HR 1843 — Telehealth Expansion Act of 2023

CHANGES IN EXISTING LAW MADE BY THE BILL, 
 AS REPORTED

 A. Changes in Existing Law Proposed by the Bill, as Reported

 In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 INTERNAL REVENUE CODE OF 1986

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Subtitle A--Income Taxes

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CHAPTER 1--NORMAL TAXES AND SURTAXES

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Subchapter B--COMPUTATION OF TAXABLE INCOME

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PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS

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SEC. 223. HEALTH SAVINGS ACCOUNTS.

 (a) Deduction allowed.--In the case of an individual who is 
an eligible individual for any month during the taxable year, 
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) Limitations.--
 (1) In general.--The amount allowable as a deduction 
 under subsection (a) to an individual for the taxable 
 year shall not exceed the sum of the monthly 
 limitations for months during such taxable year that 
 the individual is an eligible individual.
 (2) Monthly limitation.--The monthly limitation for 
 any month is 1/12 of--
 (A) in the case of an eligible individual who 
 has self-only coverage under a high deductible 
 health plan as of the first day of such month, 
 $2,250.
 (B) in the case of an eligible individual who 
 has family coverage under a high deductible 
 health plan as of the first day of such month, 
 $4,500.
 (3) Additional contributions for individuals 55 or 
 older.--
 (A) In general.--In the case of an individual 
 who has attained age 55 before the close of the 
 taxable year, the applicable limitation under 
 subparagraphs (A) and (B) of paragraph (2) 
 shall be increased by the additional 
 contribution amount.
 (B) Additional contribution amount.--For 
 purposes of this section, the additional 
 contribution amount is the amount determined in 
 accordance with the following table:
 (4) Coordination with other contributions.--The 
 limitation which would (but for this paragraph) apply 
 under this subsection to an individual for any taxable 
 year shall be reduced (but not below zero) by the sum 
 of--
 (A) the aggregate amount paid for such 
 taxable year to Archer MSAs of such individual,
 (B) the aggregate amount contributed to 
 health savings accounts of such individual 
 which is excludable from the taxpayer's gross 
 income for such taxable year under section 
 106(d) (and such amount shall not be allowed as 
 a deduction under subsection (a)), and
 (C) the aggregate amount contributed to 
 health savings accounts of such individual for 
 such taxable year under section 408(d)(9) (and 
 such amount shall not be allowed as a deduction 
 under subsection (a)).
 Subparagraph (A) shall not apply with respect to any 
 individual to whom paragraph (5) applies.
 (5) Special rule for married individuals.--In the 
 case of individuals who are married to each other, if 
 either spouse has family coverage--
 (A) both spouses shall be treated as having 
 only such family coverage (and if such spouses 
 each have family coverage under different 
 plans, as having the family coverage with the 
 lowest annual deductible), and
 (B) the limitation under paragraph (1) (after 
 the application of subparagraph (A) and without 
 regard to any additional contribution amount 
 under paragraph (3))--
 (i) shall be reduced by the aggregate 
 amount paid to Archer MSAs of such 
 spouses for the taxable year, and
 (ii) after such reduction, shall be 
 divided equally between them unless 
 they agree on a different division.
 (6) 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.
 (7) Medicare eligible individuals.--The limitation 
 under this subsection for any month with respect to an 
 individual shall be zero for the first month such 
 individual is entitled to benefits under title XVIII of 
 the Social Security Act and for each month thereafter.
 (8) Increase in limit for individuals becoming 
 eligible individuals after the beginning of the year.--
 (A) In general.--For purposes of computing 
 the limitation under paragraph (1) for any 
 taxable year, an individual who is an eligible 
 individual during the last month of such 
 taxable year shall be treated--
 (i) as having been an eligible 
 individual during each of the months in 
 such taxable year, and
 (ii) as having been enrolled, during 
 each of the months such individual is 
 treated as an eligible individual 
 solely by reason of clause (i), in the 
 same high deductible health plan in 
 which the individual was enrolled for 
 the last month of such taxable year.
 (B) Failure to maintain high deductible 
 health plan coverage.--
 (i) In general.--If, at any time 
 during the testing period, the 
