Title: Family First Medisave Empowerment Act
Policy area: Taxation

Summary:
Family First Medisave Empowerment Act
This bill creates tax-exempt Medisave accounts to pay the qualified medical expenses of account beneficiaries. The bill defines qualified medical expenses as the medical expenses of the taxpayer and the taxpayer's spouse and dependents that are not covered by insurance. The bill excludes amounts paid from a Medisave account from the gross income of an account beneficiary for income tax purposes.
The bill also allows a partially refundable tax credit, limited to $1,000 for all taxable years, for contributions to Medisave accounts made by certain low-income taxpayers before the end of the first year after the enactment of this bill.
The bill provides grants for providing fair and impartial information to consumers about Medisave accounts and facilitating enrollment in such accounts.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8473 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 8473

   To amend the Internal Revenue Code of 1986 to consolidate health 
        accounts into Medisave Accounts, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 1, 2020

  Mr. Gonzalez of Ohio (for himself and Mr. Westerman) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
 and in addition to the Committee on Energy and Commerce, for a period 
    to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to consolidate health 
        accounts into Medisave Accounts, and for other purposes.

    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 ``Family First Medisave Empowerment 
Act''.

SEC. 2. MEDISAVE ACCOUNTS.

    (a) In General.--Part VIII of subchapter F of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 530A. MEDISAVE ACCOUNTS.

