Short title; table of contents

(a)

Short title

This Act may be cited as the

American Health Care Access Improvement, Portability, and Cost Reduction Act of 2008

. (b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Nonrefundable credit for certain primary health services providers serving health professional shortage areas.

Sec. 3. Increase in Medicare physician payments through 2010.

Sec. 4. Refundable credit for health insurance coverage.

Sec. 5. Health reimbursement arrangements and spending arrangements in combination with health savings accounts.

Sec. 6. Increase in annual HSA contribution limitation.

Sec. 7. Purchase of health insurance from HSA account.

Sec. 8. Special rule for certain medical expenses incurred before establishment of account.

Sec. 9. Provisions relating to Medicare.

Sec. 10. Individuals eligible for veterans benefits for a service-connected disability.

Sec. 11. Allow both spouses to make catch-up contributions to the same HSA account.

Sec. 12. FSA and HRA Termination to fund HSAs.

Sec. 13. Including information on advance directives in Medicare & You Handbook.

Sec. 14. Restoring access requirements for certain MA private fee-for-service plan provisions as in existence before Public Law 110–275.

Nonrefundable credit for certain primary health services providers serving health professional shortage areas

(a)

In general

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:

25E.

Primary care physicians providers serving health professional shortage areas

(a)

Allowance of credit

In the case of an individual who is a qualified primary care physician or qualified nurse practitioner for any month during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year an amount equal to $1,000 for each month during such taxable year— (1)which is part of the eligible service period of such individual, and (2)for which such individual is a qualified primary care physician or qualified nurse practitioner, respectively. (b)

Qualified primary care physician

For purposes of this section, the term qualified primary care physician means, with respect to any month, any physician who is certified for such month by the Bureau to be a primary health services provider or a licensed mental health provider who— (1)is providing primary health services full time and substantially all of whose primary health services are provided in a health professional shortage area, (2)is not receiving during the calendar year which includes such month a scholarship under the National Health Service Corps Scholarship Program or the Indian health professions scholarship program or a loan repayment under the National Health Service Corps Loan Repayment Program or the Indian Health Service Loan Repayment Program, (3)is not fulfilling service obligations under such Programs, and (4)has not defaulted on such obligations. (c)

Eligible service period

For purposes of this section, the term eligible service period means the period of 60 consecutive calendar months beginning with the first month the taxpayer is a qualified primary care physician or qualified nurse practitioner. (d)

Other definitions and special rule

For purposes of this section— (1)

Bureau

The term Bureau means the Bureau of Primary Health Care, Health Resources and Services Administration of the United States Department of Health and Human Services. (2)

Physician

The term physician has the meaning given to such term by section 1861(r) of the Social Security Act. (3)

Primary health services provider

The term primary health services provider means a provider of basic health services (as described in section 330(b)(1)(A)(i) of the Public Health Service Act). (4)

Qualified nurse practitioner

The term qualified nurse practitioner means a nurse practitioner (as defined in section 1861(aa)(5) of the Social Security Act) who is providing primary health services full time and substantially all of whose primary health services are provided in a health professional shortage area. (5)

Health professional shortage area

The term health professional shortage area means any area which, as of the beginning of the eligible service period, is a health professional shortage area (as defined in section 332(a)(1) of the Public Health Service Act) taking into account only the category of health services provided by the qualified primary care physician or qualified nurse practitioner, as applicable. (6)

Only 60 months taken into account

In no event shall more than 60 months be taken into account under subsection (a) by any individual for all taxable years.

(b)

Clerical amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item:

25E. Primary care physicians serving health professional shortage areas.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

Increase in Medicare physician payments through 2010

Section 1848(d)(9) of the Social Security Act (42 U.S.C. 1395w–4(d)(9)), as added by section 131(a)(1)(B) of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110–275), is amended— (1)in subparagraph (A), by striking for 2009 and inserting for each of 2009 and 2010; and (2)in subparagraph (B), by striking 2010 and inserting 2011.

Refundable credit for health insurance coverage

(a)

In general

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by redesignating section 37 as section 38 and by inserting after section 36 the following new section:

37.

