[House Report 116-401]
[From the U.S. Government Publishing Office]


116th Congress    }                                             {  Report
                         HOUSE OF REPRESENTATIVES
 2d Session       }                                             { 116-401

======================================================================



 
                  INHALER COVERAGE AND ACCESS NOW ACT

                                _______
                                

 February 21, 2020.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Neal, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                        [To accompany H.R. 4716]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4716) to amend the Internal Revenue Code of 1986 to 
provide a safe harbor for high deductible health plans without 
a deductible for certain inhalers, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
 I. SUMMARY AND BACKGROUND............................................1
        A. Purpose and Summary...................................     1
        B. Background and Need for Legislation...................     1
        C. Legislative History...................................     3
II. EXPLANATION OF THE BILL...........................................4
        A. Safe Harbor for High Deductible Health Plans Without 
            Deductible for Certain Inhalers (sec. 2 of the bill 
            and sec. 223 of the Code)............................     4
III.VOTES OF THE COMMITTEE............................................6

IV. BUDGET EFFECTS OF THE BILL........................................6
        A. Committee Estimate of Budgetary Effects...............     6
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures Budget Authority........................     8
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................     8
 V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......11
        A. Committee Oversight Findings and Recommendations......    11
        B. Statement of General Performance Goals and Objectives.    11
        C. Information Relating to Unfunded Mandates.............    12
        D. Applicability of House Rule XXI, Clause 5(b)..........    12
        E. Tax Complexity Analysis...............................    12
        F. Congressional Earmarks, Limited Tax Benefits, and 
            Limited Tariff Benefits..............................    12
        G. Duplication of Federal Programs.......................    12
        H. Hearings..............................................    13
VI. CHANGES IN EXISTING LAW MADE BY THE BILL.........................13

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Inhaler Coverage and Access Now Act'' 
or as the ``I CAN Act''.

SEC. 2. SAFE HARBOR FOR HIGH DEDUCTIBLE HEALTH PLANS WITHOUT DEDUCTIBLE 
                    FOR CERTAIN INHALERS.

  (a) In General.--Section 223(c)(2)(C) of the Internal Revenue Code of 
1986 is amended--
          (1) by striking ``for preventive care'' and inserting ``for 
        one or more of the following:
                          ``(i) Preventive care'', and
          (2) by adding at the end the following new clause:
                          ``(ii) Inhalers for treatment of any chronic 
                        lung disease (and any medicine or drug which is 
                        delivered through such inhaler for treatment of 
                        such disease).''.
  (b) Conforming Amendment.--The heading for section 223(c)(2)(C) of 
such Code is amended by striking ``preventive care deductible'' and 
inserting ``certain deductibles''.
  (c) Effective Date.--The amendments made by this section shall apply 
to months beginning after the date of the enactment of this Act.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 4716, the ``I CAN Act,'' as amended and 
ordered reported by the Committee on Ways and Means on October 
17, 2019, provides for coverage under a high deductible health 
plan not requiring a deductible of inhalers for treatment of 
any chronic lung disease, including asthma (and any medicine or 
drug which is delivered through such inhalers for treatment of 
such diseases).

                 B. Background and Need for Legislation

    High Deductible Health Plans (HDHPs) represent a growing 
percentage of plans offered on the individual and group market. 
HDHPs have defined minimum deductibles and maximum out-of-
pocket limits. HDHPs are often, but not always, paired with a 
tax-free 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, an HSA is a tax-exempt account created 
exclusively to pay for qualified medical expenses. Employers 
are increasingly offering HSA-eligible HDHPs as a way to lower 
their health care spending. Proponents argue this benefit 
design leads to increased consumer engagement in their health 
care and greater sensitivity to prices in the health care 
market. However even with HSAs available, greater deductibles 
lead to greater cost for consumers and an additional barrier to 
care.
    To use an HSA associated with a HDHP, the plan is 
prohibited from offering coverage below the deductible (i.e., 
first dollar coverage) of services or benefits meant to treat 
``an existing illness, injury or condition.'' However, an HDHP 
may offer preventive care, such as mammography and 
immunizations, without a deductible. Recognizing that consumers 
often delay care because of higher deductibles, many 
researchers have recommended offering coverage for chronic 
conditions below the deductible. While such actions run counter 
to the original intent of HDHPs, they are helpful to 
individuals facing rising health care costs, especially those 
individuals with consistent health care spending, and generally 
improve health outcomes because individuals have easier access 
to much needed treatment. Inhalers for treatment of chronic 
lung disease is one such pre-deductible service that has been 
identified as providing cost savings and improved health 
outcomes for individuals with access to such treatments.

                         C. Legislative History


Background

    H.R. 4716, the ``Inhaler Coverage and Access Now Act'' or 
``I CAN Act,'' was introduced on October 17, 2019 and was 
referred to the Committee on Ways and Means.

