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Title II — Health Care Tax Reform

H.R. 2900 · 113th Congress · Aug 1, 2013 · Lineage

II Health Care Tax Reform

A HSA Reform

Sec. 201 Repeal of high deductible health plan requirement

(a)
In general— Section 223 of the Internal Revenue Code of 1986 is amended by striking subsection (c) and redesignating subsections (d) through (h) as subsections (c) through (g), respectively.
(b)
Conforming amendments—
(1)
Subsection (a) of section 223 of such Code is amended to read as follows:

“(a) Deduction allowed—In the case of an individual, there shall be allowed as a deduction for a taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a health savings account of such individual.”

(2)
Subsection (b) of section 223 of such Code is amended by striking paragraph (8).
(3)
Subparagraph (A) of section 223(c)(1) of the Internal Revenue Code of 1986 (as redesignated by subsection (b)(1)) is amended—
(A)
by striking “subsection (f)(5)” and inserting “subsection (e)(5)”, and
(B)
in clause (ii)—
(i)
by striking “the sum of—” and all that follows and inserting “the dollar amount in effect under subsection (b)(1).”.
(4)
Section 223(f)(1) of such Code (as redesignated by subsection (b)(1)) is amended by striking “Each dollar amount in subsections (b)(2) and (c)(2)(A)” and inserting “In the case of a taxable year beginning after December 31, 2010, each dollar amount in subsection (b)(1)”.
(5)
Section 26(b)(U) of such Code is amended by striking “section 223(f)(4)” and inserting “section 223(e)(4)”.
(6)
Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(v), 4973(a)(5), and 6051(a)(12) of such Code are each amended by striking “section 223(d)” each place it appears and inserting “section 223(c)”.
(7)
Section 106(d)(1) of such Code is amended—
(A)
by striking “who is an eligible individual (as defined in section 223(c)(1))”, and
(B)
by striking “section 223(d)” and inserting “section 223(c)”.
(8)
Section 408(d)(9) of such Code is amended—
(A)
in subparagraph (A) by striking “who is an eligible individual (as defined in section 223(c)) and”, and
(B)
in subparagraph (C) by striking “computed on the basis of the type of coverage under the high deductible health plan covering the individual at the time of the qualified HSA funding distribution”.
(9)
Section 877A(g)(6) of such Code is amended by striking “223(f)(4)” and inserting “223(e)(4)”.
(10)
Section 4973(g) of such Code is amended—
(A)
by striking “section 223(d)” and inserting “section 223(c)”,
(B)
in paragraph (2), by striking “section 223(f)(2)” and inserting “section 223(e)(2)”, and
(C)
by striking “section 223(f)(3)” and inserting “section 223(e)(3)”.
(11)
Section 4975 of such Code is amended—
(A)
in subsection (c)(6)—
(i)
by striking “section 223(d)” and inserting “section 223(c)”, and
(ii)
by striking “section 223(e)(2)” and inserting “section 223(d)(2)”, and
(B)
in subsection (e)(1)(E), by striking “section 223(d)” and inserting “section 223(c)”.
(12)
Section 6693(a)(2)(C) of such Code is amended by striking “section 223(h)” and inserting “section 223(g)”.
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

Sec. 202 Increase in deductible HSA contribution limitations

(a)
In general— Paragraph (1) of section 223(b) of the Internal Revenue Code of 1986 is amended by striking “the sum of the monthly” and all that follows through “eligible individual” and inserting “$10,000 ($20,000 in the case of a joint return)”.
(b)
Conforming amendments—
(1)
Subsection (b) of such Code is amended by striking paragraphs (2), (3), and (5) and by redesignating paragraphs (4), (6), and (7) as paragraphs (2), (3), and (4), respectively.
(2)
Paragraph (2) of section 223(b) of such Code (as redesignated by paragraph (1)) is amended by striking the last sentence.
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

Sec. 203 Medicare eligible individuals eligible to contribute to HSA

(a)
Subsection (b) of section 223 of the Internal Revenue Code of 1986 is amended by striking paragraph (7).
(b)
Paragraph (1) of section 223(c) of such Code is amended by adding at the end the following new subparagraph:

“(C) Special rule for individuals entitled to benefits under medicare—In the case of an individual—

