II 

116TH CONGRESS 

1ST SESSION S. 12 

To amend the Internal Revenue Code of 1986 to improve access to health 

care through expanded health savings accounts, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 3, 2019 

Mr. RUBIO introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to improve 

access to health care through expanded health savings 

accounts, and for other purposes. 

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, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Health Savings Act of 2019’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 


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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

3 (c) TABLE OF CONTENTS.—The table of contents is 

4 as follows: 

Sec. 1. Short title, etc. 

TITLE I—RENAMING HIGH DEDUCTIBLE HEALTH PLANS 

Sec. 101. High deductible health plans renamed HSA-qualified health plans. 

TITLE II—ENHANCING ACCESS TO TAX-PREFERRED HEALTH 

ACCOUNTS 

Sec. 201. Allow both spouses to make catch-up contributions to the same HSA 

account. 

Sec. 202. Provisions relating to Medicare. 

Sec. 203. Individuals eligible for Indian Health Service assistance. 

Sec. 204. Members of health care sharing ministries eligible to establish health 

savings accounts. 

Sec. 205. Treatment of direct primary care service arrangements. 

Sec. 206. Individuals eligible for on-site medical clinic coverage. 

Sec. 207. Treatment of embedded deductibles. 

TITLE III—IMPROVING COVERAGE UNDER TAX-PREFERRED 

HEALTH ACCOUNTS 

Sec. 301. Allowance of distributions for prescription and over-the-counter medicines and drugs. 

Sec. 302. Purchase of health insurance from HSA account. 

Sec. 303. Special rule for certain medical expenses incurred before establishment of account. 

Sec. 304. Preventive care prescription drug clarification. 

TITLE IV—MISCELLANEOUS PROVISIONS RELATING TO TAXPREFERRED HEALTH ACCOUNTS 

Sec. 401. FSA and HRA interaction with HSAs. 

Sec. 402. Equivalent bankruptcy protections for health savings accounts as retirement funds. 

Sec. 403. Administrative error correction before due date of return. 

Sec. 404. Reauthorization of Medicaid health opportunity accounts. 

Sec. 405. Maximum contribution limit to health savings account increased to 

amount of deductible and out-of-pocket limitation. 

TITLE V—OTHER PROVISIONS 

Sec. 501. Certain exercise equipment and physical fitness programs treated as 

medical care. 

Sec. 502. Certain nutritional and dietary supplements to be treated as medical 

care. 

Sec. 503. Certain provider fees to be treated as medical care. 


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1 TITLE I—RENAMING HIGH 

2 DEDUCTIBLE HEALTH PLANS 

3 SEC. 101. HIGH DEDUCTIBLE HEALTH PLANS RENAMED 

4 HSA-QUALIFIED HEALTH PLANS. 

5 (a) IN GENERAL.—Section 223 is amended by strik6 ing ‘‘high deductible health plan’’ each place it appears 

7 and inserting ‘‘HSA-qualified health plan’’. 

8 (b) CONFORMING AMENDMENTS.— 

9 (1) The heading for paragraph (2) of section 

10 223(c) is amended by striking ‘‘HIGH DEDUCTIBLE

11 HEALTH PLAN’’ and inserting ‘‘HSA-QUALIFIED

12 HEALTH PLAN’’. 

13 (2) Section 408(d)(9) is amended— 

14 (A) by striking ‘‘high deductible health 

15 plan’’ each place it appears in subparagraph 

16 (C) and inserting ‘‘HSA-qualified health plan’’; 

17 and 

18 (B) by striking ‘‘HIGH DEDUCTIBLE

19 HEALTH PLAN’’ in the heading of subparagraph 

20 (D) and inserting ‘‘HSA-QUALIFIED HEALTH

21 PLAN’’. 

22 (3) Section 106(e) is amended— 

23 (A) by striking ‘‘HIGH DEDUCTIBLE

24 HEALTH PLAN’’ in the heading of paragraph (3) 


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1 and inserting ‘‘HSA-QUALIFIED HEALTH

2 PLAN’’; and 

3 (B) by striking ‘‘high deductible health 

4 plan’’ in paragraph (5)(B)(iii) and inserting 

5 ‘‘HSA-qualified health plan’’. 

6 TITLE II—ENHANCING ACCESS 

7 TO TAX-PREFERRED HEALTH 

8 ACCOUNTS 

9 SEC. 201. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON10 TRIBUTIONS TO THE SAME HSA ACCOUNT. 

11 (a) IN GENERAL.—Paragraph (5) of section 223(b) 

12 is amended to read as follows: 

13 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS

14 WITH FAMILY COVERAGE.— 

15 ‘‘(A) IN GENERAL.—In the case of individ16 uals who are married to each other, if both 

17 spouses are eligible individuals and either 

18 spouse has family coverage under an HSA19 qualified health plan as of the first day of any 

20 month— 

21 ‘‘(i) the limitation under paragraph 

22 (1) shall be applied by not taking into ac23 count any other HSA-qualified health plan 

24 coverage of either spouse (and if such 

25 spouses both have family coverage under 


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1 separate HSA-qualified health plans, only 

2 one such coverage shall be taken into ac3 count), 

4 ‘‘(ii) such limitation (after application 

5 of clause (i)) shall be reduced by the ag6 gregate amount paid to Archer MSAs of 

7 such spouses for the taxable year, and 

8 ‘‘(iii) such limitation (after application 

9 of clauses (i) and (ii)) shall be divided 

10 equally between such spouses unless they 

11 agree on a different division. 