    ``(a) Medisave Account.--For purposes of this section--
            ``(1) In general.--The term `Medisave account' means a 
        trust created or organized in the United States as a Medisave 
        account exclusively for the purpose of paying the qualified 
        medical expenses 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 contribution 
                described in subparagraph (A) or (B) of subsection 
                (e)(5), no contribution will be accepted--
                            ``(i) unless it is in cash,
                            ``(ii) to the extent such contribution, 
                        when added to previous contributions to the 
                        trust for the calendar year, exceeds the 
                        limitation amount specified in subsection 
                        (b)(1), or
                            ``(iii) to the extent such contribution, 
                        when added to the balance of the account, 
                        exceeds the limitation amount specified in 
                        subsection (b)(2).
                    ``(B) The trustee is a bank (as defined in section 
                408(n)), an insurance company (as defined in section 
                816), or another person who demonstrates to the 
                satisfaction of the Secretary 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 invested 
                in life insurance contracts.
                    ``(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 account 
                beneficiary, amounts paid by such beneficiary for 
                medical care, but only to the extent such amounts are 
                not compensated for by insurance or otherwise--
                            ``(i) for--
                                    ``(I) such individual,
                                    ``(II) the spouse of such 
                                individual,
                                    ``(III) any dependent (as defined 
                                in section 152, determined without 
                                regard to subsections (b)(1), (b)(2), 
                                and (d)(1)(B) thereof) of such 
                                individual, and
                                    ``(IV) any individual who bears a 
                                relationship to the account beneficiary 
                                that is described in subparagraph (C) 
                                or (D) of section 152(d) if the account 
                                beneficiary is or was a dependent of 
                                such individual for any taxable year 
                                ending before or with the taxable year 
                                in which the individual attained 18 
                                years of age, and
                            ``(ii) if, on the date such medical care 
                        was provided, such individual, spouse or 
                        dependent to whom such care was provided was 
                        covered under the qualified health insurance of 
                        the account beneficiary.
                    ``(B) Modified definition of medical care.--For 
                purposes of subparagraph (A), the term `medical care' 
                has the meaning given such term by section 213(d), 
                except that such term includes--
                            ``(i) direct pay arrangements with primary 
                        physicians, and
                            ``(ii) predetermined level of access to 
                        care from an integrated health plan.
            ``(3) Account beneficiary.--The term `account beneficiary' 
        means the individual on whose behalf the Medisave 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 deduction 
                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 payments).
                    ``(D) Section 408(g) (relating to community 
                property laws).
                    ``(E) Section 408(h) (relating to custodial 
                accounts).
    ``(b) Limitations.--
            ``(1) Annual limitation.--
                    ``(A) In general.--The limitation amount specified 
                in this paragraph is--
                            ``(i) $10,000 in the case of a qualified 
                        health plan with an actuarial value of less 
                        than 55 percent,
                            ``(ii) $8,600 in the case of a qualified 
                        health plan with an actuarial value that is 55 
                        percent or more and less than 65 percent, and
                            ``(iii) $7,200 in the case of a qualified 
                        health plan with an actuarial value that is 65 
                        percent or more.
                    ``(B) Actuarial value of qualified health plan.--
                For purposes of subparagraph (A), the actuarial value 
                of a qualified health plan is the percentage of the 
                total average costs of covered benefits under the 
                health plan.
            ``(2) Account accumulation limitation.--The limitation 
        amount specified in this paragraph is $50,000.
            ``(3) Indexing.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2020, each dollar 
                amount contained in paragraph (1)(A) shall be increased 
                by the medical care cost adjustment of such amount for 
                such calendar year.
                    ``(B) Medical care cost adjustment.--For purposes 
                of subparagraph (A), the medical care cost adjustment 
                for any calendar year is the percentage (if any) by 
                which--
                            ``(i) the medical care component of the C-
                        CPI-U (as defined in section 1(f)(6)) for 
                        August of the preceding calendar year, exceeds
                            ``(ii) such component of the C-CPI-U (as so 
                        defined) for August of 2019.
                    ``(C) Rounding.--
                            ``(i) Annual limitation.--If any increase 
                        in a dollar amount contained in paragraph 
                        (1)(A) determined under subparagraph (A) is not 
                        a multiple of $100, such increase shall be 
                        rounded to the nearest multiple of $100.
                            ``(ii) Account limitation.--If any increase 
                        in the dollar amount contained in paragraph (2) 
                        determined under subparagraph (A) is not a 
                        multiple of $1,000, such increase shall be 
                        rounded to the nearest multiple of $1,000.
            ``(4) Coordination with other contributions.--The 
        limitation which would (but for this paragraph) apply under 
        paragraphs (1) and (2) to an individual for any taxable year 
        shall be reduced (but not below zero) by the sum of--
                    ``(A) the aggregate amount contributed to Medisave 
                accounts of such individual which is excludable from 
                the taxpayer's gross income for such taxable year under 
                section 106(d), and
                    ``(B) the aggregate amount contributed to Medisave 
                accounts of such individual for such taxable year under 
                section 408(d)(9).
            ``(5) Deposit of advance premium tax credit.--An account 
        beneficiary who is eligible for an advance payment of the 
        premium tax credit may elect to have the Secretary deposit the 
        advance payment into the Medisave account of the account 
        beneficiary.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Eligible individual.--
                    ``(A) In general.--The term `eligible individual' 
                means, with respect to any month, any individual if 
                such individual is covered under a qualified health 
                plan as of the 1st day of such month.
                    ``(B) Certain coverage disregarded.--Subparagraph 
                (A) shall be applied without regard to--
                            ``(i) coverage for any benefit provided by 
                        permitted insurance, and
                            ``(ii) coverage (whether through insurance 
                        or otherwise) for accidents, disability, dental 
                        care, vision care, or long-term care.
                    ``(C) Special rule for individuals eligible for 
                certain veterans benefits.--An individual shall not 
                fail to be treated as an eligible individual for any 
                period merely because the individual receives hospital 
                care or medical services under any law administered by 
                the Secretary of Veterans Affairs for a service-
                connected disability (within the meaning of section 
                101(16) of title 38, United States Code).