Qualified health insurance credit

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the sum of the monthly limitations determined under subsection (b) for the taxpayer and the taxpayers spouse and dependents. (b)

Monthly limitation

(1)

In general

The monthly limitation for each month during the taxable year for an eligible individual is 1⁄12th of— (A)the applicable adult amount, in the case that the eligible individual is the taxpayer or the taxpayer’s spouse, (B)the applicable adult amount, in the case that the eligible individual is an adult dependent, and (C)the applicable child amount, in the case that the eligible individual is a child dependent. (2)

Limitation on aggregate amount

Notwithstanding paragraph (1), the aggregate monthly limitations for the taxpayer and the taxpayer’s spouse and dependents for any month shall not exceed 1⁄12th of the applicable aggregate amount. (3)

No credit for ineligible months

With respect to any individual, the monthly limitation shall be zero for any month for which such individual is not an eligible individual. (c)

Applicable amounts

For purposes of this section— (1)

Applicable adult amount

The term applicable adult amount means $2,500. (2)

Applicable child amount

The term applicable child amount means $1,000. (3)

Applicable aggregate amount

The term applicable aggregate amount means $5,000. (d)

Eligible individual

For purposes of this section— (1)

In general

The term eligible individual means, with respect to any month, an individual who— (A)is the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent, and (B)is covered under qualified health insurance as of the 1st day of such month. (2)

Coverage under medicare, medicaid, schip, military coverage

The term eligible individual shall not include any individual for a month if, as of the first day of such month, such individual is— (A)entitled to benefits under part A of title XVIII of the Social Security Act or enrolled under part B of such title, and the individual is not a participant or beneficiary in a group health plan or large group health plan that is a primary plan (as defined in section 1862(b)(2)(A) of such Act), (B)in the case of a State that has not made the election described in section 1939(a)(1)(B) of the Social Security Act, enrolled in the program under title XIX of such Act (other than under section 1928 of such Act), or (C)entitled to benefits under chapter 55 of title 10, United States Code. (3)

Identification requirements

The term eligible individual shall not include any individual for any month unless the policy number associated with the qualified refund eligible health insurance and the TIN of each eligible individual covered under such health insurance for such month are included on the return of tax for the taxable year in which such month occurs. (4)

Prisoners

The term eligible individual shall not include any individual for a month if, as of the first day of such month, such individual is imprisoned under Federal, State, or local authority. (5)

Aliens

The term eligible individual shall not include any alien individual for a month if, as of the first day of such month, such individual is not a lawful permanent resident of the United States. (e)

Qualified health insurance

For purposes of this section— (1)

In general

The term qualified health insurance means any insurance constituting medical care which (as determined under regulations prescribed by the Secretary) provides coverage for inpatient and outpatient care, emergency benefits, and physician care. (2)

Certain coverage disregarded

Such term does not include any insurance— (A)substantially all of the coverage of which is coverage described in section 223(c)(1)(B), or (B)which constitutes medical care under any health plan maintained by any employer (or former employer) of the taxpayer or the taxpayer’s spouse. (f)

Other definitions

For purposes of this section— (1)

Dependent

The term dependent has the meaning given such term by section 152 (determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof). An individual who is a child to whom section 152(e) applies shall be treated as a dependent of the custodial parent for a coverage month unless the custodial and noncustodial parent agree otherwise. (2)

Adult

The term adult means an individual who is not a child. (3)

Child

The term child means a qualifying child (as defined in section 152(c)). (g)

Special rules

(1)

Coordination with medical deduction, etc

Any amount paid by a taxpayer for insurance to which subsection (a) applies shall not be taken into account in computing the amount allowable to the taxpayer as a credit under section 35 or as a deduction under section 213(a). (2)

Medical and health savings accounts

The credit allowed under subsection (a) for any taxable year shall be reduced by the aggregate amount distributed from Archer MSAs (as defined in section 220(d)) and health savings accounts (as defined in section 223(d)) which are excludable from gross income for such taxable years by reason of being used to pay premiums for coverage of an eligible individual (as defined in subsection (e)) under qualified health insurance (as defined in subsection (f)) for any month. (3)

Denial of credit to dependents

No credit shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individuals taxable year begins. (4)

Married couples must file joint return

(A)

In general

If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and his spouse file a joint return for the taxable year. (B)

Marital status; certain married individuals living apart

Rules similar to the rules of paragraphs (3) and (4) of section 21(e) shall apply for purposes of this paragraph. (5)

Verification of coverage, etc

No credit shall be allowed under this section with respect to any individual unless such individual’s coverage (and such related information as the Secretary may require) is verified in such manner as the Secretary may prescribe. (6)

Insurance which covers other individuals; treatment of payments

Rules similar to the rules of paragraphs (7) and (8) of section 35(g) shall apply for purposes of this section. (h)

Coordination with advance payments

(1)

