I 
118TH CONGRESS 
1ST SESSION H. R. 6857 
To amend the Internal Revenue Code of 1986 to modernize health savings 
accounts, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 19, 2023 
Mr. GALLAGHER 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 modernize 
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 ‘‘Simplify and Expand 
Health Savings Accounts Act’’. 
SEC. 2. MODERNIZATION OF HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Section 223 of the Internal Rev-
enue Code of 1986 is amended to read as follows: 
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‘‘SEC. 223. HEALTH SAVINGS ACCOUNTS. 
‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual who is an eligible individual for any month during 
the taxable year, there shall be allowed as a deduction for 
the taxable year an amount equal to the aggregate amount 
paid in cash during such taxable year by or on behalf of 
such individual to a health savings account of such indi-
vidual. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
deduction under subsection (a) to an individual for 
the taxable year shall not exceed the sum of the 
monthly limitations for months during such taxable 
year that the individual is an eligible individual. 
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is 1⁄12 of— 
‘‘(A) in the case of an eligible individual 
who has self-only coverage under a qualified 
plan as of the first day of such month, the an-
nual limitation determined under the following 
table: 
‘‘In the case of a plan with an actu-
arial value of: 
The annual limitation is: 
Less than 55 percent ...........................
$10,000 
At least 55 percent and less than 65 
percent.
$8,600 
At least 65 percent ...............................
$7,200 
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‘‘(B) in the case of an eligible individual 
who has family coverage under a qualified plan 
as of the first day of such month, the annual 
limitation determined under the following table: 
‘‘In the case of a plan with an actu-
arial value of: 
The annual limitation is: 
Less than 55 percent ...........................
$20,000 
At least 55 percent and less than 65 
percent.
$17,200 
At least 65 percent ...............................
$14,400. 
‘‘(3) ADDITIONAL
CONTRIBUTIONS
FOR
INDI-
VIDUALS 55 OR OLDER.—In the case of an individual 
who has attained age 55 before the close of the tax-
able year, the applicable limitation under subpara-
graphs (A) and (B) of paragraph (2) shall be in-
creased by $1,000. 
‘‘(4) COORDINATION WITH OTHER CONTRIBU-
TIONS.—The limitation which would (but for this 
paragraph) apply under this subsection to an indi-
vidual for any taxable year shall be reduced (but not 
below zero) by the sum of— 
‘‘(A) the aggregate amount contributed to 
health savings accounts of such individual 
which is excludable from the taxpayer’s gross 
income for such taxable year under section 
106(d) (and such amount shall not be allowed 
as a deduction under subsection (a)), and 
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‘‘(B) the aggregate amount contributed to 
health savings accounts of such individual for 
such taxable year under section 408(d)(9) (and 
such amount shall not be allowed as a deduc-
tion under subsection (a)). 
‘‘(5) SPECIAL
RULE
FOR
MARRIED
INDIVID-
UALS.—In the case of individuals who are married 
to each other, if either spouse has family coverage— 
‘‘(A) both spouses shall be treated as hav-
ing only such family coverage (and if such 
spouses each have family coverage under dif-
ferent plans, as being covered under the plan 
with the highest actuarial value), and 
‘‘(B) the limitation under paragraph (1) 
(after the application of subparagraph (A) and 
without regard to any additional contribution 
amount under paragraph (3)) shall be divided 
equally between them unless they agree on a 
different division. 
‘‘(6) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No deduction shall be allowed under this 
section to any individual with respect to whom a de-
duction under section 151 is allowable to another 
taxpayer for a taxable year beginning in the cal-
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endar year in which such individual’s taxable year 
begins. 
‘‘(7) INCREASE IN LIMIT FOR INDIVIDUALS BE-
COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN-
NING OF THE YEAR.— 
‘‘(A) IN GENERAL.—For purposes of com-
puting the limitation under paragraph (1) for 
any taxable year, an individual who is an eligi-
ble individual during the last month of such 
taxable year shall be treated— 
‘‘(i) as having been an eligible indi-
vidual during each of the months in such 
taxable year, and 
‘‘(ii) as having been enrolled, during 
each of the months such individual is 
treated as an eligible individual solely by 
reason of clause (i), in the same qualified 
plan in which the individual was enrolled 
for the last month of such taxable year. 
