I 
110TH CONGRESS 
2D SESSION 
H. R. 6288 
To amend the Internal Revenue Code of 1986 to provide for tax-favored 
retirement health savings accounts, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 17, 2008 
Mr. MCHUGH (for himself, Mr. KUHL of New York, Mr. KING of New York, 
and Mr. WALSH of New York) 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 provide 
for tax-favored retirement 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 ‘‘Retiree Health Ac-
count Act of 2008’’. 
SEC. 2. RETIREMENT HEALTH ARRANGEMENT. 
(a) IN GENERAL.—Section 401 of the Internal Rev-
enue Code of 1986 (relating to qualified pension, profit- 
sharing, and stock bonus plans) is amended by redesig-
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nating subsection (o) as subsection (p) and inserting after 
subsection (n) the following new subsection: 
‘‘(o) RETIREMENT HEALTH PLAN.— 
‘‘(1) IN GENERAL.— 
‘‘(A) TREATED
IN
SAME
MANNER
AS 
401(k).—Except as provided in this subsection, 
a retirement health arrangement shall be treat-
ed for purposes of this title in the same manner 
as an qualified cash or deferred arrangement 
described in section 401(k)(2). 
‘‘(B) SEPARATE APPLICATION OF APPLICA-
BLE RULES.—Rules made applicable by reason 
of this paragraph shall be applied separately 
with respect to retirement health arrangements 
and other qualified cash or deferred arrange-
ments of the individual. 
‘‘(2) RETIREMENT HEALTH ARRANGEMENT.— 
For purposes of this subsection, the term ‘retirement 
health arrangement’ means a cash or deferred ar-
rangement described in section 401(k)(2) which is 
designated (in such manner as the Secretary may 
prescribe) at the time of establishment of the plan 
as a retirement health arrangement. 
‘‘(3) CONTRIBUTIONS AFTER MEDICARE ELIGI-
BILITY.—Except in the case of a rollover contribu-
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tion described in paragraph (5)(A), no contributions 
may be made to an employee’s retirement health ar-
rangement during calendar years beginning after the 
first month such employee is entitled to benefits 
under title XVIII of the Social Security Act. 
‘‘(4) TREATMENT OF DISTRIBUTIONS.— 
‘‘(A) IN GENERAL.—Any amounts distrib-
uted from a retirement health arrangement 
shall be included in gross income, unless such 
amount is used exclusively to pay qualified med-
ical retirement expenses of the employee. 
‘‘(B) QUALIFIED
RETIREMENT
MEDICAL 
EXPENSE.—For purposes of this section, the 
term ‘qualified retirement medical expense’ 
means, with respect to an individual, amounts 
paid by such individual for medical care (as de-
fined in section 213(d)) of the individual, the 
individual’s spouse, or a dependent of the indi-
vidual, but only if such payments are made on 
or after the date that the individual attains age 
55. 
‘‘(C) 
HARDSHIP
DISTRIBUTIONS.—Sub-
paragraph (A) shall not apply to any amount 
paid or distributed— 
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‘‘(i) on or after disability of the em-
ployee, 
‘‘(ii) if such amount is used exclu-
sively to pay for insurance covering med-
ical care with respect to the individual, the 
individual’s spouse, or a dependent of the 
individual during a period of unemploy-
ment of the individual, or 
‘‘(iii) if such amount is used exclu-
sively to pay for medical care under cir-
cumstances that, to the extent provided in 
regulations, constitute a hardship. 
‘‘(D) OTHER DISTRIBUTION RULES.— 
‘‘(i) PLAN
TERMINATION.—Subpara-
graph (A) shall not apply to amounts paid 
or distributed on or after an event de-
scribed in paragraph (10) of subsection 
(k). 
‘‘(ii) EXCESS CONTRIBUTIONS.—Rules 
similar to the rules of section 401(k)(8) 
shall apply for purposes of this subsection. 
‘‘(iii) NO MINIMUM DISTRIBUTION RE-
QUIREMENT
PRIOR
TO
DEATH.—Section 
401(a)(9) and the incidental death benefit 
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requirement of section 401(a) shall not 
apply for purposes of this subsection. 
‘‘(iv) AFTER DEATH OF EMPLOYEE.— 
Rules similar to the rules of paragraph (8) 
of section 223(f) shall apply for purposes 
of this section. 
‘‘(5) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) 
ROLLOVER
CONTRIBUTIONS.—An 
amount is described in this subparagraph as a 
rollover contribution if it meets the require-
ments of clauses (i) and (ii). 
