IB 
Union Calendar No. 653 
115TH CONGRESS 
2D SESSION 
H. R. 6305 
[Report No. 115–844] 
To amend the Internal Revenue Code of 1986 to improve access to health 
care through modernized health savings accounts. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 3, 2018 
Mr. KELLY of Pennsylvania (for himself and Mr. BLUMENAUER) introduced 
the following bill; which was referred to the Committee on Ways and Means 
JULY 19, 2018 
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 July 3, 2018] 
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A BILL 
To amend the Internal Revenue Code of 1986 to improve 
access to health care through modernized health savings 
accounts. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Bipartisan HSA Im-
provement Act of 2018’’. 
SEC. 2. CERTAIN EMPLOYMENT RELATED SERVICES NOT 
TREATED AS DISQUALIFYING COVERAGE FOR 
PURPOSES OF HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Section 223(c)(1) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph: 
‘‘(D) SPECIAL RULE FOR QUALIFIED ITEMS 
AND SERVICES.— 
‘‘(i) IN GENERAL.—An individual shall 
not be treated as covered under a health 
plan for purposes of subparagraph (A)(ii) 
merely because the individual, in connection 
with the employment of the individual or 
the individual’s spouse, receives (or is eligi-
ble to receive) qualified items and services 
at— 
‘‘(I) a healthcare facility located 
at a facility owned or leased by the 
employer of the individual (or of the 
individual’s spouse), or operated pri-
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marily for the benefit of such employ-
er’s employees, or 
‘‘(II) a healthcare facility located 
within a supermarket, pharmacy, or 
similar retail establishment. 
‘‘(ii) QUALIFIED ITEMS AND SERVICES 
DEFINED.—For purposes of this subpara-
graph, the term ‘qualified items and serv-
ices’ means the following: 
‘‘(I) Physical examinations. 
‘‘(II) Immunizations, including 
injections of antigens provided by em-
ployees. 
‘‘(III) Drugs other than a pre-
scribed drug (as such term is defined 
in section 213(d)(3)). 
‘‘(IV) Treatment for injuries oc-
curring in the course of employment. 
‘‘(V) Drug testing, if required as a 
condition of employment. 
‘‘(VI) 
Hearing 
or 
vision 
screenings. 
‘‘(VII) Other similar items and 
services that do not provide significant 
benefits in the nature of medical care. 
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‘‘(iii) AGGREGATION.—For purposes of 
clause (i)(I), all persons treated as a single 
employer under subsection (b), (c), (m), or 
(o) of section 414 shall be treated as a single 
employer.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to months beginning after December 31, 
2018, in taxable years ending after such date. 
SEC. 3. CONTRIBUTIONS PERMITTED IF SPOUSE HAS A 
HEALTH FLEXIBLE SPENDING ACCOUNT. 
(a) CONTRIBUTIONS PERMITTED IF SPOUSE HAS A 
HEALTH
FLEXIBLE
SPENDING
ACCOUNT.—Section 
223(c)(1)(B) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘and’’ at the end of clause (ii), by 
striking the period at the end of clause (iii) and inserting 
‘‘, and’’, and by inserting after clause (iii) the following 
new clause: 
‘‘(iv) coverage under a health flexible 
spending arrangement of the spouse of the 
individual for any plan year of such ar-
rangement if the aggregate reimbursements 
under such arrangement for such year do 
not exceed the aggregate expenses which 
would be eligible for reimbursement under 
such arrangement if such expenses were de-
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termined without regard to any expenses 
paid or incurred with respect to such indi-
vidual.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to plan years beginning after December 
31, 2018. 
SEC. 4. FSA AND HRA TERMINATIONS OR CONVERSIONS TO 
FUND HSAS. 
(a) IN GENERAL.—Section 106(e)(2) of the Internal 
Revenue Code of 1986 is amended to read as follows: 
‘‘(2) QUALIFIED HSA DISTRIBUTION.—For pur-
poses of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
HSA distribution’ means, with respect to any 
employee, a distribution from a health flexible 
spending arrangement or health reimbursement 
arrangement of such employee directly to a 
health savings account of such employee if— 
‘‘(i) such distribution is made in con-
nection with such employee establishing cov-
erage under a high deductible health plan 
(as defined in section 223(c)(2)) after a sig-
nificant period of not having such coverage, 
and 
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‘‘(ii) such arrangement is described in 
section 223(c)(1)(B)(iii) with respect to the 
portion of the plan year after such distribu-
tion is made. 
‘‘(B) DOLLAR LIMITATION.—The aggregate 
amount of distributions from health flexible 
spending arrangements and health reimburse-
ment arrangements of any employee which may 
be treated as qualified HSA distributions in con-
nection with an establishment of coverage de-
scribed in subparagraph (A)(i) shall not exceed 
the dollar amount in effect under section 
125(i)(1) (twice such amount in the case of cov-
erage 
which 
is 
described 
in 
section 
223(b)(2)(B)).’’. 
(b) PARTIAL REDUCTION OF LIMITATION ON DEDUCT-
IBLE HSA CONTRIBUTIONS.—Section 223(b)(4) of such 
Code is amended by striking ‘‘and’’ at the end of subpara-
graph (B), by striking the period at the end of subpara-
graph (C) and inserting ‘‘, and’’, and by inserting after 
subparagraph (C) the following new subparagraph: 
‘‘(D) so much of any qualified HSA dis-
tribution (as defined in section 106(e)(2)) made 
to a health savings account of such individual 
during the taxable year as does not exceed the 
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aggregate increases in the balance of the arrange-
ment from which such distribution is made 
which occur during the portion of the plan year 
which precedes such distribution (other than any 
balance carried over to such plan year and deter-
mined without regard to any decrease in such 
balance during such portion of the plan year).’’. 
(c) CONVERSION TO HSA-COMPATIBLE ARRANGEMENT 
FOR
REMAINDER
OF
PLAN
YEAR.—Section 
223(c)(1)(B)(iii) of such Code, as amended by the preceding 
provisions of this Act, is amended to read as follows: 
‘‘(iii) coverage under a health flexible 
spending arrangement or health reimburse-
ment arrangement for the portion of the 
plan year after a qualified HSA distribu-
tion (as defined in section 106(e)(2) deter-
mined without regard to subparagraph 
(A)(ii) thereof) is made, if the terms of such 
arrangement which apply for such portion 
of the plan year are such that, if such terms 
applied for the entire plan year, then such 
arrangement would not be taken into ac-
count under subparagraph (A)(ii) of this 
paragraph for such plan year, and’’. 
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(d) INCLUSION OF QUALIFIED HSA DISTRIBUTIONS 
ON W–2.— 
(1) IN GENERAL.—Section 6051(a) of such Code 
is amended by striking ‘‘and’’ at the end of para-
graph (16), by striking the period at the end of para-
graph (17) and inserting ‘‘, and’’, and by inserting 
after paragraph (17) the following new paragraph: 
‘‘(18) the amount of any qualified HSA distribu-
tion (as defined in section 106(e)(2)) with respect to 
such employee.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6051(a)(12) of such Code is amended by inserting 
‘‘(other than any qualified HSA distribution, as de-
fined in section 106(e)(2))’’ before the comma at the 
end. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to distributions made after December 31, 
2018, in taxable years ending after such date. 
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Union Calendar No. 653 
115TH CONGRESS 
2D SESSION 
H. R. 6305 
[Report No. 115–844] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
improve access to health care through modern-
ized health savings accounts. 
JULY 19, 2018 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
VerDate Sep 11 2014 
21:43 Jul 19, 2018
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