[House Report 112-517]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-517
======================================================================
HEALTH SAVINGS ACCOUNTS IMPROVEMENTS ACT OF 2012
_______
June 5, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Camp, from the Committee on Ways and Means,
submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 5858]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 5858) to amend the Internal Revenue Code of 1986 to
improve health savings accounts, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
I. Summary and Background...........................................3
II. Explanation of Provision.........................................5
A. Saver's Credit for Contributions to Health Savings
Accounts (sec. 2 of the bill and sec. 25B of the
Code).............................................. 5
B. Special Rule for Certain Medical Expenses Incurred
Before Establishment of Health Savings Account
(sec. 3 of the bill and sec. 223 of the Code)...... 8
C. Allow Both Spouses to Make Catch-Up Contributions to
the Same HSA (sec. 4 of the bill and sec. 223 of
the Code).......................................... 9
D. Individuals Eligible for Veterans Benefits for a
Service-Connected Disability (sec. 5 of the bill
and sec. 223 of the Code).......................... 11
E. Distributions by Certain Early Retirees for Health
Coverage Treated as Qualified Medical Expense (sec.
6 of the bill and sec. 223 of the Code)............ 12
III. Votes of the Committee..........................................13
IV. Budget Effects of the Provision.................................14
V. Other Matters To Be Discussed Under the Rules of the House......21
VI. Changes in Existing Law Made by the Bill, as Reported...........22
VII. Dissenting Views................................................27
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE, ETC.
(a) Short Title.--This Act may be cited as the ``Health Savings
Accounts Improvements Act of 2012''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title, etc.
Sec. 2. Saver's credit for contributions to health savings accounts.
Sec. 3. Special rule for certain medical expenses incurred before
establishment of account.
Sec. 4. Allow both spouses to make catch-up contributions to the same
health savings account.
Sec. 5. Individuals eligible for veterans benefits for a service-
connected disability.
Sec. 6. Distributions by certain early retirees for health coverage
treated as qualified medical expense.
SEC. 2. SAVER'S CREDIT FOR CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNTS.
(a) Allowance of Credit.--Subsection (a) of section 25B of the
Internal Revenue Code of 1986 is amended by inserting ``aggregate
qualified HSA contributions and'' after ``so much of the''.
(b) Qualified HSA Contributions.--Subsection (d) of section 25B of
such Code is amended by redesignating paragraph (2) as paragraph (3)
and by inserting after paragraph (1) the following new paragraph:
``(2) Qualified hsa contributions.--The term `qualified HSA
contribution' means, with respect to any taxable year, any
contribution to a health savings account (as defined in section
223(d)(1)) if--
``(A) such contribution is allowable as a deduction
to the taxpayer under section 223(a) for such taxable
year, or
``(B) such contribution is made by an employer of the
taxpayer at the election of the taxpayer under a
cafeteria plan (as defined in section 125(d)) and is
not includible in the gross income of the taxpayer by
reason of section 125.''.
(c) Reporting of HSA Elective Contributions.--Paragraph (12) of
section 6051(a) of such Code is amended to read as follows:
``(12) the total amount contributed to health savings
accounts (as defined in section 223(d)) of the employee or the
employee's spouse and the portion of such total amount
contributed at the election of the employee under any cafeteria
plan (as defined in section 125(d)),''.
(d) Conforming Amendments.--Section 25B(d)(3) of such Code, as
redesignated by subsection (b), is amended--
(1) by striking the first sentence of subparagraph (A) and
inserting the following: ``The aggregate qualified retirement
savings contributions determined under paragraph (1) and
qualified HSA contributions determined under paragraph (2)
shall be reduced (but not below zero) by the aggregate
distributions received by the individual during the testing
period from any entity of a type to which contributions under
paragraph (1) or paragraph (2) (as the case may be) may be
made.'', and
(2) by inserting ``223(f)(1) or (3),'' after ``section
72(p),'' in subparagraph (C)(i).
(e) Effective Date.--The amendments made by this section shall apply
to taxable years beginning after December 31, 2012.
SEC. 3. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE
ESTABLISHMENT OF ACCOUNT.
(a) In General.--Paragraph (2) of section 223(d) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(D) 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 the date of the enactment of
this Act.
SEC. 4. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME
HEALTH SAVINGS ACCOUNT.
(a) In General.--Paragraph (5) of section 223(b) 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 amendment made by this section shall apply
to taxable years beginning after December 31, 2012.
SEC. 5. INDIVIDUALS ELIGIBLE FOR VETERANS BENEFITS FOR A SERVICE-
CONNECTED DISABILITY.
(a) In General.--Paragraph (1) of section 223(c) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Special rule for individuals eligible for
certain veterans benefits.--An individual shall not
fail to be treated as an eligible individual for any
period merely because the individual receives hospital
care or medical services under any law administered by
the Secretary of Veterans Affairs 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 months beginning after December 31, 2012.
SEC. 6. DISTRIBUTIONS BY CERTAIN EARLY RETIREES FOR HEALTH COVERAGE
TREATED AS QUALIFIED MEDICAL EXPENSE.
(a) In General.--Subparagraph (C) of section 223(d)(2) of the
Internal Revenue Code of 1986 is amended by striking ``or'' at the end
of clause (iii), by striking the period at the end of clause (iv) and
inserting ``, or'', and by adding at the end the following new clause:
``(v) in the case of an account beneficiary
who has attained age 55 but not the age
specified in section 1811 of the Social
Security Act, any group health plan (as defined
in section 5000(b)(1)) in which such account
beneficiary is enrolled by reason of being a
former employee or a surviving spouse of a
former employee.''.
