I 
115TH CONGRESS 
1ST SESSION H. R. 1072 
To repeal provisions of the Patient Protection and Affordable Care Act 
and provide private health insurance reform, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 15, 2017 
Mr. SANFORD (for himself, Mr. DUNCAN of South Carolina, Mr. MEADOWS, 
Mr. GOSAR, Mr. GARRETT, and Mr. MOONEY of West Virginia) intro-
duced the following bill; which was referred to the Committee on Energy 
and Commerce, and in addition to the Committees on Ways and Means, 
Education and the Workforce, and the Judiciary, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To repeal provisions of the Patient Protection and Affordable 
Care Act and provide private health insurance reform, 
and for other purposes. 
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 ‘‘Obamacare Replace-
ment Act’’. 
SEC. 2. TABLE OF CONTENTS. 
The table of contents for this Act is as follows: 
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Sec. 1. Short title. 
Sec. 2. Table of contents. 
TITLE I—REPEALS 
Sec. 101. Repeal of individual and employer mandates. 
Sec. 102. Repeal of Public Health Service Act provisions. 
Sec. 103. Repeal of Patient Protection and Affordable Care Act provisions. 
Sec. 104. Conforming and technical amendments. 
TITLE II—TAXATION REFORM 
Subtitle A—Equalizing Tax Treatment of Non-Employer Provided Health 
Insurance 
Sec. 201. Tax deduction for health insurance premiums. 
Sec. 202. Refundable tax credit for payroll taxes attributable to health insur-
ance premiums. 
Subtitle B—Health Savings Accounts 
Sec. 211. Repeal of contribution limitations. 
Sec. 212. Freedom from mandate. 
Sec. 213. Allowance of distributions for prescription and over-the-counter medi-
cines and drugs. 
Sec. 214. Purchase of health insurance from HSA. 
Sec. 215. Special rule for certain medical expenses incurred before establish-
ment of account. 
Sec. 216. Administrative error correction before due date of return. 
Sec. 217. Allowing HSA rollover to child or parent of account holder. 
Sec. 218. Credit for contributions to an HSA. 
Sec. 219. Equivalent bankruptcy protections for health savings accounts as re-
tirement funds. 
Sec. 220. Distributions for abortion expenses from health savings accounts in-
cluded in gross income. 
Subtitle C—Medical Expenses 
Sec. 221. Certain exercise equipment and physical fitness programs treated as 
medical care. 
Sec. 222. Certain nutritional and dietary supplements to be treated as medical 
care. 
Sec. 223. Certain provider fees to be treated as medical care. 
Sec. 224. Clarification of treatment of capitated primary care payments as 
amounts paid for medical care. 
Subtitle D—Miscellaneous 
Sec. 231. Contributions of medicare beneficiaries participating in medicare ad-
vantage MSA. 
Sec. 232. Physician charity and uncompensated care deduction. 
TITLE III—INDIVIDUAL HEALTH INSURANCE REFORM 
Sec. 301. Pool reform for individual membership expansion. 
Sec. 302. Cooperative governing of individual health insurance coverage. 
TITLE IV—ASSOCIATION HEALTH PLANS 
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Sec. 401. Rules governing association health plans. 
Sec. 402. Clarification of treatment of single employer arrangements. 
Sec. 403. Enforcement provisions relating to association health plans. 
Sec. 404. Cooperation between Federal and State authorities. 
Sec. 405. Effective date and transitional and other rules. 
TITLE V—MEDICAID REFORM 
Sec. 501. Increasing State flexibility to conduct Medicaid waivers. 
TITLE VI—MISCELLANEOUS PROVISIONS 
Sec. 601. Certain medical stop-loss insurance obtained by certain plan sponsors 
of group health plans not included under the definition of 
health insurance coverage. 
Sec. 602. Restoring the application of antitrust laws to health sector insurers. 
TITLE I—REPEALS 
SEC. 101. REPEAL OF INDIVIDUAL AND EMPLOYER MAN-
DATES. 
(a) REPEAL
OF INDIVIDUAL MANDATE.—Section 
5000A of the Internal Revenue Code of 1986 is amended 
by adding at the end the following: 
‘‘(h) TERMINATION.—This section shall not apply 
with respect to any month beginning after the date of en-
actment of the Obamacare Replacement Act.’’. 
(b) REPEAL
OF
EMPLOYER
MANDATE.—Section 
4980H of the Internal Revenue Code of 1986 is amended 
by adding at the end the following: 
‘‘(e) TERMINATION.—This section shall not apply 
with respect to any month beginning after the date of en-
actment of the Obamacare Replacement Act.’’. 
