I 
117TH CONGRESS 
1ST SESSION H. R. 2808 
To amend the Internal Revenue Code of 1986 to make improvements to 
Health Savings Accounts. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 22, 2021 
Mr. ROSENDALE (for himself, Mr. HICE of Georgia, Ms. MACE, Mr. VAN 
DREW, Ms. HERRELL, and Mr. CAWTHORN) 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 make 
improvements to 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 ‘‘Health Freedom and 
Flexibility Act’’. 
SEC. 2. REPEAL OF REQUIREMENT TO BE ENROLLED IN 
HEALTH PLAN. 
(a) IN GENERAL.—Subsection (a) of section 223 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
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‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual, there shall be allowed as a deduction for the tax-
able 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 individual.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 3. REPEAL OF LIMITATIONS; RETENTION OF DENIAL 
OF DEDUCTION TO DEPENDENTS. 
(a) IN GENERAL.—Subsection (b) of section 223 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(b) DENIAL OF DEDUCTION TO DEPENDENTS.—No 
deduction shall be allowed under this section to any indi-
vidual with respect to whom a deduction under section 151 
is allowable to another taxpayer for a taxable year begin-
ning in the calendar year in which such individual’s tax-
able year begins.’’. 
(b) CONFORMING AMENDMENT.—Subsection (f) of 
section 223 of such Code is amended by striking para-
graph (3) and by redesignating paragraphs (4) through 
(8) as paragraphs (3) through (7), respectively. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 4. REPEAL OF RULES RELATING TO ELIGIBLE INDI-
VIDUAL; HIGH DEDUCTIBLE HEALTH PLAN. 
(a) IN GENERAL.—Section 223 of the Internal Rev-
enue Code of 1986 is amended by striking subsections (c) 
and (g) and by redesignating subsections (d), (e), (f), and 
(h) as subsections (c), (d), (e), and (f), respectively. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 5. HEALTH SAVINGS ACCOUNT. 
(a) IN GENERAL.—Subparagraph (A) of section 
223(c)(1) of the Internal Revenue Code of 1986, as 
amended by the preceding sections of this Act, is amended 
to read as follows: 
‘‘(A) Except in the case of a rollover con-
tribution described in subsection (e)(5) or sec-
tion 220(f)(5), no contribution will be accepted 
unless it is in cash.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
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SEC. 6. QUALIFIED MEDICAL EXPENSES. 
(a) REPEAL OF PURCHASE OF HEALTH INSURANCE 
LIMITATION.—Paragraph (2) of section 223(c) of the In-
ternal Revenue Code of 1986, as redesignated by the pre-
ceding provisions of this Act, is amended to read as fol-
lows: 
‘‘(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, any dependent (as defined in section 
152, determined without regard to subsections 
(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 other-
wise. 
‘‘(B) MENSTRUAL CARE PRODUCTS.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—Amounts paid for 
menstrual care products shall be treated as 
paid for medical care. 
‘‘(ii) DEFINITION.—The term ‘men-
strual care product’ means a tampon, pad, 
liner, cup, sponge, or similar product used 
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by individuals with respect to menstruation 
or other genital-tract secretions.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 7. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIP-
TION AND OVER-THE-COUNTER MEDICINES 
AND DRUGS AND OTHER MEDICALLY NEC-
ESSARY ITEMS. 
(a) HSAS.—Paragraph (2) of section 223(c) of the 
Internal Revenue Code of 1986, as redesignated by the 
preceding provisions of this Act, is amended by adding at 
the end the following: 
‘‘(C) 
PRESCRIPTION
AND
OVER-THE- 
COUNTER MEDICINES AND DRUGS AND OTHER 
MEDICALLY NECESSARY ITEMS.—For purposes 
of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied medical expenses’ shall include an 
amount paid for any prescription or over- 
the-counter medicine or drug and medically 
necessary items. 
