[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 369 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 369

To amend the Internal Revenue Code of 1986 to improve access to health 
    care by allowing a deduction for the health insurance costs of 
individuals, expanding health savings accounts, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 20, 2011

 Mr. Austria (for himself, Mr. Pence, Mrs. Bachmann, Mr. Sessions, Mr. 
  Akin, Mr. Burton of Indiana, Mr. Coffman of Colorado, Mr. Paul, Mr. 
 Ross of Florida, Mr. Thompson of Pennsylvania, Mr. Westmoreland, Mr. 
Cassidy, Mr. Long, and Mr. Tiberi) introduced the following bill; which 
            was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to improve access to health 
    care by allowing a deduction for the health insurance costs of 
individuals, expanding health savings accounts, and for other purposes.

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

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Health Savings and 
Affordability Act of 2011''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. DEDUCTION FOR QUALIFIED HEALTH INSURANCE COSTS OF INDIVIDUALS.

    (a) In General.--Part VII of subchapter B of chapter 1 (relating to 
additional itemized deductions) is amended by redesignating section 224 
as section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to the amount paid during the 
taxable year for coverage for the taxpayer, his spouse, and dependents 
under qualified health insurance.
    ``(b) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' means insurance which constitutes 
medical care; except that such term shall not include any insurance if 
substantially all of its coverage is of excepted benefits described in 
section 9832(c).
    ``(c) 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 deduction under section 162(l) 
        or 213(a). Any amount taken into account in determining the 
        credit allowed under section 35 or 36B shall not be taken into 
        account for purposes of this section.
            ``(2) Deduction not allowed for self-employment tax 
        purposes.--The deduction allowable by reason of this section 
        shall not be taken into account in determining an individual's 
        net earnings from self-employment (within the meaning of 
        section 1402(a)) for purposes of chapter 2.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 is amended by inserting before the last 
sentence the following new paragraph:
            ``(22) Costs of qualified health insurance.--The deduction 
        allowed by section 224.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 is amended by redesignating the item relating 
to section 224 as an item relating to section 225 and inserting before 
such item the following new item:

``Sec. 224. Costs of qualified health insurance.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME 
              HSA ACCOUNT.

    (a) In General.--Paragraph (3) of section 223(b) 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 amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 4. INCREASE IN HSA CONTRIBUTION LIMITATION.

    (a) In General.--Subsection (b) of section 223 (relating to monthly 
limitation) is amended--
            (1) by striking ``$2,250'' in paragraph (2)(A) and 
        inserting ``the amount in effect under subsection 
        (c)(2)(A)(ii)(I)'', and
            (2) by striking ``$4,500'' in paragraph (2)(B) and 
        inserting ``the amount in effect under subsection 
        (c)(2)(A)(ii)(II)''.
    (b) Conforming Amendment.--Paragraph (1) of section 223(g) is 
amended by striking ``subsections (b)(2) and'' and inserting 
``subsection''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after the date of 
the enactment of this Act.

SEC. 5. TREATMENT OF FAMILY COVERAGE PLANS HAVING BOTH INDIVIDUAL AND 
              FAMILY DEDUCTIBLES.

    (a) In General.--Paragraph (2) of section 223(c) (defining high 
deductible plan) is amended by adding at the end the following new 
subparagraph:
                    ``(E) Family coverage plans having both individual 
                and family deductibles.--In the case of a family 
                coverage plan having a deductible (and the same 
                deductible) for each covered individual and a 
                deductible for the family as a whole, the requirement 
                of subparagraph (A)(i) shall be treated as met if 
                (without regard to this subparagraph)--
                            ``(i) the individual deductible meets the 
                        requirement of subparagraph (A)(i)(I), or
                            ``(ii) the family deductible meets the 
                        requirement of subparagraph (A)(i)(II).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 6. FSA AND HRA TERMINATION TO FUND HSAS.