Reduction in credit for advance payments

With respect to any taxable year, the amount which would (but for this subsection) be allowed as a credit to the taxpayer under subsection (a) shall be reduced (but not below zero) by the aggregate amount paid on behalf of such taxpayer under section 7527A for months beginning in such taxable year. (2)

Recapture of excess advance payments

If the aggregate amount paid on behalf of the taxpayer under section 7527A for months beginning in the taxable year exceeds the sum of the monthly limitations determined under subsection (b) for the taxpayer and the taxpayer’s spouse and dependents for such months, then the tax imposed by this chapter for such taxable year shall be increased by the sum of— (A)such excess, plus (B)interest on such excess determined at the underpayment rate established under section 6621 for the period from the date of the payment under section 7527A to the date such excess is paid.

For purposes of subparagraph (B), an equal part of the aggregate amount of the excess shall be deemed to be attributable to payments made under section 7527A on the first day of each month beginning in such taxable year, unless the taxpayer establishes the date on which each such payment giving rise to such excess occurred, in which case subparagraph (B) shall be applied with respect to each date so established.

(i)

Annual inflation adjustment

In the case of any taxable year beginning in a calendar year after 2009, each of the dollar amounts contained in subsection (c) shall be annually increased by the annual inflation adjustment determined under subparagraph (B) section 1809(c)(2) of the Social Security Act for such calendar year. Any adjustment under the preceding sentence shall be rounded in the manner described in subparagraph (A) of such section.

(b)

Advance payment of credit

Chapter 77 (relating to miscellaneous provisions) of such Code is amended by inserting after section 7527 the following new section:

7527A.

Advance payment of qualified health insurance credit

(a)

In general

The Secretary shall establish a program for making payments on behalf of individuals to providers of qualified health insurance (as defined in section 37(e)) for such individuals. (b)

Limitation

The Secretary may make payments under subsection (a) only to the extent that the Secretary determines that the amount of such payments made on behalf of any taxpayer for any month does not exceed the sum of the monthly limitations determined under section 37 for the taxpayer and taxpayer’s spouse and dependents for such month.

(c)

Information reporting

(1)

In general

Subpart B of part III of subchapter A of chapter 61 of such Code (relating to information concerning transactions with other persons) is amended by inserting after section 6050V the following new section:

6050W.

Returns relating to qualified health insurance credit

(a)

Requirement of reporting

Every person who is entitled to receive payments for any month of any calendar year under section 7527A (relating to advance payment of qualified health insurance credit) with respect to any individual shall, at such time as the Secretary may prescribe, make the return described in subsection (b) with respect to each such individual. (b)

Form and manner of returns

A return is described in this subsection if such return— (1)is in such form as the Secretary may prescribe, and (2)contains, with respect to each individual referred to in subsection (a)— (A)the name, address, and TIN of each such individual, (B)the months for which amounts payments under section 7527A were received, (C)the amount of each such payment, (D)the type of insurance coverage provide by such person with respect to such individual and the policy number associated with such coverage, (E)the name, address, and TIN of the spouse and each dependent covered under such coverage, and (F)such other information as the Secretary may prescribe. (c)

Statements To be furnished to individuals with respect to whom information is required

Every person required to make a return under subsection (a) shall furnish to each individual whose name is required to be set forth in such return a written statement showing— (1)the name and address of the person required to make such return and the phone number of the information contact for such person, and (2)the information required to be shown on the return with respect to such individual.

The written statement required under the preceding sentence shall be furnished on or before January 31 of the year following the calendar year for which the return under subsection (a) is required to be made.

(d)

Returns which would be required To be made by 2 or more persons

Except to the extent provided in regulations prescribed by the Secretary, in the case of any amount received by any person on behalf of another person, only the person first receiving such amount shall be required to make the return under subsection (a).

(2)

Assessable penalties

(A)Subparagraph (B) of section 6724(d)(1) (relating to definitions) of such Code is amended by redesignating clauses (xv) through (xxi) as clauses (xvi) through (xxii), respectively, and by inserting after clause (xiv) the following new clause:

(xv)section 6050W (relating to returns relating to qualified health insurance credit),

(B)Paragraph (2) of section 6724(d) of such Code is amended by striking the period at the end of subparagraph (CC) and inserting , or and by inserting after subparagraph (CC) the following new subparagraph:

(DD)section 6050W (relating to returns relating to qualified health insurance credit).

