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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1004 Reported in House (RH)]

                                                 Union Calendar No. 363
112th CONGRESS
  2d Session
                                H. R. 1004

                          [Report No. 112-515]

To amend the Internal Revenue Code of 1986 to increase participation in 
                medical flexible spending arrangements.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 10, 2011

Mr. Boustany (for himself, Mr. Larson of Connecticut, Mr. Paulsen, Mr. 
Johnson of Illinois, Mr. Bishop of Georgia, and Mr. Burton of Indiana) 
 introduced the following bill; which was referred to the Committee on 
                             Ways and Means

                              June 5, 2012

 Additional sponsors: Mr. Schock, Ms. Speier, Mr. Paul, Mr. Reichert, 
  Mr. Himes, Mr. Tiberi, Mr. Murphy of Connecticut, Mr. Gerlach, Mr. 
 Davis of Kentucky, Mr. Roskam, Mr. Austria, Mr. Griffin of Arkansas, 
   Mr. Cicilline, Mr. Harris, Ms. Herrera Beutler, Mr. Courtney, Mr. 
 Hultgren, Mr. Nunes, Mrs. Black, Mr. Berg, Mr. Sam Johnson of Texas, 
 Mr. Bartlett, Mr. Schilling, Mr. Terry, Mr. Amodei, Mr. Buchanan, and 
                         Mr. Walsh of Illinois

                              June 5, 2012

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to increase participation in 
                medical flexible spending arrangements.

 

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

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Medical FSA Improvement Act 
of 2011''.</DELETED>

SEC. 2. ADDITION OF TAXABLE DISTRIBUTIONS.

<DELETED>    (a) Treatment of Amounts Expended for Medical Care.--
Section 105 of the Internal Revenue Code of 1986 (relating to amounts 
received under accident and health plans) is amended by inserting at 
the end the following new subsection:</DELETED>
<DELETED>    ``(k) Amounts Paid Under Medical Flexible Spending 
Arrangements.--</DELETED>
        <DELETED>    ``(1) Application of subsection (b) and section 
        106.--For purposes of subsection (b) and section 106, a plan 
        shall not fail to be treated as flexible spending arrangement 
        solely because such plan, in addition to reimbursing expenses 
        incurred for medical care (as defined in subsection (b)) during 
        the plan year, distributes for the plan year all or a portion 
        of the employee's balance.</DELETED>
        <DELETED>    ``(2) Limitation.--Paragraph (1) shall apply only 
        in the case that the balance under such arrangement for a plan 
        year is distributed after the close of the plan year to which 
        the balance relates and not later than the end of the 7th month 
        following the close of such plan year.</DELETED>
        <DELETED>    ``(3) Tax treatment of distribution.--Any 
        distribution to which paragraph (1) applies shall be treated as 
        remuneration of the employee for employment for the taxable 
        year in which it is distributed.</DELETED>
        <DELETED>    ``(4) Flexible spending arrangement.--The term 
        `flexible spending arrangement' means a benefit program within 
        the meaning of section 106(c)(2) (relating to long-term care 
        benefits).''.</DELETED>
<DELETED>    (b) Additional Deferred Compensation Exception.--Paragraph 
(2) of section 125(d) of such Code (relating to deferred compensation 
under a cafeteria plan) is amended by inserting at the end the 
following new subparagraph:</DELETED>
                <DELETED>    ``(E) Exception for certain flexible 
                spending arrangements.--Subparagraph (A) shall not 
                apply to a flexible spending arrangement (within the 
                meaning of section 106(c)(2)) as a result of amounts 
                being distributed to the covered employee in accordance 
                with section 105(k).''.</DELETED>
<DELETED>    (c) Conforming Amendment.--Section 409A(d)(1) of such Code 
is amended by striking ``and'' at the end of subparagraph (A), by 
striking the period at the end of subparagraph (B) and inserting ``, 
and'', and by adding at the end the following:</DELETED>
                <DELETED>    ``(C) a flexible spending arrangement 
                which is subject to section 105(k).''.</DELETED>
<DELETED>    (d) Effective Date.--The amendments made by this section 
shall apply to plan years beginning after December 31, 2012.</DELETED>
<DELETED>    (e) Transition Rules.--In the case of plan years that 
begin before the date of the enactment of this Act, in implementing the 
amendments made by this section a flexible spending arrangement may 
allow an individual to make a new election or to revise an existing 
election under such arrangement so long as such new or revised election 
is made within 90 days after the date of the enactment of this 
Act.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Flexible Spending 
Arrangements Improvements Act of 2012''.

SEC. 2. TAXABLE DISTRIBUTIONS OF UNUSED BALANCES UNDER HEALTH FLEXIBLE 
              SPENDING ARRANGEMENTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
is amended by redesignating subsections (k) and (l) as subsections (l) 
and (m), respectively, and by inserting after subsection (j) the 
following new subsection:
    ``(k) Taxable Distributions of Unused Balances Under Health 
Flexible Spending Arrangements.--
            ``(1) In general.--For purposes of this section and 
        sections 105(b) and 106, a plan or other arrangement which (but 
        for any qualified distribution) would be a health flexible 
        spending arrangement shall not fail to be treated as a 
        cafeteria plan or health flexible spending arrangement (and 
        shall not fail to be treated as an accident or health plan) 
        merely because such arrangement provides for qualified 
        distributions.
            ``(2) Qualified distributions.--For purposes of this 
        subsection, the term `qualified distribution' means any 
        distribution to an individual under the arrangement referred to 
        in paragraph (1) with respect to any plan year if--
                    ``(A) such distribution is made after the last date 
                on which requests for reimbursement under such 
                arrangement for such plan year may be made and not 
                later than the end of the 7th month following the close 
                of such plan year, and
                    ``(B) such distribution does not exceed the lesser 
                of--
                            ``(i) $500, or
                            ``(ii) the excess of--
                                    ``(I) the salary reduction 
                                contributions made under such 
                                arrangement for such plan year, over
                                    ``(II) the reimbursements for 
                                expenses incurred for medical care made 
                                under such arrangement for such plan 
                                year.
            ``(3) Tax treatment of qualified distributions.--Qualified 
        distributions shall be includible in the gross income of the 
        employee in the taxable year in which distributed and shall be 
        taken into account as wages or compensation under the 
        applicable provisions of subtitle C when so distributed.
            ``(4) Coordination with qualified reservist 
        distributions.--A qualified reservist distribution (as defined 
        in subsection (h)(2)) shall not be treated as a qualified 
        distribution and shall not be taken into account in applying 
        the limitation of paragraph (2)(B)(i).''.
    (b) Conforming Amendment.--Paragraph (1) of section 409A(d) of such 
Code is amended by striking ``and'' at the end of subparagraph (A), by 
striking the period at the end of subparagraph (B) and inserting ``, 
and'', and by adding at the end the following new subparagraph:
                    ``(C) a health flexible spending arrangement to 
                which subsection (h) or (k) of section 125 applies.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2012.
                                                 Union Calendar No. 363

112th CONGRESS

  2d Session

                               H. R. 1004

                          [Report No. 112-515]

_______________________________________________________________________

                                 A BILL

To amend the Internal Revenue Code of 1986 to increase participation in 
                medical flexible spending arrangements.

_______________________________________________________________________

                              June 5, 2012

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
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