,i #aaith ,,congress #ast ,session ,h4 ,r4 #iee ,,in ,,the ,,house ,,of ,,representatives ,february #d1 #bjbe,mr4 ,moore of ,utah 7for himself1 ,mr4 ,panetta1 ,mr4 ,fitzpatrick1 ,mr4 ,schneider1 ,mr4 ,smith of ,nebraska1 ,mr4 ,ruiz1 ,mr4 ,valadao1 ,mrs4 ,dingell1 ,mr4 ,moolenaar1 and ,mr4 ,davis of ,north ,carolina7 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 health provisions1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,health ,out-of-,pocket ,expense ,act of #bjbe or the ,,hope ,act of #bjbe4 #b4 ,hope ,accounts 7a7 ,accounts established 7#a7 ,in general ,part ,,viii of subchapter ,f of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #ecj;,a4 ,,hope ,accounts 7a7 ,in general ,a ,,hope ,account shall be exempt from taxation under this subtitle4 ,notwithstanding the preceding sentence1 the ,hope ,account shall be subject to the taxes imposed by section #eaa 7relating to the imposition of tax on unrelated business income of charitable organizations74 7b7 ,definitions and special rules ,for purposes of this section-- 7#a7 ,,hope ,account ,the term ,,hope ,account means a trust created or organized in the ,united ,states as a ,,hope ,account exclusively for the purpose of paying the qualified medical expenses of the account beneficiary1 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,except in the case of a rollover contribution described in subsection 7d77#d7 of this section1 no contribution will be accepted-- 7i7 unless it is in cash1 or 7ii7 to the extent such contribution1 when added to previous contributions to the trust for the calendar year1 exceeds the contribution limitations in subsection 7c74 7,b7 ,the trustee is a bank 7as defined in section #djh7n771 an insurance company 7as defined in section #haf71 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 section4 7,c7 ,no part of the trust assets will be invested in life insurance contracts4 7,d7 ,the assets of the trust will not be commingled with other property except in a common trust fund or common investment fund4 7,e7 ,the interest of an individual in the balance in the individual's account is nonforfeitable4 7,f7 ,no more than reasonable fees are paid in connection with the administration of the account4 7,g7 ,the trust includes procedures for the trustee to reasonably assure that distributions are limited to payment or reimbursement for qualified medical expenses incurred after the establishment of the trust4 ,procedures shall be considered reasonable that meet the substantiation requirements contained in ,proposed ,treasury ,regulation section #a4abe-f 7as in effect on ,january #a1 #bjbe7 or under any superseding guidance prescribed by the ,secretary4 7,h7 ,the trust follows all reporting requirements as may be prescribed by the ,secretary with respect to distributions that are not substantiated as qualified medical expenses pursuant to this section4 7,i7 ,the trust follows any other guidance with respect to ,,hope ,accounts prescribed by the ,secretary4 7,j7 ,except as provided in subsection 7d77#b77;,b71 amounts held by the trust may not be distributable other than exclusively to pay the qualified medical expenses of the account beneficiary1 spouse or dependents4 7,k7 ,the trust reports all contributions on ,form #edih-;,a1 or such other form as is required by the ,secretary4 ,the trust annually must also-- 7i7 request each account owner to provide the trust with the amount if any1 the account owner contributed to an ,,fsa for the year1 and 7ii7 report such amount on ,form #edih-;,a or such other form as is required by the ,secretary4 7#b7 ,eligible individual 7,a7 ,in general ,the term eligible individual means1 with respect to any month1 any individual if for such month such individual meets the requirements of subparagraphs 7,b7 and 7,c74 7,b7 ,coverage requirement ,an individual meets the requirements of this subparagraph for a month if such individual is covered under one of the following types of coverage as of the #ast day of such month3 7i7 ,minimum essential coverage 7as defined in section #ejjj;,a7f774 7ii7 ,with respect to members of federally recognized ,american ,indian and ,alaska ,native ,tribes and their descendants1 the ,indian ,health ,service4 7,c7 ,other coverage 7i7 ,in general ,an individual meets the requirements of this subparagraph for a month if during such month no amounts are contributed by or on behalf of the individual to any of the following accounts of such individual3 7,i7 ,a health flexible spending arrangement4 7,,ii7 ,a health savings account 7as defined in section #bbc7;d774 7,,iii7 ,a health reimbursement arrangement which is treated as employer-provided coverage under an accident or health plan for purposes of section #ajf4 7,,iv7 ,an ,archer ,,msa 7as defined in section #bbj7;d774 7ii7 ,exception for certain disregarded coverage ,clause 7i7 shall not apply in the case of an account described therein if for the month such account constitutes coverage described in section #bbc7;c77#a77;,b74 7#c7 ,qualified medical