‘‘(B) FAILURE
TO
MAINTAIN
QUALIFIED 
PLAN COVERAGE.— 
‘‘(i) IN
GENERAL.—If, at any time 
during the testing period, the individual is 
not an eligible individual, then— 
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‘‘(I) gross income of the indi-
vidual for the taxable year in which 
occurs the first month in the testing 
period for which such individual is not 
an eligible individual is increased by 
the aggregate amount of all contribu-
tions to the health savings account of 
the individual which could not have 
been made but for subparagraph (A), 
and 
‘‘(II) the tax imposed by this 
chapter for any taxable year on the 
individual shall be increased by 10 
percent of the amount of such in-
crease. 
‘‘(ii) EXCEPTION FOR DISABILITY OR 
DEATH.—Subclauses (I) and (II) of clause 
(i) shall not apply if the individual ceased 
to be an eligible individual by reason of the 
death of the individual or the individual 
becoming disabled (within the meaning of 
section 72(m)(7)). 
‘‘(iii) TESTING
PERIOD.—The term 
‘testing period’ means the period beginning 
with the last month of the taxable year re-
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ferred to in subparagraph (A) and ending 
on the last day of the 12th month fol-
lowing such month. 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 
individual’ means, with respect to any month, any 
individual if such individual is covered under a quali-
fied plan as of the 1st day of such month. 
‘‘(2) QUALIFIED PLAN.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
health plan’ means any health plan, including 
employer plans, individual plans, short term 
plans, Medicare, Medicaid, VA health care, 
TRICARE, health care sharing ministries, and 
association health plans. 
‘‘(B) EXCLUSION
OF
CERTAIN
PLANS.— 
Such term does not include a health plan if 
substantially all of its coverage is— 
‘‘(i) coverage for any benefit provided 
by permitted insurance, or 
‘‘(ii) coverage (whether through insur-
ance or otherwise) for accidents, disability, 
dental care, vision care, or long-term care. 
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‘‘(3) PERMITTED INSURANCE.—The term ‘per-
mitted insurance’ means— 
‘‘(A) insurance if substantially all of the 
coverage provided under such insurance relates 
to— 
‘‘(i) liabilities incurred under workers’ 
compensation laws, 
‘‘(ii) tort liabilities, 
‘‘(iii) liabilities relating to ownership 
or use of property, or 
‘‘(iv) such other similar liabilities as 
the Secretary may specify by regulations, 
‘‘(B) insurance for a specified disease or 
illness, and 
‘‘(C) insurance paying a fixed amount per 
day (or other period) of hospitalization. 
‘‘(4) FAMILY
COVERAGE.—The term ‘family 
coverage’ means any coverage other than self-only 
coverage. 
‘‘(d) HEALTH SAVINGS ACCOUNT.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘health savings 
account’ means a trust created or organized in the 
United States as a health savings account exclusively 
for the purpose of paying the qualified medical ex-
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penses of the account beneficiary, but only if the 
written governing instrument creating the trust 
meets the following requirements: 
‘‘(A) Except in the case of a rollover con-
tribution described in subsection (f)(5) or sec-
tion 220(f)(5), no contribution will be accept-
ed— 
‘‘(i) unless it is in cash, or 
‘‘(ii) to the extent such contribution, 
when added to previous contributions to 
the trust for the calendar year, exceeds the 
sum of the dollar amounts in effect under 
paragraphs (2) and (3) of subsection (b) or 
are excludible from gross income under 
section 106(d). 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)), an insurance company (as de-
fined in section 816), or another person who 
demonstrates to the satisfaction of the Sec-
retary that the manner in which such person 
will administer the trust will be consistent with 
the requirements of this section. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
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‘‘(D) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(E) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
medical expenses’ means, with respect to an ac-
count beneficiary, amounts paid by such bene-
ficiary for medical care (as defined in section 
213(d)) for such individual, the spouse of such 
individual, and any dependent (as defined in 
section 152, determined without regard to sub-
sections (b)(1), (b)(2), and (d)(1)(B) thereof) 
of such individual, but only to the extent such 
amounts are not compensated for by insurance 
or otherwise. For purposes of this subpara-
graph, amounts paid for menstrual care prod-
ucts shall be treated as paid for medical care. 