‘‘(ii) 
MEDICALLY
NECESSARY 
ITEMS.—The term ‘medically necessary 
item’ means any item for which a doctor or 
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nurse certifies by a letter of medical neces-
sity that the service or medication or item 
is for a medical diagnosis, treatment, or 
prevention of a medical diseases or condi-
tion.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to amounts paid in taxable years 
ending after the date of the enactment of this Act. 
SEC. 8. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 
INCURRED BEFORE ESTABLISHMENT OF AC-
COUNT. 
(a) IN GENERAL.—Paragraph (2) of section 223(c) 
of the Internal Revenue Code of 1986, as redesignated by 
the preceding sections of this Act, is amended by adding 
at the end the following new subparagraph: 
‘‘(D) CERTAIN
MEDICAL
EXPENSES
IN-
CURRED BEFORE ESTABLISHMENT OF ACCOUNT 
TREATED AS QUALIFIED.—An expense shall not 
fail to be treated as a qualified medical expense 
solely because such expense was incurred before 
the establishment of the health savings account 
if such expense was incurred— 
‘‘(i) during either— 
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‘‘(I) the taxable year in which the 
health savings account was estab-
lished, or 
‘‘(II) the preceding taxable year, 
in the case of a health savings ac-
count established after the taxable 
year in which such expense was in-
curred but before the time prescribed 
by law for filing the return for such 
taxable year (not including extensions 
thereof), and 
‘‘(ii) for medical care which (but for 
the fact that it was incurred before the es-
tablishment of the account) otherwise 
meets the requirements of the preceding 
subparagraphs.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this subsection (a) shall apply to taxable years ending 
after the date of the enactment of this Act. 
SEC. 9. DIRECT PRIMARY CARE; EXERCISE EQUIPMENT; 
DENTAL CARE ITEMS. 
(a) IN GENERAL.—Paragraph (2) of section 223(c) 
of the Internal Revenue Code of 1986, as amended by the 
preceding sections of this Act, is amended by adding at 
the end the following new subparagraph: 
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‘‘(E) DIRECT
PRIMARY
CARE; EXERCISE 
EQUIPMENT; DENTAL CARE ITEMS.—For pur-
poses of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied 
medical 
expenses’ 
shall 
include 
amounts paid— 
‘‘(I) amounts paid under a direct 
primary care service arrangement, 
‘‘(II) amounts paid for exercise 
equipment, and 
‘‘(III) amounts paid for dental 
care items. 
‘‘(ii) DIRECT PRIMARY CARE SERVICE 
ARRANGEMENT.—The term ‘direct primary 
care service arrangement’ means, with re-
spect to any individual, an arrangement 
under which such individual is provided 
medical care (as defined in section 213(d)) 
consisting solely of primary care services 
provided by primary care practitioners (as 
defined in section 1833(x)(2)(A) of the So-
cial Security Act, determined without re-
gard to clause (ii) thereof), if the sole com-
pensation for such care is a fixed periodic 
fee. 
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‘‘(iii) EXERCISE OR FITNESS EQUIP-
MENT.—The term ‘exercise or fitness 
equipment’ means devices such as motor-
ized treadmills, stair climbers or step ma-
chines, stationary bicycles, rowing ma-
chines, weight machines, circuit training 
equipment, 
cardiovascular 
equipment, 
strength equipment, or other similar equip-
ment. 
‘‘(iv) DENTAL
CARE
ITEMS.—The 
term ‘dental care items’ includes manual 
or electric toothbrush, dental floss, and 
dental mouthwash.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to plan years ending after the date 
of the enactment of this Act. 
SEC. 10. PROHIBITION ON USE OF FUNDS FOR ELECTIVE 
ABORTIONS. 
(a) IN GENERAL.—Paragraph (2) of section 223(c) 
of the Internal Revenue Code of 1986, as amended by the 
preceding sections of this Act, is amended by adding at 
the end the following new subparagraph: 
‘‘(F) PROHIBITION ON USE OF FUNDS FOR 
ELECTIVE
ABORTIONS.—For purposes of this 
paragraph— 
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‘‘(i) PAYMENTS FOR HEALTH INSUR-
ANCE
WITH
ABORTION
COVERAGE.—The 
term ‘qualified medical expenses’ shall not 
include amounts paid for insurance that 
includes coverage for abortions. 