(b) Effective Date.--The amendments made by this section shall apply
to amounts paid for coverage for periods after December 31, 2012.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 5858, as reported by the Committee on Ways
and Means, provides for various improvements to Health Savings
Accounts (``HSAs'') in order to make them more attractive to
various populations of consumers.
B. Background and Need for Legislation
In 2011, 13.5 million Americans maintained a Health Savings
Account (``HSA''), and the number of such accounts has been
growing by over 10 percent annually for several years.
According to The Mercer National Survey of Employer Sponsored
Plans 2011 report: ``This was the biggest one-year increase for
CDHPs [Consumer Directed Health Plans] since 2007. . . . With a
40 percent increase in the number of large employers offering
CDHPs in 2012, it seems safe to say that the future of CDHPs
has arrived.'' The strong, steady growth of HSAs indicates that
consumers value these accounts and CDHPs.
HSAs and CDHPs encourage good health and health care
policy. By encouraging individuals to plan, shop, and save for
their own health care needs, patients have more control over
their own health care. According to the Employee Benefits
Research Institute, individuals utilizing CDHPs are more likely
to use wellness programs. A recent study published in the May
2012 edition of Health Affairs estimated that CDHPs and HSAs
have the potential to save $57 billion in annual health care
costs. The authors of the Health Affairs article, ``Growth of
Consumer-Directed Health Plans to One-Half of All Employer-
Sponsored Insurance Could Save $57 Billion Annually,''
concluded that ``[o]ur findings that reductions in spending
occur through lower spending per episode, more use of generic
versus brand-name drugs, less use of specialists, and lower
inpatient hospitalization suggest that these plans do induce
changes in treatment choices and not just access.''
To support continued HSA growth, legislation is needed to
make these accounts more attractive to populations that, for
various reasons, receive limited benefits from existing
incentives.
C. Legislative History
Background
H.R. 5858 was introduced on May 29, 2012, and was referred
to the Committee on Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 5858 on May
31, 2012, and ordered the bill, as amended, favorably reported
(with a quorum being present).
Committee hearings
The impact of HSAs on health care and policy issues
surrounding health savings accounts have been discussed at six
committee hearings during the 112th Congress.
Full Committee Hearing on the Health Care Law's
Impact on Jobs, Employers, and the Economy (January 26, 2011)
Full Committee Hearing on the President's Fiscal
Year 2012 Budget Proposal with U.S. Department of Health and
Human Services Secretary Kathleen Sebelius (February 16, 2011)
Subcommittee on Select Revenue Measures Hearing on
the Tax-Related Provision of H.R. 3 (March 16, 2011)
Subcommittee on Oversight Hearing on Internal
Revenue Service Operations and the 2011 Tax Return Filing
Season (March 31, 2011)
Full Committee Hearing on How the Tax Code's
Burdens on Individuals and Families Demonstrate the Need for
Comprehensive Tax Reform (April 13, 2011)
Subcommittee on Health Hearing on The Individual
and Employer Mandates in the Democrats' Health Care Law (March
29, 2012)
II. EXPLANATION OF PROVISION
A. Saver's Credit for Contributions to Health Savings Accounts (sec. 2
of the bill and sec. 25B of the Code)
PRESENT LAW
Health savings accounts
General rules
An individual with a high deductible health plan (and no
other health plan other than a plan that provides certain
permitted insurance or permitted coverage) may establish a
health savings account (``HSA''). In general, HSAs provide tax-
favored treatment for current medical expenses as well as the
ability to save on a tax-favored basis for future medical
expenses. In general, HSAs are tax-exempt trusts or custodial
accounts created exclusively to pay for the qualified medical
expenses of the account holder and his or her spouse and
dependents. Thus, earnings on amounts in HSAs are not taxable.
Subject to limits, contributions to an HSA made by or on
behalf of an eligible individual are deductible by the
individual.\1\ Contributions made by an employer to an HSA are
excludible from income and wages for employment tax purposes.
For 2012, the maximum aggregate annual contribution that can be
made to an HSA is $3,100 in the case of self-only coverage and
$6,250 in the case of family coverage. The annual contribution
limits are increased by $1,000 for individuals who have
attained age 55 by the end of the taxable year (referred to as
``catch-up contributions''). An excise tax applies to
contributions in excess of the maximum contribution amount for
the HSA unless the excess contributions (and earnings allocable
thereto) are distributed no later than the due date for the
individual's Federal income tax return for the year.
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\1\Sec. 223(a).
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Distributions from an HSA for qualified medical expenses
are not includible in gross income. Distributions from an HSA
that are not used for qualified medical expenses are includible
in gross income and are subject to an additional tax of 20
percent. The 20 percent additional tax does not apply if the
distribution is made after death, disability, or the individual
attains the age of Medicare eligibility (i.e., age 65).
Cafeteria plan
A cafeteria plan is a separate written plan of an employer
under which all participants are employees, and participants
are permitted to choose among at least one permitted taxable
benefit (for example, current cash compensation) and at least
one qualified benefit (generally an employer-provided benefit
excludible from gross income, such as employer-provided health
coverage). If an employee receives a qualified benefit based on
his or her election between the qualified benefit and a taxable
benefit under a cafeteria plan, the qualified benefit generally
is not includible in gross income.\2\ The amount of the cash
compensation forgone pursuant to an election under a cafeteria
plan is generally referred to as a salary reduction
contribution. One of the choices that may be offered under a
cafeteria plan is the choice between cash compensation and the
employer making salary reduction contributions to an HSA.
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\2\Sec. 125(a).
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W-2 reporting requirements
An employer must include the amount of any contributions
made to an employee's HSA on the employee's Form W-2.\3\ There
is no requirement to separate on the Form W-2 the amount of any
salary reduction contribution to an HSA under a cafeteria plan
from any other contribution made by an employer to an HSA.
