I

103D CONGRESS

1ST SESSION H. R. 2367

To amend the Internal Revenue Code of 1986 to restore the deduction

for the health insurance costs of self-employed individuals, to provide

incentives for certain medical practitioners to practice in rural areas,

to provide for the creation of medical savings accounts, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 10, 1993

Mr. BAKER of Louisiana introduced the following bill; which was referred

jointly to the Committees on Ways and Means, Energy and Commerce,

and the Judiciary

A BILL

To amend the Internal Revenue Code of 1986 to restore

the deduction for the health insurance costs of self-employed individuals, to provide incentives for certain medical practitioners to practice in rural areas, to provide

for the creation of medical 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.

4 This Act may be cited as the ‘‘Health Care Accessibil5 ity Expansion Act of 1993’’.
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1 SEC. 2. FULL DEDUCTION FOR HEALTH INSURANCE COSTS

2 OF SELF-EMPLOYED INDIVIDUALS.

3 (a) DEDUCTION MADE PERMANENT.—

4 (1) IN GENERAL.—Subsection (l) of section 162

5 of the Internal Revenue Code of 1986 (relating to

6 special rules for health insurance costs of self-em7 ployed individuals) is amended by striking paragraph

8 (6).

9 (2) CONFORMING AMENDMENT.—Subsection (a)

10 of section 110 of the Tax Extension Act of 1991 is

11 amended by striking paragraph (2).

12 (3) EFFECTIVE DATE.—The amendments made

13 by this subsection shall apply to taxable years begin14 ning after December 31, 1991.

15 (b) DEDUCTION INCREASED TO 100 PERCENT.—

16 (1) IN GENERAL.—Paragraph (1) of section

17 162(l) of such Code is amended by striking ‘‘25 per18 cent’’ and inserting ‘‘100 percent’’.

19 (2) EFFECTIVE DATE.—The amendment made

20 by paragraph (1) shall apply to taxable years begin21 ning after December 31, 1993.

22 SEC. 3. CREDIT FOR MEDICAL PRACTITIONERS COMMENC23 ING MEDICAL PRACTICE IN RURAL AREAS.

24 (a) IN GENERAL.—Subpart A of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code of

26 1986 (relating to nonrefundable personal credits) is
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1 amended by inserting after section 22 the following new

2 section:

3 ‘‘SEC. 23. CERTAIN MEDICAL PRACTITIONERS COMMENC4 ING MEDICAL PRACTICE IN RURAL AREAS.

5 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli6 gible medical practitioner who commences a medical prac7 tice in a rural area, there is allowed as a credit against

8 the tax imposed by this subtitle for the taxable year during

9 which such commencement occurs, and for each of the 4

10 succeeding taxable years, an amount equal to $5,000.

11 ‘‘(b) LIMITATION.—No credit shall be allowed under

12 subsection (a) with respect to any taxable year in which

13 the taxpayer practices a medical practice in the rural area

14 for less than 9 months or ceases to practice a medical

15 practice in the rural area.

16 ‘‘(c) DEFINITIONS.—For purposes of this section—

17 ‘‘(1) ELIGIBLE MEDICAL PRACTITIONER.—The

18 term ‘eligible medical practitioner’ means any physi19 cian, nurse practitioner, or certified physician assist20 ant.

21 ‘‘(2) PHYSICIAN.—The term ‘physician’ means

22 a doctor of medicine or osteopathy legally authorized

23 to practice medicine and surgery by the State in

24 which such individual performs such function or ac25 tion.
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1 ‘‘(3) COMMENCES PRACTICE.—The term ‘com2 mences practice’ means the location or relocation of

3 an eligible medical practitioner’s principal place of

4 medical practice to a rural area. Such term does not

5 include the relocation of a practitioner’s medical

6 practice from 1 rural area to another rural area.

7 ‘‘(4) RURAL AREA.—The term ‘rural area’

8 means any area that is not within any metropolitan

9 statistical area (as defined by the Secretary of Com10 merce).

11 ‘‘(d) RECAPTURE OF CREDIT.—

12 ‘‘(1) IN GENERAL.—If, a taxpayer who is al13 lowed a credit under subsection (a) ceases medical

14 practice in a rural area during any taxable year,

15 then the tax of the taxpayer under this chapter for

16 such taxable year shall be increased by an amount

17 equal to the sum of the credits allowed under sub18 section (a) for the 5 preceding taxable years.

19 ‘‘(2) NO CREDITS AGAINST TAX.—Any increase

20 in tax under this subsection shall not be treated as

21 a tax imposed by this chapter for purposes of deter22 mining—

23 ‘‘(A) the amount of any credit under this

24 part, or
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1 ‘‘(B) the amount of the tax under section

2 55.’’

