I 
111TH CONGRESS 
1ST SESSION H. R. 3971 
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 
OCTOBER 29, 2009 
Mr. FLAKE 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, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Health Savings Account Expansion Act of 2009’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
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Sec. 1. Short title, etc. 
TITLE I—EXPANSION OF HEALTH SAVINGS ACCOUNTS 
Sec. 101. Repeal of high deductible health plan requirement. 
Sec. 102. Health insurance may be purchased from account. 
Sec. 103. Increase in dollar limitation. 
Sec. 104. Effective date. 
TITLE II—TERMINATION OF EXISTING HEALTH-RELATED TAX 
PREFERENCES FOR MEDICAL COVERAGE, MEDICAL CARE, ETC 
Sec. 201. Termination of existing health-related tax preferences for medical 
coverage, medical care, etc. 
Sec. 202. Termination of employer deduction for health coverage. 
TITLE I—EXPANSION OF HEALTH 
SAVINGS ACCOUNTS 
SEC. 101. REPEAL OF HIGH DEDUCTIBLE HEALTH PLAN RE-
QUIREMENT. 
(a) IN GENERAL.—Section 223 of the Internal Rev-
enue Code of 1986 is amended by striking subsection (c) 
and redesignating subsections (d) through (h) as sub-
sections (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 
is amended by striking paragraph (8). 
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(3) Subparagraph (A) of section 223(c)(1) of 
the Internal Revenue Code of 1986 (as redesignated 
by subsection (a)) is amended— 
(A) by striking ‘‘subsection (f)(5)’’ and in-
serting ‘‘subsection (e)(5)’’, and 
(B) in clause (ii)— 
(i) 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 
‘‘Each dollar amount in subsections (b)(2) and 
(c)(2)(A)’’ and inserting ‘‘In the case of a taxable 
year beginning after December 31, 2010, each dollar 
amount in 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— 
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(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— 
(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 
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(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 
(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)’’. 
SEC. 102. HEALTH INSURANCE MAY BE PURCHASED FROM 
ACCOUNT. 
Paragraph (2) of section 223(d) of the Internal Rev-
enue Code of 1986 is amended to read as follows: 
‘‘(2) QUALIFIED
MEDICAL
EXPENSES.—The 
term ‘qualified medical expenses’ means, with re-
spect to an account beneficiary, amounts paid by 
such beneficiary for medical care (as defined in sec-
tion 213(d)) for such individual, the spouse of such 
individual, and any dependent (as defined in section 
152, determined without regard to subsections 
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(b)(1), (b)(2), and (d)(1)(B) thereof) of such indi-
vidual, but only to the extent such amounts are not 
compensated for by insurance or otherwise.’’. 
SEC. 103. INCREASE IN DOLLAR LIMITATION. 
(a) IN GENERAL.—Paragraph (1) of section 223(b) 
of the Internal Revenue Code of 1986 is amended by strik-
ing ‘‘the sum of the monthly’’ and all that follows through 
‘‘eligible individual’’ and inserting ‘‘$8,000 ($16,000 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), and (7) as paragraphs 
(2), (3), and (4), respectively. 
(2) Paragraph (2) of section 223(b) of such 
Code (as redesignated by paragraph (1)) is amended 
by striking the last sentence. 
(3) Paragraph (4) of section 223(b) of such 
Code (as redesignated by paragraph (1)) is amended 
to read as follows: 
‘‘(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 
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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— 
‘‘(i) the number of months in the tax-
able year during which such individual was 
not so entitled, bears 
‘‘(ii) to 12, and 
‘‘(B) be zero for any taxable year there-
after.’’. 
(4) Subparagraph (B) of section 223(f)(1) of 
such Code (as redesignated by section 101) is 
amended 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 2009’ for 
‘calendar year 1992’.’’. 
SEC. 104. EFFECTIVE DATE. 
The amendments made by this title shall apply to tax-
able years beginning after the date of the enactment of 
this Act. 
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TITLE II—TERMINATION OF EX-
ISTING 
HEALTH-RELATED 
TAX PREFERENCES FOR MED-
ICAL 
COVERAGE, 
MEDICAL 
CARE, ETC 
SEC. 201. TERMINATION OF EXISTING HEALTH-RELATED 
TAX 
PREFERENCES 
FOR 
MEDICAL 
COV-
ERAGE, MEDICAL CARE, ETC. 
(a) AMOUNTS RECEIVED UNDER ACCIDENT
AND 
HEALTH PLANS.—Section 105 of the Internal Revenue 
Code of 1986 is amended by adding at the end the fol-
lowing: 
‘‘(k) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2009.’’. 
(b) CONTRIBUTIONS BY EMPLOYER TO ACCIDENT 
AND HEALTH PLANS.— 
(1) IN GENERAL.—Section 106 of such Code is 
amended by adding at the end the following: 
‘‘(f) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2009.’’. 
(2) CONFORMING AMENDMENT.—Subparagraph 
(B) of section 223(b)(2) of such Code, as amended 
by section 103 of this Act, is amended by striking 
‘‘which is excludable from the taxpayer’s gross in-
come for such taxable year under section 106(d)’’ 
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and inserting ‘‘which would have been excludable 
from the taxpayer’s gross income for such taxable 
year under section 106(d) (determined as if such 
section was in effect on the day before the date of 
enactment of the Health Savings Account Expansion 
Act of 2009)’’. 
(c) SPECIAL RULES FOR HEALTH INSURANCE COSTS 
OF SELF-EMPLOYED INDIVIDUALS.—Paragraph (1) of 
section 162(l) of such Code is amended by adding at the 
end the following new subparagraph: 
‘‘(C) YEARS AFTER 2009.—In the case of 
any taxable year beginning in a calendar year 
after 2009, the applicable percentage shall be 
zero.’’. 
(d) MEDICAL, DENTAL, ETC., EXPENSES.—Section 
213 of such Code is amended by adding at the end the 
following: 
‘‘(f) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2009.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
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SEC. 202. TERMINATION OF EMPLOYER DEDUCTION FOR 
HEALTH COVERAGE. 
(a) IN GENERAL.—Section 162 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(q) as subsection (r) and by inserting after subsection (p) 
the following new subsection: 
‘‘(q) DENIAL OF DEDUCTION FOR MEDICAL CARE.— 
No deduction shall be allowed under this chapter to an 
employer for any amount paid or incurred with respect 
to an employee, his spouse, and dependents during the 
taxable year— 
‘‘(1) for insurance which constitutes medical 
care, 
‘‘(2) under a health flexible spending arrange-
ment or health reimbursement arrangement, 
‘‘(3) to an Archer MSA or a health savings ac-
count, or 
‘‘(4) under any other arrangement under which 
the employer provides medical care, directly or indi-
rectly, to the employee, spouse, or dependent.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2009. 
Æ 
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