,i #aaeth ,,congress #b;d ,session ,h4 ,r4 #each ,,in ,,the ,,house ,,of ,,representatives ,march #a1 #bjah,mr4 ,kelly of ,pennsylvania 7for himself1 ,mr4 ,blumenauer1 ,mr4 ,paulsen1 ,mr4 ,kind1 ,ms4 ,sewell of ,alabama1 and ,mr4 ,fitzpatrick7 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 improve access to health care through modernized health savings accounts4 #a4 ,short title ,this ,act may be cited as the ,bipartisan ,,hsa ,improvement ,act of #bjah4 #b4 ,excepted benefits allowed as permitted insurance 7a7 ,in general ,paragraph 7#c7 of section #bbc7;c7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by redesignating subparagraphs 7,b7 and 7,c7 as subparagraphs 7,c7 and 7,d71 respectively2 and 7#b7 by inserting the following new subparagraph3 7,b7 insurance consisting of coverage for any excepted benefits described in section #ihcb7;c71 4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years after the date of the enactment of this ,act4 #c4 ,on-site employee clinics and retail clinics 7a7 ,in general ,paragraph 7#a7 of section #bbc7;c7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,d7 ,special rule for qualified items and services 7i7 ,in general ,for purposes of subparagraph 7,a77ii71 an individual shall not be treated as covered under a health plan for purposes of subparagraph 7,a77ii7 merely because the individual is eligible to receive1 or receives1 qualified items and services at-- 7,i7 a healthcare facility located at a facility owned or leased by the employer of the individual 7or of the individual's spouse71 or operated primarily for the benefit of such employer's employees1 or 7,,ii7 a retail health clinic4 7ii7 ,qualified items and services defined ,for purposes of this subparagraph1 the term qualified items and services means the following3 7,i7 ,primary care including physical examination4 7,,ii7 ,immunizations1 including injections of antigens provided by employees4 7,,iii7 ,drugs or biologicals other than a prescribed drug 7as such term is defined in section #bac7;d77#c774 7,,iv7 ,treatment for injuries occurring in the course of employment4 7,v7 ,tests for conditions or infectious diseases4 7,,vi7 ,management of medically complex chronic conditions4 7,,vii7 ,drug testing4 7,,viii7 ,hearing or vision screenings and related services4 7,,ix7 ,other similar items and services4 7iii7 ,retail health clinic defined ,for purposes of this subparagraph1 the term retail health clinic means a health care facility located within a supermarket1 pharmacy1 or similar retail establishment that offers urgent care by a licensed healthcare provider4 7iv7 ,aggregation ,for purposes of clause 7i71 all persons treated as a single employer under subsection 7b71 7c71 7m71 or 7o7 of section #dad shall be treated as a single employer4 4 7b7 ,effective date ,the amendments made by this section shall apply to months in taxable years beginning after the date of enactment of this ,act4 #d4 ,contributions permitted if spouse has a health flexible spending account 7a7 ,contributions permitted if spouse has a health flexible spending account ,subparagraph 7,b7 of section #bbc7;c77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of clause 7ii71 by striking the period at the end of clause 7iii7 and inserting 1 and1 and by inserting after clause 7iii7 the following3 7iv7 coverage under a health flexible spending arrangement of the spouse of the individual4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #e4 ,dependents to include children up to age #bf 7a7 ,in general ,subparagraph 7,a7 of section #bbc7;d77#b7 of the ,internal ,revenue ,code of #aihf is amended by striking and any dependent 7as defined in section #aeb1 determined without regard to subsections 7b77#a71 7b77#b71 and 7d77#a77;,b7 thereof7 of such individual in subparagraph 7,a7 and inserting any dependent 7as defined in section #aeb1 determined without regard to subsections 7b77#a71 7b77#b71 and 7d77#a77;,b7 thereof7 of such individual1 and any child 7as defined in section #aeb7;f77,a77 of such individual who has not attained the age of #bg before the end of such individual's taxable year4 7b7 ,effective date ,the amendments made