I 
108TH CONGRESS 
1ST SESSION H. R. 2351
To amend the Internal Revenue Code of 1986 to allow a deduction to 
individuals for amounts contributed to health savings accounts and to 
provide for the disposition of unused health benefits in cafeteria plans 
and flexible spending arrangements. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 5, 2003
Mr. THOMAS (for himself, Mr. LIPINSKI, Mrs. JOHNSON of Connecticut, Mr. 
SAM JOHNSON of Texas, Mr. HAYWORTH, Mr. LEWIS of Kentucky, Mr. 
BRADY of Texas, Mr. ENGLISH, Mr. SESSIONS, Mr. OSE, Mr. FOSSELLA, 
Mr. PAUL, Mr. SMITH of New Jersey, Mr. WELDON of Florida, Mr. 
RYUN of Kansas, Mr. DELAY, Mr. TOOMEY, Mr. BARTON of Texas, Mr. 
WALSH, Mr. BALLENGER, Mr. CAMP, Mr. COLLINS, Mr. RYAN of Wis-
consin, Mr. KELLER, Mr. HERGER, Mr. DOOLITTLE, Mr. DEMINT, and 
Mr. NORWOOD) 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 allow a 
deduction to individuals for amounts contributed to 
health savings accounts and to provide for the disposition 
of unused health benefits in cafeteria plans and flexible 
spending arrangements.
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 Availability Act’’. 
SEC. 2. HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions for individuals) is amended 
by redesignating section 223 as section 224 and by insert-
ing after section 222 the following new section: 
‘‘SEC. 223. HEALTH SAVINGS ACCOUNTS. 
‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual who is an eligible individual for any month during 
the taxable year, there shall be allowed as a deduction for 
the taxable year an amount equal to the aggregate amount 
paid in cash during such taxable year by such individual 
to a health savings account of such individual. 
‘‘(b) LIMITATIONS.—
‘‘(1) IN GENERAL.—The amount allowable as a 
deduction under subsection (a) to an individual for 
the taxable year shall not exceed the sum of the 
monthly limitations for months during such taxable 
year that the individual is an eligible individual. 
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the amount equal to 1⁄12 of 
the annual deductible (as of the first day of such
month) of the individual’s coverage under the high 
deductible health plan. 
‘‘(3) COORDINATION WITH EMPLOYER AND MSA 
CONTRIBUTIONS.—The limitation which would (but 
for this paragraph) apply under this subsection to 
the taxpayer for any taxable year shall be reduced 
(but not below zero) by the sum of—
‘‘(A) the aggregate amount which would 
(but for subsections (b) and (d) of section 106) 
be includible in the taxpayer’s gross income for 
such taxable year, and 
‘‘(B) the aggregate amount paid during 
such taxable by such individual to Archer MSAs 
of such individual. 
‘‘(4) SPECIAL RULES FOR MARRIED INDIVID-
UALS, DEPENDENTS, AND MEDICARE ELIGIBLE INDI-
VIDUALS.—Rules similar to the rules of paragraphs 
(3), (6), and (7) of section 220(b) shall apply for 
purposes of this section. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.— 
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any month, any 
individual if—
‘‘(i) such individual is covered under a 
high deductible health plan as of the 1st 
day of such month, and 
‘‘(ii) such individual is not, while cov-
ered under a high deductible health plan, 
covered under any health plan—
‘‘(I) which is not a high deduct-
ible health plan, and 
‘‘(II) which provides coverage for 
any benefit which is covered under the 
high deductible health plan. 
‘‘(B) 
CERTAIN
COVERAGE
DIS-
REGARDED.—Subparagraph (A)(ii) shall be ap-
plied without regard to— 
‘‘(i) coverage for any benefit provided 
by permitted insurance, and 
‘‘(ii) coverage (whether through insur-
ance or otherwise) for accidents, disability, 
dental care, vision care, or long-term care. 
‘‘(2) HIGH DEDUCTIBLE HEALTH PLAN.—
‘‘(A) IN
GENERAL.—The term ‘high de-
ductible health plan’ means a health plan— 
‘‘(i) in the case of self-only coverage, 
which has an annual deductible which is
not less than $1,000 and not more than 
$2,250, 
‘‘(ii) in the case of family coverage, 
which has an annual deductible which is
not less than $2,000 and not more than 
$4,500, and 
‘‘(iii) the annual out-of-pocket ex-
penses required to be paid under the plan 
(other than for premiums) for covered ben-
efits does not exceed— 
‘‘(I) $3,000 for self-only cov-
erage, and 
‘‘(II) $5,500 for family coverage. 
‘‘(B) SPECIAL RULES.— 
‘‘(i) 
EXCLUSION
OF
CERTAIN 
PLANS.—Such term does not include a 
health plan if substantially all of its cov-
erage is coverage described in paragraph 
(1)(B). 
‘‘(ii) SAFE HARBOR FOR ABSENCE OF 
PREVENTIVE CARE DEDUCTIBLE.—A plan 
shall not fail to be treated as a high de-
ductible health plan by reason of failing to 
have a deductible for preventive care.
