117 S380 IS: Health Savings Act of 2021
U.S. Senate
2021-02-23
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.
(a)This Act may be cited as the Health Savings Act of 2021
. (b)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.
(c)The table of contents is as follows: Sec. 1. Short title, etc. TITLE I—Renaming high deductible health plans Sec. 101. High deductible health plans renamed HSA-qualified health plans. TITLE II—Enhancing access to tax-preferred health accounts Sec. 201. Allow both spouses to make catch-up contributions to the same HSA account. Sec. 202. Provisions relating to Medicare. Sec. 203. Individuals eligible for Indian Health Service assistance. Sec. 204. Members of health care sharing ministries eligible to establish health savings accounts. Sec. 205. Treatment of direct primary care service arrangements. Sec. 206. Individuals eligible for on-site medical clinic coverage. Sec. 207. Treatment of embedded deductibles. TITLE III—Improving coverage under tax-preferred health accounts Sec. 301. Purchase of health insurance from HSA account. Sec. 302. Special rule for certain medical expenses incurred before establishment of account. Sec. 303. Preventive care prescription drug clarification. TITLE IV—Miscellaneous provisions relating to tax-preferred health accounts Sec. 401. FSA and HRA interaction with HSAs. Sec. 402. Equivalent bankruptcy protections for health savings accounts as retirement funds. Sec. 403. Administrative error correction before due date of return. Sec. 404. Reauthorization of Medicaid health opportunity accounts. Sec. 405. Maximum contribution limit to health savings account increased to amount of deductible and out-of-pocket limitation. TITLE V—Other provisions Sec. 501. Certain exercise equipment and physical fitness programs treated as medical care. Sec. 502. Certain nutritional and dietary supplements to be treated as medical care. Sec. 503. Certain provider fees to be treated as medical care. <enum>I</enum><header>Renaming high deductible health plans</header> <section id="id1450123AF5A346AAAD543B49A4D01D81"><enum>101.</enum><header>High deductible health plans renamed HSA-qualified health plans</header> <subsection commented="no" display-inline="no-display-inline" id="idD54400944A8F47BF9572CCC3A340BB80"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/223">Section 223</external-xref> is amended by striking <quote>high deductible health plan</quote> each place it appears and inserting <quote>HSA-qualified health plan</quote>.</text></subsection>
<subsection commented="no" display-inline="no-display-inline" id="id7E2AE3450F2E4E95AA11C14FFB9CE15F"><enum>(b)</enum><header>Conforming amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="idBFF566DD68F248C0B35DAA37AEEE373D"><enum>(1)</enum><text>The heading for paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(c)</external-xref> is amended by striking <quote><header-in-text level="paragraph" style="OLC">High deductible health plan</header-in-text></quote> and inserting <quote><header-in-text level="paragraph" style="OLC">HSA-qualified health plan</header-in-text></quote>.</text></paragraph> <paragraph commented="no" display-inline="no-display-inline" id="id6E67FB83A8874100AE4C6D7E38F08757"><enum>(2)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/408">Section 408(d)(9)</external-xref> is amended—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id803B0B0AC7E04EACA9581C707BA15210"><enum>(A)</enum><text>by striking <quote>high deductible health plan</quote> each place it appears in subparagraph (C) and inserting <quote>HSA-qualified health plan</quote>; and</text></subparagraph> <subparagraph commented="no" display-inline="no-display-inline" id="idB9DC84B1252D429B948DAB0BB386C32B"><enum>(B)</enum><text>by striking <quote><header-in-text level="subparagraph" style="OLC">High deductible health plan</header-in-text></quote> in the heading of subparagraph (D) and inserting <quote><header-in-text level="subparagraph" style="OLC">HSA-qualified health plan</header-in-text></quote>.</text></subparagraph></paragraph>
<paragraph commented="no" display-inline="no-display-inline" id="id2FE3F94923A54BE8B652688AC997216B"><enum>(3)</enum><text><external-xref legal-doc="usc" parsable-cite="usc/26/106">Section 106(e)</external-xref> is amended—</text> <subparagraph commented="no" display-inline="no-display-inline" id="idB910827EC1FB40DD80D13337DBAFB72A"><enum>(A)</enum><text>by striking <quote><header-in-text level="paragraph" style="OLC">High deductible health plan</header-in-text></quote> in the heading of paragraph (3) and inserting <quote><header-in-text level="paragraph" style="OLC">HSA-qualified health plan</header-in-text></quote>; and</text></subparagraph>
<subparagraph commented="no" display-inline="no-display-inline" id="id58D91C0FC07A41B39D8E2D8FC318ECA0"><enum>(B)</enum><text>by striking <quote>high deductible health plan</quote> in paragraph (5)(B)(iii) and inserting <quote>HSA-qualified health plan</quote>.</text></subparagraph></paragraph></subsection></section> <enum>II</enum><header>Enhancing access to tax-preferred health accounts</header> <section id="ID5d802a72eb8e49dc8b5080c30151a8bb"><enum>201.</enum><header>Allow both spouses to make catch-up contributions to the same HSA account</header> <subsection id="H029B9358241F4BEFB382948274BBB7E1"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Paragraph (5) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(b)</external-xref> is amended to read as follows:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="H4C37DBB108434DDC86EECB7238D9FB00">
<paragraph display-inline="no-display-inline" id="HD35189722AC44A1F8468363D865E5B03"><enum>(5)</enum><header>Special rule for married individuals with family coverage</header>
<subparagraph id="HC850B99EEF9C4DA185C10B06F14765DE"><enum>(A)</enum><header>In general</header><text>In the case of individuals who are married to each other, if both spouses are eligible individuals and either spouse has family coverage under an HSA-qualified health plan as of the first day of any month—</text> <clause id="HC2C3CE21C9EE427AA2CA6229D66DB7BA"><enum>(i)</enum><text>the limitation under paragraph (1) shall be applied by not taking into account any other HSA-qualified health plan coverage of either spouse (and if such spouses both have family coverage under separate HSA-qualified health plans, only one such coverage shall be taken into account),</text></clause>
<clause id="H2FA572C82E61405B8F7359048FDDC823"><enum>(ii)</enum><text>such limitation (after application of clause (i)) shall be reduced by the aggregate amount paid to Archer MSAs of such spouses for the taxable year, and</text></clause> <clause id="H84ACD0FB881646ADAF7B6950B5A23A08"><enum>(iii)</enum><text>such limitation (after application of clauses (i) and (ii)) shall be divided equally between such spouses unless they agree on a different division.</text></clause></subparagraph>
<subparagraph id="H25DE4ADB3CC64EEDAB4E41B2CF4B584A"><enum>(B)</enum><header>Treatment of additional contribution amounts</header><text>If both spouses referred to in subparagraph (A) have attained age 55 before the close of the taxable year, the limitation referred to in subparagraph (A)(iii) which is subject to division between the spouses shall include the additional contribution amounts determined under paragraph (3) for both spouses. In any other case, any additional contribution amount determined under paragraph (3) shall not be taken into account under subparagraph (A)(iii) and shall not be subject to division between the spouses.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection commented="no" display-inline="no-display-inline" id="H0C10CAE49B1944C9976141A61E65CB76"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>
<section id="ID723846fe55ab4676a6ca93a12cde68ea"><enum>202.</enum><header>Provisions relating to Medicare</header>
<subsection id="IDc246cd7ebc0846498fd7775a317b716e"><enum>(a)</enum><header>Individuals over age 65 only enrolled in Medicare Part A</header><text>Paragraph (7) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(b)</external-xref> is amended by adding at the end the following: <quote>This paragraph shall not apply to any individual during any period for which 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) of such Act.</quote>.</text></subsection> <subsection id="ID6bea18026caf4180b352e290231fbac8"><enum>(b)</enum><header>Medicare beneficiaries participating in Medicare advantage MSA may contribute their own money to their MSA</header> <paragraph id="idBE01315E1139423694A7EB19451E12C6"><enum>(1)</enum><header>In general</header><text>Subsection (b) of <external-xref legal-doc="usc" parsable-cite="usc/26/138">section 138</external-xref> is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.</text></paragraph>
<paragraph id="id4DD84704FF3B49099C5199FEF789856A"><enum>(2)</enum><header>Conforming amendment</header><text>Paragraph (4) of <external-xref legal-doc="usc" parsable-cite="usc/26/138">section 138(c)</external-xref> is amended by striking <quote>and paragraph (2)</quote>.</text></paragraph></subsection> <subsection commented="no" display-inline="no-display-inline" id="IDb569f5d8ace94890acbaa2a60ffa3a54"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>
<section commented="no" display-inline="no-display-inline" id="id30DF1AF8CD76428B8AF672D8D16FCB6E"><enum>203.</enum><header>Individuals eligible for Indian Health Service assistance</header>
<subsection commented="no" display-inline="no-display-inline" id="idEB66ED60B0E844FDB3EFA9C47E6E99BE"><enum>(a)</enum><header>In general</header><text>Paragraph (1) of section 223(c), as amended by section 102(c)(4) of the No Surprises Act, is amended by adding at the end the following new subparagraph:</text> <quoted-block style="OLC" act-name="" id="id633125821D804C0B8521AE4ADE28DD89"> <subparagraph id="id47199CF0872C40F8B1C028DDE99F8664"><enum>(E)</enum><header>Special rule for individuals eligible for assistance under Indian Health Service programs</header><text>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 hospital care or medical services under a medical care program of the Indian Health Service or of a tribal organization.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection commented="no" display-inline="no-display-inline" id="idB98096975524446982E3F9CC82FAB50F"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section> <section id="idE4A73142282F429BB8805FDC85170ACA"><enum>204.</enum><header>Members of health care sharing ministries eligible to establish health savings accounts</header> <subsection id="id31716F83A9824848A9FAB6A272710209"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/223">Section 223</external-xref> is amended by adding at the end the following new subsection:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="id448ED6964F0D41E1BE6B00B341D7B479">
<subsection id="idC20B297851A54F258239C4C657316F6C"><enum>(i)</enum><header>Application to health care sharing ministries</header><text display-inline="yes-display-inline">For purposes of this section, membership in a health care sharing ministry (as defined in section 5000A(d)(2)(B)(ii)) shall be treated as coverage under an HSA-qualified health plan.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection commented="no" display-inline="no-display-inline" id="idB4367F57E1E14F138E48185057091AA0"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>
<section commented="no" display-inline="no-display-inline" id="id1C268EA5A5D947C596E49E8B216517B0"><enum>205.</enum><header>Treatment of direct primary care service arrangements</header>
<subsection commented="no" display-inline="no-display-inline" id="id190AAA4E88B34E8B886D18D55FB049F6"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/223">Section 223(c)</external-xref> is amended by adding at the end the following new paragraph:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="id49670C1B846F4168959196D13EEA0A72"> <paragraph commented="no" display-inline="no-display-inline" id="idA871AB2114DC47B1AC7A0199E1E5E59F"><enum>(6)</enum><header>Treatment of direct primary care service arrangements</header><text>An arrangement under which an individual is provided coverage restricted to primary care services in exchange for a fixed periodic fee or payment for primary care services—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idA9E446DD9EF3490E92BBEAE35F4E2B95"><enum>(A)</enum><text>shall not be treated as a health plan for purposes of paragraph (1)(A)(ii), and</text></subparagraph> <subparagraph commented="no" display-inline="no-display-inline" id="id6AC29D933302413FA5B1AE3A80E6ADA3"><enum>(B)</enum><text>shall not be treated as insurance for purposes of subsection (d)(2)(B).</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection commented="no" display-inline="no-display-inline" id="id431636E8AD69434BB17AF3511C05593D"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section> <section commented="no" display-inline="no-display-inline" id="idA26C2DF53FE04EBDA2830672A28EFE0A"><enum>206.</enum><header>Individuals eligible for on-site medical clinic coverage</header> <subsection commented="no" display-inline="no-display-inline" id="id16C4E82C18284CB7BFF0BAD80F230433"><enum>(a)</enum><header>In general</header><text>Paragraph (1) of section 223(c), as amended by sections 203, is amended by adding at the end the following new subparagraph:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="idA19CFA756082477E94D22BD69AAC810C">
<subparagraph commented="no" display-inline="no-display-inline" id="id8F0E16EC4A3C410EA78715BB118EB40E"><enum>(F)</enum><header>Special rule for individuals eligible for on-site medical clinic coverage</header>
<clause commented="no" display-inline="no-display-inline" id="idB197A8A1701A40B485D9EED6A95FC519"><enum>(i)</enum><header>In general</header><text>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 is eligible to receive health care benefits from an on-site medical clinic of the employer of the individual or the individual's spouse if such health care benefits are not significant benefits.</text></clause> <clause commented="no" display-inline="no-display-inline" id="idAA09167310774C83A1B16E8B0481582C"><enum>(ii)</enum><header>Included benefits</header><text>For purposes of clause (i), the following health care benefits shall be considered to be benefits which are not significant benefits:</text>
<subclause commented="no" display-inline="no-display-inline" id="idA5878ADDBA624B96BC0582879E5601AD"><enum>(I)</enum><text>Physicals and immunizations.</text></subclause> <subclause commented="no" display-inline="no-display-inline" id="id015B25DA1CBD4A1FB5C5EDADA426A216"><enum>(II)</enum><text>Injecting antigens provided by employees.</text></subclause>
<subclause commented="no" display-inline="no-display-inline" id="idBF2D9EE2195049739A8BC397F0432EC1"><enum>(III)</enum><text>Medications available without a prescription, such as pain relievers and antihistamines.</text></subclause> <subclause commented="no" display-inline="no-display-inline" id="idE4F3D198F8F34C44A6A4530A914C5136"><enum>(IV)</enum><text>Treatment for injuries occurring at the employer's place of employment or otherwise in the course of employment.</text></subclause>
<subclause commented="no" display-inline="no-display-inline" id="idF520AE6FBB9E4C978E685A788F5FC034"><enum>(V)</enum><text>Tests for infectious diseases and conditions, such as streptococcal sore throat.</text></subclause> <subclause commented="no" display-inline="no-display-inline" id="id712107A1E2DD4A4CBD4EA69EB75E66BE"><enum>(VI)</enum><text>Monitoring of chronic conditions, such as diabetes.</text></subclause>
<subclause commented="no" display-inline="no-display-inline" id="id74057C0AC6BA45E1AB50BCFC4058D4F5"><enum>(VII)</enum><text>Drug testing.</text></subclause> <subclause commented="no" display-inline="no-display-inline" id="id8BA7DD98CF1842C9ACC4F9A36DD2E3AA"><enum>(VIII)</enum><text>Hearing or vision screenings and related services.</text></subclause>
<subclause commented="no" display-inline="no-display-inline" id="id3BD55F8A36984089A039A7D1B45F820D"><enum>(IX)</enum><text>Other services and treatments of a similar nature to the services described in subclauses (I) through (VIII).</text></subclause></clause> <clause commented="no" display-inline="no-display-inline" id="idE27F300800274951AB9D48429B88EBCC"><enum>(iii)</enum><header>Aggregation rules</header><text>For purposes of clause (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.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection commented="no" display-inline="no-display-inline" id="idC8446D2348344CBC876AC7B94DF8F8E4"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section> <section commented="no" id="idB42FEB517D934D78A669320177DDF64A"><enum>207.</enum><header>Treatment of embedded deductibles</header> <subsection commented="no" id="id4AB6049D8D4E47D18340BAEB27B3E46A"><enum>(a)</enum><header>In general</header><text>Paragraph (2) of section 223(c), as amended by section 102(c)(4) of the No Surprises Act, is amended by adding at the end the following new subparagraph:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="idFF606EC787F140789587A808D5715D06">
<subparagraph commented="no" id="id96055D37E6104493BC67053B5712F3A2"><enum>(G)</enum><header>Treatment of embedded deductible</header><text>A health plan providing family coverage that has an annual deductible for all covered individuals under the plan of at least the amount described in subparagraph (A)(i)(II) shall not fail to be treated as an HSA-qualified health plan solely because it covers expenses with respect to an individual under that plan that exceed an embedded deductible which is equal to or in excess of the amount described in subparagraph (A)(i)(I).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection commented="no" display-inline="no-display-inline" id="idFEC047CCDEF949439AC4470D145EC94C"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>
<enum>III</enum><header>Improving coverage under tax-preferred health accounts</header>
<section id="ID81930c7cea454402bbfc78baf748b46d"><enum>301.</enum><header>Purchase of health insurance from HSA account</header>
<subsection id="ID532eded869b9499a8bca767d92470ad0"><enum>(a)</enum><header>In general</header><text>Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(d)</external-xref> is amended—</text> <paragraph id="id61240ACAFA9944E688A8D49D2A46B303"><enum>(1)</enum><text>by striking <quote>and any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual</quote> in subparagraph (A) and inserting <quote>any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, and any child (as defined in section 152(f)(1)) of such individual who has not attained the age of 27 before the end of such individual's taxable year</quote>;</text></paragraph>
<paragraph id="id5ABEEA633F14445FB8D1DC9A7727DF45"><enum>(2)</enum><text>by striking subparagraph (B) and inserting the following:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="id7DA27E50800E4E20BD49C2C964DAE3C4"> <subparagraph id="ID6962c733a35647be8c7fb231a4626da6"><enum>(B)</enum><header>Health insurance may not be purchased from account</header><text>Except as provided in subparagraph (C), subparagraph (A) shall not apply to any payment for insurance.</text></subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph>
<paragraph id="idCE460B00CB264AFD8BF62186421CDC44"><enum>(3)</enum><text>by striking <quote>or</quote> at the end of subparagraph (C)(iii) and by striking subparagraph (C)(iv) and inserting the following:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="id2D4210604603455FBF726BF38C486928"> <clause id="id9F91BC85F2B84192B45A95D1A2A68850"><enum>(iv)</enum><text>an HSA-qualified health plan, or</text></clause>
<clause id="ID28867f895ad140408a28adc063eeed45"><enum>(v)</enum><text>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).</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection id="ID5c43299f781f4f11b87fce50d44e7728"><enum>(b)</enum><header>Effective date</header><text>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.</text></subsection></section>
<section id="H642F93963D49409C8DB13359F5469106"><enum>302.</enum><header>Special rule for certain medical expenses incurred before establishment of account</header>
<subsection id="HC6E83560C9B547B883760838ACD9A268"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(d)</external-xref> is amended by adding at the end the following new subparagraph:</text> <quoted-block style="OLC" id="H2B82ACBFD7DB46DEAE7589E44B53B8BB"> <subparagraph id="H9D1B9326608047CCA348247877290969"><enum>(E)</enum><header>Treatment of certain medical expenses incurred before establishment of account</header><text display-inline="yes-display-inline">If a health savings account is established during the 60-day period beginning on the date that coverage of the account beneficiary under an HSA-qualified health plan begins, then, solely for purposes of determining whether an amount paid is used for a qualified medical expense, such account shall be treated as having been established on the date that such coverage begins.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection commented="no" display-inline="no-display-inline" id="HE56B10380C6B4C13BBDF691B25E47DA9"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply with respect to coverage beginning after the date of the enactment of this Act.</text></subsection></section> <section id="IDfb3405b06f9d42c8adadc0514293cb4e"><enum>303.</enum><header>Preventive care prescription drug clarification</header> <subsection id="ID8103e922806643ba937dbda859478357"><enum>(a)</enum><header>Clarify use of drugs in preventive care</header><text>Subparagraph (C) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(c)(2)</external-xref> is amended by adding at the end the following: <quote>Preventive care shall include prescription and over-the-counter drugs and medicines which have the primary purpose of preventing the onset of, further deterioration from, or complications associated with chronic conditions, illnesses, or diseases.</quote>.</text></subsection>
<subsection id="ID70742958d900471b8cb337b57de99fac"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after December 31, 2019.</text></subsection></section> <enum>IV</enum><header>Miscellaneous provisions relating to tax-preferred health accounts</header> <section id="IDfa06b05591ed411892db75c86914674f"><enum>401.</enum><header>FSA and HRA interaction with HSAs</header> <subsection id="IDcd7a0f30fd674a8bb7fe3076043a1f14"><enum>(a)</enum><header>Eligible individuals include FSA and HRA participants</header><text>Subparagraph (B) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(c)(1)</external-xref> is amended—</text>
<paragraph id="id0FEB9024EF4940D5898D3323CFFC9E69"><enum>(1)</enum><text>by striking <quote>and</quote> at the end of clause (ii);</text></paragraph> <paragraph id="id751582B050014168A3C7F0336625B000"><enum>(2)</enum><text>by striking the period at the end of clause (iii) and inserting <quote>, and</quote>; and</text></paragraph>
<paragraph commented="no" display-inline="no-display-inline" id="idAA9ACA2536254FA9BF14CBC14BC2D992"><enum>(3)</enum><text>by inserting after clause (iii) the following new clause:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="idD4D1F50724254C66AFA0108FFE7982B6"> <clause id="IDf43f64f713d7490d86183baf505149da"><enum>(iv)</enum><text>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 arrangement is converted solely to one or more of the following:</text>
<subclause id="IDda2cb2d0745b4c46b2ae9c7173dcc750"><enum>(I)</enum><header>Post-deductible FSA or HRA</header><text>A health flexible spending arrangement or a health reimbursement arrangement that does not pay or reimburse any medical expense incurred before the minimum annual deductible under paragraph (2)(A)(i) (prorated for the period occurring after the qualified HSA distribution is made) is satisfied.</text></subclause> <subclause id="ID841d3b0ac59f4bfc8c65cccec5c7e826"><enum>(II)</enum><header>Preventative care</header><text>A health flexible spending arrangement or a health reimbursement arrangement 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 paragraph (2)(C).</text></subclause>
<subclause id="ID8323a7609b014fff9f17cfed47646720"><enum>(III)</enum><header>Limited purpose health FSA</header><text>A health flexible spending arrangement that, after the qualified HSA distribution is made, pays or reimburses benefits for coverage described in clause (ii) (but not through insurance or for long-term care services).</text></subclause> <subclause id="IDa6710b062ba54e9abb4f9b61d0f87adc"><enum>(IV)</enum><header>Limited purpose HRA</header><text>A health reimbursement arrangement that, after the qualified HSA distribution is made, pays or reimburses benefits for permitted insurance or coverage described in clause (ii) (but not for long-term care services).</text></subclause>
<subclause id="IDbbace8fc568343568660e1dae77e55a8"><enum>(V)</enum><header>Retirement HRA</header><text>A health reimbursement arrangement 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).</text></subclause> <subclause id="IDe1d63918b6d54b6b8fcdb3058c43b1ba"><enum>(VI)</enum><header>Suspended HRA</header><text>A health reimbursement arrangement 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 an HSA-qualified health plan, that does not pay or reimburse, at any time, any medical expense incurred during the suspension period except as described in the preceding subclauses of this clause.</text></subclause></clause><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection>
<subsection id="IDfea0df8298144e8eabe50e839ebde3b9"><enum>(b)</enum><header>Qualified HSA distribution shall not affect flexible spending arrangement</header><text>Paragraph (1) of <external-xref legal-doc="usc" parsable-cite="usc/26/106">section 106(e)</external-xref> is amended to read as follows:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="id71D9D7D751D94AD6A976EA552C61696A"> <paragraph id="ID990a8c04ce9e4d09ab161962643e3a5b"><enum>(1)</enum><header>In general</header><text>A plan shall not fail to be treated as—</text>
<subparagraph id="id35D213AC26A043678021EACF4A00F932"><enum>(A)</enum><text>a health flexible spending arrangement under this section, section 105, or section 125,</text></subparagraph> <subparagraph id="id0F9C701E035545CEB46E0C67AB072185"><enum>(B)</enum><text>a health reimbursement arrangement under this section or section 105, or</text></subparagraph>
<subparagraph id="id25FC7C0A6F294BC58017E6FB4EBCF8B7"><enum>(C)</enum><text>an accident or health plan,</text></subparagraph><continuation-text continuation-text-level="paragraph">merely because such plan provides for a qualified HSA distribution.</continuation-text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="ID358b9fb30de649d5afc7a8080d52b801"><enum>(c)</enum><header>FSA balances at year end shall not forfeit</header><text>Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/125">section 125(d)</external-xref> is amended by adding at the end the following new subparagraph:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="idC0B8626593CE4C748B69545C71649D02">
<subparagraph id="ID3ebd346b403d4c9b8b0ed85577dfc49c"><enum>(E)</enum><header>Exception for qualified HSA distributions</header><text>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)).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="id78681CAB510C44E491836CECE439CB7A"><enum>(d)</enum><header>Simplification of limitations on FSA and HRA rollovers</header><text>Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/106">section 106(e)</external-xref> is amended to read as follows:</text>
<quoted-block style="OLC" display-inline="no-display-inline" act-name="" id="idE10A9EDE94D54A2A95190F99111F7ECC">
<paragraph id="id01EE5CC5914848F8B6F2D1D6022A0D4C"><enum>(2)</enum><header>Qualified HSA distribution</header>
<subparagraph id="idCA3C672726CE44A6AC348EE1E11C7581"><enum>(A)</enum><header>In general</header><text>The term <term>qualified HSA distribution</term> means a distribution from a health flexible spending arrangement or health reimbursement arrangement directly to a health savings account of the employee to the extent that such distribution does not exceed the lesser of—</text> <clause id="idC6E4F6B051DB4FBBB4A524E5E3734BD6"><enum>(i)</enum><text>the balance in such arrangement as of the date of such distribution, or</text></clause>
<clause id="id495D56AEFAB148FDBAD584B61C39E818"><enum>(ii)</enum><text>the amount determined under subparagraph (B).</text></clause><continuation-text continuation-text-level="subparagraph">Such term shall not include more than 1 distribution with respect to any arrangement.</continuation-text></subparagraph> <subparagraph id="idF1B4BA45FBA14181A2A3BE2C7BF2EC44"><enum>(B)</enum><header>Dollar limitations</header> <clause id="id859137558BA74BDFB8382B43220AFB18"><enum>(i)</enum><header>Distributions from a health flexible spending arrangement</header><text>A qualified HSA distribution from a health flexible spending arrangement shall not exceed the applicable amount.</text></clause>
<clause id="id9DD91579C13246D8950ADEAC6D353C6F"><enum>(ii)</enum><header>Distributions from a health reimbursement arrangement</header><text>A qualified HSA distribution from a health reimbursement arrangement shall not exceed—</text> <subclause id="id4A21264117A749B596B1FC91115F36A8"><enum>(I)</enum><text>the applicable amount divided by 12, multiplied by</text></subclause>
<subclause id="id7606ABC29F994BD1A2274D65C4807674"><enum>(II)</enum><text>the number of months during which the individual is a participant in the health reimbursement arrangement.</text></subclause></clause> <clause id="id77F38646BD4A4F4D9257B871606544EF"><enum>(iii)</enum><header>Applicable amount</header><text>For purposes of this subparagraph, the applicable amount is—</text>
<subclause id="id3B7B729173A34E168060DFA574D52F31"><enum>(I)</enum><text>$2,250 in the case of an eligible individual who has self-only coverage under an HSA-qualified health plan at the time of such distribution, and</text></subclause> <subclause commented="no" display-inline="no-display-inline" id="id6EEFE59D82734A3FB554C62B411DD25E"><enum>(II)</enum><text>$4,500 in the case of an eligible individual who has family coverage under an HSA-qualified health plan at the time of such distribution.</text></subclause></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="id2CA306A031AC4F48BF1AC801A51EF421"><enum>(e)</enum><header>Elimination of additional tax for failure To maintain HSA-Qualified health plan coverage</header><text>Subsection (e) of <external-xref legal-doc="usc" parsable-cite="usc/26/106">section 106</external-xref>, as amended by <external-xref legal-doc="usc" parsable-cite="usc/26/101">section 101,</external-xref> is amended—</text> <paragraph id="id2CA7802FDAA047379BC5E3B2BA20BC3A"><enum>(1)</enum><text>by striking paragraph (3) and redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively; and</text></paragraph>
<paragraph id="id3026C916D02D40E896CAA8DB7564F208"><enum>(2)</enum><text>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.</text></paragraph></subsection> <subsection id="ID3c4b41723aeb404588ff34f1b7c9b722"><enum>(f)</enum><header>Limited purpose FSAs and HRAs</header><text>Subsection (e) of <external-xref legal-doc="usc" parsable-cite="usc/26/106">section 106</external-xref>, as amended by this section, is amended by adding at the end the following new paragraph:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="id63FCB58F1E9C495BB130DB233E5B155D">
<paragraph id="IDb51e2ef8f0d447f2b3f8b65e969b524f"><enum>(5)</enum><header>Limited purpose FSAs and HRAs</header><text>A plan shall not fail to be a health flexible spending arrangement, a health reimbursement arrangement, or an accident or health plan under this section or section 105 merely because the plan converts coverage for individuals who enroll in an HSA-qualified health plan described in section 223(c)(2) to coverage described in subclause (I), (II), (III), (IV), (V), or (VI) of section 223(c)(1)(B)(iv). Coverage for such individuals may be converted as of the date of enrollment in the HSA-qualified 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 an HSA-qualified health plan.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="idA7FF53FB59E148AA9CE7AD0CD4E5459A"><enum>(g)</enum><header>Distribution amounts adjusted for cost-of-Living</header><text>Subsection (e) of <external-xref legal-doc="usc" parsable-cite="usc/26/106">section 106</external-xref>, as amended by this section, is amended by adding at the end the following new paragraph:</text>
<quoted-block style="OLC" act-name="" id="id344178067BC34D64B201328EC1DD9D3A">
<paragraph id="id13DAA3F1FFEE4899880BB3168C34F48A"><enum>(6)</enum><header>Cost-of-living adjustment</header>
<subparagraph id="id1ABE9AF3AFAF4BE487567E9F82206050"><enum>(A)</enum><header>In general</header><text>In the case of any taxable year beginning in a calendar year after 2019, 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 <quote>calendar year 2018</quote> for <quote>calendar year 2016</quote> in subparagraph (A)(ii) thereof.</text></subparagraph> <subparagraph id="idF15FCDB9B142412FA53D0EB40E6664F3"><enum>(B)</enum><header>Rounding</header><text>If any increase under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="ID47f7ead37773458aa5c6bf5b000d9170"><enum>(h)</enum><header>Disclaimer of disqualifying coverage</header><text>Subparagraph (B) of section 223(c)(1), as amended by this section, is amended—</text> <paragraph id="id0753309E4B4043A3B55BC4144BE0B1EB"><enum>(1)</enum><text>by striking <quote>and</quote> at the end of clause (iii);</text></paragraph>
<paragraph id="id8EF4F7305B84480B9439855FB787BB50"><enum>(2)</enum><text>by striking the period at the end of clause (iv) and inserting <quote>, and</quote>; and</text></paragraph> <paragraph id="id07DC08A639FA43EFBCE9219A835AA5EA"><enum>(3)</enum><text>by inserting after clause (iv) the following new clause:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="id6E6D27654F824EF6A66D9C38FD2CC505">
<clause id="id6C61E3A703F245779632455BA865A9BC"><enum>(v)</enum><text>any coverage (including prospective coverage) under a health plan that is not an HSA-qualified 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.</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection> <subsection commented="no" display-inline="no-display-inline" id="IDbea87530dc714b7ba9f19dcfecd0e4e7"><enum>(i)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>
<section section-type="subsequent-section" id="id6B6E07889C694C298788B168BC338444"><enum>402.</enum><header>Equivalent bankruptcy protections for health savings accounts as retirement funds</header>
<subsection id="id390C1E5995D34416A415B0409EDD3A4D"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 522 of title 11, United States Code, is amended by adding at the end the following new subsection:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="id90C6B482887645898DE25A1ACB2BBA43"> <subsection id="id2CAED9EE795E4AE8BF8C186426E11983"><enum>(r)</enum><header>Treatment of health savings accounts</header><text>For purposes of this section, any health savings account (as described in <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223</external-xref> of the Internal Revenue Code of 1986) shall be treated in the same manner as an individual retirement account described in section 408 of such Code.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection id="idB31F085EC6464360B9928FD00F82BD2A"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to cases commencing under title 11, United States Code, after the date of the enactment of this Act.</text></subsection></section> <section id="id1267D92289C84E448F3130A83F535D5A"><enum>403.</enum><header>Administrative error correction before due date of return</header> <subsection id="id710B1CD278A2438FA5C73B296014424B"><enum>(a)</enum><header>In general</header><text>Paragraph (4) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(f)</external-xref> is amended by adding at the end the following new subparagraph:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="id71B9A3F2550A4635B0CC871152D6C83C">
<subparagraph id="idF21DBC164F504BF2B95CD75423AF305F"><enum>(D)</enum><header>Exception for administrative errors corrected before due date of return</header><text>Subparagraph (A) shall not apply if any payment or distribution is made to correct an administrative, clerical, or payroll contribution error and if—</text> <clause id="idC0FF85D9660A4D3382179E6EFC2D446F"><enum>(i)</enum><text>such distribution is received by the individual on or before the last day prescribed by law (including extensions of time) for filing such individual's return for such taxable year, and</text></clause>
<clause id="idC2D7DB83DC0E4901BD71189BE2B6582F"><enum>(ii)</enum><text>such distribution is accompanied by the amount of net income attributable to such contribution.</text></clause><continuation-text continuation-text-level="subparagraph">Any net income described in clause (ii) shall be included in the gross income of the individual for the taxable year in which it is received.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="idD12C34F29A594D18A7E181445876BF45"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall take effect on the date of the enactment of this Act.</text></subsection></section>
<section section-type="subsequent-section" id="idDB17DEEC7F95404DBFE7EC6EE3BD0A81"><enum>404.</enum><header>Reauthorization of Medicaid health opportunity accounts</header>
<subsection id="id91A32AA070D24B879451109B01B5E44A"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 1938 of the Social Security Act (<external-xref legal-doc="usc" parsable-cite="usc/42/1396u-8">42 U.S.C. 1396u–8</external-xref>) is amended—</text> <paragraph id="id9637986EAD7D46ECBFC4CF433065A8ED"><enum>(1)</enum><text display-inline="yes-display-inline">in subsection (a)—</text>
<subparagraph id="id55770FEA98A544D5BEFC08E719F2DE85"><enum>(A)</enum><text display-inline="yes-display-inline">by striking paragraph (2) and inserting the following:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="idEAEC30A0AC8948269F4BC662F79EC92B"> <paragraph id="id9CDB8CDC9F5B45F29020F2EBDDDA7941"><enum>(2)</enum><header>Initial demonstration</header><text>The Secretary shall approve States to conduct demonstration programs under this section for a 5-year period, with each State demonstration program covering one or more geographic areas specified by the State. With respect to a State, after the initial 5-year period of any demonstration program conducted under this section by the State, unless the Secretary finds, taking into account cost-effectiveness and quality of care, that the State demonstration program has been unsuccessful, the demonstration program may be extended or made permanent in the State.</text></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph>
<subparagraph id="idCE13062FD0C8422EA68510BBA67B56BA"><enum>(B)</enum><text>in paragraph (3), in the matter preceding subparagraph (A)—</text> <clause id="id0221E1F0C3F749788EAF86361962D395"><enum>(i)</enum><text>by striking <quote>not</quote>; and</text></clause>
<clause id="id5C522CFC554F4E93944B2B5A40354000"><enum>(ii)</enum><text>by striking <quote>unless</quote> and inserting <quote>if </quote>;</text></clause></subparagraph></paragraph> <paragraph id="idE0B4768410B64D179D0CD5AD35D95944"><enum>(2)</enum><text>in subsection (b)—</text>
<subparagraph id="id1983A1B8FD354B31A22B43E389B16640"><enum>(A)</enum><text>in paragraph (3), by inserting <quote>clause (i) through (vii), (viii) (without regard to the amendment made by section 2004(c)(2) of <external-xref legal-doc="public-law" parsable-cite="pl/111/148">Public Law 111–148</external-xref>), (x), or (xi) of</quote> after <quote>described in </quote>; and</text></subparagraph> <subparagraph id="idEE6E6468C53C4B47BAB4BFC93B41CD26"><enum>(B)</enum><text>by striking paragraphs (4), (5), and (6);</text></subparagraph></paragraph>
<paragraph id="id5E5C0980866B422DB12EAE27F69DBC3C"><enum>(3)</enum><text>in subsection (c)—</text> <subparagraph id="id2C367EA5D3E34375B6C1F493AA7FD961"><enum>(A)</enum><text>by striking paragraphs (3) and (4);</text></subparagraph>
<subparagraph id="id8D52F5B9184A4F46BC3590BB72F0F1FF"><enum>(B)</enum><text>by redesignating paragraphs (5) through (8) as paragraphs (3) through (6), respectively; and</text></subparagraph> <subparagraph id="idBDA1B94C176B41D2A4DCDBE27E2BFF81"><enum>(C)</enum><text>in paragraph (4) (as redesignated by subparagraph (B)), by striking <quote>Subject to subparagraphs (D) and (E)</quote> and inserting <quote>Subject to subparagraph (D)</quote>; and</text></subparagraph></paragraph>
<paragraph id="id2A2A2727AFEF4801B2315B3637D95BCF"><enum>(4)</enum><text>in subsection (d)—</text> <subparagraph id="idDBFD90EB4C4640F4BE52D676D81A8BF2"><enum>(A)</enum><text>in paragraph (2), by striking subparagraph (E); and</text></subparagraph>
<subparagraph id="id06B2BE7A91314876BBCC3E3E802F0A96"><enum>(B)</enum><text>in paragraph (3)—</text> <clause id="idDB8AD8B8ABC94D2C80F31DBC3864A36A"><enum>(i)</enum><text>in subparagraph (A)(ii), by striking <quote>Subject to subparagraph (B)(ii), in</quote> and inserting <quote>In</quote>; and</text></clause>
<clause id="id2A39D3378C214B81AA4BB571055C9290"><enum>(ii)</enum><text>by striking subparagraph (B) and inserting the following:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="id80310F84E01146B19492105973A93AF8"> <subparagraph id="IDFB5B505DFE2F4F7487CDBF43A6C14161"><enum>(B)</enum><header>Maintenance of health opportunity account after becoming ineligible for public benefit</header><text>Notwithstanding any other provision of law, if an account holder of a health opportunity account becomes ineligible for benefits under this title because of an increase in income or assets—</text>
<clause id="ID7D75D9B3B3E84A2BBF299A62C2B0795F"><enum>(i)</enum><text>no additional contribution shall be made into the account under paragraph (2)(A)(i); and</text></clause> <clause id="ID5265AE5CB5E44A2194C58F3FD82A3C09"><enum>(ii)</enum><text>the account shall remain available to the account holder for 3 years after the date on which the individual becomes ineligible for such benefits for withdrawals under the same terms and conditions as if the account holder remained eligible for such benefits, and such withdrawals shall be treated as medical assistance in accordance with subsection (c)(4).</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></clause></subparagraph></paragraph></subsection>
<subsection commented="no" display-inline="no-display-inline" id="idBD050393E0E649A281ABAAEE275A26F5"><enum>(b)</enum><header>Conforming amendment</header><text>Section 613 of <external-xref legal-doc="public-law" parsable-cite="pl/111/3">Public Law 111–3</external-xref> is repealed.</text></subsection></section> <section commented="no" display-inline="no-display-inline" id="idDB5CE28252A344519800F9B82009C8FC"><enum>405.</enum><header>Maximum contribution limit to health savings account increased to amount of deductible and out-of-pocket limitation</header> <subsection id="idb4c331393f93414cb6f70c7578e1d370"><enum>(a)</enum><header>Self-Only coverage</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/223">Section 223(b)(2)(A)</external-xref> is amended by striking <quote>$2,250</quote> and inserting <quote>the amount in effect under subsection (c)(2)(A)(ii)(I)</quote>.</text></subsection>
<subsection id="id33848ecb1af44e2ea9c5356b2f5c0275"><enum>(b)</enum><header>Family Coverage</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/223">Section 223(b)(2)(B)</external-xref> is amended by striking <quote>$4,500</quote> and inserting <quote>the amount in effect under subsection (c)(2)(A)(ii)(II)</quote>.</text></subsection> <subsection id="id4e7f3fc26bb44245ac22c3e87dbabc4c"><enum>(c)</enum><header>Conforming Amendments</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/223">Section 223(g)(1)</external-xref> is amended—</text>
<paragraph id="idead1526e178a407aaca5c3e87456e26b"><enum>(1)</enum><text>by striking <quote>subsections (b)(2) and</quote> both places it appears and inserting <quote>subsection</quote>; and</text></paragraph> <paragraph id="id4dbba3e42ee94fd5ace530343956fcbd"><enum>(2)</enum><text>by striking <quote>determined by</quote> in subparagraph (B) thereof and all that follows through <quote><quote>calendar year 2003</quote>.</quote> and inserting <quote>determined by substituting <quote>calendar year 2003</quote> for <quote>calendar year 2016</quote> in subparagraph (A)(ii) thereof.</quote>.</text></paragraph></subsection>
<subsection id="id2cfba7fc94704efe9e961a2f9b78c63f"><enum>(d)</enum><header>Effective Date</header><text>The amendments made by this section shall apply to taxable years beginning after December 31, 2021.</text></subsection></section> <enum>V</enum><header>Other provisions</header> <section commented="no" id="IDf2514de3f1274a8790331f1e3b1dbf49"><enum>501.</enum><header>Certain exercise equipment and physical fitness programs treated as medical care</header> <subsection commented="no" id="IDb90e033f4e8c4de7bdc1e9711bca8b0b"><enum>(a)</enum><header>In general</header><text>Subsection (d) of <external-xref legal-doc="usc" parsable-cite="usc/26/213">section 213</external-xref> is amended by adding at the end the following new paragraph:</text>
<quoted-block style="OLC" display-inline="no-display-inline" id="id6E84546AA8BF4E11BF9885ED0AC23ED7">
<paragraph commented="no" id="ID491ca348ca714e25a0977e33828a187a"><enum>(12)</enum><header>Exercise equipment and physical fitness activity</header>
<subparagraph commented="no" id="IDfe7fded721994e1ba3e4bc50b8e47872"><enum>(A)</enum><header>In general</header><text>The term <term>medical care</term> shall include amounts paid—</text> <clause commented="no" id="ID97025bf7fb06443e8f289de6cb116b55"><enum>(i)</enum><text>for equipment for use in a program (including a self-directed program) of physical exercise or physical activity,</text></clause>
<clause commented="no" id="ID0ee3de122fdd4163b9e33da22cadb3fd"><enum>(ii)</enum><text>to participate, or receive instruction, in a program of physical exercise, nutrition, or health coaching (including a self-directed program), and</text></clause> <clause commented="no" id="IDe93dd45ab95e47c284d29af010d00e36"><enum>(iii)</enum><text>for membership at a fitness facility.</text></clause></subparagraph>
<subparagraph commented="no" id="IDf0b4ec5c23a049b897fef71f41a0c095"><enum>(B)</enum><header>Overall dollar limitation</header>
<clause commented="no" id="id843F43512446479CA3544124EE323837"><enum>(i)</enum><header>In general</header><text>Amounts treated as medical care under subparagraph (A) shall not exceed $1,000 with respect to any individual for any taxable year.</text></clause> <clause commented="no" id="id0180B7B1B91C4218BD736450A294459A"><enum>(ii)</enum><header>Exception</header><text>Clause (i) shall not apply for purposes of determining whether expenses reimbursed through a health flexible spending arrangement subject to section 125(i)(1) are incurred for medical care.</text></clause></subparagraph>
<subparagraph id="H1C0DB556D8F4413EBDE7259E4D698FAB"><enum>(C)</enum><header>Limitations related to sports and fitness equipment</header><text>Amounts paid for equipment described in subparagraph (A)(i) shall be treated as medical care only—</text> <clause id="HA1E5A02C994A45E1A6AC979B6B46CB6A"><enum>(i)</enum><text>if such equipment is utilized exclusively for participation in fitness, exercise, sport, or other physical activity programs,</text></clause>
<clause id="H29A46C32D5894897ABB118341FC6A7C5"><enum>(ii)</enum><text>if such equipment is not apparel or footwear, and</text></clause> <clause id="H5C5996B300AA4CC681679F9983EDF654"><enum>(iii)</enum><text>in the case of any item of sports equipment (other than exercise equipment), with respect to so much of the amount paid for such item as does not exceed $250.</text></clause></subparagraph>
<subparagraph display-inline="no-display-inline" id="HAED06D3A29DE49078344E397BCBBFFBA"><enum>(D)</enum><header>Fitness facility defined</header><text>For purposes of subparagraph (A)(iii), the term <term>fitness facility</term> means a facility—</text> <clause id="HE4E246BACEF147CEA2CB1BC3B50E9962"><enum>(i)</enum><text>providing instruction in a program of physical exercise, offering facilities for the preservation, maintenance, encouragement, or development of physical fitness, or serving as the site of such a program of a State or local government,</text></clause>
<clause id="HA7DCC3A00E914170BA7A3C0A09CE9261"><enum>(ii)</enum><text>which is not a private club owned and operated by its members,</text></clause> <clause id="HEBFFB47168C54E758189F4E08B96E79C"><enum>(iii)</enum><text>which does not offer golf, hunting, sailing, or riding facilities,</text></clause>
<clause id="H307B856403EE4668B1179DC28C2138EF"><enum>(iv)</enum><text>whose health or fitness facility is not incidental to its overall function and purpose, and</text></clause> <clause id="H866F6A90A89C43008F49D80EF826A646"><enum>(v)</enum><text>which is fully compliant with the State of jurisdiction and Federal anti-discrimination laws.</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection commented="no" id="id97024B2C73D24E149E50307206761BEF"><enum>(b)</enum><header>Limitation not To apply for certain purposes</header>
<paragraph commented="no" id="id245F8E598FB043B08C526ADF3D8EBA5F"><enum>(1)</enum><header>Health savings accounts</header><text>Subparagraph (A) of <external-xref legal-doc="usc" parsable-cite="usc/26/223">section 223(d)(2)</external-xref> is amended by inserting <quote>, determined without regard to paragraph (12)(B) thereof</quote> after <quote>medical care (as defined in section 213(d)</quote>.</text></paragraph> <paragraph commented="no" id="idA1DF06B0F31349159AAEDEB4BB6E00A3"><enum>(2)</enum><header>Archer MSAs</header><text>Subparagraph (A) of <external-xref legal-doc="usc" parsable-cite="usc/26/220">section 220(d)(2)</external-xref> is amended by inserting <quote>, determined without regard to paragraph (12)(B) thereof</quote> after <quote>medical care (as defined in section 213(d)</quote>.</text></paragraph></subsection>
<subsection commented="no" id="ID0422b5e7ef8449729307fac5c7a55bf7"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section> <section id="IDacc7969cb585404ba4c482155cc17ed7"><enum>502.</enum><header>Certain nutritional and dietary supplements to be treated as medical care</header> <subsection id="ID80c38bcf9c634a63affe9600f0d9a60d"><enum>(a)</enum><header>In general</header><text>Subsection (d) of <external-xref legal-doc="usc" parsable-cite="usc/26/213">section 213</external-xref>, as amended by <external-xref legal-doc="usc" parsable-cite="usc/26/501">section 501,</external-xref> is amended by adding at the end the following new paragraph:</text>
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<paragraph id="ID8634aebfac7a46a8b01d7e718c40882f"><enum>(13)</enum><header>Nutritional and dietary supplements</header>
<subparagraph id="ID30c1756d1590414c8e3ad279664878e4"><enum>(A)</enum><header>In general</header><text>The term <term>medical care</term> shall include amounts paid to purchase herbs, vitamins, minerals, homeopathic remedies, meal replacement products, and other dietary and nutritional supplements.</text></subparagraph> <subparagraph commented="no" id="ID0f3d12b9ded04192be8ae8d8f4395510"><enum>(B)</enum><header>Limitation</header><text>Amounts treated as medical care under subparagraph (A) shall not exceed $1,000 with respect to any individual for any taxable year.</text></subparagraph>
<subparagraph id="id48443CF87DFF4521AAFC0A8FC774B8F6"><enum>(C)</enum><header>Meal replacement product</header><text>For purposes of this paragraph, the term <term>meal replacement product</term> means any product that—</text> <clause id="id65F6DC38C7CD484EBC5E4DBF8EA546B8"><enum>(i)</enum><text>is permitted to bear labeling making a claim described in section 403(r)(3) of the Federal Food, Drug, and Cosmetic Act, and</text></clause>
<clause id="id661EFC071BCA40659707DC6C684E325B"><enum>(ii)</enum><text>is permitted to claim under such section that such product is low in fat and is a good source of protein, fiber, and multiple essential vitamins and minerals.</text></clause></subparagraph> <subparagraph commented="no" display-inline="no-display-inline" id="idDF5528C3447E4670942FD21AEAC3858D"><enum>(D)</enum><header display-inline="yes-display-inline">Exception</header><text display-inline="yes-display-inline">Subparagraph (B) shall not apply for purposes of determining whether expenses reimbursed through a health flexible spending arrangement subject to section 125(i)(1) are incurred for medical care.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection commented="no" id="idBC2D3006E75B42E5931327AF021CD476"><enum>(b)</enum><header>Limitation not To apply for certain purposes</header>
<paragraph commented="no" id="id33CFFA926E7C4D4882B8E6E9529F6EE4"><enum>(1)</enum><header>Health savings accounts</header><text>Subparagraph (A) of section 223(d)(2), as amended by <external-xref legal-doc="usc" parsable-cite="usc/26/501">section 501,</external-xref> is amended by striking <quote>paragraph (12)(B)</quote> and inserting <quote>paragraphs (12)(B) and (13)(B)</quote>.</text></paragraph> <paragraph commented="no" display-inline="no-display-inline" id="idAD99CB0C802C4CCA9DF573E3BA781A34"><enum>(2)</enum><header>Archer MSAs</header><text>Subparagraph (A) of section 220(d)(2), as amended by <external-xref legal-doc="usc" parsable-cite="usc/26/501">section 501,</external-xref> is amended by striking <quote>paragraph (12)(B)</quote> and inserting <quote>paragraphs (12)(B) and (13)(B)</quote>.</text></paragraph></subsection>
<subsection id="IDd54c4387e6c44fed91d4d1766295df2f"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section> <section commented="no" id="ID39b8a109b27a4b6582631ab1aa1144d7"><enum>503.</enum><header>Certain provider fees to be treated as medical care</header> <subsection commented="no" id="IDefef4384712b4c22973d171796a3df0e"><enum>(a)</enum><header>In general</header><text>Subsection (d) of <external-xref legal-doc="usc" parsable-cite="usc/26/213">section 213</external-xref>, as amended by sections 501 and 502, is amended by adding at the end the following new paragraph:</text>
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<paragraph commented="no" id="IDd5f0339f1e8e43359f6539b030357a84"><enum>(14)</enum><header>Periodic provider fees</header><text>The term <term>medical care</term> shall include—</text> <subparagraph commented="no" id="id37FFC3383C6448EBA2817A888076DF6B"><enum>(A)</enum><text>periodic fees paid to a primary care physician for a defined set of medical services or the right to receive medical services on an as-needed basis, and</text></subparagraph>
<subparagraph commented="no" id="id038CEC1C5BF44FBA91C326370998366C"><enum>(B)</enum><text>pre-paid primary care services designed to screen for, diagnose, cure, mitigate, treat, or prevent disease and promote wellness.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection commented="no" id="id4358E8731A424D4E90F29954809098DD"><enum>(b)</enum><header>Exception for flexible spending accounts</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/125">Section 125</external-xref> is amended by redesignating subsections (k) and (l) as subsections (l) and (m), respectively, and by inserting after subsection (j) the following new subsection:</text>
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<subsection commented="no" id="idF0768D3BC41041689A2985F7BE87C1D8"><enum>(k)</enum><header>Special rule with respect to health flexible spending arrangements</header><text>For purposes of applying this with respect to any health flexible spending arrangement, amounts described in section 213(d)(14) shall not be considered insurance.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection commented="no" id="IDcccb47c345374db6982f54f054fa3b1f"><enum>(c)</enum><header>Effective date</header><text display-inline="yes-display-inline">The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.</text></subsection></section>