Committee hearings

    The Committee on Ways and Means Subcommittee on Health held 
a hearing on Lowering Costs and Expanding Access to Health Care 
through Consumer-Directed Health Plans on June 6, 2018. The 
witnesses for this hearing were Roy Ramthun, President and 
Founder of Ask Mr. HSA Service; Matt Eyles, President and CEO 
of America's Health Insurance Plans; Jody Dietel, Chief 
Compliance Officer at WageWorks; and Dr. Sherry Glied, Dean of 
New York University's Robert F. Wagner Graduate School of 
Public Service.
    The Committee on Ways and Means held a hearing on The 
Rising Costs of Prescription Drugs on February 12, 2019. The 
witnesses for this hearing were Ola Ojewumi, Founder of Project 
ASCEND and patient; Mark E. Miller, PhD, Executive Vice 
President of Health Care Arnold Ventures; Rachel Sachs, 
Associate Professor of Law, Washington University in St. Louis; 
Alan Reuther, Legislative Consultant, UAW Retiree Medical 
Benefits Trust; and Joseph R. Antos, PhD, Wilson H. Taylor 
Scholar In Health Care and Retirement Policy with the American 
Enterprise Institute.
    The Committee on Ways and Means held a hearing on Investing 
in the U.S. Health System by Lowering Drug Prices, Reducing 
Out-of-Pocket costs, and Improving Medicare Benefits on October 
17, 2019. The witnesses for this hearing were Samantha Reid, a 
Crohn's Disease patient; Catherine Alicia Georges, National 
Volunteer President for AARP; Mark E. Miller, PhD, Executive 
Vice President of Health Care at Arnold Ventures; Judy Feder, 
PhD, Professor and former Dean of Georgetown University's 
McCourt School of Public Policy; and Benedic N. Ippolito, PhD, 
Research Fellow at the American Enterprise Institute.

Committee action

    The Committee on Ways and Means marked up H.R. 4716 on 
October 23, 2019, and ordered the bill, as amended, favorably 
reported to the House of Representatives by voice vote (with a 
quorum being present).

                      II. EXPLANATION OF THE BILL


A. Safe Harbor for High Deductible Health Plans Without Deductible for 
     Certain Inhalers (sec. 2 of the bill and sec. 223 of the Code)


                              PRESENT LAW

Health savings accounts

    An individual may establish a health savings account 
(``HSA'') only if the individual is covered under a plan that 
meets the requirements for a high deductible health plan, as 
described below. 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, an 
HSA is a tax-exempt trust or custodial account created 
exclusively to pay for the qualified medical expenses of the 
account holder and his or her spouse and dependents.
    Within limits,\1\ 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 employment taxes if made by the employer. Earnings in HSAs 
are not taxable. 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 (age 65).
---------------------------------------------------------------------------
    \1\For 2019, the basic limit on annual contributions that can be 
made to an HSA is $3,500 in the case of self-only coverage and $7,000 
in the case of family coverage. The basic annual contributions 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).
---------------------------------------------------------------------------

