $50,000. 

21 ‘‘(3) INDEXING.— 

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

23 taxable year beginning in a calendar year after 

24 2020, each dollar amount contained in para25 graph (1)(A) shall be increased by the medical 


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1 care cost adjustment of such amount for such 

2 calendar year. 

3 ‘‘(B) MEDICAL CARE COST ADJUST4 MENT.—For purposes of subparagraph (A), the 

5 medical care cost adjustment for any calendar 

6 year is the percentage (if any) by which— 

7 ‘‘(i) the medical care component of 

8 the C–CPI–U (as defined in section 

9 1(f)(6)) for August of the preceding cal10 endar year, exceeds 

11 ‘‘(ii) such component of the C–CPI–U 

12 (as so defined) for August of 2019. 

13 ‘‘(C) ROUNDING.— 

14 ‘‘(i) ANNUAL LIMITATION.—If any in15 crease in a dollar amount contained in 

16 paragraph (1)(A) determined under sub17 paragraph (A) is not a multiple of $100, 

18 such increase shall be rounded to the near19 est multiple of $100. 

20 ‘‘(ii) ACCOUNT LIMITATION.—If any 

21 increase in the dollar amount contained in 

22 paragraph (2) determined under subpara23 graph (A) is not a multiple of $1,000, such 

24 increase shall be rounded to the nearest 

25 multiple of $1,000. 


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1 ‘‘(4) COORDINATION WITH OTHER CONTRIBU2 TIONS.—The limitation which would (but for this 

3 paragraph) apply under paragraphs (1) and (2) to 

4 an individual for any taxable year shall be reduced 

5 (but not below zero) by the sum of— 

6 ‘‘(A) the aggregate amount contributed to 

7 Medisave accounts of such individual which is 

8 excludable from the taxpayer’s gross income for 

9 such taxable year under section 106(d), and 

10 ‘‘(B) the aggregate amount contributed to 

11 Medisave accounts of such individual for such 

12 taxable year under section 408(d)(9). 

13 ‘‘(5) DEPOSIT OF ADVANCE PREMIUM TAX

14 CREDIT.—An account beneficiary who is eligible for 

15 an advance payment of the premium tax credit may 

16 elect to have the Secretary deposit the advance pay17 ment into the Medisave account of the account bene18 ficiary. 

19 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur20 poses of this section— 

21 ‘‘(1) ELIGIBLE INDIVIDUAL.— 

22 ‘‘(A) IN GENERAL.—The term ‘eligible in23 dividual’ means, with respect to any month, any 

24 individual if such individual is covered under a 


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1 qualified health plan as of the 1st day of such 

2 month. 

3 ‘‘(B) CERTAIN COVERAGE DIS4 REGARDED.—Subparagraph (A) shall be ap5 plied without regard to— 

6 ‘‘(i) coverage for any benefit provided 

7 by permitted insurance, and 

8 ‘‘(ii) coverage (whether through insur9 ance or otherwise) for accidents, disability, 

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

11 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI12 GIBLE FOR CERTAIN VETERANS BENEFITS.—An 

13 individual shall not fail to be treated as an eli14 gible individual for any period merely because 

15 the individual receives hospital care or medical 

16 services under any law administered by the Sec17 retary of Veterans Affairs for a service-con18 nected disability (within the meaning of section 

19 101(16) of title 38, United States Code). 

20 ‘‘(2) QUALIFIED HEALTH PLAN.— 

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

22 health plan’ means a health plan that offers 

23 health insurance coverage. Such term includes 

24 entitlement to benefits under title XVIII or title 

25 XIX of the Social Security Act. 


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1 ‘‘(B) EXCLUSION OF CERTAIN PLANS.— 

2 Such term does not include a health plan if 

3 substantially all of its coverage is disregarded 

4 under paragraph (1)(B). 

5 ‘‘(C) HEALTH INSURANCE COVERAGE.— 

6 The term ‘health insurance coverage’ means 

7 benefits consisting of medical care (provided di8 rectly, through insurance or reimbursement, or 

9 otherwise and including items and services paid 

10 for as medical care) under any hospital or med11 ical service policy or certificate, hospital or 

12 medical service plan contract, or health mainte13 nance organization contract offered by a health 

14 insurance issuer. 

