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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5688 Introduced in House (IH)]

<DOC>

118th CONGRESS
  1st Session
                                H. R. 5688

 To amend the Internal Revenue Code of 1986 to improve health savings 
                               accounts.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 26, 2023

 Mr. Smucker (for himself and Mr. Blumenauer) 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 improve health savings 
                               accounts.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bipartisan HSA Improvement Act of 
2023''.

SEC. 2. TREATMENT OF DIRECT PRIMARY CARE SERVICE ARRANGEMENTS.

    (a) In General.--Section 223(c)(1) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(E) Treatment of direct primary care service 
                arrangements.--
                            ``(i) In general.--A direct primary care 
                        service arrangement shall not be treated as a 
                        health plan for purposes of subparagraph 
                        (A)(ii).
                            ``(ii) Direct primary care service 
                        arrangement.--For purposes of this paragraph--
                                    ``(I) In general.--The term `direct 
                                primary care service arrangement' 
                                means, with respect to any individual, 
                                an arrangement under which such 
                                individual is provided medical care (as 
                                defined in section 213(d)) consisting 
                                solely of primary care services 
                                provided by primary care practitioners 
                                (as defined in section 1833(x)(2)(A) of 
                                the Social Security Act, determined 
                                without regard to clause (ii) thereof), 
                                if the sole compensation for such care 
                                is a fixed periodic fee.
                                    ``(II) Limitation.--With respect to 
                                any individual for any month, such term 
                                shall not include any arrangement if 
                                the aggregate fees for all direct 
                                primary care service arrangements 
                                (determined without regard to this 
                                subclause) with respect to such 
                                individual for such month exceed $150 
                                (twice such dollar amount in the case 
                                of an individual with any direct 
                                primary care service arrangement (as so 
                                determined) that covers more than one 
                                individual).
                            ``(iii) Certain services specifically 
                        excluded from treatment as primary care 
                        services.--For purposes of this paragraph, the 
                        term `primary care services' shall not 
                        include--
                                    ``(I) procedures that require the 
                                use of general anesthesia,
                                    ``(II) prescription drugs (other 
                                than vaccines), and
                                    ``(III) laboratory services not 
                                typically administered in an ambulatory 
                                primary care setting.
                        The Secretary, after consultation with the 
                        Secretary of Health and Human Services, shall 
                        issue regulations or other guidance regarding 
                        the application of this clause.''.
    (b) Direct Primary Care Service Arrangement Fees Treated as Medical 
Expenses.--Section 223(d)(2)(C) of such Code is amended by striking 
``or'' at the end of clause (iii), by striking the period at the end of 
clause (iv) and inserting ``, or'', and by adding at the end the 
following new clause:
                            ``(v) any direct primary care service 
                        arrangement.''.
    (c) Inflation Adjustment.--Section 223(g)(1) of such Code is 
amended--
            (1) by inserting ``, (c)(1)(E)(ii)(II),'' after ``(b)(2)'' 
        each place it appears, and
            (2) in subparagraph (B), by inserting ``and (iii)'' after 
        ``clause (ii)'' in clause (i), by striking ``and'' at the end 
        of clause (i), by striking the period at the end of clause (ii) 
        and inserting ``, and'', and by inserting after clause (ii) the 
        following new clause:
                            ``(iii) in the case of the dollar amount in 
                        subsection (c)(1)(E)(ii)(II) for taxable years 
                        beginning in calendar years after 2026, 
                        `calendar year 2025'.''.
    (d) Reporting of Direct Primary Care Service Arrangement Fees on W-
2.--Section 6051(a) of such Code is amended by striking ``and'' at the 
end of paragraph (16), by striking the period at the end of paragraph 
(17) and inserting ``, and'', and by inserting after paragraph (17) the 
following new paragraph:
            ``(18) in the case of a direct primary care service 
        arrangement (as defined in section 223(c)(1)(E)(ii)) which is 
        provided in connection with employment, the aggregate fees for 
        such arrangement for such employee.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2025, in taxable years 
ending after such date.

SEC. 3. ON-SITE EMPLOYEE CLINICS.

    (a) In General.--Section 223(c)(1) of the Internal Revenue Code of 
1986, as amended by the preceding provisions of this Act, is amended by 
adding at the end the following new subparagraph:
                    ``(F) Special rule for qualified items and 
                services.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), an individual shall not 
                        be treated as covered under a health plan 
                        described in subclauses (I) and (II) of such 
                        subparagraph merely because the individual is 
                        eligible to receive, or receives, qualified 
                        items and services--
                                    ``(I) at a healthcare facility 
                                located at a facility owned or leased 
                                by the employer of the individual (or 
                                of the individual's spouse), or
                                    ``(II) at a healthcare facility 
                                operated primarily for the benefit of 
                                employees of the employer of the 
                                individual (or of the individual's 
                                spouse).
                            ``(ii) Qualified items and services 
                        defined.--For purposes of this subparagraph, 
                        the term `qualified items and services' means 
                        the following:
                                    ``(I) Physical examination.
                                    ``(II) Immunizations, including 
                                injections of antigens provided by 
                                employees.
                                    ``(III) Drugs or biologicals other 
                                than a prescribed drug (as such term is 
                                defined in section 213(d)(3)).
                                    ``(IV) Treatment for injuries 
                                occurring in the course of employment.
                                    ``(V) Preventive care for chronic 
                                conditions (as defined in clause (iv)).
                                    ``(VI) Drug testing.
                                    ``(VII) Hearing or vision 
                                screenings and related services.
                            ``(iii) Aggregation.--For purposes of 
                        clause (i), all persons treated as a single 
                        employer under subsection (b), (c), (m), or (o) 
                        of section 414 shall be treated as a single 
                        employer.
                            ``(iv) Preventive care for chronic 
                        conditions.--For purposes of this subparagraph, 
                        the term `preventive care for chronic 
                        conditions' means any item or service specified 
                        in the Appendix of Internal Revenue Service 
                        Notice 2019-45 which is prescribed to treat an 
                        individual diagnosed with the associated 
                        chronic condition specified in such Appendix 
                        for the purpose of preventing the exacerbation 
                        of such chronic condition or the development of 
                        a secondary condition, including any amendment, 
                        addition, removal, or other modification made 
                        by the Secretary (pursuant to the authority 
                        granted to the Secretary under paragraph 
                        (2)(C)) to the items or services specified in 
                        such Appendix subsequent to the date of 
                        enactment of this subparagraph.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to months in taxable years beginning after December 31, 2025.