‘‘(i) IN GENERAL.—Paragraph (4)(A) 
shall not apply to any amount paid or dis-
tributed from a retirement health arrange-
ment to the account holder to the extent 
the amount received is paid into a retire-
ment health arrangement or individual 
health account (as defined in section 
408B) for the benefit of such holder not 
later than the 60th day after the day on 
which the holder receives the payment or 
distribution. 
‘‘(ii) 
LIMITATION.—This 
subpara-
graph shall not apply to any amount de-
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scribed in clause (i) received by an indi-
vidual from a retirement health arrange-
ment if, at any time during the 1-year pe-
riod ending on the day of such receipt, 
such individual received any other amount 
described in clause (i) from a retirement 
health arrangement which was not includ-
ible in the individual’s gross income be-
cause of the application of this subpara-
graph. 
‘‘(B) COORDINATION WITH MEDICAL EX-
PENSE
DEDUCTION.—For purposes of deter-
mining the amount of the deduction under sec-
tion 213, any payment or distribution out of a 
retirement health arrangement shall not be 
treated as an expense paid for medical care, to 
the extent such payment or distribution was not 
included in gross income. 
‘‘(C) NO
EXCLUSIVE
PLAN
REQUIRE-
MENT.—Section 401(k)(11)(A)(ii) shall not 
apply with respect to a retirement health ar-
rangement. 
‘‘(D) APPLICATION OF PARTICIPATION AND 
DISCRIMINATION
STANDARDS.—An 
employer 
may elect, at such time and in such form and 
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manner as the Secretary shall by regulation 
prescribe, to treat any qualified cash or de-
ferred arrangement and retirement health ar-
rangement maintained by the employer as 1 ar-
rangement for purposes of meeting the require-
ments of section 401(k)(3)(A)(ii).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2008. 
SEC. 3. INDIVIDUAL HEALTH ACCOUNTS. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 of the Internal Revenue Code of 1986 (re-
lating to pension, profit-sharing, stock bonus plans, etc.) 
is amended by inserting after section 408A the following 
new section: 
‘‘SEC. 408B. INDIVIDUAL HEALTH ACCOUNTS. 
‘‘(a) IN GENERAL.— 
‘‘(1) TREATED IN SAME MANNER AS IRA.—Ex-
cept as provided in this section, an individual health 
account shall be treated for purposes of this title in 
the same manner as an individual retirement plan. 
‘‘(2) SEPARATE
APPLICATION
OF
RULES.— 
Rules made applicable by reason of this paragraph 
shall be applied separately with respect to individual 
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health accounts and individual retirement plans of 
the individual. 
‘‘(b) INDIVIDUAL HEALTH ACCOUNT.—For purposes 
of this title, the term ‘individual health account’ means 
an individual retirement plan (as defined in section 
7701(a)(37)) which is designated (in such manner as the 
Secretary may prescribe) at the time of establishment of 
the plan as an individual health account. 
‘‘(c) CONTRIBUTIONS.— 
‘‘(1) RETIREMENT HEALTH SAVINGS REFUND 
PAYMENT.—Section 408(a)(1) shall not apply with 
respect to a payment under section 6431. 
‘‘(2) CONTRIBUTIONS AFTER MEDICARE ELIGI-
BILITY.—Except in the case of a rollover contribu-
tion described in subsection (e)(1), no contributions 
may be made to an employee’s retirement health ar-
rangement during calendar years beginning after the 
first month such employee is entitled to benefits 
under title XVIII of the Social Security Act. 
‘‘(d) TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) IN
GENERAL.—Any amounts distributed 
from an individual health account shall be included 
in gross income, unless such amount is used exclu-
sively to pay qualified medical retirement expenses 
of the account beneficiary. 
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‘‘(2) QUALIFIED
RETIREMENT
MEDICAL
EX-
PENSE.—For purposes of this section, the term 
‘qualified retirement medical expense’ shall have the 
meaning given such term by section 401(o)(4) (relat-
ing to retirement health arrangements). 
‘‘(3) HARDSHIP
DISTRIBUTIONS.—Paragraph 
(1) shall not apply to any amount paid or distrib-
uted— 
‘‘(A) on or after disability (within the 
meaning of section 72(m)(7)) of the account 
beneficiary, 
‘‘(B) if such amount is used exclusively to 
pay for insurance covering medical care with re-
spect to the individual, the individual’s spouse, 
or a dependent of the individual during a period 
of unemployment of the account beneficiary, or 
‘‘(C) if such amount is used exclusively to 
pay for medical care under circumstances that, 
to the extent provided in regulations, constitute 
a hardship. 