High deductible health plans

    A high deductible health plan is a health plan that has an 
annual deductible which is not less than $1,350 (for 2019) for 
self-only coverage and twice this amount for family coverage, 
and for which the sum of the annual deductible and other annual 
out-of-pocket expenses (other than premiums) for covered 
benefits does not exceed $6,750 (for 2019) for self-only 
coverage and twice this amount for family coverage.\2\ These 
dollar thresholds are subject to inflation adjustment, based on 
chained CPI.\3\
---------------------------------------------------------------------------
    \2\Sec. 223(c)(2).
    \3\Sec. 223(g).
---------------------------------------------------------------------------
    An individual who is covered under a high deductible health 
plan is eligible to establish an HSA, provided that while such 
individual is covered under the high deductible health plan, 
the individual is not covered under any health plan that (1) is 
not a high deductible health plan and (2) provides coverage for 
any benefit (subject to certain exceptions) covered under the 
high deductible health plan.\4\
---------------------------------------------------------------------------
    \4\Sec. 223(c)(1).
---------------------------------------------------------------------------
    Various types of coverage are disregarded for this purpose, 
including coverage of any benefit provided by permitted 
insurance, coverage (whether through insurance or otherwise) 
for accidents, disability, dental care, vision care, or long-
term care, as well as certain limited coverage through health 
flexible savings accounts.\5\ Permitted insurance means 
insurance under which substantially all of the coverage 
provided relates to liabilities incurred under workers' 
compensation laws, tort liabilities, liabilities relating to 
ownership or use of property, or such other similar liabilities 
as specified by the Secretary under regulations. Permitted 
insurance also means insurance for a specified disease or 
illness, and insurance paying a fixed amount per day (or other 
period) of hospitalization.\6\
---------------------------------------------------------------------------
    \5\Sec. 223(c)(1)(B).
    \6\Sec. 223(c)(3).
---------------------------------------------------------------------------
    Under a safe harbor, a high deductible health plan is 
permitted to provide coverage for preventive care (within the 
meaning of section 1861 of the Social Security Act, except as 
otherwise provided by the Secretary) before satisfaction of the 
minimum deductible.\7\ IRS guidance describes the types of 
coverage that constitute preventive care for this purpose.\8\ 
More recently, Notice 2019-45\9\ provides an appendix with a 
limited list of preventive care services and items for certain 
chronic conditions that may be treated as preventive care, and 
provides that these services and items are treated as 
preventive only when prescribed to treat an individual 
diagnosed with the specified chronic condition, and only when 
prescribed for the purpose of preventing the exacerbation of 
the chronic condition or the development of a secondary 
condition. In connection with medicines or drugs delivered 
through inhalers, Notice 2019-45 limits as preventive care 
inhaled corticosteroids for individuals diagnosed with asthma; 
the Notice also permits as preventive care peak flow meters for 
such diagnosed individuals.
---------------------------------------------------------------------------
    \7\Sec. 223(c)(2)(C).
    \8\Notice 2004-23, 2004-15 I.R.B. 725 (April 12, 2004). See also 
Notice 2004-50, 2004-33 IRB 1 (Aug. 9, 2004); Notice 2008-59, 2008-29 
I.R.B. 123 (July 21, 2008); Notice 2013-37, 2013-40 I.R.B. 293 (Sept. 
30, 2013).
    \9\2019-32 I.R.B. 593 (August 5, 2019).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee observes that research shows that exposure to 
high out-of-pocket costs leads consumers to delay or even forgo 
treatment for necessary care. In addition, the Committee 
observes that ensuring access to inhalers for individuals who 
need them will help prevent costly complications. The Committee 
released a report that asthma medication is higher priced in 
the U.S. than other developed countries.\10\ For example, 
Advair Diskus, a common asthma medication costs 1,296 percent 
higher in the U.S. During Committee hearings on prescription 
drug costs, the Committee heard testimony about the increasing 
costs of medications for asthma. The provision will help 
address the affordability barrier by expanding access to 
inhalers for the treatment of chronic lung disease for 
individuals enrolled in high deductible health plans.
---------------------------------------------------------------------------
    \10\A Painful Pill to Swallow: U.S. vs. International Prescription 
Drug Prices, Ways and Means Committee, September 23, 2019. https://
waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/
documents/U.S.%20vs.%20International%20 
Prescription%20Drug%20Prices_0.pdf.
---------------------------------------------------------------------------

                        EXPLANATION OF PROVISION

    The provision permits a high deductible health plan to 
provide inhalers for treatment of any chronic lung disease, or 
any medicine or drug which is delivered through such inhaler 
for treatment of such disease, without satisfaction of the 
plan's minimum deductible. Thus, under the provision, a health 
plan will not fail to be treated as a high deductible health 
plan merely by reason of failing to require a deductible for 
such inhalers or such medicines and drugs, and an individual 
who is covered under such a plan may contribute to an HSA.

                             EFFECTIVE DATE

    The provision applies to months beginning after the date of 
enactment.

                      III. VOTES OF THE COMMITTEE

    Pursuant to clause 3(b) of rule XIII of the Rules of the 
House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 4716, the ``Inhaler Coverage and Access 
Now Act,'' on October 23, 2019.
    The amendment in the nature of a substitute to H.R. 4716 
was agreed to by voice vote (with a quorum being present).
    The bill, H.R. 4716, as amended, was ordered favorably 
reported to the House of Representatives by a voice vote (with 
a quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               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 bill.
    The bill is estimated to decrease Federal fiscal year 
budget receipts by $1.4 billion dollars for the period 2019 
through 2029.

                                                        ESTIMATED REVENUE EFFECT OF THE PROPOSAL
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Fiscal Years [Millions of Dollars]
                   Item                    -------------------------------------------------------------------------------------------------------------
                                              2020     2021     2022     2023     2024     2025     2026     2027     2028     2029   2020-24   2020-29
--------------------------------------------------------------------------------------------------------------------------------------------------------
Safe Harbor for High Deductible Health          -35      -68      -98     -129     -146     -157     -177     -189     -197     -206     -476     -1,402
 Plans Without Deductible for Certain
 Inhallers\1\.............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details may not add to totals due to rounding.
\1\Estimate includes the following budget effects:


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              2020     2021     2022     2023     2024     2025     2026     2027     2028     2029   2020-24   2020-29
--------------------------------------------------------------------------------------------------------------------------------------------------------
On-buget..................................      -27      -52      -76      -99     -113     -121     -139     -150     -156     -163     -367     -1,095
Off-budget................................       -8      -16      -22      -30      -33      -36      -38      -39      -41      -43     -109       -307
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    Pursuant to 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 bill involves no new tax expenditure.