 individual is not an eligible 
 individual, then--
 (I) gross income of the 
 individual for the taxable year 
 in which occurs the first month 
 in the testing period for which 
 such individual is not an 
 eligible individual is 
 increased by the aggregate 
 amount of all contributions to 
 the health savings account of 
 the individual which could not 
 have been made but for 
 subparagraph (A), and
 (II) the tax imposed by this 
 chapter for any taxable year on 
 the individual shall be 
 increased by 10 percent of the 
 amount of such increase.
 (ii) Exception for disability or 
 death.--Subclauses (I) and (II) of 
 clause (i) shall not apply if the 
 individual ceased to be an eligible 
 individual by reason of the death of 
 the individual or the individual 
 becoming disabled (within the meaning 
 of section 72(m)(7)).
 (iii) Testing period.--The term 
 ``testing period'' means the period 
 beginning with the last month of the 
 taxable year referred to in 
 subparagraph (A) and ending on the last 
 day of the 12th month following such 
 month.
 (c) Definitions and special rules.--For purposes of this 
section--
 (1) Eligible individual.--
 (A) In general.--The term ``eligible 
 individual'' means, with respect to any month, 
 any individual if--
 (i) such individual is covered under 
 a high deductible health plan as of the 
 1st day of such month, and
 (ii) such individual is not, while 
 covered under a high deductible health 
 plan, covered under any health plan--
 (I) which is not a high 
 deductible health plan, and
 (II) which provides coverage 
 for any benefit which is 
 covered under the high 
 deductible health plan.
 (B) Certain coverage disregarded.--
 Subparagraph (A)(ii) shall be applied without 
 regard to--
 (i) coverage for any benefit provided 
 by permitted insurance,
 (ii) coverage (whether through 
 insurance or otherwise) for accidents, 
 disability, dental care, vision care, 
 long-term care, or [(in the case of 
 months or plan years to which paragraph 
 (2)(E) applies)] telehealth and other 
 remote care, and
 (iii) for taxable years beginning 
 after December 31, 2006, coverage under 
 a health flexible spending arrangement 
 during any period immediately following 
 the end of a plan year of such 
 arrangement during which unused 
 benefits or contributions remaining at 
 the end of such plan year may be paid 
 or reimbursed to plan participants for 
 qualified benefit expenses incurred 
 during such period if--
 (I) the balance in such 
 arrangement at the end of such 
 plan year is zero, or
 (II) the individual is making 
 a qualified HSA distribution 
 (as defined in section 106(e)) 
 in an amount equal to the 
 remaining balance in such 
 arrangement as of the end of 
 such plan year, in accordance 
 with rules prescribed by the 
 Secretary.
 (C) Special rule for individuals eligible for 
 certain veterans benefits.--An individual shall 
 not fail to be treated as an eligible 
 individual for any period merely because the 
 individual receives hospital care or medical 
 services under any law administered by the 
 Secretary of Veterans Affairs for a service-
 connected disability (within the meaning of 
 section 101(16) of title 38, United States 
 Code).
 (D) Special rule for individuals receiving 
 benefits subject to surprise billing 
 statutes.--An individual shall not fail to be 
 treated as an eligible individual for any 
 period merely because the individual receives 
 benefits for medical care subject to and in 
 accordance with section 9816 or 9817, section 
 2799A-1 or 2799A-2 of the Public Health Service 
 Act, or section 716 or 717 of the Employee 
 Retirement Income Security Act of 1974, or any 
 State law providing similar protections to such 
 individual.
 (2) High deductible health plan.--
 (A) In general.--The term ``high deductible 
 health plan'' means a health plan--
 (i) which has an annual deductible 
 which is not less than--
 (I) $1,000 for self-only 
 coverage, and
 (II) twice the dollar amount 
 in subclause (I) for family 
 coverage, and
 (ii) the sum of the annual deductible 
 and the other annual out-of-pocket 
 expenses required to be paid under the 
 plan (other than for premiums) for 
 covered benefits does not exceed--
 (I) $5,000 for self-only 
 coverage, and
 (II) twice the dollar amount 
 in subclause (I) for family 
 coverage.
 (B) Exclusion of certain plans.--Such term 
 does not include a health plan if substantially 
 all of its coverage is coverage described in 
 paragraph (1)(B).
 (C) Safe harbor for absence of preventive 
 care deductible.--A plan shall not fail to be 
 treated as a high deductible health plan by 
 reason of failing to have a deductible for 
 preventive care (within the meaning of section 
 1861 of the Social Security Act, except as 
 otherwise provided by the Secretary).
 (D) Special rules for network plans.--In the 