12 ‘‘(B) TREATMENT OF ADDITIONAL CON13 TRIBUTION AMOUNTS.—If both spouses referred 

14 to in subparagraph (A) have attained age 55 

15 before the close of the taxable year, the limita16 tion referred to in subparagraph (A)(iii) which 

17 is subject to division between the spouses shall 

18 include the additional contribution amounts de19 termined under paragraph (3) for both spouses. 

20 In any other case, any additional contribution 

21 amount determined under paragraph (3) shall 

22 not be taken into account under subparagraph 

23 (A)(iii) and shall not be subject to division be24 tween the spouses.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 202. PROVISIONS RELATING TO MEDICARE. 

5 (a) INDIVIDUALS OVER AGE 65 ONLY ENROLLED IN

6 MEDICARE PART A.—Paragraph (7) of section 223(b) is 

7 amended by adding at the end the following: ‘‘This para8 graph shall not apply to any individual during any period 

9 for which the individual’s only entitlement to such benefits 

10 is an entitlement to hospital insurance benefits under part 

11 A of title XVIII of such Act pursuant to an enrollment 

12 for such hospital insurance benefits under section 226(a) 

13 of such Act.’’. 

14 (b) MEDICARE BENEFICIARIES PARTICIPATING IN

15 MEDICARE ADVANTAGE MSA MAY CONTRIBUTE THEIR

16 OWN MONEY TO THEIR MSA.— 

17 (1) IN GENERAL.—Subsection (b) of section 

18 138 is amended by striking paragraph (2) and by re19 designating paragraphs (3) and (4) as paragraphs 

20 (2) and (3), respectively. 

21 (2) CONFORMING AMENDMENT.—Paragraph (4) 

22 of section 138(c) is amended by striking ‘‘and para23 graph (2)’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 203. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH 

5 SERVICE ASSISTANCE. 

6 (a) IN GENERAL.—Paragraph (1) of section 223(c) 

7 is amended by adding at the end the following new sub8 paragraph: 

9 ‘‘(D) SPECIAL RULE FOR INDIVIDUALS EL10 IGIBLE FOR ASSISTANCE UNDER INDIAN

11 HEALTH SERVICE PROGRAMS.—For purposes of 

12 subparagraph (A)(ii), an individual shall not be 

13 treated as covered under a health plan de14 scribed in such subparagraph merely because 

15 the individual receives hospital care or medical 

16 services under a medical care program of the 

17 Indian Health Service or of a tribal organiza18 tion.’’. 

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

20 this section shall apply to taxable years beginning after 

21 the date of the enactment of this Act. 


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1 SEC. 204. MEMBERS OF HEALTH CARE SHARING MIN2 ISTRIES ELIGIBLE TO ESTABLISH HEALTH 

3 SAVINGS ACCOUNTS. 

4 (a) IN GENERAL.—Section 223 is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(i) APPLICATION TO HEALTH CARE SHARING MIN7 ISTRIES.—For purposes of this section, membership in a 

8 health care sharing ministry (as defined in section 

9 5000A(d)(2)(B)(ii)) shall be treated as coverage under an 

10 HSA-qualified health plan.’’. 

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

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 SEC. 205. TREATMENT OF DIRECT PRIMARY CARE SERVICE 

15 ARRANGEMENTS. 

16 (a) IN GENERAL.—Section 223(c) is amended by 

17 adding at the end the following new paragraph: 

18 ‘‘(6) TREATMENT OF DIRECT PRIMARY CARE

19 SERVICE ARRANGEMENTS.—An arrangement under 

20 which an individual is provided coverage restricted to 

21 primary care services in exchange for a fixed peri22 odic fee or payment for primary care services— 

23 ‘‘(A) shall not be treated as a health plan 

24 for purposes of paragraph (1)(A)(ii), and 

25 ‘‘(B) shall not be treated as insurance for 

26 purposes of subsection (d)(2)(B).’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 206. INDIVIDUALS ELIGIBLE FOR ON-SITE MEDICAL 

5 CLINIC COVERAGE. 

6 (a) IN GENERAL.—Paragraph (1) of section 223(c), 

7 as amended by sections 203, is amended by adding at the 

8 end the following new subparagraph: 

9 ‘‘(E) SPECIAL RULE FOR INDIVIDUALS EL10 IGIBLE FOR ON-SITE MEDICAL CLINIC COV11 ERAGE.— 

12 ‘‘(i) IN GENERAL.—For purposes of 

13 subparagraph (A)(ii), an individual shall 

14 not be treated as covered under a health 

15 plan described in such subparagraph mere16 ly because the individual is eligible to re17 ceive health care benefits from an on-site 

18 medical clinic of employer of the individual 

19 or the individual’s spouse if such health 

20 care benefits are not significant benefits. 

