,i  #aacth ,,congress  #ast ,session    
,h4 ,r4 #afcd  ,,in ,,the ,,house ,,of  
,,representatives  ,april #ah1 #bjac    
,mr4 ,boustany 7for himself1 ,mr4       
,larson of ,connecticut1 ,mr4 ,rodney   
,davis of ,illinois1 and ,mr4 ,schock7  
introduced the following bill2 which was
 referred to the ,committee on ,ways and
 ,means  ,a ,,bill  ,to amend the       
,internal ,revenue ,code of #aihf to    
increase participation in medical       
flexible spending arrangements4  #a4    
,short title ,this ,act may be cited as 
the ,medical ,,fsa ,improvement ,act of 
#bjac4  #b4 ,addition of taxable        
distributions  7a7 ,treatment of        
,amounts ,expended for ,medical ,care   
,section #aje of the ,internal ,revenue 
,code of #aihf 7relating to amounts     
received under accident and health      
plans7 is amended by inserting at the   
end the following new subsection3  7k7  
,amounts ,paid ,under ,medical ,flexible
 ,spending ,arrangements  7#a7          
,application of subsection 7b7 and      

section #ajf ,for purposes of subsection
 7b7 and section #ajf1 a plan shall not 
fail to be treated as flexible spending 
arrangement solely because such plan1 in
 addition to reimbursing expenses       
incurred for medical care 7as defined in
 subsection 7b77 during the plan year1  
distributes for the plan year all or a  
portion of the employee's balance4  7#b7
 ,limitation ,paragraph 7#a7 shall apply
 only in the case that the balance under
 such arrangement for a plan year is    
distributed after the close of the plan 
year to which the balance relates and   
not later than the end of the #gth month
 following the close of such plan year4 
7#c7 ,tax treatment of distribution ,any
 distribution to which paragraph 7#a7   
applies shall be treated as remuneration
 of the employee for employment for the 
taxable year in which it is distributed4
  7#d7 ,flexible spending arrangement   
,the term flexible spending arrangement 
means a benefit program within the      
meaning of section #ajf7;c77#b7         

7relating to long-term care benefits74  
4  7b7 ,additional ,deferred            
,compensation ,exception ,paragraph 7#b7
 of section #abe7;d7 of such ,code      
7relating to deferred compensation under
 a cafeteria plan7 is amended by        
inserting at the end the following new  
subparagraph3  7,e7 ,exception for      
certain flexible spending arrangements  
,subparagraph 7,a7 shall not apply to a 
flexible spending arrangement 7within   
the meaning of section #ajf7;c77#b77 as 
a result of amounts being distributed to
 the covered employee in accordance with
 section #aje7k74  4  7c7 ,conforming   
,amendment ,section #dji;,a7d77#a7 of   
such ,code is amended by striking and at
 the end of subparagraph 7,a71 by       
striking the period at the end of       
subparagraph 7,b7 and inserting 1 and1  
and by adding at the end the following3 
7,c7 a flexible spending arrangement    
which is subject to section #aje7k74  4 
7d7 ,effective ,date ,the amendments    
made by this section shall apply to plan

 years beginning after ,december #ca1   
#bjad4  7e7 ,transition ,rules ,in the  
case of plan years that begin before the
 date of the enactment of this ,act1 in 
implementing the amendments made by this
 section a flexible spending arrangement
 may allow an individual to make a new  
election or to revise an existing       
election under such arrangement so long 
as such new or revised election is made 
within #ij days after the date of the   
enactment of this ,act4