[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6199 Engrossed in House (EH)]

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115th CONGRESS
  2d Session
                                H. R. 6199

_______________________________________________________________________

                                 AN ACT


 
To amend the Internal Revenue Code of 1986 to include certain over-the-
        counter medical products as qualified medical expenses.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Restoring Access 
to Medication and Modernizing Health Savings Accounts Act of 2018''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. First dollar coverage flexibility for high deductible health 
                            plans.
Sec. 3. Treatment of direct primary care service arrangements.
Sec. 4. Certain employment related services not treated as 
                            disqualifying coverage for purposes of 
                            health savings accounts.
Sec. 5. Contributions permitted if spouse has a health flexible 
                            spending account.
Sec. 6. FSA and HRA terminations or conversions to fund HSAs.
Sec. 7. Inclusion of certain over-the-counter medical products as 
                            qualified medical expenses.
Sec. 8. Certain amounts paid for physical activity, fitness, and 
                            exercise treated as amounts paid for 
                            medical care.

SEC. 2. FIRST DOLLAR COVERAGE FLEXIBILITY FOR HIGH DEDUCTIBLE HEALTH 
              PLANS.

    (a) In General.--Section 223(c)(2) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(E) First dollar coverage flexibility.--
                            ``(i) In general.--A plan shall not fail to 
                        be treated as a high deductible health plan by 
                        reason of failing to have a deductible for not 
                        more than $250 of specified services for self-
                        only coverage (twice such amount in the case of 
                        family coverage) during a plan year.
                            ``(ii) Specified services.--For purposes of 
                        this subparagraph, the term `specified 
                        services' means, with respect to a plan, 
                        services other than preventive care (within the 
                        meaning of subparagraph (C)) identified under 
                        the terms of the plan as being services to 
                        which clause (i) applies.''.
    (b) Inflation Adjustment.--Section 223(g)(1) of such Code is 
amended--
            (1) by striking ``and (c)(2)(A)'' each place it appears and 
        inserting ``, (c)(2)(A), and (c)(2)(E)'', and
            (2) in subparagraph (B)--
                    (A) by striking ``such taxable year'' in the matter 
                preceding clause (i) and inserting ``the taxable year 
                (plan year in the case of the dollar amount in 
                subsection (c)(2)(E))'', and
                    (B) by striking ``clause (ii)'' and inserting 
                ``clauses (ii) and (iii)'' in clause (i), by striking 
                ``and'' at the end of clause (i), by striking the 
                period at the end of clause (ii) and inserting ``, 
                and'', and by inserting after clause (ii) the following 
                new clause:
                            ``(iii) in the case of the dollar amount in 
                        subsection (c)(2)(E) for plan years beginning 
                        in calendar years after 2019, `calendar year 
                        2018'.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after December 31, 2018.

SEC. 3. TREATMENT OF DIRECT PRIMARY CARE SERVICE ARRANGEMENTS.