(d)

Conforming amendments

(1)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 37, after 36,. (2)The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating the item relating to section 37 as an item relating to section 38 and by inserting after the item relating to section 36 the following new item:

Sec. 37. Qualified health insurance credit.

(3)The table of sections for chapter 77 of such Code is amended by inserting after the item relating to section 7527 the following new item:

Sec. 7527A. Advance payment of qualified health insurance credit.

(4)The table of sections for subpart B of part III of subchapter A of chapter 61 of such Code is amended by adding at the end the following new item:

Sec. 6050W. Returns relating to qualified health insurance credit.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

Health reimbursement arrangements and spending arrangements in combination with health savings accounts

(a)

In general

Subparagraph (B) of section 223(c)(1) of the Internal Revenue Code of 1986 (relating to certain coverage disregarded) is amended by striking and at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and, and by inserting after clause (iii) the following new clause:

(iv)coverage under a flexible spending arrangement or a health reimbursement arrangement, or both, which meets the requirements of paragraph (6).

(b)

Combination health reimbursement, savings, and spending arrangements

Subsection (c) of section 223 of such Code (relating to definitions and special rules) is amended by adding at the end the following new paragraph:

(6)

Combined limit for contributions or credits to health reimbursement, arrangements and spending arrangements

(A)

In general

In the case of coverage under a flexible spending arrangement or a health reimbursement arrangement, or both, such coverage meets the requirements of this paragraph if, with respect to an individual— (i)the sum of— (I)the amount allowable as a deduction under subsection (a), (II)the salary reduction amount elected by the individual and, if applicable, the employer contribution or credit allocated to the individual for the taxable year under the flexible spending arrangement (as defined in section 106(c)(2)), plus (III)the amounts that the individual is permitted, under the terms of the plan, to receive in reimbursements for the taxable year under the health reimbursement arrangement, does not exceed (ii)the sum of the annual deductible and the other annual out-of-pocket expenses (other than for premiums) required to be paid under the plan by the eligible individual for covered benefits. (B)

Exceptions for disregarded coverage

For purposes of subparagraph (A)— (i)

Certain flexible spending arrangements

Any flexible spending arrangement salary reduction amounts or employer contributions or credits that are restricted by the employer to use for coverage described in paragraph (1)(B) shall not be taken into account under subparagraph (A)(i)(II). (ii)

Certain health reimbursement arrangements

Any reimbursements from a health reimbursement arrangement for coverage described in paragraph (1)(B) shall not be taken into account under subparagraph (A)(i)(III). (iii)

Qualified HSA distributions from FSA and HRA terminations

Any qualified HSA distribution (as defined in section 106(e)) shall not be taken into account under subparagraph (A)(i). (C)

Termination

Coverage shall not be treated as meeting the requirements of this paragraph for any taxable year beginning after December 31, 2012.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

Increase in annual HSA contribution limitation

(a)

In general

Paragraph (2) of section 223(b) of the Internal Revenue Code of 1986 (relating to monthly limitation) is amended— (1)in subparagraph (A) by striking $2,250 and inserting $4,500, and (2)in subparagraph (B) by striking $4,500 and inserting $9,000. (b)

Cost-of-living adjustment

Section 223(g)(1)(B)(i) of such Code is amended by striking calendar year 1997 and inserting calendar year 2008. (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

Purchase of health insurance from HSA account

(a)

In general

Paragraph (2) of section 223(d) of the Internal Revenue Code of 1986 (defining qualified medical expenses) is amended— (1)by striking subparagraphs (B) and (C), (2)in subparagraph (A) by striking

(A) In general.—

and moving the text 2 ems to the left, and (3)by inserting and including payment for insurance) after section 213(d). (b)

Effective date

The amendments made by this section shall apply with respect to insurance purchased after the date of the enactment of this Act in taxable years beginning after such date.

Special rule for certain medical expenses incurred before establishment of account

(a)

In general

Subsection (d) of section 223 of the Internal Revenue Code of 1986 is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:

(4)

Certain medical expenses incurred before establishment of account treated as qualified

(A)

In general

For purposes of paragraph (2), an expense shall not fail to be treated as a qualified medical expense solely because such expense was incurred before the establishment of the health savings account if such expense was incurred during the 60-day period beginning on the date on which the high deductible health plan is first effective. (B)

Special rules

For purposes of subparagraph (A)— (i)an individual shall be treated as an eligible individual for any portion of a month for which the individual is described in subsection (c)(1), determined without regard to whether the individual is covered under a high deductible health plan on the 1st day of such month, and (ii)the effective date of the health savings account is deemed to be the date on which the high deductible health plan is first effective after the date of the enactment of this paragraph.

