I 
114TH CONGRESS 
2D SESSION 
H. R. 4469 
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 HOUSE OF REPRESENTATIVES 
FEBRUARY 4, 2016 
Mr. PAULSEN (for himself, Mr. KELLY of Pennsylvania, and Ms. JENKINS of 
Kansas) introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on the 
Judiciary and Energy and Commerce, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Health Savings Act of 2016’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
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to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents is 
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. Individuals eligible for TRICARE coverage. 
Sec. 205. Members of health care sharing ministries eligible to establish health 
savings accounts. 
Sec. 206. Treatment of direct primary care service arrangements. 
Sec. 207. Individuals eligible for on-site medical clinic coverage. 
Sec. 208. Treatment of embedded deductibles. 
TITLE III—IMPROVING COVERAGE UNDER TAX-PREFERRED 
HEALTH ACCOUNTS 
Sec. 301. Allowance of distributions for prescription and over-the-counter medi-
cines and drugs. 
Sec. 302. Purchase of health insurance from HSA account. 
Sec. 303. Special rule for certain medical expenses incurred before establish-
ment of account. 
Sec. 304. Preventive care prescription drug clarification. 
TITLE IV—PROTECTING ACCESS TO LOW-COST HEALTH PLANS 
BY REDUCING BURDENSOME MANDATES 
Sec. 401. HSA-qualified health plans qualify as providing minimum value. 
TITLE V—MISCELLANEOUS PROVISIONS RELATING TO TAX- 
PREFERRED HEALTH ACCOUNTS 
Sec. 501. FSA and HRA interaction with HSAs. 
Sec. 502. Equivalent bankruptcy protections for health savings accounts as re-
tirement funds. 
Sec. 503. Administrative error correction before due date of return. 
Sec. 504. Reauthorization of Medicaid health opportunity accounts. 
Sec. 505. Exclusion of certain health arrangements from employer-sponsored 
excise tax. 
TITLE VI—OTHER PROVISIONS 
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Sec. 601. Certain exercise equipment and physical fitness programs treated as 
medical care. 
Sec. 602. Certain nutritional and dietary supplements to be treated as medical 
care. 
Sec. 603. Certain provider fees to be treated as medical care. 
TITLE I—RENAMING HIGH 
DEDUCTIBLE HEALTH PLANS 
SEC. 101. HIGH DEDUCTIBLE HEALTH PLANS RENAMED 
HSA-QUALIFIED HEALTH PLANS. 
(a) IN GENERAL.—Section 223 is amended by strik-
ing ‘‘high deductible health plan’’ each place it appears 
and inserting ‘‘HSA-qualified health plan’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The heading for paragraph (2) of section 
223(c) is amended by striking ‘‘HIGH DEDUCTIBLE 
HEALTH
PLAN’’ and inserting ‘‘HSA-QUALIFIED 
HEALTH PLAN’’. 
(2) Section 408(d)(9) is amended— 
(A) by striking ‘‘high deductible health 
plan’’ each place it appears in subparagraph 
(C) and inserting ‘‘HSA-qualified health plan’’, 
and 
(B) 
by 
striking 
‘‘HIGH
DEDUCTIBLE 
HEALTH PLAN’’ in the heading of subparagraph 
(D) and inserting ‘‘HSA-QUALIFIED
HEALTH 
PLAN’’. 
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TITLE II—ENHANCING ACCESS 
TO TAX-PREFERRED HEALTH 
ACCOUNTS 
SEC. 201. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON-
TRIBUTIONS TO THE SAME HSA ACCOUNT. 
(a) IN GENERAL.—Paragraph (5) of section 223(b) 
is amended to read as follows: 
‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS 
WITH FAMILY COVERAGE.— 
‘‘(A) IN GENERAL.—In the case of individ-
uals who are married to each other, if both 
spouses are eligible individuals and either 
spouse has family coverage under an HSA- 
qualified health plan as of the first day of any 
month— 
‘‘(i) the limitation under paragraph 
(1) shall be applied by not taking into ac-
count any other HSA-qualified health plan 
coverage of either spouse (and if such 
spouses both have family coverage under 
separate HSA-qualified health plans, only 
one such coverage shall be taken into ac-
count), 
‘‘(ii) such limitation (after application 
of clause (i)) shall be reduced by the ag-
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amended by adding at the end the following: ‘‘This para-
graph shall not apply to any individual during any period 
for which the individual’s only entitlement to such benefits 
is an entitlement to hospital insurance benefits under part 
A of title XVIII of such Act pursuant to an enrollment 
for such hospital insurance benefits under section 226(a) 
of such Act.’’. 