15 ‘‘(D) HEALTH INSURANCE ISSUER.—The 

16 term ‘health insurance issuer’ means an insur17 ance company, insurance service, or insurance 

18 organization (including a health maintenance 

19 organization) which is licensed to engage in the 

20 business of insurance in a State and which is 

21 subject to State law which regulates insurance 

22 (within the meaning of section 514(b)(2) of the 

23 Employee Retirement Income Security Act of 

24 1974 (29 U.S.C. 1144(b)(2)). 


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1 ‘‘(E) HEALTH MAINTENANCE ORGANIZA2 TION.—The term ‘health maintenance organiza3 tion’ means— 

4 ‘‘(i) a Federally qualified health main5 tenance organization (as defined in section 

6 1301(a) of the Public Health Service Act 

7 (42 U.S.C. 300e(a)), 

8 ‘‘(ii) an organization recognized under 

9 State law as a health maintenance organi10 zation, or 

11 ‘‘(iii) a similar organization regulated 

12 under State law for solvency in the same 

13 manner and to the same extent as such a 

14 health maintenance organization. 

15 ‘‘(3) PERMITTED INSURANCE.—The term ‘per16 mitted insurance’ means— 

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

18 coverage provided under such insurance relates 

19 to— 

20 ‘‘(i) liabilities incurred under workers’ 

21 compensation laws, 

22 ‘‘(ii) tort liabilities, 

23 ‘‘(iii) liabilities relating to ownership 

24 or use of property, or 


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1 ‘‘(iv) such other similar liabilities as 

2 the Secretary may specify by regulations, 

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

4 illness, and 

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

6 day (or other period) of hospitalization. 

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

8 coverage’ means any coverage other than self-only 

9 coverage. 

10 ‘‘(d) TAX TREATMENT OF ACCOUNTS.— 

11 ‘‘(1) IN GENERAL.—A Medisave account is ex12 empt from taxation under this subtitle unless such 

13 account has ceased to be a Medisave account. Not14 withstanding the preceding sentence, any Medisave 

15 account is subject to the taxes imposed by section 

16 511 (relating to imposition of tax on unrelated busi17 ness income of charitable, etc. organizations). 

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

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

20 408(e) shall apply to Medisave accounts, and any 

21 amount treated as distributed under such rules shall 

22 be treated as not used to pay qualified medical ex23 penses. 

24 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 


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1 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

2 EXPENSES.—Any amount paid or distributed out of 

3 a Medisave account which is used exclusively to pay 

4 qualified medical expenses of any account beneficiary 

5 shall not be includible in gross income. 

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

7 QUALIFIED MEDICAL EXPENSES.—Any amount paid 

8 or distributed out of a Medisave account which is 

9 not used exclusively to pay the qualified medical ex10 penses of the account beneficiary shall be included in 

11 the gross income of such beneficiary. 

12 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE13 FORE DUE DATE OF RETURN.— 

14 ‘‘(A) IN GENERAL.—If any excess con15 tribution is contributed for a taxable year to 

16 any Medisave account of an individual, para17 graph (2) shall not apply to distributions from 

18 the Medisave accounts of such individual (to the 

19 extent such distributions do not exceed the ag20 gregate excess contributions to all such ac21 counts of such individual for such year) if— 

22 ‘‘(i) such distribution is received by 

23 the individual on or before the last day 

24 prescribed by law (including extensions of 


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1 time) for filing such individual’s return for 

2 such taxable year, and 

3 ‘‘(ii) such distribution is accompanied 

4 by the amount of net income attributable 

5 to such excess contribution. 

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

7 included in the gross income of the individual 

8 for the taxable year in which it is received. 

9 ‘‘(B) EXCESS CONTRIBUTION.—For pur10 poses of subparagraph (A), the term excess con11 tribution means any contribution (other than a 

12 rollover contribution described in paragraph 

13 (5)) which exceeds the limitations specified in 

14 subsection (b). 

15 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

16 USED FOR QUALIFIED MEDICAL EXPENSES.— 

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

18 this chapter on the account beneficiary for any 

19 taxable year in which there is a payment or dis20 tribution from a Medisave account of such ben21 eficiary which is includible in gross income 

22 under paragraph (2) shall be increased by 20 

23 percent of the amount which is so includible. 

24 ‘‘(B) EXCEPTION FOR DISABILITY OR

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


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1 the payment or distribution is made after the 

2 account beneficiary becomes disabled within the 

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

4 ‘‘(5) ROLLOVER CONTRIBUTION.— 

5 ‘‘(A) IN GENERAL.—An amount is de6 scribed in this subparagraph as a rollover con7 tribution if it meets the requirements of clauses 

8 (i) and (ii). 