‘‘(B) HEALTH
INSURANCE
MAY
NOT
BE 
PURCHASED FROM ACCOUNT.— 
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall not apply to any payment for insur-
ance. 
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‘‘(ii) EXCEPTIONS.—Claue (i) shall 
not apply to any expense for coverage 
under— 
‘‘(I) a health plan during any pe-
riod of continuation coverage required 
under any Federal law, 
‘‘(II) a qualified long-term care 
insurance contract (as defined in sec-
tion 7702B(b)), 
‘‘(III) a health plan during a pe-
riod in which the individual is receiv-
ing 
unemployment 
compensation 
under any Federal or State law, or 
‘‘(IV) in the case of an account 
beneficiary who has attained the age 
specified in section 1811 of the Social 
Security Act, any health insurance 
other than a medicare supplemental 
policy (as defined in section 1882 of 
the Social Security Act). 
‘‘(iii) EXCEPTION
FOR
INTEGRATED 
HEALTH
PLANS.—Clause (i) shall not 
apply to any expense for coverage under an 
integration eligible health plan which is in-
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tegrated with the health savings account 
within the meaning of section 106(d). 
‘‘(iv) EXCEPTION
FOR
DIRECT
PRI-
MARY CARE SERVICE ARRANGEMENTS.— 
‘‘(I) IN GENERAL.—A direct pri-
mary care service arrangement shall 
not be treated as insurance for pur-
poses of clause (i)). 
‘‘(II) DIRECT
PRIMARY
CARE 
SERVICE
ARRANGEMENT
DEFINED.— 
For purposes of this clause, the term 
‘direct primary care service arrange-
ment’ means an arrangement under 
which an individual is provided med-
ical care (as defined in section 
213(d)(1), determined without regard 
to subparagraph (E) thereof) con-
sisting solely of primary care services 
provided by primary care practitioners 
(as defined in section 1833(x)(2)(A) 
of the Social Security Act, determined 
without regard to clause (ii) thereof), 
if the sole compensation for such care 
is a fixed periodic fee. 
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‘‘(C) MENSTRUAL
CARE
PRODUCT.—For 
purposes of this paragraph, the term ‘menstrual 
care product’ means a tampon, pad, liner, cup, 
sponge, or similar product used by individuals 
with respect to menstruation or other genital- 
tract secretions. 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the health savings account was established. 
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 219(d)(2) (relating to no de-
duction for rollovers). 
‘‘(B) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(C) Except as provided in section 106(d), 
section 219(f)(5) (relating to employer pay-
ments). 
‘‘(D) Section 408(g) (relating to commu-
nity property laws). 
‘‘(E) Section 408(h) (relating to custodial 
accounts). 
‘‘(e) TAX TREATMENT OF ACCOUNTS.— 
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‘‘(1) IN GENERAL.—A health savings account is 
exempt from taxation under this subtitle unless such 
account has ceased to be a health savings account. 
Notwithstanding the preceding sentence, any such 
account is subject to the taxes imposed by section 
511 (relating to imposition of tax on unrelated busi-
ness income of charitable, etc. organizations). 
‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 
408(e) shall apply to health savings accounts, and 
any amount treated as distributed under such rules 
shall be treated as not used to pay qualified medical 
expenses. 
‘‘(f) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL 
EXPENSES.—Any amount paid or distributed out of 
a health savings account which is used exclusively to 
pay qualified medical expenses of any account bene-
ficiary shall not be includible in gross income. 
‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 
QUALIFIED MEDICAL EXPENSES.—Any amount paid 
or distributed out of a health savings account which 
is not used exclusively to pay the qualified medical 
expenses of the account beneficiary shall be included 
in the gross income of such beneficiary. 