(b) MEDICARE BENEFICIARIES PARTICIPATING
IN 
MEDICARE ADVANTAGE MSA MAY CONTRIBUTE THEIR 
OWN MONEY TO THEIR MSA.— 
(1) IN
GENERAL.—Subsection (b) of section 
138 is amended by striking paragraph (2) and by re-
designating paragraphs (3) and (4) as paragraphs 
(2) and (3), respectively. 
(2) CONFORMING AMENDMENT.—Paragraph (4) 
of section 138(c) is amended by striking ‘‘and para-
graph (2)’’. 
(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. 203. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH 
SERVICE ASSISTANCE. 
(a) IN GENERAL.—Paragraph (1) of section 223(c) 
is amended by adding at the end the following new sub-
paragraph: 
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‘‘(D) SPECIAL RULE FOR INDIVIDUALS EL-
IGIBLE
FOR
ASSISTANCE
UNDER
INDIAN 
HEALTH SERVICE PROGRAMS.—For purposes of 
subparagraph (A)(ii), an individual shall not be 
treated as covered under a health plan de-
scribed in such subparagraph merely because 
the individual receives hospital care or medical 
services under a medical care program of the 
Indian Health Service or of a tribal organiza-
tion.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 204. INDIVIDUALS ELIGIBLE FOR TRICARE COVERAGE. 
(a) IN GENERAL.—Paragraph (1) of section 223(c), 
as amended by section 203, is amended by adding at the 
end the following new subparagraph: 
‘‘(E) SPECIAL RULE FOR INDIVIDUALS EL-
IGIBLE FOR ASSISTANCE UNDER TRICARE.—For 
purposes of subparagraph (A)(ii), an individual 
shall not be treated as covered under a health 
plan described in such subparagraph merely be-
cause the individual is eligible to receive hos-
pital care, medical services, or prescription 
drugs under TRICARE Extra or TRICARE 
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Standard and such individual is not enrolled in 
TRICARE Prime.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 205. MEMBERS OF HEALTH CARE SHARING MIN-
ISTRIES ELIGIBLE TO ESTABLISH HEALTH 
SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Section 223 is amended by adding 
at the end the following new subsection: 
‘‘(i) APPLICATION TO HEALTH CARE SHARING MIN-
ISTRIES.—For purposes of this section, membership in a 
health care sharing ministry (as defined in section 
5000A(d)(2)(B)(ii)) shall be treated as coverage under an 
HSA-qualified health plan.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 206. TREATMENT OF DIRECT PRIMARY CARE SERVICE 
ARRANGEMENTS. 
(a) IN GENERAL.—Section 223(c) is amended by 
adding at the end the following new paragraph: 
‘‘(6) TREATMENT
OF
DIRECT
PRIMARY
CARE 
SERVICE ARRANGEMENTS.—An arrangement under 
which an individual is provided coverage restricted to 
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primary care services in exchange for a fixed peri-
odic fee or payment for primary care services— 
‘‘(A) shall not be treated as a health plan 
for purposes of paragraph (1)(A)(ii), and 
‘‘(B) shall not be treated as insurance for 
purposes of subsection (d)(2)(B).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 207. INDIVIDUALS ELIGIBLE FOR ON-SITE MEDICAL 
CLINIC COVERAGE. 
(a) IN GENERAL.—Paragraph (1) of section 223(c), 
as amended by sections 203 and 204, is amended by add-
ing at the end the following new subparagraph: 
‘‘(F) SPECIAL RULE FOR INDIVIDUALS EL-
IGIBLE
FOR
ON-SITE
MEDICAL
CLINIC
COV-
ERAGE.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), an individual shall 
not be treated as covered under a health 
plan described in such subparagraph mere-
ly because the individual is eligible to re-
ceive health care benefits from an onsite- 
medical clinic of employer of the individual 
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or the individual’s spouse if such health 
care benefits are not significant benefits. 