by this section shall apply with respect to qualified medical expenses incurred in taxable years beginning after the date of the enactment of this ,act4 #f4 ,,fsa and ,,hra interaction with ,h,s,as 7a7 ,eligible individuals include ,,fsa and ,,hra participants ,subparagraph 7,b7 of section #bbc7;c77#a7 of the ,internal ,revenue ,code of #aihf1 as amended by this ,act1 is amended by striking and at the end of clause 7iii71 by striking the period at the end of clause 7iv7 and inserting 1 and1 and by inserting after clause 7iv7 the following new clause3 7v7 coverage under a health flexible spending arrangement or a health reimbursement arrangement in the plan year a qualified ,,hsa distribution as described in section #ajf7;e7 is made on behalf of the individual if1 after the qualified ,,hsa distribution is made and for the remaining duration of the plan year1 the coverage provided under the arrangement is converted solely to one or more of the following3 7,i7 ,post-deductible ,,fsa or ,,hra ,a health flexible spending arrangement or a health reimbursement arrangement that does not pay or reimburse any medical expense incurred before the minimum annual deductible under paragraph 7#b77;,a77i7 7prorated for the period occurring after the qualified ,,hsa distribution is made7 is satisfied4 7,,ii7 ,preventative care ,a health flexible spending arrangement or a health reimbursement arrangement that1 after the qualified ,,hsa distribution is made1 does not pay or reimburse any medical expense incurred after the qualified ,,hsa distribution is made other than preventive care as defined in paragraph 7#b77;,c74 7,,iii7 ,limited purpose health ,,fsa ,a health flexible spending arrangement that1 after the qualified ,,hsa distribution is made1 pays or reimburses benefits for coverage described in clause 7ii7 7but not through insurance or for long-term care services74 7,,iv7 ,limited purpose ,,hra ,a health reimbursement arrangement that1 after the qualified ,,hsa distribution is made1 pays or reimburses benefits for permitted insurance or coverage described in clause 7ii7 7but not for long-term care services74 7,v7 ,retirement ,,hra ,a health reimbursement arrangement that1 after the qualified ,,hsa distribution is made1 pays or reimburses only those medical expenses incurred after an individual's retirement 7and no expenses incurred before retirement74 7,,vi7 ,suspended ,,hra ,a health reimbursement arrangement that1 after the qualified ,,hsa distribution is made1 is suspended1 pursuant to an election made on or before the date the individual elects a qualified ,,hsa distribution or1 if later1 on the date of the individual enrolls in an ,,hsa-qualified health plan1 that does not pay or reimburse1 at any time1 any medical expense incurred during the suspension period except as described in the preceding subclauses of this clause4 4 7b7 ,qualified ,,hsa distribution shall not affect flexible spending arrangement ,paragraph 7#a7 of section #ajf7;e7 of such ,code is amended to read as follows3 7#a7 ,in general ,a plan shall not fail to be treated as-- 7,a7 a health flexible spending arrangement under this section1 section #aje1 or section #abe1 7,b7 a health reimbursement arrangement under this section or section #aje1 or 7,c7 an accident or health plan1 merely because such plan provides for a qualified ,,hsa distribution4 4 7c7 ,,fsa balances at year end shall not forfeit ,paragraph 7#b7 of section #abe7;d7 of such ,code is amended by adding at the end the following new subparagraph3 7,e7 ,exception for qualified ,,hsa distributions ,subparagraph 7,a7 shall not apply to the extent that there is an amount remaining in a health flexible spending account at the end of a plan year that an individual elects to contribute to a health savings account pursuant to a qualified ,,hsa distribution 7as defined in section #ajf7;e77#b774 4 7d7 ,simplification of limitations on ,,fsa and ,,hra rollovers ,paragraph 7#b7 of section #ajf7;e7 of such ,code is amended to read as follows3 7#b7 ,qualified ,,hsa distribution 7,a7 ,in general ,the term qualified ,,hsa distribution means a distribution from a health flexible spending arrangement or