[House Report 118-109]
[From the U.S. Government Publishing Office]
118th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 118-109
======================================================================
TELEHEALTH EXPANSION ACT OF 2023
_______
June 13, 2023.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Smith of Missouri, from the Committee on Ways and Means, submitted
the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1843]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 1843) to amend the Internal Revenue Code of 1986 to
permanently extend the exemption for telehealth services from
certain high deductible health plan rules, 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...........................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 2
C. Legislative History................................. 2
D. Legislative History................................. 3
II. EXPLANATION OF THE BILL..........................................3
A. Making Permanent the Safe Harbor for Absence of
Deductible for Telehealth (sec. 2 of the bill and
sec. 223 of the Code).............................. 3
III. VOTE OF THE COMMITTEE............................................5
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...................... 6
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 6
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......6
A. Committee Oversight Findings and Recommendations.... 6
B. Statement of General Performance Goals and
Objectives......................................... 6
C. Information Relating to Unfunded Mandates........... 6
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 7
E. Tax Complexity Analysis............................. 7
F. Duplication of Federal Programs..................... 7
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............7
A. Changes in Existing Law Proposed by the Bill, as
Reported........................................... 7
VII. DISSENTING VIEWS................................................18
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 ``Telehealth Expansion Act of 2023''.
SEC. 2. MAKING PERMANENT THE SAFE HARBOR FOR ABSENCE OF DEDUCTIBLE FOR
TELEHEALTH.
(a) In General.--Section 223(c)(2)(E) of the Internal Revenue Code of
1986 is amended by striking ``In the case of'' and all that follows
through ``a plan'' and inserting ``A plan''.
(b) Certain Coverage Disregarded.--Section 223(c)(1)(B)(ii) of the
Internal Revenue Code of 1986 is amended by striking ``(in the case of
months or plan years to which paragraph (2)(E) applies)''.
(c) Effective Date.--The amendments made by this section shall apply
to plan years beginning after December 31, 2024.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 1843, the ``Telehealth Expansion Act of
2023,'' as ordered reported by the Committee on Ways and Means
on June 7, 2023, to permanently extend the safe harbor that
allows employers who offer High Deductible Health Plans (HDHP)
paired with a Health Savings Account (HSA) to allow for the
absence of a deductible for telehealth.
B. Background and Need for Legislation
In order for an individual with a HDHP to make or receive
contributions to a HSA, an individual cannot have disqualifying
health coverage. An HDHP is a health insurance plan that
satisfies certain requirements with respect to minimum
deductibles and maximum out-of-pocket expenses. Generally,
under section 223(c)(2)(A) of the Internal Revenue Code, a HDHP
may not provide benefits for any year until the minimum
deductible for that year is satisfied. In the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act, PL 116-136)
Congress established a safe harbor for the absence of a
deductible for telehealth for plan years beginning on or before
December 31, 2021. This flexibility was subsequentially
extended in the Consolidated Appropriations Act of 2022 (PL
117-103) and the Consolidated Appropriations Act of 2023 (PL
117-328). This safe harbor is set to expire for plan years
beginning after January 1, 2025. The Committee believes that
this legislation is needed to permanently extend the ability
for employees who are enrolled in HDHPs paired with an HSA to
utilize first dollar coverage for telehealth services.
C. Legislative History
Background
H.R. 1843 was introduced on March 28, 2023, and was
referred to the Committee on Ways and Means.
Committee hearings
On Tuesday, March 23, 2023, the Committee held a Full
Committee Hearing on ``Why Health Care is Unaffordable: The
Fallout of Democrats'' Inflation on Patients and Small
Businesses''.
Committee action
The Committee on Ways and Means marked up H.R. 1843, the
``Telehealth Expansion Act of 2023,'' on June 7, 2023, and
ordered the bill, as amended, favorably reported (with a quorum
being present).
D. Legislative History
Pursuant to clause 3(c)(6) of rule XIII, the following
hearings were used to develop and consider H.R. 1843:
(1) Committee on Ways and Means Full Committee Hearing
``Why Health Care is Unaffordable: The Fallout of Democrats''
Inflation on Patients and Small Businesses''.
II. EXPLANATION OF THE BILL
A. Making Permanent the Safe Harbor for Absence of Deductible for
Telehealth (sec. 2 of the bill and sec. 223 of the Code)
PRESENT LAW
Health savings accounts
An individual may contribute to 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. 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.\1\ The HSA rules allow deductible contributions to,
and tax-exempt distributions from, HSAs for current medical
expenses as well as an income tax exemption for earnings on HSA
investments to be used for future medical expenses.
---------------------------------------------------------------------------
\1\Sec. 223(d).
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Within limits,\2\ an eligible individual is allowed a
deduction for contributions to an HSA made by or on behalf of
the individual.\3\ Contributions to an HSA are excludible from
an individual's income and from employment taxes if made by
theindividual's employer. Earnings in HSAs are not taxable.\4\
Distributions from an HSA for qualified medical expenses are
not includible in the HSA beneficiary's gross income.\5\
Distributions from an HSA that are not used for qualified
medical expenses are includible in the HSA beneficiary's gross
income and are subject to an additional tax of 20 percent.\6\
The 20-percent additional tax does not apply if the
distribution is made after the beneficiary dies, becomes
disabled, or attains the age of Medicare eligibility (age
65).\7\
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\2\For 2023, the basic limit on annual contributions that can be
made to an HSA is $3,850 in the case of self-only coverage and $7,750
in the case of family coverage. Rev. Proc. 2022-24, 2022-20 I.R.B.
1075. 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). Sec. 223(b)(3).
\3\A family member (or any other person) may make contributions to
an HSA on behalf of an eligible individual. See Notice 2004-50, Q & A
38, 2003-33, I.R.B. 196 (August 9, 2004).
\4\Sec. 223(e).
\5\Sec. 223(f)(1).
\6\Sec. 223(f)(2), (4).
\7\Sec. 223(f)(4).
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High deductible health plans
A high deductible health plan (``HDHP'') is a health plan
that has an annual deductible of at least $1,500 (for 2023) for
self-only coverage and twice this amount for family coverage
($3,000 for 2023), 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 $7,500 (for
2023) for self-only coverage and twice this amount for family
coverage ($15,000 for 2023).\8\ These dollar thresholds are
adjusted for inflation.\9\
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\8\ Sec. 223(c)(2).
\9\ Sec. 223(g).
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An individual who is covered under an HDHP is eligible to
contribute to an HSA if the individual is not also covered
under a non-HDHP that provides coverage for any benefit
(subject to certain exceptions) that is covered under the
HDHP.\10\
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\10\Sec. 223(c)(1).
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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 spending arrangements.\11\ 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 of the Treasury 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.\12\
---------------------------------------------------------------------------
\11\Sec. 223(c)(1)(B).
\12\Sec. 223(c)(3).
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A plan does not fail to qualify as an HDHP by reason of
failing to have a deductible for preventive care.\13\
---------------------------------------------------------------------------
\13\Sec. 223(c)(2)(C).
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For plan years beginning on or before December 31, 2021, an
HDHP is permitted to cover telehealth and other remote care
services without satisfaction of the plan's minimum
deductible.\14\ Thus, a health plan does not fail to be treated
as an HDHP merely by reason of failing to require a deductible
for telehealth and other remote care services for plan years
beginning on or before December 31, 2021, and an individual who
is covered under such a plan may contribute to an HSA.\15\
Section 307 of Division P of the Consolidated Appropriations
Act, 2022 extended the exemption for telehealth services to
include months beginning after March 31, 2022, and before
January 1, 2023.\16\ Finally, Section 4151 of Division FF of
the Consolidated Appropriations Act, 2023, extended the
exemption for telehealth services to include plan years
beginning after December 31, 2022, and before January 1,
2025.\17\
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\14\CARES Act, Pub. L. No. 116-136, sec. 3701, March 27, 2020.
\15\Notice 2020-29, 2020-22 I.R.B. 864, provides that this standard
applies with respect to services provided on or after January 1, 2020.
\16\Pub. L. No. 117-103, March 15, 2022.
\17\Pub. L. No. 117-328, December 29, 2022.
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REASONS FOR CHANGE
The Committee observes that many individuals who have
coverage under an HDHP, especially working parents and
individuals living in rural areas, rely on telehealth and other
remote care services for their medical care. The Committee also
notes that telehealth has made it easier for individuals who
have HDHP coverage to receive timely medical care and avoid
future medical complications. The provision is intended to
preserve access to telehealth and other remote care services
for individuals with HDHP coverage.
EXPLANATION OF PROVISION
The provision provides a permanent safe harbor under which
a plan does not fail to be treated as an HDHP merely by reason
of providing, without satisfaction of the plan's deductible,
telehealth and other remote care services.
EFFECTIVE DATE
The provision applies to plan years beginning after
December 31, 2024.
III. VOTE 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. 1843, the ``Telehealth Expansion Act of
2023,'' on June 7, 2023.
The bill, H.R. 1843, the ``Telehealth Expansion Act of
2023,'' as amended, was ordered favorably reported to the House
of Representatives as amended by a roll call vote of 30 yeas to
12 nays (with a quorum being present).