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‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
any health savings account of an individual, 
paragraph (2) shall not apply to distributions 
from the health savings accounts of such indi-
vidual (to the extent such distributions do not 
exceed the aggregate excess contributions to all 
such accounts of such individual for such year) 
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 excess 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) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
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than a rollover contribution described in para-
graph (5) or section 220(f)(5)) which is neither 
excludable from gross income under section 
106(d) nor deductible under this section. 
‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT 
USED FOR QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter on the account beneficiary for any 
taxable year in which there is a payment or dis-
tribution from a health savings account of such 
beneficiary which is includible in gross income 
under paragraph (2) shall be increased by 20 
percent of the amount which is so includible. 
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Subparagraph (A) shall not apply if 
the payment or distribution is made after the 
account beneficiary becomes disabled within the 
meaning of section 72(m)(7) or dies. 
‘‘(C) 
EXCEPTION
FOR
DISTRIBUTIONS 
AFTER MEDICARE ELIGIBILITY.—Subparagraph 
(A) shall not apply to any payment or distribu-
tion after the date on which the account bene-
ficiary attains the age specified in section 1811 
of the Social Security Act. 
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‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
‘‘(A) IN
GENERAL.—Paragraph (2) shall 
not apply to any amount paid or distributed 
from a health savings account to the account 
beneficiary to the extent the amount received is 
paid into a health savings account for the ben-
efit of such beneficiary not later than the 60th 
day after the day on which the beneficiary re-
ceives the payment or distribution. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from a 
health savings 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 a health 
savings account which was not includible in the 
individual’s gross income because of the appli-
cation of this paragraph. 
‘‘(C) ROLLOVER FROM FSA, ARCHER MSA, 
AND HRA.—An amount is described in this sub-
paragraph for a calendar year as a rollover con-
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tribution if the amount is the remaining balance 
in a health flexible spending account, Archer 
MSA, or health reimbursement arrangement 
that is contributed to the health savings ac-
count for a taxable year ending on or before 
one year after the date of the enactment of this 
subparagraph. 
‘‘(6) COORDINATION WITH MEDICAL EXPENSE 
DEDUCTION.—For purposes of determining the 
amount of the deduction under section 213, any pay-
ment or distribution out of a health savings account 
for qualified medical expenses shall not be treated as 
an expense paid for medical care. 
‘‘(7) TRANSFER OF ACCOUNT INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in 
a health savings account to an individual’s spouse or 
former spouse under a divorce or separation instru-
ment described in clause (i) of section 121(d)(3)(C) 
shall not be considered a taxable transfer made by 
such individual notwithstanding any other provision 
of this subtitle, and such interest shall, after such 
transfer, be treated as a health savings account with 
respect to which such spouse is the account bene-
ficiary. 
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‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.— 
‘‘(A) TREATMENT IF DESIGNATED BENE-
FICIARY
IS
SPOUSE.—If the account bene-
ficiary’s surviving spouse acquires such bene-
ficiary’s interest in a health savings account by 
reason of being the designated beneficiary of 
such account at the death of the account bene-
ficiary, such health savings account shall be 
treated as if the spouse were the account bene-
ficiary. 
‘‘(B) OTHER CASES.— 
‘‘(i) IN GENERAL.—If, by reason of 
the death of the account beneficiary, any 
person acquires the account beneficiary’s 
interest in a health savings account in a 
case to which subparagraph (A) does not 
apply— 
‘‘(I) such account shall cease to 
be a health savings account as of the 
date of death, and 
‘‘(II) an amount equal to the fair 
market value of the assets in such ac-
count on such date shall be includible 
if such person is not the estate of 
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such beneficiary, in such person’s 
gross income for the taxable year 
which includes such date, or if such 
person is the estate of such bene-
ficiary, in such beneficiary’s gross in-
come for the last taxable year of such 
beneficiary. 
‘‘(ii) SPECIAL RULES.— 
‘‘(I) REDUCTION
OF
INCLUSION 
FOR
PREDEATH
EXPENSES.—The 
amount includible in gross income 
under clause (i) by any person (other 
than the estate) shall be reduced by 
the amount of qualified medical ex-
penses which were incurred by the de-
cedent before the date of the dece-
dent’s death and paid by such person 
within 1 year after such date. 