9 ‘‘(i) IN GENERAL.—Paragraph (2) 

10 shall not apply to any amount paid or dis11 tributed from a Medisave account to the 

12 account beneficiary to the extent the 

13 amount received is paid into a Medisave 

14 account for the benefit of such beneficiary 

15 not later than the 60th day after the day 

16 on which the beneficiary receives the pay17 ment or distribution. 

18 ‘‘(ii) LIMITATION.—This paragraph 

19 shall not apply to any amount described in 

20 clause (i) received by an individual from a 

21 Medisave account if, at any time during 

22 the 1-year period ending on the day of 

23 such receipt, such individual received any 

24 other amount described in clause (i) from 

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1 ible in the individual’s gross income be2 cause of the application of this paragraph. 

3 ‘‘(B) ROLLOVER FROM FSA, ARCHER MSA, 

4 AND HSA.—An amount is described in this sub5 paragraph for a calendar year as a rollover con6 tribution if the amount is the remaining balance 

7 in a flexible spending account, Archer MSA, or 

8 health savings account that is contributed to 

9 the Medisave account for a taxable year ending 

10 on or before one year after the date of the en11 actment of the Family First Medisave Em12 powerment Act. 

13 ‘‘(6) COORDINATION WITH MEDICAL EXPENSE

14 DEDUCTION.—For purposes of determining the 

15 amount of the deduction under section 213, any pay16 ment or distribution out of a Medisave account for 

17 qualified medical expenses shall not be treated as an 

18 expense paid for medical care. 

19 ‘‘(7) TRANSFER OF ACCOUNT INCIDENT TO DI20 VORCE.—The transfer of an individual’s interest in 

21 a Medisave account to an individual’s spouse or 

22 former spouse under a divorce or separation instru23 ment described in clause (i) of section 121(d)(3)(C) 

24 shall not be considered a taxable transfer made by 

25 such individual notwithstanding any other provision 


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

2 transfer, be treated as a Medisave account with re3 spect to which such spouse is the account bene4 ficiary. 

5 ‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT

6 BENEFICIARY.— 

7 ‘‘(A) TREATMENT IF DESIGNATED BENE8 FICIARY IS SPOUSE.—If the account bene9 ficiary’s surviving spouse acquires such bene10 ficiary’s interest in a Medisave account by rea11 son of being the designated beneficiary of such 

12 account at the death of the account beneficiary, 

13 such Medisave account shall be treated as if the 

14 spouse were the account beneficiary. 

15 ‘‘(B) OTHER CASES.— 

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

17 the death of the account beneficiary, any 

18 person acquires the account beneficiary’s 

19 interest in a Medisave account in a case to 

20 which subparagraph (A) does not apply— 

21 ‘‘(I) such account shall cease to 

22 be a Medisave account as of the date 

23 of death, and 

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

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1 count on such date shall be includible 

2 if such person is not the estate of 

3 such beneficiary, in such person’s 

4 gross income for the taxable year 

5 which includes such date, or if such 

6 person is the estate of such bene7 ficiary, in such beneficiary’s gross in8 come for the last taxable year of such 

9 beneficiary. 

10 ‘‘(ii) SPECIAL RULES.— 

11 ‘‘(I) REDUCTION OF INCLUSION

12 FOR PREDEATH EXPENSES.—The 

13 amount includible in gross income 

14 under clause (i) by any person (other 

15 than the estate) shall be reduced by 

16 the amount of qualified medical ex17 penses which were incurred by the de18 cedent before the date of the dece19 dent’s death and paid by such person 

20 within 1 year after such date. 

21 ‘‘(II) DEDUCTION FOR ESTATE

22 TAXES.—An appropriate deduction 

23 shall be allowed under section 691(c) 

24 to any person (other than the dece25 dent or the decedent’s spouse) with 


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1 respect to amounts included in gross 

2 income under clause (i) by such per3 son. 

