Sec. 102. Consolidation of HSAs, HRAs, FSAs, and MSAs into Medisave accounts
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Section 105(b) of the Internal Revenue Code of 1986 is amended by striking paid, and inserting paid under a self-funded major medical plan of the employer . Subsection
(h)of such Code is amended to read as follows: Subsection
(b)shall not apply to health reimbursement arrangements. . Section 106 of such Code is amended— by striking subsections (b), (d), and (e), and by redesignating subsections
(f)and
(g)as subsections
(d)and (e), respectively. Section 106 of such Code, as amended by subparagraph (A), is amended by inserting after subsection
(a)the following: In the case of an employee who is an eligible individual (as defined in section 530A(c)(1)), amounts contributed by such employee’s employer to any Medisave account (as defined in section 530A(a)) of such employee shall be treated as employer-provided coverage for medical expenses under an accident or health plan to the extent such amounts do not exceed the limitations specified in clauses
(ii)and
(iii)of section 530A(a)(1)(A) (determined without regard to this subsection) which is applicable to such employee for such taxable year unless such employee is receiving and advance payment of the premium tax credit under section, then such amounts shall not be treated as employer-provided coverage for medical expense under an accident or health plan and are subject to taxation as personal income. No amount shall be included in the gross income of any employee solely because the employee may choose between the contributions referred to in paragraph
(1)and employer contributions to another health plan of the employer. Any employer contribution to a Medisave account, if otherwise allowable as a deduction under this chapter, shall be allowed only for the taxable year in which paid. Every individual required to file a return under section 6012 for the taxable year shall include on such return the aggregate amount contributed by employers to the Medisave accounts of such individual or such individual’s spouse for such taxable year. Paragraph
(1)shall not apply for purposes of section 4980B. For penalty on failure by employer to make comparable contributions to the Medisave accounts of comparable employees, see section 4980G. . Section 408(d)(9) of such Code is amended to read as follows: In the case of an individual who is an eligible individual (as defined in section 530A(c)(1)) and who elects the application of this paragraph for a taxable year, gross income of the individual for the taxable year does not include a qualified Medisave account funding distribution to the extent such distribution is otherwise includible in gross income. For purposes of this paragraph, the term qualified Medisave account funding distribution means a distribution from an individual retirement plan (other than a plan described in subsection
(k)or (p)) of the employee to the extent that— such distribution is contributed to the Medisave account of the individual in a direct trustee-to-trustee transfer, and such distribution— when added to previous contributions to the Medisave account for the calendar year does not exceed the limitation amount specified in section 530A(b)(1), and when added to the balance of the Medisave account, exceeds the limitation amount specified in section 530A(b)(2). An individual may make an election under subparagraph
(A)only for one qualified Medisave account funding distribution during the lifetime of the individual. Such an election, once made, shall be irrevocable. Notwithstanding section 72, in determining the extent to which an amount is treated as otherwise includible in gross income for purposes of subparagraph (A), the aggregate amount distributed from an individual retirement plan shall be treated as includible in gross income to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts from all individual retirement plans were distributed. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years. . Section 4980G(a) of such Code is amended by striking health savings account and inserting Medisave account . Section 4980G(c) of such Code is amended by striking Archer MSAs and health savings accounts and inserting Medisave accounts . 2 statements Section 6051(a) of such Code is amended— by striking paragraph
(11)and redesignating paragraphs
(12)through
(17)as paragraphs
(11)through (16), respectively, and by amending paragraph (11), as so redesignated, to read as follows: the amount contributed to any Medisave account (as defined in section 530A) of such employee or such employee’s spouse, . Section 220(a) of such Code is amended by adding at the end the following: No amount is allowed as a deduction under the preceding sentence for any taxable year beginning after one year after the date of the enactment of the Fair Care Act of 2020. . Section 223(a) of such Code is amended by adding at the end the following: No amount is allowed as a deduction under the preceding sentence for any taxable year beginning after one year after the date of the enactment of the . Fair Care Act of 2020 . Notwithstanding any other provision of law, if the remaining balance in a health flexible spending arrangement, Archer MSA, or health savings account is transferred to a Medisave account before the end of any taxable year ending on or before one year after the date of the enactment of the Fair Care Act of 2020 , such transfer shall be treated as a rollover to the Medisave account under section 530A(e)(5)(B) of the Internal Revenue Code of 1986 and the distribution from the health flexible spending arrangement, Archer MSA, or health savings account shall not be includible in gross income. The amendments made by this section shall apply to taxable years beginning after one year after the date of the enactment of this Act.