21 ‘‘(ii) INCLUDED BENEFITS.—For pur22 poses of clause (i), the following health 

23 care benefits shall be considered to be ben24 efits which are not significant benefits: 


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1 ‘‘(I) Physicals and immuniza2 tions. 

3 ‘‘(II) Injecting antigens provided 

4 by employees. 

5 ‘‘(III) Medications available with6 out a prescription, such as pain reliev7 ers and antihistamines. 

8 ‘‘(IV) Treatment for injuries oc9 curring at the employer’s place of em10 ployment or otherwise in the course of 

11 employment. 

12 ‘‘(V) Tests for infectious diseases 

13 and conditions, such as streptococcal 

14 sore throat. 

15 ‘‘(VI) Monitoring of chronic con16 ditions, such as diabetes. 

17 ‘‘(VII) Drug testing. 

18 ‘‘(VIII) Hearing or vision 

19 screenings and related services. 

20 ‘‘(IX) Other services and treat21 ments of a similar nature to the serv22 ices described in subclauses (I) 

23 through (VIII). 

24 ‘‘(iii) AGGREGATION RULES.—For 

25 purposes of clause (i), all persons treated 


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1 as a single employer under subsection (b), 

2 (c), (m), or (o) of section 414 shall be 

3 treated as a single employer.’’. 

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

5 this section shall apply to taxable years beginning after 

6 the date of the enactment of this Act. 

7 SEC. 207. TREATMENT OF EMBEDDED DEDUCTIBLES. 

8 (a) IN GENERAL.—Paragraph (2) of section 223(c) 

9 is amended by adding at the end the following new sub10 paragraph: 

11 ‘‘(E) TREATMENT OF EMBEDDED DEDUCT12 IBLE.—A health plan providing family coverage 

13 that has an annual deductible for all covered in14 dividuals under the plan of at least the amount 

15 described in subparagraph (A)(i)(II) shall not 

16 fail to be treated as an HSA-qualified health 

17 plan solely because it covers expenses with re18 spect to an individual under that plan that ex19 ceed an embedded deductible which is equal to 

20 or in excess of the amount described in sub21 paragraph (A)(i)(I).’’. 

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

23 this section shall apply to taxable years beginning after 

24 the date of the enactment of this Act. 


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1 TITLE III—IMPROVING COV2 ERAGE UNDER TAX-PRE3 FERRED HEALTH ACCOUNTS 

4 SEC. 301. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP5 TION AND OVER-THE-COUNTER MEDICINES 

6 AND DRUGS. 

7 (a) HSAS.—Section 223(d)(2)(A) is amended by 

8 striking the last sentence thereof and inserting the fol9 lowing: ‘‘Such term shall include an amount paid for any 

10 prescription or over-the-counter medicine or drug.’’. 

11 (b) ARCHER MSAS.—Section 220(d)(2)(A) is amend12 ed by striking the last sentence thereof and inserting the 

13 following: ‘‘Such term shall include an amount paid for 

14 any prescription or over-the-counter medicine or drug.’’. 

15 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS

16 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sub17 section (f) of section 106 is amended to read as follows: 

18 ‘‘(f) REIMBURSEMENTS FOR ALL MEDICINES AND

19 DRUGS.—For purposes of this section and section 105, 

20 reimbursement for expenses incurred for any prescription 

21 or over-the-counter medicine or drug shall be treated as 

22 a reimbursement for medical expenses.’’. 

23 (d) EFFECTIVE DATES.— 

24 (1) DISTRIBUTIONS FROM SAVINGS AC25 COUNTS.—The amendments made by subsections (a) 


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1 and (b) shall apply to amounts paid in taxable years 

2 beginning after December 31, 2019. 

3 (2) REIMBURSEMENTS.—The amendment made 

4 by subsection (c) shall apply to expenses incurred in 

5 plan years beginning after December 31, 2019. 

6 SEC. 302. PURCHASE OF HEALTH INSURANCE FROM HSA 

7 ACCOUNT. 

8 (a) IN GENERAL.—Paragraph (2) of section 223(d), 

9 as amended by section 301, is amended— 

10 (1) by striking ‘‘and any dependent (as defined 

11 in section 152, determined without regard to sub12 sections (b)(1), (b)(2), and (d)(1)(B) thereof) of 

13 such individual’’ in subparagraph (A) and inserting 

14 ‘‘any dependent (as defined in section 152, deter15 mined without regard to subsections (b)(1), (b)(2), 

16 and (d)(1)(B) thereof) of such individual, and any 

17 child (as defined in section 152(f)(1)) of such indi18 vidual who has not attained the age of 27 before the 

19 end of such individual’s taxable year’’; 

20 (2) by striking subparagraph (B) and inserting 

21 the following: 

22 ‘‘(B) HEALTH INSURANCE MAY NOT BE

23 PURCHASED FROM ACCOUNT.—Except as pro24 vided in subparagraph (C), subparagraph (A) 


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1 shall not apply to any payment for insurance.’’; 

2 and 

3 (3) by striking ‘‘or’’ at the end of subparagraph 

4 (C)(iii) and by striking subparagraph (C)(iv) and in5 serting the following: 

6 ‘‘(iv) an HSA-qualified health plan, or 

7 ‘‘(v) any health insurance under title 

8 XVIII of the Social Security Act, other 

9 than a Medicare supplemental policy (as 

10 defined in section 1882 of such Act).’’. 

