[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9394 Introduced in House (IH)]

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118th CONGRESS
  2d Session
                                H. R. 9394

To amend the Internal Revenue Code of 1986 to reform health provisions, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            August 23, 2024

   Mr. Moore of Utah (for himself, Mr. Panetta, Mr. Fitzpatrick, Mr. 
    Schneider, Mr. Smith of Nebraska, and Mr. Ruiz) 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 reform health provisions, 
                        and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Out-of-Pocket Expense Act of 
2024'' or the ``HOPE Act of 2024''.

SEC. 2. HOPE ACCOUNTS.

    (a) Accounts Established.--
            (1) In general.--Part VIII of subchapter F of chapter 1 of 
        the Internal Revenue Code of 1986 is amended by adding at the 
        end the following new section:

``SEC. 530A. HOPE ACCOUNTS.

    ``(a) In General.--A HOPE Account shall be exempt from taxation 
under this subtitle. Notwithstanding the preceding sentence, the Hope 
Account shall be subject to the taxes imposed by section 511 (relating 
to the imposition of tax on unrelated business income of charitable 
organizations).
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) HOPE account.--The term `HOPE Account' means a trust 
        created or organized in the United States as a HOPE Account 
        exclusively for the purpose of paying the qualified medical 
        expenses of the account beneficiary, but only if the written 
        governing instrument creating the trust meets the following 
        requirements:
                    ``(A) Except in the case of a rollover contribution 
                described in subsection (d)(4) of this section, no 
                contribution will be accepted--
                            ``(i) unless it is in cash, or
                            ``(ii) to the extent such contribution, 
                        when added to previous contributions to the 
                        trust for the calendar year, exceeds the 
                        contribution limitations in subsection (c).
                    ``(B) The trustee is a bank (as defined in section 
                408(n)), an insurance company (as defined in section 
                816), or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) The interest of an individual in the balance 
                in the individual's account is nonforfeitable.
                    ``(F) No more than reasonable fees are paid in 
                connection with the administration of the account.
                    ``(G) The trust includes procedures for the trustee 
                to reasonably assure that distributions are limited to 
                payment or reimbursement for qualified medical expenses 
                incurred after the establishment of the trust. 
                Procedures shall be considered reasonable that meet the 
                substantiation requirements contained in Proposed 
                Treasury Regulation section 1.125-6 (as in effect on 
                January 1, 2024) or under any superseding guidance 
                prescribed by the Secretary.
                    ``(H) The trust follows all reporting requirements 
                as may be prescribed by the Secretary with respect to 
                distributions that are not substantiated as qualified 
                medical expenses pursuant to this section.
                    ``(I) The trust follows any other guidance with 
                respect to HOPE Accounts prescribed by the Secretary.
                    ``(J) Except as provided in subsection (d)(2)(B), 
                amounts held by the trust may not be distributable 
                other than exclusively to pay the qualified medical 
                expenses of the account beneficiary, spouse or 
                dependents.
                    ``(K) The trust reports all contributions on Form 
                5498-A, or such other form as is required by the 
                Secretary. The trust annually must also--
                            ``(i) request each account owner to provide 
                        the trust with the amount if any, the account 
                        owner contributed to an FSA for the year, and
                            ``(ii) report such amount on Form 5498-A or 
                        such other form as is required by the 
                        Secretary.
            ``(2) Eligible individual.--
                    ``(A) In general.--The term `eligible individual' 
                means, with respect to any month, any individual if for 
                such month such individual meets the requirements of 
                subparagraphs (B) and (C).
                    ``(B) Coverage requirement.--An individual meets 
                the requirements of this subparagraph for a month if 
                such individual is covered under one of the following 
                types of coverage as of the 1st day of such month:
                            ``(i) Minimum essential coverage (as 
                        defined in section 5000A(f)).
                            ``(ii) With respect to members of federally 
                        recognized American Indian and Alaska Native 
                        Tribes and their descendants, the Indian Health 
                        Service.
                    ``(C) Other coverage.--
                            ``(i) In general.--An individual meets the 
                        requirements of this subparagraph for a month 
                        if during such month no amounts are contributed 
                        by or on behalf of the individual to any of the 
                        following accounts of such individual:
                                    ``(I) A health flexible spending 
                                arrangement.
                                    ``(II) A health savings account (as 
                                defined in section 223(d)).
                                    ``(III) A health reimbursement 
                                arrangement which is treated as 
                                employer-provided coverage under an 
                                accident or health plan for purposes of 
                                section 106.
                                    ``(IV) An Archer MSA (as defined in 
                                section 220(d)).
                            ``(ii) Exception for certain disregarded 