            C. Cost Estimate Prepared by the Congressional 
                             Budget Office

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, requiring a cost estimate prepared by 
CBO, the following statement by CBO is provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 31, 2019.
Hon. Richard Neal,
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. 4716, the Inhaler 
Coverage and Access Now Act of 2019.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Nathaniel 
Frentz.
            Sincerely,
                                            Phillip Swagel,
                                                          Director.
    Enclosure.

    
    

    The bill would:
           H.R. 4716 would amend the Internal Revenue 
        Code to allow a high deductible plan to provide 
        inhalers for treatment of any chronic lung disease, or 
        any medicine or drug which is delivered through such 
        inhaler for treatment of such disease, without a 
        deductible and without affecting a beneficiary's 
        eligibility to participate in a Health Savings Account 
        (HSA).
    Estimated budgetary effects would primarily stem from:
           An increase in contributions to HSAs, which 
        are excluded from income and employment taxes.
    The Congressional Budget Act of 1974, as amended, 
stipulates that revenue estimates provided by the staff of the 
Joint Committee on Taxation (JCT) will be the official 
estimates for all tax legislation considered by Congress. As 
such, CBO incorporates those estimates into its cost estimates 
of the effects of legislation. All of the estimates for the 
provisions of H.R. 4716 were provided by JCT.
    Bill summary: H.R. 4716 would amend the Internal Revenue 
Code by expanding the range of services a high deductible 
health plan can cover before the plan's minimum deductible is 
satisfied. Under current law, individuals are generally 
eligible to participate in a Health Savings Account (HSA) if 
they are covered by a high deductible health plan and no other 
health care plan, except for certain types of coverage 
specifically disregarded by law. Currently, high-deductible 
health plans are allowed to provide ``first dollar'' (before 
the minimum deductible is satisfied) coverage for preventative 
care, including inhalers for individuals diagnosed with asthma. 
H.R. 4716 would allow a high deductible plan to also provide 
inhalers for treatment of any chronic lung disease, or any 
medicine or drug which is delivered through such inhaler for 
treatment of such disease, without a deductible and without 
affecting a beneficiary's eligibility to participate in an HSA.
    Estimated Federal cost: The estimated budgetary effect of 
H.R. 4716 is shown in Table 1.

                                                   TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 4716
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, millions of dollars--
                                       -----------------------------------------------------------------------------------------------------------------
                                          2020     2021     2022     2023     2024     2025     2026     2027     2028      2029    2020-2024  2020-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Decreases (-) in Revenues
 
Estimated Revenues....................      -35      -68      -98     -129     -146     -157     -177     -189     -197       -206       -476     -1,402
    On-Budget.........................      -27      -52      -76      -99     -113     -121     -139     -150     -156       -163       -367     -1,095
    Off-Budget\a\.....................       -8      -16      -22      -30      -33      -36      -38      -39      -41        -43       -109       -307
 
                                                    Increase in the Deficit From Changes in Revenues
 
Effect on the Deficit.................       35       68       98      129      146      157      177      189      197        206        476      1,402
    On-Budget Deficit.................       27       52       76       99      113      121      139      150      156        163        367      1,095
    Off-Budget Deficit................        8       16       22       30       33       36       38       39       41         43        109        307
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Components may not sum to totals because of rounding.
\a\Off-budget revenues result from changes in Social Security payroll tax receipts.

    Basis of estimate: The Congressional Budget Act of 1974, as 
amended, stipulates that revenue estimates provided by the 
staff of the Joint Committee on Taxation (JCT) are the official 
estimates for all tax legislation considered by the Congress. 
CBO therefore incorporates those estimates into its cost 
estimates of the effects of legislation. All of the estimates 
for the provisions of H.R. 4716 were provided by JCT.\1\
---------------------------------------------------------------------------
    \1\For JCT's estimates of the provisions, which include detail 
beyond the summary presented below, see Joint Committee on Taxation, 
Description of H.R. 4716, Description Of H.R. 4716, The ``Inhaler 
Coverage and Access Now Act'', JCX-45-19 (October 21, 2019) https://
go.usa.gov/xpajj
---------------------------------------------------------------------------
    Revenues: JCT estimates that the bill would decrease 
revenues by $1.4 billion over the 2020-2029 period. The change 
in revenues includes a reduction of $307 million that would 
result from changes in off-budget revenues (from Social 
Security payroll taxes).
    Uncertainty: These budgetary estimates are uncertain 
because they rely on underlying projections and other estimates 
that are uncertain. Specifically, they are based in part on 
CBO's economic projections for the next decade under current 
law, and on estimates of changes in taxpayers' behavior in 
response to changes in tax rules.
    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 changes in revenues that are subject to those 
pay-as-you-go procedures are shown in Table 1. Only on-budget 
changes to outlays or revenues are subject to pay-as-you-go 
procedures.
    Increase in long-term deficits: JCT estimates that enacting 
H.R. 4716 would increase on-budget deficits by less than $5 
billion in each of the four consecutive 10-year periods 
beginning in 2030.
    Mandates: None.
    JCT has reviewed H.R. 4716 and determined that it contains 
no intergovernmental or private-sector mandates as defined in 
the Unfunded Mandates Reform Act.
    Estimate prepared by: Revenues: Staff of the Joint 
Committee on Taxation and Nathaniel Frentz; Mandates: Staff of 
the Joint Committee on Taxation.
    Estimate reviewed by: Joshua Shakin, Chief, Revenue 
Estimating Unit; Joseph Rosenberg, Deputy Assistant Director 
for Tax Analysis; John McClelland, Assistant Director for Tax 
Analysis.

