Most commented sections:

• Paragraph 212 (1 comments)
• Paragraph 25 (1 comments)
• Paragraph 35 (1 comments)

S 1098 ISCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

S. 1098CommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to improve access to health care through expanded health savings accounts, and for other purposes.CommentsClose CommentsPermalink

IN THE SENATE OF THE UNITED STATESCommentsClose CommentsPermalink

May 26, 2011CommentsClose CommentsPermalink

Mr. HATCH (for himself and Mr. RUBIO) introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to improve access to health care through expanded 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, ETC.

(a) Short Title- This Act may be cited as the ‘Family and Retirement Health Investment Act of 2011’.CommentsClose CommentsPermalink





(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.CommentsClose CommentsPermalink





(c) Table of Contents- The table of contents is as follows:CommentsClose CommentsPermalink





Sec. 1. Short title, etc.CommentsClose CommentsPermalink

TITLE I--PROVISIONS RELATING TO TAX-PREFERRED HEALTH ACCOUNTS

Sec. 101. Allow both spouses to make catch-up contributions to the same HSA account.CommentsClose CommentsPermalink





Sec. 102. Provisions relating to Medicare.CommentsClose CommentsPermalink





Sec. 103. Individuals eligible for veterans benefits for a service-connected disability.CommentsClose CommentsPermalink





Sec. 104. Individuals eligible for Indian Health Service assistance.CommentsClose CommentsPermalink





Sec. 105. Individuals eligible for TRICARE coverage.CommentsClose CommentsPermalink





Sec. 106. Health FSA carryforwards.CommentsClose CommentsPermalink





Sec. 107. FSA and HRA interaction with HSAs.CommentsClose CommentsPermalink





Sec. 108. Allowance of distributions for prescription and over-the-counter medicines and drugs.CommentsClose CommentsPermalink





Sec. 109. Purchase of health insurance from HSA account.CommentsClose CommentsPermalink





Sec. 110. Special rule for certain medical expenses incurred before establishment of account.CommentsClose CommentsPermalink





Sec. 111. Preventive care prescription drug clarification.CommentsClose CommentsPermalink





Sec. 112. Equivalent bankruptcy protections for health savings accounts as retirement funds.CommentsClose CommentsPermalink





Sec. 113. Administrative error correction before due date of return.CommentsClose CommentsPermalink





Sec. 114. Reauthorization of medicaid health opportunity accounts.CommentsClose CommentsPermalink

TITLE II--OTHER PROVISIONS

Sec. 121. Certain exercise equipment and physical fitness programs treated as medical care.CommentsClose CommentsPermalink





Sec. 122. Certain nutritional and dietary supplements to be treated as medical care.CommentsClose CommentsPermalink





Sec. 123. Certain provider fees to be treated as medical care.CommentsClose CommentsPermalink





Sec. 124. Repeal of annual limitations on deductibles for employer-sponsored plans offered in small group market.CommentsClose CommentsPermalink

TITLE I--PROVISIONS RELATING TO TAX-PREFERRED HEALTH ACCOUNTSCommentsClose CommentsPermalink

SEC. 101. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME HSA ACCOUNT.

(a) In General- Paragraph (3) of section 223(b) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(C) SPECIAL RULE WHERE BOTH SPOUSES ARE ELIGIBLE INDIVIDUALS WITH 1 ACCOUNT- If--CommentsClose CommentsPermalink





‘(i) an individual and the individual’s spouse have both attained age 55 before the close of the taxable year, andCommentsClose CommentsPermalink





‘(ii) the spouse is not an account beneficiary of a health savings account as of the close of such year,CommentsClose CommentsPermalink





the additional contribution amount shall be 200 percent of the amount otherwise determined under subparagraph (B).’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 102. PROVISIONS RELATING TO MEDICARE.

(a) Individuals Over Age 65 Only Enrolled in Medicare Part A- Paragraph (7) of section 223(b) is amended by adding at the end the following: ‘This paragraph shall not apply to any individual during any period for which the individual’s only entitlement to such benefits is an entitlement to hospital insurance benefits under part A of title XVIII of such Act pursuant to an enrollment for such hospital insurance benefits under section 226(a)(1) of such Act.’.CommentsClose CommentsPermalink





(b) Medicare Beneficiaries Participating in Medicare Advantage MSA May Contribute Their Own Money to Their MSA- Subsection (b) of section 138 is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 103. INDIVIDUALS ELIGIBLE FOR VETERANS BENEFITS FOR A SERVICE-CONNECTED DISABILITY.

(a) In General- Paragraph (1) of section 223(c) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(C) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR CERTAIN VETERANS BENEFITS- For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in such subparagraph merely because the individual receives periodic hospital care or medical services for a service-connected disability under any law administered by the Secretary of Veterans Affairs but only if the individual is not eligible to receive such care or services for any condition other than a service-connected disability.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 104. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH SERVICE ASSISTANCE.

(a) In General- Paragraph (1) of section 223(c), as amended by section 103, is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(D) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR ASSISTANCE UNDER INDIAN HEALTH SERVICE PROGRAMS- For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in such subparagraph merely because the individual receives hospital care or medical services under a medical care program of the Indian Health Service or of a tribal organization.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 105. INDIVIDUALS ELIGIBLE FOR TRICARE COVERAGE.

(a) In General- Paragraph (1) of section 223(c), as amended by sections 103 and 104, is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(E) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR ASSISTANCE UNDER TRICARE- For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in such subparagraph merely because the individual is eligible to receive hospital care, medical services, or prescription drugs under TRICARE Extra or TRICARE Standard and such individual is not enrolled in TRICARE Prime.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 106. HEALTH FSA CARRYFORWARDS.

(a) In General- Section 125 is amended by redesignating subsections (i) and (j) as subsections (j) and (k), respectively, and by inserting after subsection (h) the following new subsection:CommentsClose CommentsPermalink





‘(i) Special Rules Applicable to Health Flexible Spending Arrangements-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For purposes of this title, a plan or other arrangement shall not fail to be treated as a health flexible spending or similar arrangement solely because under the plan or arrangement a participant is permitted access to any unused balance in the participant’s accounts under such plan or arrangement in the manner provided under paragraph (2).CommentsClose CommentsPermalink





‘(2) CARRYFORWARD OF UNUSED BENEFITS IN HEALTH ARRANGEMENTS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- A plan or arrangement may permit a participant in a health flexible spending arrangement to elect to carry forward any aggregate unused balances in the participant’s accounts under such arrangement as of the close of any year to the succeeding year. Such carryforward shall be treated as having occurred within 30 days of the close of the year.CommentsClose CommentsPermalink





‘(B) DOLLAR LIMIT ON CARRYFORWARDS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The amount which a participant may elect to carry forward under subparagraph (A) from any year shall not exceed $500. For purposes of this paragraph, all plans and arrangements maintained by an employer or any related person shall be treated as 1 plan.CommentsClose CommentsPermalink





‘(ii) COST-OF-LIVING ADJUSTMENT- In the case of any taxable year beginning in a calendar year after 2011, the $500 amount under clause (i) shall be increased by an amount equal to--CommentsClose CommentsPermalink





‘(I) $500, multiplied byCommentsClose CommentsPermalink





‘(II) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting ‘2010’ for ‘1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





If any dollar amount as increased under this clause is not a multiple of $100, such amount shall be rounded to the next lowest multiple of $100.CommentsClose CommentsPermalink





‘(C) EXCLUSION FROM GROSS INCOME- No amount shall be required to be included in gross income under this chapter by reason of any carryforward under this paragraph.CommentsClose CommentsPermalink





‘(D) COORDINATION WITH LIMITS- The maximum amount which may be contributed to a health flexible spending arrangement for any year to which an unused amount is carried under this paragraph shall be reduced by such amount.CommentsClose CommentsPermalink





‘(3) TERMS RELATING TO FLEXIBLE SPENDING ARRANGEMENTS-CommentsClose CommentsPermalink





‘(A) FLEXIBLE SPENDING ARRANGEMENTS- For purposes of this subsection, a flexible spending arrangement is a benefit program which provides employees with coverage under which specified incurred expenses may be reimbursed (subject to reimbursement maximums and other reasonable conditions).CommentsClose CommentsPermalink





‘(B) HEALTH ARRANGEMENTS- The term ‘health flexible spending arrangement’ means any flexible spending arrangement (or portion thereof) which provides payments for expenses incurred for medical care (as defined in section 213(d)).’.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) The heading for section 125 of the Internal Revenue Code of 1986 is amended by inserting ‘and health flexible spending arrangements’ after ‘plans’.CommentsClose CommentsPermalink





(2) The item relating to section 125 in the table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting ‘and health flexible spending arrangements’ after ‘plans’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 107. FSA AND HRA INTERACTION WITH HSAS.

(a) Eligible Individuals Include FSA and HRA Participants- Subparagraph (B) of section 223(c)(1) is amended--CommentsClose CommentsPermalink





(1) by striking ‘and’ at the end of clause (ii),CommentsClose CommentsPermalink





(2) by striking the period at the end of clause (iii) and inserting ‘, and’, andCommentsClose CommentsPermalink





(3) by inserting after clause (iii) the following new clause:CommentsClose CommentsPermalink





‘(iv) coverage under a health flexible spending arrangement or a health reimbursement arrangement in the plan year a qualified HSA distribution as described in section 106(e) is made on behalf of the individual if after the qualified HSA distribution is made and for the remaining duration of the plan year, the coverage provided under the health flexible spending arrangement or health reimbursement arrangement is converted to--CommentsClose CommentsPermalink





‘(I) coverage that does not pay or reimburse any medical expense incurred before the minimum annual deductible under paragraph (2)(A)(i) (prorated for the period occurring after the qualified HSA distribution is made) is satisfied,CommentsClose CommentsPermalink





‘(II) coverage that, after the qualified HSA distribution is made, does not pay or reimburse any medical expense incurred after the qualified HSA distribution is made other than preventive care as defined in paragraph (2)(C),CommentsClose CommentsPermalink





‘(III) coverage that, after the qualified HSA distribution is made, pays or reimburses benefits for coverage described in clause (ii) (but not through insurance or for long-term care services),CommentsClose CommentsPermalink





‘(IV) coverage that, after the qualified HSA distribution is made, pays or reimburses benefits for permitted insurance or coverage described in clause (ii) (but not for long-term care services),CommentsClose CommentsPermalink





‘(V) coverage that, after the qualified HSA distribution is made, pays or reimburses only those medical expenses incurred after an individual’s retirement (and no expenses incurred before retirement), orCommentsClose CommentsPermalink





‘(VI) coverage that, after the qualified HSA distribution is made, is suspended, pursuant to an election made on or before the date the individual elects a qualified HSA distribution or, if later, on the date of the individual enrolls in a high deductible health plan, that does not pay or reimburse, at any time, any medical expense incurred during the suspension period except as defined in the preceding subclauses of this clause.’.CommentsClose CommentsPermalink





(b) Qualified HSA Distribution Shall Not Affect Flexible Spending Arrangement- Paragraph (1) of section 106(e) is amended to read as follows:CommentsClose CommentsPermalink





‘(1) IN GENERAL- A plan shall not fail to be treated as a health flexible spending arrangement under this section, section 105, or section 125, or as a health reimbursement arrangement under this section or section 105, merely because such plan provides for a qualified HSA distribution.’.CommentsClose CommentsPermalink





(c) FSA Balances at Year End Shall Not Forfeit- Paragraph (2) of section 125(d) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(E) EXCEPTION FOR QUALIFIED HSA DISTRIBUTIONS- Subparagraph (A) shall not apply to the extent that there is an amount remaining in a health flexible spending account at the end of a plan year that an individual elects to contribute to a health savings account pursuant to a qualified HSA distribution (as defined in section 106(e)(2)).’.CommentsClose CommentsPermalink





(d) Simplification of Limitations on FSA and HRA Rollovers- Paragraph (2) of section 106(e) is amended to read as follows:CommentsClose CommentsPermalink





‘(2) QUALIFIED HSA DISTRIBUTION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘qualified HSA distribution’ means a distribution from a health flexible spending arrangement or health reimbursement arrangement to the extent that such distribution does not exceed the lesser of--CommentsClose CommentsPermalink





‘(i) the balance in such arrangement as of the date of such distribution, orCommentsClose CommentsPermalink





‘(ii) the amount determined under subparagraph (B).CommentsClose CommentsPermalink





Such term shall not include more than 1 distribution with respect to any arrangement.CommentsClose CommentsPermalink





‘(B) DOLLAR LIMITATIONS-CommentsClose CommentsPermalink





‘(i) DISTRIBUTIONS FROM A HEALTH FLEXIBLE SPENDING ARRANGEMENT- A qualified HSA distribution from a health flexible spending arrangement shall not exceed the applicable amount.CommentsClose CommentsPermalink





‘(ii) DISTRIBUTIONS FROM A HEALTH REIMBURSEMENT ARRANGEMENT- A qualified HSA distribution from a health reimbursement arrangement shall not exceed--CommentsClose CommentsPermalink





‘(I) the applicable amount divided by 12, multiplied byCommentsClose CommentsPermalink





‘(II) the number of months during which the individual is a participant in the health reimbursement arrangement.CommentsClose CommentsPermalink





‘(iii) APPLICABLE AMOUNT- For purposes of this subparagraph, the applicable amount is--CommentsClose CommentsPermalink





‘(I) $2,250 in the case of an eligible individual who has self-only coverage under a high deductible health plan at the time of such distribution, andCommentsClose CommentsPermalink





‘(II) $4,500 in the case of an eligible individual who has family coverage under a high deductible health plan at the time of such distribution.’.CommentsClose CommentsPermalink





(e) Elimination of Additional Tax for Failure To Maintain High Deductible Health Plan Coverage- Subsection (e) of section 106 is amended--CommentsClose CommentsPermalink





(1) by striking paragraph (3) and redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively, andCommentsClose CommentsPermalink





(2) by striking subparagraph (A) of paragraph (3), as so redesignated, and redesignating subparagraphs (B) and (C) of such paragraph as subparagraphs (A) and (B) thereof, respectively.CommentsClose CommentsPermalink





(f) Limited Purpose FSAs and HRAs- Subsection (e) of section 106, as amended by this section, is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(5) LIMITED PURPOSE FSAS AND HRAS- A plan shall not fail to be a health flexible spending arrangement or health reimbursement arrangement under this section or section 105 merely because the plan converts coverage for individuals who enroll in a high deductible health plan described in section 223(c)(2) to coverage described in section 223(c)(1)(B)(iv). Coverage for such individuals may be converted as of the date of enrollment in the high deductible health plan, without regard to the period of coverage under the health flexible spending arrangement or health reimbursement arrangement, and without requiring any change in coverage to individuals who do not enroll in a high deductible health plan.’.CommentsClose CommentsPermalink





(g) Distribution Amounts Adjusted for Cost-of-Living- Subsection (e) of section 106, as amended by this section, is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(6) COST-OF-LIVING ADJUSTMENT-CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of any taxable year beginning after December 31, 2011, each of the dollar amounts in paragraph (2)(B)(iii) shall be increased by an amount equal to such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





‘(B) ROUNDING- If any increase under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.’.CommentsClose CommentsPermalink





(h) Disclaimer of Disqualifying Coverage- Subparagraph (B) of section 223(c)(1), as amended by this section, is amended--CommentsClose CommentsPermalink





(1) by striking ‘and’ at the end of clause (iii),CommentsClose CommentsPermalink





(2) by striking the period at the end of clause (iv) and inserting ‘, and’, andCommentsClose CommentsPermalink





(3) by inserting after clause (iv) the following new clause:CommentsClose CommentsPermalink





‘(v) any coverage (including prospective coverage) under a health plan that is not a high deductible health plan which is disclaimed in writing, at the time of the creation or organization of the health savings account, including by execution of a trust described in subsection (d)(1) through a governing instrument that includes such a disclaimer, or by acceptance of an amendment to such a trust that includes such a disclaimer.’.CommentsClose CommentsPermalink





(i) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 108. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIPTION AND OVER-THE-COUNTER MEDICINES AND DRUGS.

(a) Repeal of Distributions for Medicine Qualified Only if for Prescribed Drug or Insulin- Section 9003 of the Patient Protection and Affordable Care Act (Public Law 111-148) and the amendments made by such section are repealed and the Internal Revenue Code of 1986 shall be applied as if such section and amendments had never been enacted.CommentsClose CommentsPermalink





(b) Allowance of Distributions for All Medicines and Drugs-CommentsClose CommentsPermalink





(1) HSAS- Subparagraph (A) of section 223(d)(2) is amended by adding at the end the following: ‘Such term shall include an amount paid for any prescription or over-the-counter medicine or drug.’.CommentsClose CommentsPermalink





(2) ARCHER MSAS- Subparagraph (A) of section 220(d)(2) is amended by adding at the end the following: ‘Such term shall include an amount paid for any prescription or over-the-counter medicine or drug.’.CommentsClose CommentsPermalink





(3) HEALTH FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH REIMBURSEMENT ARRANGEMENTS- Section 106 is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(f) Reimbursements for All Medicines and Drugs- For purposes of this section and section 105, reimbursement for expenses incurred for any prescription or over-the-counter medicine or drug shall be treated as a reimbursement for medical expenses.’.CommentsClose CommentsPermalink





(4) EFFECTIVE DATES-CommentsClose CommentsPermalink





(A) DISTRIBUTIONS FROM SAVINGS ACCOUNTS- The amendments made by paragraphs (1) and (2) shall apply to amounts paid with respect to taxable years beginning after December 31, 2009.CommentsClose CommentsPermalink





(B) REIMBURSEMENTS- The amendment made by paragraph (3) shall apply to expenses incurred with respect to taxable years beginning after December 31, 2009.CommentsClose CommentsPermalink

SEC. 109. PURCHASE OF HEALTH INSURANCE FROM HSA ACCOUNT.

(a) In General- Paragraph (2) of section 223(d) is amended to read as follows:CommentsClose CommentsPermalink





‘(2) QUALIFIED MEDICAL EXPENSES-CommentsClose CommentsPermalink





‘(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 any individual covered by a high deductible health plan of the account beneficiary, but only to the extent such amounts are not compensated for by insurance or otherwise.CommentsClose CommentsPermalink





‘(B) HEALTH INSURANCE MAY NOT BE PURCHASED FROM ACCOUNT- Except as provided in subparagraph (C), subparagraph (A) shall not apply to any payment for insurance.CommentsClose CommentsPermalink





‘(C) EXCEPTIONS- Subparagraph (B) shall not apply to any expense for coverage under--CommentsClose CommentsPermalink





‘(i) a health plan during any period of continuation coverage required under any Federal law,CommentsClose CommentsPermalink





‘(ii) a qualified long-term care insurance contract (as defined in section 7702B(b)),CommentsClose CommentsPermalink





‘(iii) a health plan during any period in which the individual is receiving unemployment compensation under any Federal or State law,CommentsClose CommentsPermalink





‘(iv) a high deductible health plan, orCommentsClose CommentsPermalink





‘(v) any health insurance under title XVIII of the Social Security Act, other than a Medicare supplemental policy (as defined in section 1882 of such Act).’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply with respect to insurance purchased after the date of the enactment of this Act in taxable years beginning after such date.CommentsClose CommentsPermalink

SEC. 110. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT.

(a) In General- Paragraph (2) of section 223(d), as amended by section 109, is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(D) CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT TREATED AS QUALIFIED- An expense shall not fail to be treated as a qualified medical expense solely because such expense was incurred before the establishment of the health savings account if such expense was incurred--CommentsClose CommentsPermalink





‘(i) during either--CommentsClose CommentsPermalink





‘(I) the taxable year in which the health savings account was established, orCommentsClose CommentsPermalink





‘(II) the preceding taxable year in the case of a health savings account established after the taxable year in which such expense was incurred but before the time prescribed by law for filing the return for such taxable year (not including extensions thereof), andCommentsClose CommentsPermalink





‘(ii) for medical care of an individual during a period that such individual was covered by a high deductible health plan and met the requirements of subsection (c)(1)(A)(ii) (after application of subsection (c)(1)(B)).’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 111. PREVENTIVE CARE PRESCRIPTION DRUG CLARIFICATION.

(a) Clarify Use of Drugs in Preventive Care- Subparagraph (C) of section 223(c)(2) is amended by adding at the end the following: ‘Preventive care shall include prescription and over-the-counter drugs and medicines which have the primary purpose of preventing the onset of, further deterioration from, or complications associated with chronic conditions, illnesses, or diseases.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2003.CommentsClose CommentsPermalink

SEC. 112. EQUIVALENT BANKRUPTCY PROTECTIONS FOR HEALTH SAVINGS ACCOUNTS AS RETIREMENT FUNDS.

(a) In General- Section 522 of title 11, United States Code, is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(r) Treatment of Health Savings Accounts- For purposes of this section, any health savings account (as described in section 223 of the Internal Revenue Code of 1986) shall be treated in the same manner as an individual retirement account described in section 408 of such Code.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to cases commencing under title 11, United States Code, after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 113. ADMINISTRATIVE ERROR CORRECTION BEFORE DUE DATE OF RETURN.

(a) In General- Paragraph (4) of section 223(f) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(D) EXCEPTION FOR ADMINISTRATIVE ERRORS CORRECTED BEFORE DUE DATE OF RETURN- Subparagraph (A) shall not apply if any payment or distribution is made to correct an administrative, clerical or payroll contribution error and if--CommentsClose CommentsPermalink





‘(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, andCommentsClose CommentsPermalink





‘(ii) such distribution is accompanied by the amount of net income attributable to such contribution.CommentsClose CommentsPermalink





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.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 114. REAUTHORIZATION OF MEDICAID HEALTH OPPORTUNITY ACCOUNTS.

(a) In General- Section 1938 of the Social Security Act (42 U.S.C. 1396u-8) is amended--CommentsClose CommentsPermalink





(1) in subsection (a)--CommentsClose CommentsPermalink





(A) by striking paragraph (2) and inserting the following:CommentsClose CommentsPermalink





‘(2) INITIAL DEMONSTRATION- The demonstration program under this section shall begin on January 1, 2007. The Secretary shall approve States to conduct demonstration programs under this section for a 5-year period, with each State demonstration program covering 1 or more geographic areas specified by the State. With respect to a State, after the initial 5-year period of any demonstration program conducted under this section by the State, unless the Secretary finds, taking into account cost-effectiveness and quality of care, that the State demonstration program has been unsuccessful, the demonstration program may be extended or made permanent in the State.’; andCommentsClose CommentsPermalink





(B) in paragraph (3), in the matter preceding subparagraph (A)--CommentsClose CommentsPermalink





(i) by striking ‘not’; andCommentsClose CommentsPermalink





(ii) by striking ‘unless’ and inserting ‘if’;CommentsClose CommentsPermalink





(2) in subsection (b)--CommentsClose CommentsPermalink





(A) in paragraph (3), by inserting ‘clause (i) through (vii), (viii) (without regard to the amendment made by section 2004(c)(2) of Public Law 111-148), (x), or (xi) of’ after ‘described in’; andCommentsClose CommentsPermalink





(B) by striking paragraphs (4), (5), and (6);CommentsClose CommentsPermalink





(3) in subsection (c)--CommentsClose CommentsPermalink





(A) by striking paragraphs (3) and (4);CommentsClose CommentsPermalink





(B) by redesignating paragraphs (5) through (8) as paragraphs (3) through (6), respectively; andCommentsClose CommentsPermalink





(C) in paragraph (4) (as redesignated by subparagraph (B)), by striking ‘Subject to subparagraphs (D) and (E)’ and inserting ‘Subject to subparagraph (D)’; andCommentsClose CommentsPermalink





(4) in subsection (d)--CommentsClose CommentsPermalink





(A) in paragraph (2), by striking subparagraph (E); andCommentsClose CommentsPermalink





(B) in paragraph (3)--CommentsClose CommentsPermalink





(i) in subparagraph (A)(ii), by striking ‘Subject to subparagraph (B)(ii), in’ and inserting ‘In’; andCommentsClose CommentsPermalink





(ii) by striking subparagraph (B) and inserting the following:CommentsClose CommentsPermalink





‘(B) MAINTENANCE OF HEALTH OPPORTUNITY ACCOUNT AFTER BECOMING INELIGIBLE FOR PUBLIC BENEFIT- Notwithstanding any other provision of law, if an account holder of a health opportunity account becomes ineligible for benefits under this title because of an increase in income or assets--CommentsClose CommentsPermalink





‘(i) no additional contribution shall be made into the account under paragraph (2)(A)(i); andCommentsClose CommentsPermalink





‘(ii) the account shall remain available to the account holder for 3 years after the date on which the individual becomes ineligible for such benefits for withdrawals under the same terms and conditions as if the account holder remained eligible for such benefits, and such withdrawals shall be treated as medical assistance in accordance with subsection (c)(4).’.CommentsClose CommentsPermalink





(b) Conforming Amendment- Section 613 of Public Law 111-3 is repealed.CommentsClose CommentsPermalink

TITLE II--OTHER PROVISIONSCommentsClose CommentsPermalink

SEC. 121. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL FITNESS PROGRAMS TREATED AS MEDICAL CARE.

(a) In General- Subsection (d) of section 213 is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(12) EXERCISE EQUIPMENT AND PHYSICAL FITNESS PROGRAMS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘medical care’ shall include amounts paid--CommentsClose CommentsPermalink





‘(i) to purchase or use equipment used in a program (including a self-directed program) of physical exercise,CommentsClose CommentsPermalink





‘(ii) to participate, or receive instruction, in a program of physical exercise, andCommentsClose CommentsPermalink





‘(iii) for membership dues in a fitness club the primary purpose of which is to provide access to equipment and facilities for physical exercise.CommentsClose CommentsPermalink





‘(B) LIMITATION- Amounts treated as medical care under subparagraph (A) shall not exceed $1,000 with respect to any individual for any taxable year.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 122. CERTAIN NUTRITIONAL AND DIETARY SUPPLEMENTS TO BE TREATED AS MEDICAL CARE.

(a) In General- Subsection (d) of section 213, as amended by section 121, is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(13) NUTRITIONAL AND DIETARY SUPPLEMENTS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘medical care’ shall include amounts paid to purchase herbs, vitamins, minerals, homeopathic remedies, meal replacement products, and other dietary and nutritional supplements.CommentsClose CommentsPermalink





‘(B) LIMITATION- Amounts treated as medical care under subparagraph (A) shall not exceed $1,000 with respect to any individual for any taxable year.CommentsClose CommentsPermalink





‘(C) MEAL REPLACEMENT PRODUCT- For purposes of this paragraph, the term ‘meal replacement product’ means any product that--CommentsClose CommentsPermalink





‘(i) is permitted to bear labeling making a claim described in section 403(r)(3) of the Federal Food, Drug, and Cosmetic Act, andCommentsClose CommentsPermalink





‘(ii) is permitted to claim under such section that such product is low in fat and is a good source of protein, fiber, and multiple essential vitamins and minerals.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 123. CERTAIN PROVIDER FEES TO BE TREATED AS MEDICAL CARE.

(a) In General- Subsection (d) of section 213, as amended by sections 121 and 122, is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(14) PERIODIC PROVIDER FEES- The term ‘medical care’ shall include periodic fees paid to a primary physician, physician assistant, or nurse practitioner for the right to receive medical services on an as-needed basis.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 124. REPEAL OF ANNUAL LIMITATIONS ON DEDUCTIBLES FOR EMPLOYER-SPONSORED PLANS OFFERED IN SMALL GROUP MARKET.

Section 1302(c)(2) of the Patient Protection and Affordable Care Act (Public Law 111-148) is repealed.CommentsClose CommentsPermalink