Family and Retirement Health Investment Act of 2011 - Amends the Internal Revenue Code, with respect to health savings accounts (HSAs), to allow: (1) both spouses to make increased catch-up contributions to the same HSA; (2) Medicare Part A beneficiaries to establish and contribute to an HSA; (3) veterans eligible for service-connected disability benefits and individuals eligible for Indian health service assistance to establish an HSA; (4) individuals eligible to receive benefits under certain TRICARE plans to establish an HSA; (5) a carryforward of unused benefits, up to $500, in a flexible spending arrangement; (6) payments from an HSA for prescription and over-the-counter medicine or drugs; (7) the use of HSAs to purchase certain health insurance coverage and long-term care insurance; and (8) payment of certain medical expenses incurred before the establishment of an HSA.
Amends the bankruptcy code to treat HSAs as tax-exempt individual retirement accounts (IRAs) for purposes of exempting them from creditor claims.
Reauthorizes the use of Medicaid health opportunity accounts.
Treats as medical care for purposes of the tax deduction for medical expenses certain exercise equipment and physical fitness programs, nutritional and dietary supplements, and periodic fees paid to a primary physician, physician assistant, or nurse practitioner.
Repeals provisions of the Patient Protection and Affordable Care Act that impose annual limitations on deductibles for health plans offered in the small group market.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1098 Introduced in Senate (IS)]
112th CONGRESS
1st Session
S. 1098
To amend the Internal Revenue Code of 1986 to improve access to health
care through expanded health savings accounts, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 26, 2011
Mr. Hatch (for himself and Mr. Rubio) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to improve access to health
care through expanded health savings accounts, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE, ETC.
(a) Short Title.--This Act may be cited as the ``Family and
Retirement Health Investment Act of 2011''.
(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.
(c) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title, etc.
TITLE I--PROVISIONS RELATING TO TAX-PREFERRED HEALTH ACCOUNTS
Sec. 101. Allow both spouses to make catch-up contributions to the same
HSA account.
Sec. 102. Provisions relating to Medicare.
Sec. 103. Individuals eligible for veterans benefits for a service-
connected disability.
Sec. 104. Individuals eligible for Indian Health Service assistance.
Sec. 105. Individuals eligible for TRICARE coverage.
Sec. 106. Health FSA carryforwards.
Sec. 107. FSA and HRA interaction with HSAs.
Sec. 108. Allowance of distributions for prescription and over-the-
counter medicines and drugs.
Sec. 109. Purchase of health insurance from HSA account.
Sec. 110. Special rule for certain medical expenses incurred before
establishment of account.
Sec. 111. Preventive care prescription drug clarification.
Sec. 112. Equivalent bankruptcy protections for health savings accounts
as retirement funds.
Sec. 113. Administrative error correction before due date of return.
Sec. 114. Reauthorization of medicaid health opportunity accounts.
TITLE II--OTHER PROVISIONS
Sec. 121. Certain exercise equipment and physical fitness programs
treated as medical care.
Sec. 122. Certain nutritional and dietary supplements to be treated as
medical care.
Sec. 123. Certain provider fees to be treated as medical care.
Sec. 124. Repeal of annual limitations on deductibles for employer-
sponsored plans offered in small group
market.
TITLE I--PROVISIONS RELATING TO TAX-PREFERRED HEALTH ACCOUNTS
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:
``(C) Special rule where both spouses are eligible
individuals with 1 account.--If--
``(i) an individual and the individual's
spouse have both attained age 55 before the
close of the taxable year, and
``(ii) the spouse is not an account
beneficiary of a health savings account as of
the close of such year,
the additional contribution amount shall be 200 percent
of the amount otherwise determined under subparagraph
(B).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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.''.
(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.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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:
``(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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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:
``(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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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:
``(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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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:
``(i) Special Rules Applicable to Health Flexible Spending
Arrangements.--
``(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).
``(2) Carryforward of unused benefits in health
arrangements.--
``(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.
``(B) Dollar limit on carryforwards.--
``(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.
``(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--
``(I) $500, multiplied by
``(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.
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.
``(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.
``(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.
``(3) Terms relating to flexible spending arrangements.--
``(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).
``(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)).''.
(b) Conforming Amendments.--
(1) The heading for section 125 of the Internal Revenue
Code of 1986 is amended by inserting ``and health flexible
spending arrangements'' after ``plans''.
(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''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
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--
(1) by striking ``and'' at the end of clause (ii),
(2) by striking the period at the end of clause (iii) and
inserting ``, and'', and
(3) by inserting after clause (iii) the following new
clause:
``(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--
``(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,
``(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),
``(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),
``(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),
``(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), or
``(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.''.
(b) Qualified HSA Distribution Shall Not Affect Flexible Spending
Arrangement.--Paragraph (1) of section 106(e) is amended to read as
follows:
``(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.''.
(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:
``(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)).''.
(d) Simplification of Limitations on FSA and HRA Rollovers.--
Paragraph (2) of section 106(e) is amended to read as follows:
``(2) Qualified hsa distribution.--
``(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--
``(i) the balance in such arrangement as of
the date of such distribution, or
``(ii) the amount determined under
subparagraph (B).