‘‘(II) DEDUCTION
FOR
ESTATE 
TAXES.—An 
appropriate 
deduction 
shall be allowed under section 691(c) 
to any person (other than the dece-
dent or the decedent’s spouse) with 
respect to amounts included in gross 
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income under clause (i) by such per-
son. 
‘‘(g) COST-OF-LIVING ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after December 31, 2024, each dollar 
amount in paragraphs (2) and (3) of subsection (c) 
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 such taxable year begins deter-
mined by substituting ‘2023’ for ‘2016’ in sub-
paragraph (A)(ii) thereof. 
‘‘(2) ROUNDING.—If any increase under para-
graph (1) is not a multiple of $50, such increase 
shall be rounded to the nearest multiple of $50. 
‘‘(h) REPORTS.—The Secretary may require— 
‘‘(1) the trustee of a health savings account to 
make such reports regarding such account to the 
Secretary and to the account beneficiary with re-
spect to contributions, distributions, the return of 
excess contributions, and such other matters as the 
Secretary determines appropriate, and 
‘‘(2) any person who provides an individual with 
a qualified health plan to make such reports to the 
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Secretary and to the account beneficiary with re-
spect to such plan as the Secretary determines ap-
propriate.’’. 
(b) EMPLOYER CONTRIBUTIONS TO HEALTH SAV-
INGS ACCOUNTS.— 
(1) IN GENERAL.—Section 106(d) is amended 
to read as follows: 
‘‘(d) CONTRIBUTIONS
TO HEALTH SAVINGS AC-
COUNTS.— 
‘‘(1) IN GENERAL.—In the case of an employee 
who is an eligible individual, amounts contributed by 
such employee’s employer to any health savings ac-
count of such employee shall be treated as employer- 
provided coverage for medical expenses under an ac-
cident or health plan to the extent— 
‘‘(A) such amounts do not exceed twice the 
limitation in effect under section 223(b)(2) (de-
termined without regard to this subsection) 
which is applicable to such employee for such 
taxable year, 
‘‘(B) such amounts are contributed to an 
account which is integrated with an integration 
eligible health plan, 
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‘‘(C) such employer does not offer such 
employee coverage under any other accident or 
health plan, 
‘‘(D) such employer offers such amounts 
only to members of a qualified class of employ-
ees and offers such amounts to all members of 
any such qualified class, 
‘‘(E) such employer offers employees an 
opportunity to elect not to receive such amounts 
at least once per year and upon termination 
from employment, and 
‘‘(F) such employee is not covered under 
any health insurance offered by an employer of 
such employee’s spouse. 
‘‘(2) INTEGRATION ELIGIBLE HEALTH PLAN.— 
For purposes of this subsection, the term ‘integra-
tion eligible health plan’ means— 
‘‘(A) any bronze, silver, or gold plan of-
fered through an Exchange established under 
the Patient Protection and Affordable Care Act, 
‘‘(B) entitlement to benefits under part A 
of title XVIII of the Social Security Act and en-
rollment under part B of such title, including 
enrollment under a Medicare Advantage plan 
under part C of such title, 
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‘‘(C) in the case of any individual who has 
not attained age 30 or is determined by the 
Secretary (after consultation with the Secretary 
of Health and Human Services) to have a hard-
ship, coverage under a catastrophic plan, and 
‘‘(D) in the case of any student, coverage 
under a health plan which is conditioned on 
maintaining status as being such a student. 
‘‘(3) 
INTEGRATION
OF
PLANS
AND
AC-
COUNTS.—For purposes of this subsection, an ac-
count shall be treated as integrated with an integra-
tion eligible health plan (and such plan shall be 
treated as integrated with such account) for any 
month if— 
‘‘(A) the employee is the account bene-
ficiary of such account and such employee is 
covered under an integration eligible health 
plan for such month, 
‘‘(B) the employer verifies that the em-
ployee is so covered by requiring the submission 
of documentation to such employer, and 
‘‘(C) the employer makes contributions to 
such account for such month which are not less 
than the excess (if any) of— 
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‘‘(i) the adjusted monthly premiums 
for the applicable second lowest cost silver 
plan with respect to the taxpayer, over 
‘‘(ii) 1⁄12 of 9.5 percent of the tax-
payer’s household income (within the 
meaning of section 36B). 
