maining in a health flexible spending account at 
the end of a plan year that an individual elects 
to contribute to a health savings account pursu-
ant to a qualified HSA distribution (as defined 
in section 106(e)(2)).’’. 
(d) SIMPLIFICATION OF LIMITATIONS ON FSA AND 
HRA ROLLOVERS.—Paragraph (2) of section 106(e) is 
amended to read as follows: 
‘‘(2) QUALIFIED HSA DISTRIBUTION.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
HSA distribution’ means a distribution from a 
health flexible spending arrangement or health 
reimbursement arrangement directly to a health 
savings account of the employee to the extent 
that such distribution does not exceed the lesser 
of— 
‘‘(i) the balance in such arrangement 
as of the date of such distribution, or 
‘‘(ii) the amount determined under 
subparagraph (B). 
Such term shall not include more than 1 dis-
tribution with respect to any arrangement. 
‘‘(B) DOLLAR LIMITATIONS.— 
‘‘(i) DISTRIBUTIONS FROM A HEALTH 
FLEXIBLE
SPENDING
ARRANGEMENT.—A 
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qualified HSA distribution from a health 
flexible spending arrangement shall not ex-
ceed the applicable amount. 
‘‘(ii) DISTRIBUTIONS FROM A HEALTH 
REIMBURSEMENT
ARRANGEMENT.—A 
qualified HSA distribution from a health 
reimbursement arrangement shall not ex-
ceed— 
‘‘(I) the applicable amount di-
vided by 12, multiplied by 
‘‘(II) the number of months dur-
ing which the individual is a partici-
pant in the health reimbursement ar-
rangement. 
‘‘(iii) 
APPLICABLE
AMOUNT.—For 
purposes of this subparagraph, the applica-
ble amount is— 
‘‘(I) $2,250 in the case of an eli-
gible individual who has self-only cov-
erage under an HSA-qualified health 
plan at the time of such distribution, 
and 
‘‘(II) $4,500 in the case of an eli-
gible individual who has family cov-
erage under an HSA-qualified health 
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plan at the time of such distribu-
tion.’’. 
(e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE 
TO MAINTAIN HSA-QUALIFIED HEALTH PLAN COV-
ERAGE.—Subsection (e) of section 106, as amended by 
section 101, is amended— 
(1) by striking paragraph (3) and redesignating 
paragraphs (4) and (5) as paragraphs (3) and (4), 
respectively, and 
(2) by striking subparagraph (A) of paragraph 
(3), as so redesignated, and redesignating subpara-
graphs (B) and (C) of such paragraph as subpara-
graphs (A) and (B) thereof, respectively. 
(f) LIMITED PURPOSE FSAS
AND HRAS.—Sub-
section (e) of section 106, as amended by this section, is 
amended by adding at the end the following new para-
graph: 
‘‘(5) LIMITED PURPOSE FSAS AND HRAS.—A 
plan shall not fail to be a health flexible spending 
arrangement, a health reimbursement arrangement, 
or an accident or health plan under this section or 
section 105 merely because the plan converts cov-
erage for individuals who enroll in an HSA-qualified 
health plan described in section 223(c)(2) to cov-
erage described in subclause (I), (II), (III), (IV), 
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(V), or (VI) of section 223(c)(1)(B)(iv). Coverage 
for such individuals may be converted as of the date 
of enrollment in the HSA-qualified health plan, 
without regard to the period of coverage under the 
health flexible spending arrangement or health reim-
bursement arrangement, and without requiring any 
change in coverage to individuals who do not enroll 
in an HSA-qualified health plan.’’. 
(g) DISTRIBUTION AMOUNTS ADJUSTED FOR COST- 
OF-LIVING.—Subsection (e) of section 106, as amended 
by this section, is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) COST-OF-LIVING ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2024, each of the dollar amounts in paragraph 
(2)(B)(iii) shall be increased by an amount 
equal to such dollar amount, multiplied by the 
cost-of-living adjustment determined under sec-
tion 1(f)(3) for the calendar year in which such 
taxable year begins by substituting ‘calendar 
year 2023’ for ‘calendar year 2016’ in subpara-
graph (A)(ii) thereof. 
