S. 28Senate115th Congress (2017-2019)In Committee

Health Savings Account Expansion Act of 2017

Sponsored by Jeff FlakeSen. Jeff Flake (R-AZ)
Introduced January 4, 2017

AI-Generated Summary

Updated April 15, 2026 at 11:12 AM UTC

The Health Savings Account Expansion Act of 2017 amends the tax code to let people put more money into HSAs, use those funds to pay health‑insurance premiums, and cover direct primary‑care services. It also simplifies some HSA rules and cuts the penalty for improper withdrawals. The changes affect anyone who contributes to or withdraws from an HSA.

Key Provisions

  • Increase the annual HSA contribution limit to $9,000 for an individual and $18,000 for a joint return, effective for tax years beginning after Dec. 31, 2017.
  • Allow HSA funds to be used to pay health‑insurance premiums and other qualified medical expenses that are not reimbursed by insurance.
  • Expand the definition of qualified medical expenses to include payments for direct primary‑care service arrangements (a fixed‑fee primary‑care plan).
  • Reorganize and remove certain mandatory provisions in the HSA code, giving account holders more flexibility in contributions and deductions.
  • Lower the penalty for non‑qualified HSA distributions from 20% to 10% for tax years beginning after Dec. 31, 2017.

Legislative Activity

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1 earlier action
SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S60-61)

January 4, 2017

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SenateIntro Referral

Introduced in Senate

January 4, 2017

SenateIntro Referral

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S60-61)

January 4, 2017

Floor Debate

11 members

What members said about S. 28 on the floor

5 Republicans5 Democrats1 Independent
Rand Paul
Sen. Rand PaulR-KY · Jan 4, 2017

Mr. President, the more things change, the more they seem to stay the same. Republicans won the White House. Republicans control the Senate. Republicans control the House. What will the first order…

Debbie Stabenow
Sen. Debbie StabenowD-MI · Jan 4, 2017

Mr. President, first let me comment on what my friend, the distinguished Senator from Texas, said. If my car goes into a ditch, the first thing I don't do is dismantle the car. That doesn't help me…

Michael B. Enzi
Sen. Michael B. EnziR-WY · Jan 4, 2017

Mr. President, I ask unanimous consent that the time be equally divided between the two sides during quorum calls. I suggest the absence of a quorum. Mr. President, I ask unanimous consent that the…

John Cornyn
Sen. John CornynR-TX · Jan 4, 2017

Mr. President, there has been a flurry of activity this week with the beginning of the new year and the beginning of a new Congress--the 115th Congress--and we have a lot of work to do. This election…

Bernard Sanders
Sen. Bernard SandersI-VT · Jan 4, 2017

Mike Enzi, the Senator from Wyoming, is a friend of mine. He comes from a beautiful rural State--Wyoming. I come from a beautiful rural State--Vermont. That is probably the end of our commonality. We…

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Richard J. Durbin
Sen. Richard J. DurbinD-IL · Jan 4, 2017

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, we are discussing the budget resolution. It is an interesting time to do it in the month of…

Sheldon Whitehouse
Sen. Sheldon WhitehouseD-RI · Jan 4, 2017

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, I want to comment and say a few words about the use of the budget reconciliation process to…

Jeff Flake
Sen. Jeff FlakeR-AZ · Jan 4, 2017

Mr. President, I rise to speak today about legislation I am introducing, the Health Savings Account Expansion Act. Earlier this month, individuals across this country were once again faced with fewer…

Jeff Flake
Sen. Jeff FlakeR-AZ · Jan 4, 2017

Mr. President, I rise to speak today about legislation I am introducing, the Health Savings Account Expansion Act. Earlier this month, individuals across this country were once again faced with fewer…

Dianne Feinstein
Sen. Dianne FeinsteinD-CA · Jan 4, 2017

Mr. President, I rise to introduce the Extending Justice for Sex Crime Victims Act, a bill to extend the time for minors to seek justice against their perpetrators. Sex crimes committed against…

Sherrod Brown
Sen. Sherrod BrownD-OH · Jan 4, 2017

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, 70 years ago United Mine Workers president John L. Lewis, a lifelong Republican, sat down with…

John Cornyn
Sen. John CornynR-TX · Oct 26, 2017

Mr. President, I ask unanimous consent that the text of the resolution be printed in the Record.

Mitch McConnell
Sen. Mitch McConnellR-KY · Jan 4, 2017

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Show 1 more
Jeff Flake
Sen. Jeff FlakeR-AZ · Jan 4, 2017

I yield the floor and suggest the absence of a quorum.

Bill Text

Latest available legislative text

Reading Mode
Latest
Introduced in SenateIssued January 4, 2017

II

115th CONGRESS

1st Session

S. 28

IN THE SENATE OF THE UNITED STATES

January 4, 2017

Mr. Flake (for himself and Mr. Johnson) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to expand the permissible use of health savings accounts to include health insurance payments and to increase the dollar limitation for contributions to health savings accounts, and for other purposes.

1.

Short title

This Act may be cited as the Health Savings Account Expansion Act of 2017.