‘‘(4) QUALIFIED CLASS.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
class’ means only the following: All employees; 
Full-time employees; Part-time employees; Sea-
sonal employees; Employees covered under a 
collective bargaining agreement; Employees in a 
waiting period; Foreign employees who work 
abroad; Employees working in the same geo-
graphic location (same insurance rating area, 
State, or multi-State region); Salaried workers; 
Non-Salaried workers (such as hourly workers); 
Temporary employees of staffing firms. 
‘‘(B) RULES RELATED TO CLASS SIZE.— 
‘‘(i) MINIMUM CLASS SIZE.—A class 
shall not be treated as a qualified class un-
less in consisting of at least the following 
number of employees: 
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‘‘(I) In the case of an employer 
with fewer than 100 employees, the 
lesser of 10 employees or all employ-
ees of the employer. 
‘‘(II) In the case of an employer 
with at least 100 and not more than 
200 employees, 10 percent of the 
number of such employees (if not a 
whole number, rounded down to the 
next lowest whole number). 
‘‘(III) In the case of an employer 
with more than 200 employees, 20 
employees. 
‘‘(ii) COMBINATION
OF
CLASSES.— 
Two or more qualified classes described in 
subparagraph (A) may be combined if each 
such class separately would not satisfy the 
requirement of clause (i). 
‘‘(C) 
PERMITTED
VARIATION
WITHIN 
QUALIFIED
CLASSES.—An employer shall not 
fail to meet the requirements of paragraph 
(1)(D) solely because the amounts offered to 
members of a qualified class vary on the basis 
of— 
‘‘(i) number of dependents, 
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‘‘(ii) age, if such variation based on 
age does not exceed a ratio of 3:1, and 
‘‘(iii) chronic health condition, if such 
variation based on chronic health condition 
does not exceed a ratio of 1.2:1. 
‘‘(5) COORDINATION WITH ACA PROVISIONS.— 
In the case of an integration eligible health plan 
which is integrated with a health savings account— 
‘‘(A) such plan shall be treated as an eligi-
ble employer-sponsored plan described in sec-
tion 5000A(f)(1)(B), 
‘‘(B) if an individual receives contributions 
to such account which are excludible from the 
gross income of such individual under this sec-
tion during any taxable year, no credit shall be 
allowed under section 36B with respect to such 
individual for such taxable year, and 
‘‘(C) 
for 
purposes 
of 
section 
36B(c)(2)(C)(i)(II), the employee’s required 
contribution with respect to such plan shall be 
treated as being equal to the excess (if any) 
of— 
‘‘(i) the adjusted monthly premiums 
for the applicable second lowest cost silver 
plan with respect to the taxpayer, over 
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‘‘(ii) the contributions made the em-
ployer to such health savings account 
which are excludible from the gross income 
of the employee under this section. 
‘‘(6) NO CONSTRUCTIVE RECEIPT.—No amount 
shall be included in the gross income of any em-
ployee solely because the employee may choose be-
tween the contributions referred to in paragraph (1) 
and employer contributions to another health plan of 
the employer. 
‘‘(7) SPECIAL RULE FOR DEDUCTION OF EM-
PLOYER CONTRIBUTIONS.—Any employer contribu-
tion to a health savings account, if otherwise allow-
able as a deduction under this chapter, shall be al-
lowed only for the taxable year in which paid. 
‘‘(8) EMPLOYER
HEALTH
SAVINGS
ACCOUNT 
CONTRIBUTIONS REQUIRED TO BE SHOWN ON RE-
TURN.—Every individual required to file a return 
under section 6012 for the taxable year shall include 
on such return the aggregate amount contributed by 
employers to the health savings accounts of such in-
dividual or such individual’s spouse for such taxable 
year. 