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)................... X ....... ......... Mr. Neal........... ....... X .........
Mr. Buchanan..................... X ....... ......... Mr. Doggett........ ....... X .........
Mr. Smith (NE)................... X ....... ......... Mr. Thompson....... X ....... .........
Mr. Kelly........................ X ....... ......... Mr. Larson......... ....... X .........
Mr. Schweikert................... X ....... ......... Mr. Blumenauer..... ....... X .........
Mr. LaHood....................... X ....... ......... Mr. Pascrell....... ....... X .........
Dr. Wenstrup..................... X ....... ......... Mr. Davis.......... ....... X .........
Mr. Arrington.................... X ....... ......... Ms. Sanchez........ ....... ....... .........
Dr. Ferguson..................... X ....... ......... Mr. Higgins........ ....... X .........
Mr. Estes........................ X ....... ......... Ms. Sewell......... X ....... .........
Mr. Smucker...................... X ....... ......... Ms. DelBene........ X ....... .........
Mr. Hern......................... X ....... ......... Ms. Chu............ ....... X .........
Ms. Miller....................... X ....... ......... Ms. Moore.......... ....... X .........
Dr. Murphy....................... X ....... ......... Mr. Kildee......... ....... X .........
Mr. Kustoff...................... X ....... ......... Mr. Beyer.......... ....... X .........
Mr. Fitzpatrick.................. X ....... ......... Mr. Evans.......... ....... X .........
Mr. Steube....................... X ....... ......... Mr. Schneider...... X ....... .........
Ms. Tenney....................... X ....... ......... Mr. Panetta........ X ....... .........
Mrs. Fischbach................... X ....... .........
Mr. Moore........................ X ....... .........
Mrs. Steel....................... X ....... .........
Ms. Van Duyne.................... X ....... .........
Mr. Feenstra..................... X ....... .........
Ms. Malliotakis.................. X ....... .........
Mr. Carey........................ X ....... .........
----------------------------------------------------------------------------------------------------------------
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, H.R. 1843, as
reported. The estimate prepared by the Congressional Budget
Office (CBO) is included below.
The bill is estimated to decrease Federal fiscal year
budget receipts by $5.1 billion for the period 2023 through
2033.
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.
C. Cost Estimate Prepared by the
Congressional Budget Office
The Committee has requested but not received from the
Director of the Congressional Budget Office a statement as to
whether this bill contains any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures.
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, 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 does not authorize 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. 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.
E. Tax Complexity Analysis
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 Internal Revenue
Code of 1986 and that have ``widespread applicability'' to
individuals or small businesses, within the meaning of the
rule.
F. 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
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
VI. CHANGES IN EXISTING LAW MADE BY THE BILL,
AS REPORTED
A. Changes in Existing Law Proposed 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,
long-term care, or [(in the case of
months or plan years to which paragraph
(2)(E) applies)] telehealth and other
remote 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).
(D) Special rule for individuals receiving
benefits subject to surprise billing
statutes.--An individual shall not fail to be
treated as an eligible individual for any
period merely because the individual receives
benefits for medical care subject to and in
accordance with section 9816 or 9817, section
2799A-1 or 2799A-2 of the Public Health Service
Act, or section 716 or 717 of the Employee
Retirement Income Security Act of 1974, or any
State law providing similar protections to such
individual.
(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.--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 (within the meaning of section
1861 of the Social Security Act, except as
otherwise provided by the Secretary).
(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).
(E) Safe harbor for absence of deductible for
telehealth.--[In the case of--]
[(i) months beginning after March 31,
2022, and before January 1, 2023, and
[(ii) plan years beginning on or
before December 31, 2021, or after
December 31, 2022, and before January
1, 2025,
a plan] A plan shall not fail to be treated
as a high deductible health plan by reason of
failing to have a deductible for telehealth and
other remote care services.
(F) Special rule for surprise billing.--A
plan shall not fail to be treated as a high
deductible health plan by reason of providing
benefits for medical care in accordance with
section 9816 or 9817, section 2799A-1 or 2799A-
2 of the Public Health Service Act, or section
716 or 717 of the Employee Retirement Income
Security Act of 1974, or any State law
providing similar protections to individuals,
prior to the satisfaction of the deductible
under paragraph (2)(A)(i).
(G) Safe harbor for absence of deductible for
certain insulin products.--
(i) In general.--A plan shall not
fail to be treated as a high deductible
health plan by reason of failing to
have a deductible for selected insulin
products.