expenses ,the term qualified medical expenses has the meaning given such term in section #bbc7;d77#b74 7#d7 ,account beneficiary ,the term account beneficiary means the individual on whose behalf the ,,hope ,account was established4 7#e7 ,account terminations ,rules similar to the rules of paragraphs 7#b7 and 7#d7 of section #djh7;e7 shall apply to ,,hope ,accounts1 and any amount treated as distributed under such rules shall be treated as not used to pay qualified medical expenses4 7#f7 ,certain rules to apply ,rules similar to the following rules shall apply for purposes of this section3 7,a7 ,section #bai7;f77#c7 7relating to time when contributions deemed made74 7,b7 ,except as provided in section #ajf7;h71 section #bai7;f77#e7 7relating to employer payments74 7,c7 ,section #djh7;g7 7relating to community property laws74 7,d7 ,section #djh7;h7 7relating to custodial accounts74 7,e7 ,section #bbc7;f77#g7 7relating to transfer of account incident of divorce74 7,f7 ,section #bbc7;f77#h7 7relating to treatment after death of account beneficiary74 7c7 ,contribution limitations 7#a7 ,in general ,the aggregate amount of contributions from all sources to all ,,hope ,accounts maintained for the benefit of an eligible individual for any taxable year shall not exceed the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual4 7#b7 ,monthly limitation ,the monthly limitation for any month is #a_/ab of-- 7,a7 in the case of an eligible individual who has self-only coverage1 or an eligible individual that is married filing separately or married filing jointly that has family coverage1 #d1jjj1 or 7,b7 in the case of an eligible individual who has family coverage and is head of household1 #h1jjj4 7#c7 ,limitation on third party contributions ,a trust shall not be treated as a ,hope ,account under this section unless the aggregate of contributions on behalf of the individual from all employers of the individual and from any ,medicaid program established and administered by a ,state or subdivision thereof1 if approved by the ,secretary of ,health and ,human ,services under ,section #aaae of the ,social ,security ,act or ,section #accb of the ,patient ,protection and ,affordable ,care ,act1 will not be accepted in excess of #ej percent of the limit with respect to such individual4 7#d7 ,no deduction ,no deduction shall be allowed for a contribution made by an eligible individual to a ,,hope ,account maintained for the benefit of such individual for any taxable year4 7#e7 ,exclusion from gross income limited ,any contribution under paragraph 7c77#c7 to the ,,hope account of an individual whose adjusted gross income for the prior taxable year does not exceed #ajj1jjj 7#bjj1jjj in the case of a married individual filing a joint return7 shall be excluded from the individual's adjusted gross income4 7#f7 ,coordination with other contributions ,the limitation which would 7but for this paragraph7 apply under this subsection to an individual for any taxable year shall be reduced 7but not below zero7 by the sum of-- 7,a7 the aggregate amount determined with respect to the individual for the taxable year under section #bbc7;b77#d71 7,b7 the aggregate amount contributed by the individual to health savings accounts of the individual for such taxable year and not taken into account under subparagraph 7,a71 7,c7 the aggregate amount contributed to a ,,hope ,account of such individual by the individual's employer1 and 7,d7 the aggregate amount contributed to a ,,hope ,account of such individual for such taxable year by a program established and administered by a ,state or subdivision thereof with respect to converted cost-sharing reduction payments4 7#g7 ,cost-of-living adjustment ,in the case of any taxable year beginning in a calendar year after #bjbf1 each dollar amount in paragraph 7#b7 shall be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which such taxable year begins determined-- 7i7 by substituting calendar year #bjbe for calendar year #bjaf in subparagraph 7,a77ii7 thereof1 and 7ii7 by substituting ,march #ca for ,august #ca in section #a7;f77#d74 ,the ,secretary shall publish the adjusted amounts under paragraph 7#b7 for taxable years beginning in any calendar year no later than ,june #a of the preceding calendar year4 ,if any increase under this paragraph is not a multiple of #ej1 such increase shall be rounded to the nearest multiple of #ej4 7d7 ,tax treatment of distributions 7#a7 ,amounts used for qualified medical expenses ,any amount paid or distributed out of a ,,hope ,account which is used exclusively to pay qualified medical expenses of any account beneficiary shall not be includible in gross income4 7#b7 ,distribution and taxation of amounts not used for qualified medical expenses 7,a7 ,in general ,except as provided in subparagraph 7,b71 no amount may be paid or distributed out of a ,,hope ,account which is not used exclusively to pay the qualified medical expenses of the account beneficiary4 7,b7 ,exception for certain distributions ,an amount