11 (b) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply with respect to insurance pur13 chased after the date of the enactment of this Act in tax14 able years beginning after such date. 

15 SEC. 303. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

16 INCURRED BEFORE ESTABLISHMENT OF AC17 COUNT. 

18 (a) IN GENERAL.—Paragraph (2) of section 223(d) 

19 is amended by adding at the end the following new sub20 paragraph: 

21 ‘‘(D) TREATMENT OF CERTAIN MEDICAL

22 EXPENSES INCURRED BEFORE ESTABLISHMENT

23 OF ACCOUNT.—If a health savings account is 

24 established during the 60-day period beginning 

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1 ficiary under an HSA-qualified health plan be2 gins, then, solely for purposes of determining 

3 whether an amount paid is used for a qualified 

4 medical expense, such account shall be treated 

5 as having been established on the date that 

6 such coverage begins.’’. 

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

8 this section shall apply with respect to coverage beginning 

9 after the date of the enactment of this Act. 

10 SEC. 304. PREVENTIVE CARE PRESCRIPTION DRUG CLARI11 FICATION. 

12 (a) CLARIFY USE OF DRUGS IN PREVENTIVE

13 CARE.—Subparagraph (C) of section 223(c)(2) is amend14 ed by adding at the end the following: ‘‘Preventive care 

15 shall include prescription and over-the-counter drugs and 

16 medicines which have the primary purpose of preventing 

17 the onset of, further deterioration from, or complications 

18 associated with chronic conditions, illnesses, or diseases.’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2019. 


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1 TITLE IV—MISCELLANEOUS 

2 PROVISIONS RELATING TO 

3 TAX-PREFERRED HEALTH AC4 COUNTS 

5 SEC. 401. FSA AND HRA INTERACTION WITH HSAS. 

6 (a) ELIGIBLE INDIVIDUALS INCLUDE FSA AND HRA 

7 PARTICIPANTS.—Subparagraph (B) of section 223(c)(1) 

8 is amended— 

9 (1) by striking ‘‘and’’ at the end of clause (ii); 

10 (2) by striking the period at the end of clause 

11 (iii) and inserting ‘‘, and’’; and 

12 (3) by inserting after clause (iii) the following 

13 new clause: 

14 ‘‘(iv) coverage under a health flexible 

15 spending arrangement or a health reim16 bursement arrangement in the plan year a 

17 qualified HSA distribution as described in 

18 section 106(e) is made on behalf of the in19 dividual if, after the qualified HSA dis20 tribution is made and for the remaining 

21 duration of the plan year, the coverage 

22 provided under the arrangement is con23 verted solely to one or more of the fol24 lowing: 


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1 ‘‘(I) POST-DEDUCTIBLE FSA OR

2 HRA.—A health flexible spending ar3 rangement or a health reimbursement 

4 arrangement that does not pay or re5 imburse any medical expense incurred 

6 before the minimum annual deductible 

7 under paragraph (2)(A)(i) (prorated 

8 for the period occurring after the 

9 qualified HSA distribution is made) is 

10 satisfied. 

11 ‘‘(II) PREVENTATIVE CARE.—A 

12 health flexible spending arrangement 

13 or a health reimbursement arrange14 ment that, after the qualified HSA 

15 distribution is made, does not pay or 

16 reimburse any medical expense in17 curred after the qualified HSA dis18 tribution is made other than preven19 tive care as defined in paragraph 

20 (2)(C). 

21 ‘‘(III) LIMITED PURPOSE

22 HEALTH FSA.—A health flexible 

23 spending arrangement that, after the 

24 qualified HSA distribution is made, 

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1 erage described in clause (ii) (but not 

2 through insurance or for long-term 

3 care services). 

4 ‘‘(IV) LIMITED PURPOSE HRA.— 

5 A health reimbursement arrangement 

6 that, after the qualified HSA distribu7 tion is made, pays or reimburses bene8 fits for permitted insurance or cov9 erage described in clause (ii) (but not 

10 for long-term care services). 

11 ‘‘(V) RETIREMENT HRA.—A 

12 health reimbursement arrangement 

13 that, after the qualified HSA distribu14 tion is made, pays or reimburses only 

15 those medical expenses incurred after 

16 an individual’s retirement (and no ex17 penses incurred before retirement). 

18 ‘‘(VI) SUSPENDED HRA.—A 

19 health reimbursement arrangement 

20 that, after the qualified HSA distribu21 tion is made, is suspended, pursuant 

22 to an election made on or before the 

23 date the individual elects a qualified 

24 HSA distribution or, if later, on the 

25 date of the individual enrolls in an 


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1 HSA-qualified health plan, that does 

2 not pay or reimburse, at any time, 

3 any medical expense incurred during 

4 the suspension period except as de5 scribed in the preceding subclauses of 

6 this clause.’’. 