2.

Adequate funds for health insurance plans

(a)

In general

Section 223(b)(1) of the Internal Revenue Code of 1986 is amended by striking the sum of the monthly and all that follows through eligible individual and inserting $9,000 ($18,000 in the case of a joint return).

(b)

Conforming amendments

(1)

Subsection (b) of such Code is amended by striking paragraphs (2), (3), and (5) and by redesignating paragraphs (4), (6), (7), and (8) as paragraphs (2), (3), (4), and (5), respectively.

(2)

Section 223(b)(2) of such Code (as redesignated by paragraph (1)) is amended by striking the last sentence.

(3)

Section 223(b)(4) of such Code (as redesignated by paragraph (1)) is amended to read as follows:

(4)

Medicare eligible individuals

The limitation under this subsection for any taxable year with respect to an individual shall—

(A)

in the case of the first taxable year in which such individual is entitled to benefits under title XVIII of the Social Security Act, be the amount which bears the same proportion to the amount in effect under paragraph (1) with respect to such individual as—

(i)

the number of months in the taxable year during which such individual was not so entitled, bears to

(ii)

12, and

(B)

be zero for any taxable year thereafter.

.

(4)

Section 223(g)(1) of such Code is amended—

(A)

in the matter preceding subparagraph (A) by striking Each dollar amount in subsection (b)(2) and inserting In the case of taxable years beginning after December 31, 2018, each dollar amount in subsection (b)(1), and

(B)

by amending subparagraph (B) to read as follows:

(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 calendar year 2017 for calendar year 1992.

.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

3.

Parity with employer-provided health insurance; direct primary care

(a)

In general

Section 223(d)(2) of the Internal Revenue Code of 1986 is amended to read as follows:

(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.

(B)

Direct primary care

(i)

In general

Such term includes expenses for direct primary care service arrangements.

(ii)

Direct primary care service arrangements

For purposes of clause (i), the term direct primary care service arrangements means an arrangement under which an individual is provided coverage restricted to primary care services in exchange for a fixed periodic fee or payment for primary care services.

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

4.

Freedom from mandate

(a)

In general

Section 223 of the Internal Revenue Code of 1986, as amended by sections 2 and 3, is amended by striking subsection (c) and redesignating subsections (d) through (h) as subsections (c) through (g), respectively.

(b)

Conforming amendments

(1)

Subsection (a) of section 223 of such Code is amended to read as follows:

(a)

Deduction allowed

In the case of an individual, there shall be allowed as a deduction for a 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.

.

(2)

Subsection (b) of section 223 of such Code (as amended by section 2) is amended by striking paragraph (5).

(3)

Section 223(c)(1)(A) of such Code (as redesignated by subsection (a)) is amended—

(A)

by striking subsection (f)(5) and inserting subsection (e)(5), and

(B)

in clause (ii) by striking the sum
of—
and all that follows and inserting the dollar amount in effect under subsection (b)(1)..

(4)

Section 223(f)(1) of such Code (as redesignated by subsection (a)) is amended by striking subsections (b)(1) and (c)(2)(A) and inserting subsection (b)(1).

(5)

Section 26(b)(2)(U) of such Code is amended by striking section 223(f)(4) and inserting section 223(e)(4).

(6)

Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(v), 4973(a)(5), and 6051(a)(12) of such Code are each amended by striking section 223(d) each place it appears and inserting section 223(c).

(7)

Section 106(d)(1) of such Code is amended—

(A)

by striking who is an eligible individual (as defined in section 223(c)(1)), and

(B)

by striking section 223(d) and inserting section 223(c).

(8)

Section 408(d)(9) of such Code is amended—

(A)

in subparagraph (A) by striking who is an eligible individual (as defined in section 223(c)) and, and

(B)

in subparagraph (C) by striking computed on the basis of the type of coverage under the high deductible health plan covering the individual at the time of the qualified HSA funding distribution.

(9)

Section 877A(g)(6) of such Code is amended by striking 223(f)(4) and inserting 223(e)(4).

(10)

Section 4973(g) of such Code is amended—

(A)

by striking section 223(d) and inserting section 223(c),

(B)

in paragraph (2), by striking section 223(f)(2) and inserting section 223(e)(2), and

(C)

by striking section 223(f)(3) and inserting section 223(e)(3).

(11)

Section 4975 of such Code is amended—

(A)

in subsection (c)(6)—

(i)

by striking section 223(d) and inserting section 223(c), and

(ii)

by striking section 223(e)(2) and inserting section 223(d)(2), and

(B)

in subsection (e)(1)(E), by striking section 223(d) and inserting section 223(c).

(12)

Section 6693(a)(2)(C) of such Code is amended by striking section 223(h) and inserting section 223(g).

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2017.

5.

Restoring Lower Penalty for Nonqualified Distributions

(a)

HSAs

Section 223(e)(4)(A) of the Internal Revenue Code of 1986, as amended by section 4, is amended by striking 20 percent and inserting 10 percent.

(b)

Effective date

The amendment made by this section shall apply to distributions made in taxable years beginning after December 31, 2017.