Section 1 Short title
This Act may be cited as the “Health Savings Modernization Act of 2018”.
Health Savings Modernization Act of 2018
A BILL
To amend the Internal Revenue Code of 1986 to improve health savings accounts, and for other purposes.
Sec. 2 High deductible plan safe harbor for absence of deductible for certain coverage
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) Safe harbor for absence of deductible for certain other care—A plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for—
“(i) a defined number of visits for outpatient primary care, mental health care, behavioral health care, or urgent care, or
“(ii) a generic or preferred prescription drug formulary.”
Effective date— The amendment made by this section shall apply to plan years beginning after the date of the enactment of this Act.
Sec. 3 Medical expenses of young adult children
In general— The first sentence of section 223(d)(2)(A) of the Internal Revenue Code of 1986 is amended by striking “and any dependent” and all that follows through “thereof) of such individual” and inserting “and any child (as defined in section 152(f)(1)) of such individual who as of the end of the taxable year has not attained age 27”.
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Sec. 4 Excess health insurance coverage credit payable to health savings account
In general— Chapter 77 of the Internal Revenue Code of 1986 is amended by adding at the end the following:
“7529. Excess health insurance coverage credit payable to health savings account
“(a) In general—At the request of an eligible taxpayer, the Secretary shall make a payment to the trustee of the designated health savings account with respect to such taxpayer in an amount equal to the sum of the excesses (if any) described in subsection (c)(2) with respect to months in the taxable year.
“(b) Designated Health Savings Account—The term “designated health savings account” means a health savings account of an individual described in subsection (c)(3) which is identified by the eligible taxpayer for purposes of this section.
“(c) Eligible Taxpayer—The term “eligible taxpayer” means, with respect to any taxable year, any taxpayer if—
“(1) such taxpayer is allowed a credit under section 36B for such taxable year,
“(2) the amount described in subparagraph (B) of section 36B(b)(2) exceeds the amount described in subparagraph (A) of such section with respect to such taxpayer applied with respect to any month during such taxable year, and
“(3) the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer were eligible individuals (as defined in section 223(c)(1)) for one or more months during such taxable year.
“(d) Contributions treated as rollovers, etc
“(1) In general—Any amount paid the Secretary to a health savings account under this section shall be treated for purposes of this title in the same manner as a rollover contribution described in section 223(f)(5).
“(2) Coordination with limitation on rollovers—Any amount described in paragraph (1) shall not be taken into account in applying section 223(f)(5)(B) with respect to any other amount and the limitation of section 223(f)(5)(B) shall not apply with respect to the application of paragraph (1).
“(e) Form and manner of request—The request referred to in subsection (a) shall be made at such time and in such form and manner as the Secretary may provide. To the extent that the Secretary determines feasible, such request may identify more than one designated health savings account (and the amount to be paid to each such account) provided that the aggregate of such payments with respect to any taxpayer for any taxable year do not exceed the excess described in subsection (c)(2).
“(f) Taxpayers with seriously delinquent tax debt—In the case of an individual who has a seriously delinquent tax debt (as defined in section 7345(b)) which has not been fully satisfied—
“(1) if such individual is the eligible taxpayer (or, in the case of a joint return, either spouse), the Secretary shall not make any payment under this section with respect to such taxpayer, and
“(2) if such individual is the account beneficiary (as defined in section 223(d)(3)) of any health savings account, the Secretary shall not make any payment under this section to such health savings account.
“(g) Advance payment—To the extent that the Secretary determines feasible, payment under this section may be made in advance on a monthly basis under rules similar to the rules under section 1412 of the Patient Protection and Affordable Care Act. The Secretary, in consultation with the Secretary of Health and Human Services, shall issue guidance on Exchanges (established under the Patient Protection and Affordable Care Act) facilitating the deposit of amounts to designated health savings account under this section.”
Conforming amendments—
Section 162(l) of such Code is amended by adding at the end the following new paragraph:
“(6) Coordination with health insurance coverage credit—The deduction otherwise allowable to a taxpayer under paragraph (1) for any taxable year shall be reduced (but not below zero) by the sum of—
“(A) the amount of the credit allowable to such taxpayer under section 36B (determined without regard to subsection (f)(1) thereof) for such taxable year, plus
“(B) the aggregate payments made with respect to the taxpayer under section 7529 for months during such taxable year.”
Section 1324(b)(2) of title 31, United States Code is amended by striking “or 6431” and inserting “6431, or 7529”.
The table of sections for chapter 77 of such Code is amended by adding at the end the following new items:
Effective date— The amendments made by this section shall apply to months beginning after the date of the enactment of this Act, in taxable years ending after such date.
Sec. 5 Allowing all individuals purchasing health insurance in the individual market the option to purchase a lower premium 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 so redesignated, 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 including enrollees in plans described in section 1302(e)” after “Exchange”.
Requirement To offer additional coverage— Section 2707 of the Public Health Service Act (42 U.S.C. 300gg–6) is amended by adding at the end the following new subsection:
“(e) Limitation on catastrophic plans—A health insurance issuer may not offer a catastrophic plan (as defined in subsection (e) of section 1302 of the Patient Protection and Affordable Care Act) to an individual unless such issuer also offers health insurance coverage to such individual that provides either the bronze, silver, gold, or platinum level of coverage described in subsection (d) of such section.”
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 with respect to plan years beginning after the date of the enactment of this Act.
Sec. 6 High deductible health plan maximum out-of-pocket limitation
In general— Section 223(c)(2)(A)(ii) is amended by striking “does not exceed” and all that follows and inserting “does not exceed the amount in effect under section 1302(c) of the Patient Protection and Affordable Care Act”.
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Sec. 7 Maximum contribution limit to HSA increased to amount of 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) with respect to self-only coverage”.
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) with respect to self-only coverage”.
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.