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\3\Sec. 6051(a)(12).
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Saver's credit
Present law provides a nonrefundable tax credit for
eligible taxpayers who make qualified retirement savings
contributions.\4\ Subject to AGI limits, the credit is
available to individuals who are 18 or older, other than
individuals who are full-time students or claimed as a
dependent on another taxpayer's return. The AGI limits for 2012
(as indexed for inflation) are $57,500 for married taxpayers
filing joint returns, $43,125 for head of household taxpayers,
and $28,750 for single taxpayers and married taxpayers filing
separate returns.
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\4\Sec. 25B.
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For purposes of the credit, qualified retirement savings
contributions include (1) elective deferrals to a section
401(k) plan, a section 403(b) plan, a governmental section 457
plan, a SIMPLE IRA, or a SEP; (2) contributions to a
traditional or Roth IRA; and (3) voluntary after-tax employee
contributions to a qualified retirement plan or annuity or a
section 403(b) plan. The maximum amount of qualified retirement
savings contributions taken into account for purposes of the
credit is $2,000. The amount of any contribution eligible for
the credit is reduced by distributions received by the taxpayer
(or by the taxpayer's spouse if the taxpayer files a joint
return) from any plan or IRA to which eligible contributions
can be made during the taxable year for which the credit is
claimed, the two taxable years prior to the year the credit is
claimed, and during the period after the end of the taxable
year for which the credit is claimed and prior to the due date
for filing the taxpayer's return for the year. Certain
distributions are disregarded for purposes of this rule, such
as corrective distributions of qualified retirement savings
contributions. Distributions that are rolled over to another
retirement plan do not affect the credit.
The credit is a percentage of the taxpayer's qualified
retirement savings contributions up to $2,000. The credit
percentage depends on the AGI of the taxpayer, varying from 10
percent to 50 percent, as shown in the table below. The credit
is in addition to any deduction or exclusion that would
otherwise apply with respect to the contribution. The credit
offsets minimum tax liability as well as regular tax liability.
TABLE 1.--CREDIT RATES FOR SAVER'S CREDIT (FOR 2012)
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Joint filers Heads of households All other filers Credit rate
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$0-$34,500........................... $0-$25,875............ $0-$17,250............ 50 percent.
$34,501-$37,500...................... $25,876-$28,125....... $17,251-$18,750....... 20 percent.
$37,501-$57,500...................... $28,126-$43,125....... $18,751-$28,750....... 10 percent.
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REASONS FOR CHANGE
The Committee believes that more should be done to
encourage low-income taxpayers to take advantage of HSAs. To
provide an additional tax benefit for contributions to HSAs for
low-income taxpayers, the bill makes contributions to HSAs
eligible contributions for the saver's credit.
EXPLANATION OF PROVISION
Under the provision, deductible contributions to an HSA
made by a taxpayer and salary reduction contributions under a
cafeteria plan made by an employer to an HSA for the taxpayer
qualify for the saver's credit. These HSA contributions are
aggregated with qualified retirement savings contributions to
determine the amount of credit to which a taxpayer is entitled.
Thus, the present law limit of $2,000 applies to aggregate
contributions (both HSA contributions and qualified retirement
savings contributions) taken into account in determining the
amount of the credit.
HSA contributions are generally subject to the same rules
as apply to qualified retirement savings contributions
including the reduction in the amount of qualified
contributions due to distributions received by the taxpayer (or
by the taxpayer's spouse if the taxpayer files a joint return
with the spouse) during certain periods. However, distributions
from an HSA used for qualified medical expenses are disregarded
in determining the amount by which qualified contributions are
reduced for distributions. Further, as in the case of
corrective distributions of qualified retirement savings
contributions, distributions of excess HSA contributions plus
allocable earnings (made before the due date of the taxpayer's
Federal income tax return) are also disregarded in determining
the amount by which qualified contributions are reduced for
distributions.
In order to identify salary reduction contributions to an
HSA under a cafeteria plan for purposes of the saver's credit,
the provision also includes a requirement that the employer
separately state on an employee's Form W-2 the amount of salary
reduction contributions made to an HSA under a cafeteria plan.
EFFECTIVE DATE
The provision applies for taxable years beginning after
December 31, 2012.
B. Special Rule for Certain Medical Expenses Incurred Before
Establishment of Health Savings Account (sec. 3 of the bill and sec.
223 of the Code)
PRESENT LAW
Health savings accounts
An individual with a high deductible health plan (and no
other health plan other than a plan that provides certain
permitted insurance or permitted coverage) may establish a
health savings account (``HSA'').\5\ In general, HSAs provide
tax-favored treatment for current medical expenses as well as
the ability to save on a tax-favored basis for future medical
expenses. In general, HSAs are tax-exempt trusts or custodial
accounts created exclusively to pay for the qualified medical
expenses of the account holder and his or her spouse and
dependents. Thus, earnings on amounts in HSAs are not taxable.
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\5\Sec. 223. Generally, a high deductible health plan is a health
plan that, for 2012, has an annual deductible that is at least $1,200
for self-only coverage or $2,400 for family coverage and that has an
out-of-pocket expense limit that is no more than $6,050 in the case of
self-only coverage and $12,100 in the case of family coverage. Out-of-
pocket expenses include deductibles, co-payments, and other amounts
(other than premiums) that the individual must pay for covered benefits
under the plan. A plan does not fail to be a high deductible health
plan by reason of failing to have a deductible for preventive care.
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Subject to limits, contributions to an HSA made by or on
behalf of an eligible individual are deductible by the
individual. Contributions to an HSA are excludible from income
and wages for employment tax purposes if made by the employer.
