,i #aaith ,,congress #ast ,session ,h4 ,r4 #fahc ,,in ,,the ,,house ,,of ,,representatives ,november #bj1 #bjbe,mr4 ,doggett 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 reform certain rules related to health savings accounts4 #a4 ,references ,except as otherwise expressly provided1 whenever in this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 #b4 ,repeal of exception to requirement that penalty-free distributions be for qualified medical expenses 7a7 ,in general ,section #bbc7;f77#d7 is amended by striking subparagraph 7,c74 7b7 ,effective date ,the amendment made by this section shall apply to distributions made after ,december #ca1 #bjbe4 #c4 ,income limitation on deductible contributions to health savings accounts 7a7 ,in general ,section #bbc7;b7 is amended by adding at the end the following new paragraph3 7#i7 ,limitation based on modified adjusted gross income 7,a7 ,in general ,the amount otherwise allowable as a deduction under subsection 7a7 shall be reduced 7but not below zero7 by an amount which bears the same ratio to the amount so allowable 7determined without regard to this paragraph7 as-- 7i7 the amount 7if any7 by which the taxpayer's modified adjusted gross income exceeds the applicable income threshold1 bears to 7ii7 #dj1jjj 7#bj1jjj in the case of a married individual filing a separate return74 7,b7 ,applicable income threshold ,for purposes of this paragraph1 the term applicable income threshold means-- 7i7 in the case of a joint return or surviving spouse 7as defined in section #b7;a771 #cjj1jjj1 7ii7 in the case of a head of household1 #bej1jjj1 7iii7 in the case of a married individual filing a separate return1 #aej1jjj1 and 7iv7 in any other case1 #bjj1jjj4 7,c7 ,modified adjusted gross income ,for purposes of this paragraph1 the term modified adjusted gross income means adjusted gross income determined without regard to this section and sections #iaa1 #ica1 and #icc4 4 7b7 ,treatment of non-deductible contributions 7#a7 ,rules for distribution ,section #bbc7;f77#b7 is amended is amended by striking shall be included in the gross income of such beneficiary4 and inserting shall be included in the gross income of the beneficiary as provided in section #gb4 ,rules similar to the rules of section #djh7;d77#b7 shall apply for purposes of the preceding sentence44 7#b7 ,coordination with excise tax on excess contributions ,section #digc7;g77#a7 is amended by inserting 7determined without regard to section #bbc7;b77#i77 after section #bbc4 7c7 ,payroll taxes 7#a7 ,,fica ,section #caba7;a7 is amended by striking or at the end of paragraph 7#bb71 by striking the period at the end of paragraph 7#bc7 and inserting 2 or1 and by inserting afer paragraph 7#bc7 the following new paragraph3 7#bd7 7,a7 for purposes of section #caja1 any payment excludable from the employee's gross income under section #ajf7;d71 and 7,b7 for purposes of any other provision of this chapter 7including section #cajb71 any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section #ajf7;d74 4 7#b7 ,railroad ,retirement ,section #cbca7;e77#aa7 is amended to read as follows3 7#aa7 7,a7 for purposes of section #cbja1 any payment excludable from the employee's gross income under section #ajf7;d71 and 7,b7 for purposes of any other provision of this chapter 7including section #cbjb71 any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section #ajf7;d72 4 7d7 ,effective date 7#a7 ,in general ,except as otherwise provided in this subsection1 the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbe4 7#b7 ,payroll taxes ,the amendments made by subsection 7c7 shall apply to payments made after ,december #ca1 #bjbe4 #d4 ,health savings account reimbursement of medical expenses limited to #b years 7a7 ,in general ,section #bbc7;d77#b7 is amended by adding at the end the following new subparagraph3 7,e7 ,reimbursements limited to #b years ,an amount paid or distributed from a health savings account to reimburse the account beneficiary for a qualified medical expense shall not be treated as used to pay a qualified medical expense unless such distribution is made not later than #b years after the date on which such reimbursed qualified medical expense was paid4 4 7b7 ,effective date ,the amendment made by this section shall apply to amounts paid or distributed from a health savings account after ,december #ca1 #bjbe4 #e4 ,requirement to substantiate distributions from health savings accounts that are for qualified medical expenses 7a7 ,in general ,section #bbc7;d77#b71 as amended by the preceding provisions of this ,act1 is amended by adding at the end the following new subparagraph3 7,f7 ,substantiation requirement 7i7 ,in general ,an amount paid or distributed from a health savings account shall not be treated as used to pay a qualified medical expense unless such amount is substantiated as a qualified medical expense4 7ii7 ,assessment required ,in the case of any expense with respect to which a provider's opinion is required to substantiate such expense as a qualified medical expense under clause 7i71 such opinion shall not constitute substantiation unless-- 7,i7 such opinion is based on an assessment conducted pursuant to a bona fide provider-patient relationship1 7,,ii7 such assessment is conducted in-person or is an assessment of a type that generally accepted standards of medical practice do not require to be in-person1 and 