    (a) In General.--Section 223(c)(1) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(D) Treatment of direct primary care service 
                arrangements.--
                            ``(i) In general.--A direct primary care 
                        service arrangement shall not be treated as a 
                        health plan for purposes of subparagraph 
                        (A)(ii).
                            ``(ii) Direct primary care service 
                        arrangement.--For purposes of this paragraph--
                                    ``(I) In general.--The term `direct 
                                primary care service arrangement' 
                                means, with respect to any individual, 
                                an arrangement under which such 
                                individual is provided medical care (as 
                                defined in section 213(d)) consisting 
                                solely of primary care services 
                                provided by primary care practitioners 
                                (as defined in section 1833(x)(2)(A) of 
                                the Social Security Act, determined 
                                without regard to clause (ii) thereof), 
                                if the sole compensation for such care 
                                is a fixed periodic fee.
                                    ``(II) Limitation.--With respect to 
                                any individual for any month, such term 
                                shall not include any arrangement if 
                                the aggregate fees for all direct 
                                primary care service arrangements 
                                (determined without regard to this 
                                subclause) with respect to such 
                                individual for such month exceed $150 
                                (twice such dollar amount in the case 
                                of an individual with any direct 
                                primary care service arrangement (as so 
                                determined) that covers more than one 
                                individual).
                            ``(iii) Certain services specifically 
                        excluded from treatment as primary care 
                        services.--For purposes of this paragraph, the 
                        term `primary care services' shall not 
                        include--
                                    ``(I) procedures that require the 
                                use of general anesthesia,
                                    ``(II) prescription drugs (other 
                                than vaccines), and
                                    ``(III) laboratory services not 
                                typically administered in an ambulatory 
                                primary care setting.
                        The Secretary, after consultation with the 
                        Secretary of Health and Human Services, shall 
                        issue regulations or other guidance regarding 
                        the application of this clause.''.
    (b) Direct Primary Care Service Arrangement Fees Treated as Medical 
Expenses.--Section 223(d)(2)(C) is amended by striking ``or'' at the 
end of clause (iii), by striking the period at the end of clause (iv) 
and inserting ``, or'', and by adding at the end the following new 
clause:
                            ``(v) any direct primary care service 
                        arrangement.''.
    (c) Inflation Adjustment.--Section 223(g)(1) of such Code, as 
amended by section 2(b), is amended--
            (1) by inserting ``(c)(1)(D)(ii)(II),'' after ``(b)(2),'' 
        each place it appears, and
            (2) in subparagraph (B), by striking ``and (iii)'' and 
        inserting ``, (iii) and (iv)'' in clause (i), 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) in the case of the dollar amount in 
                        subsection (c)(1)(D)(ii)(II) for taxable years 
                        beginning in calendar years after 2019, 
                        `calendar year 2018'.''.
    (d) Reporting of Direct Primary Care Service Arrangement Fees on W-
2.--Section 6051(a) of such Code is amended by striking ``and'' at the 
end of paragraph (16), by striking the period at the end of paragraph 
(17) and inserting ``, and'', and by inserting after paragraph (17) the 
following new paragraph:
            ``(18) in the case of a direct primary care service 
        arrangement (as defined in section 223(c)(1)(D)(ii)) which is 
        provided in connection with employment, the aggregate fees for 
        such arrangement for such employee.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2018, in taxable years 
ending after such date.

SEC. 4. CERTAIN EMPLOYMENT RELATED SERVICES NOT TREATED AS 
              DISQUALIFYING COVERAGE FOR PURPOSES OF HEALTH SAVINGS 
              ACCOUNTS.

    (a) In General.--Section 223(c)(1) of the Internal Revenue Code of 
1986, as amended by section 3(a), is amended by adding at the end the 
following new subparagraph:
                    ``(E) Special rule for qualified items and 
                services.--
                            ``(i) In general.--An individual shall not 
                        be treated as covered under a health plan for 
                        purposes of subparagraph (A)(ii) merely because 
                        the individual, in connection with the 
                        employment of the individual or the 
                        individual's spouse, receives (or is eligible 
                        to receive) qualified items and services at--
                                    ``(I) a healthcare facility located 
                                at a facility owned or leased by the 
                                employer of the individual (or of the 
                                individual's spouse), or operated 
                                primarily for the benefit of such 
                                employer's employees, or
                                    ``(II) a healthcare facility 
                                located within a supermarket, pharmacy, 
                                or similar retail establishment.
                            ``(ii) Qualified items and services 
                        defined.--For purposes of this subparagraph, 
                        the term `qualified items and services' means 
                        the following:
                                    ``(I) Physical examinations.
                                    ``(II) Immunizations, including 
                                injections of antigens provided by 
                                employees.
                                    ``(III) Drugs other than a 
                                prescribed drug (as such term is 
                                defined in section 213(d)(3)).
                                    ``(IV) Treatment for injuries 
                                occurring in the course of employment.
                                    ``(V) Drug testing, if required as 
                                a condition of employment.
                                    ``(VI) Hearing or vision 
                                screenings.
                                    ``(VII) Other similar items and 
                                services that do not provide 
                                significant benefits in the nature of 
                                medical care.
                            ``(iii) Aggregation.--For purposes of 
                        clause (i)(I), all persons treated as a single 
                        employer under subsection (b), (c), (m), or (o) 
                        of section 414 shall be treated as a single 
                        employer.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2018, in taxable years 
ending after such date.

SEC. 5. CONTRIBUTIONS PERMITTED IF SPOUSE HAS A HEALTH FLEXIBLE 
              SPENDING ACCOUNT.

    (a) Contributions Permitted if Spouse Has a Health Flexible 
Spending Account.--Section 223(c)(1)(B) of the Internal Revenue Code of 
1986 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 health flexible 
                        spending arrangement of the spouse of the 
                        individual for any plan year of such 
                        arrangement if the aggregate reimbursements 
                        under such arrangement for such year do not 
                        exceed the aggregate expenses which would be 
                        eligible for reimbursement under such 
                        arrangement if such expenses were determined 
                        without regard to any expenses paid or incurred 
                        with respect to such individual.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2018.

SEC. 6. FSA AND HRA TERMINATIONS OR CONVERSIONS TO FUND HSAS.

