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I
116TH CONGRESS
2D SESSION
H. R. 8473
To amend the Internal Revenue Code of 1986 to consolidate health accounts
into Medisave Accounts, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 1, 2020
Mr. GONZALEZ of Ohio (for himself and Mr. WESTERMAN) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Energy and Commerce, for a period
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To amend the Internal Revenue Code of 1986 to consolidate
health accounts into Medisave Accounts, and for other
purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Family First Medisave
4
Empowerment Act’’.
5
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SEC. 2. MEDISAVE ACCOUNTS.
1
(a) IN GENERAL.—Part VIII of subchapter F of
2
chapter 1 of the Internal Revenue Code of 1986 is amend-
3
ed by adding at the end the following new section:
4
‘‘SEC. 530A. MEDISAVE ACCOUNTS.
5
‘‘(a) MEDISAVE ACCOUNT.—For purposes of this sec-
6
tion—
7
‘‘(1) IN
GENERAL.—The term ‘Medisave ac-
8
count’ means a trust created or organized in the
9
United States as a Medisave account exclusively for
10
the purpose of paying the qualified medical expenses
11
of the account beneficiary, but only if the written
12
governing instrument creating the trust meets the
13
following requirements:
14
‘‘(A) Except in the case of a rollover con-
15
tribution described in subparagraph (A) or (B)
16
of subsection (e)(5), no contribution will be ac-
17
cepted—
18
‘‘(i) unless it is in cash,
19
‘‘(ii) to the extent such contribution,
20
when added to previous contributions to
21
the trust for the calendar year, exceeds the
22
limitation amount specified in subsection
23
(b)(1), or
24
‘‘(iii) to the extent such contribution,
25
when added to the balance of the account,
26
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exceeds the limitation amount specified in
1
subsection (b)(2).
2
‘‘(B) The trustee is a bank (as defined in
3
section 408(n)), an insurance company (as de-
4
fined in section 816), or another person who
5
demonstrates to the satisfaction of the Sec-
6
retary that the manner in which such person
7
will administer the trust will be consistent with
8
the requirements of this section.
9
‘‘(C) No part of the trust assets will be in-
10
vested in life insurance contracts.
11
‘‘(D) The assets of the trust will not be
12
commingled with other property except in a
13
common trust fund or common investment
14
fund.
15
‘‘(E) The interest of an individual in the
16
balance in his account is nonforfeitable.
17
‘‘(2) QUALIFIED MEDICAL EXPENSES.—
18
‘‘(A) IN
GENERAL.—The term ‘qualified
19
medical expenses’ means, with respect to an ac-
20
count beneficiary, amounts paid by such bene-
21
ficiary for medical care, but only to the extent
22
such amounts are not compensated for by in-
23
surance or otherwise—
24
‘‘(i) for—
25
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•HR 8473 IH
‘‘(I) such individual,
1
‘‘(II) the spouse of such indi-
2
vidual,
3
‘‘(III) any dependent (as defined
4
in section 152, determined without re-
5
gard to subsections (b)(1), (b)(2), and
6
(d)(1)(B) thereof) of such individual,
7
and
8
‘‘(IV) any individual who bears a
9
relationship to the account beneficiary
10
that is described in subparagraph (C)
11
or (D) of section 152(d) if the ac-
12
count beneficiary is or was a depend-
13
ent of such individual for any taxable
14
year ending before or with the taxable
15
year in which the individual attained
16
18 years of age, and
17
‘‘(ii) if, on the date such medical care
18
was provided, such individual, spouse or
19
dependent to whom such care was provided
20
was covered under the qualified health in-
21
surance of the account beneficiary.
22
‘‘(B) MODIFIED DEFINITION OF MEDICAL
23
CARE.—For purposes of subparagraph (A), the
24
term ‘medical care’ has the meaning given such
25
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•HR 8473 IH
term by section 213(d), except that such term
1
includes—
2
‘‘(i) direct pay arrangements with pri-
3
mary physicians, and
4
‘‘(ii) predetermined level of access to
5
care from an integrated health plan.
6
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
7
count beneficiary’ means the individual on whose be-
8
half the Medisave account was established.
9
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar
10
to the following rules shall apply for purposes of this
11
section:
12
‘‘(A) Section 219(d)(2) (relating to no de-
13
duction for rollovers).
14
‘‘(B) Section 219(f)(3) (relating to time
15
when contributions deemed made).
16
‘‘(C) Except as provided in section 106(d),
17
section 219(f)(5) (relating to employer pay-
18
ments).
