Responsible Additions and Increases to Sustain Employee Health Benefits Act of 2016

Bill: 114-s-3242
Sponsor: full_name: Sen. Ayotte, Kelly [R-NH]
Introduced: 2016-07-14
Policy area: Taxation
Subjects: Employee benefits and pensions

Health care costs and insurance

Income tax exclusion

Inflation and prices
Latest action: action_date: 2016-07-14
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2016-07-14
action_desc: Introduced in Senate
text: <p><strong>Responsible Additions and Increases to Sustain Employee Health Benefits Act of 201</strong><b>6</b></p> <p>This bill amends the Internal Revenue Code, with respect to the tax exclusion for distributions from health flexible spending arrangements provided 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 2017; and (3) allow a carryforward into the next year for unused amounts in such plans. </p>

tv_txt: II 114th CONGRESS 2d Session S. 3242 IN THE SENATE OF THE UNITED STATES July 14, 2016 Ms. Ayotte introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide the opportunity for responsible health savings to all American families.

1. Short title This Act may be cited as the Responsible Additions and Increases to Sustain Employee Health Benefits Act of 2016 . 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, 2017 , (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 2016 . (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 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, 2016.