I 
114TH CONGRESS 
2D SESSION 
H. R. 5324 
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. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 25, 2016 
Mr. BRAT (for himself, Mr. CULBERSON, and Mr. MEADOWS) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
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. 
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 ‘‘Health Savings Ac-
count Expansion Act of 2016’’. 
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SEC. 2. ADEQUATE FUNDS FOR HEALTH INSURANCE PLANS. 
(a) IN GENERAL.—Section 223(b)(1) of the Internal 
Revenue Code of 1986 is amended by striking ‘‘the sum 
of the monthly’’ and all that follows through ‘‘eligible indi-
vidual’’ and inserting ‘‘$9,000 ($18,000 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 redesig-
nating paragraphs (4), (6), (7), and (8) as para-
graphs (2), (3), (4), and (5), respectively. 
(2) Section 223(b)(2) of such Code (as redesig-
nated by paragraph (1)) is amended by striking the 
last sentence. 
(3) Section 223(b)(4) of such Code (as redesig-
nated by paragraph (1)) is amended to read as fol-
lows: 
‘‘(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— 
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‘‘(i) the number of months in the tax-
able year during which such individual was 
not so entitled, bears to 
‘‘(ii) 12, and 
‘‘(B) be zero for any taxable year there-
after.’’. 
(4) Section 223(g)(1) of such Code is amend-
ed— 
(A) in the matter preceding subparagraph 
(A) by striking ‘‘Each dollar amount in sub-
section (b)(2)’’ and inserting ‘‘In the case of 
taxable years beginning after December 31, 
2017, each dollar amount in subsection (b)(1)’’, 
(B) by amending subparagraph (B) to read 
as follows: 
‘‘(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 2016’ for 
‘calendar year 1992’.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2016. 
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SEC. 3. PARITY WITH EMPLOYER-PROVIDED HEALTH IN-
SURANCE; DIRECT PRIMARY CARE. 
(a) IN GENERAL.—Section 223(d)(2) of the Internal 
Revenue Code of 1986 is amended to read as follows: 
‘‘(2) QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
medical expenses’ means, with respect to an ac-
count beneficiary, amounts paid by such bene-
ficiary for medical care (as defined in section 
213(d)) for such individual, the spouse of such 
individual, 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, but only to the extent such 
amounts are not compensated for by insurance 
or otherwise. 
‘‘(B) DIRECT PRIMARY CARE.— 
‘‘(i) IN
GENERAL.—Such term in-
cludes 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’ 
means 
an 
arrangement 
under which an individual is provided cov-
erage restricted to primary care services in 
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exchange for a fixed periodic fee or pay-
ment for primary care services.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2016. 
SEC. 4. FREEDOM FROM MANDATE. 
(a) IN GENERAL.—Section 223 of the Internal Rev-
enue Code of 1986, as amended by sections 2 and 3, is 
amended by striking subsection (c) and redesignating sub-
sections (d) through (h) as subsections (c) through (g), 
respectively. 
(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 indi-
vidual, 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 indi-
vidual 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 re-
designated by subsection (a)) is amended— 
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(A) by striking ‘‘subsection (f)(5)’’ and in-
serting ‘‘subsection (e)(5)’’, and 
(B) in clause (ii) by striking ‘‘the sum 
of—’’ and all that follows and inserting ‘‘the 
dollar amount in effect under subsection 
(b)(1).’’. 
(4) Section 223(f)(1) of such Code (as redesig-
nated by subsection (a)) is amended by striking 
‘‘subsections (b)(1) and (c)(2)(A)’’ and inserting 
‘‘subsection (b)(1)’’. 
(5) Section 26(b)(U) of such Code is amended 
by striking ‘‘section 223(f)(4)’’ and inserting ‘‘sec-
tion 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)’’ 
each place it appears and inserting ‘‘section 223(c)’’. 
(7) 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)’’. 
(8) Section 408(d)(9) of such Code is amend-
ed— 
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(A) in subparagraph (A) by striking ‘‘who 
is an eligible individual (as defined in section 
223(c)) and’’, and 
(B) in subparagraph (C) by striking ‘‘com-
puted on the basis of the type of coverage under 
the high deductible health plan covering the in-
dividual at the time of the qualified HSA fund-
ing distribution’’. 
(9) Section 877A(g)(6) of such Code is amend-
ed 
by 
striking 
‘‘223(f)(4)’’ 
and 
inserting 
‘‘223(e)(4)’’. 
(10) Section 4973(g) of such Code is amend-
ed— 
(A) by striking ‘‘section 223(d)’’ and in-
serting ‘‘section 223(c)’’, 
(B) in paragraph (2), by striking ‘‘section 
223(f)(2)’’ and inserting ‘‘section 223(e)(2)’’, 
and 
(C) by striking ‘‘section 223(f)(3)’’ and in-
serting ‘‘section 223(e)(3)’’. 
(11) 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)’’. 
(12) Section 6693(a)(2)(C) of such Code is 
amended by striking ‘‘section 223(h)’’ and inserting 
‘‘section 223(g)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2016. 
SEC. 5. RESTORING LOWER PENALTY FOR NONQUALIFIED 
DISTRIBUTIONS. 
(a) HSAS.—Section 223(e)(4)(A) of the Internal 
Revenue Code of 1986, as amended by section 4, is 
amended by striking ‘‘20 percent’’ and inserting ‘‘10 per-
cent’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions made in taxable 
years beginning after December 31, 2016. 
Æ 
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