Such term shall not include more than 1 distribution
with respect to any arrangement.
``(B) Dollar limitations.--
``(i) Distributions from a health flexible
spending arrangement.--A qualified HSA
distribution from a health flexible spending
arrangement shall not exceed the applicable
amount.
``(ii) Distributions from a health
reimbursement arrangement.--A qualified HSA
distribution from a health reimbursement
arrangement shall not exceed--
``(I) the applicable amount divided
by 12, multiplied by
``(II) the number of months during
which the individual is a participant
in the health reimbursement
arrangement.
``(iii) Applicable amount.--For purposes of
this subparagraph, the applicable amount is--
``(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,
and
``(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.''.
(e) Elimination of Additional Tax for Failure To Maintain High
Deductible Health Plan Coverage.--Subsection (e) of section 106 is
amended--
(1) by striking paragraph (3) and redesignating paragraphs
(4) and (5) as paragraphs (3) and (4), respectively, and
(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.
(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:
``(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.''.
(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:
``(6) Cost-of-living adjustment.--
``(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.
``(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.''.
(h) Disclaimer of Disqualifying Coverage.--Subparagraph (B) of
section 223(c)(1), as amended by this section, is amended--
(1) by striking ``and'' at the end of clause (iii),
(2) by striking the period at the end of clause (iv) and
inserting ``, and'', and
(3) by inserting after clause (iv) the following new
clause:
``(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.''.
(i) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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.
(b) Allowance of Distributions for All Medicines and Drugs.--
(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.''.
(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.''.
(3) Health flexible spending arrangements and health
reimbursement arrangements.--Section 106 is amended by adding
at the end the following new subsection:
``(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.''.
(4) Effective dates.--
(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.
(B) Reimbursements.--The amendment made by
paragraph (3) shall apply to expenses incurred with
respect to taxable years beginning after December 31,
2009.
SEC. 109. PURCHASE OF HEALTH INSURANCE FROM HSA ACCOUNT.
(a) In General.--Paragraph (2) of section 223(d) is amended to read
as follows:
``(2) Qualified medical expenses.--
``(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.
``(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.
``(C) Exceptions.--Subparagraph (B) shall not apply
to any expense for coverage under--
``(i) a health plan during any period of
continuation coverage required under any
Federal law,
``(ii) a qualified long-term care insurance
contract (as defined in section 7702B(b)),
``(iii) a health plan during any period in
which the individual is receiving unemployment
compensation under any Federal or State law,
``(iv) a high deductible health plan, or
``(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).''.
(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.
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:
``(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
covered by a high deductible health plan and
met the requirements of subsection
(c)(1)(A)(ii) (after application of subsection
(c)(1)(B)).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2003.
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:
``(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.''.
(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.
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:
``(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--
``(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, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
contribution.
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.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
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--
(1) in subsection (a)--
(A) by striking paragraph (2) and inserting the
following:
``(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.''; and
(B) in paragraph (3), in the matter preceding
subparagraph (A)--
(i) by striking ``not''; and
(ii) by striking ``unless'' and inserting
``if'';
(2) in subsection (b)--
(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''; and
(B) by striking paragraphs (4), (5), and (6);
(3) in subsection (c)--
(A) by striking paragraphs (3) and (4);
(B) by redesignating paragraphs (5) through (8) as
paragraphs (3) through (6), respectively; and
(C) in paragraph (4) (as redesignated by
subparagraph (B)), by striking ``Subject to
subparagraphs (D) and (E)'' and inserting ``Subject to
subparagraph (D)''; and
(4) in subsection (d)--
(A) in paragraph (2), by striking subparagraph (E);
and
(B) in paragraph (3)--
(i) in subparagraph (A)(ii), by striking
``Subject to subparagraph (B)(ii), in'' and
inserting ``In''; and
(ii) by striking subparagraph (B) and
inserting the following:
``(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--
``(i) no additional contribution shall be
made into the account under paragraph
(2)(A)(i); and
``(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).''.
(b) Conforming Amendment.--Section 613 of Public Law 111-3 is
repealed.
TITLE II--OTHER PROVISIONS
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:
``(12) Exercise equipment and physical fitness programs.--
``(A) In general.--The term `medical care' shall
include amounts paid--
``(i) to purchase or use equipment used in
a program (including a self-directed program)
of physical exercise,
``(ii) to participate, or receive
instruction, in a program of physical exercise,
and
``(iii) for membership dues in a fitness
club the primary purpose of which is to provide
access to equipment and facilities for physical
exercise.
``(B) Limitation.--Amounts treated as medical care
under subparagraph (A) shall not exceed $1,000 with
respect to any individual for any taxable year.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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:
``(13) Nutritional and dietary supplements.--
``(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.
``(B) Limitation.--Amounts treated as medical care
under subparagraph (A) shall not exceed $1,000 with
respect to any individual for any taxable year.
``(C) Meal replacement product.--For purposes of
this paragraph, the term `meal replacement product'
means any product that--
``(i) is permitted to bear labeling making
a claim described in section 403(r)(3) of the
Federal Food, Drug, and Cosmetic Act, and
``(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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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:
``(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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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