            ``(2) Qualified health plan.--
                    ``(A) In general.--The term `qualified health plan' 
                means a health plan that offers health insurance 
                coverage. Such term includes entitlement to benefits 
                under title XVIII or title XIX of the Social Security 
                Act.
                    ``(B) Exclusion of certain plans.--Such term does 
                not include a health plan if substantially all of its 
                coverage is disregarded under paragraph (1)(B).
                    ``(C) Health insurance coverage.--The term `health 
                insurance coverage' means benefits consisting of 
                medical care (provided directly, through insurance or 
                reimbursement, or otherwise and including items and 
                services paid for as medical care) under any hospital 
                or medical service policy or certificate, hospital or 
                medical service plan contract, or health maintenance 
                organization contract offered by a health insurance 
                issuer.
                    ``(D) Health insurance issuer.--The term `health 
                insurance issuer' means an insurance company, insurance 
                service, or insurance organization (including a health 
                maintenance organization) which is licensed to engage 
                in the business of insurance in a State and which is 
                subject to State law which regulates insurance (within 
                the meaning of section 514(b)(2) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1144(b)(2)).
                    ``(E) Health maintenance organization.--The term 
                `health maintenance organization' means--
                            ``(i) a Federally qualified health 
                        maintenance organization (as defined in section 
                        1301(a) of the Public Health Service Act (42 
                        U.S.C. 300e(a)),
                            ``(ii) an organization recognized under 
                        State law as a health maintenance organization, 
                        or
                            ``(iii) a similar organization regulated 
                        under State law for solvency in the same manner 
                        and to the same extent as such a health 
                        maintenance organization.
            ``(3) Permitted insurance.--The term `permitted 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) Tax Treatment of Accounts.--
            ``(1) In general.--A Medisave account is exempt from 
        taxation under this subtitle unless such account has ceased to 
        be a Medisave account. Notwithstanding the preceding sentence, 
        any Medisave account is subject to the taxes imposed by section 
        511 (relating to imposition of tax on unrelated business 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 
        Medisave accounts, and any amount treated as distributed under 
        such rules shall be treated as not used to pay qualified 
        medical expenses.
    ``(e) Tax Treatment of Distributions.--
            ``(1) Amounts used for qualified medical expenses.--Any 
        amount paid or distributed out of a Medisave account which is 
        used exclusively to pay qualified medical expenses of any 
        account beneficiary 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 Medisave 
        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.
            ``(3) Excess contributions returned before due date of 
        return.--
                    ``(A) In general.--If any excess contribution is 
                contributed for a taxable year to any Medisave account 
                of an individual, paragraph (2) shall not apply to 
                distributions from the Medisave accounts of such 
                individual (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 purposes of 
                subparagraph (A), the term excess contribution means 
                any contribution (other than a rollover contribution 
                described in paragraph (5)) which exceeds the 
                limitations specified in subsection (b).
            ``(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 distribution from a 
                Medisave 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.
            ``(5) Rollover contribution.--
                    ``(A) In general.--An amount is described in this 
                subparagraph as a rollover contribution if it meets the 
                requirements of clauses (i) and (ii).
                            ``(i) In general.--Paragraph (2) shall not 
                        apply to any amount paid or distributed from a 
                        Medisave account to the account beneficiary to 
                        the extent the amount received is paid into a 
                        Medisave account for the benefit of such 
                        beneficiary not later than the 60th day after 
                        the day on which the beneficiary receives the 
                        payment or distribution.
                            ``(ii) Limitation.--This paragraph shall 
                        not apply to any amount described in clause (i) 
                        received by an individual from a Medisave 
                        account if, at any time during the 1-year 
                        period ending on the day of such receipt, such 
                        individual received any other amount described 
                        in clause (i) from a Medisave account which was 
                        not includible in the individual's gross income 
                        because of the application of this paragraph.
                    ``(B) Rollover from fsa, archer msa, and hsa.--An 
                amount is described in this subparagraph for a calendar 
                year as a rollover contribution if the amount is the 
                remaining balance in a flexible spending account, 
                Archer MSA, or health savings account that is 
                contributed to the Medisave account for a taxable year 
                ending on or before one year after the date of the 
                enactment of the Family First Medisave Empowerment Act.
            ``(6) Coordination with medical expense deduction.--For 
        purposes of determining the amount of the deduction under 
        section 213, any payment or distribution out of a Medisave 
        account for qualified medical expenses shall not be treated as 
        an expense paid for medical care.
            ``(7) Transfer of account incident to divorce.--The 
        transfer of an individual's interest in a Medisave account to 
        an individual's spouse or former spouse under a divorce or 
        separation instrument 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 Medisave account with respect to which such spouse 
        is the account beneficiary.
            ``(8) Treatment after death of account beneficiary.--
                    ``(A) Treatment if designated beneficiary is 
                spouse.--If the account beneficiary's surviving spouse 
                acquires such beneficiary's interest in a Medisave 
                account by reason of being the designated beneficiary 
                of such account at the death of the account 
                beneficiary, such Medisave account shall be treated as 
                if the spouse were the account beneficiary.
                    ``(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 Medisave account in a case to which 
                        subparagraph (A) does not apply--
                                    ``(I) such account shall cease to 
                                be a Medisave account as of the date of 
                                death, and
                                    ``(II) an amount equal to the fair 
                                market value of the assets in such 
                                account on such date shall be 
                                includible if such person is not the 
                                estate of 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 
                                beneficiary, in such beneficiary's 
                                gross income 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 expenses which 
                                were incurred by the decedent before 
                                the date of the decedent'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 decedent or the 
                                decedent's spouse) with respect to 
                                amounts included in gross income under 
                                clause (i) by such person.
    ``(f) Reports.--The Secretary may require--
            ``(1) the trustee of a Medisave account to make such 
        reports regarding such account to the Secretary and to the 
        account beneficiary with respect 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 Secretary and 