For 2012, the maximum aggregate annual contribution that can be
made to an HSA is $3,100 in the case of self-only coverage and
$6,250 in the case of family coverage. The annual contribution
limits are increased by $1,000 for individuals who have
attained age 55 by the end of the taxable year (referred to as
``catch-up contributions''). Contributions, including catch-up
contributions, cannot be made once an individual is enrolled in
Medicare.
Distributions from an HSA for qualified medical expenses
are not includible in gross income. Distributions from an HSA
that are not used for qualified medical expenses are includible
in gross income and are subject to an additional tax of 20
percent. The 20 percent additional tax does not apply if the
distribution is made after death, disability, or the individual
attains the age of Medicare eligibility (i.e., age 65).
In order for a distribution from as an HSA to be excludible
as a payment for a qualified medical expense, the medical
expense must be incurred on or after the date that the HSA is
established.\6\ Thus, a distribution from an HSA is not
excludible as payment used for a qualified medical expense if
the medical expense is incurred after a taxpayer enrolls in a
high deductible health plan but before the taxpayer establishes
an HSA.
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\6\Q&A-26 of Notice 2004-2, 2004-1 C.B. 269.
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REASONS FOR CHANGE
The Committee continues to believe that high deductible
health plans and the related HSAs will help reduce health care
costs. The Committee has identified certain cases where it
believes that the operation of HSAs can be improved. One such
case involves the typical lag between obtaining coverage under
a high deductible health plan and the establishment of an HSA.
Recognizing this lag, the Committee believes it is
appropriate to allow medical expenses incurred after coverage
is obtained under a HDHP but prior to the establishment of the
HSA to be paid for from the HSA and to be excludible from
income, provided the HSA is established within 60 days of
obtaining coverage under a HDHP.
EXPLANATION OF PROVISION
Under the provision, if an HSA is established during the
60-day period beginning on the date that an individual's
coverage under a high deductible health plan begins, then the
HSA is treated as having been established on the date that such
coverage begins for purposes of determining if an expense
incurred is a qualified medical expense. Thus, if a taxpayer
establishes an HSA within 60 days of the date that the
taxpayer's coverage under a high deductible health plan begins,
any distribution from an HSA used as a payment for a medical
expense incurred during that 60-day period after the high
deductible health plan coverage began is excludible from gross
income as a payment used for a qualified medical expense even
though the expense was incurred before the date that the HSA
was established.
EFFECTIVE DATE
The provision applies with respect to high deductible
health plan coverage commencing after the date of enactment.
C. Allow Both Spouses To Make Catch-Up Contributions to the Same HSA
(sec. 4 of the bill and sec. 223 of the Code)
PRESENT LAW
An individual with a high deductible health plan and no
other health plan (other than a plan that provides certain
permitted insurance or permitted coverage) may establish a
health savings account (``HSA''). In general, HSAs provide tax-
favored treatment for current medical expenses as well as the
ability to save on a tax-favored basis for future medical
expenses. In general, HSAs are tax-exempt trusts or custodial
accounts created exclusively to pay for the qualified medical
expenses of the account holder and his or her spouse and
dependents. Thus, earnings on amounts in HSAs are not taxable.
Subject to limits, contributions to an HSA made by or on
behalf of an eligible individual are deductible in determining
adjusted gross income of the individual (that is, an ``above-
the-line'' deduction). Contributions to an HSA by an employer
for an employee (including salary reduction contributions made
through a cafeteria plan) are excludible from income and from
wages for employment tax purposes. Distributions from an HSA
for qualified medical expenses are not includible in gross
income. Distributions from an HSA that are not used for
qualified medical expenses are includible in gross income and
are subject to an additional tax of 20 percent. The 20 percent
additional tax does not apply if the distribution is made after
death, disability, or the individual attains the age of
Medicare eligibility (i.e., age 65).
For 2012, the maximum aggregate annual contribution that
can be made to an HSA is $3,100 in the case of self-only
coverage and $6,250 in the case of family coverage.\7\ The
annual contribution limits are increased by $1,000 for an
eligible individual who has attained age 55 by the end of the
taxable year (referred to as ``catch-up contributions'').\8\
All HSA contributions are aggregated for purposes of the
maximum annual contribution limit, and contributions to Archer
MSAs reduce the annual HSA contribution limit. The annual HSA
contribution limit for an individual is generally the sum of
the limits determined separately for each month (1/12 of the
maximum aggregate annual contribution amount), based on the
individual's status and health plan coverage as of the first
day of the month.\9\
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\7\Under section 4973, an excise tax applies to contributions in
excess of the maximum contribution amount for the HSA. The excise tax
generally is equal to six percent of the cumulative amount of excess
contributions that are not distributed from the HSA.
\8\Contributions, including catch-up contributions, cannot be made
once an individual is enrolled in Medicare.
\9\Under a special rule, an individual who is an eligible
individual during the last month of a taxable year is treated as having
been an eligible individual for every month in the taxable year for
purposes of computing the amount that may be contributed to the HSA for
the year. Thus, the individual may contribute the maximum aggregate
annual contribution amount. However, if the individual ceases to be an
eligible individual within a certain period, contributions that could
not otherwise have been made are generally includible in income and are
subject to a 10-percent additional tax.
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If eligible individuals are married to each other and
either spouse has family coverage, both spouses are treated as
having only family coverage, so that the annual contribution
limit for family coverage applies. This annual contribution
limit (without regard to any catch-up contribution amounts) is
reduced by any Archer MSA contributions and then divided
equally between the spouses unless they agree on a different
division.