7 (b) QUALIFIED HSA DISTRIBUTION SHALL NOT AF8 FECT FLEXIBLE SPENDING ARRANGEMENT.—Paragraph 

9 (1) of section 106(e) is amended to read as follows: 

10 ‘‘(1) IN GENERAL.—A plan shall not fail to be 

11 treated as— 

12 ‘‘(A) a health flexible spending arrange13 ment under this section, section 105, or section 

14 125, 

15 ‘‘(B) a health reimbursement arrangement 

16 under this section or section 105, or 

17 ‘‘(C) an accident or health plan, 

18 merely because such plan provides for a qualified 

19 HSA distribution.’’. 

20 (c) FSA BALANCES AT YEAR END SHALL NOT FOR21 FEIT.—Paragraph (2) of section 125(d) is amended by 

22 adding at the end the following new subparagraph: 

23 ‘‘(E) EXCEPTION FOR QUALIFIED HSA DIS24 TRIBUTIONS.—Subparagraph (A) shall not 

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1 maining in a health flexible spending account at 

2 the end of a plan year that an individual elects 

3 to contribute to a health savings account pursu4 ant to a qualified HSA distribution (as defined 

5 in section 106(e)(2)).’’. 

6 (d) SIMPLIFICATION OF LIMITATIONS ON FSA AND

7 HRA ROLLOVERS.—Paragraph (2) of section 106(e) is 

8 amended to read as follows: 

9 ‘‘(2) QUALIFIED HSA DISTRIBUTION.— 

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

11 HSA distribution’ means a distribution from a 

12 health flexible spending arrangement or health 

13 reimbursement arrangement directly to a health 

14 savings account of the employee to the extent 

15 that such distribution does not exceed the lesser 

16 of— 

17 ‘‘(i) the balance in such arrangement 

18 as of the date of such distribution, or 

19 ‘‘(ii) the amount determined under 

20 subparagraph (B). 

21 Such term shall not include more than 1 dis22 tribution with respect to any arrangement. 

23 ‘‘(B) DOLLAR LIMITATIONS.— 

24 ‘‘(i) DISTRIBUTIONS FROM A HEALTH

25 FLEXIBLE SPENDING ARRANGEMENT.—A 


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1 qualified HSA distribution from a health 

2 flexible spending arrangement shall not ex3 ceed the applicable amount. 

4 ‘‘(ii) DISTRIBUTIONS FROM A HEALTH

5 REIMBURSEMENT ARRANGEMENT.—A 

6 qualified HSA distribution from a health 

7 reimbursement arrangement shall not ex8 ceed— 

9 ‘‘(I) the applicable amount di10 vided by 12, multiplied by 

11 ‘‘(II) the number of months dur12 ing which the individual is a partici13 pant in the health reimbursement ar14 rangement. 

15 ‘‘(iii) APPLICABLE AMOUNT.—For 

16 purposes of this subparagraph, the applica17 ble amount is— 

18 ‘‘(I) $2,250 in the case of an eli19 gible individual who has self-only cov20 erage under an HSA-qualified health 

21 plan at the time of such distribution, 

22 and 

23 ‘‘(II) $4,500 in the case of an eli24 gible individual who has family cov25 erage under an HSA-qualified health 


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1 plan at the time of such distribu2 tion.’’. 

3 (e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE

4 TO MAINTAIN HSA-QUALIFIED HEALTH PLAN COV5 ERAGE.—Subsection (e) of section 106, as amended by 

6 section 101, is amended— 

7 (1) by striking paragraph (3) and redesignating 

8 paragraphs (4) and (5) as paragraphs (3) and (4), 

9 respectively; and 

10 (2) by striking subparagraph (A) of paragraph 

11 (3), as so redesignated, and redesignating subpara12 graphs (B) and (C) of such paragraph as subpara13 graphs (A) and (B) thereof, respectively. 

14 (f) LIMITED PURPOSE FSAS AND HRAS.—Sub15 section (e) of section 106, as amended by this section, is 

16 amended by adding at the end the following new para17 graph: 

18 ‘‘(5) LIMITED PURPOSE FSAS AND HRAS.—A 

19 plan shall not fail to be a health flexible spending 

20 arrangement, a health reimbursement arrangement, 

21 or an accident or health plan under this section or 

22 section 105 merely because the plan converts cov23 erage for individuals who enroll in an HSA-qualified 

24 health plan described in section 223(c)(2) to cov25 erage described in subclause (I), (II), (III), (IV), 


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1 (V), or (VI) of section 223(c)(1)(B)(iv). Coverage 

2 for such individuals may be converted as of the date 

3 of enrollment in the HSA-qualified health plan, 

4 without regard to the period of coverage under the 

5 health flexible spending arrangement or health reim6 bursement arrangement, and without requiring any 

7 change in coverage to individuals who do not enroll 

8 in an HSA-qualified health plan.’’. 