4 ‘‘(f) REPORTS.—The Secretary may require— 

5 ‘‘(1) the trustee of a Medisave account to make 

6 such reports regarding such account to the Secretary 

7 and to the account beneficiary with respect to con8 tributions, distributions, the return of excess con9 tributions, and such other matters as the Secretary 

10 determines appropriate, and 

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

12 a qualified health plan to make such reports to the 

13 Secretary and to the account beneficiary with re14 spect to such plan as the Secretary determines ap15 propriate. 

16 The reports required by this subsection shall be filed at 

17 such time and in such manner and furnished to such indi18 viduals at such time and in such manner as may be re19 quired by the Secretary. 

20 ‘‘(g) REGULATIONS AND GUIDANCE.—For purposes 

21 of this section, the Secretary shall prescribe such regula22 tions or other guidance as the Secretary determines nec23 essary or appropriate to carry out this section, including 

24 regulations or guidance on the methods acceptable to the 


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1 Secretary for determining qualified health plan actuarial 

2 value.’’. 

3 (b) TREATMENT OF EMPLOYER PAYMENTS.— 

4 (1) EXCLUSION LIMITED TO SELF-FUNDED

5 MAJOR MEDICAL PLAN OF EMPLOYERS.—Section 

6 105(b) of such Code is amended by striking ‘‘paid,’’ 

7 and inserting ‘‘paid under a self-funded major med8 ical plan of the employer’’. 

9 (2) EXCLUSION NOT APPLICABLE TO HEALTH

10 REIMBURSEMENT ARRANGEMENTS.—Subsection (h) 

11 of such Code is amended to read as follows: 

12 ‘‘(h) EXCLUSION NOT APPLICABLE TO HEALTH RE13 IMBURSEMENT ARRANGEMENTS.—Subsection (b) shall 

14 not apply to health reimbursement arrangements.’’. 

15 (3) REPEAL OF EXCLUSIONS FROM INCOME FOR

16 ARCHER MSAS, FSAS, AND HSAS.— 

17 (A) IN GENERAL.—Section 106 of such 

18 Code is amended— 

19 (i) by striking subsections (b), (d), 

20 and (e), and 

21 (ii) by redesignating subsections (f) 

22 and (g) as subsections (d) and (e), respec23 tively. 

24 (B) EXCLUSION FROM INCOME FOR

25 MEDISAVE ACCOUNTS.—Section 106 of such 


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1 Code, as amended by subparagraph (A), is 

2 amended by inserting after subsection (a) the 

3 following: 

4 ‘‘(b) CONTRIBUTIONS TO MEDISAVE ACCOUNTS.— 

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

6 who is an eligible individual (as defined in section 

7 530A(c)(1)), amounts contributed by such employ8 ee’s employer to any Medisave account (as defined in 

9 section 530A(a)) of such employee shall be treated 

10 as employer-provided coverage for medical expenses 

11 under an accident or health plan to the extent such 

12 amounts do not exceed the limitations specified in 

13 clauses (ii) and (iii) of section 530A(a)(1)(A) (deter14 mined without regard to this subsection) which is 

15 applicable to such employee for such taxable year. 

16 ‘‘(2) NO CONSTRUCTIVE RECEIPT.—No amount 

17 shall be included in the gross income of any em18 ployee solely because the employee may choose be19 tween the contributions referred to in paragraph (1) 

20 and employer contributions to another health plan of 

21 the employer. 

22 ‘‘(3) SPECIAL RULE FOR DEDUCTION OF EM23 PLOYER CONTRIBUTIONS.—Any employer contribu24 tion to a Medisave account, if otherwise allowable as 


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1 a deduction under this chapter, shall be allowed only 

2 for the taxable year in which paid. 

3 ‘‘(4) EMPLOYER MEDISAVE ACCOUNT CON4 TRIBUTIONS REQUIRED TO BE SHOWN ON RE5 TURN.—Every individual required to file a return 

6 under section 6012 for the taxable year shall include 

7 on such return the aggregate amount contributed by 

8 employers to the Medisave accounts of such indi9 vidual or such individual’s spouse for such taxable 

10 year. 

11 ‘‘(5) MEDISAVE ACCOUNT CONTRIBUTIONS NOT

12 PART OF COBRA COVERAGE.—Paragraph (1) shall 

13 not apply for purposes of section 4980B. 

14 ‘‘(6) CROSS REFERENCE.—For penalty on fail15 ure by employer to make comparable contributions 

16 to the Medisave accounts of comparable employees, 

17 see section 4980G.’’. 