     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 and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee made findings and recommendations that are 
reflected in this report.

        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 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).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

            D. Applicability of House Rule XXI, Clause 5(b)

    Clause 5(b) of rule XXI of the Rules of the House of 
Representatives provides, in part, that ``It shall not be in 
order to consider a bill, joint resolution, amendment, or 
conference report carrying a retroactive Federal income tax 
rate increase.'' The Committee, after careful review, states 
that the bill does not involve any retroactive Federal income 
tax rate increase within the meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of Pub. L. No. 105-266, the Internal 
Revenue Service Restructuring and Reform Act of 1998 (the 
``RRA''), requires the staff of the Joint Committee on Taxation 
(in consultation with the Internal Revenue Service and the 
Treasury Department) 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 of 1986 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 RRA because the bill 
contains no provision that amends the Internal Revenue Code of 
1986 and has ``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.

                   G. Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
to Congress pursuant to section 21 of Pub. L. No. 111-139; or 
(3) a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance, published 
pursuant to section 6104 of title 31, United States Code.

                              H. Hearings

    In compliance with Sec. 103(i) of H. Res. 6 (116th 
Congress) (1) the following hearing was used to develop or 
consider H.R. 4716:
    On February 12, 2019, the Committee held a hearing on the 
Rising Costs of Prescription Drugs, held.
    (2) The following related hearing was held:
    On October 17th, 2019. the Committee held a hearing on 
Investing in the U.S. Health System by Lowering Drug Prices, 
Reducing Out-of-Pocket Costs, and Improving Medicare Benefits.

              VI. CHANGES IN EXISTING LAW MADE BY THE BILL


         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 italics, and 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 B--COMPUTATION OF TAXABLE INCOME

           *       *       *       *       *       *       *


PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS

           *       *       *       *       *       *       *


SEC. 223. HEALTH SAVINGS ACCOUNTS.