‘‘(B) ROUNDING.—If any increase under 
paragraph (1) is not a multiple of $50, such in-
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crease shall be rounded to the nearest multiple 
of $50.’’. 
(h) DISCLAIMER OF DISQUALIFYING COVERAGE.— 
Subparagraph (B) of section 223(c)(1), as amended by 
this section, is amended— 
(1) by striking ‘‘and’’ at the end of clause (iii); 
(2) by striking the period at the end of clause 
(iv) and inserting ‘‘, and’’; and 
(3) by inserting after clause (iv) the following 
new clause: 
‘‘(v) any coverage (including prospec-
tive coverage) under a health plan that is 
not an HSA-qualified health plan which is 
disclaimed in writing, at the time of the 
creation or organization of the health sav-
ings account, including by execution of a 
trust 
described 
in 
subsection 
(d)(1) 
through a governing instrument that in-
cludes such a disclaimer, or by acceptance 
of an amendment to such a trust that in-
cludes such a disclaimer.’’. 
(i) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 402. EQUIVALENT BANKRUPTCY PROTECTIONS FOR 
HEALTH SAVINGS ACCOUNTS AS RETIRE-
MENT FUNDS. 
(a) IN GENERAL.—Section 522 of title 11, United 
States Code, is amended by adding at the end the fol-
lowing new subsection: 
‘‘(r) 
TREATMENT
OF
HEALTH
SAVINGS
AC-
COUNTS.—For purposes of this section, any health savings 
account (as described in section 223 of the Internal Rev-
enue Code of 1986) shall be treated in the same manner 
as an individual retirement account described in section 
408 of such Code.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to cases commencing under title 
11, United States Code, after the date of the enactment 
of this Act. 
SEC. 403. ADMINISTRATIVE ERROR CORRECTION BEFORE 
DUE DATE OF RETURN. 
(a) IN GENERAL.—Paragraph (4) of section 223(f) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(D) EXCEPTION
FOR
ADMINISTRATIVE 
ERRORS CORRECTED BEFORE DUE DATE OF RE-
TURN.—Subparagraph (A) shall not apply if 
any payment or distribution is made to correct 
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an administrative, clerical, or payroll contribu-
tion error and 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 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) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 404. REAUTHORIZATION OF MEDICAID HEALTH OP-
PORTUNITY ACCOUNTS. 
(a) IN GENERAL.—Section 1938 of the Social Secu-
rity Act (42 U.S.C. 1396u–8) is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (2) and insert-
ing the following: 
‘‘(2) INITIAL DEMONSTRATION.—The Secretary 
shall approve States to conduct demonstration pro-
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grams under this section for a 5-year period, with 
each State demonstration program covering one or 
more geographic areas specified by the State. With 
respect to a State, after the initial 5-year period of 
any demonstration program conducted under this 
section by the State, unless the Secretary finds, tak-
ing into account cost-effectiveness and quality of 
care, that the State demonstration program has 
been unsuccessful, the demonstration program may 
be extended or made permanent in the State.’’; and 
(B) in paragraph (3), in the matter pre-
ceding subparagraph (A)— 
(i) by striking ‘‘not’’; and 
(ii) by striking ‘‘unless’’ and inserting 
‘‘if’’; 
(2) in subsection (b)— 
(A) in paragraph (3), by inserting ‘‘clause 
(i) through (vii), (viii) (without regard to the 
amendment made by section 2004(c)(2) of Pub-
lic Law 111–148), (x), or (xi) of’’ after ‘‘de-
scribed in’’; and 
(B) by striking paragraphs (4), (5), and 
(6); 
(3) in subsection (c)— 
(A) by striking paragraphs (3) and (4); 
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(B) 
by 
redesignating 
paragraphs 
(5) 
through (8) as paragraphs (3) through (6), re-
spectively; and 
(C) in paragraph (4) (as redesignated by 
subparagraph (B)), by striking ‘‘Subject to sub-
paragraphs (D) and (E)’’ and inserting ‘‘Sub-
ject to subparagraph (D)’’; and 
(4) in subsection (d)— 
(A) in paragraph (2), by striking subpara-
graph (E); and 
(B) in paragraph (3)— 
(i) in subparagraph (A)(ii), by strik-
ing ‘‘Subject to subparagraph (B)(ii), in’’ 
and inserting ‘‘In’’; and 
(ii) by striking subparagraph (B) and 
inserting the following: 
‘‘(B) MAINTENANCE OF HEALTH OPPOR-
TUNITY
ACCOUNT
AFTER
BECOMING
INELI-
GIBLE FOR PUBLIC BENEFIT.—Notwithstanding 
any other provision of law, if an account holder 
of a health opportunity account becomes ineli-
gible for benefits under this title because of an 
increase in income or assets— 
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‘‘(i) no additional contribution shall be 
made into the account under paragraph 
(2)(A)(i); and 
‘‘(ii) the account shall remain avail-
able to the account holder for 3 years after 
the date on which the individual becomes 
ineligible for such benefits for withdrawals 
under the same terms and conditions as if 
the account holder remained eligible for 
such benefits, and such withdrawals shall 
be treated as medical assistance in accord-
ance with subsection (c)(4).’’. 