If both spouses of a married couple are eligible
individuals, each may contribute to an HSA, but they cannot
have a joint HSA.\10\ Under the rule described above, however,
the spouses may divide their annual contribution limit by
allocating the entire amount to one spouse to be contributed to
that spouse's HSA.\11\ This rule does not apply to catch-up
contribution amounts, though. Thus, if both spouses are at
least age 55 and eligible to make catch-up contributions, each
must make the catch-up contribution to his or her own HSA.\12\
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\10\Notice 2004-50, 2004-2 C.B. 196, Q&A-63.
\11\Notice 2004-50, Q&A-32. Funds from that HSA can be used to pay
qualified medical expenses for either spouse on a tax-free basis.
Notice 2004-50, Q&A-36.
\12\Notice 2008-59, 2008-2 C.B. 123, Q&A-22.
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reasons for change
The Committee has identified certain cases where it
believes that the operation of HSAs can be improved. One such
case involves the present-law obstacle that prevents both
otherwise eligible spouses from making catch-up contributions
if they have only one HSA account. The Committee believes the
efficiency of HSAs could be improved by allowing both eligible
spouses to make catch up contributions to a single HSA, rather
than the present law requirement that they each must have their
own HSA in order to make catch up contributions.
EXPLANATION OF PROVISION
Under the provision, if both spouses of a married couple
are eligible for catch-up contributions and either has family
coverage, the annual contribution limit that can be divided
between them includes both catch-up contribution amounts. Thus,
for example, they can agree that their combined catch-up
contribution amount is allocated to one spouse to be
contributed to that spouse's HSA. In other cases, as under
present law, a spouse's catch-up contribution amount is not
eligible for division between the spouses; the catch-up
contribution must be made to the HSA of that spouse.
EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2012.
D. Individuals Eligible for Veterans Benefits for a Service-Connected
Disability (sec. 5 of the bill and sec. 223 of the Code)
PRESENT LAW
An individual with a high deductible health plan and no
other health plan (other than a plan that provides certain
permitted insurance or permitted coverage) is generally
eligible to make deductible contributions to a health savings
account (``HSA''), subject to certain limits (an ``eligible
individual''). HSA contributions made on behalf of an eligible
individual by an employer are excludible from income and wages
for employment tax purposes. Eligibility for HSA contributions
is generally determined monthly, based on the individual's
status and health plan coverage as of the first day of the
month. Contributions to an HSA cannot be made once an
individual is enrolled in Medicare.
An individual with other coverage in addition to a high
deductible health plan is still eligible to make HSA
contributions if such other coverage is permitted insurance or
permitted coverage. Permitted insurance is: (1) insurance if
substantially all of the coverage provided under such insurance
relates to (a) liabilities incurred under worker's compensation
law, (b) tort liabilities, (c) liabilities relating to
ownership or use of property (e.g., auto insurance), or (d)
such other similar liabilities as the Secretary of Treasury may
prescribe by regulations; (2) insurance for a specified disease
or illness; and (3) insurance that provides a fixed payment per
day (or other period) for hospitalization. Permitted coverage
is coverage (whether provided through insurance or otherwise)
for accidents, disability, dental care, vision care, or long-
term care. Coverage under certain health flexible spending
arrangements or health reimbursement arrangements is also
permitted.
Under IRS guidance, an otherwise eligible individual who is
eligible for medical benefits under a program of the Department
of Veterans Affairs (``VA''), but who has not actually received
such benefits during the preceding three months, continues to
be an eligible individual.\13\ However, an individual is not
eligible to make HSA contributions for any month if the
individual has received VA medical benefits at any time during
the previous three months unless the benefits are for
permissible coverage or preventive care.\14\
---------------------------------------------------------------------------
\13\Notice 2004-50, 2004-2 C.B. 196, Q&A-5.
\14\Notice 2004-50, Q&A-5; Notice 2008-59, 2008-2 C.B. 123, Q&A-9.
---------------------------------------------------------------------------
REASONS FOR CHANGE
The Committee believes the present-law HSA eligibility
rules inappropriately discriminate against those who avail
themselves of VA medical benefits for a service-connected
disability. The Committee therefore believes it is appropriate
to allow otherwise eligible individuals to contribute to an HSA
regardless of whether they receive VA medical benefits for a
service-connected disability.
EXPLANATION OF PROVISION
Under the provision, an individual does not fail to be
treated as an eligible individual for any period merely because
the individual receives VA medical benefits for a service-
connected disability.
The provision does not otherwise change the application of
the present-law rule for individuals eligible for VA medical
benefits. Thus, an otherwise eligible individual who is
eligible for VA medical benefits, but who has not actually
received such benefits during the preceding three months,
continues to be an eligible individual. However, an individual
is not eligible to make HSA contributions for any month if the
individual has received VA medical benefits at any time during
the previous three months unless the benefits are for
permissible coverage or preventive care (or for a service-
connected disability).
EFFECTIVE DATE
The provision applies to months beginning after December
31, 2012.
E. Distributions by Certain Early Retirees for Health Coverage Treated
as Qualified Medical Expense (sec. 6 of the bill and sec. 223 of the
Code)
PRESENT LAW
An individual with a high deductible health plan and no
other health plan (other than a plan that provides certain
permitted insurance or permitted coverage) may establish a
health savings account (``HSA''). In general, HSAs are tax-
exempt trusts or custodial accounts created exclusively to pay
for the qualified medical expenses of the account holder and
his or her spouse and dependents.
Distributions from an HSA for qualified medical expenses
are not includible in gross income.\15\ Distributions from an
HSA that are not used for qualified medical expenses are
includible in gross income and are subject to an additional tax
of 20 percent. The 20-percent additional tax does not apply if
the distribution is made after death, disability, or the
individual attains the age of Medicare eligibility (i.e., age
65).
---------------------------------------------------------------------------
\15\Amounts in an HSA can be used for qualified medical expenses
even if the individual is not currently eligible to make HSA
contributions.
