H.R. 1204 – Responsible Additions and Increases to Sustain Employee Health Benefits Act of…

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The Responsible Additions and Increases to Sustain Employee Health Benefits Act of 2017 changes the tax code to let families put more pre‑tax money into health flexible spending accounts (FSAs). It raises the yearly contribution limit and adds a rule that lets unused FSA balances roll over to the next year without being taxed. The changes affect employees who participate in employer‑offered health FSAs.

Key Provisions

Increases the annual FSA contribution limit from $2,500 to $5,000, with an extra $500 allowed for each dependent beyond the first two.
Updates the inflation‑adjustment dates in the code to reflect a 2017 reference point.
Allows participants to carry forward any unused FSA balance to the following year, treating the carryforward as occurring within 30 days of year‑end.
Specifies that rolled‑over amounts are excluded from gross income and do not reduce the amount an employee may contribute in the next year.

Legislative Activity

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1 earlier action

HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

February 17, 2017

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HouseIntro Referral

Introduced in House

February 17, 2017

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

February 17, 2017

Bill Text

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Introduced in HouseIssued February 17, 2017

I

115th CONGRESS

1st Session

H. R. 1204

IN THE HOUSE OF REPRESENTATIVES

February 17, 2017

Mr. Stivers (for himself, Ms. Michelle Lujan Grisham of New Mexico, Mrs. Blackburn, Ms. Pingree, Mrs. Comstock, Mr. Collins of New York, Mr. Kilmer, Mr. Pearce, Mr. Tiberi, Mr. DeFazio, Ms. Sinema, and Mrs. Bustos) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide the opportunity for responsible health savings to all American families.

1.

Short title

This Act may be cited as the Responsible Additions and Increases to Sustain Employee Health Benefits Act of 2017.

2.

Expandable health flexible spending arrangements

(a)

Expansion of annual maximum

(1)

In general

Paragraph (1) of section 125(i) of the Internal Revenue Code of 1986 is amended—

(A)

by striking $2,500 and inserting $5,000, with an additional $500 per each additional employee dependent above two dependents, and

(B)

by inserting at the end the following: An additional employee dependent may not be taken into account under the preceding sentence for any taxable year if such additional employee dependent has been taken into account by another person under such sentence for such taxable year..

(2)

Adjustment for inflation

Paragraph (2) of section 125(i) of the Internal Revenue Code of 1986 is amended—

(A)

by striking December 31, 2013 and inserting December 31, 2017,

(B)

by striking the dollar amount and inserting each of the dollar amounts, and

(C)

in subparagraph (B), by striking calendar year 2012 and inserting calendar year 2016.

(b)

Carryforward of unused benefits

Section 125(i) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(3)

Carryforward of unused benefits

(A)

In general

A plan or arrangement may permit a participant in a health flexible spending arrangement to elect to carry forward any aggregate unused balances in the participant’s accounts under such arrangement as of the close of any year to the succeeding year. Such carryforward shall be treated as having occurred within 30 days of the close of the year.

(B)

Limitation

The amount which a participant may elect to carry forward under subparagraph (A) from any year shall be any aggregate unused balances in the participant’s account at the close of any year.

(C)

Exclusion from gross income

No amount shall be included in gross income under this chapter by reason of any carryforward under this paragraph.

(D)

Coordination limits

The maximum amount which may be contributed to a health flexible spending arrangement for any year to which an unused amount is carried under this paragraph shall not be reduced by such unused amount.

.

(c)

Conforming amendment

Section 125(i) of the Internal Revenue Code of 1986 is amended by striking Limitation on flexible spending arrangements in the heading and inserting Special rules for health flexible spending arrangements.

(d)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act.