Simplify and Expand Health Savings Accounts Act

Bill: 118-hr-6857
Sponsor: full_name: Rep. Gallagher, Mike [R-WI-8]
Introduced: 2023-12-19
Policy area: Taxation
Latest action: action_date: 2024-12-17
text: Referred to the Subcommittee on Health.

Summaries:

tv_txt: I 118th CONGRESS 1st Session H. R. 6857 IN THE HOUSE OF REPRESENTATIVES December 19, 2023 Mr. Gallagher 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 modernize health savings accounts, and for other purposes.

1. Short title This Act may be cited as the Simplify and Expand Health Savings Accounts Act . 2. Modernization of health savings accounts (a) In general Section 223 of the Internal Revenue Code of 1986 is amended to read as follows: 223. Health savings accounts (a) Deduction allowed In the case of an individual who is an eligible individual for any month during the taxable year, there shall be allowed as a deduction for the taxable 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) Limitations (1) In general The amount allowable as a deduction under subsection (a) to an individual for the taxable year shall not exceed the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual. (2) Monthly limitation The monthly limitation for any month is 1/12 of— (A) in the case of an eligible individual who has self-only coverage under a qualified plan as of the first day of such month, the annual limitation determined under the following table: In the case of a plan with an actuarial value of: The annual limitation is: Less than 55 percent $10,000 At least 55 percent and less than 65 percent $8,600 At least 65 percent $7,200 (B) in the case of an eligible individual who has family coverage under a qualified plan as of the first day of such month, the annual limitation determined under the following table: In the case of a plan with an actuarial value of: The annual limitation is: Less than 55 percent $20,000 At least 55 percent and less than 65 percent $17,200 At least 65 percent $14,400. (3) Additional contributions for individuals 55 or older In the case of an individual who has attained age 55 before the close of the taxable year, the applicable limitation under subparagraphs (A) and (B) of paragraph (2) shall be increased by $1,000. (4) Coordination with other contributions The limitation which would (but for this paragraph) apply under this subsection to an individual for any taxable year shall be reduced (but not below zero) by the sum of— (A) the aggregate amount contributed to health savings accounts of such individual which is excludable from the taxpayer’s gross income for such taxable year under section 106(d) (and such amount shall not be allowed as a deduction under subsection (a)), and (B) the aggregate amount contributed to health savings accounts of such individual for such taxable year under section 408(d)(9) (and such amount shall not be allowed as a deduction under subsection (a)). (5) Special rule for married individuals In the case of individuals who are married to each other, if either spouse has family coverage— (A) both spouses shall be treated as having only such family coverage (and if such spouses each have family coverage under different plans, as being covered under the plan with the highest actuarial value), and (B) the limitation under paragraph (1) (after the application of subparagraph (A) and without regard to any additional contribution amount under paragraph (3)) shall be divided equally between them unless they agree on a different division. (6) Denial of deduction to dependents No deduction 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. (7) Increase in limit for individuals becoming eligible individuals after the beginning of the year (A) In general For purposes of computing the limitation under paragraph (1) for any taxable year, an individual who is an eligible individual during the last month of such taxable year shall be treated— (i) as having been an eligible individual during each of the months in such taxable year, and (ii) as having been enrolled, during each of the months such individual is treated as an eligible individual solely by reason of clause (i), in the same qualified plan in which the individual was enrolled for the last month of such taxable year. (B) Failure to maintain qualified plan coverage (i) In general If, at any time during the testing period, the individual is not an eligible individual, then— (I) gross income of the individual for the taxable year in which occurs the first month in the testing period for which such individual is not an eligible individual is increased by the aggregate amount of all contributions to the health savings account of the individual which could not have been made but for subparagraph (A), and (II) the tax imposed by this chapter for any taxable year on the individual shall be increased by 10 percent of the amount of such increase. (ii) Exception for disability or death Subclauses (I) and (II) of clause (i) shall not apply if the individual ceased to be an eligible individual by reason of the death of the individual or the individual becoming disabled (within the meaning of section 72(m)(7)). (iii) Testing period The term testing period means the period beginning with the last month of the taxable year referred to in subparagraph (A) and ending on the last day of the 12th month following such month. (c) Definitions and special rules For purposes of this section— (1) Eligible individual The term eligible individual means, with respect to any month, any individual if such individual is covered under a qualified plan as of the 1st day of such month. (2) Qualified plan (A) In general The term qualified health plan means any health plan, including employer plans, individual plans, short term plans, Medicare, Medicaid, VA health care, TRICARE, health care sharing ministries, and association health plans. (B) Exclusion of certain plans Such term does not include a health plan if substantially all of its coverage is— (i) coverage for any benefit provided by permitted insurance, or (ii) coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care. (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) Health savings account For purposes of this section— (1) In general The term health savings account means a trust created or organized in the United States as a health savings 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 subsection (f)(5) or section 220(f)(5), no contribution will be accepted— (i) unless it is in cash, or (ii) to the extent such contribution, when added to previous contributions to the trust for the calendar year, exceeds the sum of the dollar amounts in effect under paragraphs (2) and (3) of subsection (b) or are excludible from gross income under section 106(d). (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 (as defined in section 213(d)) for such individual, the spouse of such individual, and 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 otherwise. For purposes of this subparagraph, amounts paid for menstrual care products shall be treated as paid for medical care. (B) Health insurance may not be purchased from account (i) In general Subparagraph (A) shall not apply to any payment for insurance. (ii) Exceptions Claue (i) shall not apply to any expense for coverage under— (I) a health plan during any period of continuation coverage required under any Federal law, (II) a qualified long-term care insurance contract (as defined in section 7702B(b)), (III) a health plan during a period in which the individual is receiving unemployment compensation under any Federal or State law, or (IV) in the case of an account beneficiary who has attained the age specified in section 1811 of the Social Security Act, any health insurance other than a medicare supplemental policy (as defined in section 1882 of the Social Security Act). (iii) Exception for integrated health plans Clause (i) shall not apply to any expense for coverage under an integration eligible health plan which is integrated with the health savings account within the meaning of section 106(d). (iv) Exception for direct primary care service arrangements (I) In general A direct primary care service arrangement shall not be treated as insurance for purposes of clause (i)). (II) Direct primary care service arrangement defined For purposes of this clause, the term direct primary care service arrangement means an arrangement under which an individual is provided medical care (as defined in section 213(d)(1), determined without regard to subparagraph (E) thereof) consisting solely of primary care services provided by primary care practitioners (as defined in section 1833(x)(2)(A) of the Social Security Act, determined without regard to clause (ii) thereof), if the sole compensation for such care is a fixed periodic fee. (C) Menstrual care product For purposes of this paragraph, the term menstrual care product means a tampon, pad, liner, cup, sponge, or similar product used by individuals with respect to menstruation or other genital-tract secretions. (3) Account beneficiary The term account beneficiary means the individual on whose behalf the health savings 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). (e) Tax treatment of accounts (1) In general A health savings account is exempt from taxation under this subtitle unless such account has ceased to be a health savings account. Notwithstanding the preceding sentence, any such 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 health savings accounts, and any amount treated as distributed under such rules shall be treated as not used to pay qualified medical expenses. (f) Tax treatment of distributions (1) Amounts used for qualified medical expenses Any amount paid or distributed out of a health savings 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 health savings 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 health savings account of an individual, paragraph (2) shall not apply to distributions from the health savings 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) or section 220(f)(5)) which is neither excludable from gross income under section 106(d) nor deductible under this section. (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 health savings 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. (C) Exception for distributions after medicare eligibility Subparagraph (A) shall not apply to any payment or distribution after the date on which the account beneficiary attains the age specified in section 1811 of the Social Security Act. (5) Rollover contribution An amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs (A) and (B). (A) In general Paragraph (2) shall not apply to any amount paid or distributed from a health savings account to the account beneficiary to the extent the amount received is paid into a health savings 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. (B) Limitation This paragraph shall not apply to any amount described in subparagraph (A) received by an individual from a health savings 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 subparagraph (A) from a health savings account which was not includible in the individual’s gross income because of the application of this paragraph. (C) Rollover from FSA, Archer MSA, and HRA An amount is described in this subparagraph for a calendar year as a rollover contribution if the amount is the remaining balance in a health flexible spending account, Archer MSA, or health reimbursement arrangement that is contributed to the health savings account for a taxable year ending on or before one year after the date of the enactment of this subparagraph. (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 health savings 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 health savings 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 health savings 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 health savings account by reason of being the designated beneficiary of such account at the death of the account beneficiary, such health savings 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 health savings account in a case to which subparagraph (A) does not apply— (I) such account shall cease to be a health savings 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. (g) Cost-of-Living adjustment (1) In general In the case of any taxable year beginning after December 31, 2024, each dollar amount in paragraphs (2) and (3) of subsection (c) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins determined by substituting 2023 for 2016 in subparagraph (A)(ii) thereof. (2) Rounding If any increase under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50. (h) Reports The Secretary may require— (1) the trustee of a health savings 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. . (b) Employer contributions to health savings accounts (1) In general Section 106(d) is amended to read as follows: (d) Contributions to health savings accounts (1) In