    (a) In General.--Section 106(e)(2) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(2) Qualified hsa distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified HSA 
                distribution' means, with respect to any employee, a 
                distribution from a health flexible spending 
                arrangement or health reimbursement arrangement of such 
                employee directly to a health savings account of such 
                employee if--
                            ``(i) such distribution is made in 
                        connection with such employee establishing 
                        coverage under a high deductible health plan 
                        (as defined in section 223(c)(2)) after a 
                        significant period of not having such coverage, 
                        and
                            ``(ii) such arrangement is described in 
                        section 223(c)(1)(B)(iii) with respect to the 
                        portion of the plan year after such 
                        distribution is made.
                    ``(B) Dollar limitation.--The aggregate amount of 
                distributions from health flexible spending 
                arrangements and health reimbursement arrangements of 
                any employee which may be treated as qualified HSA 
                distributions in connection with an establishment of 
                coverage described in subparagraph (A)(i) shall not 
                exceed the dollar amount in effect under section 
                125(i)(1) (twice such amount in the case of coverage 
                which is described in section 223(b)(2)(B)).''.
    (b) Partial Reduction of Limitation on Deductible HSA 
Contributions.--Section 223(b)(4) of such Code is amended by striking 
``and'' at the end of subparagraph (B), by striking the period at the 
end of subparagraph (C) and inserting ``, and'', and by inserting after 
subparagraph (C) the following new subparagraph:
                    ``(D) so much of any qualified HSA distribution (as 
                defined in section 106(e)(2)) made to a health savings 
                account of such individual during the taxable year as 
                does not exceed the aggregate increases in the balance 
                of the arrangement from which such distribution is made 
                which occur during the portion of the plan year which 
                precedes such distribution (other than any balance 
                carried over to such plan year and determined without 
                regard to any decrease in such balance during such 
                portion of the plan year).''.
    (c) Conversion to HSA-compatible Arrangement for Remainder of Plan 
Year.--Section 223(c)(1)(B)(iii) of such Code, as amended by section 
5(a), is amended to read as follows:
                            ``(iii) coverage under a health flexible 
                        spending arrangement or health reimbursement 
                        arrangement for the portion of the plan year 
                        after a qualified HSA distribution (as defined 
                        in section 106(e)(2) determined without regard 
                        to subparagraph (A)(ii) thereof) is made, if 
                        the terms of such arrangement which apply for 
                        such portion of the plan year are such that, if 
                        such terms applied for the entire plan year, 
                        then such arrangement would not be taken into 
                        account under subparagraph (A)(ii) of this 
                        paragraph for such plan year, and''.
    (d) Inclusion of Qualified HSA Distributions on W-2.--
            (1) In general.--Section 6051(a) of such Code, as amended 
        by section 3(d), is amended by striking ``and'' at the end of 
        paragraph (17), by striking the period at the end of paragraph 
        (18) and inserting ``, and'', and by inserting after paragraph 
        (18) the following new paragraph:
            ``(19) the amount of any qualified HSA distribution (as 
        defined in section 106(e)(2)) with respect to such employee.''.
            (2) Conforming amendment.--Section 6051(a)(12) of such Code 
        is amended by inserting ``(other than any qualified HSA 
        distribution, as defined in section 106(e)(2))'' before the 
        comma at the end.
    (e) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 2018, in taxable years 
ending after such date.

SEC. 7. INCLUSION OF CERTAIN OVER-THE-COUNTER MEDICAL PRODUCTS AS 
              QUALIFIED MEDICAL EXPENSES.

    (a) HSAs.--Section 223(d)(2) of the Internal Revenue Code of 1986 
is amended--
            (1) by striking the last sentence of subparagraph (A) and 
        inserting the following: ``For purposes of this subparagraph, 
        amounts paid for menstrual care products shall be treated as 
        paid for medical care.'', and
            (2) by adding at the end the following new subparagraph:
                    ``(D) Menstrual care product.--For purposes of this 
                paragraph, the term `menstrual care product' means a 
                tampon, pad, liner, cup, sponge, or similar product 
                used by women with respect to menstruation or other 
                genital-tract secretions.''.
    (b) Archer MSAs.--Section 220(d)(2)(A) of such Code is amended by 
striking the last sentence and inserting the following: ``For purposes 
of this subparagraph, amounts paid for menstrual care products (as 
defined in section 223(d)(2)(D)) shall be treated as paid for medical 
care.''.
    (c) Health Flexible Spending Arrangements and Health Reimbursement 
Arrangements.--Section 106 of such Code is amended by striking 
subsection (f) and inserting the following new subsection:
    ``(f) Reimbursements for Menstrual Care Products.--For purposes of 
this section and section 105, expenses incurred for menstrual care 
products (as defined in section 223(d)(2)(D)) shall be treated as 
incurred for medical care.''.
    (d) Effective Dates.--
            (1) Distributions from health savings accounts.--The 
        amendments made by subsections (a) and (b) shall apply to 
        amounts paid after December 31, 2018.
            (2) Reimbursements.--The amendment made by subsection (c) 
        shall apply to expenses incurred after December 31, 2018.