SEC. 4. CONTRIBUTIONS PERMITTED IF SPOUSE HAS HEALTH FLEXIBLE SPENDING 
              ARRANGEMENT.

    (a) Contributions Permitted if Spouse Has a Health Flexible 
Spending Arrangement.--Section 223(c)(1)(B) of the Internal Revenue 
Code of 1986 is amended by striking ``and'' at the end of clause (ii), 
by striking the period at the end of clause (iii) and inserting ``, 
and'', and by adding at the end the following new clause:
                            ``(iv) coverage under a health flexible 
                        spending arrangement of the spouse of the 
                        individual for any plan year of such 
                        arrangement if the aggregate reimbursements 
                        under such arrangement for such year do not 
                        exceed the aggregate expenses which would be 
                        eligible for reimbursement under such 
                        arrangement if such expenses were determined 
                        without regard to any expenses paid or incurred 
                        with respect to such individual.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2025.

SEC. 5. FSA AND HRA TERMINATIONS OR CONVERSIONS TO FUND HSAS.

    (a) In General.--Section 106(e)(2) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(2) Qualified hsa distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified HSA 
                distribution' means, with respect to any employee, a 
                distribution from a health flexible spending 
                arrangement or health reimbursement arrangement of such 
                employee contributed directly to a health savings 
                account of such employee if--
                            ``(i) such distribution is made in 
                        connection with such employee establishing 
                        coverage under a high deductible health plan 
                        (as defined in section 223(c)(2)) if during the 
                        4-year period preceding the date the employee 
                        so establishes coverage the employee was not 
                        covered under such a high deductible health 
                        plan, and
                            ``(ii) such arrangement is described in 
                        section 223(c)(1)(B)(vi) with respect to any 
                        portion of the plan year remaining after such 
                        distribution is made, if such employee remains 
                        enrolled in such arrangement.
                    ``(B) Dollar limitation.--The aggregate amount of 
                distributions from health flexible spending 
                arrangements and health reimbursement arrangements of 
                any employee which may be treated as qualified HSA 
                distributions in connection with an establishment of 
                coverage described in subparagraph (A)(i) shall not 
                exceed the dollar amount in effect under section 
                125(i)(1) (twice such amount in the case of coverage 
                which is described in section 223(b)(2)(B)).''.
    (b) Partial Reduction of Limitation on Deductible HSA 
Contributions.--Section 223(b)(4) of such Code is amended by striking 
``and'' at the end of subparagraph (B), by striking the period at the 
end of subparagraph (C) and inserting ``, and'', and by inserting after 
subparagraph (C) the following new subparagraph:
                    ``(D) so much of any qualified HSA distribution (as 
                defined in section 106(e)(2)) made to a health savings 
                account of such individual during the taxable year as 
                does not exceed the aggregate increases in the balance 
                of the arrangement from which such distribution is made 
                which occur during the portion of the plan year which 
                precedes such distribution (other than any balance 
                carried over to such plan year and determined without 
                regard to any decrease in such balance during such 
                portion of the plan year).''.
    (c) Conversion to HSA-Compatible Arrangement for Remainder of Plan 
Year.--Section 223(c)(1)(B) of such Code, as amended by this preceding 
provisions of this Act, is amended by striking ``and'' at the end of 
clause (iii), by striking the period at the end of clause (iv) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(v) coverage under a health flexible 
                        spending arrangement or health reimbursement 
                        arrangement for the portion of the plan year 
                        after a qualified HSA distribution (as defined 
                        in section 106(e)(2) determined without regard 
                        to subparagraph (A)(ii) thereof) is made, if 
                        the terms of such arrangement which apply for 
                        such portion of the plan year are such that, if 
                        such terms applied for the entire plan year, 
                        then such arrangement would not be taken into 
                        account under subparagraph (A)(ii) of this 
                        paragraph for such plan year.''.
    (d) Inclusion of Qualified HSA Distributions on W-2.--
            (1) In general.--Section 6051(a) of such Code, as amended 
        by this preceding provisions of this Act, is amended by 
        striking ``and'' at the end of paragraph (17), by striking the 
        period at the end of paragraph (18) and inserting ``, and'', 
        and by inserting after paragraph (18) the following new 
        paragraph:
            ``(19) the amount of any qualified HSA distribution (as 
        defined in section 106(e)(2)) with respect to such employee.''.
            (2) Conforming amendment.--Section 6051(a)(12) of such Code 
        is amended by inserting ``(other than any qualified HSA 
        distribution, as defined in section 106(e)(2))'' before the 
        comma at the end.
    (e) Effective Date.--The amendments made by this subsection shall 
apply to distributions made after December 31, 2025, in taxable years 
ending after such date.
                                 <all>
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