        to the account beneficiary with respect to such plan as the 
        Secretary determines appropriate.
The reports required by this subsection shall be filed at such time and 
in such manner and furnished to such individuals at such time and in 
such manner as may be required by the Secretary.
    ``(g) Regulations and Guidance.--For purposes of this section, the 
Secretary shall prescribe such regulations or other guidance as the 
Secretary determines necessary or appropriate to carry out this 
section, including regulations or guidance on the methods acceptable to 
the Secretary for determining qualified health plan actuarial value.''.
    (b) Treatment of Employer Payments.--
            (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 
        medical plan of the employer''.
            (2) Exclusion not applicable to health reimbursement 
        arrangements.--Subsection (h) of such Code is amended to read 
        as follows:
    ``(h) Exclusion Not Applicable to Health Reimbursement 
Arrangements.--Subsection (b) shall not apply to health reimbursement 
arrangements.''.
            (3) Repeal of exclusions from income for archer msas, fsas, 
        and hsas.--
                    (A) In general.--Section 106 of such Code is 
                amended--
                            (i) by striking subsections (b), (d), and 
                        (e), and
                            (ii) by redesignating subsections (f) and 
                        (g) as subsections (d) and (e), respectively.
                    (B) Exclusion from income for medisave accounts.--
                Section 106 of such Code, as amended by subparagraph 
                (A), is amended by inserting after subsection (a) the 
                following:
    ``(b) Contributions to Medisave Accounts.--
            ``(1) In general.--In the case of an employee who is an 
        eligible individual (as defined in section 530A(c)(1)), amounts 
        contributed by such employee's employer to any Medisave account 
        (as defined in section 530A(a)) of such employee shall be 
        treated as employer-provided coverage for medical expenses 
        under an accident or health plan to the extent such amounts do 
        not exceed the limitations specified in clauses (ii) and (iii) 
        of section 530A(a)(1)(A) (determined without regard to this 
        subsection) which is applicable to such employee for such 
        taxable year.
            ``(2) No constructive receipt.--No amount shall be included 
        in the gross income of any employee solely because the employee 
        may choose between the contributions referred to in paragraph 
        (1) and employer contributions to another health plan of the 
        employer.
            ``(3) Special rule for deduction of employer 
        contributions.--Any employer contribution to a Medisave 
        account, if otherwise allowable as a deduction under this 
        chapter, shall be allowed only for the taxable year in which 
        paid.
            ``(4) Employer medisave account contributions required to 
        be shown on return.--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 
        Medisave accounts of such individual or such individual's 
        spouse for such taxable year.
            ``(5) Medisave account contributions not part of cobra 
        coverage.--Paragraph (1) shall not apply for purposes of 
        section 4980B.
            ``(6) Cross reference.--For penalty on failure by employer 
        to make comparable contributions to the Medisave accounts of 
        comparable employees, see section 4980G.''.
            (4) Distribution from certain retirement accounts for 
        medisave account funding.--Section 408(d)(9) of such Code is 
        amended to read as follows:
            ``(9) Distribution for medisave account funding.--
                    ``(A) In general.--In the case of an individual who 
                is an eligible individual (as defined in section 
                530A(c)(1)) and who elects the application of this 
                paragraph for a taxable year, gross income of the 
                individual for the taxable year does not include a 
                qualified Medisave account funding distribution to the 
                extent such distribution is otherwise includible in 
                gross income.
                    ``(B) Qualified medisave account funding 
                distribution.--For purposes of this paragraph, the term 
                `qualified Medisave account funding distribution' means 
                a distribution from an individual retirement plan 
                (other than a plan described in subsection (k) or (p)) 
                of the employee to the extent that--
                            ``(i) such distribution is contributed to 
                        the Medisave account of the individual in a 
                        direct trustee-to-trustee transfer, and
                            ``(ii) such distribution--
                                    ``(I) when added to previous 
                                contributions to the Medisave account 
                                for the calendar year does not exceed 
                                the limitation amount specified in 
                                section 530A(b)(1), and
                                    ``(II) when added to the balance of 
                                the Medisave account, exceeds the 
                                limitation amount specified in section 
                                530A(b)(2).
                    ``(C) One-time transfer.--An individual may make an 
                election under subparagraph (A) only for one qualified 
                Medisave account funding distribution during the 
                lifetime of the individual. Such an election, once 
                made, shall be irrevocable.
                    ``(D) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as otherwise includible in gross 
                income for purposes of subparagraph (A), the aggregate 
                amount distributed from an individual retirement plan 
                shall be treated as includible in gross income to the 
                extent that such amount does not exceed the aggregate 
                amount which would have been so includible if all 
                amounts from all individual retirement plans were 
                distributed. Proper adjustments shall be made in 
                applying section 72 to other distributions in such 
                taxable year and subsequent taxable years.''.
            (5) Failure of employer to make comparable contributions.--
                    (A) Section 4980G(a) of such Code is amended by 
                striking ``health savings account'' and inserting 
                ``Medisave account''.
                    (B) Section 4980G(c) of such Code is amended by 
                striking ``Archer MSAs and health savings accounts'' 
                and inserting ``Medisave accounts''.
            (6) W-2 statements.--Section 6051(a) of such Code is 
        amended--
                    (A) by striking paragraph (11) and redesignating 
                paragraphs (12) through (17) as paragraphs (11) through 
                (16), respectively, and
                    (B) by amending paragraph (11), as so redesignated, 
                to read as follows:
            ``(11) the amount contributed to any Medisave account (as 
        defined in section 530A) of such employee or such employee's 
        spouse,''.
    (c) Other Conforming Amendments.--
            (1) Archer msas.--Section 220(a) of such Code is amended by 
        adding at the end the following: ``No amount is allowed as a 
        deduction under the preceding sentence for any taxable year 
        beginning after one year after the date of the enactment of 
        Family First Medisave Empowerment Act.''.
            (2) Health savings accounts.--Section 223(a) of such Code 
        is amended by adding at the end the following: ``No amount is 
        allowed as a deduction under the preceding sentence for any 
        taxable year beginning after one year after the date of the 
        enactment of the Family First Medisave Empowerment Act.''.
    (d) Rollover of FSA, Archer MSA, HSA to Medisave Account.--
Notwithstanding any other provision of law, if the remaining balance in 
a health flexible spending arrangement, Archer MSA, or Health Savings 
Account is transferred to a Medisave account before the end of any 
taxable year ending on or before one year after the date of the 
enactment of the Family First Medisave Empowerment Act, such transfer 
shall be treated as a rollover to the Medisave account under section 
530A(e)(5)(B) of the Internal Revenue Code of 1986 and the distribution 
from the health flexible spending arrangement, Archer MSA, or Health 
Savings Account shall not be includible in gross income.
    (e) Clerical Amendments.--The table of sections for part VIII of 
subchapter F of chapter 1 of such Code is amended by adding at the end 
the following new item:

``Sec. 530A. Medisave Accounts.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after one year after the date of the 
enactment of this Act.

SEC. 3. TAX CREDIT FOR CONTRIBUTIONS TO MEDISAVE ACCOUNT DURING FIRST 
              YEAR.

    (a) In General.--In the case of an individual who makes a 
contribution to a Medisave account before the end of the 1-year period 
beginning on the date of the enactment of this Act, there shall be 
allowed as a credit against the tax imposed by subtitle A of the 
Internal Revenue Code of 1986 for the taxable year in which the 
contribution is made an amount equal to the aggregate of $1 for every 
$3 contributed to the account (other than a rollover contribution under 
section 530A(e)(5) of such Code) for such taxable year.
    (b) Limitation.--The aggregate amount allowed to an individual as a 
credit under subsection (a) for all taxable years shall not exceed 
$1,000.
    (c) Portion of Credit Refundable.--For purposes of this section--
            (1) In general.--For purposes of the Internal Revenue Code 
        of 1986, in the case of an eligible individual--
                    (A) Increase in credit rate.--Subsection (a) shall 
                be applied by substituting ``$1 for every $1 
                contributed'' for ``$1 for every $3 contributed''.
                    (B) Credit refundable.--The credit allowed under 
                this section shall be treated in the same manner as a 
                credit allowed under subpart C of part IV of subchapter 
                A of chapter 1 of such Code.
            (2) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means, with respect to any taxable year, a taxpayer 
                whose household income for the taxable year does not 
                exceeds 400 percent of an amount equal to the poverty 
                line for a family of the size involved.
                    (B) Married couples must file joint return.--If the 
                taxpayer is married (within the meaning of section 7703 
                of such Code) at the close of the taxable year--
                            (i) the taxpayer shall be treated as an 
                        eligible individual only if the taxpayer and 
                        the taxpayer's spouse file a joint return for 
                        the taxable year, and
                            (ii) paragraph (1) shall be applied 
                        separately to each spouse.
            (3) Family size, household income, modified adjusted gross 
        income, poverty line.--The terms ``family size'', ``household 
        income'', ``modified adjusted gross income'', and ``poverty 
        line'' have the meaning given such terms by section 36B(d) of 
        such Code.
    (d) Denial of Credit to Dependents.--No credit shall be allowed 
under this section to any individual with respect to whom a deduction 
under section 151 is allowable to another taxpayer for a taxable year 
beginning in the calendar year in which such individual's taxable year 
begins.

