I 
115TH CONGRESS 
2D SESSION 
H. R. 6305 
To amend the Internal Revenue Code of 1986 to improve access to health 
care through modernized health savings accounts. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 3, 2018 
Mr. KELLY of Pennsylvania (for himself and Mr. BLUMENAUER) 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 improve 
access to health care through modernized health savings 
accounts. 
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 ‘‘Bipartisan HSA Im-
provement Act of 2018’’. 
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SEC. 2. CERTAIN EMPLOYMENT RELATED SERVICES NOT 
TREATED AS DISQUALIFYING COVERAGE FOR 
PURPOSES OF HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Section 223(c)(1) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph: 
‘‘(D) SPECIAL
RULE
FOR
QUALIFIED 
ITEMS AND SERVICES.— 
‘‘(i) 
IN
GENERAL.—An 
individual 
shall not be treated as covered under a 
health plan for purposes of subparagraph 
(A)(ii) merely because the individual, in 
connection with the employment of the in-
dividual or the individual’s spouse, receives 
(or is eligible to receive) qualified items 
and services at— 
‘‘(I) a healthcare facility located 
at a facility owned or leased by the 
employer of the individual (or of the 
individual’s spouse), or operated pri-
marily for the benefit of such employ-
er’s employees, or 
‘‘(II) a healthcare facility located 
within a supermarket, pharmacy, or 
similar retail establishment. 
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‘‘(ii) QUALIFIED ITEMS AND SERVICES 
DEFINED.—For purposes of this subpara-
graph, the term ‘qualified items and serv-
ices’ means the following: 
‘‘(I) Physical examinations. 
‘‘(II) Immunizations, including 
injections of antigens provided by em-
ployees. 
‘‘(III) Drugs other than a pre-
scribed drug (as such term is defined 
in section 213(d)(3)). 
‘‘(IV) Treatment for injuries oc-
curring in the course of employment. 
‘‘(V) Drug testing, if required as 
a condition of employment. 
‘‘(VI) Hearing or vision screen-
ings. 
‘‘(VII) Other similar items and 
services that do not provide signifi-
cant benefits in the nature of medical 
care. 
‘‘(iii) AGGREGATION.—For purposes 
of clause (i)(I), all persons treated as a 
single employer under subsection (b), (c), 
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(m), or (o) of section 414 shall be treated 
as a single employer.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to months beginning after Decem-
ber 31, 2018, in taxable years ending after such date. 
SEC. 3. CONTRIBUTIONS PERMITTED IF SPOUSE HAS A 
HEALTH FLEXIBLE SPENDING ACCOUNT. 
(a) CONTRIBUTIONS PERMITTED IF SPOUSE HAS A 
HEALTH
FLEXIBLE
SPENDING
ACCOUNT.—Section 
223(c)(1)(B) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘and’’ at the end of clause (ii), by 
striking the period at the end of clause (iii) and inserting 
‘‘, and’’, and by inserting after clause (iii) the following 
new clause: 
‘‘(iv) coverage under a health flexible 
spending arrangement of the spouse of the 
individual for any plan year of such ar-
rangement if the aggregate reimburse-
ments under such arrangement for such 
year do not exceed the aggregate expenses 
which would be eligible for reimbursement 
under such arrangement if such expenses 
were determined without regard to any ex-
penses paid or incurred with respect to 
such individual.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to plan years beginning after De-
cember 31, 2018. 
SEC. 4. FSA AND HRA TERMINATIONS OR CONVERSIONS TO 
FUND HSAS. 
(a) IN GENERAL.—Section 106(e)(2) of the Internal 
Revenue Code of 1986 is amended to read as follows: 
‘‘(2) QUALIFIED HSA DISTRIBUTION.—For pur-
poses of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
HSA distribution’ means, with respect to any 
employee, a distribution from a health flexible 
spending arrangement or health reimbursement 
arrangement of such employee directly to a 
health savings account of such employee if— 
‘‘(i) such distribution is made in con-
nection with such employee establishing 
coverage under a high deductible health 
plan (as defined in section 223(c)(2)) after 
a significant period of not having such cov-
erage, and 
‘‘(ii) such arrangement is described in 
section 223(c)(1)(B)(iii) with respect to 
the portion of the plan year after such dis-
tribution is made. 
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‘‘(B) DOLLAR
LIMITATION.—The aggre-
gate amount of distributions from health flexi-
ble spending arrangements and health reim-
bursement arrangements of any employee which 
may be treated as qualified HSA distributions 
in connection with an establishment of coverage 
described in subparagraph (A)(i) shall not ex-
ceed the dollar amount in effect under section 
125(i)(1) (twice such amount in the case of cov-
erage 
which 
is 
described 
in 
section 
223(b)(2)(B)).’’. 
(b) PARTIAL REDUCTION OF LIMITATION ON DE-
DUCTIBLE HSA CONTRIBUTIONS.—Section 223(b)(4) of 
such Code is amended by striking ‘‘and’’ at the end of 
subparagraph (B), by striking the period at the end of 
subparagraph (C) and inserting ‘‘, and’’, and by inserting 
after subparagraph (C) the following new subparagraph: 
‘‘(D) so much of any qualified HSA dis-
tribution (as defined in section 106(e)(2)) made 
to a health savings account of such individual 
during the taxable year as does not exceed the 
aggregate increases in the balance of the ar-
rangement from which such distribution is 
made which occur during the portion of the 
plan year which precedes such distribution 
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(other than any balance carried over to such 
plan year and determined without regard to any 
decrease in such balance during such portion of 
the plan year).’’. 
(c) CONVERSION TO HSA-COMPATIBLE ARRANGE-
MENT
FOR
REMAINDER
OF
PLAN
YEAR.—Section 
223(c)(1)(B)(iii) of such Code, as amended by the pre-
ceding provisions of this Act, is amended to read as fol-
lows: 
‘‘(iii) coverage under a health flexible 
spending arrangement or health reimburse-
ment arrangement for the portion of the 
plan year after a qualified HSA distribu-
tion (as defined in section 106(e)(2) deter-
mined without regard to subparagraph 
(A)(ii) thereof) is made, if the terms of 
such arrangement which apply for such 
portion of the plan year are such that, if 
such terms applied for the entire plan 
year, then such arrangement would not be 
taken into account under subparagraph 
(A)(ii) of this paragraph for such plan 
year, and’’. 
(d) INCLUSION OF QUALIFIED HSA DISTRIBUTIONS 
ON W–2.— 
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(1) IN
GENERAL.—Section 6051(a) of such 
Code is amended by striking ‘‘and’’ at the end of 
paragraph (16), by striking the period at the end of 
paragraph (17) and inserting ‘‘, and’’, and by insert-
ing after paragraph (17) the following new para-
graph: 
‘‘(18) the amount of any qualified HSA dis-
tribution (as defined in section 106(e)(2)) with re-
spect to such employee.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6051(a)(12) of such Code is amended by inserting 
‘‘(other than any qualified HSA distribution, as de-
fined in section 106(e)(2))’’ before the comma at the 
end. 
(e) EFFECTIVE DATE.—The amendments made by 
this subsection shall apply to distributions made after De-
cember 31, 2018, in taxable years ending after such date. 
Æ 
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