[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 309 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 309

     To amend the Internal Revenue Code of 1986 to provide for the 
 disposition of unused health benefits in cafeteria plans and flexible 
                         spending arrangements.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 8, 2005

 Mr. DeMint (for himself, Mr. Salazar, and Mr. Ensign) 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 provide for the 
 disposition of unused health benefits in cafeteria plans and flexible 
                         spending arrangements.

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

SECTION 1. DISPOSITION OF UNUSED HEALTH BENEFITS IN CAFETERIA PLANS AND 
              FLEXIBLE SPENDING ARRANGEMENTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
(relating to cafeteria plans) is amended by redesignating subsections 
(h) and (i) as subsections (i) and (j), respectively, and by inserting 
after subsection (g) the following:
    ``(h) Contributions of Certain Unused Health Benefits.--
            ``(1) In general.--For purposes of this title, a plan or 
        other arrangement shall not fail to be treated as a cafeteria 
        plan solely because qualified benefits under such plan include 
        a health flexible spending arrangement under which not more 
        than $500 of unused health benefits may be--
                    ``(A) carried forward to the succeeding plan year 
                of such health flexible spending arrangement, or
                    ``(B) to the extent permitted by section 106(d), 
                contributed by the employer to a health savings account 
                (as defined in section 223(d)) maintained for the 
                benefit of the employee.
            ``(2) Health flexible spending arrangement.--For purposes 
        of this subsection, the term `health flexible spending 
        arrangement' means a flexible spending arrangement (as defined 
        in section 106(c)) that is a qualified benefit and only permits 
        reimbursement for expenses for medical care (as defined in 
        section 213(d)(1), without regard to subparagraphs (C) and (D) 
        thereof).
            ``(3) Unused health benefits.--For purposes of this 
        subsection, with respect to an employee, the term `unused 
        health benefits' means the excess of--
                    ``(A) the maximum amount of reimbursement allowable 
                to the employee for a plan year under a health flexible 
                spending arrangement, over
                    ``(B) the actual amount of reimbursement for such 
                year under such arrangement.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to taxable years beginning after December 31, 2004.
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