 case of a plan using a network of providers--
 (i) Annual out-of-pocket 
 limitation.--Such plan shall not fail 
 to be treated as a high deductible 
 health plan by reason of having an out-
 of-pocket limitation for services 
 provided outside of such network which 
 exceeds the applicable limitation under 
 subparagraph (A)(ii).
 (ii) Annual deductible.--Such plan's 
 annual deductible for services provided 
 outside of such network shall not be 
 taken into account for purposes of 
 subsection (b)(2).
 (E) Safe harbor for absence of deductible for 
 telehealth.--[In the case of--]
 [(i) months beginning after March 31, 
 2022, and before January 1, 2023, and
 [(ii) plan years beginning on or 
 before December 31, 2021, or after 
 December 31, 2022, and before January 
 1, 2025,
 a plan] A plan shall not fail to be treated 
 as a high deductible health plan by reason of 
 failing to have a deductible for telehealth and 
 other remote care services.
 (F) Special rule for surprise billing.--A 
 plan shall not fail to be treated as a high 
 deductible health plan by reason of providing 
 benefits for medical care in accordance with 
 section 9816 or 9817, section 2799A-1 or 2799A-
 2 of the Public Health Service Act, or section 
 716 or 717 of the Employee Retirement Income 
 Security Act of 1974, or any State law 
 providing similar protections to individuals, 
 prior to the satisfaction of the deductible 
 under paragraph (2)(A)(i).
 (G) Safe harbor for absence of deductible for 
 certain insulin products.--
 (i) In general.--A plan shall not 
 fail to be treated as a high deductible 
 health plan by reason of failing to 
 have a deductible for selected insulin 
 products.
 (ii) Selected insulin products.--For 
 purposes of this subparagraph--
 (I) In general.--The term 
 ``selected insulin products'' 
 means any dosage form (such as 
 vial, pump, or inhaler dosage 
 forms) of any different type 
 (such as rapid-acting, short-
 acting, intermediate-acting, 
 long-acting, ultra long-acting, 
 and premixed) of insulin.
 (II) Insulin.--The term 
 ``insulin'' means insulin that 
 is licensed under subsection 
 (a) or (k) of section 351 of 
 the Public Health Service Act 
 (42 U.S.C. 262) and continues 
 to be marketed under such 
 section, including any insulin 
 product that has been deemed to 
 be licensed under section 
 351(a) of such Act pursuant to 
 section 7002(e)(4) of the 
 Biologics Price Competition and 
 Innovation Act of 2009 (Public 
 Law 111-148) and continues to 
 be marketed pursuant to such 
 licensure.
 (3) Permitted insurance.--The term ``permitted 
 insurance'' means--
 (A) insurance if substantially all of the 
 coverage provided under such insurance relates 
 to--
 (i) liabilities incurred under 
 workers' compensation laws,
 (ii) tort liabilities,
 (iii) liabilities relating to 
 ownership or use of property, or
 (iv) such other similar liabilities 
 as the Secretary may specify by 
 regulations,
 (B) insurance for a specified disease or 
 illness, and
 (C) insurance paying a fixed amount per day 
 (or other period) of hospitalization.
 (4) Family coverage.--The term ``family coverage'' 
 means any coverage other than self-only coverage.
 (5) Archer MSA.--The term ``Archer MSA'' has the 
 meaning given such term in section 220(d).
 (d) Health savings account.--For purposes of this section--
 (1) In general.--The term ``health savings account'' 
 means a trust created or organized in the United States 
 as a health savings account exclusively for the purpose 
 of paying the qualified medical expenses of the account 
 beneficiary, but only if the written governing 
 instrument creating the trust meets the following 
 requirements:
 (A) Except in the case of a rollover 
 contribution described in subsection (f)(5) or 
 section 220(f)(5), no contribution will be 
 accepted--
 (i) unless it is in cash, or
 (ii) to the extent such contribution, 
 when added to previous contributions to 
 the trust for the calendar year, 
 exceeds the sum of--
 (I) the dollar amount in 
 effect under subsection 
 (b)(2)(B), and
 (II) the dollar amount in 
 effect under subsection 
 (b)(3)(B).
 (B) The trustee is a bank (as defined in 
 section 408(n)), an insurance company (as 
 defined in section 816), or another person who 
 demonstrates to the satisfaction of the 
 Secretary that the manner in which such person 
 will administer the trust will be consistent 
 with the requirements of this section.
 (C) No part of the trust assets will be 
 invested in life insurance contracts.
 (D) The assets of the trust will not be 
 commingled with other property except in a 
 common trust fund or common investment fund.
 (E) The interest of an individual in the 
 balance in his account is nonforfeitable.
 (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, and 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. For purposes of this 
