[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1350 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1350

 To amend the Internal Revenue Code of 1986 to expand the availability 
                      of medical savings accounts.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 12, 1999

Mr. Grassley (for himself and Mr. Torricelli) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to expand the availability 
                      of medical savings accounts.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medical Savings Account Improvement 
Act of 1999''.

SEC. 2. EXPANSION OF AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) Repeal of Limitations on Number of Medical Savings Accounts.--
            (1) In general.--Subsections (i) and (j) of section 220 of 
        the Internal Revenue Code of 1986 are hereby repealed.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 220(c) of such Code is 
                amended by striking subparagraph (D).
                    (B) Section 138 of such Code (relating to 
                Medicare+Choice MSA) is amended by striking subsection 
                (f).
    (b) Availability Not Limited To Accounts for Employees of Small 
Employers and Self-Employed Individuals.--
            (1) In general.--Section 220(c)(1)(A) of the Internal 
        Revenue Code of 1986 (relating to eligible individual) is 
        amended to read as follows:
                    ``(A) In general.--The term `eligible individual' 
                means, with respect to any month, any individual if--
                            ``(i) such individual is covered under a 
                        high deductible health plan as of the 1st day 
                        of such month, and
                            ``(ii) such individual is not, while 
                        covered under a high deductible health plan, 
                        covered under any health plan--
                                    ``(I) which is not a high 
                                deductible health plan, and
                                    ``(II) which provides coverage for 
                                any benefit which is covered under the 
                                high deductible health plan.''
            (2) Conforming amendments.--
                    (A) Section 220(c)(1) of such Code is amended by 
                striking subparagraph (C).
                    (B) Section 220(c) of such Code is amended by 
                striking paragraph (4) (defining small employer) and by 
                redesignating paragraph (5) as paragraph (4).
                    (C) Section 220(b) of such Code is amended by 
                striking paragraph (4) (relating to deduction limited 
                by compensation) and by redesignating paragraphs (5), 
                (6), and (7) as paragraphs (4), (5), and (6), 
                respectively.
    (c) Increase in Amount of Deduction Allowed for Contributions to 
Medical Savings Accounts.--
            (1) In general.--Paragraph (2) of section 220(b) of such 
        Code is amended to read as follows:
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is the amount equal to \1/12\ of the annual deductible 
        (as of the first day of such month) of the individual's 
        coverage under the high deductible health plan.''.
            (2) Conforming amendment.--Clause (ii) of section 
        220(d)(1)(A) of such Code is amended by striking ``75 percent 
        of''.
    (d) Both Employers and Employees May Contribute to Medical Savings 
Accounts.--Paragraph (4) of section 220(b) of such Code, as 
redesignated by subsection (b)(2)(C), is amended to read as follows:
            ``(4) Coordination with exclusion for employer 
        contributions.--The limitation which would (but for this 
        paragraph) apply under this subsection to the taxpayer for any 
        taxable year shall be reduced (but not below zero) by the 
        amount which would (but for section 106(b)) be includible in 
        the taxpayer's gross income for such taxable year.''.
    (e) Reduction of Permitted Deductibles Under High Deductible Health 
Plans.--
            (1) In general.--Subparagraph (A) of section 220(c)(2) of 
        such Code (defining high deductible health plan) is amended--
                    (A) by striking ``$1,500'' and inserting 
                ``$1,000'', and
                    (B) by striking ``$3,000'' in clause (ii) and 
                inserting ``$2,000''.
            (2) Conforming amendment.--Subsection (g) of section 220 of 
        such Code is amended--
                    (A) by striking ``1998'' and inserting ``1999''; 
                and
                    (B) by striking ``1997'' and inserting ``1998''.
    (f) Medical Savings Accounts May Be Offered Under Cafeteria 
Plans.--Subsection (f) of section 125 of such Code is amended by 
striking ``106(b),''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

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