‘‘(ii) PAYMENTS
FOR
ABORTIONS.— 
The term ‘qualified medical expense’ shall 
not include amounts paid for an abortion. 
‘‘(iii) ABORTION.—The term ‘abor-
tion’ means the use or prescription of any 
instrument, medicine, drug, or any other 
substance or device— 
‘‘(I) to intentionally kill the un-
born child of a woman known to be 
pregnant, or 
‘‘(II) to intentionally terminate 
the pregnancy of a woman known to 
be pregnant, with an intention other 
than— 
‘‘(aa) 
after 
viability, 
to 
produce a live birth and preserve 
the life and health of the child 
born alive, or 
‘‘(bb) to remove a dead un-
born child.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to plan years ending after the date 
of the enactment of this Act. 
SEC. 11. TREATMENT AFTER DEATH IF DESIGNATED BENE-
FICIARY IS SPOUSE OR CHILD OF ACCOUNT 
BENEFICIARY. 
(a) IN GENERAL.—Subparagraph (A) of section 
223(e)(7) of the Internal Revenue Code of 1986, as redes-
ignated by the preceding sections of this Act, is amended 
to read as follows: 
‘‘(A) TREATMENT AFTER DEATH IF DES-
IGNATED BENEFICIARY IS SPOUSE OR CHILD OF 
ACCOUNT BENEFICIARY.—If the account bene-
ficiary’s surviving spouse or child acquires such 
beneficiary’s interest in a health savings ac-
count by reason of being the designated bene-
ficiary of such account at the death of the ac-
count beneficiary, such health savings account 
shall be treated as if the spouse or child (as the 
case may be) were the account beneficiary.’’. 
(b) CHILD DEFINED.—Paragraph (7) of section 
223(e) of such Code, as so redesignated, is amended by 
adding at the end the following: 
‘‘(C) CHILD.—For purposes of this para-
graph, the term ‘child’ means, with respect to 
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an account beneficiary, an individual who bears 
a relationship to the account beneficiary de-
scribed in section 152(f)(1).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to account bene-
ficiaries dying in taxable years ending after the date of 
the enactment of this Act. 
SEC. 12. ADMINISTRATIVE ERROR CORRECTION BEFORE 
DUE DATE OF RETURN. 
(a) IN GENERAL.—Paragraph (3) of section 223(d) 
of the Internal Revenue Code of 1986, as amended and 
redesignated by the preceding sections of this Act, is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) 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 
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 
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‘‘(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. 13. CONFORMING AMENDMENTS. 
(a) Section 26(b)(2) of the Internal Revenue Code of 
1986 is amended— 
(1) by striking ‘‘, 223(b)(8)(B)(i)(II),’’ in sub-
paragraph (S), and 
(2) by striking ‘‘223(f)(4)’’ in subparagraph 
(U) and inserting ‘‘223(e)(3)’’. 
(b) Section 106 of such Code is amended— 
(1) by amending subsection (d)(1) to read as 
follows: 
‘‘(1) IN GENERAL.—In the case of an employee, 
amounts contributed by such employee’s employer to 
any health savings account (as defined in section 
223(c)) of such employee shall be treated as em-
ployer-provided coverage for medical expenses under 
an accident or health plan.’’, 
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(2) in subsection (e)— 
(A) by striking paragraphs (3) and (4) and 
redesignating paragraph (5) as paragraph (4), 
(B) by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) TREATMENT
AS
ROLLOVER
CONTRIBU-
TION.—A qualified HSA distribution shall be treated 
as a rollover contribution described in section 
223(e)(4).’’, and 
(C) by striking ‘‘to any eligible individual 
covered under a high deductible health plan of 
the employer’’ in paragraph (4)(B)(ii) (as so re-
designated) and inserting ‘‘to any employee 
with respect to whom a health savings account 
has been established’’. 