(b)

Effective date

The amendment made by this section shall apply with respect to insurance purchased after the date of the enactment of this Act in taxable years beginning after such date.

Provisions relating to Medicare

(a)

Individuals over age 65 only enrolled in Medicare Part A

Section 223(b)(7) of the Internal Revenue Code of 1986 (relating to contribution limitation on Medicare eligible individuals) is amended by adding at the end the following new sentence: This paragraph shall not apply to any individual during any period the individual’s only entitlement to such benefits is an entitlement to hospital insurance benefits under part A of title XVIII of such Act pursuant to an enrollment for such hospital insurance benefits under section 226(a)(1) of such Act.. (b)

Medicare beneficiaries participating in Medicare Advantage MSA may contribute their own money to their MSA

Subsection (b) of section 138 of such Code is amended by striking paragraph (2) and redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively. (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

10.

Individuals eligible for veterans benefits for a service-connected disability

(a)

In general

Section 223(c)(1) of the Internal Revenue Code of 1986 (defining eligible individual) is amended by adding at the end the following new subparagraph:

(D)

Special rule for individuals eligible for certain veterans benefits

For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in such subparagraph merely because the individual receives periodic hospital care or medical services for a service-connected disability under any law administered by the Secretary of Veterans Affairs but only if the individual is not eligible to receive such care or services for any condition other than a service-connected disability.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

11.

Allow both spouses to make catch-up contributions to the same HSA account

(a)

In general

Paragraph (3) of section 223(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(C)

Special rule where both spouses are eligible individuals with 1 account

If— (i)an individual and the individual’s spouse have both attained age 55 before the close of the taxable year, and (ii)the spouse is not an account beneficiary of a health savings account as of the close of such year,

the additional contribution amount shall be 200 percent of the amount otherwise determined under subparagraph (B).

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

12.

FSA and HRA Termination to fund HSAs

(a)

Grace period not required

Section 106(e)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: A distribution shall not fail to be treated as a qualified HSA distribution merely because the balance in such arrangement is determined without regard to the requirement that unused amounts remaining at the end of a plan year must be forfeited in the absence of a grace period.. (b)

Deposit in limited FSA or HRA of funds in excess FSA or HRA termination distribution

Paragraph (1) of section 106(e) of such Code is amended by inserting before the period at the end thereof the following: and the deposit of funds in excess of a qualified HSA distribution amount into a health flexible spending account or health reimbursement arrangement which is compatible with a health savings account and which, on the date of such distribution, is a part of the employer’s plan. (c)

Disclaimer of disqualifying coverage

Subparagraph (B) of section 223(c)(1) of such Code is amended by striking and at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and, and by inserting after clause (iii) the following new clause:

(iv)any coverage (whether actual or prospective) otherwise described in subparagraph (A)(ii) which is disclaimed at the time of the creation or organization of the health savings account.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

13.

Including information on advance directives in Medicare & You Handbook

(a)

In general

Section 1804(a) of the Social Security Act (42 U.S.C. 1395b–2(a)) is amended— (1)in paragraph (2), at the end by striking and; (2)in paragraph (3), at the end by striking the period and inserting ; and; and (3)by inserting after paragraph (3), the following new paragraph:

(4)educational information about advance directives (as defined in section 1866(f)(3)).

(b)

Effective date

The amendments made by subsection (a) shall apply to information distributed for years beginning on or after the date of the enactment of this Act.

14.

Restoring access requirements for certain MA private fee-for-service plan provisions as in existence before Public Law 110–275

(a)

In general

Section 1852(d) of the Social Security Act (42 U.S.C. 1395w–22(d)), as amended by section 162(a) of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110–275), is amended— (1)in paragraph (4), in the second sentence— (A)by striking Subject to paragraphs (5) and (6), the Secretary and inserting The Secretary; and (B)in subparagraph (B), by striking sufficient number and range of providers within such category to meet the access standards in subparagraphs (A) through (E) of paragraph (1) and inserting sufficient number and range of providers within such category to provide covered services under the terms of the plan; and (2)by striking paragraphs (5) and (6). (b)

Clarification regarding utilization

Section 1859(b)(2) of the Social Security Act (42 U.S.C. 1395w–28(b)(2)), as amended by section 162(b) of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110–275), is amended by striking Nothing in subparagraph (B) through specified preventive or screening services..