SEC. 8. CERTAIN AMOUNTS PAID FOR PHYSICAL ACTIVITY, FITNESS, AND 
              EXERCISE TREATED AS AMOUNTS PAID FOR MEDICAL CARE.

    (a) In General.--Section 213(d)(1) of the Internal Revenue Code of 
1986 is amended by striking ``or'' at the end of subparagraph (C), by 
striking the period at the end of subparagraph (D) and inserting ``, 
or'', and by adding at the end the following new subparagraph:
                    ``(E) for qualified sports and fitness expenses.''.
    (b) Qualified Sports and Fitness Expenses.--Section 213(d) of such 
Code is amended by adding at the end the following paragraph:
            ``(12) Qualified sports and fitness expenses.--
                    ``(A) In general.--The term `qualified sports and 
                fitness expenses' means amounts paid for--
                            ``(i) membership at a fitness facility,
                            ``(ii) participation or instruction in a 
                        program of qualified physical activity, or
                            ``(iii) safety equipment for use in a 
                        program (including a self-directed program) of 
                        qualified physical activity.
                    ``(B) Limitations.--
                            ``(i) Overall dollar limitation.--The 
                        aggregate amount treated as qualified sports 
                        and fitness expenses with respect to any 
                        taxpayer for any taxable year shall not exceed 
                        $500 (twice such amount in the case of a joint 
                        return or a head of household (as defined in 
                        section 2(b))).
                            ``(ii) Dollar limitation on safety 
                        equipment.--The amount treated as qualified 
                        sports and fitness expenses with respect to any 
                        item of safety equipment described in 
                        subparagraph (A)(iii) shall not exceed $250.
                            ``(iii) Exclusion of exercise videos, 
                        etc.--Qualified sports and fitness expenses 
                        shall not include videos, books, or similar 
                        materials.
                    ``(C) Qualified physical activity.--For purposes of 
                this paragraph--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the term `qualified physical 
                        activity' means any physical exercise or 
                        physical activity.
                            ``(ii) Exclusions.--The Secretary, after 
                        consultation with the Secretary of Health and 
                        Human Services, shall issue guidance to 
                        determine for purposes of this paragraph what 
                        does not constitute a qualified physical 
                        activity, including golf, hunting, sailing, 
                        horseback riding, and other similar activities.
                    ``(D) Fitness facility defined.--For purposes of 
                subparagraph (A)(i), the term `fitness facility' means 
                a facility--
                            ``(i) providing instruction in a program of 
                        qualified physical activity or facilities for 
                        qualified physical activity,
                            ``(ii) which is not a private club owned 
                        and operated by its members,
                            ``(iii) whose health or fitness facility is 
                        not incidental to its overall function and 
                        purpose, and
                            ``(iv) which is fully compliant with 
                        applicable State and Federal anti-
                        discrimination laws.
                    ``(E) Programs which include components other 
                qualified physical activity.--Rules similar to the 
                rules of paragraph (6) shall apply in the case of any 
                program or facility that includes qualified physical 
                activity (or facilities therefore) and also other 
                components. For purposes of the preceding sentence, 
                travel and accommodations shall be treated as an other 
                component.
                    ``(F) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2019, 
                the $500 amount in subparagraph (B)(i) and the $250 
                amount in subparagraph (B)(ii) shall each be increased 
                by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which such taxable year 
                        begins, determined by substituting `calendar 
                        year 2018' for `calendar year 2016' in 
                        subparagraph (A)(ii) thereof.
                If any increase determined under the preceding sentence 
                is not a multiple of $10, such increase shall be 
                rounded to the next lowest multiple of $10.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2018.

            Passed the House of Representatives July 25, 2018.

            Attest:

                                                                 Clerk.
115th CONGRESS

  2d Session

                               H. R. 6199

_______________________________________________________________________

                                 AN ACT

To amend the Internal Revenue Code of 1986 to include certain over-the-
        counter medical products as qualified medical expenses.