IB 

Union Calendar No. 317 

118TH CONGRESS 

2D SESSION H. R. 5687 

[Report No. 118–387] 

To amend the Internal Revenue Code of 1986 to modernize health savings 

accounts. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 26, 2023 

Ms. VAN DUYNE introduced the following bill; which was referred to the 

Committee on Ways and Means 

FEBRUARY 13, 2024 

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] 

[For text of introduced bill, see copy of bill as introduced on September 26, 2023] 


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A BILL 

To amend the Internal Revenue Code of 1986 to modernize 

health savings accounts. 


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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 ‘‘HSA Modernization Act 

5 of 2023’’. 

6 SEC. 2. INDIVIDUALS WITHOUT SERVICE-CONNECTED DIS7 ABILITY AND ELIGIBLE FOR CERTAIN VET8 ERANS BENEFITS PERMITTED TO CON9 TRIBUTE TO HEALTH SAVINGS ACCOUNTS. 

10 (a) IN GENERAL.—Section 223(c)(1)(C) of the Internal 

11 Revenue Code of 1986 is amended by striking ‘‘for a service12 connected disability (within the meaning of section 101(16) 

13 of title 38, United States Code)’’. 

14 (b) EFFECTIVE DATE.—The amendment made by this 

15 section shall apply to taxable years beginning after Decem16 ber 31, 2025. 

17 SEC. 3. INDIVIDUALS ENTITLED TO PART A OF MEDICARE 

18 BY REASON OF AGE ALLOWED TO CON19 TRIBUTE TO HEALTH SAVINGS ACCOUNTS. 

20 (a) IN GENERAL.—Section 223(c)(1)(B) of the Inter21 nal Revenue Code of 1986 is amended by striking ‘‘and’’ 

22 at the end of clause (ii), by striking the period at the end 

23 of clause (iii) and inserting ‘‘, and’’, and by adding at the 

24 end the following new clause: 


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1 ‘‘(iv) entitlement to hospital insurance 

2 benefits under part A of title XVIII of the 

3 Social Security Act by reason of section 

4 226(a) of such Act.’’. 

5 (b) TREATMENT OF HEALTH INSURANCE PURCHASED

6 FROM ACCOUNT.—Section 223(d)(2)(C)(iv) of such Code is 

7 amended by inserting ‘‘and who is not an eligible indi8 vidual’’ after ‘‘who has attained the age specified in section 

9 1811 of the Social Security Act’’. 

10 (c) COORDINATION WITH PENALTY ON DISTRIBUTIONS

11 NOT USED FOR QUALIFIED MEDICAL EXPENSES.—Section 

12 223(f)(4)(C) of such Code is amended by striking ‘‘Subpara13 graph (A)’’ and inserting ‘‘Except in the case of an eligible 

14 individual, subparagraph (A)’’ 

15 (d) CONFORMING AMENDMENT.—Section 223(b)(7) of 

16 such Code is amended by inserting ‘‘(other than an entitle17 ment to benefits described in subsection (c)(1)(B)(iv))’’ after 

18 ‘‘Social Security Act’’. 

19 (e) EFFECTIVE DATE.—The amendments made by this 

20 section shall apply to months beginning after December 31, 

21 2025, in taxable years ending after such date. 


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1 SEC. 4. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH SERV2 ICE ASSISTANCE NOT DISQUALIFIED FROM 

3 HEALTH SAVINGS ACCOUNTS. 

4 (a) IN GENERAL.—Section 223(c)(1) of the Internal 

5 Revenue Code of 1986 is amended by adding at the end 

6 the following new subparagraph: 

7 ‘‘(E) SPECIAL RULE FOR INDIVIDUALS ELI8 GIBLE FOR ASSISTANCE UNDER INDIAN HEALTH

9 SERVICE PROGRAMS.—For purposes of subpara10 graph (A)(ii), an individual shall not be treated 

11 as covered under a health plan described in such 

12 subparagraph merely because the individual re13 ceives hospital care or medical services under a 

14 medical care program of the Indian Health Serv15 ice or of a tribal organization.’’. 

16 (b) EFFECTIVE DATE.—The amendment made by this 

17 section shall apply to taxable years beginning after Decem18 ber 31, 2025. 

19 SEC. 5. ALLOWANCE OF BRONZE AND CATASTROPHIC 

20 PLANS IN CONNECTION WITH HEALTH SAV21 INGS ACCOUNTS. 

22 (a) IN GENERAL.—Section 223(c)(2) of the Internal 

23 Revenue Code of 1986 is amended by adding at the end 

24 the following new subparagraph: 

25 ‘‘(H) BRONZE AND CATASTROPHIC PLANS

26 TREATED AS HIGH DEDUCTIBLE HEALTH


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1 PLANS.—The term ‘high deductible health plan’ 

2 shall include any plan described in subsection 

3 (d)(1)(A) or (e) of section 1302 of the Patient 

4 Protection and Affordable Care Act.’’. 

5 (b) EFFECTIVE DATE.—The amendment made by this 

6 section shall apply to months beginning after December 31, 

7 2025, in taxable years ending after such date. 

8 SEC. 6. SAFE HARBOR FOR ABSENCE OF DEDUCTIBLE FOR 

9 MENTAL HEALTH SERVICES. 

10 (a) IN GENERAL.—Section 223(c)(2) of the Internal 

11 Revenue Code of 1986, as amended by this Act, is amended 

12 by adding at the end the following new subparagraph: 

13 ‘‘(I) SAFE HARBOR FOR ABSENCE OF DE14 DUCTIBLE FOR MENTAL HEALTH SERVICES.—A 

15 plan shall not fail to be treated as a high deduct16 ible health plan by reason of failing to have a 

17 deductible for not more than the first $500 of 

18 any mental health benefits (as defined in section 

19 9812(e)(4)) specified by the plan for purposes of 

20 this subparagraph.’’. 