9 (g) DISTRIBUTION AMOUNTS ADJUSTED FOR COST10 OF-LIVING.—Subsection (e) of section 106, as amended 

11 by this section, is amended by adding at the end the fol12 lowing new paragraph: 

13 ‘‘(6) COST-OF-LIVING ADJUSTMENT.— 

14 ‘‘(A) IN GENERAL.—In the case of any 

15 taxable year beginning in a calendar year after 

16 2019, each of the dollar amounts in paragraph 

17 (2)(B)(iii) shall be increased by an amount 

18 equal to such dollar amount, multiplied by the 

19 cost-of-living adjustment determined under sec20 tion 1(f)(3) for the calendar year in which such 

21 taxable year begins by substituting ‘calendar 

22 year 2018’ for ‘calendar year 2016’ in subpara23 graph (A)(ii) thereof. 

24 ‘‘(B) ROUNDING.—If any increase under 

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1 crease shall be rounded to the nearest multiple 

2 of $50.’’. 

3 (h) DISCLAIMER OF DISQUALIFYING COVERAGE.— 

4 Subparagraph (B) of section 223(c)(1), as amended by 

5 this section, is amended— 

6 (1) by striking ‘‘and’’ at the end of clause (iii); 

7 (2) by striking the period at the end of clause 

8 (iv) and inserting ‘‘, and’’; and 

9 (3) by inserting after clause (iv) the following 

10 new clause: 

11 ‘‘(v) any coverage (including prospec12 tive coverage) under a health plan that is 

13 not an HSA-qualified health plan which is 

14 disclaimed in writing, at the time of the 

15 creation or organization of the health sav16 ings account, including by execution of a 

17 trust described in subsection (d)(1) 

18 through a governing instrument that in19 cludes such a disclaimer, or by acceptance 

20 of an amendment to such a trust that in21 cludes such a disclaimer.’’. 

22 (i) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to taxable years beginning after 

24 the date of the enactment of this Act. 


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1 SEC. 402. EQUIVALENT BANKRUPTCY PROTECTIONS FOR 

2 HEALTH SAVINGS ACCOUNTS AS RETIRE3 MENT FUNDS. 

4 (a) IN GENERAL.—Section 522 of title 11, United 

5 States Code, is amended by adding at the end the fol6 lowing new subsection: 

7 ‘‘(r) TREATMENT OF HEALTH SAVINGS AC8 COUNTS.—For purposes of this section, any health savings 

9 account (as described in section 223 of the Internal Rev10 enue Code of 1986) shall be treated in the same manner 

11 as an individual retirement account described in section 

12 408 of such Code.’’. 

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

14 this section shall apply to cases commencing under title 

15 11, United States Code, after the date of the enactment 

16 of this Act. 

17 SEC. 403. ADMINISTRATIVE ERROR CORRECTION BEFORE 

18 DUE DATE OF RETURN. 

19 (a) IN GENERAL.—Paragraph (4) of section 223(f) 

20 is amended by adding at the end the following new sub21 paragraph: 

22 ‘‘(D) EXCEPTION FOR ADMINISTRATIVE

23 ERRORS CORRECTED BEFORE DUE DATE OF RE24 TURN.—Subparagraph (A) shall not apply if 

25 any payment or distribution is made to correct 


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1 an administrative, clerical, or payroll contribu2 tion error and if— 

3 ‘‘(i) such distribution is received by 

4 the individual on or before the last day 

5 prescribed by law (including extensions of 

6 time) for filing such individual’s return for 

7 such taxable year, and 

8 ‘‘(ii) such distribution is accompanied 

9 by the amount of net income attributable 

10 to such contribution. 

11 Any net income described in clause (ii) shall be 

12 included in the gross income of the individual 

13 for the taxable year in which it is received.’’. 

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

15 this section shall take effect on the date of the enactment 

16 of this Act. 

17 SEC. 404. REAUTHORIZATION OF MEDICAID HEALTH OP18 PORTUNITY ACCOUNTS. 

19 (a) IN GENERAL.—Section 1938 of the Social Secu20 rity Act (42 U.S.C. 1396u–8) is amended— 

21 (1) in subsection (a)— 

22 (A) by striking paragraph (2) and insert23 ing the following: 

24 ‘‘(2) INITIAL DEMONSTRATION.—The Secretary 

25 shall approve States to conduct demonstration proVerDate Sep 11 2014 03:56 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S12.IS S12

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1 grams under this section for a 5-year period, with 

2 each State demonstration program covering one or 

3 more geographic areas specified by the State. With 

4 respect to a State, after the initial 5-year period of 

5 any demonstration program conducted under this 

6 section by the State, unless the Secretary finds, tak7 ing into account cost-effectiveness and quality of 

8 care, that the State demonstration program has 

9 been unsuccessful, the demonstration program may 

10 be extended or made permanent in the State.’’; and 

11 (B) in paragraph (3), in the matter pre12 ceding subparagraph (A)— 

13 (i) by striking ‘‘not’’; and 

14 (ii) by striking ‘‘unless’’ and inserting 

15 ‘‘if’’; 