3 (b) CLERICAL AMENDMENT.—The table of sections

4 for subpart A of part IV of subchapter A of chapter 1

5 of such Code is amended by inserting after the item relat6 ing to section 22 the following new item:

‘‘Sec. 23. Certain medical practitioners commencing medical practice in rural areas.’’

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

8 this section shall apply to taxable years beginning after

9 December 31, 1993.

10 SEC. 4. DEDUCTION FOR MEDICAL SCHOOL EDUCATION

11 LOAN INTEREST INCURRED BY CERTAIN

12 MEDICAL PRACTITIONERS SERVING IN

13 RURAL AREAS.

14 (a) IN GENERAL.—Paragraph (1) of section 163(h)

15 of the Internal Revenue Code of 1986 (relating to dis16 allowance of deduction for personal interest) is amended

17 by striking ‘‘and’’ at the end of subparagraph (D), by re18 designating subparagraph (E) as subparagraph (F), and

19 by inserting after subparagraph (D) the following new

20 subparagraph:

21 ‘‘(E) any qualified medical education loan

22 interest (within the meaning of paragraph (5)),

23 and’’.
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1 (b) QUALIFIED MEDICAL EDUCATION LOAN INTER2 EST DEFINED.—Subsection (h) of section 163 of such

3 Code is amended by redesignating paragraph (5) as para4 graph (6) and by inserting after paragraph (4) the follow5 ing new paragraph:

6 ‘‘(5) QUALIFIED MEDICAL EDUCATION LOAN IN7 TEREST.—

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

9 medical education loan interest’ means inter10 est—

11 ‘‘(i) which is on a medical education

12 loan of an eligible medical practitioner (as

13 defined in section 23(c)),

14 ‘‘(ii) which is paid or accrued by such

15 practitioner, and

16 ‘‘(iii) which accrues during the period

17 during which the practitioner is eligible to

18 receive a credit under section 23(c).

19 ‘‘(B) MEDICAL EDUCATION LOAN.—The

20 term ‘medical education loan’ means indebted21 ness incurred to pay the individual’s—

22 ‘‘(i) qualified tuition and related ex23 penses (as defined in section 117(b)) in24 curred for the medical education of such

25 individual, or
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1 ‘‘(ii) reasonable living expenses while

2 away from home in order to attend an edu3 cational institution described in section

4 170(b)(1)(A)(ii) for the medical education

5 of such individual.

6 ‘‘(C) RURAL AREA.—The term ‘rural area’

7 means any area that is not within any metro8 politan statistical area (as defined by the Sec9 retary of Commerce).’’

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

11 this section shall apply to taxable years ending after the

12 date of the enactment of this Act.

13 SEC. 5. MEDICAL SAVINGS ACCOUNTS.

14 (a) IN GENERAL.—Part VII of subchapter B of chap15 ter 1 of the Internal Revenue Code of 1986 (relating to

16 additional itemized deductions for individuals) is amended

17 by redesignating section 220 as section 221 and by insert18 ing after section 219 the following new section:

19 ‘‘SEC. 220. MEDICAL SAVINGS ACCOUNTS.

20 ‘‘(a) DEDUCTION ALLOWED.—In the case of an eligi21 ble individual, there shall be allowed as a deduction

22 amounts paid in cash during the taxable year by or on

23 behalf of such individual to a medical savings account.

24 ‘‘(b) LIMITATION.—
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1 ‘‘(1) IN GENERAL.—The amount allowable as a

2 deduction under subsection (a) to an individual for

3 the taxable year shall not exceed the excess (if any)

4 of—

5 ‘‘(A) the lesser of—

6 ‘‘(i) the applicable limit, or

7 ‘‘(ii) the compensation (as defined in

8 section 219(f)) includible in the individ9 ual’s gross income for the taxable year,

10 over

11 ‘‘(B) the sum of—

12 ‘‘(i) the value of employer-provided

13 coverage for the medical expenses of such

14 individual, plus

15 ‘‘(ii) the aggregate amount contrib16 uted to such account during the taxable

17 year pursuant to section 125(d)(3).

18 ‘‘(2) APPLICABLE LIMIT.—For purposes of

19 paragraph (1), the applicable limit is the sum of—

20 ‘‘(A) $4,800, plus

21 ‘‘(B) $1,000 for each individual who is a

22 dependent (as defined in section 152) of the in23 dividual for whose benefit the account is estab24 lished.
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1 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section—

3 ‘‘(1) MEDICAL SAVINGS ACCOUNT.—The term

4 ‘medical savings account’ means a trust created or

5 organized in the United States exclusively for the

6 purpose of paying the qualified medical expenses of

7 the individual for whose benefit the trust is estab8 lished, but only if the written governing instrument

9 creating the trust meets the following requirements:

10 ‘‘(A) No contribution will be accepted un11 less it is in cash and contributions will not be

12 accepted for any taxable year in excess of the

13 applicable limit (as defined in subsection

14 (b)(2)).