19
‘‘(D) Section 408(g) (relating to commu-
20
nity property laws).
21
‘‘(E) Section 408(h) (relating to custodial
22
accounts).
23
‘‘(b) LIMITATIONS.—
24
‘‘(1) ANNUAL LIMITATION.—
25
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‘‘(A) IN GENERAL.—The limitation amount
1
specified in this paragraph is—
2
‘‘(i) $10,000 in the case of a qualified
3
health plan with an actuarial value of less
4
than 55 percent,
5
‘‘(ii) $8,600 in the case of a qualified
6
health plan with an actuarial value that is
7
55 percent or more and less than 65 per-
8
cent, and
9
‘‘(iii) $7,200 in the case of a qualified
10
health plan with an actuarial value that is
11
65 percent or more.
12
‘‘(B) ACTUARIAL
VALUE
OF
QUALIFIED
13
HEALTH PLAN.—For purposes of subparagraph
14
(A), the actuarial value of a qualified health
15
plan is the percentage of the total average costs
16
of covered benefits under the health plan.
17
‘‘(2) ACCOUNT ACCUMULATION LIMITATION.—
18
The limitation amount specified in this paragraph is
19
$50,000.
20
‘‘(3) INDEXING.—
21
‘‘(A) IN
GENERAL.—In the case of any
22
taxable year beginning in a calendar year after
23
2020, each dollar amount contained in para-
24
graph (1)(A) shall be increased by the medical
25
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•HR 8473 IH
care cost adjustment of such amount for such
1
calendar year.
2
‘‘(B)
MEDICAL
CARE
COST
ADJUST-
3
MENT.—For purposes of subparagraph (A), the
4
medical care cost adjustment for any calendar
5
year is the percentage (if any) by which—
6
‘‘(i) the medical care component of
7
the C–CPI–U (as defined in section
8
1(f)(6)) for August of the preceding cal-
9
endar year, exceeds
10
‘‘(ii) such component of the C–CPI–U
11
(as so defined) for August of 2019.
12
‘‘(C) ROUNDING.—
13
‘‘(i) ANNUAL LIMITATION.—If any in-
14
crease in a dollar amount contained in
15
paragraph (1)(A) determined under sub-
16
paragraph (A) is not a multiple of $100,
17
such increase shall be rounded to the near-
18
est multiple of $100.
19
‘‘(ii) ACCOUNT
LIMITATION.—If any
20
increase in the dollar amount contained in
21
paragraph (2) determined under subpara-
22
graph (A) is not a multiple of $1,000, such
23
increase shall be rounded to the nearest
24
multiple of $1,000.
25
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‘‘(4) COORDINATION WITH OTHER CONTRIBU-
1
TIONS.—The limitation which would (but for this
2
paragraph) apply under paragraphs (1) and (2) to
3
an individual for any taxable year shall be reduced
4
(but not below zero) by the sum of—
5
‘‘(A) the aggregate amount contributed to
6
Medisave accounts of such individual which is
7
excludable from the taxpayer’s gross income for
8
such taxable year under section 106(d), and
9
‘‘(B) the aggregate amount contributed to
10
Medisave accounts of such individual for such
11
taxable year under section 408(d)(9).
12
‘‘(5) DEPOSIT
OF
ADVANCE
PREMIUM
TAX
13
CREDIT.—An account beneficiary who is eligible for
14
an advance payment of the premium tax credit may
15
elect to have the Secretary deposit the advance pay-
16
ment into the Medisave account of the account bene-
17
ficiary.
18
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
19
poses of this section—
20
‘‘(1) ELIGIBLE INDIVIDUAL.—
21
‘‘(A) IN GENERAL.—The term ‘eligible in-
22
dividual’ means, with respect to any month, any
23
individual if such individual is covered under a
24
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•HR 8473 IH
qualified health plan as of the 1st day of such
1
month.
2
‘‘(B)
CERTAIN
COVERAGE
DIS-
3
REGARDED.—Subparagraph (A) shall be ap-
4
plied without regard to—
5
‘‘(i) coverage for any benefit provided
6
by permitted insurance, and
7
‘‘(ii) coverage (whether through insur-
8
ance or otherwise) for accidents, disability,
9
dental care, vision care, or long-term care.
10
‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI-
11
GIBLE FOR CERTAIN VETERANS BENEFITS.—An
12
individual shall not fail to be treated as an eli-
13
gible individual for any period merely because
14
the individual receives hospital care or medical
15
services under any law administered by the Sec-
16
retary of Veterans Affairs for a service-con-
17
nected disability (within the meaning of section
18
101(16) of title 38, United States Code).