16 (2) in subsection (b)— 

17 (A) in paragraph (3), by inserting ‘‘clause 

18 (i) through (vii), (viii) (without regard to the 

19 amendment made by section 2004(c)(2) of Pub20 lic Law 111–148), (x), or (xi) of’’ after ‘‘de21 scribed in’’; and 

22 (B) by striking paragraphs (4), (5), and 

23 (6); 

24 (3) in subsection (c)— 

25 (A) by striking paragraphs (3) and (4); 


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1 (B) by redesignating paragraphs (5) 

2 through (8) as paragraphs (3) through (6), re3 spectively; and 

4 (C) in paragraph (4) (as redesignated by 

5 subparagraph (B)), by striking ‘‘Subject to sub6 paragraphs (D) and (E)’’ and inserting ‘‘Sub7 ject to subparagraph (D)’’; and 

8 (4) in subsection (d)— 

9 (A) in paragraph (2), by striking subpara10 graph (E); and 

11 (B) in paragraph (3)— 

12 (i) in subparagraph (A)(ii), by strik13 ing ‘‘Subject to subparagraph (B)(ii), in’’ 

14 and inserting ‘‘In’’; and 

15 (ii) by striking subparagraph (B) and 

16 inserting the following: 

17 ‘‘(B) MAINTENANCE OF HEALTH OPPOR18 TUNITY ACCOUNT AFTER BECOMING INELI19 GIBLE FOR PUBLIC BENEFIT.—Notwithstanding 

20 any other provision of law, if an account holder 

21 of a health opportunity account becomes ineli22 gible for benefits under this title because of an 

23 increase in income or assets— 


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1 ‘‘(i) no additional contribution shall be 

2 made into the account under paragraph 

3 (2)(A)(i); and 

4 ‘‘(ii) the account shall remain avail5 able to the account holder for 3 years after 

6 the date on which the individual becomes 

7 ineligible for such benefits for withdrawals 

8 under the same terms and conditions as if 

9 the account holder remained eligible for 

10 such benefits, and such withdrawals shall 

11 be treated as medical assistance in accord12 ance with subsection (c)(4).’’. 

13 (b) CONFORMING AMENDMENT.—Section 613 of 

14 Public Law 111–3 is repealed. 

15 SEC. 405. 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) is 

20 amended by striking ‘‘$2,250’’ and inserting ‘‘the amount 

21 in effect under subsection (c)(2)(A)(ii)(I)’’. 

22 (b) FAMILY COVERAGE.—Section 223(b)(2)(B) is 

23 amended by striking ‘‘$4,500’’ and inserting ‘‘the amount 

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


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

2 is amended— 

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

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

5 (2) by striking ‘‘determined by’’ in subpara6 graph (B) thereof and all that follows through ‘‘ ‘cal7 endar year 2003’.’’ and inserting ‘‘determined by 

8 substituting ‘calendar year 2003’ for ‘calendar year 

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

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2019. 

13 TITLE V—OTHER PROVISIONS 

14 SEC. 501. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL 

15 FITNESS PROGRAMS TREATED AS MEDICAL 

16 CARE. 

17 (a) IN GENERAL.—Subsection (d) of section 213 is 

18 amended by adding at the end the following new para19 graph: 

20 ‘‘(12) EXERCISE EQUIPMENT AND PHYSICAL

21 FITNESS ACTIVITY.— 

22 ‘‘(A) IN GENERAL.—The term ‘medical 

23 care’ shall include amounts paid— 


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1 ‘‘(i) for equipment for use in a pro2 gram (including a self-directed program) of 

3 physical exercise or physical activity, 

4 ‘‘(ii) to participate, or receive instruc5 tion, in a program of physical exercise, nu6 trition, or health coaching (including a 

7 self-directed program), and 

8 ‘‘(iii) for membership at a fitness fa9 cility. 

10 ‘‘(B) OVERALL DOLLAR LIMITATION.— 

11 ‘‘(i) IN GENERAL.—Amounts treated 

12 as medical care under subparagraph (A) 

13 shall not exceed $1,000 with respect to any 

14 individual for any taxable year. 

15 ‘‘(ii) EXCEPTION.—Clause (i) shall 

16 not apply for purposes of determining 

17 whether expenses reimbursed through a 

18 health flexible spending arrangement sub19 ject to section 125(i)(1) are incurred for 

20 medical care. 

21 ‘‘(C) LIMITATIONS RELATED TO SPORTS

22 AND FITNESS EQUIPMENT.—Amounts paid for 

23 equipment described in subparagraph (A)(i) 

24 shall be treated as medical care only— 


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1 ‘‘(i) if such equipment is utilized ex2 clusively for participation in fitness, exer3 cise, sport, or other physical activity pro4 grams, 

5 ‘‘(ii) if such equipment is not apparel 

6 or footwear, and 

7 ‘‘(iii) in the case of any item of sports 

8 equipment (other than exercise equip9 ment), with respect to so much of the 

10 amount paid for such item as does not ex11 ceed $250. 