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SEC. 102. REPEAL OF PUBLIC HEALTH SERVICE ACT PROVI-
SIONS. 
(a) REPEAL.—The following provisions of title 
XXVII of the Public Health Service Act (42 U.S.C. 300gg 
et seq.) are repealed: 
(1) Section 2701 (42 U.S.C. 300gg). 
(2) Section 2702 (42 U.S.C. 300gg–1). 
(3) Section 2703 (42 U.S.C. 300gg–2). 
(4) Section 2704 (42 U.S.C. 300gg–3). 
(5) Section 2705 (42 U.S.C. 300gg–4). 
(6) Section 2707 (42 U.S.C. 300gg–6). 
(7) Section 2708 (42 U.S.C. 300gg–7). 
(8) Section 2711 (42 U.S.C. 300gg–11). 
(9) Section 2712 (42 U.S.C. 300gg–12). 
(10) Section 2713 (42 U.S.C. 300gg–13). 
(11) Section 2715 (42 U.S.C. 300gg–15). 
(12) Section 2715A (42 U.S.C. 300gg–15a). 
(13) Section 2716 (42 U.S.C. 300gg–16). 
(14) Section 2718 (42 U.S.C. 300gg–18). 
(15) Section 2719 (42 U.S.C. 300gg–19). 
(16) Section 2719A (42 U.S.C. 300gg–19a). 
(17) Section 2794 (42 U.S.C. 300gg–94), relat-
ing to ensuring that consumers get value for their 
dollars. 
(b) 
REINSTATING
PRE-PPACA 
LAW.—Sections 
2701, 2702, 2711, and 2712 of the Public Health Service 
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Act as in effect on the day before the date of enactment 
of the Patient Protection and Affordable Care Act (Public 
Law 111–148) shall be restored or revived as if such Act 
had not been enacted (subject to paragraphs (1), (2), (6), 
and (7) of subsection (c)). 
(c) REDESIGNATIONS
AND TRANSFERS.—The fol-
lowing provisions of title XXVII of the Public Health Serv-
ice Act (42 U.S.C. 300gg et seq.) shall be redesignated 
and transferred as follows: 
(1) Section 2701, as restored or revived under 
subsection (b), shall be transferred so as to appear 
as the first section in subpart I of part A. 
(2) Section 2702, as restored or revived under 
subsection (b), shall be transferred so as to appear 
after such section 2701. 
(3) Section 2706 (42 U.S.C. 300gg–5) shall be 
redesignated as section 2703 and transferred so as 
to appear after such section 2702. 
(4) Section 2709 (42 U.S.C. 300gg–8), relating 
to coverage for individuals participating in approved 
clinical trials, shall be redesignated as section 2704 
and transferred so as to appear after section 2703 
(as so redesignated). 
(5) Section 2709 (42 U.S.C. 300gg–9), relating 
to disclosure of information, shall be redesignated as 
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section 2705 and transferred so as to appear after 
section 2704 (as so redesignated). 
(6) Section 2711, as restored or revived under 
subsection (b), shall be redesignated as section 2706 
and transferred so as to appear after section 2705 
(as so redesignated). 
(7) Section 2712, as restored or revived under 
subsection (b), shall be redesignated as section 2707 
and transferred so as to appear after section 2706 
(as so redesignated). 
(8) Section 2714 (42 U.S.C. 300gg–14) shall be 
redesignated as section 2711 and transferred so as 
to appear as the first section under subpart II of 
part A. 
(9) Section 2717 (42 U.S.C. 300gg–17) shall be 
redesignated as section 2712 and transferred so as 
to appear after section 2711 (as so redesignated). 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the repeals under subsection (a) shall 
take effect on the date of enactment of this Act and 
shall apply to plan years beginning after such date 
of enactment. 
(2) DELAYED EFFECTIVE DATES.—The repeals 
under paragraphs (2), (3), (4), and (5) of subsection 
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(a), the provisions restored or revived under sub-
section (b), and the conforming amendment in sec-
tion 104(a)(2) shall be effective for plan years begin-
ning on January 1, 2019, and (notwithstanding sub-
section (c)) the provisions of law repealed by such 
paragraphs of subsection (a) or amended by such 
conforming amendment shall continue to remain in 
effect until such date. 
SEC. 103. REPEAL OF PATIENT PROTECTION AND AFFORD-
ABLE CARE ACT PROVISIONS. 
(a) IN GENERAL.—Section 1312(c) of the Patient 
Protection and Affordable Care Act (42 U.S.C. 18032(c)) 
is repealed. 
