Responsible Additions and Increases To Sustain Employee Health Benefits Act of 2021
Bill: H.R.1860 | Sponsor: Rep. Stivers, Steve (R-OH)
Policy area: Taxation

Summary:
Responsible Additions and Increases to Sustain Employee Health Benefits Act of 2021
This bill modifies the tax exclusion for distributions from health flexible spending arrangements provided to employees under a cafeteria plan to (1) increase the annual limit on employee salary reduction contributions to $5,000, with an additional $500 for each additional employee dependent above two dependents that has not been taken into account by another person for the year; (2) revise the adjustment for inflation after 2021; and (3) allow a carryforward into the next year for unused amounts in such plans.

To amend the Internal Revenue Code of 1986 to provide the opportunity 
        for responsible health savings to all American families.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Responsible Additions and Increases 
To Sustain Employee Health Benefits Act of 2021''.

SEC. 2. EXPANDABLE HEALTH FLEXIBLE SPENDING ARRANGEMENTS.

    (a) Expansion of Annual Maximum.--
            (1) In general.--Paragraph (1) of section 125(i) of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``$2,500'' and inserting ``$5,000, 
                with an additional $500 per each additional employee 
                dependent above two dependents'', and
                    (B) by inserting at the end the following: ``An 
                additional employee dependent may not be taken into 
                account under the preceding sentence for any taxable 
                year if such additional employee dependent has been 
                taken into account by another person under such 
                sentence for such taxable year.''.
            (2) Adjustment for inflation.--Paragraph (2) of section 
        125(i) of the Internal Revenue Code of 1986 is amended--
                    (A) by striking ``December 31, 2013'' and inserting 
                ``December 31, 2022'',
                    (B) by striking ``the dollar amount'' and inserting 
                ``each of the dollar amounts'', and
                    (C) in subparagraph (B), by striking ``calendar 
                year 2012'' and inserting ``calendar year 2021''.
    (b) Carryforward of Unused Benefits.--Section 125(i) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(3) Carryforward of unused benefits.--
                    ``(A) In general.--A plan or arrangement may permit 
                a participant in a health flexible spending arrangement 
                to elect to carry forward any aggregate unused balances 
                in the participant's accounts under such arrangement as 
                of the close of any year to the succeeding year. Such 
                carryforward shall be treated as having occurred within 
                30 days of the close of the year.
                    ``(B) Limitation.--The amount which a participant 
                may elect to carry forward under subparagraph (A) from 
                any year shall be any aggregate unused balances in the 
                participant's account at the close of any year.
                    ``(C) Exclusion from gross income.--No amount shall 
                be included in gross income under this chapter by 
                reason of any carryforward under this paragraph.
                    ``(D) Coordination limits.--The maximum amount 
                which may be contributed to a health flexible spending 
                arrangement for any year to which an unused amount is 
                carried under this paragraph shall not be reduced by 
                such unused amount.''.
    (c) Conforming Amendment.--Section 125(i) of the Internal Revenue 
Code of 1986 is amended by striking ``Limitation on Health Flexible 
Spending Arrangements'' in the heading and inserting ``Special Rules 
for Health Flexible Spending Arrangements''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2021.
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