15 ‘‘(B) The trustee is a bank (as defined in

16 section 408(n)) or another person who dem17 onstrates to the satisfaction of the Secretary

18 that the manner in which such person will ad19 minister the trust will be consistent with the re20 quirements of this section.

21 ‘‘(C) No part of the trust assets will be in22 vested in life insurance contracts.

23 ‘‘(D) The assets of the trust will not be

24 commingled with other property except in a
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1 common trust fund or common investment

2 fund.

3 ‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible

4 individual’ means any individual if—

5 ‘‘(A) such individual is not covered by any

6 employer-provided group health plan, or

7 ‘‘(B) such individual is covered by an em8 ployer-provided group health plan which is a

9 qualified catastrophic coverage health plan and

10 is not covered by any other health plan.

11 ‘‘(3) QUALIFIED MEDICAL EXPENSES.—

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

13 medical expenses’ means—

14 ‘‘(i) medical expenses, and

15 ‘‘(ii) amounts paid for qualified long16 term care insurance.

17 ‘‘(B) MEDICAL EXPENSES.—The term

18 ‘medical expenses’ means amounts paid by the

19 individual for whose benefit the account was es20 tablished for medical care (as defined in section

21 213) of such individual, the spouse of such indi22 vidual, and any dependent (as defined in section

23 152) of such individual, but only to the extent

24 such amounts are not compensated for by in25 surance or otherwise.
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1 ‘‘(C) QUALIFIED LONG-TERM CARE INSUR2 ANCE.—

3 ‘‘(i) IN GENERAL.—Subject to clauses

4 (i) and (ii), the term ‘qualified long-term

5 care insurance’ means insurance under a

6 policy or rider, which is issued by a quali7 fied issuer, which meets standards at least

8 as stringent as those set forth in the Janu9 ary 1990 Long-Term Care Insurance

10 Model Regulation of the National Associa11 tion of Insurance Commissioners, and

12 which is certified by the Secretary of

13 Health and Human Services (in accord14 ance with procedures similar to the proce15 dures prescribed in section 1882 of the So16 cial Security Act (42 U.S.C. 1385ss) used

17 in the certification of medicare supple18 mental policies (as defined in subsection

19 (g)(1) of such section)) to be advertised,

20 marketed, offered, or designed to provide

21 coverage—

22 ‘‘(I) for not less than 12 consecu23 tive months for each covered person

24 who has attained age 50,
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1 ‘‘(II) on an expense incurred, in2 demnity, or prepaid basis,

3 ‘‘(III) for 1 or more medically

4 necessary, diagnostic services, preven5 tive services, therapeutic services, re6 habilitation services, maintenance

7 services, or personal care services, and

8 ‘‘(IV) provided in a setting other

9 than an acute care unit of a hospital.

10 The requirement of subclause (IV) shall be

11 met only if at least 1 of the settings in

12 which such coverage is provided is the pa13 tient’s home.

14 ‘‘(ii) COVERAGE SPECIFICALLY EX15 CLUDED.—Such term does not include any

16 insurance under any policy or rider which

17 is offered primarily to provide any com18 bination of the following kinds of coverage:

19 ‘‘(I) Basic Medicare supplement

20 coverage.

21 ‘‘(II) Basic hospital-based acute

22 care expense coverage.

23 ‘‘(III) Basic medical-surgical ex24 pense coverage.
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1 ‘‘(IV) Hospital confinement in2 demnity coverage.

3 ‘‘(V) Major medical expense cov4 erage.

5 ‘‘(VI) Disability income protec6 tion coverage.

7 ‘‘(VII) Accident only coverage.

8 ‘‘(VIII) Specified disease cov9 erage.

10 ‘‘(IX) Specified accident cov11 erage.

12 ‘‘(X) Limited benefit health cov13 erage.

14 ‘‘(iii) QUALIFIED ISSUER.—For pur15 poses of clause (i), the term ‘qualified is16 suer’ means any of the following:

17 ‘‘(I) Private insurance company.

18 ‘‘(II) Fraternal benefit society.

19 ‘‘(III) Nonprofit health corpora20 tion.

21 ‘‘(IV) Nonprofit hospital corpora22 tion.

23 ‘‘(V) Nonprofit medical service

24 corporation.

25 ‘‘(VI) Prepaid health plan.
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1 ‘‘(4) QUALIFIED CATASTROPHIC COVERAGE

2 HEALTH PLAN.—The term ‘qualified catastrophic

3 coverage health plan’ means any health plan which

4 is certified by the Secretary of Health and Human

5 Services as a plan—

6 ‘‘(A) which provides no compensation for

7 medical expenses not exceeding $3,000 during

8 any year,

9 ‘‘(B) which requires the individual to pay

10 15 percent of such individual’s medical expenses

11 to the extent they exceed $3,000 but not

12 $9,000 during any year, and

13 ‘‘(C) which provides full reimbursement for

14 medical expenses exceeding $9,000.