(b) REPEAL OF 3-MONTH GRACE PERIOD FOR NON- 
PAYMENT
PREMIUMS.—Clause 
(iv) 
of 
section 
1412(c)(2)(B) of the Patient Protection and Affordable 
Care Act is amended by striking ‘‘nonpayment of pre-
miums by the insured’’ and all that follows and inserting 
‘‘nonpayment of premiums by the insured, notify the Sec-
retary of such nonpayment.’’. 
(c) EFFECTIVE DATE.—This section, and the amend-
ments made by this section, shall take effect on the date 
of enactment of this Act and shall apply to plan years and 
taxable years beginning after such date of enactment. 
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SEC. 104. CONFORMING AND TECHNICAL AMENDMENTS. 
(a) PHSA PROVISIONS.—Title XXVII of the Public 
Health Service Act (42 U.S.C. 300gg et seq.) is amend-
ed— 
(1) in section 2724(c) (42 U.S.C. 300gg–23(c)), 
by striking ‘‘(other than section 2704)’’ and insert-
ing ‘‘(other than section 2725)’’; 
(2) in section 2741(b)(3) (42 U.S.C. 300gg– 
41(a)(3)), by striking ‘‘2712’’ and inserting ‘‘2707’’; 
(3) in section 2751(a) (42 U.S.C. 300gg– 
51(a)), by striking ‘‘2704’’ and inserting ‘‘2725’’; 
(4) in section 2752 (42 U.S.C. 300gg–52), by 
striking ‘‘2706’’ and inserting ‘‘2727’’; and 
(5) in section 2753 (42 U.S.C. 300gg–54), re-
lating to coverage of dependent students on medi-
cally necessary leave of absence, by striking ‘‘2707’’ 
and inserting ‘‘2728’’. 
(b) PPACA PROVISIONS.—The Patient Protection 
and Affordable Care Act (Public Law 111–148) is amend-
ed— 
(1) 
in 
section 
1103(b)(1) 
(42 
U.S.C. 
18003(b)(1))— 
(A) by striking ‘‘the percentage of total 
premium revenue expended on nonclinical costs 
(as reported under section 2718(a) of the Pub-
lic Health Service Act),’’; and 
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(B) by striking ‘‘and be consistent with the 
standards adopted for the uniform explanation 
of coverage as provided for in section 2715 of 
the Public Health Service Act’’; 
(2) in section 1251(a) (42 U.S.C. 18011(a)), by 
striking paragraphs (3) and (4), and inserting the 
following: 
‘‘(3) APPLICATION OF CERTAIN PROVISIONS.— 
Section 2711 of the Public Health Service Act (re-
lating to extension of dependent coverage) shall 
apply to grandfathered health plans for plan years 
beginning with the first plan year to which such pro-
visions would otherwise apply.’’; 
(3) 
in 
section 
1301(a)(4) 
(42 
U.S.C. 
18021(a)(4)), by striking ‘‘section 2701(a)(2) of the 
Public Health Service Act’’ and inserting ‘‘section 
2701(a)(2) of the Public Health Service Act as in ef-
fect on the day before the date of enactment of the 
Obamacare Replacement Act or as determined by 
the Secretary’’; 
(4) in section 1302(e)(1)(B)(i) (42 U.S.C. 
18022(e)(1)(B)(i)), by striking ‘‘(except as provided 
for in section 2713)’’; 
(5) in section 1311 (42 U.S.C. 18031)— 
(A) in subsection (c)— 
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(i) in paragraph (1)(B), by striking 
‘‘(in a manner consistent with applicable 
network adequacy provisions under section 
2702(c) of the Public Health Service 
Act)’’; and 
(ii) in paragraph (5), by striking ‘‘to 
the uniform outline of coverage the plan is 
required to provide under section 2716 of 
the Public Health Service Act and’’; 
(B) in subsection (d)(4)(E), by striking ‘‘, 
including the use of the uniform outline of cov-
erage established under section 2715 of the 
Public Health Service Act’’; 
(C) in subsection (e)(2), by striking ‘‘, and 
the information and the recommendations’’ and 
all that follows through ‘‘premium increases),’’; 
and 
(D) in subsection (f)(2)(B), by inserting 
before the period ‘‘as in effect on the day before 
the date of enactment of the Obamacare Re-
placement Act or as determined by the Sec-
retary’’; and 
(6) in section 1334(a)(2), by inserting before 
the period ‘‘as in effect on the day before the date 
of enactment of the Obamacare Replacement Act’’. 