“(i) who is entitled to benefits under title XVIII of the Social Security Act, and

“(ii) with respect to whom a health savings account is established in a month before the first month such individual is entitled to such benefits,”

(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

Sec. 204 HSA Rollover to Medicare Advantage MSA

(a)
In general— Paragraph (2) of section 138(b) of the Internal Revenue Code of 1986 is amended by striking “or” at the end of subparagraph (A), by adding “or” at the end of subparagraph (C), and by adding at the end the following new subparagraph:

“(C) a HSA rollover contribution described in subsection (d)(5),”

(b)
HSA rollover contribution— Subsection (c) of section 138 of such Code is amended by adding at the end the following new paragraph:

“(5) Rollover contribution—An amount is described in this paragraph as a rollover contribution if it meets the requirement of subparagraphs (A) and (B).

“(A) In general—The requirements of this subparagraph are met in the case of an amount paid or distributed from a health savings to the account beneficiary to the extent the amount is received is paid into a Medicare Advantage MSA of such beneficiary not later than the 60th day after the day on which the beneficiary receives the payment or distribution.

“(B) Limitation—This paragraph shall not apply to any amount described in subparagraph (A) received by an individual from a health savings account if, at any time during the 1-year period ending on the day of such receipt, such individual received any other amount described in subparagraph (A) from a health savings account which was not includible in the individual’s gross income because of the application of section 223(f)(5)(A).”

(c)
Conforming amendment— Subparagraph (A) of section 223(f)(5) of such Code is amended by inserting “or Medicare Advantage MSA” after “into a health savings account”.
(d)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

Sec. 205 Repeal of additional tax on distributions not used for qualified medical expenses

(a)
In general— Subsection (f) of section 223 of the Internal Revenue Code of 1986 is amended by striking paragraph (4) and redesignating paragraphs (5), (6), and (7) and paragraphs (4), (5), and (6), respectively.
(b)
Conforming amendments—
(1)
Paragraph (2) of section 25(b) of such Code is amended by striking subparagraph (U) and by redesignating subparagraphs (V), (W), and (X) as subparagraphs (U), (V), and (W).
(2)
Subparagraph (C) of section 106(e)(4) of such Code is amended by striking “223(f)(5)” and inserting “223(f)(4)”.
(3)
Paragraph (6) of section 877A(g) of such Code is amended by striking “223(f)(4),”.
(4)
Paragraph (1) of section 4973(g) of such Code is amended by striking “223(f)(5)” and inserting “223(f)(4)”.
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

B Other Health Care Tax Reform

Sec. 206 Elimination of 10-percent floor on medical expense deductions

(a)
In general— Subsection (a) of section 213 of the Internal Revenue Code of 1986 is amended by striking “, to the extent that such expenses exceed 10 percent of adjusted gross income”.
(b)
Conforming amendment— Paragraph (1) of section 56(b) of such Code is amended by striking subparagraph (B).
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

Sec. 207 Repeal of prescribed drug limitation on certain tax benefits for medical expenses

(a)
Deduction for medical expenses—
(1)
In general— Section 213 of the Internal Revenue Code of 1986 is amended by striking subsection (b).
(2)
Conforming amendment— Subsection (d) of section 213 of such Code is amended by striking paragraph (3).
(b)
Treatment of reimbursements under accident or health plans— Section 106 of such Code is amended by striking subsection (f).
(c)
Health savings accounts— Subparagraph (A) of section 223(d)(2) of such Code is amended by striking the last sentence thereof.
(d)
Archer MSAs— Subparagraph (A) of section 220(d)(2) of such Code is amended by striking the last sentence thereof.
(e)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

Sec. 208 Repeal of 2-percent miscellaneous itemized deduction floor for medical expense deductions

(a)
In general— Subsection (b) of section 67 of the Internal Revenue Code of 1986 is amended by striking paragraph (5).
(b)
Effective date— The amendment made by this section shall apply to taxable years beginning after the December 31, 2012.