  (a) Deduction allowed.--In the case of an individual who is 
an eligible individual for any month during the taxable year, 
there shall be allowed as a deduction for the taxable year an 
amount equal to the aggregate amount paid in cash during such 
taxable year by or on behalf of such individual to a health 
savings account of such individual.
  (b) Limitations.--
          (1) In general.--The amount allowable as a deduction 
        under subsection (a) to an individual for the 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 under a high deductible 
                health plan as of the first day of such month, 
                $2,250.
                  (B) in the case of an eligible individual who 
                has family coverage under a high deductible 
                health plan as of the first day of such month, 
                $4,500.
          (3) Additional contributions for individuals 55 or 
        older.--
                  (A) In general.--In the case of an individual 
                who has attained age 55 before the close of the 
                taxable year, the applicable limitation under 
                subparagraphs (A) and (B) of paragraph (2) 
                shall be increased by the additional 
                contribution amount.
                  (B) Additional contribution amount.--For 
                purposes of this section, the additional 
                contribution amount is the amount determined in 
                accordance with the following table:
          (4) 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 paid for such 
                taxable year to Archer MSAs of such individual,
                  (B) the aggregate amount contributed to 
                health savings accounts of such individual 
                which is excludable from the taxpayer's gross 
                income for such taxable year under section 
                106(d) (and such amount shall not be allowed as 
                a deduction under subsection (a)), and
                  (C) the aggregate amount contributed to 
                health savings accounts of such individual for 
                such taxable year under section 408(d)(9) (and 
                such amount shall not be allowed as a deduction 
                under subsection (a)).
        Subparagraph (A) shall not apply with respect to any 
        individual to whom paragraph (5) applies.
          (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.
          (6) Denial of deduction to dependents.--No deduction 
        shall be allowed under this section to any individual 
        with respect to whom a deduction under section 151 is 
        allowable to another taxpayer for a taxable year 
        beginning in the calendar year in which such 
        individual's taxable year begins.
          (7) Medicare eligible individuals.--The limitation 
        under this subsection for any month with respect to an 
        individual shall be zero for the first month such 
        individual is entitled to benefits under title XVIII of 
        the Social Security Act and for each month thereafter.
          (8) Increase in limit for individuals becoming 
        eligible individuals after the beginning of the year.--
                  (A) In general.--For purposes of computing 
                the limitation under paragraph (1) for any 
                taxable year, an individual who is an eligible 
                individual during the last month of such 
                taxable year shall be treated--
                          (i) as having been an eligible 
                        individual during each of the months in 
                        such taxable year, and
                          (ii) as having been enrolled, during 
                        each of the months such individual is 
                        treated as an eligible individual 
                        solely by reason of clause (i), in the 
                        same high deductible health plan in 
                        which the individual was enrolled for 
                        the last month of such taxable year.
                  (B) Failure to maintain high deductible 
                health plan coverage.--
                          (i) In general.--If, at any time 
                        during the testing period, the 
                        individual is not an eligible 
                        individual, then--
                                  (I) gross income of the 
                                individual for the taxable year 
                                in which occurs the first month 
                                in the testing period for which 
                                such individual is not an 
                                eligible individual is 
                                increased by the aggregate 
                                amount of all contributions to 
                                the health savings account of 
                                the individual which could not 
                                have been made but for 
                                subparagraph (A), and
                                  (II) the tax imposed by this 
                                chapter for any taxable year on 
                                the individual shall be 
                                increased by 10 percent of the 
                                amount of such increase.
                          (ii) Exception for disability or 
                        death.--Subclauses (I) and (II) of 
                        clause (i) shall not apply if the 
                        individual ceased to be an eligible 
                        individual by reason of the death of 
                        the individual or the individual 
                        becoming disabled (within the meaning 
                        of section 72(m)(7)).
                          (iii) Testing period.--The term 
                        ``testing period'' means the period 
                        beginning with the last month of the 
                        taxable year referred to in 
                        subparagraph (A) and ending on the last 
                        day of the 12th month following such 
                        month.
  (c) Definitions and special rules.--For purposes of this 
section--
          (1) Eligible individual.--
                  (A) In general.--The term ``eligible 
                individual'' means, with respect to any month, 
                any individual if--
                          (i) such individual is covered under 
                        a high deductible health plan as of the 
                        1st day of such month, and
                          (ii) such individual is not, while 
                        covered under a high deductible health 
                        plan, covered under any health plan--
                                  (I) which is not a high 
                                deductible health plan, and
                                  (II) which provides coverage 
                                for any benefit which is 
                                covered under the high 
                                deductible health plan.
                  (B) Certain coverage disregarded.--
                Subparagraph (A)(ii) shall be applied without 
                regard to--
                          (i) coverage for any benefit provided 
                        by permitted insurance,
                          (ii) coverage (whether through 
                        insurance or otherwise) for accidents, 
                        disability, dental care, vision care, 
                        or long-term care, and
                          (iii) for taxable years beginning 
                        after December 31, 2006, coverage under 
                        a health flexible spending arrangement 
                        during any period immediately following 
                        the end of a plan year of such 
                        arrangement during which unused 
                        benefits or contributions remaining at 
                        the end of such plan year may be paid 
                        or reimbursed to plan participants for 
                        qualified benefit expenses incurred 
                        during such period if--
                                  (I) the balance in such 
                                arrangement at the end of such 
                                plan year is zero, or
                                  (II) the individual is making 
                                a qualified HSA distribution 
                                (as defined in section 106(e)) 