‘‘(ii) INCLUDED BENEFITS.—For pur-
poses of clause (i), the following health 
care benefits shall be considered to be ben-
efits which are not significant benefits: 
‘‘(I) Physicals and immuniza-
tions. 
‘‘(II) Injecting antigens provided 
by employees. 
‘‘(III) Medications available with-
out a prescription, such as pain reliev-
ers and antihistamines. 
‘‘(IV) Treatment for injuries oc-
curring at the employer’s place of em-
ployment or otherwise in the course of 
employment. 
‘‘(V) Tests for infectious diseases 
and conditions, such as streptococcal 
sore throat. 
‘‘(VI) Monitoring of chronic con-
ditions, such as diabetes. 
‘‘(VII) Drug testing. 
‘‘(VIII) 
Hearing 
or 
vision 
screenings and related services. 
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‘‘(IX) Other services and treat-
ments of a similar nature to the serv-
ices 
described 
in 
subclauses 
(I) 
through (VIII). 
‘‘(iii) 
AGGREGATION
RULES.—For 
purposes of clause (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 amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 208. TREATMENT OF EMBEDDED DEDUCTIBLES. 
(a) IN GENERAL.—Paragraph (2) of section 223(c) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(E) TREATMENT OF EMBEDDED DEDUCT-
IBLE.—A health plan providing family coverage 
that has an annual deductible for all covered in-
dividuals under the plan of at least the amount 
described in subparagraph (A)(i)(II) shall not 
fail to be treated as an HSA-qualified health 
plan solely because it covers expenses with re-
spect to an individual under that plan that ex-
ceed an embedded deductible which is equal to 
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or in excess of the amount described in sub-
paragraph (A)(i)(I).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
TITLE 
III—IMPROVING 
COV-
ERAGE 
UNDER 
TAX-PRE-
FERRED HEALTH ACCOUNTS 
SEC. 301. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP-
TION AND OVER-THE-COUNTER MEDICINES 
AND DRUGS. 
(a) HSAS.—Section 223(d)(2)(A) is amended by 
striking the last sentence thereof and inserting the fol-
lowing: ‘‘Such term shall include an amount paid for any 
prescription or over-the-counter medicine or drug.’’. 
(b) ARCHER MSAS.—Section 220(d)(2)(A) is amend-
ed 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-
section (f) of section 106 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 
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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 December 31, 2016. 
(2) REIMBURSEMENTS.—The amendment made 
by subsection (c) shall apply to expenses incurred in 
plan years beginning after December 31, 2016. 
SEC. 302. PURCHASE OF HEALTH INSURANCE FROM HSA 
ACCOUNT. 
(a) IN GENERAL.—Paragraph (2) of section 223(d), 
as amended by section 301, is amended— 
(1) by striking ‘‘and any dependent (as defined 
in section 152, determined without regard to sub-
sections (b)(1), (b)(2), and (d)(1)(B) thereof) of 
such individual’’ in subparagraph (A) and inserting 
‘‘any dependent (as defined in section 152, deter-
mined 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 indi-
vidual who has not attained the age of 27 before the 
end of such individual’s taxable year’’, 
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(2) by striking subparagraph (B) and inserting 
the following: 
‘‘(B) HEALTH
INSURANCE
MAY
NOT
BE 
PURCHASED FROM ACCOUNT.—Except as pro-
vided in subparagraph (C), subparagraph (A) 
shall not apply to any payment for insurance.’’, 
and 
(3) by striking ‘‘or’’ at the end of subparagraph 
(C)(iii) and by striking subparagraph (C)(iv) and in-
serting the following: 
‘‘(iv) an HSA-qualified health plan, or 
‘‘(v) any health insurance under title 
XVIII of the Social Security Act, other 
than a Medicare supplemental policy (as 
defined in section 1882 of such Act).’’. 
(b) 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. 303. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 
INCURRED BEFORE ESTABLISHMENT OF AC-
COUNT. 