(ii) Selected insulin products.--For
purposes of this subparagraph--
(I) In general.--The term
``selected insulin products''
means any dosage form (such as
vial, pump, or inhaler dosage
forms) of any different type
(such as rapid-acting, short-
acting, intermediate-acting,
long-acting, ultra long-acting,
and premixed) of insulin.
(II) Insulin.--The term
``insulin'' means insulin that
is licensed under subsection
(a) or (k) of section 351 of
the Public Health Service Act
(42 U.S.C. 262) and continues
to be marketed under such
section, including any insulin
product that has been deemed to
be licensed under section
351(a) of such Act pursuant to
section 7002(e)(4) of the
Biologics Price Competition and
Innovation Act of 2009 (Public
Law 111-148) and continues to
be marketed pursuant to such
licensure.
(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. For purposes of this
subparagraph, amounts paid for menstrual care
products shall be treated as paid for medical
care.
(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).
(D) Menstrual care product.--For purposes of
this paragraph, the term ``menstrual care
product'' means a tampon, pad, liner, cup,
sponge, or similar product used by individuals
with respect to menstruation or other genital-
tract secretions.
(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.
* * * * * * *
VII. DISSENTING VIEWS
House of Representatives,
Committee on Ways and Means,
Washington, DC, June 7, 2023.
DISSENTING VIEWS ON TELEHEALTH EXPANSION ACT OF 2023, H.R. 1843
H.R. 1843 (Steel, R-CA; Schneider, D-IL) makes permanent
the safe harbor for telehealth services covered under the
deductible for high deductible health plans (HDHPs), without
impacting the health services account (HSA) eligibility of such
a plan. This temporary safe harbor was put in place during the
COVID-19 pandemic and would be made permanent with this
legislation. The safe harbor was extended most recently in
December of 2022 for two years.
The safe harbor is in effect to study access and usage of
telehealth. Only five months ago, a bipartisan, bicameral
agreement was signed into law providing a two-year extension of
the safe harbor for coverage of telehealth services under the
HDHP deductible. The two-year extension was intended to provide
time for Congress to evaluate how this safe harbor is working,
including potential challenges, and allow for an informed path
forward. H.R. 1843, which makes permanent the safe harbor, is
an attempt by Republicans to bypass this bipartisan agreement,
making a provision permanent that has little empirical data
about its operation.
Telehealth has the potential to exacerbate disparities.
Marginalized communities often face heightened obstacles when
it comes to utilizing telehealth services due to a myriad of
issues, including lack of access to appropriate devices or
broadband. One study showed that numerous groups of patients
were less likely to utilize telehealth services, including
Hispanic, Asian, Spanish-speaking, low-income, and Medicaid
populations.\1\ Permanently allowing HDHPs to cover telehealth
services under the deductible could benefit wealthier
individuals who have access to additional resources, while
lower-income individuals may not benefit from such provisions.
This approach, inappropriately implemented, could exacerbate
inequities and allow for more plan benefit designs that are
discriminatory.
---------------------------------------------------------------------------
\1\https://onlinelibrary.wiley.com/doi/10.1002/cam4.4518.
---------------------------------------------------------------------------
This provision is not solely about telehealth access, but
also about advantaging triple tax-preferred health savings
accounts (HSAs) that benefit the wealthy. Health plans can
already provide any allowable pre-deductible services via
telehealth without any change in law. This legislation would
vastly expand the scope of services subject to the pre-
deductible safe harbor, only if provided by telehealth. Under
this policy, if a person with an HDHP wanted an in-person
physician visit, s/he would be subject to the full cost of care
until the deductible is met; however, if s/he used a telehealth
visit, the plan could pay for the visit before the person hit
his/her deductible (while maintaining an HSA), favoring
telehealth as a modality of care over any in-person services.
This policy provides the greatest benefit, as is evidenced
by the Joint Committee on Taxation analysis, to those in the
highest income brackets. HSAs are primarily utilized by high-
income earners, those who have the financial wherewithal to set
aside funds and invest in future medical costs. In fact, 86
percent of the HSA tax benefits from this policy will go to
families earning over $100,000 annually.
