II 
Calendar No. 427 
112TH CONGRESS 
2D SESSION 
H. R. 436 
IN THE SENATE OF THE UNITED STATES 
JUNE 11, 2012 
Received; read the first time 
JUNE 12, 2012 
Read the second time and placed on the calendar 
AN ACT 
To amend the Internal Revenue Code of 1986 to repeal 
the excise tax on medical devices. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Health Care Cost Reduction Act of 2012’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Repeal of medical device excise tax. 
Sec. 3. Repeal of disqualification of expenses for over-the-counter drugs under 
certain accounts and arrangements. 
Sec. 4. Taxable distributions of unused balances under health flexible spending 
arrangements. 
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Sec. 5. Recapture of overpayments resulting from certain federally-subsidized 
health insurance. 
SEC. 2. REPEAL OF MEDICAL DEVICE EXCISE TAX. 
(a) IN GENERAL.—Chapter 32 of the Internal Rev-
enue Code of 1986 is amended by striking subchapter E. 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (a) of section 4221 of such Code 
is amended by striking the last sentence. 
(2) Paragraph (2) of section 6416(b) of such 
Code is amended by striking the last sentence. 
(c) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 32 of such Code is amended by strik-
ing the item relating to subchapter E. 
SEC. 3. REPEAL OF DISQUALIFICATION OF EXPENSES FOR 
OVER-THE-COUNTER DRUGS UNDER CERTAIN 
ACCOUNTS AND ARRANGEMENTS. 
(a) HSAS.—Subparagraph (A) of section 223(d)(2) 
of the Internal Revenue Code of 1986 is amended by strik-
ing the last sentence. 
(b) ARCHER MSAS.—Subparagraph (A) of section 
220(d)(2) of such Code is amended by striking the last 
sentence. 
(c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS 
AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sec-
tion 106 of such Code is amended by striking subsection 
(f). 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenses incurred after Decem-
ber 31, 2012. 
SEC. 4. TAXABLE DISTRIBUTIONS OF UNUSED BALANCES 
UNDER HEALTH FLEXIBLE SPENDING AR-
RANGEMENTS. 
(a) IN GENERAL.—Section 125 of the Internal Rev-
enue Code of 1986 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) TAXABLE DISTRIBUTIONS OF UNUSED BAL-
ANCES UNDER HEALTH FLEXIBLE SPENDING ARRANGE-
MENTS.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion and sections 105(b) and 106, a plan or other 
arrangement which (but for any qualified distribu-
tion) would be a health flexible spending arrange-
ment shall not fail to be treated as a cafeteria plan 
or health flexible spending arrangement (and shall 
not fail to be treated as an accident or health plan) 
merely because such arrangement provides for quali-
fied distributions. 
‘‘(2) QUALIFIED
DISTRIBUTIONS.—For pur-
poses of this subsection, the term ‘qualified distribu-
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tion’ means any distribution to an individual under 
the arrangement referred to in paragraph (1) with 
respect to any plan year if— 
‘‘(A) such distribution is made after the 
last date on which requests for reimbursement 
under such arrangement for such plan year may 
be made and not later than the end of the 7th 
month following the close of such plan year, 
and 
‘‘(B) such distribution does not exceed the 
lesser of— 
‘‘(i) $500, or 
‘‘(ii) the excess of— 
‘‘(I) the salary reduction con-
tributions made under such arrange-
ment for such plan year, over 
‘‘(II) the reimbursements for ex-
penses incurred for medical care made 
under such arrangement for such plan 
year. 
‘‘(3) TAX
TREATMENT
OF
QUALIFIED
DIS-
TRIBUTIONS.—Qualified distributions shall be in-
cludible in the gross income of the employee in the 
taxable year in which distributed and shall be taken 
into account as wages or compensation under the 
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applicable provisions of subtitle C when so distrib-
uted. 
‘‘(4) COORDINATION WITH QUALIFIED RESERV-
IST DISTRIBUTIONS.—A qualified reservist distribu-
tion (as defined in subsection (h)(2)) shall not be 
treated as a qualified distribution and shall not be 
taken into account in applying the limitation of 
paragraph (2)(B)(i).’’. 
(b) CONFORMING AMENDMENT.—Paragraph (1) of 
section 409A(d) of such Code is amended by striking 
‘‘and’’ at the end of subparagraph (A), by striking the 
period at the end of subparagraph (B) and inserting ‘‘, 
and’’, and by adding at the end the following new subpara-
graph: 
‘‘(C) a health flexible spending arrange-
ment to which subsection (h) or (k) of section 
125 applies.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2012. 
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SEC. 5. RECAPTURE OF OVERPAYMENTS RESULTING FROM 
CERTAIN FEDERALLY-SUBSIDIZED HEALTH 
INSURANCE. 
(a) IN GENERAL.—Paragraph (2) of section 36B(f) 
of the Internal Revenue Code of 1986 is amended by strik-
ing subparagraph (B). 
(b) CONFORMING AMENDMENT.—So much of para-
graph (2) of section 36B(f) of such Code, as amended by 
subsection (a), as precedes ‘‘advance payments’’ is amend-
ed to read as follows: 
‘‘(2) EXCESS ADVANCE PAYMENTS.—If the’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 31, 2013. 
Passed the House of Representatives June 7, 2012. 
Attest: 
KAREN L. HAAS, 
Clerk. 
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Calendar No. 427 
112TH CONGRESS 
2D SESSION 
H. R. 436 
AN ACT 
To amend the Internal Revenue Code of 1986 to 
repeal the excise tax on medical devices. 
JUNE 12, 2012 
Read the second time and placed on the calendar 
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