 subparagraph, amounts paid for menstrual care 
 products shall be treated as paid for medical 
 care.
 (B) Health insurance may not be purchased 
 from account.--Subparagraph (A) shall not apply 
 to any payment for insurance.
 (C) Exceptions.--Subparagraph (B) shall not 
 apply to any expense for coverage under--
 (i) a health plan during any period 
 of continuation coverage required under 
 any Federal law,
 (ii) a qualified long-term care 
 insurance contract (as defined in 
 section 7702B(b)),
 (iii) a health plan during a period 
 in which the individual is receiving 
 unemployment compensation under any 
 Federal or State law, or
 (iv) in the case of an account 
 beneficiary who has attained the age 
 specified in section 1811 of the Social 
 Security Act, any health insurance 
 other than a medicare supplemental 
 policy (as defined in section 1882 of 
 the Social Security Act).
 (D) Menstrual care product.--For purposes of 
 this paragraph, 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.
 (3) Account beneficiary.--The term ``account 
 beneficiary'' means the individual on whose behalf the 
 health savings account was established.
 (4) Certain rules to apply.--Rules similar to the 
 following rules shall apply for purposes of this 
 section:
 (A) Section 219(d)(2) (relating to no 
 deduction for rollovers).
 (B) Section 219(f)(3) (relating to time when 
 contributions deemed made).
 (C) Except as provided in section 106(d), 
 section 219(f)(5) (relating to employer 
 payments).
 (D) Section 408(g) (relating to community 
 property laws).
 (E) Section 408(h) (relating to custodial 
 accounts).
 (e) Tax treatment of accounts.--
 (1) In general.--A health savings account is exempt 
 from taxation under this subtitle unless such account 
 has ceased to be a health savings account. 
 Notwithstanding the preceding sentence, any such 
 account is subject to the taxes imposed by section 511 
 (relating to imposition of tax on unrelated business 
 income of charitable, etc. organizations).
 (2) Account terminations.--Rules similar to the rules 
 of paragraphs (2) and (4) of section 408(e) shall apply 
 to health savings accounts, and any amount treated as 
 distributed under such rules shall be treated as not 
 used to pay qualified medical expenses.
 (f) Tax treatment of distributions.--
 (1) Amounts used for qualified medical expenses.--Any 
 amount paid or distributed out of a health savings 
 account which is used exclusively to pay qualified 
 medical expenses of any account beneficiary shall not 
 be includible in gross income.
 (2) Inclusion of amounts not used for qualified 
 medical expenses.--Any amount paid or distributed out 
 of a health savings account which is not used 
 exclusively to pay the qualified medical expenses of 
 the account beneficiary shall be included in the gross 
 income of such beneficiary.
 (3) Excess contributions returned before due date of 
 return.--
 (A) In general.--If any excess contribution 
 is contributed for a taxable year to any health 
 savings account of an individual, paragraph (2) 
 shall not apply to distributions from the 
 health savings accounts of such individual (to 
 the extent such distributions do not exceed the 
 aggregate excess contributions to all such 
 accounts of such individual for such year) 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 excess 
 contribution.
 Any net income described in clause (ii) shall 
 be included in the gross income of the 
 individual for the taxable year in which it is 
 received.
 (B) Excess contribution.--For purposes of 
 subparagraph (A), the term ``excess 
 contribution'' means any contribution (other 
 than a rollover contribution described in 
 paragraph (5) or section 220(f)(5)) which is 
 neither excludable from gross income under 
 section 106(d) nor deductible under this 
 section.
 (4) Additional tax on distributions not used for 
 qualified medical expenses.--
 (A) In general.--The tax imposed by this 
 chapter on the account beneficiary for any 
 taxable year in which there is a payment or 
 distribution from a health savings account of 
 such beneficiary which is includible in gross 
 income under paragraph (2) shall be increased 
 by 20 percent of the amount which is so 
 includible.
 (B) Exception for disability or death.--
 Subparagraph (A) shall not apply if the payment 
 or distribution is made after the account 
 beneficiary becomes disabled within the meaning 
 of section 72(m)(7) or dies.
 (C) Exception for distributions after 
 medicare eligibility.--Subparagraph (A) shall 
 not apply to any payment or distribution after 
 the date on which the account beneficiary 
 attains the age specified in section 1811 of 
 the Social Security Act.
 (5) Rollover contribution.--An amount is described in 