18 (4) DISTRIBUTION FROM CERTAIN RETIREMENT

19 ACCOUNTS FOR MEDISAVE ACCOUNT FUNDING.— 

20 Section 408(d)(9) of such Code is amended to read 

21 as follows: 

22 ‘‘(9) DISTRIBUTION FOR MEDISAVE ACCOUNT

23 FUNDING.— 

24 ‘‘(A) IN GENERAL.—In the case of an indi25 vidual who is an eligible individual (as defined 


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1 in section 530A(c)(1)) and who elects the appli2 cation of this paragraph for a taxable year, 

3 gross income of the individual for the taxable 

4 year does not include a qualified Medisave ac5 count funding distribution to the extent such 

6 distribution is otherwise includible in gross in7 come. 

8 ‘‘(B) QUALIFIED MEDISAVE ACCOUNT

9 FUNDING DISTRIBUTION.—For purposes of this 

10 paragraph, the term ‘qualified Medisave ac11 count funding distribution’ means a distribution 

12 from an individual retirement plan (other than 

13 a plan described in subsection (k) or (p)) of the 

14 employee to the extent that— 

15 ‘‘(i) such distribution is contributed to 

16 the Medisave account of the individual in 

17 a direct trustee-to-trustee transfer, and 

18 ‘‘(ii) such distribution— 

19 ‘‘(I) when added to previous con20 tributions to the Medisave account for 

21 the calendar year does not exceed the 

22 limitation amount specified in section 

23 530A(b)(1), and 

24 ‘‘(II) when added to the balance 

25 of the Medisave account, exceeds the 


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1 limitation amount specified in section 

2 530A(b)(2). 

3 ‘‘(C) ONE-TIME TRANSFER.—An individual 

4 may make an election under subparagraph (A) 

5 only for one qualified Medisave account funding 

6 distribution during the lifetime of the indi7 vidual. Such an election, once made, shall be ir8 revocable. 

9 ‘‘(D) APPLICATION OF SECTION 72.—Not10 withstanding section 72, in determining the ex11 tent to which an amount is treated as otherwise 

12 includible in gross income for purposes of sub13 paragraph (A), the aggregate amount distrib14 uted from an individual retirement plan shall be 

15 treated as includible in gross income to the ex16 tent that such amount does not exceed the ag17 gregate amount which would have been so in18 cludible if all amounts from all individual retire19 ment plans were distributed. Proper adjust20 ments shall be made in applying section 72 to 

21 other distributions in such taxable year and 

22 subsequent taxable years.’’. 

23 (5) FAILURE OF EMPLOYER TO MAKE COM24 PARABLE CONTRIBUTIONS.— 


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1 (A) Section 4980G(a) of such Code is 

2 amended by striking ‘‘health savings account’’ 

3 and inserting ‘‘Medisave account’’. 

4 (B) Section 4980G(c) of such Code is 

5 amended by striking ‘‘Archer MSAs and health 

6 savings accounts’’ and inserting ‘‘Medisave ac7 counts’’. 

8 (6) W–2 STATEMENTS.—Section 6051(a) of 

9 such Code is amended— 

10 (A) by striking paragraph (11) and redes11 ignating paragraphs (12) through (17) as para12 graphs (11) through (16), respectively, and 

13 (B) by amending paragraph (11), as so re14 designated, to read as follows: 

15 ‘‘(11) the amount contributed to any Medisave 

16 account (as defined in section 530A) of such em17 ployee or such employee’s spouse,’’. 

18 (c) OTHER CONFORMING AMENDMENTS.— 

19 (1) ARCHER MSAS.—Section 220(a) of such 

20 Code is amended by adding at the end the following: 

21 ‘‘No amount is allowed as a deduction under the 

22 preceding sentence for any taxable year beginning 

23 after one year after the date of the enactment of 

24 Family First Medisave Empowerment Act.’’. 


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1 (2) HEALTH SAVINGS ACCOUNTS.—Section 

2 223(a) of such Code is amended by adding at the 

3 end the following: ‘‘No amount is allowed as a de4 duction under the preceding sentence for any taxable 

5 year beginning after one year after the date of the 

6 enactment of the Family First Medisave Empower7 ment Act.’’. 