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(c) ERISA PROVISIONS.—Section 715 of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1185d) is amended— 
(1) in subsection (a)— 
(A) by striking ‘‘(a) GENERAL RULE’’ and 
all that follows through ‘‘the provisions of part 
A’’ in paragraph (1) and inserting ‘‘The provi-
sions of part A’’; and 
(B) by striking ‘‘as if included in this sub-
part; and’’ in paragraph (1) and all that follows 
through ‘‘to the extent that’’ in paragraph (2) 
and inserting ‘‘as if included in this subpart. To 
the extent that’’; and 
(2) by striking subsection (b). 
(d) IRC PROVISIONS.—The Internal Revenue Code 
of 1986 is amended— 
(1) section 36B(b)(3)(C) is amended— 
(A) in the first sentence, by striking ‘‘and 
the premium was adjusted only for the age of 
each such individual in the manner allowed 
under section 2701 of the Public Health Service 
Act’’; and 
(B) by striking the second sentence; 
(2) in section 833(c), by striking paragraph (5); 
and 
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(3) in section 9815— 
(A) in subsection (a)— 
(i) by striking ‘‘(a) GENERAL RULE’’ 
and all that follows through ‘‘the provi-
sions of part A’’ in paragraph (1) and in-
serting ‘‘The provisions of part A’’; and 
(ii) by striking ‘‘as if included in this 
subpart; and’’ in paragraph (1) and all 
that follows through ‘‘to the extent that’’ 
in paragraph (2) and inserting ‘‘as if in-
cluded in this subpart. To the extent 
that’’; and 
(B) by striking subsection (b). 
(e) SOCIAL SECURITY ACT.—Section 1937(b)(6)(A) 
of the Social Security Act (42 U.S.C. 1396u–7(b)(6)(A)) 
is amended by striking ‘‘2705(a)’’ and inserting 
‘‘2726(a)’’. 
(f) EFFECTIVE DATE.—Except as provided in section 
102(d)(2), this section and the amendments made by this 
section shall take effect on the date of enactment of this 
Act and shall apply to plan years and taxable years begin-
ning after such date of enactment. 
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TITLE II—TAXATION REFORM 
Subtitle A—Equalizing Tax Treat-
ment of Non-Employer Provided 
Health Insurance 
SEC. 201. TAX DEDUCTION FOR HEALTH INSURANCE PRE-
MIUMS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by redesignating section 224 as section 225 and by insert-
ing after section 222 the following new section: 
‘‘SEC. 224. HEALTH INSURANCE PREMIUMS. 
‘‘(a) IN GENERAL.—There shall be allowed as a de-
duction the amount of premiums paid by the taxpayer for 
health insurance coverage (as defined in section 9832) of 
the taxpayer, the taxpayer’s spouse, or any dependent (as 
defined in section 152, determined without regard to sub-
sections (b)(1), (b)(2), and (d)(1)(B) thereof) of the tax-
payer. 
‘‘(b) COORDINATION PROVISIONS.— 
‘‘(1) PREMIUM
ASSISTANCE
CREDIT.—Sub-
section (a) shall not apply with respect to so much 
of any premium for which a credit has been allowed 
under section 36B. 
‘‘(2) ARCHER MSAS AND HSAS.—Subsection (a) 
shall not apply with respect to any amount which is 
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treated as a qualified medical expense under either 
section 220(d) or 223(c). 
‘‘(3) DEDUCTION FOR MEDICAL EXPENSES.— 
For purposes of determining the amount of the de-
duction under section 213, any amount for which a 
deduction is allowed under subsection (a) shall not 
be treated as an expense paid for medical care.’’. 
(b) DEDUCTION AVAILABLE ABOVE THE LINE.—Sec-
tion 62(a) of the Internal Revenue Code of 1986 is amend-
ed by inserting after paragraph (21) the following new 
paragraph: 
‘‘(22) HEALTH
INSURANCE
PREMIUMS.—The 
deduction allowed by section 224.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 35(g)(2) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘or 213’’ and 
inserting ‘‘213, or 224’’. 
(2) Section 162(l)(3) of such Code is amended 
by inserting ‘‘or 224(a)’’ after ‘‘213(a)’’. 
(3) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by 
redesignating the item relating to section 224 as re-
lating to section 225 and by inserting after the item 
relating to section 223 the following new item: 
‘‘Sec. 224. Health insurance premiums.’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
SEC. 202. REFUNDABLE TAX CREDIT FOR PAYROLL TAXES 
ATTRIBUTABLE TO HEALTH INSURANCE PRE-
MIUMS. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 36C. REFUND OF PAYROLL TAXES ATTRIBUTABLE TO 
HEALTH INSURANCE PREMIUMS. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this subtitle 
for any taxable year an amount equal to the applicable 
percentage of the premiums paid by the taxpayer for 
health insurance coverage (as defined in section 9832) of 
the taxpayer, the taxpayer’s spouse, or any dependent (as 
defined in section 152, determined without regard to sub-
sections (b)(1), (b)(2), and (d)(1)(B) thereof) of the tax-
payer. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
subsection (a), the term ‘applicable percentage’ means the 
percentage equal to the sum of the rates of in effect under 
subsections (a) and (b) of section 3101. 