    (a) Eligible Individuals Include FSA and HRA Participants.--Section 
223(c)(1)(B) is amended--
            (1) by striking ``and'' at the end of clause (ii),
            (2) by striking the period at the end of clause (iii) and 
        inserting ``, and'', and
            (3) by inserting after clause (iii) the following new 
        clause:
                            ``(iv) coverage under a health flexible 
                        spending arrangement or a health reimbursement 
                        arrangement in the plan year a qualified HSA 
                        distribution as described in section 106(e) is 
                        made on behalf of the individual if after the 
                        qualified HSA distribution is made and for the 
                        remaining duration of the plan year, the 
                        coverage provided under the health flexible 
                        spending arrangement or health reimbursement 
                        arrangement is converted to--
                                    ``(I) coverage that does not pay or 
                                reimburse any medical expense incurred 
                                before the minimum annual deductible 
                                under section 223(c)(2)(A)(i) (prorated 
                                for the period occurring after the 
                                qualified HSA distribution is made) is 
                                satisfied,
                                    ``(II) coverage that, after the 
                                qualified HSA distribution is made, 
                                does not pay or reimburse any medical 
                                expense incurred after the qualified 
                                HSA distribution is made other than 
                                preventive care as defined in section 
                                223(c)(2)(C),
                                    ``(III) coverage that, after the 
                                qualified HSA distribution is made, 
                                pays or reimburses benefits for 
                                coverage described in section 
                                223(c)(1)(B)(ii) (but not through 
                                insurance or for long-term care 
                                services),
                                    ``(IV) coverage that, after the 
                                qualified HSA distribution is made, 
                                pays or reimburses benefits for 
                                permitted insurance as defined in 
                                section 223(c)(1)(B)(i) or coverage 
                                described in section 223(c)(1)(B)(ii) 
                                (but not for long-term care services),
                                    ``(V) coverage that, after the 
                                qualified HSA distribution is made, 
                                pays or reimburses only those medical 
                                expenses incurred after an individual's 
                                retirement (and no expenses incurred 
                                before retirement), or
                                    ``(VI) coverage that, after the 
                                qualified HSA distribution is made, is 
                                suspended, pursuant to an election made 
                                on or before the date the individual 
                                elects a qualified HSA distribution or, 
                                if later, on the date of the individual 
                                enrolls in a high deductible health 
                                plan (as defined in section 223(c)(2)), 
                                that does not pay or reimburse, at any 
                                time, any medical expense incurred 
                                during the suspension period except as 
                                defined in subclauses (I) through (V) 
                                above.''.
    (b) Qualified HSA Distribution Shall Not Affect Flexible Spending 
Arrangement.--Section 106(e)(1) is amended to read as follows:
            ``(1) In general.--A plan shall not fail to be treated as a 
        health flexible spending arrangement under this section, 
        section 105, or section 125, or as a health reimbursement 
        arrangement under this section or section 105, merely because 
        such plan provides for a qualified HSA distribution.''.
    (c) FSA Balances at Year End Shall Not Forfeit.--Section 125(d)(2) 
is amended by adding at the end the following new subparagraph:
                    ``(E) Exception for qualified hsa distributions.--
                Subparagraph (A) shall not apply to the extent that 
                there is an amount remaining in a health flexible 
                spending account at the end of a plan year that an 
                individual elects to contribute to a health savings 
                account pursuant to a qualified HSA distribution (as 
                defined in section 106(e)(2)).''.
    (d) Simplification of Limitations on FSA and HRA Rollovers.--
Section 106(e)(2) (relating to qualified HSA distribution) is amended 
to read as follows:
            ``(2) Qualified hsa distribution.--
                    ``(A) In general.--The term `qualified HSA 
                distribution' means a distribution from a health 
                flexible spending arrangement or health reimbursement 
                arrangement to the extent that such distribution does 
                not exceed the lesser of--
                            ``(i) the balance in such arrangement as of 
                        the date of such distribution, or
                            ``(ii) the amount determined under 
                        subparagraph (B).
                Such term shall not include more than 1 distribution 
                with respect to any arrangement.
                    ``(B) Dollar limitations.--
                            ``(i) Distributions from a health flexible 
                        spending arrangement.--A qualified HSA 
                        distribution from a health flexible spending 
                        arrangement shall not exceed the applicable 
                        amount.
                            ``(ii) Distributions from a health 
                        reimbursement arrangement.--A qualified HSA 
                        distribution from a health reimbursement 
                        arrangement shall not exceed--
                                    ``(I) the applicable amount divided 
                                by 12, multiplied by
                                    ``(II) the number of months during 
                                which the individual is a participant 
                                in the health reimbursement 
                                arrangement.
                            ``(iii) Applicable amount.--For purposes of 
                        this subparagraph, the applicable amount is--
                                    ``(I) $2,250 in the case of an 
                                eligible individual who has self-only 
                                coverage under a high deductible health 
                                plan at the time of such distribution, 
                                and
                                    ``(II) $4,500 in the case of an 
                                eligible individual who has family 
                                coverage under a high deductible health 
                                plan at the time of such 
                                distribution.''.
    (e) Elimination of Additional Tax for Failure To Maintain High 
Deductible Health Plan Coverage.--Section 106(e) is amended--
            (1) by striking paragraph (3) and redesignating paragraphs 
        (4) and (5) as paragraphs (3) and (4), respectively, and
            (2) by striking subparagraph (A) of paragraph (3), as so 
        redesignated, and redesignating subparagraphs (B) and (C) of 
        such paragraph as subparagraphs (A) and (B) thereof, 
        respectively.
    (f) Limited Purpose FSAs and HRAs.--Section 106(e), as amended by 
this section, is amended by adding at the end the following new 
paragraph:
            ``(5) Limited purpose fsas and hras.--A plan shall not fail 
        to be a health flexible spending arrangement or health 
        reimbursement arrangement under this section or section 105 
        merely because the plan converts coverage for individuals who 
        enroll in a high deductible health plan described in section 
        223(c)(2) to coverage described in section 223(c)(1)(B)(iv). 
        Coverage for such individuals may be converted as of the date 
        of enrollment in the high deductible health plan, without 
        regard to the period of coverage under the health flexible 
        spending arrangement or health reimbursement arrangement, and 
        without requiring any change in coverage to individuals who do 
        not enroll in a high deductible health plan.''.
    (g) Distribution Amounts Adjusted for Cost-of-Living.--Section 
106(e), as amended by this section, is amended by adding at the end the 
following new paragraph:
            ``(6) Cost-of-living adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning after December 31, 2011, each of the dollar 
                amounts in paragraph (2)(B)(iii) shall be increased by 
                an amount equal to such dollar amount, multiplied by 
                the cost-of-living adjustment determined under section 
                1(f)(3) for the calendar year in which such taxable 
                year begins by substituting `calendar year 2010' for 
                `calendar year 1992' in subparagraph (B) thereof.
                    ``(B) Rounding.--If any increase under subparagraph 
                (A) is not a multiple of $50, such increase shall be 
                rounded to the nearest multiple of $50.''.
    (h) Disclaimer of Disqualifying Coverage.--Section 223(c)(1)(B), as 
amended by this section, is amended--
            (1) by striking ``and'' at the end of clause (iii),
            (2) by striking the period at the end of clause (iv) and 
        inserting ``, and'', and
            (3) by inserting after clause (iv) the following new 
        clause:
                            ``(v) any coverage (including prospective 
                        coverage) under a health plan that is not a 
                        high deductible health plan which is disclaimed 
                        in writing, at the time of the creation or 
                        organization of the health savings account, 
                        including by execution of a trust described in 
                        subsection (d)(1) through a governing 
                        instrument that includes such a disclaimer, or 
                        by acceptance of an amendment to such a trust 
                        that includes such a disclaimer.''.
    (i) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 7. PURCHASE OF HEALTH INSURANCE FROM HSA ACCOUNT.