15 ‘‘(5) TIME WHEN CONTRIBUTIONS DEEMED

16 MADE.—A taxpayer shall be deemed to have made a

17 contribution on the last day of the preceding taxable

18 year if the contribution is made on account of such

19 taxable year and is made not later than the time

20 prescribed by law for filing the return for such tax21 able year (not including extensions thereof).

22 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—

23 ‘‘(1) IN GENERAL.—Except as otherwise pro24 vided in this subsection, any amount paid or distrib25 uted out of a medical savings account shall be in-
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1 cluded in the gross income of the individual for

2 whose benefit such account was established unless

3 such amount is used exclusively to pay the qualified

4 medical expenses of such individual.

5 ‘‘(2) EXCESS CONTRIBUTIONS RETURNED BE6 FORE DUE DATE OF RETURN.—Paragraph (1) shall

7 not apply to the distribution of any contribution paid

8 during a taxable year to a medical savings account

9 to the extent that such contribution exceeds the

10 amount allowable as a deduction under subsection

11 (a) if—

12 ‘‘(A) such distribution is received on or be13 fore the day prescribed by law (including exten14 sions of time) for filing such individual’s return

15 for such taxable year,

16 ‘‘(B) no deduction is allowed under sub17 section (a) with respect to such excess contribu18 tion, and

19 ‘‘(C) such distribution is accompanied by

20 the amount of net income attributable to such

21 excess contribution.

22 Any net income described in subparagraph (C) shall

23 be included in the gross income of the individual for

24 the taxable year in which it is received.

25 ‘‘(e) TAX TREATMENT OF ACCOUNTS.—
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1 ‘‘(1) EXEMPTION FROM TAX.—A medical sav2 ings account is exempt from taxation under this sub3 title unless such account has ceased to be an invest4 ment savings account by reason of paragraph (2).

5 Notwithstanding the preceding sentence, any such

6 account is subject to the taxes imposed by section

7 511 (relating to imposition of tax on unrelated busi8 ness income of charitable, etc. organizations).

9 ‘‘(2) LOSS OF EXEMPTION OF ACCOUNT WHERE

10 INDIVIDUAL ENGAGES IN PROHIBITED TRANS11 ACTION.—

12 ‘‘(A) IN GENERAL.—If, during any taxable

13 year of the individual for whose benefit the

14 medical savings account was established, such

15 individual engages in any transaction prohibited

16 by section 4975 with respect to the account, the

17 account ceases to be a medical savings account

18 as of the first day of that taxable year.

19 ‘‘(B) ACCOUNT TREATED AS DISTRIBUTING

20 ALL ITS ASSETS.—In any case in which any ac21 count ceases to be a medical savings account by

22 reason of subparagraph (A) on the first day of

23 any taxable year, paragraph (1) of subsection

24 (d) applies as if there were a distribution on

25 such first day in an amount equal to the fair
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1 market value (on such first day) of all assets in

2 the account (on such first day).

3 ‘‘(3) EFFECT OF PLEDGING ACCOUNT AS SECU4 RITY.—If, during any taxable year, the individual for

5 whose benefit a medical savings account was estab6 lished uses the account or any portion thereof as se7 curity for a loan, the portion so used is treated as

8 distributed to that individual.

9 ‘‘(f) ADDITIONAL TAX ON CERTAIN AMOUNTS IN10 CLUDED IN GROSS INCOME.—

11 ‘‘(1) DISTRIBUTION NOT USED FOR QUALIFIED

12 MEDICAL EXPENSES.—If a distribution from a medi13 cal savings account is made, and not used to pay the

14 qualified medical expenses of the individual for

15 whose benefit the account was established, the tax li16 ability of such individual for the taxable year in

17 which such distribution is received shall be increased

18 by an amount equal to 10 percent of the amount of

19 the distribution which is includible in gross income

20 for such taxable year.

21 ‘‘(2) DISQUALIFICATION CASES.—If an amount

22 is includible in the gross income of an individual for

23 a taxable year under subsection (e), his tax under

24 this chapter for such taxable year shall be increased
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1 by an amount equal to 10 percent of such amount

2 includible in his gross income.

3 ‘‘(3) DISABILITY OR DEATH CASES.—Para4 graphs (1) and (2) do not apply if the payment or

5 distribution is made after the individual for whose

6 benefit the medical savings account was established

7 becomes disabled within the meaning of section

8 72(m)(7) or dies.