‘‘(C) TREATMENT
OF
NETWORK
SERV-
ICES.—
‘‘(i) IN GENERAL.—In the case of a 
health plan which is a preferred provider 
organization plan and which would (with-
out regard to services provided outside 
such organization’s network of providers 
described in clause (iii)(I)) be a high de-
ductible health plan, such plan shall not 
fail to be a high deductible health plan be-
cause—
‘‘(I) the annual deductible for 
services provided outside such network 
exceeds the applicable maximum dol-
lar amount in clause (i) or (ii) of sub-
paragraph (A), or 
‘‘(II) the annual out-of-pocket ex-
penses required to be paid for services 
provided outside such network exceeds 
the applicable dollar amount in sub-
paragraph (A)(iii). 
‘‘(ii) ANNUAL DEDUCTIBLE.—The an-
nual deductible taken into account under 
subsection (b)(2) with respect to a plan 
which is a high deductible health plan by
reason of clause (i) shall be the annual de-
ductible for services provided within such 
network. 
‘‘(iii) PREFERRED PROVIDER ORGANI-
ZATION PLAN DEFINED.—In this subpara-
graph, the term ‘preferred provider organi-
zation plan’ means a health plan that—
‘‘(I) has a network of providers 
that have agreed to a contractually 
specified reimbursement for covered 
benefits with the organization offering 
the plan, 
‘‘(II) provides for reimbursement 
for all covered benefits regardless of 
whether such benefits are provided 
within such network of providers, and 
‘‘(III) is offered by an organiza-
tion that is not licensed or organized 
under State law as a health mainte-
nance organization. 
‘‘(3) PERMITTED INSURANCE.—The term ‘per-
mitted insurance’ has the meaning given such term 
in section 220(c)(3).
‘‘(f) TAX TREATMENT OF DISTRIBUTIONS.—
‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL 
EXPENSES.—Any amount paid or distributed out of 
a health savings account which is used exclusively to 
pay qualified medical expenses of any account holder 
shall not be includible in gross income.
‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 
QUALIFIED MEDICAL EXPENSES.—Any amount paid 
or distributed out of a health savings account which 
is not used exclusively to pay the qualified medical 
expenses of the account holder shall be included in 
the gross income of such holder. 
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
any health savings account of an individual, 
paragraph (2) shall not apply to distributions 
from the health savings accounts of such indi-
vidual (to the extent such distributions do not 
exceed the aggregate excess contributions to all 
such accounts of such individual for such year) 
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 excess 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) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
than a rollover contribution) which is neither 
excludable from gross income under section 
106(d) nor deductible under this section. 
‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT 
USED FOR QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter on the account holder for any tax-
able year in which there is a payment or dis-
tribution from a health savings account of such 
holder which is includible in gross income under 
paragraph (2) shall be increased by 15 percent 
of the amount which is so includible.
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Subparagraph (A) shall not apply if 
the payment or distribution is made after the 
account holder becomes disabled within the 
meaning of section 72(m)(7) or dies. 
‘‘(C) 
EXCEPTION
FOR
DISTRIBUTIONS 
AFTER MEDICARE ELIGIBILITY.—Subparagraph 
(A) shall not apply to any payment or distribu-
tion after the date on which the account holder 
attains the age specified in section 1811 of the 
Social Security Act. 
‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
‘‘(A) IN
GENERAL.—Paragraph (2) shall 
not apply to any amount paid or distributed 
from an Archer MSA or a health savings ac-
count to the account holder to the extent the 
amount received is paid into a health savings 
account for the benefit of such holder not later 
than the 60th day after the day on which the 
holder receives the payment or distribution. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from an Ar-
cher MSA or a health savings account if, at any 
time during the 1-year period ending on the day 
of such receipt, such individual received any 
other amount described in subparagraph (A) 
from an Archer MSA or a health savings ac-
count which was not includible in the individ-
ual’s gross income because of the application of 
this paragraph. 
‘‘(6) ADDITIONAL TAX; SPECIAL RULES.—Rules 
similar to the rules of paragraphs (6), (7), and (8) 
of section 220(f) shall apply for purposes of this sec-
tion. 
‘‘(g) COST-OF-LIVING ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in a calendar year after 1998, each 
dollar amount in subsection (c)(2) shall be increased 
by an amount equal to—
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which such taxable year begins by sub-
stituting ‘calendar year 1997’ for ‘calendar year 
1992’ in subparagraph (B) thereof.
‘‘(2) SPECIAL
RULES.—In the case of the 
$1,000 amount in subsection (c)(2)(A)(i) and the 
$2,000 amount in subsection (c)(2)(A)(ii), para-
graph (1)(B) shall be applied by substituting ‘cal-
endar year 2002’ for ‘calendar year 1997’. 
‘‘(3) ROUNDING.—If any increase under para-
graph (1) or (2) is not a multiple of $50, such in-
crease shall be rounded to the nearest multiple of 
$50. 
‘‘(h) REPORTS.—The Secretary may require the 
trustee of a health savings account to make such reports 
regarding such account to the Secretary and to the ac-
count holder with respect to contributions, distributions, 
and such other matters as the Secretary determines appro-
priate. The reports required by this subsection shall be 
filed at such time and in such manner and furnished to 
such individuals at such time and in such manner as may 
be required by the Secretary.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 
of section 62 of such Code is amended by inserting after 
paragraph (18) the following new paragraph: 
‘‘(19) HEALTH SAVINGS ACCOUNTS.—The de-
duction allowed by section 223.’’.