(a) IN GENERAL.—Paragraph (2) of section 223(d) 
is amended by adding at the end the following new sub-
paragraph: 
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‘‘(D) TREATMENT OF CERTAIN MEDICAL 
EXPENSES INCURRED BEFORE ESTABLISHMENT 
OF ACCOUNT.—If a health savings account is 
established during the 60-day period beginning 
on the date that coverage of the account bene-
ficiary under an HSA-qualified health plan be-
gins, then, solely for purposes of determining 
whether an amount paid is used for a qualified 
medical expense, such account shall be treated 
as having been established on the date that 
such coverage begins.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to coverage beginning 
after the date of the enactment of this Act. 
SEC. 304. PREVENTIVE CARE PRESCRIPTION DRUG CLARI-
FICATION. 
(a) CLARIFY
USE
OF
DRUGS
IN
PREVENTIVE 
CARE.—Subparagraph (C) of section 223(c)(2) is amend-
ed by adding at the end the following: ‘‘Preventive care 
shall include prescription and over-the-counter drugs and 
medicines which have the primary purpose of preventing 
the onset of, further deterioration from, or complications 
associated with chronic conditions, illnesses, or diseases.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2016. 
TITLE IV—PROTECTING ACCESS 
TO LOW-COST HEALTH PLANS 
BY REDUCING BURDENSOME 
MANDATES 
SEC. 401. HSA-QUALIFIED HEALTH PLANS QUALIFY AS PRO-
VIDING MINIMUM VALUE. 
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
36B(c)(2)(C) is amended by inserting ‘‘, in the case of 
a plan other than an HSA-qualified health plan,’’ after 
‘‘an eligible employer-sponsored plan (as defined in section 
5000A(f)(2)) and’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to months beginning after Decem-
ber 31, 2016. 
TITLE V—MISCELLANEOUS PRO-
VISIONS RELATING TO TAX- 
PREFERRED 
HEALTH 
AC-
COUNTS 
SEC. 501. FSA AND HRA INTERACTION WITH HSAS. 
(a) ELIGIBLE INDIVIDUALS INCLUDE FSA AND HRA 
PARTICIPANTS.—Subparagraph (B) of section 223(c)(1) 
is amended— 
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(1) by striking ‘‘and’’ at the end of clause (ii), 
(2) by striking the period at the end of clause 
(iii) and inserting ‘‘, and’’, and 
(3) by inserting after clause (iii) the following 
new clause: 
‘‘(iv) coverage under a health flexible 
spending arrangement or a health reim-
bursement arrangement in the plan year a 
qualified HSA distribution as described in 
section 106(e) is made on behalf of the in-
dividual if, after the qualified HSA dis-
tribution is made and for the remaining 
duration of the plan year, the coverage 
provided under the arrangement is con-
verted solely to one or more of the fol-
lowing: 
‘‘(I) POST-DEDUCTIBLE
FSA
OR 
HRA.—A health flexible spending ar-
rangement or a health reimbursement 
arrangement that does not pay or re-
imburse any medical expense incurred 
before the minimum annual deductible 
under paragraph (2)(A)(i) (prorated 
for the period occurring after the 
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qualified HSA distribution is made) is 
satisfied. 
‘‘(II) PREVENTATIVE
CARE.—A 
health flexible spending arrangement 
or a health reimbursement arrange-
ment that, after the qualified HSA 
distribution is made, does not pay or 
reimburse any medical expense in-
curred after the qualified HSA dis-
tribution is made other than preven-
tive care as defined in paragraph 
(2)(C). 
‘‘(III) 
LIMITED
PURPOSE 
HEALTH
FSA.—A 
health 
flexible 
spending arrangement that, after the 
qualified HSA distribution is made, 
pays or reimburses benefits for cov-
erage described in clause (ii) (but not 
through insurance or for long-term 
care services). 
‘‘(IV) LIMITED PURPOSE HRA.— 
A health reimbursement arrangement 
that, after the qualified HSA distribu-
tion is made, pays or reimburses bene-
fits for permitted insurance or cov-
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(b) QUALIFIED HSA DISTRIBUTION SHALL NOT AF-
FECT FLEXIBLE SPENDING ARRANGEMENT.—Paragraph 
(1) of section 106(e) is amended to read as follows: 
‘‘(1) IN GENERAL.—A plan shall not fail to be 
treated as— 
‘‘(A) a health flexible spending arrange-
ment under this section, section 105, or section 
125, 
‘‘(B) a health reimbursement arrangement 
under this section or section 105, or 
‘‘(C) an accident or health plan, 
merely because such plan provides for a qualified 
HSA distribution.’’. 
