I 

118TH CONGRESS 

1ST SESSION H. R. 5317 

To amend the Internal Revenue Code of 1986 to allow distributions from 

a health flexible spending arrangement or health reimbursement arrangement directly to a health savings account in connection with establishing 

coverage under a high deductible health plan. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 29, 2023 

Mrs. STEEL (for herself, Ms. MANNING, and Mr. CRENSHAW) 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 distributions from a health flexible spending arrangement 

or health reimbursement arrangement directly to a health 

savings account in connection with establishing coverage 

under a high deductible health plan. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. FSA AND HRA TERMINATIONS OR CONVER4 SIONS TO FUND HSAs. 

5 (a) IN GENERAL.—Section 106(e)(2) of the Internal 

6 Revenue Code of 1986 is amended to read as follows: 


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1 ‘‘(2) QUALIFIED HSA DISTRIBUTION.—For pur2 poses of this subsection— 

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

4 HSA distribution’ means, with respect to any 

5 employee, a distribution from a health flexible 

6 spending arrangement or health reimbursement 

7 arrangement of such employee directly to a 

8 health savings account of such employee if— 

9 ‘‘(i) such distribution is made in con10 nection with such employee establishing 

11 coverage under a high deductible health 

12 plan (as defined in section 223(c)(2)) after 

13 a significant period of not having such cov14 erage, and 

15 ‘‘(ii) such arrangement is described in 

16 section 223(c)(1)(B)(iii) with respect to 

17 the portion of the plan year after such dis18 tribution is made. 

19 ‘‘(B) DOLLAR LIMITATION.—The aggre20 gate amount of distributions from health flexi21 ble spending arrangements and health reim22 bursement arrangements of any employee which 

23 may be treated as qualified HSA distributions 

24 in connection with an establishment of coverage 

25 described in subparagraph (A)(i) shall not exVerDate Sep 11 2014 02:14 Aug 30, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5317.IH H5317

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1 ceed the dollar amount in effect under section 

2 125(i)(1) (twice such amount in the case of cov3 erage which is described in section 

4 223(b)(2)(B)).’’. 

5 (b) PARTIAL REDUCTION OF LIMITATION ON DE6 DUCTIBLE HSA CONTRIBUTIONS.—Section 223(b)(4) of 

7 such Code is amended by striking ‘‘and’’ at the end of 

8 subparagraph (B), by striking the period at the end of 

9 subparagraph (C) and inserting ‘‘, and’’, and by inserting 

10 after subparagraph (C) the following new subparagraph: 

11 ‘‘(D) so much of any qualified HSA dis12 tribution (as defined in section 106(e)(2)) made 

13 to a health savings account of such individual 

14 during the taxable year as does not exceed the 

15 aggregate increases in the balance of the ar16 rangement from which such distribution is 

17 made which occur during the portion of the 

18 plan year which precedes such distribution 

19 (other than any balance carried over to such 

20 plan year and determined without regard to any 

21 decrease in such balance during such portion of 

22 the plan year).’’. 

23 (c) CONVERSION TO HSA-COMPATIBLE ARRANGE24 MENT FOR REMAINDER OF PLAN YEAR.—Section 


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1 223(c)(1)(B)(iii) of such Code is amended to read as fol2 lows: 

3 ‘‘(iii) coverage under a health flexible 

4 spending arrangement or health reimburse5 ment arrangement for the portion of the 

6 plan year after a qualified HSA distribu7 tion (as defined in section 106(e)(2) deter8 mined without regard to subparagraph 

9 (A)(ii) thereof) is made, if the terms of 

10 such arrangement which apply for such 

11 portion of the plan year are such that, if 

12 such terms applied for the entire plan 

13 year, then such arrangement would not be 

14 taken into account under subparagraph 

15 (A)(ii) of this paragraph for such plan 

16 year.’’. 

17 (d) INCLUSION OF QUALIFIED HSA DISTRIBUTIONS

18 ON W–2.— 

19 (1) IN GENERAL.—Section 6051(a) of such 

20 Code is amended by striking ‘‘and’’ at the end of 

21 paragraph (16), by striking the period at the end of 

22 paragraph (17) and inserting ‘‘, and’’, and by insert23 ing after paragraph (17) the following new para24 graph: 


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1 ‘‘(18) the amount of any qualified HSA dis2 tribution (as defined in section 106(e)(2)) with re3 spect to such employee.’’. 

4 (2) CONFORMING AMENDMENT.—Section 

5 6051(a)(12) of such Code is amended by inserting 

6 ‘‘(other than any qualified HSA distribution, as de7 fined in section 106(e)(2))’’ before the comma at the 

8 end. 

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

10 this section shall apply to distributions made after Decem11 ber 31, 2023, in taxable years ending after such date. 

Æ 


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