Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018
AN ACT
To amend the Internal Revenue Code of 1986 and the Patient Protection and Affordable Care Act to modify the definition of qualified health plan for purposes of the health insurance premium tax credit and to allow individuals purchasing health insurance in the individual market to purchase a lower premium copper plan.
Sec. 2 Carryforward of health flexible spending arrangement account balances
In general— Section 106 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
“(h) Carryforward of health flexible spending arrangement account balances—A plan shall not fail to be treated as a health flexible spending arrangement under this section or section 105 merely because the lesser of—
“(1) such arrangement’s account balance (or any portion thereof) determined as of the end of any plan year, or
“(2) the product of the dollar limitation in effect under section 125(i) for such plan year (determined without regard to paragraph (2) thereof) multiplied by 3,”
Coordination with limitation on salary reduction contributions—
In general— Section 125(i) of such Code is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph:
“(2) Coordination with carryforward of account balances—The dollar amount otherwise in effect under paragraph (1) for any plan year shall be reduced (but not below zero) by the excess (if any) of—
“(A) the amount of any account balance which is carried forward to such plan year from the preceding plan year, over
“(B) twice the dollar limitation in effect under paragraph (1) (determined without regard to this paragraph).”
Conforming amendments— Section 125(i) of such Code is amended by striking “taxable year” each place it appears in paragraphs (1) and (3) (as redesignated by paragraph (1) of this subsection) and inserting “plan year”.
Coordination with cafeteria plan limitation on deferred compensation— Section 125(d)(2) of such Code is amended by adding at the end the following new subparagraph:
“(E) Exception for health flexible spending arrangements—Subparagraph (A) shall not apply to a plan to the extent of amounts in a health flexible spending arrangement which may be carried forward as described in section 106(h).”
Effective date— The amendments made by this section shall apply to plan years beginning after December 31, 2018.
Sec. 3 Individuals entitled to part A of Medicare by reason of age allowed to contribute to health savings accounts
In general— Section 223(c)(1)(B) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting “, and”, and by adding at the end the following new clause:
“(iv) entitlement to hospital insurance benefits under part A of title XVIII of the Social Security Act by reason of section 226(a) of such Act.”
Conforming amendment— Section 223(b)(7) of such Code is amended by inserting “(other than an entitlement to benefits described in subsection (c)(1)(B)(v))” after “Social Security Act”.
Effective date— The amendments made by this section shall apply to months beginning after December 31, 2018, in taxable years ending after such date.
Sec. 4 Maximum contribution limit to health savings account increased to amount of deductible and out-of-pocket limitation
Self-Only coverage— Section 223(b)(2)(A) 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)”.
Family coverage— Section 223(b)(2)(B) of such Code is amended by striking “$4,500” and inserting “the amount in effect under subsection (c)(2)(A)(ii)(II)”.
Conforming amendments— Section 223(g)(1) of such Code is amended—
by striking “subsections (b)(2) and” both places it appears and inserting “subsection”, and
in subparagraph (B), by striking “determined by” and all that follows through ““calendar year 2003”.” and inserting “determined by substituting “calendar year 2003” for “calendar year 2016” in subparagraph (A)(ii) thereof.”.
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2018.
Sec. 5 Allow both spouses to make catch-up contributions to the same health savings account
In general— Section 223(b)(5) of the Internal Revenue Code of 1986 is amended to read as follows:
“(5) Special rule for married individuals with family coverage
“(A) In general—In the case of individuals who are married to each other, if both spouses are eligible individuals and either spouse has family coverage under a high deductible health plan as of the first day of any month—
“(i) the limitation under paragraph (1) shall be applied by not taking into account any other high deductible health plan coverage of either spouse (and if such spouses both have family coverage under separate high deductible health plans, only one such coverage shall be taken into account),
“(ii) such limitation (after application of clause (i)) shall be reduced by the aggregate amount paid to Archer MSAs of such spouses for the taxable year, and
“(iii) such limitation (after application of clauses (i) and (ii)) shall be divided equally between such spouses unless they agree on a different division.
“(B) Treatment of additional contribution amounts—If both spouses referred to in subparagraph (A) have attained age 55 before the close of the taxable year, the limitation referred to in subparagraph (A)(iii) which is subject to division between the spouses shall include the additional contribution amounts determined under paragraph (3) for both spouses. In any other case, any additional contribution amount determined under paragraph (3) shall not be taken into account under subparagraph (A)(iii) and shall not be subject to division between the spouses.”
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2018.
Sec. 6 Special rule for certain medical expenses incurred before establishment of health savings account
In general— Section 223(d)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(D) Treatment of certain medical expenses incurred before establishment of account—If a health savings account is established during the 60-day period beginning on the date that coverage of the account beneficiary under a high deductible health plan begins, then, solely for purposes of determining whether an amount paid is used for a qualified medical expense, such account shall be treated as having been established on the date that such coverage begins.”
Effective date— The amendment made by this section shall apply with respect to coverage beginning after December 31, 2018.
Sec. 7 Allowance of bronze and catastrophic plans in connection with health savings accounts
In general— Section 223(c)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(E) Bronze and catastrophic plans treated as high deductible health plans
“(i) In general—The term “high deductible health plan” shall include any plan described in subsection (d)(1)(A) or (e) of section 1302 of the Patient Protection and Affordable Care Act.
“(ii) Certain rules not applicable—Subparagraphs (C) and (D) shall not apply with respect to any plan described in clause (i).”
Effective date— The amendment made by this section shall apply to months beginning after December 31, 2018, in taxable years ending after such date.
Sec. 8 Allowing all individuals purchasing health insurance in the individual market the option to purchase a lower premium copper plan
In general— Section 1302(e) of the Patient Protection and Affordable Care Act (42 U.S.C. 18022(e)) is amended—
in paragraph (1)—
by redesignating clauses (i) and (ii) of subparagraph (B) as subparagraphs (A) and (B), respectively, and adjusting the margins accordingly;
by striking “plan year if—” and all that follows through “the plan provides—” and inserting “plan year if the plan provides—”; and
in subparagraph (A), as redesignated by paragraph (1), by striking “clause (ii)” and inserting “subparagraph (B)”;
by striking paragraph (2); and
by redesignating paragraph (3) as paragraph (2).
Risk pools— Section 1312(c)(1) of the Patient Protection and Affordable Care Act (42 U.S.C. 18032(c)(1)) is amended by inserting “and enrollees in catastrophic plans described in section 1302(e)” after “Exchange”.
Conforming amendment— Section 1312(d)(3)(C) of the Patient Protection and Affordable Care Act (42 U.S.C. 18032(d)(3)(C)) is amended by striking “, except that in the case of a catastrophic plan described in section 1302(e), a qualified individual may enroll in the plan only if the individual is eligible to enroll in the plan under section 1302(e)(2)”.
Effective date— The amendments made by this section shall apply to plan years beginning after December 31, 2018.