9 ‘‘(g) SPECIAL RULES.—

10 ‘‘(1) COMMUNITY PROPERTY LAWS.—This sec11 tion shall be applied without regard to any commu12 nity property laws.

13 ‘‘(2) CUSTODIAL ACCOUNTS.—For purposes of

14 this section, a custodial account shall be treated as

15 a trust if—

16 ‘‘(A) the assets of such account are held by

17 a bank (as defined in section 408(n)) or an18 other person who demonstrates to the satisfac19 tion of the Secretary that the manner in which

20 he will administer the account will be consistent

21 with the requirements of this section, and

22 ‘‘(B) the custodial account would, except

23 for the fact that it is not a trust, constitute a

24 medical savings account described in subsection

25 (c).
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1 For purposes of this title, in the case of a custodial

2 account treated as a trust by reason of the preceding

3 sentence, the custodian of such account shall be

4 treated as the trustee thereof.

5 ‘‘(3) DENIAL OF DEDUCTIONS.—No amount

6 paid or distributed from a medical savings account

7 shall be taken into account in determining the de8 duction provided by section 213.

9 ‘‘(h) INFLATION ADJUSTMENT.—

10 ‘‘(1) IN GENERAL.—In the case of any taxable

11 year beginning in a calendar year after 1994, each

12 applicable dollar amount shall be increased by an

13 amount equal to—

14 ‘‘(A) such dollar amount, multiplied by

15 ‘‘(B) the cost-of-living adjustment for the

16 calendar year in which the taxable year begins.

17 ‘‘(2) COST-OF-LIVING ADJUSTMENT.—For pur18 poses of paragraph (1), the cost-of-living adjustment

19 for any calendar year is the percentage (if any) by

20 which—

21 ‘‘(A) the deemed average total wages (as

22 defined in section 209(k) of the Social Security

23 Act) for the preceding calendar year, exceeds

24 ‘‘(B) the deemed average total wages (as

25 so defined) for calendar year 1993.
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1 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur2 poses of paragraph (1), the term ‘applicable dollar

3 amount’ means—

4 ‘‘(A) the $4,800 and $1,000 amounts in

5 subsection (b), and

6 ‘‘(B) the $3,000 and $9,000 amounts in

7 subsection (c)(4).

8 ‘‘(4) ROUNDING.—If any amount as adjusted

9 under paragraph (1) is not a multiple of $10, such

10 amount shall be rounded to the nearest multiple of

11 $10 (or, if such amount is a multiple of $5 and not

12 of $10, such amount shall be rounded to the next

13 highest multiple of $10).

14 ‘‘(i) REPORTS.—The trustee of a medical savings ac15 count shall make such reports regarding such account to

16 the Secretary and to the individual for whose benefit the

17 account is maintained with respect to contributions, dis18 tributions, and such other matters as the Secretary may

19 require under regulations. The reports required by this

20 subsection shall be filed at such time and in such manner

21 and furnished to such individuals at such time and in such

22 manner as may be required by those regulations.’’

23 (b) DEDUCTION ALLOWED IN ARRIVING AT AD24 JUSTED GROSS INCOME.—Paragraph (7) of section 62(a)
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1 of such Code (relating to retirement savings) is amend2 ed—

3 (1) by inserting ‘‘OR MEDICAL EXPENSE’’ after

4 ‘‘RETIREMENT’’ in the heading of such paragraph,

5 and

6 (2) by inserting before the period at the end

7 thereof the following: ‘‘and the deduction allowed by

8 section 220 (relating to deduction of certain pay9 ments to medical savings accounts)’’.

10 (c) TAX ON EXCESS CONTRIBUTIONS.—Section 4973

11 of such Code (relating to tax on excess contributions to

12 individual retirement accounts, certain section 403(b) con13 tracts, and certain individual retirement annuities) is

14 amended—

15 (1) by inserting ‘‘MEDICAL SAVINGS AC16 COUNTS,’’ after ‘‘ACCOUNTS,’’ in the heading of

17 such section,

18 (2) by redesignating paragraph (2) of sub19 section (a) as paragraph (3) and by inserting after

20 paragraph (1) the following:

21 ‘‘(2) a medical savings account (within the

22 meaning of section 220(c)),’’,

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

24 (1) of subsection (a), and
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1 (4) by adding at the end thereof the following

2 new subsection:

3 ‘‘(d) EXCESS CONTRIBUTIONS TO MEDICAL SAVINGS

4 ACCOUNTS.—For purposes of this section, in the case of

5 a medical savings account, the term ‘excess contributions’

6 means the amount by which the amount contributed for

7 the taxable year to the account exceeds the amount allow8 able as a deduction under section 220 for such taxable

9 year. For purposes of this subsection, any contribution

10 which is distributed out of the medical savings account

11 and a distribution to which section 220(d)(2) applies shall

12 be treated as an amount not contributed.’’