                        coverage.--Clause (i) shall not apply in the 
                        case of an account described therein if for the 
                        month such account constitutes coverage 
                        described in section 223(c)(1)(B).
            ``(3) Qualified medical expenses.--The term `qualified 
        medical expenses' has the meaning given such term in section 
        223(d)(2).
            ``(4) Account beneficiary.--The term `account beneficiary' 
        means the individual on whose behalf the HOPE Account was 
        established.
            ``(5) Account terminations.--Rules similar to the rules of 
        paragraphs (2) and (4) of section 408(e) shall apply to HOPE 
        Accounts, and any amount treated as distributed under such 
        rules shall be treated as not used to pay qualified medical 
        expenses.
            ``(6) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                    ``(B) Except as provided in section 106(h), section 
                219(f)(5) (relating to employer payments).
                    ``(C) Section 408(g) (relating to community 
                property laws).
                    ``(D) Section 408(h) (relating to custodial 
                accounts).
                    ``(E) Section 223(f)(7) (relating to transfer of 
                account incident of divorce).
                    ``(F) Section 223(f)(8) (relating to treatment 
                after death of account beneficiary).
    ``(c) Contribution Limitations.--
            ``(1) In general.--The aggregate amount of contributions 
        from all sources to all HOPE Accounts maintained for the 
        benefit of an eligible individual for any taxable year shall 
        not exceed the sum of the monthly limitations for months during 
        such taxable year that the individual is an eligible 
        individual.
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is \1/12\ of--
                    ``(A) in the case of an eligible individual who has 
                self-only coverage, or an eligible individual that is 
                married filing separately or married filing jointly 
                that has family coverage, $4,000, or
                    ``(B) in the case of an eligible individual who has 
                family coverage and is head of household, $8,000.
            ``(3) Limitation on third party contributions.--A trust 
        shall not be treated as a Hope Account under this section 
        unless the aggregate of contributions on behalf of the 
        individual from all employers of the individual and from any 
        Medicaid program established and administered by a State or 
        subdivision thereof, if approved by the Secretary of Health and 
        Human Services under Section 1115 of the Social Security Act or 
        Section 1332 of the Patient Protection and Affordable Care Act, 
        will not be accepted in excess of 50 percent of the limit with 
        respect to such individual.
            ``(4) No deduction.--No deduction shall be allowed for a 
        contribution made by an eligible individual to a HOPE Account 
        maintained for the benefit of such individual for any taxable 
        year.
            ``(5) Exclusion from gross income limited.--Any 
        contribution under paragraph (c)(3) to the HOPE account of an 
        individual whose adjusted gross income for the prior taxable 
        year does not exceed $100,000 ($200,000 in the case of a 
        married individual filing a joint return) shall be excluded 
        from the individual's adjusted gross income.
            ``(6) Coordination with other contributions.--The 
        limitation which would (but for this paragraph) apply under 
        this subsection to an individual for any taxable year shall be 
        reduced (but not below zero) by the sum of--
                    ``(A) the aggregate amount determined with respect 
                to the individual for the taxable year under section 
                223(b)(4),
                    ``(B) the aggregate amount contributed by the 
                individual to health savings accounts of the individual 
                for such taxable year and not taken into account under 
                subparagraph (A),
                    ``(C) the aggregate amount contributed to a HOPE 
                Account of such individual by the individual's 
                employer, and
                    ``(D) the aggregate amount contributed to a HOPE 
                Account of such individual for such taxable year by a 
                program established and administered by a State or 
                subdivision thereof with respect to converted cost-
                sharing reduction payments.
            ``(7) Cost-of-living adjustment.--Each dollar amount in 
        paragraph (2) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                such taxable year begins determined--
                            ``(i) by substituting `calendar year 2024' 
                        for `calendar year 2016' in subparagraph 
                        (A)(ii) thereof, and
                            ``(ii) by substituting `March 31' for 
                        `August 31' in section 1(f)(4).
                The Secretary shall publish the adjusted amounts under 
                paragraph (2) for taxable years beginning in any 
                calendar year no later than June 1 of the preceding 
                calendar year. If any increase under this paragraph is 
                not a multiple of $50, such increase shall be rounded 
                to the nearest multiple of $50.
    ``(d) Tax Treatment of Distributions.--
            ``(1) Amounts used for qualified medical expenses.--Any 
        amount paid or distributed out of a HOPE Account which is used 
        exclusively to pay qualified medical expenses of any account 
        beneficiary shall not be includible in gross income.
            ``(2) Distribution and taxation of amounts not used for 
        qualified medical expenses.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), no amount may be paid or distributed 
                out of a HOPE Account which is not used exclusively to 
                pay the qualified medical expenses of the account 
                beneficiary.
                    ``(B) Exception for certain distributions.--An 
                amount may be paid or distributed out of a HOPE Account 
                which is not used exclusively to pay the qualified 
                medical expenses of the account beneficiary if such 
