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Full Text of this Amendment
At the appropriate place, insert the following:
SEC. __. PROVISIONS TO IMPROVE AND EXPAND THE AVAILABILITY OF HEALTH SAVINGS ACCOUNTS.
(a) Provisions Relating to Eligibility to Contribute to HSAs.--
(1) INDIVIDUALS ELIGIBLE FOR REIMBURSEMENT UNDER SPOUSE'
S FLEXIBLE SPENDING ARRANGEMENT.--Section 223(c)(1) (defining eligible individual) is amended by adding at the end the following new subparagraph:
``(C) SPECIAL RULE FOR CERTAIN FLEXIBLE SPENDING ARRANGEMENTS.--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 covered under a flexible spending arrangement (within the meaning of section 106(c)(2)) which is maintained by an employer of the spouse of the individual, but only if--
``(i) the employer is not also the employer of the individual, and
``(ii) the individual certifies to the employer and to the Secretary (in such form and manner as the Secretary may prescribe) that the individual and the individual's spouse will not accept reimbursement under the arrangement for any expenses for medical care provided to the individual.''.
(2) INDIVIDUALS OVER AGE 65 AUTOMATICALLY ENROLLED IN MEDICARE PART A.--Section 223(b)(7) (relating to contribution limitation on medicare eligible individuals) is amended by adding at the end the following new sentence: ``This paragraph shall not apply to any individual during any period 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 automatic enrollment for such hospital insurance
benefits under the regulations under section 226(a)(1) of such Act.''
(3) INDIVIDUALS ELIGIBLE FOR CERTAIN VETERANS BENEFITS.--Section 223(c)(1) (defining eligible individual), as amended by subsection (a), is amended by adding at the end the following new subparagraph:
``(D) 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.''.
(b) Family Plan May Have Individual Annual Deductible Limit.--Section 223(c)(2) (defining high deductible health plan) is amended by adding at the end the following new subparagraph:
``(E) SPECIAL RULE FOR FAMILY COVERAGE.--A health plan providing family coverage shall not fail to meet the requirements of subparagraph (A)(i)(II) merely because the plan elects to provide both--
``(i) an aggregate annual deductible limit for all individuals covered by the plan which is not less than the amount in effect under subparagraph (A)(i)(II), and
``(ii) an annual deductible limit for each individual covered by the plan which is not less than the amount in effect under subparagraph (A)(i)(I).''.
(c) Definition of Qualified Medical Expenses.--
(1) PREMIUMS FOR LOW PREMIUM HEALTH PLANS TREATED AS QUALIFIED MEDICAL EXPENSES.--Subparagraph (C) of section 223(d)(2) is amended by striking ``or'' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ``, or'', and by adding at the end the following new clause:
``(v) a high deductible health plan, but only if the expenses are for coverage for a month with respect to which the account beneficiary is an eligible individual by reason of the coverage under the plan.''.
(2) SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT.--Paragraph (2) of section 223(d) is amended by adding at the end the following new subparagraph:
``(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--
``(i) during either--
``(I) the taxable year in which the health savings account was established, or
``(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), and
``(ii) for medical care of an individual during a period that such individual was an eligible individual.
For purposes of clause (ii), an individual shall be treated as an eligible individual for any portion of a month the individual is described in subsection (c)(1), determined without regard to whether the individual is covered under a high deductible health plan on the 1st day of such month.''.
(d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
(As printed in the Congressional Record for the Senate on Jan 23, 2007.)