Sec. 209 Charity care credit

(a)
In general— Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:

“25E. Charity care credit

“(a) Allowance of credit—In the case of a physician, there shall be allowed as a credit against the tax imposed by this chapter for a taxable year the amount determined in accordance with the following table:

“(b) Qualified hours of charity care—For purposes of this section—

“(1) Qualified hours of charity care—The term qualified hours of charity care means the hours that a physician provides medical care (as defined in section 213(d)(1)(A)) on a volunteer or pro bono basis.

“(2) Physician—The term physician has the meaning given to such term in section 1861(r) of the Social Security Act (42 U.S.C. 1395x(r)).”

(b)
Conforming amendment— The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25D the following new item:
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

Sec. 210 Credit for contributions made for purpose of providing medical care to the indigent

(a)
In general— Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

“30E. Contributions for providing medical care to the indigent

“(a) In general—There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the indigent care contributions made by the taxpayer during the taxable year.

“(b) Indigent care contribution—For purposes of this section, the term indigent care contribution means any contribution or gift of money or other property to or for the use of any person if such contribution or gift is used (or the proceeds from which are used) by such person for the purpose of providing medical care to indigent individuals in the United States.

“(c) Valuation and substantiation of contributions, etc—Rules similar to the rules of subsections (e) and (f) of section 170 shall apply for purposes of this section.

“(d) Application with other credits

“(1) Business credit treated as part of general business credit—So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to indigent care contributions made by—

“(A) any corporation or partnership, or

“(B) any other person if such contribution was made in connection with a trade or business carried on by such person,

“(2) Personal credit—For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

“(e) Denial of double benefit—The amount of any deduction or other credit allowable under this chapter for any indigent care contribution shall be reduced by the amount of credit allowable under this section for such contribution.”

(b)
Conforming amendments—
(1)
Section 38(b) of such Code is amended by striking “plus” at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting “, plus”, and by adding at the end the following new paragraph:

“(37) the portion of the credit described in section 30E(d)(1) (relating to credit for contributions for providing medical care to the indigent).”

(2)
Section 38(c)(4)(B) of such Code is amended by striking “and” at the end of clause (viii), by striking the period at the end of clause (ix) and inserting “, and”, and by adding at the end the following new clause:

“(x) the portion of the credit described in section 30E(d)(1) (relating to credit for contributions for providing medical care to the indigent).”

(3)
The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:
(c)
Effective date— The amendments made by this section shall apply to contributions made after the date of the enactment of this Act.

Sec. 211 COBRA continuation coverage extended

(a)
Under IRC— Subparagraph (B) of section 4980B(f)(2) of the Internal Revenue Code of 1986 is amended by striking clauses (i) and (v) and by redesignating clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively.
(b)
Under ERISA— Paragraph (2) of section 602 of the Employee Retirement Income Security Act of 2009 (29 U.S.C. 1162) is amended by striking subparagraphs (A) and (E) and by redesignating subparagraphs (B), (C), and (D) as subparagraphs (A), (B), and (C), respectively.
(c)
Under PHSA— Paragraph (2) of section 2202(2) of the Public Health Service Act (42 U.S.C. 300bb–2(2)) is amended by striking subparagraphs (A) and (E) and by redesignating subparagraphs (B), (C), and (D) as subparagraphs (A), (B), and (C), respectively.
(d)
Effective date— The amendments made by this section shall apply with respect to group health plans, and health insurance coverage offered in connection with group health plans, for plan years beginning after the date of the enactment of this Act.

Sec. 212 HSA charitable contributions

(a)
In general— Subsection (f) of section 223 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

“(9) Distributions for charitable purposes—For purposes of this subsection—

“(A) In general—Paragraph (2) shall not apply to any qualified charitable distributions with respect to a taxpayer made during any taxable year.

“(B) Qualified charitable distribution—For purposes of this paragraph, the term qualified charitable distribution means any distribution from a health savings account which is made directly by the trustee to an organization described in section 170(b)(1)(A) (other than any organization described in section 509(a)(3) or any fund or account described in section 4966(d)(2)). A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A).

“(C) Contributions must be otherwise deductible—For purposes of this paragraph, a distribution to an organization described in subparagraph (B) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).

“(D) Denial of deduction—Qualified charitable distributions which are not includible in gross income pursuant to subparagraph (A) shall not be taken into account in determining the deduction under section 170.”

(b)
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2012.