Health Savings Act of 2014

Bill: 113-hr-4777
Sponsor: full_name: Rep. Burgess, Michael C. [R-TX-26]
Introduced: 2014-05-30
Policy area: Taxation
Subjects: Bankruptcy

Child health

Consumer affairs

Employee benefits and pensions

Health care costs and insurance

Health care coverage and access

Income tax deductions

Income tax exclusion

Tax treatment of families
Latest action: action_date: 2014-07-21
text: Referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law.

Summaries:
action_date: 2014-05-30
action_desc: Introduced in House
text: <p>Health Savings Act of 2014 - Amends the Internal Revenue Code, with respect to health savings accounts (HSAs), to: (1) allow an additional tax deduction for amounts paid to the HSA of a taxpayer's child or grandchild; (2) allow a rollover of HSA funds to the child, parent, or grandparent of an account holder; (3) increase the maximum HSA contribution limit; (4) allow mandatory distributions from an individual retirement account (IRA) to be paid into an HSA; (5) exempt HSAs from creditor claims in bankruptcy; and (6) expand the definition of an HSA compatible plan to include bronze, silver, and catastrophic plans on an insurance exchange.</p>

tv_txt: I 113th CONGRESS 2d Session H. R. 4777 IN THE HOUSE OF REPRESENTATIVES May 30, 2014 Mr. Burgess introduced the following bill; which was referred to the Committee on Ways and Means , and in addition to the Committees on the Judiciary and 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 modify rules relating to health savings accounts.