13 (d) TAX ON PROHIBITED TRANSACTIONS.—Section

14 4975 of such Code (relating to prohibited transactions)

15 is amended—

16 (1) by adding at the end of subsection (c) the

17 following new paragraph:

18 ‘‘(4) SPECIAL RULE FOR MEDICAL SAVINGS AC19 COUNTS.—An individual for whose benefit a medical

20 savings account is established shall be exempt from

21 the tax imposed by this section with respect to any

22 transaction concerning such account (which would

23 otherwise be taxable under this section) if, with re24 spect to such transaction, the account ceases to be
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1 a medical savings account by reason of the applica2 tion of section 220(e)(2)(A) to such account.’’, and

3 (2) by inserting ‘‘or a medical savings account

4 described in section 220(c)’’ in subsection (e)(1)

5 after ‘‘described in section 408(a)’’.

6 (e) FAILURE TO PROVIDE REPORTS ON MEDICAL

7 SAVINGS ACCOUNTS.—Section 6693 of such Code (relat8 ing to failure to provide reports on individual retirement

9 account or annuities) is amended—

10 (1) by inserting ‘‘OR ON MEDICAL SAVINGS

11 ACCOUNTS’’ after ‘‘ANNUITIES’’ in the heading of

12 such section, and

13 (2) by adding at the end of subsection (a) the

14 following: ‘‘The person required by section 220(i) to

15 file a report regarding a medical savings account at

16 the time and in the manner required by such section

17 shall pay a penalty of $50 for each failure unless it

18 is shown that such failure is due to reasonable

19 cause.’’

20 (f) CLERICAL AMENDMENTS.—

21 (1) The table of sections for part VII of sub22 chapter B of chapter 1 of such Code is amended by

23 striking the item relating to section 220 and insert24 ing the following:

‘‘Sec. 220. Medical savings accounts.

‘‘Sec. 221. Cross reference.’’
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1 (2) The table of sections for chapter 43 of such

2 Code is amended by striking the item relating to sec3 tion 4973 and inserting the following:

‘‘Sec. 4973. Tax on excess contributions to individual retirement

accounts, medical savings accounts, certain 403(b)

contracts, and certain individual retirement annuities.’’

4 (3) The table of sections for subchapter B of

5 chapter 68 of such Code is amended by inserting ‘‘or

6 on medical savings accounts’’ after ‘‘annuities’’ in

7 the item relating to section 6693.

8 (g) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to taxable years beginning after

10 December 31, 1993.

11 SEC. 6. UNUSED AMOUNTS IN FLEXIBLE SPENDING AC12 COUNTS TRANSFERABLE TO MEDICAL SAV13 INGS ACCOUNTS.

14 (a) IN GENERAL.—Subsection (d) of section 125 of

15 the Internal Revenue Code of 1986 (relating to cafeteria

16 plans) is amended by adding at the end thereof the follow17 ing new paragraph:

18 ‘‘(3) UNUSED AMOUNTS TRANSFERABLE TO

19 MEDICAL SAVINGS ACCOUNTS.—

20 ‘‘(A) IN GENERAL.—Subsection (a) shall

21 not fail to apply to a participant in a plan, and

22 a plan shall not fail to be treated as a cafeteria

23 plan, solely because under the plan amounts not
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1 paid out as reimbursements under a flexible

2 spending arrangement for health and disability

3 for the benefit of an individual are contributed

4 to a medical savings account (as defined in sec5 tion 220(c)) for the benefit of such individual.

6 ‘‘(B) SPECIAL RULES.—

7 ‘‘(i) TIMING OF CONTRIBUTIONS.—

8 Contributions made under this paragraph

9 shall be made on the last day of the plan

10 year of the cafeteria plan.

11 ‘‘(ii) AVAILABILITY REQUIREMENT.—

12 Subparagraph (A) shall apply only if the

13 plan is available to at least 80 percent of

14 the employees of the employer. For pur15 poses of the preceding sentence, there shall

16 be excluded employees who are excluded

17 under section 414(q)(8) or who would be

18 so excluded if ‘30’ were substituted for

‘171 19 ⁄2’ in subparagraph (B) thereof.’’

20 (b) TREATMENT OF AMOUNTS RECEIVED BY QUALI21 FIED CASH OR DEFERRED ARRANGEMENT.—

22 (1) Paragraph (2) of section 401(k) of such

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

24 subparagraph (C), by striking the period at the end

25 of subparagraph (D) and inserting ‘‘, and’’, and by
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1 adding at the end thereof the following new sub2 paragraph:

3 ‘‘(E) which provides that, with respect to

4 amounts held by the trust which are attrib5 utable to contributions made to the trust pursu6 ant to section 125(d)(3)—

7 ‘‘(i) an employee’s right to such

8 amounts is nonforfeitable, and

9 ‘‘(ii) such amounts may be used only

10 to pay expenses (not compensated for by

11 insurance or otherwise) for the medical

12 care (as defined in section 213) of the em13 ployee, the spouse of the employee, or any

14 dependent (as defined in section 152) of

15 the employee.’’