(c) FSA BALANCES AT YEAR END SHALL NOT FOR-
FEIT.—Paragraph (2) of section 125(d) is amended by 
adding at the end the following new subparagraph: 
‘‘(E) EXCEPTION FOR QUALIFIED HSA DIS-
TRIBUTIONS.—Subparagraph 
(A) 
shall 
not 
apply to the extent that there is an amount re-
maining in a health flexible spending account at 
the end of a plan year that an individual elects 
to contribute to a health savings account pursu-
ant to a qualified HSA distribution (as defined 
in section 106(e)(2)).’’. 
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(d) SIMPLIFICATION OF LIMITATIONS ON FSA AND 
HRA ROLLOVERS.—Paragraph (2) of section 106(e) is 
amended to read as follows: 
‘‘(2) QUALIFIED HSA DISTRIBUTION.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
HSA distribution’ means a distribution from a 
health flexible spending arrangement or health 
reimbursement arrangement directly to a health 
savings account of the employee to the extent 
that such distribution does not exceed the lesser 
of— 
‘‘(i) the balance in such arrangement 
as of the date of such distribution, or 
‘‘(ii) the amount determined under 
subparagraph (B). 
Such term shall not include more than 1 dis-
tribution with respect to any arrangement. 
‘‘(B) DOLLAR LIMITATIONS.— 
‘‘(i) DISTRIBUTIONS FROM A HEALTH 
FLEXIBLE
SPENDING
ARRANGEMENT.—A 
qualified HSA distribution from a health 
flexible spending arrangement shall not ex-
ceed the applicable amount. 
‘‘(ii) DISTRIBUTIONS FROM A HEALTH 
REIMBURSEMENT
ARRANGEMENT.—A 
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qualified HSA distribution from a health 
reimbursement arrangement shall not ex-
ceed— 
‘‘(I) the applicable amount di-
vided by 12, multiplied by 
‘‘(II) the number of months dur-
ing which the individual is a partici-
pant in the health reimbursement ar-
rangement. 
‘‘(iii) 
APPLICABLE
AMOUNT.—For 
purposes of this subparagraph, the applica-
ble amount is— 
‘‘(I) $2,250 in the case of an eli-
gible individual who has self-only cov-
erage under an HSA-qualified health 
plan at the time of such distribution, 
and 
‘‘(II) $4,500 in the case of an eli-
gible individual who has family cov-
erage under an HSA-qualified health 
plan at the time of such distribu-
tion.’’. 
(e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE 
TO MAINTAIN HSA-QUALIFIED HEALTH PLAN COV-
ERAGE.—Subsection (e) of section 106 is amended— 
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(1) by striking paragraph (3) and redesignating 
paragraphs (4) and (5) as paragraphs (3) and (4), 
respectively, and 
(2) by striking subparagraph (A) of paragraph 
(3), as so redesignated, and redesignating subpara-
graphs (B) and (C) of such paragraph as subpara-
graphs (A) and (B) thereof, respectively. 
(f) LIMITED PURPOSE FSAS
AND HRAS.—Sub-
section (e) of section 106, as amended by this section, is 
amended by adding at the end the following new para-
graph: 
‘‘(5) LIMITED PURPOSE FSAS AND HRAS.—A 
plan shall not fail to be a health flexible spending 
arrangement, a health reimbursement arrangement, 
or an accident or health plan under this section or 
section 105 merely because the plan converts cov-
erage for individuals who enroll in an HSA-qualified 
health plan described in section 223(c)(2) to cov-
erage described in subclause (I), (II), (III), (IV), 
(V), or (VI) of section 223(c)(1)(B)(iv). Coverage 
for such individuals may be converted as of the date 
of enrollment in the HSA-qualified health plan, 
without regard to the period of coverage under the 
health flexible spending arrangement or health reim-
bursement arrangement, and without requiring any 
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change in coverage to individuals who do not enroll 
in an HSA-qualified health plan.’’. 