‘‘(4) OTHER DISTRIBUTION RULES.— 
‘‘(A) EXCESS CONTRIBUTIONS; TRANSFER 
OF
ACCOUNT
INCIDENT
TO
DIVORCE.—Rules 
similar to the rules of paragraphs (4) through 
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(6) of section 408(d) shall apply for purposes of 
this section. 
‘‘(B) NO
MINIMUM
DISTRIBUTION
RE-
QUIREMENT
PRIOR
TO
DEATH.—Notwith-
standing subsections (a)(6) and (b)(6), section 
401(a)(9) and the incidental death benefit re-
quirement of section 401(a) shall not apply for 
purposes of this subsection. 
‘‘(C) TREATMENT AFTER DEATH OF AC-
COUNT
BENEFICIARY.—Rules similar to the 
rules of paragraph (8) of section 223(f) shall 
apply for purposes of this section. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) ROLLOVER CONTRIBUTIONS.—An amount 
is described in this paragraph as a rollover contribu-
tion if it meets the requirements of clauses (i) and 
(ii). 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to any amount paid or distributed 
from an individual health account to the ac-
count holder to the extent the amount received 
is paid into an individual health account or re-
tirement health arrangement (as defined in sec-
tion 401(o)(2)) for the benefit of such holder 
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not later than the 60th day after the day on 
which the holder receives the payment or dis-
tribution. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in para-
graph (A) received by an individual from an in-
dividual health account if, at any time during 
the 1-year period ending on the day of such re-
ceipt, such individual received any other amount 
described in subparagraph (A) from an indi-
vidual health account which was not includible 
in the individual’s gross income because of the 
application of this paragraph. 
‘‘(2) COORDINATION WITH MEDICAL EXPENSE 
DEDUCTION.—For purposes of determining the 
amount of the deduction under section 213, any pay-
ment or distribution out of an individual health ac-
count shall not be treated as an expense paid for 
medical care, to the extent such payment or distribu-
tion was not included in gross income. 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the retiree health savings account is estab-
lished.’’. 
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(b) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part I of subchapter D of chapter 1 of 
such Code is amended by inserting after the item relating 
to section 408A the following new item: 
‘‘Sec. 408B. Individual health accounts.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 4. PORTION OF SAVER’S CREDIT REFUNDABLE. 
(a) IN GENERAL.—Section 25B of such Code (relat-
ing to elective deferrals and IRA contributions by certain 
individuals) is amended by adding at the end the following 
new subsection: 
‘‘(h) PORTION OF CREDIT REFUNDABLE.— 
‘‘(1) IN GENERAL.—The aggregate credits al-
lowed to a taxpayer under subpart C shall be in-
creased by the lesser of— 
‘‘(A) $1,000, or 
‘‘(B) the amount of the credit attributable 
to qualified retirement savings contributions 
made by the individual to individual health ac-
counts and retirement health arrangements 
which would be allowed under this section 
(without regard to this subsection and the limi-
tation under section 26(a)(2) or subsection (g), 
as the case may be). 
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The amount of the credit allowed under this subsection 
shall not be treated as a credit allowed under this subpart 
and shall reduce the amount of credit otherwise allowable 
under subsection (a) without regard to section 26(a)(2) 
or subsection (g), as the case may be. 
‘‘(2) LIMITATION.—The amount of the credit 
allowed under this subsection for any taxable year 
shall not exceed an amount equal to the excess (if 
any) of— 
‘‘(A) $5,000, over 
‘‘(B) the aggregate amount of credits al-
lowed under this subsection for all prior taxable 
years. 
‘‘(3) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year after 
2009, the $1,000 amount contained in paragraph 
(1)(A) 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 the taxable year begins, deter-
mined by substituting ‘calendar year 2008’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
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Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of 
$10.’’. 
(b) REFUND PAYABLE TO HEALTH ACCOUNT.— 
(1) IN GENERAL.—Subchapter B of chapter 65 
of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 6431. RETIREMENT HEALTH SAVINGS REFUND PAY-
MENT. 
‘‘(a) IN GENERAL.—In the case of a credit allowed 
to an individual which is attributable to an increase under 
section 25B(h), the Secretary shall pay the amount of 
such credit into the designated retirement account of the 
individual. 
‘‘(b) DESIGNATED
RETIREMENT
ACCOUNT.—The 
term ‘designated retirement account’ means any individual 
health account or retirement health arrangement of the 
individual— 
‘‘(1) which is designated (in such form and 
manner as the Secretary may provide) on the indi-
vidual’s return of tax for the taxable year to receive 
the payment under subsection (a), and 
‘‘(2) which, under the terms of the account or 
arrangement, accepts the payment described in para-
graph (1). 
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