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‘‘(9) HEALTH
SAVINGS
ACCOUNT
CONTRIBU-
TIONS NOT PART OF COBRA COVERAGE.—Paragraph 
(1) shall not apply for purposes of section 4980B. 
‘‘(10) DEFINITIONS.—Terms used in this sub-
section which are also used in section 223 shall have 
the same respective meanings as when used in such 
section. 
‘‘(11) 
REGULATIONS.—The 
Secretaries 
of 
Treasury, Labor, and Health and Human Services 
shall each issue such regulations or other guidance 
as may be necessary or appropriate to carry out the 
purposes of this subsection, including regulations or 
other guidance to— 
‘‘(A) prevent employers from offering plans 
integrated with health savings accounts selec-
tively to sicker workers, and 
‘‘(B) establish a safe harbor that helps em-
ployers determine whether contributions to 
health savings accounts with respect to which 
there is an integrated health plan comply with 
affordability requirements under the Patient 
Protection and Affordable Care Act and the 
amendments made by such Act. 
‘‘(12) CROSS REFERENCE.—For penalty on fail-
ure by employer to make comparable contributions 
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to the health savings accounts of comparable em-
ployees, see section 4980G.’’. 
(2) NONAPPLICATION OF ERISA.—Contributions 
by an employer to a health savings account (as de-
fined in section 223 of the Internal Revenue Code of 
1986), and an integration eligible health plan which 
is integrated with such account (within the meaning 
of such section), shall not be treated as a plan for 
purposes of the Employee Retirement Income Secu-
rity Act of 1974 if— 
(A) receipt of such contributions by the 
employee is voluntary, 
(B) the employer does not select or en-
dorse the integration eligible health plan which 
is integrated with such account, 
(C) no premiums, other than premiums for 
the integration eligible health plan which is in-
tegrated with such account, are paid from the 
account, 
(D) the employer receives no consideration 
(money or other benefit) in connection with the 
employee selecting or renewing a plan, and 
(E) each participant is notified annually 
that such contributions and such plan are not 
subject to the requirements of such Act. 
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(c) TERMINATION
OF CERTAIN OTHER HEALTH 
CARE RELATED TAX BENEFITS.— 
(1) EXCLUSION
LIMITED
TO
SELF-FUNDED 
MAJOR
MEDICAL
PLAN
OF
EMPLOYERS.—Section 
105(b) of such Code is amended by striking ‘‘paid,’’ 
and inserting ‘‘paid under a self-funded major med-
ical plan of the employer’’. 
(2) EXCLUSION NOT APPLICABLE TO HEALTH 
REIMBURSEMENT ARRANGEMENTS.—Section 105(h) 
of such Code is amended to read as follows: 
‘‘(h) EXCLUSION NOT APPLICABLE TO HEALTH RE-
IMBURSEMENT ARRANGEMENTS.—Subsection (b) shall 
not apply to health reimbursement arrangements.’’. 
(3) REPEAL OF EXCLUSIONS FROM INCOME FOR 
ARCHER MSAS AND FSAS.—Section 106 of such Code 
is amended by striking subsections (b), (e), and (g). 
(4) TERMINATION
OF
DEDUCTION
FOR
CON-
TRIBUTIONS TO ARCHER MSAS.—Section 220(a) of 
such Code is amended by adding at the end the fol-
lowing: ‘‘No amount shall be allowed as a deduction 
under the preceding sentence for any taxable year 
beginning after one year after the date of the enact-
ment of this sentence.’’. 
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(G) Community and consumer-focused 
nonprofit groups. 
(H) Chambers of commerce. 
(I) Unions. 
(J) Small business development centers (as 
defined in section 21 of the Small Business Act 
(15 U.S.C. 648)). 
(K) Other entities capable of carrying out 
the activities described under subsection (b). 
(4) HEALTH
SAVINGS
ACCOUNT.—The term 
‘‘health savings account’’ has the meaning given 
such term in section 223 of the Internal Revenue 
Code of 1986. 
(5) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, each 
territory and possession of the United States, and 
each federally recognized Indian Tribe. 
Æ 
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