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‘‘(c) LIMITATION.—The amount of the credit allowed 
under subsection (a) shall not exceed the excess of— 
‘‘(1) the social security taxes (as defined in sec-
tion 24(d)) of the taxpayer for the taxable year, re-
duced by 
‘‘(2) the sum of the credits allowed under sec-
tion 24(d) and 32 for the taxable year.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘, 
36C’’ after ‘‘36B’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting after the 
item relating to section 36B the following new item: 
‘‘Sec. 36C. Refund of payroll taxes attributable to health insurance pre-
miums.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2017. 
Subtitle B—Health Savings 
Accounts 
SEC. 211. REPEAL OF CONTRIBUTION LIMITATIONS. 
(a) IN GENERAL.—Subsection (b) of section 223 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
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‘‘(b) DENIAL OF DEDUCTION TO DEPENDENTS.—No 
deduction shall be allowed under this section to any indi-
vidual with respect to whom a deduction under section 151 
is allowable to another taxpayer for a taxable year begin-
ning in the calendar year in which such individual’s tax-
able year begins.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (A) of section 223(d)(1) of 
the Internal Revenue Code of 1986 is amended— 
(A) by striking ‘‘subsection (f)(5)’’ and in-
serting ‘‘subsection (f)(4)’’, and 
(B) by striking ‘‘accepted—’’ and all that 
follows and inserting ‘‘accepted unless it is in 
cash.’’. 
(2) Subsection (f) of section 223 of such Code 
is amended by striking paragraph (3) and by redes-
ignating paragraphs (4) through (8) as paragraphs 
(3) through (7), respectively. 
(3) Subsection (g) of section 223 of such Code 
is amended— 
(A) by striking ‘‘subsections (b)(2) and 
(c)(2)(A)’’ both places it appears and inserting 
‘‘subsection (c)(2)(A)’’, and 
(B) by amending subparagraph (B) to read 
as follows: 
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‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which such taxable year begins deter-
mined by substituting ‘calendar year 2003’ for 
‘calendar year 1992’.’’. 
(4) Section 26(b)(2) of such Code is amended— 
(A) by striking ‘‘, 223(b)(8)(B)(i)(II),’’ in 
subparagraph (S), and 
(B) by striking ‘‘223(f)(4)’’ in subpara-
graph (U) and inserting ‘‘223(f)(3)’’. 
(5) Paragraph (1) of section 106(d) of such 
Code is amended by striking ‘‘under an accident or 
health plan’’ and all that follows and inserting 
‘‘under an accident or health plan.’’. 
(6) Subparagraph (C) of section 106(e)(4) of 
such Code is amended by striking ‘‘223(f)(5)’’ and 
inserting ‘‘223(f)(4)’’. 
(7) Subparagraph (C) of section 408(d)(9) of 
such Code is amended— 
(A) by striking ‘‘LIMITATIONS.—’’ in the 
heading and all that follows through ‘‘(ii) ONE- 
TIME TRANSFER.—’’ in clause (ii), and insert-
ing ‘‘ONE-TIME TRANSFER.—’’, 
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(B) by redesignating subclauses (I) and 
(II) as clauses (i) and (ii) and moving such 
clauses 2 ems to the left, and 
(C) by striking ‘‘subclause (II)’’ in clause 
(i), as so redesignated, and inserting ‘‘clause 
(ii)’’. 
(8) Section 4973 of such Code is amended by 
striking subsection (g) and by redesignating sub-
section (h) as subsection (g). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 212. FREEDOM FROM MANDATE. 
(a) IN GENERAL.—Section 223 of the Internal Rev-
enue Code of 1986, as amended by section 211, is further 
amended by striking subsections (c) and (g) and by redes-
ignating subsections (d), (e), (f), and (h) as subsections 
(c), (d), (e), and (f), respectively. 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (a) of section 223 of the Inter-
nal Revenue Code of 1986 is amended to read as fol-
lows: 
‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual, there shall be allowed as a deduction for the tax-
able year an amount equal to the aggregate amount paid 
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in cash during such taxable year by or on behalf of such 
individual to a health savings account of such individual.’’. 
(2) Subsection (c)(1)(A) of section 223 of such 
Code, as amended by section 211 and redesignated 
by subsection (a), is further amended by striking 
‘‘subsection 
(f)(4)’’ 
and 
inserting 
‘‘subsection 
(e)(4)’’. 