(c) Section 408 of such Code is amended— 
(1) in subsection (d)(9)(A) by striking ‘‘who is 
an eligible individual (as defined in section 223(c)) 
and’’; and 
(2) in subsection (d)(9)(C)— 
(A) by striking ‘‘LIMITATIONS.—’’ in the 
heading and all that follows through ‘‘(ii) ONE- 
TIME TRANSFER.—’’ in clause (ii), and insert-
ing ‘‘ONE-TIME TRANSFER.—’’, 
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(B) by redesignating subclauses (I) and 
(II) as clauses (i) and (ii) and moving such 
clauses 2 ems to the left, and 
(C) by striking ‘‘subclause (II)’’ in clause 
(i), as so redesignated, and inserting ‘‘clause 
(ii)’’. 
(d) Section 877A(g)(6) of such Code is amended by 
striking ‘‘223(f)(4)’’ and inserting ‘‘223(e)(3)’’. 
(e) Section 4973 of such Code is amended by striking 
subsection (g) and by redesignating subsection (h) as sub-
section (g). 
(f) Section 4975 of such Code is amended— 
(1) in subsection (c)(6)— 
(A) by striking ‘‘section 223(d)’’ and in-
serting ‘‘section 223(c)’’, and 
(B) by striking ‘‘section 223(e)(2)’’ and in-
serting ‘‘section 223(d)(2)’’, and 
(2) in subsection (e)(1)(E), by striking ‘‘section 
223(d)’’ and inserting ‘‘section 223(c)’’. 
(g) Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(B)(v), 
4973(a)(5), and 6051(a)(12) of such Code are each 
amended by striking ‘‘section 223(d)’’ each place it ap-
pears and inserting ‘‘section 223(c)’’. 
(h) Section 4980G of such Code is amended— 
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(1) by amending Subsection (b) to read as fol-
lows: 
‘‘(b) RULES AND REQUIREMENTS.— 
‘‘(1) IN GENERAL.—An employer meets the re-
quirements of this subsection for any calendar year 
if the employer makes available comparable con-
tributions to the health savings accounts of all com-
parable participating employees for each coverage 
period during such calendar year. 
‘‘(2) COMPARABLE CONTRIBUTIONS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘comparable contributions’ 
means contributions— 
‘‘(i) which are the same amount, or 
‘‘(ii) if the employees are covered by a 
health plan, which are the same percentage 
of the annual deductible limit under the 
plan covering the employees. 
‘‘(B) PART-YEAR
EMPLOYEES.—In the 
case of an employee who is employed by the em-
ployer for only a portion of the calendar year, 
a contribution to the health savings account of 
such employee shall be treated as comparable if 
it is an amount which bears the same ratio to 
the comparable amount (determined without re-
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gard to this subparagraph) as such portion 
bears to the entire calendar year. 
‘‘(3) COMPARABLE
PARTICIPATING
EMPLOY-
EES.—For purposes of paragraph (1), the term 
‘comparable participating employees’ means all em-
ployees who are covered (if at all) under the same 
health plan of the employer and have the same cat-
egory of coverage. For purposes of the preceding 
sentence, the categories of coverage are self-only and 
family coverage. 
‘‘(4) PART-TIME EMPLOYEES.— 
‘‘(A) IN
GENERAL.—Paragraph (3) shall 
be applied separately with respect to part-time 
employees and other employees. 
‘‘(B) PART-TIME
EMPLOYEE.—For pur-
poses of subparagraph (A), the term ‘part-time 
employee’ means any employee who is custom-
arily employed for fewer than 30 hours per 
week.’’, and 
(2) in subsection (d) by striking ‘‘section 
4980E’’ and inserting ‘‘this section’’. 
(i) Section 6693(a)(2)(C) of such Code is amended 
by striking ‘‘section 223(h)’’ and inserting ‘‘section 
223(f)’’. 
Æ 
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