8 (d) ROLLOVER OF FSA, ARCHER MSA, HSA TO

9 MEDISAVE ACCOUNT.—Notwithstanding any other provi10 sion of law, if the remaining balance in a health flexible 

11 spending arrangement, Archer MSA, or Health Savings 

12 Account is transferred to a Medisave account before the 

13 end of any taxable year ending on or before one year after 

14 the date of the enactment of the Family First Medisave 

15 Empowerment Act, such transfer shall be treated as a roll16 over to the Medisave account under section 530A(e)(5)(B) 

17 of the Internal Revenue Code of 1986 and the distribution 

18 from the health flexible spending arrangement, Archer 

19 MSA, or Health Savings Account shall not be includible 

20 in gross income. 

21 (e) CLERICAL AMENDMENTS.—The table of sections 

22 for part VIII of subchapter F of chapter 1 of such Code 

23 is amended by adding at the end the following new item: 

‘‘Sec. 530A. Medisave Accounts.’’. 


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

2 this section shall apply to taxable years beginning after 

3 one year after the date of the enactment of this Act. 

4 SEC. 3. TAX CREDIT FOR CONTRIBUTIONS TO MEDISAVE 

5 ACCOUNT DURING FIRST YEAR. 

6 (a) IN GENERAL.—In the case of an individual who 

7 makes a contribution to a Medisave account before the end 

8 of the 1-year period beginning on the date of the enact9 ment of this Act, there shall be allowed as a credit against 

10 the tax imposed by subtitle A of the Internal Revenue 

11 Code of 1986 for the taxable year in which the contribu12 tion is made an amount equal to the aggregate of $1 for 

13 every $3 contributed to the account (other than a rollover 

14 contribution under section 530A(e)(5) of such Code) for 

15 such taxable year. 

16 (b) LIMITATION.—The aggregate amount allowed to 

17 an individual as a credit under subsection (a) for all tax18 able years shall not exceed $1,000. 

19 (c) PORTION OF CREDIT REFUNDABLE.—For pur20 poses of this section— 

21 (1) IN GENERAL.—For purposes of the Internal 

22 Revenue Code of 1986, in the case of an eligible in23 dividual— 

24 (A) INCREASE IN CREDIT RATE.—Sub25 section (a) shall be applied by substituting ‘‘$1 


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1 for every $1 contributed’’ for ‘‘$1 for every $3 

2 contributed’’. 

3 (B) CREDIT REFUNDABLE.—The credit al4 lowed under this section shall be treated in the 

5 same manner as a credit allowed under subpart 

6 C of part IV of subchapter A of chapter 1 of 

7 such Code. 

8 (2) ELIGIBLE INDIVIDUAL.— 

9 (A) IN GENERAL.—The term ‘‘eligible indi10 vidual’’ means, with respect to any taxable year, 

11 a taxpayer whose household income for the tax12 able year does not exceeds 400 percent of an 

13 amount equal to the poverty line for a family of 

14 the size involved. 

15 (B) MARRIED COUPLES MUST FILE JOINT

16 RETURN.—If the taxpayer is married (within 

17 the meaning of section 7703 of such Code) at 

18 the close of the taxable year— 

19 (i) the taxpayer shall be treated as an 

20 eligible individual only if the taxpayer and 

21 the taxpayer’s spouse file a joint return for 

22 the taxable year, and 

23 (ii) paragraph (1) shall be applied 

24 separately to each spouse. 


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1 (3) FAMILY SIZE, HOUSEHOLD INCOME, MODI2 FIED ADJUSTED GROSS INCOME, POVERTY LINE.— 

3 The terms ‘‘family size’’, ‘‘household income’’, 

4 ‘‘modified adjusted gross income’’, and ‘‘poverty 

5 line’’ have the meaning given such terms by section 

6 36B(d) of such Code. 

7 (d) DENIAL OF CREDIT TO DEPENDENTS.—No cred8 it shall be allowed under this section to any individual with 

9 respect to whom a deduction under section 151 is allow10 able to another taxpayer for a taxable year beginning in 

11 the calendar year in which such individual’s taxable year 

12 begins. 