(g) DISTRIBUTION AMOUNTS ADJUSTED FOR COST- 
OF-LIVING.—Subsection (e) of section 106, as amended 
by this section, is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) COST-OF-LIVING ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2016, each of the dollar amounts in paragraph 
(2)(B)(iii) shall be increased by an amount 
equal to such dollar amount, multiplied by the 
cost-of-living adjustment determined under sec-
tion 1(f)(3) for the calendar year in which such 
taxable year begins by substituting ‘calendar 
year 2015’ for ‘calendar year 1992’ in subpara-
graph (B) thereof. 
‘‘(B) ROUNDING.—If any increase under 
paragraph (1) is not a multiple of $50, such in-
crease shall be rounded to the nearest multiple 
of $50.’’. 
(h) DISCLAIMER OF DISQUALIFYING COVERAGE.— 
Subparagraph (B) of section 223(c)(1), as amended by 
this section, is amended— 
(1) by striking ‘‘and’’ at the end of clause (iii), 
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(2) by striking the period at the end of clause 
(iv) and inserting ‘‘, and’’, and 
(3) by inserting after clause (iv) the following 
new clause: 
‘‘(v) any coverage (including prospec-
tive coverage) under a health plan that is 
not an HSA-qualified health plan which is 
disclaimed in writing, at the time of the 
creation or organization of the health sav-
ings account, including by execution of a 
trust 
described 
in 
subsection 
(d)(1) 
through a governing instrument that in-
cludes such a disclaimer, or by acceptance 
of an amendment to such a trust that in-
cludes such a disclaimer.’’. 
(i) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 502. 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: 
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‘‘(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. 
SEC. 503. ADMINISTRATIVE ERROR CORRECTION BEFORE 
DUE DATE OF RETURN. 
(a) IN GENERAL.—Paragraph (4) of section 223(f) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(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 
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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. 
SEC. 504. REAUTHORIZATION OF MEDICAID HEALTH OP-
PORTUNITY ACCOUNTS. 
(a) IN GENERAL.—Section 1938 of the Social Secu-
rity Act (42 U.S.C. 1396u–8) is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (2) and insert-
ing the following: 
‘‘(2) INITIAL DEMONSTRATION.—The Secretary 
shall approve States to conduct demonstration pro-
grams under this section for a 5-year period, with 
each State demonstration program covering one or 
more geographic areas specified by the State. With 
respect to a State, after the initial 5-year period of 
any demonstration program conducted under this 
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section by the State, unless the Secretary finds, tak-
ing into account cost-effectiveness and quality of 
care, that the State demonstration program has 
been unsuccessful, the demonstration program may 
be extended or made permanent in the State.’’; and 
(B) in paragraph (3), in the matter pre-
ceding subparagraph (A)— 
(i) by striking ‘‘not’’; and 
(ii) by striking ‘‘unless’’ and inserting 
‘‘if’’; 
(2) in subsection (b)— 
(A) in paragraph (3), by inserting ‘‘clause 
(i) through (vii), (viii) (without regard to the 
amendment made by section 2004(c)(2) of Pub-
lic Law 111–148), (x), or (xi) of’’ after ‘‘de-
scribed in’’; and 
(B) by striking paragraphs (4), (5), and 
(6); 
(3) in subsection (c)— 
(A) by striking paragraphs (3) and (4); 
(B) 
by 
redesignating 
paragraphs 
(5) 
through (8) as paragraphs (3) through (6), re-
spectively; and 
(C) in paragraph (4) (as redesignated by 
subparagraph (B)), by striking ‘‘Subject to sub-
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paragraphs (D) and (E)’’ and inserting ‘‘Sub-
ject to subparagraph (D)’’; and 
(4) in subsection (d)— 
(A) in paragraph (2), by striking subpara-
graph (E); and 
(B) in paragraph (3)— 
(i) in subparagraph (A)(ii), by strik-
ing ‘‘Subject to subparagraph (B)(ii), in’’ 
and inserting ‘‘In’’; and 
(ii) by striking subparagraph (B) and 
inserting the following: 
‘‘(B) MAINTENANCE OF HEALTH OPPOR-
TUNITY
ACCOUNT
AFTER
BECOMING
INELI-
GIBLE FOR PUBLIC BENEFIT.—Notwithstanding 
any other provision of law, if an account holder 
of a health opportunity account becomes ineli-
gible for benefits under this title because of an 
increase in income or assets— 
‘‘(i) no additional contribution shall be 
made into the account under paragraph 
(2)(A)(i); and 
‘‘(ii) the account shall remain avail-
able to the account holder for 3 years after 
the date on which the individual becomes 
ineligible for such benefits for withdrawals 
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under the same terms and conditions as if 
the account holder remained eligible for 
such benefits, and such withdrawals shall 
be treated as medical assistance in accord-
ance with subsection (c)(4).’’. 