12 ‘‘(D) FITNESS FACILITY DEFINED.—For 

13 purposes of subparagraph (A)(iii), the term ‘fit14 ness facility’ means a facility— 

15 ‘‘(i) providing instruction in a pro16 gram of physical exercise, offering facilities 

17 for the preservation, maintenance, encour18 agement, or development of physical fit19 ness, or serving as the site of such a pro20 gram of a State or local government, 

21 ‘‘(ii) which is not a private club owned 

22 and operated by its members, 

23 ‘‘(iii) which does not offer golf, hunt24 ing, sailing, or riding facilities, 


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1 ‘‘(iv) whose health or fitness facility is 

2 not incidental to its overall function and 

3 purpose, and 

4 ‘‘(v) which is fully compliant with the 

5 State of jurisdiction and Federal anti-dis6 crimination laws.’’. 

7 (b) LIMITATION NOT TO APPLY FOR CERTAIN PUR8 POSES.— 

9 (1) HEALTH SAVINGS ACCOUNTS.—Subpara10 graph (A) of section 223(d)(2) is amended by insert11 ing ‘‘, determined without regard to paragraph 

12 (12)(B) thereof’’ after ‘‘medical care (as defined in 

13 section 213(d)’’. 

14 (2) ARCHER MSAS.—Subparagraph (A) of sec15 tion 220(d)(2) is amended by inserting ‘‘, deter16 mined without regard to paragraph (12)(B) thereof’’ 

17 after ‘‘medical care (as defined in section 213(d)’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years beginning after 

20 the date of the enactment of this Act. 

21 SEC. 502. CERTAIN NUTRITIONAL AND DIETARY SUPPLE22 MENTS TO BE TREATED AS MEDICAL CARE. 

23 (a) IN GENERAL.—Subsection (d) of section 213, as 

24 amended by section 501, is amended by adding at the end 

25 the following new paragraph: 


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1 ‘‘(13) NUTRITIONAL AND DIETARY SUPPLE2 MENTS.— 

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

4 care’ shall include amounts paid to purchase 

5 herbs, vitamins, minerals, homeopathic rem6 edies, meal replacement products, and other di7 etary and nutritional supplements. 

8 ‘‘(B) LIMITATION.—Amounts treated as 

9 medical care under subparagraph (A) shall not 

10 exceed $1,000 with respect to any individual for 

11 any taxable year. 

12 ‘‘(C) MEAL REPLACEMENT PRODUCT.— 

13 For purposes of this paragraph, the term ‘meal 

14 replacement product’ means any product that— 

15 ‘‘(i) is permitted to bear labeling mak16 ing a claim described in section 403(r)(3) 

17 of the Federal Food, Drug, and Cosmetic 

18 Act, and 

19 ‘‘(ii) is permitted to claim under such 

20 section that such product is low in fat and 

21 is a good source of protein, fiber, and mul22 tiple essential vitamins and minerals. 

23 ‘‘(D) EXCEPTION.—Subparagraph (B) 

24 shall not apply for purposes of determining 

25 whether expenses reimbursed through a health 


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1 flexible spending arrangement subject to section 

2 125(i)(1) are incurred for medical care.’’. 

3 (b) LIMITATION NOT TO APPLY FOR CERTAIN PUR4 POSES.— 

5 (1) HEALTH SAVINGS ACCOUNTS.—Subpara6 graph (A) of section 223(d)(2), as amended by sec7 tion 501, is amended by striking ‘‘paragraph 

8 (12)(B)’’ and inserting ‘‘paragraphs (12)(B) and 

9 (13)(B)’’. 

10 (2) ARCHER MSAS.—Subparagraph (A) of sec11 tion 220(d)(2), as amended by section 501, is 

12 amended by striking ‘‘paragraph (12)(B)’’ and in13 serting ‘‘paragraphs (12)(B) and (13)(B)’’. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

17 SEC. 503. CERTAIN PROVIDER FEES TO BE TREATED AS 

18 MEDICAL CARE. 

19 (a) IN GENERAL.—Subsection (d) of section 213, as 

20 amended by sections 501 and 502, is amended by adding 

21 at the end the following new paragraph: 

22 ‘‘(14) PERIODIC PROVIDER FEES.—The term 

23 ‘medical care’ shall include— 

24 ‘‘(A) periodic fees paid to a primary care 

25 physician for a defined set of medical services 


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1 or the right to receive medical services on an 

2 as-needed basis, and 

3 ‘‘(B) pre-paid primary care services de4 signed to screen for, diagnose, cure, mitigate, 

5 treat, or prevent disease and promote 

6 wellness.’’. 

7 (b) EXCEPTION FOR FLEXIBLE SPENDING AC8 COUNTS.—Section 125 is amended by redesignating sub9 sections (k) and (l) as subsections (l) and (m), respec10 tively, and by inserting after subsection (j) the following 

11 new subsection: 

12 ‘‘(k) SPECIAL RULE WITH RESPECT TO HEALTH

13 FLEXIBLE SPENDING ARRANGEMENTS.—For purposes of 

14 applying this with respect to any health flexible spending 

15 arrangement, amounts described in section 213(d)(14) 

16 shall not be considered insurance.’’. 

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to taxable years beginning after 

19 the date of the enactment of this Act. 

Æ 


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