13 SEC. 4. ALTERNATIVE WAIVER FOR STATE INNOVATION; 

14 COST-SHARING REDUCTION PAYMENTS. 

15 (a) ALTERNATIVE WAIVER FOR STATE INNOVA16 TION.—Section 1332 of the Patient Protection and Af17 fordable Care Act (42 U.S.C. 18052) is amended by add18 ing at the end the following new subsection: 

19 ‘‘(f) ALTERNATIVE WAIVER FOR STATE INNOVA20 TION.— 

21 ‘‘(1) IN GENERAL.—Notwithstanding any pre22 ceding provision of this section, a State may apply 

23 to the Secretary for the waiver of any requirement 

24 of subsection (a)(2) with respect to health insurance 

25 coverage within that State for plan years beginning 


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1 on or after January 1, 2022, if instead of complying 

2 with section 1402 the State provides for the dis3 tribution of funding received under paragraph (2) to 

4 Medisave accounts of qualifying individuals with re5 spect to such State. Such application shall be filed 

6 at such time and in such manner as the Secretary 

7 may require, and shall include such information as 

8 the Secretary may require (including a 10-year 

9 budget plan for such plan that is budget neutral for 

10 the Federal Government). 

11 ‘‘(2) PASS-THROUGH FUNDING.—With respect 

12 to a State waiver under paragraph (1), under which, 

13 due to the structure of such waiver, individuals in 

14 the State would not qualify for cost-sharing reduc15 tions under section 1402 for which they would other16 wise be eligible, the Secretary shall provide for an al17 ternative means by which an amount is transferred 

18 to the State equal to the aggregate amount of such 

19 reductions that would have been paid on behalf of 

20 the participants in the Exchanges established under 

21 this title— 

22 ‘‘(A) had the State not received such waiv23 er; 


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1 ‘‘(B) had references to ‘eligible insureds’ 

2 under section 1402 referred to ‘qualifying in3 sureds (as defined in section 1332(f))’; and 

4 ‘‘(C) had, after application of clause (ii), in 

5 the case of a qualifying insured enrolled in the 

6 bronze level of coverage— 

7 ‘‘(i) the percentages specified in sub8 clauses (I), (II), and (III) of section 

9 1402(c)(1)(B) were references to 84 per10 cent, 77 percent, and 63 percent, respec11 tively; and 

12 ‘‘(ii) the references in subparagraphs 

13 (A), (B), and (C) of section 1402(c)(2) to 

14 94 percent, 87 percent, and 73 percent, re15 spectively, were references to 84 percent, 

16 77 percent, and 63 percent, respectively. 

17 The amount transferred pursuant to the previous 

18 sentence shall be determined annually by the Sec19 retary, taking into consideration the experience of 

20 other States with respect to participation in an Ex21 change and reductions provided under such provi22 sions to residents of the other States, and shall be 

23 paid to the State for purposes of implementing such 

24 waiver. 


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1 ‘‘(3) WAIVER CONSIDERATION AND TRANS2 PARENCY.—The provisions of paragraph (4) of sub3 section (a) shall apply to an application for a waiver 

4 under paragraph (1) in the same manner as such 

5 provisions apply with respect to an application for a 

6 waiver under subsection (a)(1), except that, for pur7 poses of this paragraph, the provisions of subsection 

8 (a)(4)(B)(ii) shall not apply. 

9 ‘‘(4) DETERMINATIONS; TERM OF WAIVER.— 

10 The provisions of subsections (d) and (e) shall apply 

11 with respect to a determination with respect to an 

12 application under paragraph (1), and with respect to 

13 the term of a waiver under such paragraph, in the 

14 same manner as such provisions apply with respect 

15 to a determination with respect to an application 

16 under subsection (a)(1), and with respect to the 

17 term of a waiver under such subsection. 

18 ‘‘(5) DEFINITIONS.—For purposes of this sub19 section: 

20 ‘‘(A) MEDISAVE ACCOUNT.—The term 

21 ‘Medisave account’ has the meaning given such 

22 term in section 530A(a) of the Internal Rev23 enue Code of 1986. 


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1 ‘‘(B) QUALIFYING INSURED.—The term 

2 ‘qualifying insured’ means, with respect to a 

3 State and a year, an individual— 

4 ‘‘(i) who is enrolled in a Medisave ac5 count; 

6 ‘‘(ii) who is enrolled for such year in 

7 a silver level or bronze level coverage of8 fered through an Exchange; and 

9 ‘‘(iii) whose household income is not 

10 less than 100 percent but not more than 

11 250 percent of the Federal poverty line for 

12 a family of the size involved.’’. 

13 (b) CONFORMING AMENDMENTS.—Section 1332 of 

14 the Patient Protection and Affordable Care Act (42 

15 U.S.C. 18052), as amended by subsection (a), is further 

16 amended in subsection (a)(4)— 

17 (1) in subparagraph (A) by striking the period 

18 and inserting ‘‘, except in the case of a waiver de19 scribed in subsection (f).’’; and 

20 (2) in subparagraph (B)(ii) by inserting after 

21 ‘‘an application’’ the following: ‘‘(except in the case 

22 of a waiver described in subsection (f))’’. 