(3) Subparagraph (U) of section 26(b)(2) of 
such Code, as amended by section 211, is further 
amended by striking ‘‘section 223(f)(3)’’ and insert-
ing ‘‘section 223(e)(3)’’. 
(4) 
Sections 
35(g)(3), 
220(f)(5)(A), 
848(e)(1)(B)(v), 4973(a)(5), and 6051(a)(12) of 
such Code are each amended by striking ‘‘section 
223(d)’’ each place it appears and inserting ‘‘section 
223(c)’’. 
(5) Section 106(d)(1) of such Code is amend-
ed— 
(A) by striking ‘‘who is an eligible indi-
vidual (as defined in section 223(c)(1))’’, and 
(B) by striking ‘‘section 223(d)’’ and in-
serting ‘‘section 223(c)’’. 
(6) Section 106(e) of such Code is amended— 
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(A) by striking paragraphs (3) and (4) and 
by redesignating paragraph (5) as paragraph 
(4), 
(B) by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) TREATMENT
AS
ROLLOVER
CONTRIBU-
TION.—A qualified HSA distribution shall be treated 
as a rollover contribution described in section 
223(e)(4).’’, and 
(C) by striking ‘‘to any eligible individual 
covered under a high deductible health plan of 
the employer’’ in paragraph (4)(B)(ii) (as so re-
designated) and inserting ‘‘to any employee 
with respect to whom a health savings account 
has been established’’. 
(7) Section 408(d)(9)(A) of such Code is 
amended by striking ‘‘who is an eligible individual 
(as defined in section 223(c)) and’’. 
(8) Section 877A(g)(6) of such Code is amend-
ed 
by 
striking 
‘‘223(f)(4)’’ 
and 
inserting 
‘‘223(e)(4)’’. 
(9) Section 4975 of such Code is amended— 
(A) in subsection (c)(6)— 
(i) by striking ‘‘section 223(d)’’ and 
inserting ‘‘section 223(c)’’, and 
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(ii) by striking ‘‘section 223(e)(2)’’ 
and inserting ‘‘section 223(d)(2)’’, and 
(B) in subsection (e)(1)(E), by striking 
‘‘section 
223(d)’’ 
and 
inserting 
‘‘section 
223(c)’’. 
(10) Subsection (b) of section 4980G of such 
Code is amended to read as follows: 
‘‘(b) RULES AND REQUIREMENTS.— 
‘‘(1) IN GENERAL.—An employer meets the re-
quirements of this subsection for any calendar year 
if the employer makes available comparable con-
tributions to the health savings accounts of all com-
parable participating employees for each coverage 
period during such calendar year. 
‘‘(2) COMPARABLE CONTRIBUTIONS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘comparable contributions’ 
means contributions— 
‘‘(i) which are the same amount, or 
‘‘(ii) if the employees are covered by a 
health plan, which are the same percentage 
of the annual deductible limit under the 
plan covering the employees. 
‘‘(B) PART-YEAR
EMPLOYEES.—In the 
case of an employee who is employed by the em-
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ployer for only a portion of the calendar year, 
a contribution to the health savings account of 
such employee shall be treated as comparable if 
it is an amount which bears the same ratio to 
the comparable amount (determined without re-
gard to this subparagraph) as such portion 
bears to the entire calendar year. 
‘‘(3) COMPARABLE
PARTICIPATING
EMPLOY-
EES.—For purposes of paragraph (1), the term 
‘comparable participating employees’ means all em-
ployees who are covered (if at all) under the same 
health plan of the employer and have the same cat-
egory of coverage. For purposes of the preceding 
sentence, the categories of coverage are self-only and 
family coverage. 
‘‘(4) PART-TIME EMPLOYEES.— 
‘‘(A) IN
GENERAL.—Paragraph (3) shall 
be applied separately with respect to part-time 
employees and other employees. 
‘‘(B) PART-TIME
EMPLOYEE.—For pur-
poses of subparagraph (A), the term ‘part-time 
employee’ means any employee who is custom-
arily employed for fewer than 30 hours per 
week.’’. 
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(11) Section 4980G(d) of such Code is amended 
by striking ‘‘section 4980E’’ and inserting ‘‘this sec-
tion’’. 
(12) Section 6693(a)(2)(C) of such Code is 
amended by striking ‘‘section 223(h)’’ and inserting 
‘‘section 223(f)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 213. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP-
TION AND OVER-THE-COUNTER MEDICINES 
AND DRUGS. 