16 (2) Subsection (k) of section 401 of such Code

17 is amended by adding at the end thereof the follow18 ing new paragraph:

19 ‘‘(11) TREATMENT OF AMOUNTS RECEIVED

20 FROM MEDICAL SAVINGS ARRANGEMENTS.—Con21 tributions made to a trust by reason of section

22 125(d)(3) shall not be taken into account under

23 paragraph (3)(A)(ii), and subsection (l) shall not

24 apply to such contributions.’’
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1 (c) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to taxable years beginning after

3 December 31, 1993.

4 SEC. 7. VOUCHERS FOR INDIVIDUALS ELIGIBLE TO PAR5 TICIPATE IN MEDICAL SAVINGS ACCOUNTS.

6 (a) IN GENERAL.—

7 (1) ESTABLISHMENT OF PROGRAM.—The Sec8 retary of the Treasury shall establish a program

9 under which eligible individuals may obtain health

10 insurance vouchers to be used during such taxable

11 year to make payments for qualified medical ex12 penses.

13 (2) DEFINITIONS.—In this section, the terms

14 ‘‘eligible individuals’’ and ‘‘qualified medical ex15 penses’’ have the meaning given such terms in sec16 tion 220(c) of the Internal Revenue Code of 1986

17 (as added by section 5(a)).

18 (b) USE OF DESIGNATED STATE AGENCIES.—Under

19 the program established pursuant to subsection (a), each

20 State shall enter into an agreement with the Secretary of

21 the Treasury under which an agency designated by the

22 State shall—

23 (1) receive applications from individuals resid24 ing in the State for vouchers described in subsection

25 (a);
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1 (2) using forms provided by the Secretary, de2 termine whether the individual is likely to be consid3 ered an eligible individual under such subsection;

4 (3) if the agency determines that an individual

5 is likely to be considered such an eligible individual

6 for such taxable year, issue the individual a health

7 insurance voucher the value of which is equal to 50

8 percent of the agency’s best estimate of the total

9 contributions to the individual’s medical savings ac10 count (as described in section 220 of the Internal

11 Revenue Code of 1986) that will be available for

12 payments for qualified medical expenses for such

13 taxable year; and

14 (4) submit regular reports notifying the Sec15 retary of those individuals in the State to whom

16 such health insurance vouchers are issued during the

17 year and the value of such vouchers.

18 (c) APPLICATION PROCESS.—Each individual may

19 apply for 2 health insurance vouchers for a taxable year,

20 at 6-month intervals (or at such other intervals as may

21 be prescribed). In order to obtain a health insurance

22 voucher, an individual shall submit to the designated agen23 cy of the State in which the individual resides an applica24 tion (at such time and in such form as the State and the
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1 Secretary may require) containing such information and

2 assurances as the State and the Secretary may require.

3 (d) APPLICATION AGAINST COSTS OF QUALIFIED

4 MEDICAL EXPENSES.—A health insurance voucher issued

5 to an individual pursuant to this section for a year may

6 be presented to an entity in full or partial payment of the

7 entity’s charges for the individual for qualified medical ex8 penses during the year. If an individual presents the entity

9 with such a voucher, the entity shall accept the voucher

10 toward payment of the entity’s charges for the individual

11 for the year.

12 (e) PAYMENT TO PROVIDERS.—

13 (1) AMOUNT.—Except as otherwise provided in

14 this paragraph, an entity providing services for

15 which an eligible individual incurs qualified medical

16 expenses shall be entitled, upon presentation to the

17 Secretary (or his designee) of an individual’s voucher

18 and of information used by the entity to determine

19 the individual’s applicable charges, to payment in

20 the amount of the voucher.

21 (2) CHARGES LESS THAN VOUCHER AMOUNT.—

22 If the amount of a voucher issued to an individual

23 pursuant to this subsection is greater than the

24 amount of the individual’s applicable charges, the

25 entity shall be entitled to payment under paragraph
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1 (1) only in the amount of the individual’s applicable

2 charges.

3 (3) OFFSETTING PAYMENTS.—If an entity has

4 received prepayment of an individual’s applicable

5 charges for any period for which the individual’s

6 voucher is in effect, the amount of the payment to

7 which the entity is otherwise entitled under para8 graph (1) shall be reduced to the extent of such

9 charges paid.