(b) CONFORMING
AMENDMENT.—Section 613 of 
Public Law 111–3 is repealed. 
SEC. 505. EXCLUSION OF CERTAIN HEALTH ARRANGE-
MENTS FROM EMPLOYER-SPONSORED EX-
CISE TAX. 
(a) IN GENERAL.—Subparagraph (B) of section 
4980I(d)(1) is amended by striking the period at the end 
of clause (iii) and inserting ‘‘, or’’ and by adding at the 
end the following new clause: 
‘‘(iv) any amounts contributed to an 
Archer MSA under section 106(b), a 
health savings account under section 
106(d), or a health flexible spending ar-
rangement— 
‘‘(I) by an employee, or 
‘‘(II) by an employer through sal-
ary reduction contributions.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 4980I(d)(2)(B) is amended by 
striking ‘‘shall be equal to the sum of’’ and all that 
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follows and inserting ‘‘shall be equal to the amount 
determined under subparagraph (A) with respect to 
any reimbursement under the arrangement in excess 
of any employer contributions under any salary re-
duction election under the arrangement.’’. 
(2) Section 4980I(d)(2)(C) is amended by in-
serting ‘‘(determined without regard to any employer 
contributions under any salary reduction election 
under the arrangement)’’ before the period at the 
end. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2019. 
TITLE VI—OTHER PROVISIONS 
SEC. 601. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL 
FITNESS PROGRAMS TREATED AS MEDICAL 
CARE. 
(a) IN GENERAL.—Subsection (d) of section 213 is 
amended by adding at the end the following new para-
graph: 
‘‘(12) EXERCISE
EQUIPMENT
AND
PHYSICAL 
FITNESS ACTIVITY.— 
‘‘(A) IN
GENERAL.—The term ‘medical 
care’ shall include amounts paid— 
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‘‘(i) for equipment for use in a pro-
gram (including a self-directed program) of 
physical exercise or physical activity, 
‘‘(ii) to participate, or receive instruc-
tion, in a program of physical exercise, nu-
trition, or health coaching (including a 
self-directed program), and 
‘‘(iii) for membership at a fitness fa-
cility. 
‘‘(B) OVERALL DOLLAR LIMITATION.— 
‘‘(i) IN GENERAL.—Amounts treated 
as medical care under subparagraph (A) 
shall not exceed $1,000 with respect to any 
individual for any taxable year. 
‘‘(ii) EXCEPTION.—Clause (i) shall 
not apply for purposes of determining 
whether expenses reimbursed through a 
health flexible spending arrangement sub-
ject to section 125(i)(1) are incurred for 
medical care. 
‘‘(C) LIMITATIONS
RELATED
TO
SPORTS 
AND FITNESS EQUIPMENT.—Amounts paid for 
equipment described in subparagraph (A)(i) 
shall be treated as medical care only— 
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‘‘(i) if such equipment is utilized ex-
clusively for participation in fitness, exer-
cise, sport, or other physical activity pro-
grams, 
‘‘(ii) if such equipment is not apparel 
or footwear, and 
‘‘(iii) in the case of any item of sports 
equipment (other than exercise equip-
ment), with respect to so much of the 
amount paid for such item as does not ex-
ceed $250. 
‘‘(D) FITNESS
FACILITY
DEFINED.—For 
purposes of subparagraph (A)(iii), the term ‘fit-
ness facility’ means a facility— 
‘‘(i) providing instruction in a pro-
gram of physical exercise, offering facilities 
for the preservation, maintenance, encour-
agement, or development of physical fit-
ness, or serving as the site of such a pro-
gram of a State or local government, 
‘‘(ii) which is not a private club owned 
and operated by its members, 
‘‘(iii) which does not offer golf, hunt-
ing, sailing, or riding facilities, 
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‘‘(iv) whose health or fitness facility is 
not incidental to its overall function and 
purpose, and 
‘‘(v) which is fully compliant with the 
State of jurisdiction and Federal anti-dis-
crimination laws.’’. 