(b) CONFORMING
AMENDMENT.—Section 613 of 
Public Law 111–3 is repealed. 
SEC. 405. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV-
INGS ACCOUNT INCREASED TO AMOUNT OF 
DEDUCTIBLE AND OUT-OF-POCKET LIMITA-
TION. 
(a) SELF-ONLY COVERAGE.—Section 223(b)(2)(A) is 
amended by striking ‘‘$2,250’’ and inserting ‘‘the amount 
in effect under subsection (c)(2)(A)(ii)(I)’’. 
(b) FAMILY COVERAGE.—Section 223(b)(2)(B) is 
amended by striking ‘‘$4,500’’ and inserting ‘‘the amount 
in effect under subsection (c)(2)(A)(ii)(II)’’. 
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(c) CONFORMING AMENDMENTS.—Section 223(g)(1) 
is amended— 
(1) by striking ‘‘subsections (b)(2) and’’ both 
places it appears and inserting ‘‘subsection’’; and 
(2) by striking ‘‘determined by’’ in subpara-
graph (B) thereof and all that follows through ‘‘ ‘cal-
endar year 2003’.’’ and inserting ‘‘determined by 
substituting ‘calendar year 2003’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2023. 
TITLE V—OTHER PROVISIONS 
SEC. 501. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL 
FITNESS PROGRAMS TREATED AS MEDICAL 
CARE. 
(a) IN GENERAL.—Subsection (d) of section 213 is 
amended by adding at the end the following new para-
graph: 
‘‘(12) EXERCISE
EQUIPMENT
AND
PHYSICAL 
FITNESS ACTIVITY.— 
‘‘(A) IN
GENERAL.—The term ‘medical 
care’ shall include amounts paid— 
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‘‘(i) for equipment for use in a pro-
gram (including a self-directed program) of 
physical exercise or physical activity, 
‘‘(ii) to participate, or receive instruc-
tion, in a program of physical exercise, nu-
trition, or health coaching (including a 
self-directed program), and 
‘‘(iii) for membership at a fitness fa-
cility. 
‘‘(B) OVERALL DOLLAR LIMITATION.— 
‘‘(i) IN GENERAL.—Amounts treated 
as medical care under subparagraph (A) 
shall not exceed $1,000 with respect to any 
individual for any taxable year. 
‘‘(ii) EXCEPTION.—Clause (i) shall 
not apply for purposes of determining 
whether expenses reimbursed through a 
health flexible spending arrangement sub-
ject to section 125(i)(1) are incurred for 
medical care. 
‘‘(C) LIMITATIONS
RELATED
TO
SPORTS 
AND FITNESS EQUIPMENT.—Amounts paid for 
equipment described in subparagraph (A)(i) 
shall be treated as medical care only— 
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‘‘(iv) whose health or fitness facility is 
not incidental to its overall function and 
purpose, and 
‘‘(v) which is fully compliant with the 
State of jurisdiction and Federal anti-dis-
crimination laws.’’. 