general In the case of an employee who is an eligible individual, amounts contributed by such employee’s employer to any health savings account of such employee shall be treated as employer-provided coverage for medical expenses under an accident or health plan to the extent— (A) such amounts do not exceed twice the limitation in effect under section 223(b)(2) (determined without regard to this subsection) which is applicable to such employee for such taxable year, (B) such amounts are contributed to an account which is integrated with an integration eligible health plan, (C) such employer does not offer such employee coverage under any other accident or health plan, (D) such employer offers such amounts only to members of a qualified class of employees and offers such amounts to all members of any such qualified class, (E) such employer offers employees an opportunity to elect not to receive such amounts at least once per year and upon termination from employment, and (F) such employee is not covered under any health insurance offered by an employer of such employee’s spouse. (2) Integration eligible health plan For purposes of this subsection, the term integration eligible health plan means— (A) any bronze, silver, or gold plan offered through an Exchange established under the Patient Protection and Affordable Care Act, (B) entitlement to benefits under part A of title XVIII of the Social Security Act and enrollment under part B of such title, including enrollment under a Medicare Advantage plan under part C of such title, (C) in the case of any individual who has not attained age 30 or is determined by the Secretary (after consultation with the Secretary of Health and Human Services) to have a hardship, coverage under a catastrophic plan, and (D) in the case of any student, coverage under a health plan which is conditioned on maintaining status as being such a student. (3) Integration of plans and accounts For purposes of this subsection, an account shall be treated as integrated with an integration eligible health plan (and such plan shall be treated as integrated with such account) for any month if— (A) the employee is the account beneficiary of such account and such employee is covered under an integration eligible health plan for such month, (B) the employer verifies that the employee is so covered by requiring the submission of documentation to such employer, and (C) the employer makes contributions to such account for such month which are not less than the excess (if any) of— (i) the adjusted monthly premiums for the applicable second lowest cost silver plan with respect to the taxpayer, over (ii) 1/12 of 9.5 percent of the taxpayer’s household income (within the meaning of section 36B). (4) Qualified class For purposes of this subsection— (A) In general The term qualified class means only the following: All employees; Full-time employees; Part-time employees; Seasonal employees; Employees covered under a collective bargaining agreement; Employees in a waiting period; Foreign employees who work abroad; Employees working in the same geographic location (same insurance rating area, State, or multi-State region); Salaried workers; Non-Salaried workers (such as hourly workers); Temporary employees of staffing firms. (B) Rules related to class size (i) Minimum class size A class shall not be treated as a qualified class unless in consisting of at least the following number of employees: (I) In the case of an employer with fewer than 100 employees, the lesser of 10 employees or all employees of the employer. (II) In the case of an employer with at least 100 and not more than 200 employees, 10 percent of the number of such employees (if not a whole number, rounded down to the next lowest whole number). (III) In the case of an employer with more than 200 employees, 20 employees. (ii) Combination of classes Two or more qualified classes described in subparagraph (A) may be combined if each such class separately would not satisfy the requirement of clause (i). (C) Permitted variation within qualified classes An employer shall not fail to meet the requirements of paragraph (1)(D) solely because the amounts offered to members of a qualified class vary on the basis of— (i) number of dependents, (ii) age, if such variation based on age does not exceed a ratio of 3:1, and (iii) chronic health condition, if such variation based on chronic health condition does not exceed a ratio of 1.2:1. (5) Coordination with ACA provisions In the case of an integration eligible health plan which is integrated with a health savings account— (A) such plan shall be treated as an eligible employer-sponsored plan described in section 5000A(f)(1)(B), (B) if an individual receives contributions to such account which are excludible from the gross income of such individual under this section during any taxable year, no credit shall be allowed under section 36B with respect to such individual for such taxable year, and (C) for purposes of section 36B(c)(2)(C)(i)(II), the employee’s required contribution with respect to such plan shall be treated as being equal to the excess (if any) of— (i) the adjusted monthly premiums for the applicable second lowest cost silver plan with respect to the taxpayer, over (ii) the contributions made the employer to such health savings account which are excludible from the gross income of the employee under this section. (6) 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. (7) Special rule for deduction of employer contributions Any employer contribution to a health savings account, if otherwise allowable as a deduction under this chapter, shall be allowed only for the taxable year in which paid. (8) Employer health savings 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 health savings accounts of such individual or such individual’s spouse for such taxable year. (9) Health savings account contributions not part of COBRA coverage Paragraph (1) shall not apply for purposes of section 4980B. (10) Definitions Terms used in this subsection which are also used in section 223 shall have the same respective meanings as when used in such section. (11) Regulations The Secretaries of Treasury, Labor, and Health and Human Services shall each issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance to— (A) prevent employers from offering plans integrated with health savings accounts selectively to sicker workers, and (B) establish a safe harbor that helps employers determine whether