SEC. 4. ALTERNATIVE WAIVER FOR STATE INNOVATION; COST-SHARING REDUCTION 
              PAYMENTS.

    (a) Alternative Waiver for State Innovation.--Section 1332 of the 
Patient Protection and Affordable Care Act (42 U.S.C. 18052) is amended 
by adding at the end the following new subsection:
    ``(f) Alternative Waiver for State Innovation.--
            ``(1) In general.--Notwithstanding any preceding provision 
        of this section, a State may apply to the Secretary for the 
        waiver of any requirement of subsection (a)(2) with respect to 
        health insurance coverage within that State for plan years 
        beginning on or after January 1, 2022, if instead of complying 
        with section 1402 the State provides for the distribution of 
        funding received under paragraph (2) to Medisave accounts of 
        qualifying individuals with respect to such State. Such 
        application shall be filed at such time and in such manner as 
        the Secretary may require, and shall include such information 
        as the Secretary may require (including a 10-year budget plan 
        for such plan that is budget neutral for the Federal 
        Government).
            ``(2) Pass-through funding.--With respect to a State waiver 
        under paragraph (1), under which, due to the structure of such 
        waiver, individuals in the State would not qualify for cost-
        sharing reductions under section 1402 for which they would 
        otherwise be eligible, the Secretary shall provide for an 
        alternative means by which an amount is transferred to the 
        State equal to the aggregate amount of such reductions that 
        would have been paid on behalf of the participants in the 
        Exchanges established under this title--
                    ``(A) had the State not received such waiver;
                    ``(B) had references to `eligible insureds' under 
                section 1402 referred to `qualifying insureds (as 
                defined in section 1332(f))'; and
                    ``(C) had, after application of clause (ii), in the 
                case of a qualifying insured enrolled in the bronze 
                level of coverage--
                            ``(i) the percentages specified in 
                        subclauses (I), (II), and (III) of section 
                        1402(c)(1)(B) were references to 84 percent, 77 
                        percent, and 63 percent, respectively; and
                            ``(ii) the references in subparagraphs (A), 
                        (B), and (C) of section 1402(c)(2) to 94 
                        percent, 87 percent, and 73 percent, 
                        respectively, were references to 84 percent, 77 
                        percent, and 63 percent, respectively.
        The amount transferred pursuant to the previous sentence shall 
        be determined annually by the Secretary, taking into 
        consideration the experience of other States with respect to 
        participation in an Exchange and reductions provided under such 
        provisions to residents of the other States, and shall be paid 
        to the State for purposes of implementing such waiver.
            ``(3) Waiver consideration and transparency.--The 
        provisions of paragraph (4) of subsection (a) shall apply to an 
        application for a waiver under paragraph (1) in the same manner 
        as such provisions apply with respect to an application for a 
        waiver under subsection (a)(1), except that, for purposes of 
        this paragraph, the provisions of subsection (a)(4)(B)(ii) 
        shall not apply.
            ``(4) Determinations; term of waiver.--The provisions of 
        subsections (d) and (e) shall apply with respect to a 
        determination with respect to an application under paragraph 
        (1), and with respect to the term of a waiver under such 
        paragraph, in the same manner as such provisions apply with 
        respect to a determination with respect to an application under 
        subsection (a)(1), and with respect to the term of a waiver 
        under such subsection.
            ``(5) Definitions.--For purposes of this subsection:
                    ``(A) Medisave account.--The term `Medisave 
                account' has the meaning given such term in section 
                530A(a) of the Internal Revenue Code of 1986.
                    ``(B) Qualifying insured.--The term `qualifying 
                insured' means, with respect to a State and a year, an 
                individual--
                            ``(i) who is enrolled in a Medisave 
                        account;
                            ``(ii) who is enrolled for such year in a 
                        silver level or bronze level coverage offered 
                        through an Exchange; and
                            ``(iii) whose household income is not less 
                        than 100 percent but not more than 250 percent 
                        of the Federal poverty line for a family of the 
                        size involved.''.
    (b) Conforming Amendments.--Section 1332 of the Patient Protection 
and Affordable Care Act (42 U.S.C. 18052), as amended by subsection 
(a), is further amended in subsection (a)(4)--
            (1) in subparagraph (A) by striking the period and 
        inserting ``, except in the case of a waiver described in 
        subsection (f).''; and
            (2) in subparagraph (B)(ii) by inserting after ``an 
        application'' the following: ``(except in the case of a waiver 
        described in subsection (f))''.
    (c) Appropriation for Cost-Sharing Payments.--Section 1402 of the 
Patient Protection and Affordable Care Act (42 U.S.C. 18071) is amended 
by adding at the end the following new subsection:
    ``(g) Funding.--
            ``(1) Appropriations.--Out of any funds in the Treasury not 
        otherwise appropriated, there is appropriated such sums as may 
        be necessary to, subject to paragraph (2), provide health 
        benefits coverage through payment to issuers (under this 
        section or through advance payment by the Secretary of the 
        Treasury under section 1412(c)(3)) of the amounts computed 
        under this section for each of plan years 2022 through 2026.
            ``(2) Adjustments.--Notwithstanding any other provision of 
        law, payments and other actions for adjustments to obligations 
        incurred prior to December 31, 2022, may be made through 
        December 31, 2022.
            ``(3) Limitation.--Amounts appropriated under paragraph (1) 
        for each of plan years 2022 through 2026 are subject to the 
        requirements and limitations under sections 506 and 507 of 
        division H of Public Law 115-31 in the same manner and to the 
        same extent as if such amounts for each such year were 
        appropriated under such division.''.