                distribution is reported to the Secretary pursuant to 
                such regulations or other guidance the Secretary may 
                prescribe, and the distribution is--
                            ``(i) made to an account beneficiary (or to 
                        the estate of the account beneficiary) on or 
                        after the death of the individual, or
                            ``(ii) attributable to the account 
                        beneficiary being disabled (within the meaning 
                        of section 72(m)(7)).
                    ``(C) Taxation of distributions not used for 
                qualified medical expenses.--
                            ``(i) In general.--Any amount paid or 
                        distributed out of a HOPE Account which is not 
                        used exclusively to pay qualified medical 
                        expenses of any account beneficiary shall be 
                        includible in gross income, except to the 
                        extent such distribution is allocable to 
                        amounts described in subparagraph (D)(iii).
                            ``(ii) Additional tax.--The tax imposed by 
                        this chapter on the account beneficiary for any 
                        taxable year in which there is a payment or 
                        distribution from a HOPE Account of such 
                        beneficiary which is includible in gross income 
                        under clause (i) shall be increased by 30 
                        percent of the amount which is so includible.
                    ``(D) Ordering of distributions.--Any distributions 
                out of a HOPE Account pursuant to subparagraph (B) 
                shall be treated as made from amounts to the extent 
                that the amount of such distribution, when added to all 
                previous distributions from the HOPE Account, does not 
                exceed the aggregate of such amount, and from such 
                amounts pursuant to the following ordering rules:
                            ``(i) from earnings, if any, on such 
                        amounts described in clauses (ii) and (iii),
                            ``(ii) from contributions described in 
                        subsection (c)(3),
                            ``(iii) from contributions by an eligible 
                        individual to the HOPE Account, and
                            ``(iv) from rollover contributions to the 
                        HOPE Account from another HOPE Account 
                        allocable to contributions by an eligible 
                        individual to such other HOPE Account, on a 
                        first-in, first-out basis.
            ``(3) Excess contributions returned before due date of 
        return.--
                    ``(A) In general.--If any excess contribution is 
                contributed for a taxable year to any HOPE Account of 
                an individual, paragraph (2) shall not apply to 
                distributions from the HOPE Accounts of such individual 
                (to the extent such distributions do not exceed the 
                aggregate excess contributions to all such accounts of 
                such individual for such year) if--
                            ``(i) 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
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                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.
                    ``(B) Excess contribution.--For purposes of 
                subparagraph (A), the term `excess contribution' means 
                any contribution (other than a rollover contribution 
                described in paragraph (4)) which is neither excludable 
                from gross income under section 106(h) nor allowable 
                under this section.
            ``(4) Rollover contribution.--An amount is described in 
        this paragraph as a rollover contribution if it meets the 
        requirements of subparagraphs (A) and (B).
                    ``(A) In general.--Paragraph (2) shall not apply to 
                any amount paid or distributed from a HOPE Account to 
                the account beneficiary to the extent the amount 
                received is paid into a HOPE Account for the benefit of 
                such beneficiary, the beneficiary's spouse or the 
                beneficiary's dependent not later than the 60th day 
                after the day on which the beneficiary receives the 
                payment or distribution.
                    ``(B) Limitation.--This paragraph shall not apply 
                to any amount described in subparagraph (A) received by 
                an individual from a HOPE Account if, at any time 
                during the 1-year period ending on the day of such 
                receipt, such individual received any other amount 
                described in subparagraph (A) from a HOPE Account which 
                was not includible in the individual's gross income 
                because of the application of this paragraph.
                    ``(C) Dependent.--The term dependent means any 
                individual with respect to whom a deduction under 
                section 151 is allowed to another taxpayer for a 
                taxable year beginning in the calendar year in which 
                such individual's taxable year begins.
            ``(5) Coordination with medical expense deduction.--For 
        purposes of determining the amount of the deduction under 
        section 213, any payment or distribution out of a HOPE Account 
        for qualified medical expenses shall not be treated as an 
        expense paid for medical care.
    ``(e) Reports.--The Secretary shall require the trustee of a HOPE 
Account to make such reports regarding such account to the Secretary 
and to the account beneficiary with respect to contributions, 
distributions, the return of excess contributions, and such other 
matters as the Secretary determines appropriate. The trustee shall 
include in each such report an accounting of the amount contributed by 
the account beneficiary, and may, if necessary to determine such 
amount, request such information from the account beneficiary.''.
            (2) Clerical amendment.--The table of sections for part 
        VIII of subchapter F of chapter 1 of such Code is amended by 
        adding at the end the following new item:

``Sec. 530A. HOPE Accounts.''.
    (b) Excess Contributions.--
            (1) In general.--Section 4973(a) of such Code is amended by 
        striking ``or'' at the end of paragraph (5), by striking the 
        period at the end of paragraph (6) and inserting ``, and'', and 
        by inserting after paragraph (6) (as so amended) the following 
        new paragraph:
            ``(7) A HOPE Account (as defined in section 530A(b)).''.
            (2) Excess contributions defined.--Section 4973 of such 
        Code is amended by adding at the end the following new 
        subsection:
    ``(i) Excess Contributions to HOPE Account.--
            ``(1) In general.--For purposes of this section, in the 
        case of HOPE Accounts (within the meaning of section 530A(b)), 
        the term ``excess contributions'' means the sum of--
                    ``(A) The aggregate amount contributed for the 
                taxable year to the accounts (other than a rollover 
                contribution described in section 530A(d)(4)) which 
                exceeds the contributions limits under section 530A(c), 
                and
                    ``(B) the amount determined under this subsection 
                for the preceding taxable year, reduced by the sum of--
                            ``(i) the distributions out of the accounts 
                        which were included in gross income under 
                        section 530A(d)(2)(C), and
                            ``(ii) the excess (if any) of--
                                    ``(I) the maximum amount of 
                                allowable contributions under 530A(c) 
                                for the taxable year, over
                                    ``(II) the amount contributed to 
                                the accounts for the taxable year.
            ``(2) Returned excess contributions.--For purposes of this 
        subsection, any contribution which is distributed out of the 
        HOPE Account in a distribution to which section 530A(d)(2)(C) 
        applies shall be treated as an amount not contributed.''.
    (c) Employer Contributions.--
            (1) In general.--Section 106 of such Code is amended by 
        adding at the end the following new subsection:
    ``(h) Contributions to HOPE Accounts.--
            ``(1) In general.--In the case of an employee who is an 
        eligible individual, amounts contributed by such employee's 
        employer to any HOPE account (as defined in section 530A(b)) of 
        such employee shall be treated as employer-provided coverage 
        for medical expenses under an accident or health plan to the 
        extent such amounts do not exceed the limitations applicable to 
        such individual for such taxable year under section 530A(c) 
        (determined without regard to this subsection).
            ``(2) Limitation.--Paragraph (1) shall not apply in the 
        case of a taxpayer whose adjusted gross income for the taxable 
        year exceeds $100,000 ($200,000 in the case of a joint return).
            ``(3) Special rules.--Rules similar to the rules of 
        paragraphs (2), (3), (4), and (5) of subsection (b) shall apply 
        for purposes of this subsection.
            ``(4) Cross reference.--For penalty on failure by employer 
        to make comparable contributions to the health savings accounts 
        of comparable employees, see section 4980G.''.
            (2) Information reporting for employees.--Section 6051(a) 
        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) (as so 
        amended) the following new paragraph:
            ``(18) the amount contributed to any HOPE Account (as 
        defined in section 530A(b)) of such employee.''.
            (3) Conforming amendment relating to cafeteria plans.--
        Section 125(f)(1) of such Code is amended by inserting 
        ``106(h),'' after ``106(b),''.
    (d) Failure of Employer To Make Comparable HOPE Account 
Contributions.--
            (1) In general.--Section 4980G(a) of such Code is amended 
        by inserting ``or HOPE Account'' after ``health savings 
        account''.
            (2) Conforming amendments.--
                    (A) Section 4980G(c) of such Code is amended by 
                striking ``and health savings accounts'' and inserting 
                ``, health savings accounts, or HOPE Accounts''.
                    (B) Section 4980G(d) of such Code is amended by 
                inserting ``or HOPE Account'' after ``health savings 
                account''.
                    (C) The heading for section 4980G of such Code is 
                amended by inserting ``or hope account'' after ``health 
                savings account''.
                    (D) The table of sections for chapter 43 of such 
                Code is amended by striking the item relating to 
                section 4980G and inserting the following new item:

``Sec. 4980G. Failure of employer to make comparable health savings 
                            account or HOPE Account contributions.''.
    (e) Application of Prohibited Transaction Rules.--
            (1) In general.--Section 4975(e)(1) of such Code is amended 
        by striking ``or'' at the end of subparagraph (F), by 
        redesignating subparagraph (G) as subparagraph (H), and by 
        inserting after subparagraph (F), as so amended, the following 
        new subparagraph:
                    ``(G) a HOPE Account described in section 530A(b), 
                or''.
    (f) Failure To Report.--Section 6693(a)(2) of such Code is amended 
by striking ``and'' at the end of subparagraph (E), by striking the 
period at the end of subparagraph (F) and inserting ``, and'', and by 
inserting after subparagraph (F) (as so amended) the following new 
subparagraph:
                    ``(G) Section 530A(e) (relating to HOPE 
                Accounts).''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.
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