health reimbursement arrangement directly to a health savings account of the employee to the extent that such distribution does not exceed the lesser of-- 7i7 the balance in such arrangement as of the date of such distribution1 or 7ii7 the amount determined under subparagraph 7,b74 ,such term shall not include more than #a distribution with respect to any arrangement4 7,b7 ,dollar limitations 7i7 ,distributions from a health flexible spending arrangement ,a qualified ,,hsa distribution from a health flexible spending arrangement shall not exceed the applicable amount4 7ii7 ,distributions from a health reimbursement arrangement ,a qualified ,,hsa distribution from a health reimbursement arrangement shall not exceed-- 7,i7 the applicable amount divided by #ab1 multiplied by 7,,ii7 the number of months during which the individual is a participant in the health reimbursement arrangement4 7iii7 ,applicable amount ,for purposes of this subparagraph1 the applicable amount is-- 7,i7 #b1bej in the case of an eligible individual who has self-only coverage under an ,,hsa-qualified health plan at the time of such distribution1 and 7,,ii7 #d1ejj in the case of an eligible individual who has family coverage under an ,,hsa-qualified health plan at the time of such distribution4 4 7e7 ,elimination of additional tax for failure to maintain ,,hsa-,qualified health plan coverage ,subsection 7e7 of section #ajf of such ,code is amended-- 7#a7 by striking subparagraph 7,a7 of paragraph 7#d7 and redesignating subparagraphs 7,b7 and 7,c7 of such paragraph as subparagraphs 7,a7 and 7,b7 thereof1 respectively2 and 7#b7 by striking paragraph 7#c7 and redesignating paragraphs 7#d7 7as so amended7 and 7#e7 as paragraphs 7#c7 and 7#d71 respectively4 7f7 ,limited purpose ,f,s,as and ,h,r,as ,subsection 7e7 of section #ajf of such ,code1 as amended by this section1 is amended by adding at the end the following new paragraph3 7#e7 ,limited purpose ,f,s,as and ,h,r,as ,a plan shall not fail to be a health flexible spending arrangement1 a health reimbursement arrangement1 or an accident or health plan under this section or section #aje merely because the plan converts coverage for individuals who enroll in an ,,hsa-qualified health plan described in section #bbc7;c77#b7 to coverage described in subclause 7,i71 7,,ii71 7,,iii71 7,,iv71 7,v71 or 7,,vi7 of section #bbc7;c77#a77;,b77iv74 ,coverage for such individuals may be converted as of the date of enrollment in the ,,hsa-qualified health plan1 without regard to the period of coverage under the health flexible spending arrangement or health reimbursement arrangement1 and without requiring any change in coverage to individuals who do not enroll in an ,,hsa-qualified health plan4 4 7g7 ,distribution amounts adjusted for cost-of-,living ,subsection 7e7 of section #ajf of such ,code1 as amended by this section1 is amended by adding at the end the following new paragraph3 7#f7 ,cost-of-living adjustment 7,a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjah1 each of the dollar amounts in paragraph 7#b77;,b77iii7 shall be increased by an amount equal to such dollar amount1 multiplied by the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which such taxable year begins by substituting calendar year #bjag for calendar year #aiib in subparagraph 7,b7 thereof4 7,b7 ,rounding ,if any increase under paragraph 7#a7 is not a multiple of #ej1 such increase shall be rounded to the nearest multiple of #ej4 4 7h7 ,disclaimer of disqualifying coverage ,subparagraph 7,b7 of section #bbc7;c77#a7 of such ,code1 as amended by this section1 is amended by striking and at the end of clause 7iv71 by striking the period at the end of clause 7v7 and inserting 1 and1 and by inserting after clause 7v7 the following new clause3 7iv7 any coverage 7including prospective coverage7 under a health plan that is not an ,,hsa-qualified health plan which is disclaimed in writing1 at the time of the creation or organization of the health savings account1 including by execution of a trust described in subsection 7d77#a7 through a governing instrument that includes such a disclaimer1 or by acceptance of an amendment to such