Health Savings Account Expansion Act of 2019

To amend the Internal Revenue Code of 1986 to expand the permissible use of health savings accounts to include health insurance payments and to increase the dollar limitation for contributions to health savings accounts, and for other purposes. 1. Short title This Act may be cited as the Health Savings Account Expansion Act of 2019 2. Adequate funds for health insurance plans (a) In general Section 223(b)(1) the sum of the monthly eligible individual $9,000 (twice such amount in the case of a joint return) (b) Conforming amendments (1) Subsection (b) of such Code is amended by striking paragraphs (2), (3), and (5) and by redesignating paragraphs (4), (6), (7), and (8) as paragraphs (2), (3), (4), and (5), respectively. (2) Section 223(b)(2) of such Code (as redesignated by paragraph (1)) is amended by striking the last sentence. (3) Section 223(b)(4) of such Code (as redesignated by paragraph (1)) is amended to read as follows: (4) Medicare eligible individuals The limitation under this subsection for any taxable year with respect to an individual shall— (A) in the case of the first taxable year in which such individual is entitled to benefits under title XVIII of the Social Security Act, be the amount which bears the same proportion to the amount in effect under paragraph (1) with respect to such individual as— (i) the number of months in the taxable year during which such individual was not so entitled, bears to (ii) 12, and (B) be zero for any taxable year thereafter. . (4) Section 223(g)(1) of such Code is amended— (A) in the matter preceding subparagraph (A) by striking Each dollar amount in subsection (b)(2) In the case of taxable years beginning after December 31, 2019, the dollar amount in subsection (b)(1) (B) by amending subparagraph (B) to read as follows: (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins determined by substituting calendar year 2018 calendar year 2016 . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2019. 3. Parity with employer-provided health insurance; direct primary care (a) In general Section 223(d)(2) (2) Qualified medical expenses (A) In general The term qualified medical expenses (B) Direct primary care (i) In general Such term includes expenses for direct primary care service arrangements. (ii) Direct primary care service arrangements For purposes of clause (i), the term direct primary care service arrangements . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2019. 4. Freedom from mandate (a) In general Section 223 (b) Conforming amendments (1) Subsection (a) of section 223 of such Code is amended to read as follows: (a) Deduction allowed In the case of an individual, there shall be allowed as a deduction for a taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a health savings account of such individual. . (2) Subsection (b) of section 223 of such Code (as amended by section 2) is amended by striking paragraph (5). (3) Section 223(c)(1)(A) of such Code (as redesignated by subsection (a)) is amended— (A) by striking subsection (f)(5) subsection (e)(5) (B) in clause (ii) by striking the sum of— the dollar amount in effect under subsection (b)(1). (4) Section 223(f)(1) of such Code (as redesignated by subsection (a)) is amended by striking subsections (b)(1) and (c)(2)(A) subsection (b)(1) (5) Section 26(b)(2)(U) of such Code is amended by striking section 223(f)(4) section 223(e)(4) (6) Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(v), 4973(a)(5), and 6051(a)(12) of such Code are each amended by striking section 223(d) section 223(c) (7) Section 106(d)(1) of such Code is amended— (A) by striking who is an eligible individual (as defined in section 223(c)(1)) (B) by striking section 223(d) section 223(c) (8) Section 408(d)(9) of such Code is amended— (A) in subparagraph (A) by striking who is an eligible individual (as defined in section 223(c)) and (B) in subparagraph (C) by striking computed on the basis of the type of coverage under the high deductible health plan covering the individual at the time of the qualified HSA funding distribution (9) Section 877A(g)(6) of such Code is amended by striking 223(f)(4) 223(e)(4) (10) Section 4973(g) of such Code is amended— (A) by striking section 223(d) section 223(c) (B) in paragraph (2), by striking section 223(f)(2) section 223(e)(2) (C) by striking section 223(f)(3) section 223(e)(3) (11) Section 4975 of such Code is amended— (A) in subsection (c)(6)— (i) by striking section 223(d) section 223(c) (ii) by striking section 223(e)(2) section 223(d)(2) (B) in subsection (e)(1)(E), by striking section 223(d) section 223(c) (12) Section 6693(a)(2)(C) of such Code is amended by striking section 223(h) section 223(g) (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2019. 5. Restoring lower penalty for nonqualified distributions (a) HSAs Section 223(e)(4)(A) 20 percent 10 percent (b) Effective date The amendment made by this section shall apply to distributions made in taxable years beginning after December 31, 2019.

Summary: Health Savings Account Expansion Act of 2019 This bill modifies the requirements for health savings accounts (HSAs) to: increase the maximum contribution amounts, permit the use of HSAs to pay health insurance premiums and for direct primary care service arrangements, repeal the restriction on using HSAs for over-the-counter medications, eliminate the requirement that a participant in an HSA be enrolled in a high deductible health care plan, and decrease the additional tax for HSA distributions not used for qualified medical expenses.