                                in an amount equal to the 
                                remaining balance in such 
                                arrangement as of the end of 
                                such plan year, in accordance 
                                with rules prescribed by the 
                                Secretary.
                  (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).
          (2) High deductible health plan.--
                  (A) In general.--The term ``high deductible 
                health plan'' means a health plan--
                          (i) which has an annual deductible 
                        which is not less than--
                                  (I) $1,000 for self-only 
                                coverage, and
                                  (II) twice the dollar amount 
                                in subclause (I) for family 
                                coverage, and
                          (ii) the sum of the annual deductible 
                        and the other annual out-of-pocket 
                        expenses required to be paid under the 
                        plan (other than for premiums) for 
                        covered benefits does not exceed--
                                  (I) $5,000 for self-only 
                                coverage, and
                                  (II) twice the dollar amount 
                                in subclause (I) for family 
                                coverage.
                  (B) Exclusion of certain plans.--Such term 
                does not include a health plan if substantially 
                all of its coverage is coverage described in 
                paragraph (1)(B).
                  (C) Safe harbor for absence of [preventive 
                care deductible] certain deductibles.--A plan 
                shall not fail to be treated as a high 
                deductible health plan by reason of failing to 
                have a deductible [for preventive care] for one 
                or more of the following:
                          (i) Preventive care  (within the 
                        meaning of section 1861 of the Social 
                        Security Act, except as otherwise 
                        provided by the Secretary).
                          (ii) Inhalers for treatment of any 
                        chronic lung disease (and any medicine 
                        or drug which is delivered through such 
                        inhaler for treatment of such disease).
                  (D) Special rules for network plans.--In the 
                case of a plan using a network of providers--
                          (i) Annual out-of-pocket 
                        limitation.--Such plan shall not fail 
                        to be treated as a high deductible 
                        health plan by reason of having an out-
                        of-pocket limitation for services 
                        provided outside of such network which 
                        exceeds the applicable limitation under 
                        subparagraph (A)(ii).
                          (ii) Annual deductible.--Such plan's 
                        annual deductible for services provided 
                        outside of such network shall not be 
                        taken into account for purposes of 
                        subsection (b)(2).
          (3) Permitted insurance.--The term ``permitted 
        insurance'' means--
                  (A) insurance if substantially all of the 
                coverage provided under such insurance relates 
                to--
                          (i) liabilities incurred under 
                        workers' compensation laws,
                          (ii) tort liabilities,
                          (iii) liabilities relating to 
                        ownership or use of property, or
                          (iv) such other similar liabilities 
                        as the Secretary may specify by 
                        regulations,
                  (B) insurance for a specified disease or 
                illness, and
                  (C) insurance paying a fixed amount per day 
                (or other period) of hospitalization.
          (4) Family coverage.--The term ``family coverage'' 
        means any coverage other than self-only coverage.
          (5) Archer MSA.--The term ``Archer MSA'' has the 
        meaning given such term in section 220(d).
  (d) Health savings account.--For purposes of this section--
          (1) In general.--The term ``health savings account'' 
        means a trust created or organized in the United States 
        as a health savings 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 (f)(5) or 
                section 220(f)(5), 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 sum of--
                                  (I) the dollar amount in 
                                effect under subsection 
                                (b)(2)(B), and
                                  (II) the dollar amount in 
                                effect under subsection 
                                (b)(3)(B).
                  (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 his account is nonforfeitable.
          (2) Qualified medical expenses.--
                  (A) In general.--The term ``qualified medical 
                expenses'' means, with respect to an account 
                beneficiary, amounts paid by such beneficiary 
                for medical care (as defined in section 213(d)) 
                for such individual, the spouse of such 
                individual, and any dependent (as defined in 
                section 152, determined without regard to 
                subsections (b)(1), (b)(2), and (d)(1)(B) 
                thereof) of such individual, but only to the 
                extent such amounts are not compensated for by 
                insurance or otherwise. Such term shall include 
                an amount paid for medicine or a drug only if 
                such medicine or drug is a prescribed drug 
                (determined without regard to whether such drug 
                is available without a prescription) or is 
                insulin.
                  (B) Health insurance may not be purchased 
                from account.--Subparagraph (A) shall not apply 
                to any payment for insurance.
                  (C) Exceptions.--Subparagraph (B) shall not 
                apply to any expense for coverage under--
                          (i) a health plan during any period 
                        of continuation coverage required under 
                        any Federal law,
                          (ii) a qualified long-term care 
                        insurance contract (as defined in 
                        section 7702B(b)),
                          (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).
          (3) Account beneficiary.--The term ``account 
        beneficiary'' means the individual on whose behalf the 
        health savings account was established.
          (4) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this 
        section:
                  (A) Section 219(d)(2) (relating to no 
                deduction for rollovers).
                  (B) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                  (C) Except as provided in section 106(d), 
                section 219(f)(5) (relating to employer 
                payments).
                  (D) Section 408(g) (relating to community 
                property laws).
                  (E) Section 408(h) (relating to custodial 
                accounts).
  (e) Tax treatment of accounts.--
          (1) In general.--A health savings account is exempt 
        from taxation under this subtitle unless such account 
        has ceased to be a health savings account. 
        Notwithstanding the preceding sentence, any such 
        account is subject to the taxes imposed by section 511 
        (relating to imposition of tax on unrelated business 
        income of charitable, etc. organizations).
          (2) Account terminations.--Rules similar to the rules 
        of paragraphs (2) and (4) of section 408(e) shall apply 
        to health savings accounts, and any amount treated as 
        distributed under such rules shall be treated as not 
        used to pay qualified medical expenses.
  (f) Tax treatment of distributions.--
          (1) Amounts used for qualified medical expenses.--Any 
        amount paid or distributed out of a health savings 
        account which is used exclusively to pay qualified 