a trust that includes such a disclaimer4 4 7i7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #g4 ,chronic disease prevention 7a7 ,in general ,section #bbc7;c77#b7 of the ,internal ,revenue ,code of #aihf is amended by redesignating subparagraph 7,d7 as subparagraph 7,e7 and by inserting after subparagraph 7,c7 the following new subparagraph3 7,d7 ,safe harbor for absence of deductible for care related to chronic conditions ,a plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for care and prescription medications related to the treatment of medically complex chronic conditions which-- 7i7 are substantially disabling or life threatening1 7ii7 have a high risk of hospitalization or other significant adverse health outcomes1 and 7iii7 require specialized delivery systems across domains of care4 4 7b7 ,effective date ,the amendments made by this section shall apply to coverage for months beginning after the date of the enactment of this ,act4 #h4 ,certain amounts paid for physical activity1 fitness1 and exercise treated as amounts paid for medical care 7a7 ,in general ,section #bac7;d77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of subparagraph 7,c71 by striking the period at the end of subparagraph 7,d7 and inserting 1 or1 and by inserting after subparagraph 7,d7 the following new subparagraph3 7,e7 for qualified sports and fitness expenses4 4 7b7 ,qualified sports and fitness expenses ,section #bac7;d7 of such ,code1 as amended by this ,act1 is amended by adding at the end the following paragraph3 7#ac7 ,qualified sports and fitness expenses 7,a7 ,in general ,the term qualified sports and fitness expenses means amounts paid exclusively for the sole purpose of participating in a physical activity including-- 7i7 for membership at a fitness facility1 7ii7 for participation or instruction in a program of physical exercise or physical activity1 and 7iii7 for equipment for use in a program 7including a self-directed program7 of physical exercise or physical activity4 7,b7 ,overall dollar limitation ,the aggregate amount treated as qualified sports and fitness expenses with respect to any taxpayer for any taxable year shall not exceed #a1jjj 7#b1jjj in the case of a joint return or a head of household 7as defined in section #b7;b7774 7,c7 ,fitness facility defined ,for purposes of subparagraph 7,a77i71 the term fitness facility means a facility-- 7i7 providing instruction in a program of physical exercise1 offering facilities for the preservation1 maintenance1 encouragement1 or development of physical fitness1 or serving as the site of such a program of a ,state or local government1 7ii7 which is not a private club owned and operated by its members1 7iii7 which does not offer golf1 hunting1 sailing1 or riding facilities1 7iv7 whose health or fitness facility is not incidental to its overall function and purpose1 and 7v7 which is fully compliant with the ,state of jurisdiction and ,federal anti-discrimination laws4 7,d7 ,treatment of exercise videos1 etc ,videos1 books1 and similar materials shall be treated as described in subparagraph 7,a77ii7 if the content of such materials constitute instruction in a program of physical exercise or physical activity4 7,e7 ,limitations related to sports and fitness equipment ,amounts paid for equipment described in subparagraph 7,a77iii7 shall be treated as a qualified sports and fitness expense only-- 7i7 if such equipment is utilized exclusively for participation in fitness1 exercise1 sport1 or other physical activity programs1 7ii7 if such equipment is not apparel or footwear1 and 7iii7 in the case of any item of sports equipment 7other than exercise equipment71 with respect to so much of the amount paid for such item as does not exceed #bej4 7,f7 ,programs which include components other than physical exercise and physical activity ,rules similar to the rules of section #bac7;d77#f7 shall apply in the case of any program that includes physical exercise or physical activity and also other components4 ,for purposes of the preceding sentence1 travel and accommodations shall be treated as an other component4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4