(b) LIMITATION NOT TO APPLY FOR CERTAIN PUR-
POSES.— 
(1) HEALTH
SAVINGS
ACCOUNTS.—Subpara-
graph (A) of section 223(d)(2) is amended by insert-
ing ‘‘, determined without regard to paragraph 
(12)(B) thereof’’ after ‘‘medical care (as defined in 
section 213(d)’’. 
(2) ARCHER MSAS.—Subparagraph (A) of sec-
tion 220(d)(2) is amended by inserting ‘‘, deter-
mined without regard to paragraph (12)(B) thereof’’ 
after ‘‘medical care (as defined in section 213(d)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 502. CERTAIN NUTRITIONAL AND DIETARY SUPPLE-
MENTS TO BE TREATED AS MEDICAL CARE. 
(a) IN GENERAL.—Subsection (d) of section 213, as 
amended by section 501, is amended by adding at the end 
the following new paragraph: 
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‘‘(13) NUTRITIONAL
AND
DIETARY
SUPPLE-
MENTS.— 
‘‘(A) IN
GENERAL.—The term ‘medical 
care’ shall include amounts paid to purchase 
herbs, vitamins, minerals, homeopathic rem-
edies, meal replacement products, and other di-
etary and nutritional supplements. 
‘‘(B) LIMITATION.—Amounts treated as 
medical care under subparagraph (A) shall not 
exceed $1,000 with respect to any individual for 
any taxable year. 
‘‘(C) MEAL
REPLACEMENT
PRODUCT.— 
For purposes of this paragraph, the term ‘meal 
replacement product’ means any product that— 
‘‘(i) is permitted to bear labeling mak-
ing a claim described in section 403(r)(3) 
of the Federal Food, Drug, and Cosmetic 
Act, and 
‘‘(ii) is permitted to claim under such 
section that such product is low in fat and 
is a good source of protein, fiber, and mul-
tiple essential vitamins and minerals. 
‘‘(D) 
EXCEPTION.—Subparagraph 
(B) 
shall not apply for purposes of determining 
whether expenses reimbursed through a health 
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flexible spending arrangement subject to section 
125(i)(1) are incurred for medical care.’’. 
(b) LIMITATION NOT TO APPLY FOR CERTAIN PUR-
POSES.— 
(1) HEALTH
SAVINGS
ACCOUNTS.—Subpara-
graph (A) of section 223(d)(2), as amended by sec-
tion 501, is amended by striking ‘‘paragraph 
(12)(B)’’ and inserting ‘‘paragraphs (12)(B) and 
(13)(B)’’. 
(2) ARCHER MSAS.—Subparagraph (A) of sec-
tion 220(d)(2), as amended by section 501, is 
amended by striking ‘‘paragraph (12)(B)’’ and in-
serting ‘‘paragraphs (12)(B) and (13)(B)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 503. CERTAIN PROVIDER FEES TO BE TREATED AS 
MEDICAL CARE. 
(a) IN GENERAL.—Subsection (d) of section 213, as 
amended by sections 501 and 502, is amended by adding 
at the end the following new paragraph: 
‘‘(14) PERIODIC
PROVIDER
FEES.—The term 
‘medical care’ shall include— 
‘‘(A) periodic fees paid to a primary care 
physician for a defined set of medical services 
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or the right to receive medical services on an 
as-needed basis, and 
‘‘(B) pre-paid primary care services de-
signed to screen for, diagnose, cure, mitigate, 
treat, 
or 
prevent 
disease 
and 
promote 
wellness.’’. 
(b) EXCEPTION
FOR
FLEXIBLE
SPENDING
AC-
COUNTS.—Section 125 is amended by redesignating sub-
sections (k) and (l) as subsections (l) and (m), respec-
tively, and by inserting after subsection (j) the following 
new subsection: 
‘‘(k) SPECIAL RULE WITH RESPECT TO HEALTH 
FLEXIBLE SPENDING ARRANGEMENTS.—For purposes of 
applying this with respect to any health flexible spending 
arrangement, amounts described in section 213(d)(14) 
shall not be considered insurance.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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