I
103D CONGRESS
1ST SESSION
H. R. 3065
To amend the Internal Revenue Code of 1986 to establish medical care
savings benefits.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 14, 1993
Mr. JACOBS (for himself, Mr. ARCHER, Mr. INHOFE, Mr. TORRICELLI, Mr.
LIPINSKI, and Mr. POSHARD) introduced the following bill; which was re-
ferred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to establish
medical care savings benefits.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medical Cost Containment Act of 1993’’.
(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
to, or repeal of, a section or other provision, the reference
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shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
SEC. 2.
Section 125A is added to the Code to read as follows:
‘‘SEC. 125A. MEDICAL CARE SAVINGS BENEFITS.
‘‘(a) IN GENERAL.—A medical care savings benefit
is a qualified benefit which consists of a Health Plan meet-
ing the requirements of this section that includes, as part
thereof, a Medical Care Savings Account, as set forth in
section 408A.
‘‘(b) ESTABLISHMENT OF MEDICAL CARE SAVINGS
BENEFIT.—A medical care savings benefit shall be estab-
lished as a Health Plan which provides that all or part
of the premium differential realized by instituting a Quali-
fied Higher Deductible Health Plan is credited to a par-
ticipating employee during a plan year to pay for medical
care described in section 213(d) subject to the limitations
set forth in subsection (e) hereof. To the extent that any
amount remains credited to that participant at the end
of each plan year, such amount shall be deposited to a
section 408(A) medical care savings account (which may
also be referred to as a ‘Medical IRA’) for that partici-
pant.
‘‘(c) PAYMENTS FROM ACCOUNT BALANCE.—If the
plan provides for level installment payments, the plan may
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also provide that the maximum amount of reimbursement
at a particular time during the period of coverage may
be limited to the amount of actual contributions to the
participant’s benefit account. A participant may be ad-
vanced, interest free, such amounts necessary to cover in-
curred medical expenses which exceed the amount then
credited to the participant’s benefit account, upon the par-
ticipant’s agreement to repay such advancement from fu-
ture installments or upon ceasing to be a participant.
‘‘(d) REPORTING.—Employers shall cause to be is-
sued to participating employees, not less frequently than
quarterly, a statement setting forth amounts remaining in
their accounts.
‘‘(e) LIMITATIONS ON MEDICAL CARE SAVINGS BEN-
EFITS.—For purposes of this section—
‘‘(1) IN GENERAL.—In the case of an Employer
who has a Health Plan in existence immediately
prior to the adoption of the Medical Care Savings
Benefit, the maximum amount that may be contrib-
uted annually to a participant’s benefit account shall
be equal to—
‘‘(A) the cost of that Health Plan for that
participant’s type of coverage; plus
‘‘(B) a cost of living adjustment for the
calendar year in which the plan year begins, de-
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termined under section 1(f)(3) of the Code as
adjusted annually based on the CPI-Medical
cost of living component.
‘‘(2) OTHER EMPLOYERS.—In the case of an
Employer to whom paragraph (1) does not apply,
the contribution limit shall be equal to the 67th per-
centile of the per employee health plan expenditures
(for the calendar year for which such plan begins)
for the type of coverage applicable to such employee
based on a broad representative survey using meth-
odology the same as or similar to that used by
States to develop an average market premium for
small group guarantee access legislation. Such study
may be no broader than each State and may be bro-
ken down into representative surveys for areas with-
in a State. The amount of such contribution shall be
adjusted annually in accordance with the cost of liv-
ing adjustment provided for in subsection (1)(b) of
this section.
‘‘(3) OVERALL LIMITATION.—In no event may
any contribution described above exceed the deduct-
ible amount of the Qualified Higher Deductible
Plan.
‘‘(f) HEALTH PLAN.—The term ‘Health Plan’ means
an employee welfare benefit plan providing medical care
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(as defined in section 213(d) of the Internal Revenue Code
of 1954) to participants or beneficiaries directly or
through insurance, reimbursement, or otherwise.
‘‘(g) QUALIFIED HIGHER DEDUCTIBLE PLAN.—The
term ‘Qualified Higher Deductible Plan’ is a Health Plan
which provides for payment of covered benefits in excess
of the higher deductible, which higher deductible shall not
exceed $5,000 in 1993 and, adjusted annually thereafter
for increases in the cost of living in accordance with regu-
lations prescribed by the Secretary.
‘‘(h) COORDINATION
WITH
HEALTH
FLEXIBLE
SPENDING ACCOUNTS.—If, during a Plan Year, a partici-
pating employee has a Medical Care Savings Benefit in
effect and a health flexible spending account established
under section 125, coverage under the health flexible
spending account, for the type of medical expenses that
may be reimbursed under the Medical Care Savings Bene-
fit, would be limited to 100 percent of the deductible under
the Qualified Higher Deductible Plan, less the amount
credited in the current year to the Employee’s Medical
Care Savings Benefit Account. For purposes of section
125, a Medical Care Savings Benefit is not considered to
involve the deferral of compensation for purposes of the
Code.
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‘‘(i) SEPARATE DETERMINATIONS FOR CATEGORIES
OF EMPLOYEES AND SEPARATE LINES OF BUSINESS.—
Contributions to Health Plans established by an Employer
may be separately determined on the basis of:
‘‘(1) Types of coverage.
‘‘(2) Reasonable classifications of employees
based on such classifications as hours of work per
week, retirement status, coverage by a collective bar-
gaining agreement.
‘‘(3) Employees within separate lines of busi-
ness, within the meaning of section 414(r).
‘‘(j) OTHER DEFINITIONS FOR PURPOSES OF THIS
SECTION.—
‘‘(1) EMPLOYEE.—The term ‘employee’ means
any individual employed by an Employer, includ-
ing—
‘‘(A) an individual who is employee within
the meaning of section 401(c)(1); and
‘‘(B) former employees.
‘‘(2) TYPES OF COVERAGE.—The types of cov-
erage are—
‘‘(A) self-only coverage; and
‘‘(B) coverage other than self-only cov-
erage.