DISTRIBUTION OF THE CHANGES IN LIABILITY FROM THE TELEHEALTH EXPANSION ACT OF 2023
----------------------------------------------------------------------------------------------------------------
Tax Year 2025 Tax Year 2033
-----------------------------------------------------------------------------
Change in Change in
Income Category (1) Number of tax Total tax Number of tax Total tax
returns liability change returns liability change
(thousands) ($millions) (percent) (thousands) ($millions) (percent)
----------------------------------------------------------------------------------------------------------------
Less than $10,000................. (2) (3) (4) (2) (3) (4)
$10,000 to $20,000................ 2 (3) (4) (2) (3) (4)
$20,000 to $30,000................ 1 -1 0.3 3 (3) (4)
$30,000 to $40,000................ 7 -1 0.3 8 -5 0.7
$40,000 to $50,000................ 26 -7 2.4 24 -9 1.2
$50,000 to $75,000................ 45 -14 4.8 84 -69 9.4
$75,000 to $100,000............... 35 -18 6.3 74 -84 11.4
$100,000 to $200,000.............. 90 -87 29.9 164 -279 38.0
$200,000 to $500,000.............. 90 -128 43.9 91 -240 32.6
$500,000 to $1,000,000............ 11 -26 9.0 12 -34 4.7
$1,000,000 and over............... 4 -10 3.3 3 -12 1.7
-----------------------------------------------------------------------------
Total, All Taxpayers.......... 311 -293 100.00 464 -735 100.0
----------------------------------------------------------------------------------------------------------------
Source: Joint Committee on Taxation.
Detail may not add to total due to rounding.
(1) The income concept used to place tax returns into income categories is adjusted gross income (``AGI'') plus:
[1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of
FICA tax, [4] workers compensation, [5] nontaxable Social Security Benefits, [6] insurance value of Medicare
benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9]
exclude income of U.S. citizens living abroad. Categories are measured at 2023 levels.
(2) Less than 500 returns.
(3) Less than $50,000.
(4) Less than .05 percent.
Republican legislation aiming to increase the amounts of
services covered under the deductible of a HDHP is merely an
attempt to free up additional money for the wealthy to
contribute to a triple-advantaged savings account, not to
benefit the most vulnerable.
The promotion of HDHPs and HSAs will hinder access to care,
further exacerbating health care inequities. Studies have
repeatedly demonstrated that high out-of-pocket costs imposed
by HDHPs result in consumers delaying or neglecting necessary
care. In fact, according to a Commonwealth Fund study, nearly
45 percent of adults with high out-of-pocket expenses push off
or forgo health care services altogether. By attempting to add
additional services covered under the deductible for HDHPs,
individuals might be further incentivized to enroll in a plan
that ultimately provides insufficient coverage and requires
higher out-of-pocket costs. Furthermore, the promotion of HDHPs
and HSAs might pose harmful consequences as it relates to
health care equity. As it stands today, Black and Hispanic
Americans report facing more obstacles when paying for
necessary health care services when enrolled in a HDHP than
White Americans. When stratified by race, there are prominent
differences in account balances and distributions of HSA
accounts.
The legislation contributes to the deficit, while
predominantly aiding the wealthy. Nearly a week after passing
the debt ceiling bill, which placed heightened burden on
vulnerable populations, Republicans seek to add five billion
dollars to the federal deficit with this bill, 86 percent of
which will benefit American families that make $100,000 or more
every year.
Richard E. Neal,
Ranking Member.
Ranking Member Richard E. Neal, Opening Statement,
Committee on Ways and Means Markup of H.R.
1843,
Wednesday, June 7, 2023.
I thank my colleague Mr. Schneider for his efforts on the
issue of telehealth, which we can all agree has become an
important vehicle for accessing care. With that, I'll yield to
him.
REPRESENTATIVE SCHNEIDER REMARKS FOR H.R. 1843
Thank you, Ranking Member Neal, I appreciate it. I believe,
and I think evidence demonstrates that we saw it during the
pandemic, telehealth saves time, as representative Steel
mentioned; it saves money, but most importantly, I believe it
saves lives.
Telehealth has been demonstrated to improve outcomes, allow
people who otherwise wouldn't have access to care to access--
whether it's a primary care physician to talk, perhaps, about a
child who has an ear infection that might need more attention,
or someone in the midst of a mental health issue reaching out
and finding someone they can talk to during a period of
pandemic where we couldn't meet face to face. I agree with the
ranking member: we need to understand how to best use it and
we're learning that. I've often spoken before the pandemic--
folks I knew were from interested to skeptical, ran the
spectrum. I consider myself now fully evangelical about the
potential of telehealth both from my personal experience, the
experience of my family, the experience of my neighbors,
constituents, and seeing it across the country.
What's important to me as we move forward is that the
access to telehealth remain available to everyone needing care.
At all income levels, in all locations, whether they live in a
city with congested traffic, or a rural community where the
nearest physician might be 100 miles away or more. This bill
would ensure that access to telehealth is not precluded; it is
protected in keeping these plans in safe harbor. I look forward
to talking more about this, but I yield back for now. Thank
you.
[all]