    (a) In General.--Paragraph (2) of section 223(d) (defining 
qualified medical expenses) is amended to read as follows:
            ``(2) Qualified medical expenses.--
                    ``(A) In general.--The term `qualified medical 
                expenses' means, with respect to an account 
                beneficiary, amounts paid by such beneficiary for 
                medical care (as defined in section 213(d)) for any 
                individual covered by a high deductible health plan of 
                the account beneficiary, but only to the extent such 
                amounts are not compensated for by insurance or 
                otherwise.
                    ``(B) Health insurance may not be purchased from 
                account.--Except as provided in subparagraph (C), 
                subparagraph (A) shall not apply to any payment for 
                insurance.
                    ``(C) Exceptions.--Subparagraph (B) shall not apply 
                to any expense for coverage under--
                            ``(i) a health plan during any period of 
                        continuation coverage required under any 
                        Federal law,
                            ``(ii) a qualified long-term care insurance 
                        contract (as defined in section 7702B(b)),
                            ``(iii) a health plan during any period in 
                        which the individual is receiving unemployment 
                        compensation under any Federal or State law,
                            ``(iv) a high deductible health plan, or
                            ``(v) any health insurance under title 
                        XVIII of the Social Security Act, other than a 
                        Medicare supplemental policy (as defined in 
                        section 1882 of such Act).''.
    (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.

SEC. 8. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL FITNESS PROGRAMS 
              TREATED AS MEDICAL CARE.

    (a) In General.--Subsection (d) of section 213 is amended by adding 
at the end the following new paragraph:
            ``(12) Exercise equipment and physical fitness programs.--
                    ``(A) In general.--The term `medical care' shall 
                include amounts paid--
                            ``(i) to purchase or use equipment used in 
                        a program (including a self-directed program) 
                        of physical exercise,
                            ``(ii) to participate, or receive 
                        instruction, in a program of physical exercise, 
                        and
                            ``(iii) for membership dues in a fitness 
                        club the primary purpose of which is to provide 
                        access to equipment and facilities for physical 
                        exercise.
                    ``(B) Limitation.--Amounts treated as medical care 
                under subparagraph (A) shall not exceed $1,200 with 
                respect to any individual for any taxable year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.
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