Bipartisan HSA Improvement Act of 2023

“(E) Treatment of direct primary care service arrangements

“(i) In general—A direct primary care service arrangement shall not be treated as a health plan for purposes of subparagraph (A)(ii).

“(ii) Direct primary care service arrangement—For purposes of this paragraph—

“(I) In general—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.

“(II) Limitation—With respect to any individual for any month, such term shall not include any arrangement if the aggregate fees for all direct primary care service arrangements (determined without regard to this subclause) with respect to such individual for such month exceed $150 (twice such dollar amount in the case of an individual with any direct primary care service arrangement (as so determined) that covers more than one individual).

“(iii) Certain services specifically excluded from treatment as primary care services—For purposes of this paragraph, the term primary care services shall not include—

“(I) procedures that require the use of general anesthesia,

“(II) prescription drugs (other than vaccines), and

“(III) laboratory services not typically administered in an ambulatory primary care setting.”

“(v) any direct primary care service arrangement.”

“(18) in the case of a direct primary care service arrangement (as defined in section 223(c)(1)(E)(ii)) which is provided in connection with employment, the aggregate fees for such arrangement for such employee.”

“(F) Special rule for qualified items and services

“(i) In general—For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in subclauses (I) and (II) of such subparagraph merely because the individual is eligible to receive, or receives, qualified items and services—

“(I) at a healthcare facility located at a facility owned or leased by the employer of the individual (or of the individual’s spouse), or

“(II) at a healthcare facility operated primarily for the benefit of employees of the employer of the individual (or of the individual’s spouse).

“(ii) Qualified items and services defined—For purposes of this subparagraph, the term qualified items and services means the following:

“(I) Physical examination.

“(II) Immunizations, including injections of antigens provided by employees.

“(III) Drugs or biologicals other than a prescribed drug (as such term is defined in section 213(d)(3)).

“(IV) Treatment for injuries occurring in the course of employment.

“(V) Preventive care for chronic conditions (as defined in clause (iv)).

“(VI) Drug testing.

“(VII) Hearing or vision screenings and related services.

“(iii) Aggregation—For purposes of clause (i), all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer.

“(iv) Preventive care for chronic conditions—For purposes of this subparagraph, the term preventive care for chronic conditions means any item or service specified in the Appendix of Internal Revenue Service Notice 2019–45 which is prescribed to treat an individual diagnosed with the associated chronic condition specified in such Appendix for the purpose of preventing the exacerbation of such chronic condition or the development of a secondary condition, including any amendment, addition, removal, or other modification made by the Secretary (pursuant to the authority granted to the Secretary under paragraph (2)(C)) to the items or services specified in such Appendix subsequent to the date of enactment of this subparagraph.”

“(iv) coverage under a health flexible spending arrangement of the spouse of the individual for any plan year of such arrangement if the aggregate reimbursements under such arrangement for such year do not exceed the aggregate expenses which would be eligible for reimbursement under such arrangement if such expenses were determined without regard to any expenses paid or incurred with respect to such individual.”

“(2) Qualified HSA distribution—For purposes of this subsection—

“(A) In general—The term qualified HSA distribution means, with respect to any employee, a distribution from a health flexible spending arrangement or health reimbursement arrangement of such employee contributed directly to a health savings account of such employee if—

“(i) such distribution is made in connection with such employee establishing coverage under a high deductible health plan (as defined in section 223(c)(2)) if during the 4-year period preceding the date the employee so establishes coverage the employee was not covered under such a high deductible health plan, and

“(ii) such arrangement is described in section 223(c)(1)(B)(vi) with respect to any portion of the plan year remaining after such distribution is made, if such employee remains enrolled in such arrangement.

“(B) Dollar limitation—The aggregate amount of distributions from health flexible spending arrangements and health reimbursement arrangements of any employee which may be treated as qualified HSA distributions in connection with an establishment of coverage described in subparagraph (A)(i) shall not exceed the dollar amount in effect under section 125(i)(1) (twice such amount in the case of coverage which is described in section 223(b)(2)(B)).”

“(D) so much of any qualified HSA distribution (as defined in section 106(e)(2)) made to a health savings account of such individual during the taxable year as does not exceed the aggregate increases in the balance of the arrangement from which such distribution is made which occur during the portion of the plan year which precedes such distribution (other than any balance carried over to such plan year and determined without regard to any decrease in such balance during such portion of the plan year).”

“(v) coverage under a health flexible spending arrangement or health reimbursement arrangement for the portion of the plan year after a qualified HSA distribution (as defined in section 106(e)(2) determined without regard to subparagraph (A)(ii) thereof) is made, if the terms of such arrangement which apply for such portion of the plan year are such that, if such terms applied for the entire plan year, then such arrangement would not be taken into account under subparagraph (A)(ii) of this paragraph for such plan year.”