19
‘‘(2) QUALIFIED HEALTH PLAN.—
20
‘‘(A) IN
GENERAL.—The term ‘qualified
21
health plan’ means a health plan that offers
22
health insurance coverage. Such term includes
23
entitlement to benefits under title XVIII or title
24
XIX of the Social Security Act.
25
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•HR 8473 IH
‘‘(B) EXCLUSION
OF
CERTAIN
PLANS.—
1
Such term does not include a health plan if
2
substantially all of its coverage is disregarded
3
under paragraph (1)(B).
4
‘‘(C) HEALTH
INSURANCE
COVERAGE.—
5
The term ‘health insurance coverage’ means
6
benefits consisting of medical care (provided di-
7
rectly, through insurance or reimbursement, or
8
otherwise and including items and services paid
9
for as medical care) under any hospital or med-
10
ical service policy or certificate, hospital or
11
medical service plan contract, or health mainte-
12
nance organization contract offered by a health
13
insurance issuer.
14
‘‘(D) HEALTH
INSURANCE
ISSUER.—The
15
term ‘health insurance issuer’ means an insur-
16
ance company, insurance service, or insurance
17
organization (including a health maintenance
18
organization) which is licensed to engage in the
19
business of insurance in a State and which is
20
subject to State law which regulates insurance
21
(within the meaning of section 514(b)(2) of the
22
Employee Retirement Income Security Act of
23
1974 (29 U.S.C. 1144(b)(2)).
24
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•HR 8473 IH
‘‘(E) HEALTH
MAINTENANCE
ORGANIZA-
1
TION.—The term ‘health maintenance organiza-
2
tion’ means—
3
‘‘(i) a Federally qualified health main-
4
tenance organization (as defined in section
5
1301(a) of the Public Health Service Act
6
(42 U.S.C. 300e(a)),
7
‘‘(ii) an organization recognized under
8
State law as a health maintenance organi-
9
zation, or
10
‘‘(iii) a similar organization regulated
11
under State law for solvency in the same
12
manner and to the same extent as such a
13
health maintenance organization.
14
‘‘(3) PERMITTED INSURANCE.—The term ‘per-
15
mitted insurance’ means—
16
‘‘(A) insurance if substantially all of the
17
coverage provided under such insurance relates
18
to—
19
‘‘(i) liabilities incurred under workers’
20
compensation laws,
21
‘‘(ii) tort liabilities,
22
‘‘(iii) liabilities relating to ownership
23
or use of property, or
24
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•HR 8473 IH
‘‘(iv) such other similar liabilities as
1
the Secretary may specify by regulations,
2
‘‘(B) insurance for a specified disease or
3
illness, and
4
‘‘(C) insurance paying a fixed amount per
5
day (or other period) of hospitalization.
6
‘‘(4) FAMILY
COVERAGE.—The term ‘family
7
coverage’ means any coverage other than self-only
8
coverage.
9
‘‘(d) TAX TREATMENT OF ACCOUNTS.—
10
‘‘(1) IN GENERAL.—A Medisave account is ex-
11
empt from taxation under this subtitle unless such
12
account has ceased to be a Medisave account. Not-
13
withstanding the preceding sentence, any Medisave
14
account is subject to the taxes imposed by section
15
511 (relating to imposition of tax on unrelated busi-
16
ness income of charitable, etc. organizations).
17
‘‘(2) ACCOUNT TERMINATIONS.—Rules similar
18
to the rules of paragraphs (2) and (4) of section
19
408(e) shall apply to Medisave accounts, and any
20
amount treated as distributed under such rules shall
21
be treated as not used to pay qualified medical ex-
22
penses.
23
‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.—
24
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•HR 8473 IH
‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL
1
EXPENSES.—Any amount paid or distributed out of
2
a Medisave account which is used exclusively to pay
3
qualified medical expenses of any account beneficiary
4
shall not be includible in gross income.
5
‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR
6
QUALIFIED MEDICAL EXPENSES.—Any amount paid
7
or distributed out of a Medisave account which is
8
not used exclusively to pay the qualified medical ex-
9
penses of the account beneficiary shall be included in
10
the gross income of such beneficiary.
11
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
12
FORE DUE DATE OF RETURN.—
13
‘‘(A) IN
GENERAL.—If any excess con-
14
tribution is contributed for a taxable year to
15
any Medisave account of an individual, para-
16
graph (2) shall not apply t
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