(a) HSAS.—Paragraph (2)(A) of section 223(c) of 
the Internal Revenue Code of 1986, as redesignated by 
section 212, is amended by striking the last sentence 
thereof and inserting the following: ‘‘Such term shall in-
clude an amount paid for any prescription or over-the- 
counter medicine or drug.’’. 
(b) ARCHER MSAS.—Section 220(d)(2)(A) of the In-
ternal Revenue Code of 1986 is amended by striking the 
last sentence thereof and inserting the following: ‘‘Such 
term shall include an amount paid for any prescription 
or over-the-counter medicine or drug.’’. 
(c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS 
AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sub-
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section (f) of section 106 of the Internal Revenue Code 
of 1986 is amended to read as follows: 
‘‘(f) REIMBURSEMENTS FOR ALL MEDICINES AND 
DRUGS.—For purposes of this section and section 105, 
reimbursement for expenses incurred for any prescription 
or over-the-counter medicine or drug shall be treated as 
a reimbursement for medical expenses.’’. 
(d) EFFECTIVE DATES.— 
(1) 
DISTRIBUTIONS
FROM
SAVINGS
AC-
COUNTS.—The amendments made by subsections (a) 
and (b) shall apply to amounts paid in taxable years 
beginning after the date of the enactment of this 
Act. 
(2) REIMBURSEMENTS.—The amendment made 
by subsection (c) shall apply to expenses incurred in 
plan years beginning after the date of the enactment 
of this Act. 
SEC. 214. PURCHASE OF HEALTH INSURANCE FROM HSA. 
(a) IN GENERAL.—Paragraph (2) of section 223(c) 
of the Internal Revenue Code of 1986, as redesignated by 
section 212, is amended by striking subparagraphs (B) 
and (C). 
(b) CONFORMING AMENDMENT.—Paragraph (2) of 
section 223(c) of the Internal Revenue Code of 1986, as 
amended by the preceding sections of this subtitle, is fur-
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ther amended by striking ‘‘and any dependent (as defined 
in section 152, determined without regard to subsections 
(b)(1), (b)(2), and (d)(1)(B) thereof) of such individual’’ 
and inserting ‘‘any dependent (as defined in section 152, 
determined without regard to subsections (b)(1), (b)(2), 
and (d)(1)(B) thereof) of such individual, and any child 
(as defined in section 152(f)(1)) of such individual who 
has not attained the age of 27 before the end of such indi-
vidual’s taxable year’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to insurance pur-
chased after the date of the enactment of this Act in tax-
able years beginning after such date. 
SEC. 215. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 
INCURRED BEFORE ESTABLISHMENT OF AC-
COUNT. 
(a) IN GENERAL.—Paragraph (2) of section 223(c) 
of the Internal Revenue Code of 1986, as amended and 
redesignated by the preceding sections of this subtitle, is 
further amended by adding at the end the following new 
subparagraph: 
‘‘(B) CERTAIN
MEDICAL
EXPENSES
IN-
CURRED BEFORE ESTABLISHMENT OF ACCOUNT 
TREATED AS QUALIFIED.—An expense shall not 
fail to be treated as a qualified medical expense 
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solely because such expense was incurred before 
the establishment of the health savings account 
if such expense was incurred— 
‘‘(i) during either— 
‘‘(I) the taxable year in which the 
health savings account was estab-
lished, or 
‘‘(II) the preceding taxable year, 
in the case of a health savings ac-
count established after the taxable 
year in which such expense was in-
curred but before the time prescribed 
by law for filing the return for such 
taxable year (not including extensions 
thereof), and 
‘‘(ii) for medical care which (but for 
the fact that it was incurred before the es-
tablishment of the account) otherwise 
meets the requirements of the preceding 
subparagraphs.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 216. ADMINISTRATIVE ERROR CORRECTION BEFORE 
DUE DATE OF RETURN. 
(a) IN GENERAL.—Paragraph (3) of section 223(f) 
of the Internal Revenue Code of 1986, as in effect on the 
day before the date of the enactment of this Act, is amend-
ed by adding at the end the following new subparagraph: 
‘‘(D) EXCEPTION
FOR
ADMINISTRATIVE 
ERRORS CORRECTED BEFORE DUE DATE OF RE-
TURN.—Subparagraph (A) shall not apply if 
any payment or distribution is made to correct 
an administrative, clerical, or payroll contribu-
tion error and if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
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SEC. 217. ALLOWING HSA ROLLOVER TO CHILD OR PARENT 
OF ACCOUNT HOLDER. 