may be paid or distributed out of a ,,hope ,account which is not used exclusively to pay the qualified medical expenses of the account beneficiary if such distribution is reported to the ,secretary pursuant to such regulations or other guidance the ,secretary may prescribe1 and the distribution is-- 7i7 made to an account beneficiary 7or to the estate of the account beneficiary7 on or after the death of the individual1 or 7ii7 attributable to the account beneficiary being disabled 7within the meaning of section #gb7m77#g774 7,c7 ,taxation of distributions not used for qualified medical expenses 7i7 ,in general ,any amount paid or distributed out of a ,,hope ,account which is not used exclusively to pay qualified medical expenses of any account beneficiary shall be includible in gross income1 except to the extent such distribution is allocable to amounts described in subparagraph 7,d77iii74 7ii7 ,additional tax ,the tax imposed by this chapter on the account beneficiary for any taxable year in which there is a payment or distribution from a ,,hope ,account of such beneficiary which is includible in gross income under clause 7i7 shall be increased by #cj percent of the amount which is so includible4 7,d7 ,ordering of distributions ,any distributions out of a ,,hope ,account pursuant to subparagraph 7,b7 shall be treated as made from amounts to the extent that the amount of such distribution1 when added to all previous distributions from the ,,hope ,account1 does not exceed the aggregate of such amount1 and from such amounts pursuant to the following ordering rules3 7i7 from earnings1 if any1 on such amounts described in clauses 7ii7 and 7iii71 7ii7 from contributions described in subsection 7c77#c71 7iii7 from contributions by an eligible individual to the ,,hope ,account1 and 7iv7 from rollover contributions to the ,,hope ,account from another ,,hope ,account allocable to contributions by an eligible individual to such other ,,hope ,account1 on a first-in1 first-out basis4 7#c7 ,excess contributions returned before due date of return 7,a7 ,in general ,if any excess contribution is contributed for a taxable year to any ,,hope ,account of an individual1 paragraph 7#b7 shall not apply to distributions from the ,,hope ,accounts of such individual 7to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such individual for such year7 if-- 7i7 such distribution is received by the individual on or before the last day prescribed by law 7including extensions of time7 for filing such individual's return for such taxable year1 and 7ii7 such distribution is accompanied by the amount of net income attributable to such excess contribution4 ,any net income described in clause 7ii7 shall be included in the gross income of the individual for the taxable year in which it is received4 7,b7 ,excess contribution ,for purposes of subparagraph 7,a71 the term excess contribution means any contribution 7other than a rollover contribution described in paragraph 7#d77 which is neither excludable from gross income under section #ajf7;h7 nor allowable under this section4 7#d7 ,rollover contribution ,an amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs 7,a7 and 7,b74 7,a7 ,in general ,paragraph 7#b7 shall not apply to any amount paid or distributed from a ,,hope ,account to the account beneficiary to the extent the amount received is paid into a ,,hope ,account for the benefit of such beneficiary1 the beneficiary's spouse or the beneficiary's dependent not later than the #fjth day after the day on which the beneficiary receives the payment or distribution4 7,b7 ,limitation ,this paragraph shall not apply to any amount described in subparagraph 7,a7 received by an individual from a ,,hope ,account if1 at any time during the #a-year period ending on the day of such receipt1 such individual received any other amount described in subparagraph 7,a7 from a ,,hope ,account which was not includible in the individual's gross income because of the application of this paragraph4 7,c7 ,dependent ,the term dependent means any individual with respect to whom a deduction under section #aea is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins4 7#e7 ,coordination with medical expense deduction ,for purposes of determining the amount of the deduction under section #bac1 any payment or distribution out of a ,,hope ,account for qualified medical expenses shall not be treated as an expense paid for medical care4 7e7 ,reports ,the ,secretary shall require the trustee of a ,,hope ,account to make such reports regarding such account to the ,secretary and to the account beneficiary with respect to contributions1 distributions1 the return of excess contributions1 and such other matters as the ,secretary determines appropriate4 ,the trustee shall include in each such report an accounting of the amount contributed by the account beneficiary1 and may1 if necessary to determine such amount1 request such information from the account beneficiary4 4 7#b7 ,clerical amendment ,the table of sections for