[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5687 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 5687

To amend the Internal Revenue Code of 1986 to modernize health savings 
                               accounts.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 26, 2023

Ms. Van Duyne 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 modernize health savings 
                               accounts.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``HSA Modernization Act of 2023''.

SEC. 2. INDIVIDUALS WITHOUT SERVICE-CONNECTED DISABILITY AND ELIGIBLE 
              FOR CERTAIN VETERANS BENEFITS PERMITTED TO CONTRIBUTE TO 
              HEALTH SAVINGS ACCOUNTS.

    (a) In General.--Section 223(c)(1)(C) of the Internal Revenue Code 
of 1986 is amended by striking ``for a service-connected disability 
(within the meaning of section 101(16) of title 38, United States 
Code)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2025.

SEC. 3. INDIVIDUALS ENTITLED TO PART A OF MEDICARE BY REASON OF AGE 
              ALLOWED TO CONTRIBUTE TO HEALTH SAVINGS ACCOUNTS.

    (a) In General.--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 adding at the end the following new clause:
                            ``(iv) entitlement to hospital insurance 
                        benefits under part A of title XVIII of the 
                        Social Security Act by reason of section 226(a) 
                        of such Act.''.
    (b) Treatment of Health Insurance Purchased From Account.--Section 
223(d)(2)(C)(iv) of such Code is amended by inserting ``and who is not 
an eligible individual'' after ``who has attained the age specified in 
section 1811 of the Social Security Act''.
    (c) Coordination With Penalty on Distributions Not Used for 
Qualified Medical Expenses.--Section 223(f)(4)(C) of such Code is 
amended by striking ``Subparagraph (A)'' and inserting ``Except in the 
case of an eligible individual, subparagraph (A)''.
    (d) Conforming Amendment.--Section 223(b)(7) of such Code is 
amended by inserting ``(other than an entitlement to benefits described 
in subsection (c)(1)(B)(iv))'' after ``Social Security Act''.
    (e) Effective Date.--The amendments made by this section shall 
apply to months beginning after December 31, 2025, in taxable years 
ending after such date.

SEC. 4. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH SERVICE ASSISTANCE NOT 
              DISQUALIFIED FROM HEALTH SAVINGS ACCOUNTS.

    (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:
                    ``(E) Special rule for individuals eligible for 
                assistance under indian health service programs.--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.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2025.

SEC. 5. ALLOWANCE OF BRONZE AND CATASTROPHIC PLANS IN CONNECTION WITH 
              HEALTH SAVINGS ACCOUNTS.

    (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:
                    ``(H) Bronze and catastrophic plans treated as high 
                deductible health plans.--The term `high deductible 
                health plan' shall include any plan described in 
                subsection (d)(1)(A) or (e) of section 1302 of the 
                Patient Protection and Affordable Care Act.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to months beginning after December 31, 2025, in taxable years ending 
after such date.

SEC. 6. SAFE HARBOR FOR ABSENCE OF DEDUCTIBLE FOR MENTAL HEALTH 
              SERVICES.

    (a) In General.--Section 223(c)(2) of the Internal Revenue Code of 
1986, as amended by this Act, is amended by adding at the end the 
following new subparagraph:
                    ``(I) Safe harbor for absence of deductible for 
                mental health services.--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 the 
                first $500 of any mental health benefits (as defined in 
                section 9812(e)(4)) specified by the plan for purposes 
                of this subparagraph.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2025.

SEC. 7. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE 
              ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.

    (a) In General.--Section 223(d)(2) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(E) Treatment of certain medical expenses 
                incurred before establishment of account.--If a health 
                savings account is established during the 60-day period 
                beginning on the date that coverage of the account 
                beneficiary under a high deductible 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.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to coverage beginning after December 31, 2025.

SEC. 8. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME 
              HEALTH SAVINGS ACCOUNT.

    (a) In General.--Section 223(b)(5) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(5) Special rule for married individuals with family 
        coverage.--
                    ``(A) In general.--In the case of individuals who 
                are married to each other, if both spouses are eligible 
                individuals and either spouse has family coverage under 
                a high deductible health plan as of the first day of 
                any month--
                            ``(i) the limitation under paragraph (1) 
                        shall be applied by not taking into account any 
                        other high deductible health plan coverage of 
                        either spouse (and if such spouses both have 
                        family coverage under separate high deductible 
                        health plans, only one such coverage shall be 
                        taken into account),
                            ``(ii) 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
                            ``(iii) such limitation (after application 
                        of clauses (i) and (ii)) shall be divided 
                        equally between such spouses unless they agree 
                        on a different division.
                    ``(B) Treatment of additional contribution 
                amounts.--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.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.

SEC. 9. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT INCREASED 
              TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET LIMITATION.

    (a) Self-Only Coverage.--Section 223(b)(2)(A) of the Internal 
Revenue Code of 1986 is amended by striking ``$2,250'' and inserting 
``the amount in effect under subsection (c)(2)(A)(ii)(I)''.
    (b) Family Coverage.--Section 223(b)(2)(B) of such Code is amended 
by striking ``$4,500'' and inserting ``the amount in effect under 
subsection (c)(2)(A)(ii)(II)''.
    (c) Conforming Amendments.--Section 223(g)(1) of such Code is 
amended--
            (1) by striking ``subsections (b)(2) and'' both places it 
        appears and inserting ``subsection'', and
            (2) in subparagraph (B), by striking ``determined by'' and 
        all that follows through ```calendar year 2003'.'' and 
        inserting ``determined by substituting `calendar year 2003' for 
        `calendar year 2016' in subparagraph (A)(ii) thereof.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.

SEC. 10. CLARIFICATION OF TREATMENT OF DISTRIBUTIONS FROM HEALTH 
              SAVINGS ACCOUNT FOR LONG-TERM CARE SERVICES.

    (a) In General.--Section 223(d)(2)(A) of the Internal Revenue Code 
of 1986 is amended by inserting before the last sentence the following: 
``Such term includes amounts paid for qualified long-term care services 
(as defined in section 7702B(c)).''.
    (b) Effective Date.--The amendment made by this subsection shall 
apply to amounts paid after the date of the enactment of this Act.
    (c) No Inference.--Nothing contained in this section or the 
amendment made thereby shall be construed to create any inference with 
respect to any amounts paid on or before such date.
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