1. Short title This Act may be cited as the Health Savings Act of 2014 . 2. Health savings accounts for children (a) In general Section 223 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (h) Child health savings accounts (1) In general In the case of an individual, in addition to any deduction allowed under subsection (a) for any taxable year, there shall be allowed as a deduction under this section an amount equal to the aggregate amount paid in cash by the taxpayer during the taxable year to a child health savings account of a child or grandchild of the taxpayer. (2) Limitations (A) Deduction limitation The amount taken into account under paragraph (1) with respect to each child or grandchild of the taxpayer, as the case may be, for the taxable year shall not exceed the sum of the monthly limitations with respect to such child for months during the taxable year that the child is an eligible individual. (B) Limit on accounts with respect to individual The aggregate amount of contributions which may be made for any taxable year to all child health savings accounts established and maintained on behalf of a child shall not exceed the sum of the monthly limitations for months during the taxable year that the child is an eligible individual. (C) Monthly limitation The monthly limitation for any month with respect to a child is 1/12 of the amount in effect for the taxable year under subsection (c)(2)(A)(ii)(I). (3) Treatment of account while a dependent For purposes of this section, except as otherwise provided in this subsection, a child health savings account established for the benefit of the child of a taxpayer shall be treated as a health savings account of the taxpayer until the first taxable year (and each taxable year thereafter) for which no deduction under section 151 is allowable to any taxpayer with respect to such child, after which such account shall be treated as a health savings account of the child. (4) Child health savings account For purposes of this subsection, the term child health savings account means a health savings account designated as a child health savings account and established for the benefit of a child of a taxpayer. (5) Qualified medical expenses For purposes of this section, the term qualified medical expenses shall, with respect to any child health savings account, not include any amounts paid for medical care (as defined in section 213(d)) for any individual other than the child for whose benefit the account is maintained. (6) Exceptions for disability or death of child If the child becomes disabled within the meaning of section 72(m)(7) or dies— (A) subsection (f)(4)(A) shall not apply to any subsequent payment or distribution, and (B) the taxpayer may rollover the amount in such account to any health savings account of the taxpayer or grandparent of the child or to any child health savings account of any other child of the taxpayer. (7) Guardians Any legal guardian of a child shall be treated as the parent of such child for purposes of this section. (8) Regulations The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including rules for determining application of this subsection in the case of legal guardians and in the case of parents of a child who file separately, are separated, or are not married. . (b) Coordination with means-Tested programs Amounts in a child health savings account shall not be taken into account in determining resources for purposes of title XIX of the Social Security Act. (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 3. Allowing HSA rollover to child or parent of account holder (a) In general Subparagraph (A) of section 223(f)(8) of the Internal Revenue Code of 1986 is amended— (1) by inserting child, parent, or grandparent after surviving spouse , (2) by inserting child, parent, or grandparent, as the case may be, after the spouse , (3) by inserting , child, parent, or grandparent after spouse in the heading thereof, and (4) by adding at the end the following: In the case of a child who acquires such beneficiary’s interest and 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, such health savings account shall be treated as a child health savings account of the child. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 4. Maximum contribution limit to HSA increased to amount of deductible and out-of-pocket limitation (a) Self-Only coverage Subparagraph (A) of section 223(b)(2) of the Internal Revenue Code of 1986 is amended by striking $2,250 and inserting the amount in effect under subsection (c)(2)(A)(ii)(I) . (b) Family coverage Subparagraph (B) of section 223(b)(2) of such Code is amended by striking $4,500 and inserting the amount in effect under subsection (c)(2)(A)(ii)(II) . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 5. Transfer of required minimum distribution from retirement plan to health savings account (a) Transfer from retirement plan (1) Individual retirement accounts Section 408(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (10) Required minimum distribution transferred to health savings account (A) In general In the case of an individual who has attained the age of 70 ½ 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 HSA transfer to the extent such transfer is otherwise includible in gross income. (B) Qualified HSA transfer For purposes of this paragraph, the term qualified HSA transfer means any distribution from an individual retirement plan— (i) to a health savings account of the individual in a direct trustee-to-trustee transfer, (ii) to the extent such distribution does not exceed the required minimum distribution determined under section 401(a)(9) for the distribution calendar year ending during the taxable year. (C) Application of section 72 Notwithstanding section 72, in determining the extent to which an amount is treated as otherwise includible in gross 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. (D) Coordination An election may not be made under subparagraph (A) for a taxable year for which an election is in effect under paragraph (9). . (2) Other retirement plans Section 402 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (m) Required minimum distribution transferred to health savings account (1) In general In the case of an individual who has attained the age of 70 ½ and who elects the application of this subsection for a taxable year, gross income of the individual for the taxable year does not include a qualified HSA transfer to the extent such transfer is otherwise includible in gross income. (2) Qualified HSA transfer For purposes of this subsection, the term qualified HSA transfer means any distribution from a retirement plan— (A) to a health savings account of the individual in a direct trustee-to-trustee transfer, (B) to the extent such distribution does not exceed the required minimum distribution determined under section 401(a)(9) for the distribution calendar year ending during the taxable year. (3) Application of section 72 Notwithstanding section 72, in determining the extent to which an amount is treated as otherwise includible in gross for purposes of paragraph (1), 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. (4) Eligible retirement plan For purposes of this subsection, the term eligible retirement plan has the meaning given such term by subsection (c)(8)(B) (determined without regard to clauses (i) and (ii) thereof). . (b) Transfer to health savings account (1) In general Subparagraph (A) of section 223(d)(1) of such Code is amended by striking or at the end of clause (i), by striking the period at the end of clause (ii)(II) and inserting , or , and by adding at the end the following new clause: (iii) unless it is in a qualified HSA transfer described in section 408(d)(10) or 402(m). . (2) Excise tax inapplicable to qualified HSA transfer Paragraph (1) of section 4973(g) of such Code is amended by inserting or in a qualified HSA transfer described in section 408(d)(10) or 402(m) after or 223(f)(5) . (c) Effective date The amendments made by this section shall apply to distributions made after the date of the enactment of this Act. 6. Equivalent bankruptcy protections for health savings accounts as retirement funds (a) In general Section 522 of title 11, United States Code, is amended by adding at the end the following new subsection: (r) For purposes of this section, any health savings account (as described in section 223 of the Internal Revenue Code of 1986) shall be treated in the same manner as an individual retirement account described in section 408 of such Code. . (b) Effective date The amendment made by this section shall apply to cases commencing under title 11, United States Code, after the date of the enactment of this Act. 7. Allowance of silver and bronze plans in connection with health savings accounts (a) In general Section 223 of the Internal Revenue Code of 1986 is amended— (1) by striking a high deductible health plan each place it appears and inserting an HSA compatible health plan , (2) by striking high deductible health plan in subsection (b)(8)(A)(ii) and inserting HSA compatible health plan , and (3) by striking the high deductible health plan in subsection (c)(1)(A)(ii)(II) and inserting the HSA compatible health plan . (b) HSA compatible health plan defined Paragraph (2) of section 223(c) of such Code is amended by redesignating subparagraphs (A), (B), (C), and (D) as subparagraphs (B), (C), (D), and (E) and by inserting before subparagraph (B), as so redesignated, the following new subparagraph: (A) In general The term HSA compatible health plan means— (i) any high deductible health plan, (ii) any plan described in section 1302(e) of the Patient Protection and Affordable Care Act (relating to catastrophic plan), or (iii) any silver or bronze plan which was enrolled in through an Exchange established under section 1311 of the Patient Protection and Affordable Care Act. . (c) Clerical amendments Section 223 of such Code is amended— (1) by striking In general in the heading for subsection (c)(2)(B), as redesignated by subsection (b) of this Act, and inserting High deductible health plan , (2) by striking high deductible health plan in the heading for subsection (b)(8)(B) and inserting hsa compatible health plan , and (3) by striking High deductible health plan in the heading for subsection (c)(2) and inserting HSA compatible health plan . (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2014. 8. Identification of HSA compatible plans Section 1103(b) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 18003(b) ) is amended by adding at the end the following new paragraph: (3) Identification of HSA compatible plans Beginning for plan year 2015, the format described in paragraph (1) shall require that information on a coverage option described in subsection (a)(2) that is an HSA compatible health plan (as defined in section 223(c)(2) of the Internal Revenue Code of 1986) identifies such plan as a plan that satisfies the requirement of section 223(c)(1)(A)(i) of such Code. .