---------------------------------------------------------------------------
Payments for insurance are generally not qualified medical
expenses that can be paid from an HSA on a tax-free basis,
subject to certain exceptions. For example, an exception
applies for health insurance expenses, other than for a
Medicare supplemental policy, of an HSA holder who is at least
age 65.
REASONS FOR CHANGE
The Committee is concerned about the growing medical care
costs of a growing population of early retirees, some of whom
may have involuntarily retired early and are unable to find new
employment in the current jobs environment. In order to help
defray the medical insurance costs of these taxpayers, the
Committee believes that it is appropriate to expand the
definition of HSA eligible medical expenses to include expenses
for coverage under a group health plan in which the HSA holder
is enrolled by reason of being a former employee or a surviving
spouse of a former employee.
EXPLANATION OF PROVISION
Under the provision, in the case of an HSA holder who is at
least age 55 but not age 65, qualified medical expenses include
expenses for coverage under a group health plan (that is, an
employer-sponsored health plan) in which the HSA holder is
enrolled by reason of being a former employee or a surviving
spouse of a former employee. Thus, in that case, expenses for
such coverage can be paid from an HSA on a tax-free basis.
EFFECTIVE DATE
The provision is effective for amounts paid for coverage
for periods after December 31, 2012.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the votes of the Committee on Ways and Means in its
consideration of H.R. 5858.
MOTION TO REPORT RECOMMENDATION
The bill H.R. 5858, as amended, was ordered favorably
reported by a roll call vote of 21 yeas to 7 nays (with a
quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ ........ ........ .........
Mr. Herger..................... X ........ ......... Mr. Rangel....... ........ ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Stark........ ........ X .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Neal......... ........ ........ .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... ........ ........ .........
Mr. Davis...................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Gerlach.................... X ........ ......... Mr. Kind......... X ........ .........
Mr. Price...................... X ........ ......... Mr. Pascrell..... ........ ........ .........
Mr. Buchanan................... X ........ ......... Ms. Berkley...... X ........ .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... ........ ........ .........
Mr. Schock..................... X ........ .........
Ms. Jenkins.................... X ........ .........
Mr. Paulsen.................... X ........ .........
Mr. Marchant................... ........ ........ .........
Mr. Berg....................... X ........ .........
Ms. Black...................... ........ ........ .........
Mr. Reed....................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE PROVISION
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the revenue provisions
of the bill, H.R. 5858, as reported.
The bill is estimated to have the following effects on
Federal budget receipts for fiscal years 2013-2022:
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that the revenue-reducing tax
provisions involve increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by the CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 4, 2012.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5858, the Health
Savings Accounts Improvements Act of 2012.
If you wish further details on this estimate, we will be
pleased to provide them. The CB0 staff contact is Kalyani
Parthasarathy.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 5858--Health Savings Accounts Improvements Act of 2012
Summary: H.R. 5858 would make several changes to the tax
treatment of health savings accounts (HSAs). The staff of the
Joint Committee on Taxation (JCT) estimates that these changes
together would decrease revenues by $173 million in 2013, about
$1.8 billion over the 2013-2017 period, and $4.7 billion over
the 2013-2022 period. Pay-as-you-go procedures apply because
enacting the legislation would affect revenues.
The bill would allow certain former employees to use HSA
contributions for their health insurance expenses, allow
spouses to allocate their catch-up contributions between their
HSAs, permit certain deductible HSA contributions to be
eligible for a saver's tax credit, allow individuals recently
receiving veterans benefits for a service-connected disability
to make HSA contributions, and allow HSA contributions to pay
for certain expenses incurred before the establishment of the
account.
JCT has determined that the provisions of H.R. 5858 contain
no intergovernmental or private-sector mandates as defined in
the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated
budgetary impact of the Health Savings Accounts Improvements
Act of 2012 is shown in the following table.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------------------------------------------------------------------------------
2012- 2012-
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2017 2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Distributions by Former Employees................ 0 -96 -144 -162 -179 -196 -212 -228 -243 -255 -266 -776 -1,981
Spousal Catch-up Contributions................... 0 -59 -127 -144 -160 -175 -190 -204 -217 -229 -239 -665 -1,745
Saver's Credit Eligibility....................... 0 -3 -29 -39 -44 -54 -56 -64 -70 -73 -75 -169 -507
Veterans' Eligibility............................ 0 -11 -18 -21 -25 -30 -35 -41 -47 54 -61 -105 -343
Previous Medical Expenses........................ 0 -4 -9 -10 -11 -12 -13 -14 -15 -15 -16 -47 -120
Total Changes.................................... 0 -173 -327 -376 -419 -467 -506 -551 -592 -626 -657 -1,762 -4,696
On-budget.................................... 0 -166 -317 -365 -405 -451 -488 -531 -570 -602 -630 -1,704 -4,527
Off-budgeta.................................. 0 -7 -10 -11 -14 -16 -18 -20 -22 -24 -27 -58 -169
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.
aOff-budget revenues result from changes in Social Security payroll tax receipts, which are categorized as off-budget.
Source: Staff of the Joint Committee on Taxation.
Basis of estimate: Under current law, tax-deductible
contributions to HSAs generally cannot be used to pay health
insurance expenses. H.R. 5858 would allow such use for an HSA
account holder between the ages of 55 and 64 who is enrolled in
an employer-sponsored health plan as a former employee or a
surviving spouse of a former employee. JCT estimates that this
proposal would decrease revenues by $96 million in 2013, $776
million over the 2013-2017 period, and about $2.0 billion over
the 2013-2022 period. Some of those revenue losses--$53 million
over the 2013-2022 period--would be off-budget.