 this paragraph as a rollover contribution if it meets 
 the requirements of subparagraphs (A) and (B).
 (A) In general.--Paragraph (2) shall not 
 apply to any amount paid or distributed from a 
 health savings account to the account 
 beneficiary to the extent the amount received 
 is paid into a health savings account for the 
 benefit 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 this paragraph.
 (6) Coordination with medical expense deduction.--For 
 purposes of determining the amount of the deduction 
 under section 213, any payment or distribution out of a 
 health savings account for qualified medical expenses 
 shall not be treated as an expense paid for medical 
 care.
 (7) Transfer of account incident to divorce.--The 
 transfer of an individual's interest in a health 
 savings account to an individual's spouse or former 
 spouse under a divorce or separation instrument 
 described in clause (i) of section 121(d)(3)(C) shall 
 not be considered a taxable transfer made by such 
 individual notwithstanding any other provision of this 
 subtitle, and such interest shall, after such transfer, 
 be treated as a health savings account with respect to 
 which such spouse is the account beneficiary.
 (8) Treatment after death of account beneficiary.--
 (A) Treatment if designated beneficiary is 
 spouse.--If the account beneficiary's surviving 
 spouse 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 were the account beneficiary.
 (B) Other cases.--
 (i) In general.--If, by reason of the 
 death of the account beneficiary, any 
 person acquires the account 
 beneficiary's interest in a health 
 savings account in a case to which 
 subparagraph (A) does not apply--
 (I) such account shall cease 
 to be a health savings account 
 as of the date of death, and
 (II) an amount equal to the 
 fair market value of the assets 
 in such account on such date 
 shall be includible if such 
 person is not the estate of 
 such beneficiary, in such 
 person's gross income for the 
 taxable year which includes 
 such date, or if such person is 
 the estate of such beneficiary, 
 in such beneficiary's gross 
 income for the last taxable 
 year of such beneficiary.
 (ii) Special rules.--
 (I) Reduction of inclusion 
 for predeath expenses.--The 
 amount includible in gross 
 income under clause (i) by any 
 person (other than the estate) 
 shall be reduced by the amount 
 of qualified medical expenses 
 which were incurred by the 
 decedent before the date of the 
 decedent's death and paid by 
 such person within 1 year after 
 such date.
 (II) Deduction for estate 
 taxes.--An appropriate 
 deduction shall be allowed 
 under section 691(c) to any 
 person (other than the decedent 
 or the decedent's spouse) with 
 respect to amounts included in 
 gross income under clause (i) 
 by such person.
 (g) Cost-of-living adjustment.--
 (1) In general.--Each dollar amount in subsections 
 (b)(2) and (c)(2)(A) shall be increased by an amount 
 equal to--
 (A) such dollar amount, multiplied by
 (B) the cost-of-living adjustment determined 
 under section 1(f)(3) for the calendar year in 
 which such taxable year begins determined by 
 substituting for ``calendar year 2016'' in 
 subparagraph (A)(ii) thereof--
 (i) except as provided in clause 
 (ii), ``calendar year 1997'', and
 (ii) in the case of each dollar 
 amount in subsection (c)(2)(A), 
 ``calendar year 2003''.
 In the case of adjustments made for any taxable year 
 beginning after 2007, section 1(f)(4) shall be applied 
 for purposes of this paragraph by substituting ``March 
 31'' for ``August 31'', and the Secretary shall publish 
 the adjusted amounts under subsections (b)(2) and 
 (c)(2)(A) for taxable years beginning in any calendar 
 year no later than June 1 of the preceding calendar 
 year.
 (2) Rounding.--If any increase under paragraph (1) is 
 not a multiple of $50, such increase shall be rounded 
 to the nearest multiple of $50.
 (h) Reports.--The Secretary may require--
 (1) the trustee of a health savings account to make 
 such reports regarding such account to the Secretary 
 and to the account beneficiary with respect to 
 contributions, distributions, the return of excess 
 contributions, and such other matters as the Secretary 
 determines appropriate, and
 (2) any person who provides an individual with a high 
 deductible health plan to make such reports to the 
 Secretary and to the account beneficiary with respect 
 to such plan as the Secretary determines appropriate.
The reports required by this subsection shall be filed at such 
time and in such manner and furnished to such individuals at 
such time and in such manner as may be required by the 
Secretary.

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 VII. DISSENTING VIEWS

 House of Representatives,
 Committee on Ways and Means,
 Washington, DC, June 7, 2023.