SEC. 5. GRANTS FOR MEDISAVE ASSISTANCE AND OUTREACH.

    (a) In General.--The Administrator shall establish a grant program 
to provide assistance to eligible entities to carry out the activities 
described in subsection (c).
    (b) Application.--An eligible entity shall submit an application to 
the Administrator in such time and in such manner as the Administrator 
may require, providing that such application requires a demonstration 
of the existence of a relationship with, or the ability to establish a 
relationship with, an employer, employee, self-employed individual, or 
consumer eligible to enroll in a Medisave account.
    (c) Use of Funds.--An eligible entity receiving a grant under this 
section shall use such funds to--
            (1) distribute fair and impartial information to consumers 
        about Medisave accounts, including the availability of such 
        accounts and how such accounts may be utilized;
            (2) conduct activities to raise public awareness of 
        Medisave accounts;
            (3) facilitate enrollment in Medisave accounts; and
            (4) refer individuals enrolled in a Medisave account to the 
        appropriate official, organization, or State agency for the 
        purpose of addressing a complaint, grievance, or other question 
        with respect to such Medisave account.
    (d) Amount.--The Administrator may distribute up to $5,000,000 
annually to be divided among grant recipients under this section.
    (e) Report.--Not later than one year after the date on which the 
last of the grant periods awarded under this section ends, the 
Administrator shall submit a report to the Congress on the 
effectiveness of the grants provided under this section.
    (f) Definitions.--In this section:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Centers for Medicare & Medicaid Services.
            (2) Consumer.--The term ``consumer'' means an individual 
        enrolled in, or seeking to enroll in, a Medisave account.
            (3) Eligible entity.--The term ``eligible entity'' includes 
        the following:
                    (A) A State.
                    (B) Trade.
                    (C) Industry.
                    (D) Professional associations.
                    (E) Commercial fishing industry organizations.
                    (F) Ranching and farming organizations.
                    (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) Medisave account.--The term ``Medisave account'' has 
        the meaning given such term in section 530A(a) of the Internal 
        Revenue Code of 1986 (as added by section 2(a)).
            (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.
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