[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2980 Introduced in Senate (IS)]
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114th CONGRESS
2d Session
S. 2980
To amend the Internal Revenue Code of 1986 to expand the permissible
use of health savings accounts to include health insurance payments and
to increase the dollar limitation for contributions to health savings
accounts, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 25, 2016
Mr. Flake (for himself and Mr. Vitter) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand the permissible
use of health savings accounts to include health insurance payments and
to increase the dollar limitation for contributions to health savings
accounts, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Health Savings Account Expansion Act
of 2016''.
SEC. 2. ADEQUATE FUNDS FOR HEALTH INSURANCE PLANS.
(a) In General.--Section 223(b)(1) of the Internal Revenue Code of
1986 is amended by striking ``the sum of the monthly'' and all that
follows through ``eligible individual'' and inserting ``$9,000 ($18,000
in the case of a joint return)''.
(b) Conforming Amendments.--
(1) Subsection (b) of such Code is amended by striking
paragraphs (2), (3), and (5) and by redesignating paragraphs
(4), (6), (7), and (8) as paragraphs (2), (3), (4), and (5),
respectively.
(2) Section 223(b)(2) of such Code (as redesignated by
paragraph (1)) is amended by striking the last sentence.
(3) Section 223(b)(4) of such Code (as redesignated by
paragraph (1)) is amended to read as follows:
``(4) Medicare eligible individuals.--The limitation under
this subsection for any taxable year with respect to an
individual shall--
``(A) in the case of the first taxable year in
which such individual is entitled to benefits under
title XVIII of the Social Security Act, be the amount
which bears the same proportion to the amount in effect
under paragraph (1) with respect to such individual
as--
``(i) the number of months in the taxable
year during which such individual was not so
entitled, bears to
``(ii) 12, and
``(B) be zero for any taxable year thereafter.''.
(4) Section 223(g)(1) of such Code is amended--
(A) in the matter preceding subparagraph (A) by
striking ``Each dollar amount in subsection (b)(2)''
and inserting ``In the case of taxable years beginning
after December 31, 2017, each dollar amount in
subsection (b)(1)'', and
(B) by amending subparagraph (B) to read as
follows:
``(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
`calendar year 2016' for `calendar year 1992'.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2016.
SEC. 3. PARITY WITH EMPLOYER-PROVIDED HEALTH INSURANCE; DIRECT PRIMARY
CARE.
(a) In General.--Section 223(d)(2) of the Internal Revenue Code of
1986 is amended to read as follows:
``(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.
``(B) Direct primary care.--
``(i) In general.--Such term includes
expenses for direct primary care service
arrangements.
``(ii) Direct primary care service
arrangements.--For purposes of clause (i), the
term `direct primary care service arrangements'
means an arrangement under which an individual
is provided coverage restricted to primary care
services in exchange for a fixed periodic fee
or payment for primary care services.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2016.
SEC. 4. FREEDOM FROM MANDATE.
(a) In General.--Section 223 of the Internal Revenue Code of 1986,
as amended by sections 2 and 3, is amended by striking subsection (c)
and redesignating subsections (d) through (h) as subsections (c)
through (g), respectively.
(b) Conforming Amendments.--
(1) Subsection (a) of section 223 of such Code is amended
to read as follows:
``(a) Deduction Allowed.--In the case of an individual, there shall
be allowed as a deduction for a 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.''.
(2) Subsection (b) of section 223 of such Code (as amended
by section 2) is amended by striking paragraph (5).
(3) Section 223(c)(1)(A) of such Code (as redesignated by
subsection (a)) is amended--
(A) by striking ``subsection (f)(5)'' and inserting
``subsection (e)(5)'', and
(B) in clause (ii) by striking ``the sum
of--'' and all that follows and inserting ``the dollar
amount in effect under subsection (b)(1).''.
(4) Section 223(f)(1) of such Code (as redesignated by
subsection (a)) is amended by striking ``subsections (b)(1) and
(c)(2)(A)'' and inserting ``subsection (b)(1)''.
(5) Section 26(b)(U) of such Code is amended by striking
``section 223(f)(4)'' and inserting ``section 223(e)(4)''.
(6) Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(v),
4973(a)(5), and 6051(a)(12) of such Code are each amended by
striking ``section 223(d)'' each place it appears and inserting
``section 223(c)''.
(7) Section 106(d)(1) of such Code is amended--
(A) by striking ``who is an eligible individual (as
defined in section 223(c)(1))'', and
(B) by striking ``section 223(d)'' and inserting
``section 223(c)''.
(8) Section 408(d)(9) of such Code is amended--
(A) in subparagraph (A) by striking ``who is an
eligible individual (as defined in section 223(c))
and'', and
(B) in subparagraph (C) by striking ``computed on
the basis of the type of coverage under the high
deductible health plan covering the individual at the
time of the qualified HSA funding distribution''.
(9) Section 877A(g)(6) of such Code is amended by striking
``223(f)(4)'' and inserting ``223(e)(4)''.
(10) Section 4973(g) of such Code is amended--
(A) by striking ``section 223(d)'' and inserting
``section 223(c)'',
(B) in paragraph (2), by striking ``section
223(f)(2)'' and inserting ``section 223(e)(2)'', and
(C) by striking ``section 223(f)(3)'' and inserting
``section 223(e)(3)''.
(11) Section 4975 of such Code is amended--
(A) in subsection (c)(6)--
(i) by striking ``section 223(d)'' and
inserting ``section 223(c)'', and
(ii) by striking ``section 223(e)(2)'' and
inserting ``section 223(d)(2)'', and
(B) in subsection (e)(1)(E), by striking ``section
223(d)'' and inserting ``section 223(c)''.
(12) Section 6693(a)(2)(C) of such Code is amended by
striking ``section 223(h)'' and inserting ``section 223(g)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2016.
SEC. 5. RESTORING LOWER PENALTY FOR NONQUALIFIED DISTRIBUTIONS.
(a) HSAs.--Section 223(e)(4)(A) of the Internal Revenue Code of
1986, as amended by section 4, is amended by striking ``20 percent''
and inserting ``10 percent''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions made in taxable years beginning after December 31,
2016.
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