I
104TH CONGRESS
1ST SESSION
H. R. 720
To amend the Internal Revenue Code of 1986 to allow individuals a deduction
for contributions to a Medisave account.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 27, 1995
Mr. HOKE 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 allow indi-
viduals a deduction for contributions to a Medisave
account.
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 ‘‘Medisave Patient
Empowerment Act of 1995’’.
SEC. 2. MEDISAVE ACCOUNTS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions for individuals) is amended
by redesignating section 220 as section 221 and by insert-
ing after section 219 the following new section:
‘‘SEC. 220. MEDISAVE ACCOUNTS.
‘‘(a) DEDUCTION ALLOWED.—In the case of an eligi-
ble individual, there shall be allowed as a deduction the
amounts paid in cash during the taxable year by or on
behalf of such individual to a Medisave account for the
benefit of such individual and (if any) such individual’s
spouse and dependents if such spouse and dependents are
eligible individuals.
‘‘(b) LIMITATIONS.—
‘‘(1) ONLY 1 ACCOUNT PER FAMILY.—Except as
provided in regulations prescribed by this Secretary,
no deduction shall be allowed under subsection (a)
for amounts paid to any Medisave account for the
benefit of an individual, such individual’s spouse, or
any dependent of such individual or spouse if such
individual, spouse, or dependent is a beneficiary of
any other Medisave account.
‘‘(2) DOLLAR LIMITATION.—The amount allow-
able as a deduction under subsection (a) for the tax-
able year shall not exceed the lesser of—
‘‘(A) the lowest deductible under any cata-
strophic health plan providing coverage to any
beneficiary of the Medisave account, or
‘‘(B)(i) $2,500, or
‘‘(ii) $5,000 if the catastrophic health plan
covering the taxpayer provides coverage for
more than 1 individual.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible
individual’ means any individual who is covered
under a catastrophic health plan throughout the cal-
endar year in which or with which the taxable year
ends.
‘‘(2) CATASTROPHIC HEALTH PLAN.—For pur-
poses of paragraph (1)—
‘‘(A) IN
GENERAL.—The term ‘cata-
strophic health plan’ means a health plan cover-
ing specified expenses incurred by an individual
for medical care for such individual and the
spouse and dependents (as defined in section
152) of such individual only to the extent such
expenses covered by the plan for any calendar
year exceed $1,800 ($3,600 if the catastrophic
health plan covering the taxpayer provides cov-
erage for more than 1 individual) or such high-
er amounts as may be specified by the plan.
‘‘(B) COST-OF-LIVING
ADJUSTMENT.—In
the case of any calendar year after 1995, each
dollar amount in subparagraph (A) shall be in-
creased by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such
calendar year by substituting ‘calendar
year 1994’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
If any increase under the preceding sentence is
not a multiple of $50, such increase shall be
rounded to the nearest multiple of $50.
‘‘(d) MEDISAVE ACCOUNTS.—For purposes of this
section—
‘‘(1) MEDISAVE ACCOUNT.—
‘‘(A) IN GENERAL.—The term ‘Medisave
account’ means a trust created or organized in
the United States exclusively for the purpose of
paying the medical expenses of the beneficiaries
of such trust, but only if the written governing
instrument creating the trust meets the follow-
ing requirements:
‘‘(i) Except in the case of a rollover
contribution described in subsection (e)(4),
no contribution will be accepted unless it is
in cash, and contributions will not be ac-