(a) IN GENERAL.—Paragraph (7)(A) of section 
223(e) of the Internal Revenue Code of 1986, as redesig-
nated by the preceding sections of this subtitle, is amend-
ed— 
(1) by inserting ‘‘, child, parent, or grand-
parent’’ after ‘‘surviving spouse’’, 
(2) by inserting ‘‘, child, parent, or grand-
parent, as the case may be,’’ after ‘‘the spouse’’, 
(3) by inserting ‘‘, CHILD, PARENT, OR GRAND-
PARENT’’ after ‘‘SPOUSE’’ in the heading thereof, 
and 
(4) by adding at the end the following: ‘‘In the 
case of a child who acquires such beneficiary’s inter-
est and with respect to whom a deduction under sec-
tion 151 is allowable to another taxpayer for a tax-
able year beginning in the calendar year in which 
such individual’s taxable year begins, such health 
savings account shall be treated as a health savings 
account of such child.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 218. CREDIT FOR CONTRIBUTIONS TO AN HSA. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 25D the fol-
lowing new section: 
‘‘SEC. 25E. CONTRIBUTIONS TO A HEALTH SAVINGS AC-
COUNT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this subtitle for the taxable year an amount 
equal to so much of the qualified HSA contributions of 
the individual as does not exceed $5,000 ($10,000 in the 
case of a joint return). 
‘‘(b) QUALIFIED HSA CONTRIBUTION.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified HSA contribution’ means 
an amount paid in cash during the taxable year by 
or on behalf of an individual to a health savings ac-
count (as defined in section 223(c)) of such indi-
vidual. 
‘‘(2) EXCEPTION FOR AMOUNTS NOT USED FOR 
QUALIFIED
MEDICAL
EXPENSES.—The 
amount 
taken into account as qualified HSA contributions of 
the individual under paragraph (1) for a taxable 
year shall be reduced by the amount of any distribu-
tion from such health savings account during such 
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taxable year which is not used exclusively to pay the 
qualified medical expenses of the account beneficiary 
(within the meaning of section 223(e)(2)). 
‘‘(c) COORDINATION WITH DEDUCTION.—For co-
ordination rule, see section 223(b)(1).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 25D the following 
new item: 
‘‘Sec. 25E. Contributions to a health savings account.’’. 
(c) CONFORMING AMENDMENT.—Subsection (b) of 
section 223 of the Internal Revenue Code of 1986, as 
amended by section 211, is further amended to read as 
follows: 
‘‘(b) SPECIAL RULES.— 
‘‘(1) 
COORDINATION
WITH
CREDIT.—The 
amount taken into account under subsection (a) with 
respect to any individual shall be reduced (but not 
below zero) by the amount of any credit allowed 
under section 25E for qualified HSA contributions 
with respect to the individual. 
‘‘(2) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No deduction shall be allowed under this 
section to any individual with respect to whom a de-
duction under section 151 is allowable to another 
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taxpayer for a taxable year beginning in the cal-
endar year in which such individual’s taxable year 
begins.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 219. EQUIVALENT BANKRUPTCY PROTECTIONS FOR 
HEALTH SAVINGS ACCOUNTS AS RETIRE-
MENT FUNDS. 
(a) IN GENERAL.—Section 522 of title 11, United 
States Code, is amended by adding at the end the fol-
lowing new subsection: 
‘‘(r) 
TREATMENT
OF
HEALTH
SAVINGS
AC-
COUNTS.—For purposes of this section, any health savings 
account (as described in section 223 of the Internal Rev-
enue Code of 1986) shall be treated in the same manner 
as an individual retirement account described in section 
408 of such Code.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to cases commencing under title 
11, United States Code, after the date of the enactment 
of this Act. 
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SEC. 220. DISTRIBUTIONS FOR ABORTION EXPENSES FROM 
HEALTH SAVINGS ACCOUNTS INCLUDED IN 
GROSS INCOME. 
(a) IN GENERAL.—Subsection (e) of section 223 of 
the Internal Revenue Code of 1986, as amended by the 
preceding provisions of this subtitle, is amended by adding 
at the end the following new paragraph: 
‘‘(8) EXCEPTION FOR CERTAIN ABORTION EX-
PENSES.— 
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), any amount used to pay for an abor-
tion (other than an abortion described in sub-
paragraph (B)) or health insurance that covers 
abortions (other than abortions so described) 
shall be included in the gross income of such 
beneficiary. 
‘‘(B) 
EXCEPTIONS.—Subparagraph 
(A) 
shall not apply to— 
‘‘(i) an abortion— 
‘‘(I) in the case of a pregnancy 
that is the result of an act of rape or 
incest, or 
‘‘(II) in the case where a woman 
suffers from a physical disorder, phys-
ical injury, or physical illness that 
would, as certified by a physician, 
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