HR 6288 IHCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to provide for tax-favored retirement health savings accounts, and for other purposes.CommentsClose CommentsPermalink

June 17, 2008CommentsClose CommentsPermalink

Mr. MCHUGH (for himself, Mr. KUHL of New York, Mr. KING of New York, and Mr. WALSH of New York) introduced the following bill; which was referred to the Committee on Ways and MeansCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to provide for tax-favored retirement health savings accounts, and for other purposes.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Retiree Health Account Act of 2008’.CommentsClose CommentsPermalink

SEC. 2. RETIREMENT HEALTH ARRANGEMENT.

(a) In General- Section 401 of the Internal Revenue Code of 1986 (relating to qualified pension, profit-sharing, and stock bonus plans) is amended by redesignating subsection (o) as subsection (p) and inserting after subsection (n) the following new subsection:CommentsClose CommentsPermalink





‘(o) Retirement Health Plan-CommentsClose CommentsPermalink





‘(1) IN GENERAL-CommentsClose CommentsPermalink





‘(A) TREATED IN SAME MANNER AS 401(k)- Except as provided in this subsection, a retirement health arrangement shall be treated for purposes of this title in the same manner as an qualified cash or deferred arrangement described in section 401(k)(2).CommentsClose CommentsPermalink





‘(B) SEPARATE APPLICATION OF APPLICABLE RULES- Rules made applicable by reason of this paragraph shall be applied separately with respect to retirement health arrangements and other qualified cash or deferred arrangements of the individual.CommentsClose CommentsPermalink





‘(2) RETIREMENT HEALTH ARRANGEMENT- For purposes of this subsection, the term ‘retirement health arrangement’ means a cash or deferred arrangement described in section 401(k)(2) which is designated (in such manner as the Secretary may prescribe) at the time of establishment of the plan as a retirement health arrangement.CommentsClose CommentsPermalink





‘(3) CONTRIBUTIONS AFTER MEDICARE ELIGIBILITY- Except in the case of a rollover contribution described in paragraph (5)(A), no contributions may be made to an employee’s retirement health arrangement during calendar years beginning after the first month such employee is entitled to benefits under title XVIII of the Social Security Act.CommentsClose CommentsPermalink





‘(4) TREATMENT OF DISTRIBUTIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Any amounts distributed from a retirement health arrangement shall be included in gross income, unless such amount is used exclusively to pay qualified medical retirement expenses of the employee.CommentsClose CommentsPermalink





‘(B) QUALIFIED RETIREMENT MEDICAL EXPENSE- For purposes of this section, the term ‘qualified retirement medical expense’ means, with respect to an individual, amounts paid by such individual for medical care (as defined in section 213(d)) of the individual, the individual’s spouse, or a dependent of the individual, but only if such payments are made on or after the date that the individual attains age 55.CommentsClose CommentsPermalink





‘(C) HARDSHIP DISTRIBUTIONS- Subparagraph (A) shall not apply to any amount paid or distributed--CommentsClose CommentsPermalink





‘(i) on or after disability of the employee,CommentsClose CommentsPermalink





‘(ii) if such amount is used exclusively to pay for insurance covering medical care with respect to the individual, the individual’s spouse, or a dependent of the individual during a period of unemployment of the individual, orCommentsClose CommentsPermalink





‘(iii) if such amount is used exclusively to pay for medical care under circumstances that, to the extent provided in regulations, constitute a hardship.CommentsClose CommentsPermalink





‘(D) OTHER DISTRIBUTION RULES-CommentsClose CommentsPermalink





‘(i) PLAN TERMINATION- Subparagraph (A) shall not apply to amounts paid or distributed on or after an event described in paragraph (10) of subsection (k).CommentsClose CommentsPermalink





‘(ii) EXCESS CONTRIBUTIONS- Rules similar to the rules of section 401(k)(8) shall apply for purposes of this subsection.CommentsClose CommentsPermalink





‘(iii) NO MINIMUM DISTRIBUTION REQUIREMENT PRIOR TO DEATH- Section 401(a)(9) and the incidental death benefit requirement of section 401(a) shall not apply for purposes of this subsection.CommentsClose CommentsPermalink





‘(iv) AFTER DEATH OF EMPLOYEE- Rules similar to the rules of paragraph (8) of section 223(f) shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(5) DEFINITIONS AND SPECIAL RULES- For purposes of this subsection--CommentsClose CommentsPermalink





‘(A) ROLLOVER CONTRIBUTIONS- An amount is described in this subparagraph as a rollover contribution if it meets the requirements of clauses (i) and (ii).CommentsClose CommentsPermalink





‘(i) IN GENERAL- Paragraph (4)(A) shall not apply to any amount paid or distributed from a retirement health arrangement to the account holder to the extent the amount received is paid into a retirement health arrangement or individual health account (as defined in section 408B) for the benefit of such holder not later than the 60th day after the day on which the holder receives the payment or distribution.CommentsClose CommentsPermalink





‘(ii) LIMITATION- This subparagraph shall not apply to any amount described in clause (i) received by an individual from a retirement health arrangement if, at any time during the 1-year period ending on the day of such receipt, such individual received any other amount described in clause (i) from a retirement health arrangement which was not includible in the individual’s gross income because of the application of this subparagraph.CommentsClose CommentsPermalink





‘(B) COORDINATION WITH MEDICAL EXPENSE DEDUCTION- For purposes of determining the amount of the deduction under section 213, any payment or distribution out of a retirement health arrangement shall not be treated as an expense paid for medical care, to the extent such payment or distribution was not included in gross income.CommentsClose CommentsPermalink





‘(C) NO EXCLUSIVE PLAN REQUIREMENT- Section 401(k)(11)(A)(ii) shall not apply with respect to a retirement health arrangement.CommentsClose CommentsPermalink





‘(D) APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS- An employer may elect, at such time and in such form and manner as the Secretary shall by regulation prescribe, to treat any qualified cash or deferred arrangement and retirement health arrangement maintained by the employer as 1 arrangement for purposes of meeting the requirements of section 401(k)(3)(A)(ii).’.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall apply to years beginning after December 31, 2008.CommentsClose CommentsPermalink

SEC. 3. INDIVIDUAL HEALTH ACCOUNTS.

(a) In General- Subpart A of part I of subchapter D of chapter 1 of the Internal Revenue Code of 1986 (relating to pension, profit-sharing, stock bonus plans, etc.) is amended by inserting after section 408A the following new section:CommentsClose CommentsPermalink

‘SEC. 408B. INDIVIDUAL HEALTH ACCOUNTS.

‘(a) In General-CommentsClose CommentsPermalink





‘(1) TREATED IN SAME MANNER AS IRA- Except as provided in this section, an individual health account shall be treated for purposes of this title in the same manner as an individual retirement plan.CommentsClose CommentsPermalink





‘(2) SEPARATE APPLICATION OF RULES- Rules made applicable by reason of this paragraph shall be applied separately with respect to individual health accounts and individual retirement plans of the individual.CommentsClose CommentsPermalink





‘(b) Individual Health Account- For purposes of this title, the term ‘individual health account’ means an individual retirement plan (as defined in section 7701(a)(37)) which is designated (in such manner as the Secretary may prescribe) at the time of establishment of the plan as an individual health account.CommentsClose CommentsPermalink





‘(c) Contributions-CommentsClose CommentsPermalink





‘(1) RETIREMENT HEALTH SAVINGS REFUND PAYMENT- Section 408(a)(1) shall not apply with respect to a payment under section 6431.CommentsClose CommentsPermalink





‘(2) CONTRIBUTIONS AFTER MEDICARE ELIGIBILITY- Except in the case of a rollover contribution described in subsection (e)(1), no contributions may be made to an employee’s retirement health arrangement during calendar years beginning after the first month such employee is entitled to benefits under title XVIII of the Social Security Act.CommentsClose CommentsPermalink





‘(d) Treatment of Distributions-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Any amounts distributed from an individual health account shall be included in gross income, unless such amount is used exclusively to pay qualified medical retirement expenses of the account beneficiary.CommentsClose CommentsPermalink





‘(2) QUALIFIED RETIREMENT MEDICAL EXPENSE- For purposes of this section, the term ‘qualified retirement medical expense’ shall have the meaning given such term by section 401(o)(4) (relating to retirement health arrangements).CommentsClose CommentsPermalink





‘(3) HARDSHIP DISTRIBUTIONS- Paragraph (1) shall not apply to any amount paid or distributed--CommentsClose CommentsPermalink





‘(A) on or after disability (within the meaning of section 72(m)(7)) of the account beneficiary,CommentsClose CommentsPermalink





‘(B) if such amount is used exclusively to pay for insurance covering medical care with respect to the individual, the individual’s spouse, or a dependent of the individual during a period of unemployment of the account beneficiary, orCommentsClose CommentsPermalink





‘(C) if such amount is used exclusively to pay for medical care under circumstances that, to the extent provided in regulations, constitute a hardship.CommentsClose CommentsPermalink





‘(4) OTHER DISTRIBUTION RULES-CommentsClose CommentsPermalink





‘(A) EXCESS CONTRIBUTIONS; TRANSFER OF ACCOUNT INCIDENT TO DIVORCE- Rules similar to the rules of paragraphs (4) through (6) of section 408(d) shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(B) NO MINIMUM DISTRIBUTION REQUIREMENT PRIOR TO DEATH- Notwithstanding subsections (a)(6) and (b)(6), section 401(a)(9) and the incidental death benefit requirement of section 401(a) shall not apply for purposes of this subsection.CommentsClose CommentsPermalink





‘(C) TREATMENT AFTER DEATH OF ACCOUNT BENEFICIARY- Rules similar to the rules of paragraph (8) of section 223(f) shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(e) Definitions and Special Rules- For purposes of this section--CommentsClose CommentsPermalink





‘(1) ROLLOVER CONTRIBUTIONS- An amount is described in this paragraph as a rollover contribution if it meets the requirements of clauses (i) and (ii).CommentsClose CommentsPermalink





‘(A) IN GENERAL- Paragraph (1) shall not apply to any amount paid or distributed from an individual health account to the account holder to the extent the amount received is paid into an individual health account or retirement health arrangement (as defined in section 401(o)(2)) for the benefit of such holder not later than the 60th day after the day on which the holder receives the payment or distribution.CommentsClose CommentsPermalink





‘(B) LIMITATION- This paragraph shall not apply to any amount described in paragraph (A) received by an individual from an individual health 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 an individual health account which was not includible in the individual’s gross income because of the application of this paragraph.CommentsClose CommentsPermalink





‘(2) COORDINATION WITH MEDICAL EXPENSE DEDUCTION- For purposes of determining the amount of the deduction under section 213, any payment or distribution out of an individual health account shall not be treated as an expense paid for medical care, to the extent such payment or distribution was not included in gross income.CommentsClose CommentsPermalink





‘(3) ACCOUNT BENEFICIARY- The term ‘account beneficiary’ means the individual on whose behalf the retiree health savings account is established.’.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for subpart A of part I of subchapter D of chapter 1 of such Code is amended by inserting after the item relating to section 408A the following new item:CommentsClose CommentsPermalink





‘Sec. 408B. Individual health accounts.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.CommentsClose CommentsPermalink

SEC. 4. PORTION OF SAVER’S CREDIT REFUNDABLE.

(a) In General- Section 25B of such Code (relating to elective deferrals and IRA contributions by certain individuals) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(h) Portion of Credit Refundable-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of--CommentsClose CommentsPermalink





‘(A) $1,000, orCommentsClose CommentsPermalink





‘(B) the amount of the credit attributable to qualified retirement savings contributions made by the individual to individual health accounts and retirement health arrangements which would be allowed under this section (without regard to this subsection and the limitation under section 26(a)(2) or subsection (g), as the case may be).CommentsClose CommentsPermalink





The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to section 26(a)(2) or subsection (g), as the case may be.CommentsClose CommentsPermalink





‘(2) LIMITATION- The amount of the credit allowed under this subsection for any taxable year shall not exceed an amount equal to the excess (if any) of--CommentsClose CommentsPermalink





‘(A) $5,000, overCommentsClose CommentsPermalink





‘(B) the aggregate amount of credits allowed under this subsection for all prior taxable years.CommentsClose CommentsPermalink





‘(3) INFLATION ADJUSTMENT- In the case of any taxable year beginning in a calendar year after 2009, the $1,000 amount contained in paragraph (1)(A) shall be increased by an amount equal to--CommentsClose CommentsPermalink





‘(A) such dollar amount, multiplied byCommentsClose CommentsPermalink





‘(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2008’ for ‘calendar year 1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $10.’.CommentsClose CommentsPermalink





(b) Refund Payable to Health Account-CommentsClose CommentsPermalink





(1) IN GENERAL- Subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:CommentsClose CommentsPermalink

‘SEC. 6431. RETIREMENT HEALTH SAVINGS REFUND PAYMENT.

‘(a) In General- In the case of a credit allowed to an individual which is attributable to an increase under section 25B(h), the Secretary shall pay the amount of such credit into the designated retirement account of the individual.CommentsClose CommentsPermalink





‘(b) Designated Retirement Account- The term ‘designated retirement account’ means any individual health account or retirement health arrangement of the individual--CommentsClose CommentsPermalink





‘(1) which is designated (in such form and manner as the Secretary may provide) on the individual’s return of tax for the taxable year to receive the payment under subsection (a), andCommentsClose CommentsPermalink





‘(2) which, under the terms of the account or arrangement, accepts the payment described in paragraph (1).CommentsClose CommentsPermalink





‘(c) Payment Not Treated as an Annual Addition- For purposes of section 415(c) (relating to limitation for defined contribution plans), a payment under section 6431 shall not be treated as an annual addition.’.CommentsClose CommentsPermalink





(2) CLERICAL AMENDMENT- The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Sec. 6431. Retirement health savings refund payment.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.CommentsClose CommentsPermalink