7,,iii7 the expense is incurred for an item or service of a type that would be typically recommended under generally accepted standards of medical practice4 7,g7 ,regulations ,the ,secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subparagraph4 4 7b7 ,determination by trustee ,section #bbc7;d77#a7 is amended by adding at the end the following new subparagraph3 7,f7 ,in the case of any amount paid or distributed from the trust1 the trustee shall determine1 consistent with the requirements of paragraph 7#b77;,f71 whether such amount has been substantiated as a qualified medical expense4 4 7c7 ,effective date ,the amendments made by this section shall apply to amounts paid or distributed from a health savings account after ,december #ca1 #bjbe4 #f4 ,certain expenses not treated as medical care 7a7 ,in general ,section #bbc7;d77#b71 as amended by the preceding provisions of this ,act1 is amended by adding at the end the following new subparagraph3 7,g7 ,exclusions ,for purposes of this paragraph1 the amounts paid for the following shall not be treated as paid for medical care3 7i7 ,spa and beauty treatments4 7ii7 ,so much of any amounts paid for exercise equipment as exceed #ejj in any taxable year4 4 7b7 ,effective date ,the amendment made by this section shall apply to amounts paid or distributed from a health savings account after ,december #ca1 #bjbe4 #g4 ,excise tax on excessive health savings account fees 7a7 ,in general ,subtitle ,d is amended by adding at the end the following new chapter3 #ej;,b ,excessive health savings account fees ,sec4 #ejjj;,e4 ,excessive health savings account fees4 #ejjj;,e4 ,excessive health savings account fees 7a7 ,in general ,there is hereby imposed on the trustee of any health savings account which charges any excessive health savings account fee a tax equal to the excess of-- 7#a7 the amount of such fee1 over 7#b7 the reasonable amount of such fee as determined under subsection 7b77#c74 7b7 ,excessive health saving account fee ,for purposes of this section-- 7#a7 ,excessive health savings account fee ,the term excessive health savings account fee means any covered health savings account fee if such fee exceeds the reasonable amount of such fee as determined under paragraph 7#c74 7#b7 ,covered health savings account fee ,the term covered health savings account fee means any of the following if charged in connection with a health savings account3 maintenance fees2 transfer fees2 fees for paper statements1 checks1 or replacement cards2 withdrawal fees2 fees for insufficient funds2 fees to ensure that fees do not exceed earnings or account balance2 and such other fees or charges as the ,secretary may identify for purposes of this paragraph4 7#c7 ,reasonable fees ,with respect to each category of fees described in paragraph 7#b7 and such additional categories or subcategories as the ,secretary may provide1 the ,secretary shall determine the reasonable amount of such fee4 7c7 ,health saving account ,for purposes of this section1 the term health savings account has the meaning given such term in section #bbc4 4 7b7 ,reporting ,subpart ,a of part ,,iii of subchapter ,a of chapter #fa is amended by inserting after section #fjci,l the following new section3 #fjci,m4 ,information regarding health savings account fees 7a7 ,in general ,each trustee of a health savings account which charges any covered health savings account fee during any calendar year shall1 for such calendar year1 make a return at such time and in such manner as the ,secretary may provide setting forth the information described in subsection 7b7 and such other information as the ,secretary may require4 7b7 ,information 7#a7 ,in general ,each return under subsection 7a7 shall include1 with respect to each category of fee charged1 a description of such fee1 the number of such fees charged1 and the aggregate amount of such fees charged4 7#b7 ,separately stated categories ,the information described in paragraph 7#a7 shall be separately stated based on such demographic or other characteristics as the ,secretary may provide4 7c7 ,definitions ,terms used in this section which are also used in section #ejjj;,e shall have the same meaning as when used in section #ejjj;,e4 4 7c7 ,clerical amendments 7#a7 ,the table of chapters for subtitle ,d is amended by adding at the end the following new item3 ,chapter #ej;,b--,excessive health savings account fees 4 7#b7 ,the table of sections for subpart ,a of part ,,iii of subchapter ,a of chapter #fa is amended by inserting after the item relating to section #fjci,l the following new item3 ,sec4 #fjci,m4 ,information regarding health savings account fees4 4 7d7 ,effective date ,the amendments made by this section shall apply to fees charged after ,december #ca1 #bjbe4 #h4 ,reporting of earnings on cash balances of health savings accounts 7a7 ,in general ,section #bbc7;h7 is amended by adding at the end the following3 ,the reports under paragraph 7#a7 shall include a statement specifying the average yield on cash balances in the health savings account of the account beneficiary for the period covered by the report and a statement of the national average yield on savings account balances for such period 7determined in such manner as the ,secretary may provide744 7b7 ,effective date ,the amendment made by this section shall apply to reports with respect to periods beginning after ,december #ca1 #bjbe4