(b) LIMITATION NOT TO APPLY FOR CERTAIN PUR-
POSES.— 
(1) HEALTH
SAVINGS
ACCOUNTS.—Subpara-
graph (A) of section 223(d)(2) is amended by insert-
ing ‘‘, determined without regard to paragraph 
(12)(B) thereof’’ after ‘‘medical care (as defined in 
section 213(d)’’. 
(2) ARCHER MSAS.—Subparagraph (A) of sec-
tion 220(d)(2) is amended by inserting ‘‘, deter-
mined without regard to paragraph (12)(B) thereof’’ 
after ‘‘medical care (as defined in section 213(d)’’. 
(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. 602. CERTAIN NUTRITIONAL AND DIETARY SUPPLE-
MENTS TO BE TREATED AS MEDICAL CARE. 
(a) IN GENERAL.—Subsection (d) of section 213, as 
amended by section 601, is amended by adding at the end 
the following new paragraph: 
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‘‘(13) NUTRITIONAL
AND
DIETARY
SUPPLE-
MENTS.— 
‘‘(A) IN
GENERAL.—The term ‘medical 
care’ shall include amounts paid to purchase 
herbs, vitamins, minerals, homeopathic rem-
edies, meal replacement products, and other di-
etary and nutritional supplements. 
‘‘(B) LIMITATION.—Amounts treated as 
medical care under subparagraph (A) shall not 
exceed $1,000 with respect to any individual for 
any taxable year. 
‘‘(C) MEAL
REPLACEMENT
PRODUCT.— 
For purposes of this paragraph, the term ‘meal 
replacement product’ means any product that— 
‘‘(i) is permitted to bear labeling mak-
ing a claim described in section 403(r)(3) 
of the Federal Food, Drug, and Cosmetic 
Act, and 
‘‘(ii) is permitted to claim under such 
section that such product is low in fat and 
is a good source of protein, fiber, and mul-
tiple essential vitamins and minerals. 
‘‘(D) 
EXCEPTION.—Subparagraph 
(B) 
shall not apply for purposes of determining 
whether expenses reimbursed through a health 
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flexible spending arrangement subject to section 
125(i)(1) are incurred for medical care.’’. 
(b) LIMITATION NOT TO APPLY FOR CERTAIN PUR-
POSES.— 
(1) HEALTH
SAVINGS
ACCOUNTS.—Subpara-
graph (A) of section 223(d)(2), as amended by sec-
tion 601, is amended by striking ‘‘paragraph 
(12)(B)’’ and inserting ‘‘paragraphs (12)(B) and 
(13)(B)’’. 
(2) ARCHER MSAS.—Subparagraph (A) of sec-
tion 220(d)(2), as amended by section 601, is 
amended by striking ‘‘paragraph (12)(B)’’ and in-
serting ‘‘paragraphs (12)(B) and (13)(B)’’. 
(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. 603. CERTAIN PROVIDER FEES TO BE TREATED AS 
MEDICAL CARE. 
(a) IN GENERAL.—Subsection (d) of section 213, as 
amended by sections 601 and 602, is amended by adding 
at the end the following new paragraph: 
‘‘(14) PERIODIC
PROVIDER
FEES.—The term 
‘medical care’ shall include— 
‘‘(A) periodic fees paid to a primary care 
physician for a defined set of medical services 
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or the right to receive medical services on an 
as-needed basis, and 
‘‘(B) pre-paid primary care services de-
signed to screen for, diagnose, cure, mitigate, 
treat, 
or 
prevent 
disease 
and 
promote 
wellness.’’. 
(b) EXCEPTION
FOR
FLEXIBLE
SPENDING
AC-
COUNTS.—Section 125 is amended by redesignating sub-
sections (k) and (l) as subsections (l) and (m), respec-
tively, and by inserting after subsection (j) the following 
new subsection: 
‘‘(k) SPECIAL RULE WITH RESPECT TO HEALTH 
FLEXIBLE SPENDING ARRANGEMENTS.—For purposes of 
applying this with respect to any health flexible spending 
arrangement, amounts described in section 213(d)(14) 
shall not be considered insurance.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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