        medical expenses of any account beneficiary shall not 
        be includible in gross income.
          (2) Inclusion of amounts not used for qualified 
        medical expenses.--Any amount paid or distributed out 
        of a health savings account which is not used 
        exclusively to pay the qualified medical expenses of 
        the account beneficiary shall be included in the gross 
        income of such beneficiary.
          (3) Excess contributions returned before due date of 
        return.--
                  (A) In general.--If any excess contribution 
                is contributed for a taxable year to any health 
                savings account of an individual, paragraph (2) 
                shall not apply to distributions from the 
                health savings 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 (5) or section 220(f)(5)) which is 
                neither excludable from gross income under 
                section 106(d) nor deductible under this 
                section.
          (4) Additional tax on distributions not used for 
        qualified medical expenses.--
                  (A) In general.--The tax imposed by this 
                chapter on the account beneficiary for any 
                taxable year in which there is a payment or 
                distribution from a health savings account of 
                such beneficiary which is includible in gross 
                income under paragraph (2) shall be increased 
                by 20 percent of the amount which is so 
                includible.
                  (B) Exception for disability or death.--
                Subparagraph (A) shall not apply if the payment 
                or distribution is made after the account 
                beneficiary becomes disabled within the meaning 
                of section 72(m)(7) or dies.
                  (C) Exception for distributions after 
                medicare eligibility.--Subparagraph (A) shall 
                not apply to any payment or distribution after 
                the date on which the account beneficiary 
                attains the age specified in section 1811 of 
                the Social Security Act.
          (5) 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 
                health savings account to the account 
                beneficiary to the extent the amount received 
                is paid into a health savings account for the 
                benefit of such beneficiary 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 health 
                savings 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 health 
                savings account which was not includible in the 
                individual's gross income because of the 
                application of this paragraph.
          (6) Coordination with medical expense deduction.--For 
        purposes of determining the amount of the deduction 
        under section 213, any payment or distribution out of a 
        health savings account for qualified medical expenses 
        shall not be treated as an expense paid for medical 
        care.
          (7) Transfer of account incident to divorce.--The 
        transfer of an individual's interest in a health 
        savings account to an individual's spouse or former 
        spouse under a divorce or separation instrument 
        described in clause (i) of section 121(d)(3)(C) shall 
        not be considered a taxable transfer made by such 
        individual notwithstanding any other provision of this 
        subtitle, and such interest shall, after such transfer, 
        be treated as a health savings account with respect to 
        which such spouse is the account beneficiary.
          (8) Treatment after death of account beneficiary.--
                  (A) Treatment if designated beneficiary is 
                spouse.--If the account beneficiary's surviving 
                spouse acquires such beneficiary's interest in 
                a health savings account by reason of being the 
                designated beneficiary of such account at the 
                death of the account beneficiary, such health 
                savings account shall be treated as if the 
                spouse were the account beneficiary.
                  (B) Other cases.--
                          (i) In general.--If, by reason of the 
                        death of the account beneficiary, any 
                        person acquires the account 
                        beneficiary's interest in a health 
                        savings account in a case to which 
                        subparagraph (A) does not apply--
                                  (I) such account shall cease 
                                to be a health savings account 
                                as of the date of death, and
                                  (II) an amount equal to the 
                                fair market value of the assets 
                                in such account on such date 
                                shall be includible if such 
                                person is not the estate of 
                                such beneficiary, in such 
                                person's gross income for the 
                                taxable year which includes 
                                such date, or if such person is 
                                the estate of such beneficiary, 
                                in such beneficiary's gross 
                                income for the last taxable 
                                year of such beneficiary.
                          (ii) Special rules.--
                                  (I) Reduction of inclusion 
                                for predeath expenses.--The 
                                amount includible in gross 
                                income under clause (i) by any 
                                person (other than the estate) 
                                shall be reduced by the amount 
                                of qualified medical expenses 
                                which were incurred by the 
                                decedent before the date of the 
                                decedent's death and paid by 
                                such person within 1 year after 
                                such date.
                                  (II) Deduction for estate 
                                taxes.--An appropriate 
                                deduction shall be allowed 
                                under section 691(c) to any 
                                person (other than the decedent 
                                or the decedent's spouse) with 
                                respect to amounts included in 
                                gross income under clause (i) 
                                by such person.
  (g) Cost-of-living adjustment.--
          (1) In general.--Each dollar amount in subsections 
        (b)(2) and (c)(2)(A) 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 by 
                substituting for ``calendar year 2016'' in 
                subparagraph (A)(ii) thereof--
                          (i) except as provided in clause 
                        (ii), ``calendar year 1997'', and
                          (ii) in the case of each dollar 
                        amount in subsection (c)(2)(A), 
                        ``calendar year 2003''.
        In the case of adjustments made for any taxable year 
        beginning after 2007, section 1(f)(4) shall be applied 
        for purposes of this paragraph by substituting ``March 
        31'' for ``August 31'', and the Secretary shall publish 
        the adjusted amounts under subsections (b)(2) and 
        (c)(2)(A) for taxable years beginning in any calendar 
        year no later than June 1 of the preceding calendar 
        year.
          (2) Rounding.--If any increase under paragraph (1) is 
        not a multiple of $50, such increase shall be rounded 
        to the nearest multiple of $50.
  (h) Reports.--The Secretary may require--
          (1) the trustee of a health savings 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, and
          (2) any person who provides an individual with a high 
        deductible health plan to make such reports to the 
        Secretary and to the account beneficiary with respect 
        to such plan as the Secretary determines appropriate.
The reports required by this subsection shall be filed at such 
time and in such manner and furnished to such individuals at 
such time and in such manner as may be required by the 
Secretary.

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