23 (c) APPROPRIATION FOR COST-SHARING PAY24 MENTS.—Section 1402 of the Patient Protection and AfVerDate Sep 11 2014 00:36 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\H8473.IH H8473

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1 fordable Care Act (42 U.S.C. 18071) is amended by add2 ing at the end the following new subsection: 

3 ‘‘(g) FUNDING.— 

4 ‘‘(1) APPROPRIATIONS.—Out of any funds in 

5 the Treasury not otherwise appropriated, there is 

6 appropriated such sums as may be necessary to, 

7 subject to paragraph (2), provide health benefits 

8 coverage through payment to issuers (under this sec9 tion or through advance payment by the Secretary 

10 of the Treasury under section 1412(c)(3)) of the 

11 amounts computed under this section for each of 

12 plan years 2022 through 2026. 

13 ‘‘(2) ADJUSTMENTS.—Notwithstanding any 

14 other provision of law, payments and other actions 

15 for adjustments to obligations incurred prior to De16 cember 31, 2022, may be made through December 

17 31, 2022. 

18 ‘‘(3) LIMITATION.—Amounts appropriated 

19 under paragraph (1) for each of plan years 2022 

20 through 2026 are subject to the requirements and 

21 limitations under sections 506 and 507 of division H 

22 of Public Law 115–31 in the same manner and to 

23 the same extent as if such amounts for each such 

24 year were appropriated under such division.’’. 


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1 SEC. 5. GRANTS FOR MEDISAVE ASSISTANCE AND OUT2 REACH. 

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

4 a grant program to provide assistance to eligible entities 

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

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

7 application to the Administrator in such time and in such 

8 manner as the Administrator may require, providing that 

9 such application requires a demonstration of the existence 

10 of a relationship with, or the ability to establish a relation11 ship with, an employer, employee, self-employed indi12 vidual, or consumer eligible to enroll in a Medisave ac13 count. 

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

15 grant under this section shall use such funds to— 

16 (1) distribute fair and impartial information to 

17 consumers about Medisave accounts, including the 

18 availability of such accounts and how such accounts 

19 may be utilized; 

20 (2) conduct activities to raise public awareness 

21 of Medisave accounts; 

22 (3) facilitate enrollment in Medisave accounts; 

23 and 

24 (4) refer individuals enrolled in a Medisave ac25 count to the appropriate official, organization, or 

26 State agency for the purpose of addressing a comVerDate Sep 11 2014 00:36 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\H8473.IH H8473

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1 plaint, grievance, or other question with respect to 

2 such Medisave account. 

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

4 to $5,000,000 annually to be divided among grant recipi5 ents under this section. 

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

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

8 section ends, the Administrator shall submit a report to 

9 the Congress on the effectiveness of the grants provided 

10 under this section. 

11 (f) DEFINITIONS.—In this section: 

12 (1) ADMINISTRATOR.—The term ‘‘Adminis13 trator’’ means the Administrator of the Centers for 

14 Medicare & Medicaid Services. 

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

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

17 Medisave account. 

18 (3) ELIGIBLE ENTITY.—The term ‘‘eligible enti19 ty’’ includes the following: 

20 (A) A State. 

21 (B) Trade. 

22 (C) Industry. 

23 (D) Professional associations. 

24 (E) Commercial fishing industry organiza25 tions. 


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1 (F) Ranching and farming organizations. 

2 (G) Community and consumer-focused 

3 nonprofit groups. 

4 (H) Chambers of commerce. 

5 (I) Unions. 

6 (J) Small business development centers (as 

7 defined in section 21 of the Small Business Act 

8 (15 U.S.C. 648)). 

9 (K) Other entities capable of carrying out 

10 the activities described under subsection (b). 

11 (4) MEDISAVE ACCOUNT.—The term ‘‘Medisave 

12 account’’ has the meaning given such term in section 

13 530A(a) of the Internal Revenue Code of 1986 (as 

14 added by section 2(a)). 

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

16 the several States, the District of Columbia, each 

17 territory and possession of the United States, and 

18 each federally recognized Indian Tribe. 

Æ 


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