I 

111TH CONGRESS 

1ST SESSION H. R. 544 

To amend the Internal Revenue Code of 1986 to allow amounts in a health 

flexible spending arrangement that are unused during a plan year to 

be carried over to subsequent plan years or deposited into certain health 

or retirement plans. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 14, 2009 

Mr. ROYCE 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 allow 

amounts in a health flexible spending arrangement that 

are unused during a plan year to be carried over to 

subsequent plan years or deposited into certain health 

or retirement plans. 

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 ‘‘Flexible Health Sav5 ings Act of 2009’’. 


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1 SEC. 2. DISPOSITION OF UNUSED HEALTH BENEFITS IN 

2 CAFETERIA PLANS AND FLEXIBLE SPENDING 

3 ARRANGEMENTS. 

4 (a) IN GENERAL.—Section 125 of the Internal Rev5 enue Code of 1986 (relating to cafeteria plans) is amended 

6 by redesignating subsections (i) and (j) as subsections (j) 

7 and (k), respectively, and by inserting after subsection (h) 

8 the following new subsection: 

9 ‘‘(i) CONTRIBUTIONS OF CERTAIN UNUSED HEALTH

10 BENEFITS.— 

11 ‘‘(1) IN GENERAL.—For purposes of this title, 

12 a plan or other arrangement shall not fail to be 

13 treated as a cafeteria plan or health flexible spend14 ing arrangement solely because qualified benefits 

15 under such plan include a health flexible spending 

16 arrangement under which not more than $500 of 

17 unused health benefits may be— 

18 ‘‘(A) carried forward to the succeeding 

19 plan year of such health flexible spending ar20 rangement, 

21 ‘‘(B) to the extent permitted by sections 

22 223, contributed on behalf of the employee to a 

23 health savings account (as defined in section 

24 223(d)), maintained for the benefit of such em25 ployee, or 


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1 ‘‘(C) contributed to a qualified retirement 

2 plan (as defined in section 4974(c)), or an eligi3 ble deferred compensation plan (as defined in 

4 section 457(b)) of an eligible employer de5 scribed in section 457(e)(1)(A). 

6 ‘‘(2) SPECIAL RULES FOR TREATMENT OF CON7 TRIBUTIONS TO HEALTH AND RETIREMENT

8 PLANS.—For purposes of this title, contributions 

9 under subparagraph (B) or (C) of paragraph (1)— 

10 ‘‘(A) shall be treated as a contribution 

11 made by the employee (and includible in the 

12 gross income of such employee) in the case of 

13 a contribution to a health savings account, 

14 ‘‘(B) shall be treated as elective deferrals 

15 (as defined in section 402(g)(3)) in the case of 

16 contributions to a qualified cash or deferred ar17 rangement (as defined in section 401(k)) or to 

18 an annuity contract described in section 403(b), 

19 ‘‘(C) shall be treated as employer contribu20 tions to which the employee has a nonforfeitable 

21 right in the case of a plan (other than a plan 

22 described in subparagraph (A)) which is de23 scribed in section 401(a) which includes a trust 

24 exempt from tax under section 501(a), 


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1 ‘‘(D) shall be treated as deferred com2 pensation in the case of contributions to an eli3 gible deferred compensation plan (as defined in 

4 section 457(b)), and 

5 ‘‘(E) shall be treated in the manner des6 ignated for purposes of section 408 or 408A in 

7 the case of contributions to an individual retire8 ment plan. 

9 ‘‘(3) HEALTH FLEXIBLE SPENDING ARRANGE10 MENT.—For purposes of this subsection, the term 

11 ‘health flexible spending arrangement’ means a flexi12 ble spending arrangement (as defined in section 

13 106(c)) that is a qualified benefit and only permits 

14 reimbursement for expenses for medical care (as de15 fined in section 213(d)(1) (without regard to sub16 paragraphs (C) and (D) thereof). 

17 ‘‘(4) UNUSED HEALTH BENEFITS.—For pur18 poses of this subsection, with respect to an em19 ployee, the term ‘unused health benefits’ means the 

20 excess of— 

21 ‘‘(A) the maximum amount of reimburse22 ment allowable to the employee during a plan 

23 year under a health flexible spending arrange24 ment, taking into account any election by the 

25 employee, over 


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1 ‘‘(B) the actual amount of reimbursement 

2 during such year under such arrangement.’’. 

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

4 subsection (a) shall apply to plan years ending after the 

5 date of the enactment of this Act. 

Æ 


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