contributions to health savings accounts with respect to which there is an integrated health plan comply with affordability requirements under the Patient Protection and Affordable Care Act and the amendments made by such Act. (12) Cross reference For penalty on failure by employer to make comparable contributions to the health savings accounts of comparable employees, see section 4980G. . (2) Nonapplication of ERISA Contributions by an employer to a health savings account (as defined in section 223 of the Internal Revenue Code of 1986), and an integration eligible health plan which is integrated with such account (within the meaning of such section), shall not be treated as a plan for purposes of the Employee Retirement Income Security Act of 1974 if— (A) receipt of such contributions by the employee is voluntary, (B) the employer does not select or endorse the integration eligible health plan which is integrated with such account, (C) no premiums, other than premiums for the integration eligible health plan which is integrated with such account, are paid from the account, (D) the employer receives no consideration (money or other benefit) in connection with the employee selecting or renewing a plan, and (E) each participant is notified annually that such contributions and such plan are not subject to the requirements of such Act. (c) Termination of certain other health care related tax benefits (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 Section 105(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 and FSAs Section 106 of such Code is amended by striking subsections (b), (e), and (g). (4) Termination of deduction for contributions to Archer MSAs Section 220(a) of such Code is amended by adding at the end the following: No amount shall be allowed as a deduction under the preceding sentence for any taxable year beginning after one year after the date of the enactment of this sentence. . (d) Bankruptcy protections 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. . (e) Rollover of FSA, Archer MSA, HRA to health savings account Notwithstanding any other provision of law, if the remaining balance in a health flexible spending arrangement, Archer MSA, or health reimbursement arrangement is transferred to a health savings account before the end of any taxable year ending on or before one year after the date of the enactment of this Act, such transfer shall be treated as a rollover to the health savings account under section 223(f)(5) of the Internal Revenue Code of 1986 and the distribution from the health flexible spending arrangement, Archer MSA, or health reimbursement arrangement shall not be includible in gross income. (f) Effective dates (1) In general The amendments made by subsections (a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. (2) Termination of certain other health care related tax benefits The amendments made by subsection (c) shall apply to taxable years beginning after the date which is 1 year after the date of the enactment of this Act. (3) Bankruptcy protections The amendment made by subsection (d) shall apply to cases commencing under title 11, United States Code, after the date of the enactment of this Act. 3. Unused premium tax credits may be deposited in health savings accounts (a) In general Section 36B is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: (h) Excess credit may be deposited into a health savings account (1) In general If the amount described in subparagraph (B) of subsection (b)(2) exceeds the amount described in subparagraph (A) of such subsection with respect to any coverage month and an election under paragraph (2) is in effect with respect to the applicable taxpayer, the Secretary shall deposit such excess into a health savings account of such taxpayer. (2) Election to deposit excess credit into a health savings account A taxpayer may elect (at such time and in such manner as the Secretary may provide) to have the Secretary deposit the excess described in paragraph (1) into a health savings account of the taxpayer. Any such election shall only be treated as being in effect if the taxpayer provides the Secretary with such information as the Secretary may require to allow the Secretary to make such deposit. (3) Coordination with health savings account rules Any amount deposited in a health savings account by the Secretary under this subsection shall— (A) be includible in the gross income of the applicable taxpayer, and (B) be taken into account as an amount paid to such account for purposes of this section. (4) Treatment of deposits For purposes of section 1324 of title 31, United States Code, any deposit made under this subsection shall be treated as a credit allowed under this section. . (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. One-time application of saver’s credit to contributions to health savings accounts (a) In general In the case of an applicable taxable year, contributions to any health savings account of the taxpayer during such taxable year shall be treated as a qualified retirement savings contribution for purposes of section 25B of the Internal Revenue Code of 1986. (b) Applicable taxable year For purposes of this section, the term applicable taxable year means any taxable year elected by the taxpayer (at such time and in such manner as the Secretary of the Treasury may provide) which begins during the 3-year period beginning 1 year after the date of the enactment of this Act. A taxpayer may not elect not more than 1 applicable taxable year under this subsection. 5. Grants for health savings account 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 health savings 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 health savings accounts, including the availability of such accounts and how such accounts may be utilized; (2) conduct activities to raise public awareness of health savings accounts; (3) facilitate enrollment in health savings accounts; and (4) refer individuals enrolled in a health savings account to the appropriate official, organization, or State agency for the purpose of addressing a complaint, grievance, or other question with respect to such health savings 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 health savings 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) Health savings account The term health savings account has the meaning given such term in section 223 of the Internal Revenue Code of 1986. (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.