Health Freedom and Flexibility Act

“(a) Deduction allowed—In the case of an individual, there shall be allowed as a deduction for the 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.”

“(b) Denial of deduction to dependents—No deduction shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins.”

“(A) Except in the case of a rollover contribution described in subsection (e)(5) or section 220(f)(5), no contribution will be accepted unless it is in cash.”

“(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 such individual, the spouse of such individual, any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, but only to the extent such amounts are not compensated for by insurance or otherwise.

“(B) Menstrual care products—For purposes of this paragraph—

“(i) In general—Amounts paid for menstrual care products shall be treated as paid for medical care.

“(ii) Definition—The term menstrual care product means a tampon, pad, liner, cup, sponge, or similar product used by individuals with respect to menstruation or other genital-tract secretions.”

“(C) Prescription and over-the-counter medicines and drugs and other medically necessary items—For purposes of this paragraph—

“(i) In general—The term qualified medical expenses shall include an amount paid for any prescription or over-the-counter medicine or drug and medically necessary items.

“(ii) Medically necessary items—The term medically necessary item means any item for which a doctor or nurse certifies by a letter of medical necessity that the service or medication or item is for a medical diagnosis, treatment, or prevention of a medical diseases or condition.”

“(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 which (but for the fact that it was incurred before the establishment of the account) otherwise meets the requirements of the preceding subparagraphs.”

“(E) Direct primary care; exercise equipment; dental care items—For purposes of this paragraph—

“(i) In general—The term qualified medical expenses shall include amounts paid—

“(I) amounts paid under a direct primary care service arrangement,

“(II) amounts paid for exercise equipment, and

“(III) amounts paid for dental care items.

“(ii) Direct primary care service arrangement—The term ‘direct primary care service arrangement’ means, with respect to any individual, an arrangement under which such individual is provided medical care (as defined in section 213(d)) consisting solely of primary care services provided by primary care practitioners (as defined in section 1833(x)(2)(A) of the Social Security Act, determined without regard to clause (ii) thereof), if the sole compensation for such care is a fixed periodic fee.

“(iii) Exercise or fitness equipment—The term exercise or fitness equipment means devices such as motorized treadmills, stair climbers or step machines, stationary bicycles, rowing machines, weight machines, circuit training equipment, cardiovascular equipment, strength equipment, or other similar equipment.

“(iv) Dental care items—The term dental care items includes manual or electric toothbrush, dental floss, and dental mouthwash.”

“(F) Prohibition on use of funds for elective abortions—For purposes of this paragraph—

“(i) Payments for health insurance with abortion coverage—The term qualified medical expenses shall not include amounts paid for insurance that includes coverage for abortions.

“(ii) Payments For Abortions—The term qualified medical expense shall not include amounts paid for an abortion.

“(iii) Abortion—The term abortion means the use or prescription of any instrument, medicine, drug, or any other substance or device—

“(I) to intentionally kill the unborn child of a woman known to be pregnant, or

“(II) to intentionally terminate the pregnancy of a woman known to be pregnant, with an intention other than—

“(aa) after viability, to produce a live birth and preserve the life and health of the child born alive, or

“(bb) to remove a dead unborn child.”

“(A) Treatment after death if designated beneficiary is spouse or child of account beneficiary—If the account beneficiary’s surviving spouse or child acquires such beneficiary’s interest in a health savings account by reason of being the designated beneficiary of such account at the death of the account beneficiary, such health savings account shall be treated as if the spouse or child (as the case may be) were the account beneficiary.”

“(C) Child—For purposes of this paragraph, the term child means, with respect to an account beneficiary, an individual who bears a relationship to the account beneficiary described in section 152(f)(1).”

“(C) 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.”