21 (b) EFFECTIVE DATE.—The amendments made by this 

22 section shall apply to plan years beginning after December 

23 31, 2025. 


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1 SEC. 7. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

2 INCURRED BEFORE ESTABLISHMENT OF 

3 HEALTH SAVINGS ACCOUNT. 

4 (a) IN GENERAL.—Section 223(d)(2) of the Internal 

5 Revenue Code of 1986 is amended by adding at the end 

6 the following new subparagraph: 

7 ‘‘(E) TREATMENT OF CERTAIN MEDICAL EX8 PENSES INCURRED BEFORE ESTABLISHMENT OF

9 ACCOUNT.—If a health savings account is estab10 lished during the 60-day period beginning on the 

11 date that coverage of the account beneficiary 

12 under a high deductible health plan begins, then, 

13 solely for purposes of determining whether an 

14 amount paid is used for a qualified medical ex15 pense, such account shall be treated as having 

16 been established on the date that such coverage 

17 begins.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by this 

19 section shall apply with respect to coverage beginning after 

20 December 31, 2025. 

21 SEC. 8. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON22 TRIBUTIONS TO THE SAME HEALTH SAVINGS 

23 ACCOUNT. 

24 (a) IN GENERAL.—Section 223(b)(5) of the Internal 

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


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1 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS

2 WITH FAMILY COVERAGE.— 

3 ‘‘(A) IN GENERAL.—In the case of individ4 uals who are married to each other, if both 

5 spouses are eligible individuals and either spouse 

6 has family coverage under a high deductible 

7 health plan as of the first day of any month— 

8 ‘‘(i) the limitation under paragraph 

9 (1) shall be applied by not taking into ac10 count any other high deductible health plan 

11 coverage of either spouse (and if such 

12 spouses both have family coverage under 

13 separate high deductible health plans, only 

14 one such coverage shall be taken into ac15 count), 

16 ‘‘(ii) such limitation (after application 

17 of clause (i)) shall be reduced by the aggre18 gate amount paid to Archer MSAs of such 

19 spouses for the taxable year, and 

20 ‘‘(iii) such limitation (after applica21 tion of clauses (i) and (ii)) shall be divided 

22 equally between such spouses unless they 

23 agree on a different division. 

24 ‘‘(B) TREATMENT OF ADDITIONAL CON25 TRIBUTION AMOUNTS.—If both spouses referred 


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1 to in subparagraph (A) have attained age 55 be2 fore the close of the taxable year, the limitation 

3 referred to in subparagraph (A)(iii) which is 

4 subject to division between the spouses shall in5 clude the additional contribution amounts deter6 mined under paragraph (3) for both spouses. In 

7 any other case, any additional contribution 

8 amount determined under paragraph (3) shall 

9 not be taken into account under subparagraph 

10 (A)(iii) and shall not be subject to division be11 tween the spouses.’’. 

12 (b) EFFECTIVE DATE.—The amendments made by this 

13 section shall apply to taxable years beginning after Decem14 ber 31, 2025. 

15 SEC. 9. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV16 INGS ACCOUNT INCREASED TO AMOUNT OF 

17 DEDUCTIBLE AND OUT-OF-POCKET LIMITA18 TION. 

19 (a) SELF-ONLY COVERAGE.—Section 223(b)(2)(A) of 

20 the Internal Revenue Code of 1986 is amended by striking 

21 ‘‘$2,250’’ and inserting ‘‘the amount in effect under sub22 section (c)(2)(A)(ii)(I)’’. 

23 (b) FAMILY COVERAGE.—Section 223(b)(2)(B) of such 

24 Code is amended by striking ‘‘$4,500’’ and inserting ‘‘the 

25 amount in effect under subsection (c)(2)(A)(ii)(II)’’. 


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1 (c) CONFORMING AMENDMENTS.—Section 223(g)(1) of 

2 such Code is amended— 

3 (1) by striking ‘‘subsections (b)(2) and’’ both 

4 places it appears and inserting ‘‘subsection’’, and 

5 (2) in subparagraph (B), by striking ‘‘deter6 mined by’’ and all that follows through ‘‘ ‘calendar 

7 year 2003’.’’ and inserting ‘‘determined by sub8 stituting ‘calendar year 2003’ for ‘calendar year 

9 2016’ in subparagraph (A)(ii) thereof.’’. 

10 (d) EFFECTIVE DATE.—The amendments made by this 

11 section shall apply to taxable years beginning after Decem12 ber 31, 2025. 

13 SEC. 10. CLARIFICATION OF TREATMENT OF DISTRIBU14 TIONS FROM HEALTH SAVINGS ACCOUNT FOR 

15 LONG-TERM CARE SERVICES. 

16 (a) IN GENERAL.—Section 223(d)(2)(A) of the Inter17 nal Revenue Code of 1986 is amended by inserting before 

18 the last sentence the following: ‘‘Such term includes 

19 amounts paid for qualified long-term care services (as de20 fined in section 7702B(c)).’’. 

21 (b) EFFECTIVE DATE.—The amendment made by this 

22 section shall apply to amounts paid after the date of the 

23 enactment of this Act. 

24 (c) NO INFERENCE.—Nothing contained in this section 

25 or the amendment made thereby shall be construed to create 


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1 any inference with respect to any amounts paid on or before 

2 such date. 


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Union Calendar No. 317 

118TH CONGRESS 

2D SESSION H. R. 5687 

[Report No. 118–387] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

modernize health savings accounts. 

FEBRUARY 13, 2024 

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


ssavage on LAPJG3WLY3PROD with BILLS