10 (4) ACCEPTANCE OF CERTAIN IMPROPER

11 VOUCHERS.—The Secretary may not deny payment

12 under paragraph (1) to an entity because a voucher

13 presented for payment was erroneously issued, im14 properly transferred, forged, counterfeited, or other15 wise invalid, unless the entity had knowledge of such

16 invalidity at the time of its acceptance of the vouch17 er.

18 (f) REFUNDABLE CREDIT TO PROVIDERS.—Subpart

19 C of part IV of subchapter A of chapter 1 of such Code

20 (relating to refundable credits) is amended by redesignat21 ing section 35 as section 36 and by inserting after section

22 34 the following new section:

23 ‘‘SEC. 35. HEALTH INSURANCE VOUCHERS.

24 ‘‘There shall be allowed as a credit against the tax

25 imposed by this subtitle an amount equal to the aggregate
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1 amount of vouchers received during the taxable year pur2 suant to section 7(a) of the Health Care Accessibility Ex3 pansion Act of 1993 as payment for providing services for

4 which individuals incur qualified medical expenses (as

5 such terms are defined under such section).’’.

6 SEC. 8. JOINT USE OF HIGH TECHNOLOGY EQUIPMENT AND

7 SERVICES BY HOSPITALS.

8 (a) WAIVER OF ANTITRUST LAWS.—

9 (1) IN GENERAL.—Notwithstanding any provi10 sion of the antitrust laws, it shall not be considered

11 a violation of the antitrust laws for hospitals to

12 jointly undertake, in the provision of care, the pur13 chasing, contracting for, or sharing of high tech14 nology equipment and services.

15 (2) ANTITRUST LAWS DEFINED.—For purposes

16 of this subsection, the term ‘‘antitrust laws’’

17 means—

18 (A) the Act entitled ‘‘An Act to protect

19 trade and commerce against unlawful restraints

20 and monopolies’’, approved July 2, 1890, com21 monly known as the ‘‘Sherman Act’’ (26 Stat.

22 209; chapter 647; 15 U.S.C. 1 et seq.);

23 (B) the Federal Trade Commission Act,

24 approved September 26, 1914 (38 Stat. 717;

25 chapter 311; 15 U.S.C. 41 et seq.);
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1 (C) the Act entitled ‘‘An Act to supple2 ment existing laws against unlawful restraints

3 and monopolies, and for other purposes’’, ap4 proved October 15, 1914, commonly known as

5 the ‘‘Clayton Act’’ (38 Stat. 730; chapter 323;

6 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

7 3285, 3691; 29 U.S.C. 52, 53); and

8 (D) any State antitrust laws that would

9 prohibit the activities described in subsection

10 (a).

11 (b) GRANTS.—Title VI of the Public Health Service

12 Act (42 U.S.C. 291 et seq.) is amended—

13 (1) by redesignating part D as part E; and

14 (2) by inserting after section 633 the following

15 new part:

16 ‘‘PART D—EQUIPMENT AND SERVICES

17 ‘‘SEC. 637. HIGH TECHNOLOGY EQUIPMENT AND SERVICES.

18 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab19 lish and carry out demonstration projects to assist hos20 pitals in acquiring and sharing high technology equipment

21 and services. In carrying out the demonstration projects,

22 the Secretary shall make grants to States for the purpose

23 of paying the Federal share of the costs of assisting hos24 pitals to jointly purchase, contract for, or share high tech-
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1 nology equipment and services in order to eliminate unnec2 essary duplication of the equipment and services.

3 ‘‘(b) AWARD OF GRANTS.—The Secretary shall allo4 cate grants under this section in accordance with criteria

5 prescribed by the Secretary.

6 ‘‘(c) DURATION OF GRANTS.—Grants made under

7 this section may be made for periods not to exceed 3 years.

8 ‘‘(d) APPLICATION.—To be eligible to receive a grant

9 under this section, a State, acting through the appropriate

10 State health authority, shall submit an application at such

11 time, in such manner, and containing such agreements,

12 assurances, and information as the Secretary determines

13 necessary to carry out this section. At a minimum, the

14 application shall include—

15 ‘‘(1) a State plan that describes the manner in

16 which the State health authority will assist hospitals

17 in undertaking the joint activities described in sub18 section (a);

19 ‘‘(2) a description of the criteria and procedures

20 the State health authority will use to select hospitals

21 to be assisted under this section; and

22 ‘‘(3) an assurance that the State will provide 50

23 percent of the cost of the demonstration project

24 from non-Federal funds.
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1 ‘‘(e) FEDERAL SHARE.—The Federal share of the

2 cost of carrying out any State plan under this section shall

3 be 50 percent.

4 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

5 are authorized to be appropriated to carry out this section

6 such sums as may be necessary for each of the 1993

7 through 1996 fiscal years.’’.

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