Eligible individuals who are at least age 55 at the end of
the taxable year may make catch-up contributions to their HSAs,
which are amounts above the normal contribution limits, under
current law. H.R. 5858 would permit catch-up contributions from
either spouse to be allocable to the HSA of one spouse in the
same manner as is allowed for other annual contributions. JCT
estimates that this change would decrease revenues by $59
million in 2013, $665 million over the 2013-2017 period, and
about $1.7 billion over the 2013-2022 period.
Current law provides a saver's tax credit to individuals
who make qualified retirement savings contributions, and whose
annual gross income is under certain thresholds. H.R. 5858
would permit tax-deductible contributions to an HSA by such
individuals to also be eligible for this saver's credit. The
sum of such HSA contributions and qualified retirement savings
contributions would still be subject to the current law limit
of $2,000. JCT estimates that the provision would result in a
revenue loss of $3 million in 2013, $169 million over the 2013-
2017 period, and $507 million over the 2013-2022 period.
H.R. 5858 also would allow individuals to remain eligible
to make deductible HSA contributions despite recently receiving
medical benefits from the Department of Veterans Affairs for a
service-connected disability. Under current law, such
individuals would not be eligible to make contributions to an
HSA if they had received such benefits in the previous three
months. JCT estimates that this change would decrease revenues
by $11 million in 2013, $105 million over the 2013-2017 period,
and $343 million over the 2013-2022 period. Some of those
revenue losses--$99 million over the 2013-2022 period--would be
off-budget.
H.R. 5858 would allow certain contributions to an HSA to
pay for expenses incurred after the taxpayer entered into a
high deductible health plan but before the establishment of the
account. Under current law, the medical expense must be
incurred on or after the date the HSA is established in order
to remain eligible for reimbursement. H.R. 5858 would remove
this requirement so long as the expense was incurred within 60
days of the date the taxpayer established the HSA. JCT
estimates that this provision would decrease revenues by $4
million in 2013, $47 million over the 2013-2017 period, and
$120 million over the 2013-2022 period. Some of those revenue
losses--$17 million over the 2013-2022 period--would be off-
budget.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table. Only on-budget changes to outlays or revenues
are subject to pay-as-you-go procedures.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5858, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MAY 31, 2012
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-2017 2012-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICIT
Statutory Pay-As-You-Go Impact................... 0 166 317 365 405 451 488 531 570 602 630 1,704 4,527
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: JCT has
determined that the provisions of H.R. 5858 contain no
intergovernmental or private-sector mandates as defined in
UMRA.
Estimate prepared by: Kalyani Parthasarathy.
Estimate approved by: Frank Sammartino, Assistant Director
for Tax Analysis.
D. Macroeconomic Impact Analysis
In compliance with clause 3(h)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made by the Joint Committee on Taxation with respect to the
provisions of the bill amending the Internal Revenue Code of
1986: the effects of the bill on economic activity are so small
as to be incalculable within the context of a model of the
aggregate economy.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 5858 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for any
measure that authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
This Committee has determined that the reported bill does
not contain any Federal private sector mandates within the
meaning of Public Law No. 104-4, the Unfunded Mandates Reform
Act of 1995. The costs required to comply with each Federal
private sector mandate generally are no greater than the
aggregate estimated budget effects of the provision.
The Committee has determined that the bill does not impose
a private sector mandate, and has determined that the bill does
not impose a Federal intergovernmental mandate on State, local,
or tribal governments.
D. Applicability of House Rule XXI 5(b)
Clause 5(b) of rule XXI of the Rules of the House of
Representatives provides, in part, that ``A bill or joint
resolution, amendment, or conference report carrying a Federal
income tax rate increase may not be considered as passed or
agreed to unless so determined by a vote of not less than
three-fifths of the Members voting, a quorum being present.''
The Committee has carefully reviewed the provisions of the
bill, and states that the provisions of the bill do not involve
any Federal income tax rate increases within the meaning of the
rule.
E. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the
Joint Committee on Taxation (in consultation with the Internal
Revenue Service and the Department of the Treasury) to provide
a tax complexity analysis. The complexity analysis is required
for all legislation reported by the Senate Committee on
Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code
and has widespread applicability to individuals or small
businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Code and that
have ``widespread applicability'' to individuals or small
businesses within the meaning of the rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
INTERNAL REVENUE CODE OF 1986
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter A--Determination of Tax Liability
* * * * * * *
PART IV--CREDITS AGAINST TAX
* * * * * * *
Subpart A--Nonrefundable Personal Credits
* * * * * * *
SEC. 25B. ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS BY CERTAIN
INDIVIDUALS.
(a) Allowance of Credit.--In the case of an eligible
individual, there shall be allowed as a credit against the tax
imposed by this subtitle for the taxable year an amount equal
to the applicable percentage of so much of the aggregate
qualified HSA contributions and qualified retirement savings
contributions of the eligible individual for the taxable year
as do not exceed $2,000.
* * * * * * *
(d) Qualified Retirement Savings Contributions.--For purposes
of this section--
(1) * * *
(2) Qualified hsa contributions.--The term
``qualified HSA contribution'' means, with respect to
any taxable year, any contribution to a health savings
account (as defined in section 223(d)(1)) if--
(A) such contribution is allowable as a
deduction to the taxpayer under section 223(a)
for such taxable year, or
(B) such contribution is made by an employer
of the taxpayer at the election of the taxpayer
under a cafeteria plan (as defined in section
125(d)) and is not includible in the gross
income of the taxpayer by reason of section
125.
[(2)] (3) Reduction for certain distributions.--
(A) In general.--[The qualified retirement
savings contributions determined under
paragraph (1) shall be reduced (but not below
zero) by the aggregate distributions received
by the individual during the testing period
from any entity of a type to which
contributions under paragraph (1) may be made.]