part ,,viii of subchapter ,f of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #ecj;,a4 ,,hope ,accounts4 4 7b7 ,excess contributions 7#a7 ,in general ,section #digc7;a7 of such ,code is amended by striking or at the end of paragraph 7#e71 by striking the period at the end of paragraph 7#f7 and inserting 1 and1 and by inserting after paragraph 7#f7 7as so amended7 the following new paragraph3 7#g7 ,a ,,hope ,account 7as defined in section #ecj;,a7b774 4 7#b7 ,excess contributions defined ,section #digc of such ,code is amended by adding at the end the following new subsection3 7i7 ,excess contributions to ,,hope ,account 7#a7 ,in general ,for purposes of this section1 in the case of ,,hope ,accounts 7within the meaning of section #ecj;,a7b771 the term 8excess contributions0 means the sum of-- 7,a7 ,the aggregate amount contributed for the taxable year to the accounts 7other than a rollover contribution described in section #ecj;,a7d77#d77 which exceeds the contributions limits under section #ecj;,a7c71 and 7,b7 the amount determined under this subsection for the preceding taxable year1 reduced by the sum of-- 7i7 the distributions out of the accounts which were included in gross income under section #ecj;,a7d77#b77;,c71 and 7ii7 the excess 7if any7 of-- 7,i7 the maximum amount of allowable contributions under #ecj;,a7c7 for the taxable year1 over 7,,ii7 the amount contributed to the accounts for the taxable year4 7#b7 ,returned excess contributions ,for purposes of this subsection1 any contribution which is distributed out of the ,,hope ,account in a distribution to which section #ecj;,a7d77#b77;,c7 applies shall be treated as an amount not contributed4 4 7c7 ,employer contributions 7#a7 ,in general ,section #ajf of such ,code is amended by adding at the end the following new subsection3 7h7 ,contributions to ,,hope ,accounts 7#a7 ,in general ,in the case of an employee who is an eligible individual1 amounts contributed by such employee's employer to any ,,hope account 7as defined in section #ecj;,a7b77 of such employee shall be treated as employer-provided coverage for medical expenses under an accident or health plan to the extent such amounts do not exceed the limitations applicable to such individual for such taxable year under section #ecj;,a7c7 7determined without regard to this subsection74 7#b7 ,limitation ,paragraph 7#a7 shall not apply in the case of a taxpayer whose adjusted gross income for the taxable year exceeds #ajj1jjj 7#bjj1jjj in the case of a joint return74 7#c7 ,special rules ,rules similar to the rules of paragraphs 7#b71 7#c71 7#d71 and 7#e7 of subsection 7b7 shall apply for purposes of this subsection4 7#d7 ,cross reference ,for penalty on failure by employer to make comparable contributions to the health savings accounts of comparable employees1 see section #dihj;,g4 4 7#b7 ,information reporting for employees ,section #fjea7;a7 is amended by striking and at the end of paragraph 7#af71 by striking the period at the end of paragraph 7#ag7 and inserting 1 and1 and by inserting after paragraph 7#ag7 7as so amended7 the following new paragraph3 7#ah7 the amount contributed to any ,,hope ,account 7as defined in section #ecj;,a7b77 of such employee4 4 7#c7 ,conforming amendment relating to cafeteria plans ,section #abe7;f77#a7 of such ,code is amended by inserting #ajf7;h71 after #ajf7;b714 7d7 ,failure of employer ,to make comparable ,,hope ,account contributions 7#a7 ,in general ,section #dihj;,g7a7 of such ,code is amended by inserting or ,,hope ,account after health savings account4 7#b7 ,conforming amendments 7,a7 ,section #dihj;,g7c7 of such ,code is amended by striking and health savings accounts and inserting 1 health savings accounts1 or ,,hope ,accounts4 7,b7 ,section #dihj;,g7d7 of such ,code is amended by inserting or ,,hope ,account after health savings account4 7,c7 ,the heading for section #dihj;,g of such ,code is amended by inserting or ,,hope ,account after health savings account4 7,d7 ,the table of sections for chapter #dc of such ,code is amended by striking the item relating to section #dihj;,g and inserting the following new item3 ,sec4 #dihj;,g4 ,failure of employer to make comparable health savings account or ,,hope ,account contributions4 4 7e7 ,application of prohibited transaction rules 7#a7 ,in general ,section #dige7;e77#a7 of such ,code is amended by striking or at the end of subparagraph 7,f71 by redesignating subparagraph 7,g7 as subparagraph 7,h71 and by inserting after subparagraph 7,f71 as so amended1 the following new subparagraph3 7,g7 a ,,hope ,account described in section #ecj;,a7b71 or 4 7f7 ,failure ,to report ,section #ffic7;a77#b7 of such ,code is amended by striking and at the end of subparagraph 7,e71 by striking the period at the end of subparagraph 7,f7 and inserting 1 and1 and by inserting after subparagraph 7,f7 7as so amended7 the following new subparagraph3 7,g7 ,section #ecj;,a7e7 7relating to ,,hope ,accounts74 4 7g7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbe4