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H.R. 35: Health Savings Act of 2017

The text of the bill below is as of Jan 3, 2017 (Introduced).


I

115th CONGRESS

1st Session

H. R. 35

IN THE HOUSE OF REPRESENTATIVES

January 3, 2017

(for himself, Mr. Sanford, and Mr. Carter of Texas) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to modify rules relating to health savings accounts.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Health Savings Act of 2017.

(b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Health savings accounts for children.

Sec. 3. Allowing HSA rollover to child or parent of account holder.

Sec. 4. Maximum contribution limit to HSA increased to amount of deductible and out-of-pocket limitation.

Sec. 5. Equivalent bankruptcy protections for health savings accounts as retirement funds.

Sec. 6. Allowance of silver and bronze plans in connection with health savings accounts.

Sec. 7. Identification of HSA compatible plans.

2.

Health savings accounts for children

(a)

In general

Section 223 of the Internal Revenue Code of 1986 is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

(h)

Child health savings accounts

(1)

In general

In the case of an individual, in addition to any deduction allowed under subsection (a) for any taxable year, there shall be allowed as a deduction under this section an amount equal to the aggregate amount paid in cash by the taxpayer during the taxable year to a child health savings account of a child or grandchild of the taxpayer.

(2)

Limitations

(A)

Deduction limitation

The amount taken into account under paragraph (1) with respect to each child or grandchild of the taxpayer, as the case may be, for the taxable year shall not exceed the sum of the monthly limitations with respect to such child for months during the taxable year that the child is an eligible individual.

(B)

Limit on accounts with respect to individual

The aggregate amount of contributions which may be made for any taxable year to all child health savings accounts established and maintained on behalf of a child shall not exceed the sum of the monthly limitations for months during the taxable year that the child is an eligible individual.

(C)

Monthly limitation

The monthly limitation for any month with respect to a child is 1/12 of the amount in effect for the taxable year under subsection (c)(2)(A)(ii)(I).

(3)

Treatment of account while a dependent

For purposes of this section, except as otherwise provided in this subsection, a child health savings account established for the benefit of the child of a taxpayer shall be treated as a health savings account of the taxpayer until the first taxable year (and each taxable year thereafter) for which no deduction under section 151 is allowable to any taxpayer with respect to such child, after which such account shall be treated as a health savings account of the child. The preceding sentence shall not apply for purposes of applying the limitations in subsection (b) to a health savings account of the taxpayer.

(4)

Child health savings account

For purposes of this subsection, the term child health savings account means a health savings account designated as a child health savings account and established for the benefit of a child of a taxpayer.

(5)

Qualified medical expenses

For purposes of this section, the term qualified medical expenses shall, with respect to any child health savings account, not include any amounts paid for medical care (as defined in section 213(d)) for any individual other than the child for whose benefit the account is maintained.

(6)

Exceptions for disability or death of child

If the child becomes disabled within the meaning of section 72(m)(7) or dies—

(A)

subsection (f)(4)(A) shall not apply to any subsequent payment or distribution, and

(B)

the taxpayer may rollover the amount in such account to any health savings account of the taxpayer or grandparent of the child or to any child health savings account of any other child of the taxpayer.

(7)

Guardians

Any legal guardian of a child shall be treated as the parent of such child for purposes of this section.

(8)

Regulations

The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including rules for determining application of this subsection in the case of legal guardians and in the case of parents of a child who file separately, are separated, or are not married.

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(b)

Coordination with means-Tested programs

Amounts in a child health savings account shall not be taken into account in determining resources for purposes of title XIX of the Social Security Act.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

3.

Allowing HSA rollover to child or parent of account holder

(a)

In general

Subparagraph (A) of section 223(f)(8) of the Internal Revenue Code of 1986 is amended—

(1)

by inserting child, parent, or grandparent after surviving spouse,

(2)

by inserting child, parent, or grandparent, as the case may be, after the spouse,

(3)

by inserting , child, parent, or grandparent after spouse in the heading thereof, and

(4)

by adding at the end the following: In the case of a child who acquires such beneficiary’s interest and 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, such health savings account shall be treated as a child health savings account of the child..

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

4.

Maximum contribution limit to HSA increased to amount of deductible and out-of-pocket limitation

(a)

Self-Only coverage

Subparagraph (A) of section 223(b)(2) of the Internal Revenue Code of 1986 is amended by striking $2,250 and inserting the amount in effect under subsection (c)(2)(A)(ii)(I).

(b)

Family coverage

Subparagraph (B) of section 223(b)(2) of such Code is amended by striking $4,500 and inserting the amount in effect under subsection (c)(2)(A)(ii)(II).

(c)

Conforming amendment

Section 223(g)(1) of such Code is amended by striking subsections (b)(2) and and inserting subsection.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

5.

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:

(r)

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.

.

(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.

6.

Allowance of silver and bronze plans in connection with health savings accounts

(a)

In general

Section 223 of the Internal Revenue Code of 1986 is amended—

(1)

by striking a high deductible health plan each place it appears and inserting an HSA compatible health plan,

(2)

by striking high deductible health plan in subsection (b)(8)(A)(ii) and inserting HSA compatible health plan, and

(3)

by striking the high deductible health plan in subsection (c)(1)(A)(ii)(II) and inserting the HSA compatible health plan.

(b)

HSA compatible health plan defined

Paragraph (2) of section 223(c) of such Code is amended by redesignating subparagraphs (A), (B), (C), and (D) as subparagraphs (B), (C), (D), and (E) and by inserting before subparagraph (B), as so redesignated, the following new subparagraph:

(A)

In general

The term HSA compatible health plan means—

(i)

any high deductible health plan,

(ii)

any plan described in section 1302(e) of the Patient Protection and Affordable Care Act (42 U.S.C. 18022(e)) (relating to catastrophic plan), or

(iii)

any silver or bronze plan which was enrolled in through an Exchange established under section 1311 or section 1321 of the Patient Protection and Affordable Care Act (42 U.S.C. 1311, 18041).

.

(c)

Clerical amendments

Section 223 of such Code is amended—

(1)

by striking In general in the heading for subsection (c)(2)(B), as redesignated by subsection (b) of this Act, and inserting High deductible health plan,

(2)

by striking high deductible health plan in the heading for subsection (b)(8)(B) and inserting hsa compatible health plan, and

(3)

by striking High deductible health plan in the heading for subsection (c)(2) and inserting HSA compatible health plan.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

7.

Identification of HSA compatible plans

Section 1103(b) of the Patient Protection and Affordable Care Act (42 U.S.C. 18003(b)) is amended by adding at the end the following new paragraph:

(3)

Identification of HSA compatible plans

Beginning for plan year 2018, the format described in paragraph (1) shall require that information on a coverage option described in subsection (a)(2) that is an HSA compatible health plan (as defined in section 223(c)(2) of the Internal Revenue Code of 1986) identifies such plan as a plan that satisfies the requirement of section 223(c)(1)(A)(i) of such Code.

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