The aggregate qualified retirement savings
contributions determined under paragraph (1)
and qualified HSA contributions determined
under paragraph (2) shall be reduced (but not
below zero) by the aggregate distributions
received by the individual during the testing
period from any entity of a type to which
contributions under paragraph (1) or paragraph
(2) (as the case may be) may be made. The
preceding sentence shall not apply to the
portion of any distribution which is not
includible in gross income by reason of a
trustee-to-trustee transfer or a rollover
distribution.
* * * * * * *
(C) Excepted distributions.--There shall not
be taken into account under subparagraph (A)--
(i) any distribution referred to in
section 72(p), 223(f)(1) or (3),
401(k)(8), 401(m)(6), 402(g)(2),
404(k), or 408(d)(4), and
* * * * * * *
Subchapter B--Computation of Taxable Income
* * * * * * *
PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS
* * * * * * *
SEC. 223. HEALTH SAVINGS ACCOUNTS.
(a) * * *
(b) Limitations.--
(1) * * *
* * * * * * *
[(5) Special rule for married individuals.--In the
case of individuals who are married to each other, if
either spouse has family coverage--
[(A) both spouses shall be treated as having
only such family coverage (and if such spouses
each have family coverage under different
plans, as having the family coverage with the
lowest annual deductible), and
[(B) the limitation under paragraph (1)
(after the application of subparagraph (A) and
without regard to any additional contribution
amount under paragraph (3))--
[(i) shall be reduced by the
aggregate amount paid to Archer MSAs of
such spouses for the taxable year, and
[(ii) after such reduction, shall be
divided equally between them unless
they agree on a different division.]
(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.
* * * * * * *
(c) Definitions and Special Rules.--For purposes of this
section--
(1) Eligible individual.--
(A) * * *
* * * * * * *
(C) Special rule for individuals eligible for
certain veterans benefits.--An individual shall
not fail to be treated as an eligible
individual for any period merely because the
individual receives hospital care or medical
services under any law administered by the
Secretary of Veterans Affairs for a service-
connected disability (within the meaning of
section 101(16) of title 38, United States
Code).
* * * * * * *
(d) Health Savings Account.--For purposes of this section--
(1) * * *
(2) Qualified medical expenses.--
(A) * * *
* * * * * * *
(C) Exceptions.--Subparagraph (B) shall not
apply to any expense for coverage under--
(i) * * *
* * * * * * *
(iii) a health plan during a period
in which the individual is receiving
unemployment compensation under any
Federal or State law, [or]
(iv) in the case of an account
beneficiary who has attained the age
specified in section 1811 of the Social
Security Act, any health insurance
other than a medicare supplemental
policy (as defined in section 1882 of
the Social Security Act)[.], or
(v) in the case of an account
beneficiary who has attained age 55 but
not the age specified in section 1811
of the Social Security Act, any group
health plan (as defined in section
5000(b)(1)) in which such account
beneficiary is enrolled by reason of
being a former employee or a surviving
spouse of a former employee.
(D) 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.
* * * * * * *
Subtitle F--Procedure and Administration
* * * * * * *
CHAPTER 61--INFORMATION AND RETURNS
* * * * * * *
Subchapter A--Returns and Records
* * * * * * *
PART III--INFORMATION RETURNS
* * * * * * *
Subpart C--Information Regarding Wages Paid Employees
SEC. 6051. RECEIPTS FOR EMPLOYEES.
(a) Requirement.--Every person required to deduct and
withhold from an employee a tax under section 3101 or 3402, or
who would have been required to deduct and withhold a tax under
section 3402 (determined without regard to subsection (n)) if
the employee had claimed no more than one withholding
exemption, or every employer engaged in a trade or business who
pays remuneration for services performed by an employee,
including the cash value of such remuneration paid in any
medium other than cash, shall furnish to each such employee in
respect of the remuneration paid by such person to such
employee during the calendar year, on or before January 31 of
the succeeding year, or, if his employment is terminated before
the close of such calendar year, within 30 days after the date
of receipt of a written request from the employee if such 30-
day period ends before January 31, a written statement showing
the following:
(1) * * *
* * * * * * *
[(12) the amount contributed to any health savings
account (as defined in section 223(d)) of such employee
or such employee's spouse,]
(12) the total amount contributed to health savings
accounts (as defined in section 223(d)) of the employee
or the employee's spouse and the portion of such total
amount contributed at the election of the employee
under any cafeteria plan (as defined in section
125(d)),
* * * * * * *
VII. DISSENTING VIEWS
We voted against this bill because it costs $4.7 billion in
lost tax revenues and this revenue loss is not offset. When
combined with the three other health care measures under
consideration at the Markup, the total cost for all bills is
nearly $42 billion and the Majority has not set forth any
options to pay for this cost. Not one option was set forth at
the Markup. It is simply unacceptable in this time of fiscal
austerity to not pay the cost of these bills. It is
irresponsible to add nearly $42 billion to the deficit.
This Markup continues the Majority's attempt to repeal the
Affordable Care Act (ACA) without offering a replacement. In
January of 2009, the Majority voted to repeal and replace the
ACA. If their replacement solution is expanded access to Health
Flexible Spending Accounts and Health Savings Accounts, then it
falls far short of the needs of American families. Neither
Health Flexible Spending Accounts nor Health Savings Accounts
provide health coverage to participants. They only provide tax
breaks for certain health costs. They are not real solutions to
the problems facing our nation with respect to health care and
insurance coverage.
Sander M. Levin.
Fortney Pete Stark.
Jim McDermott.
John Lewis.
Xavier Becerra.
Earl Blumenauer.