S. 3362 — Health Marketplace and Savings Accounts for All Act

This section revises the annual contribution limit for Health Savings Accounts (HSAs) under IRC §223(b)(1) to the elective deferral limit under §402(g)(1)(B) (e.g., $23,000 in 2024) (from $4,150 for self-only coverage or $8,300 for family coverage), thereby eliminating the distinction between self-only and family coverage limits and various coordination rules. It further increases the additional contribution limit for individuals age 50 or older to the catch-up amount under §414(v)(2)(B)(i) (e.g., $7,500 in 2024) (from $1,000), with conforming changes to the HSA exclusion amount, inflation adjustments, and cross-references; the amendments apply to taxable years beginning after enactment. (HSAs provide tax-favored savings for qualified medical expenses for individuals enrolled in high-deductible health plans.)

This section eliminates the "eligible individual" requirement under Section 223 of the Internal Revenue Code—previously defined as coverage under a high-deductible health plan (HDHP) with no disqualifying coverage (e.g., Medicare or non-HDHP plans)—for tax-deductible contributions to health savings accounts (HSAs). (Thus, any individual may now contribute to an HSA regardless of health plan type; HSAs provide tax-favored savings, deductions, and earnings for qualified medical expenses.) It also strikes special rules disqualifying Medicare-eligible individuals, redesignates subsections accordingly, and makes conforming amendments to related IRC provisions (e.g., employer contribution rules under §§106 and 4980G, prohibited transaction rules under §4973, and reporting requirements).

This section expands the definition of qualified medical expenses for Health Savings Accounts (HSAs)—tax-favored savings accounts for individuals with high-deductible health plans—to include (1) amounts paid pursuant to a direct primary care service arrangement (i.e., coverage restricted to primary care services in exchange for a fixed periodic fee or payment) and (2) medical expenses of any child (as defined in section 152(f)(1)) who has not attained age 27 by the end of the taxable year, in addition to expenses of the account holder and dependents (as defined in section 152 without regard to subsections (b)(1), (b)(2), and (d)(1)(B)). It also strikes subparagraphs (B) and (C) of section 223(c)(2) and redesignates subparagraph (D) as (B). The amendments apply to amounts paid after the date of enactment in taxable years beginning after such date.

This section establishes a special rule under IRC §223(c)(2) treating certain medical expenses incurred before the establishment of a health savings account (HSA) as qualified medical expenses eligible for tax-free reimbursement. The rule applies to expenses incurred (1) during the taxable year in which the HSA is established or (2) during the preceding taxable year, if the HSA is established after that year but before the due date for filing the return for such year (without extensions), provided the expenses otherwise qualify under existing HSA rules. (As background, HSAs enable tax-advantaged savings and reimbursements for medical expenses of individuals with high-deductible health plans.) The amendment applies to taxable years beginning after enactment.

This section establishes an exception under the Archer medical savings account (MSA) rules—tax-favored accounts for qualified medical expenses available to eligible self-employed individuals and small business employees—to the application of IRC §223(e)(4)(A) for distributions correcting an administrative, clerical, or payroll contribution error. The exception applies if the distribution is received by the individual on or before the due date (including extensions) for filing the tax return for the taxable year and includes the net income attributable to the contribution (includible in gross income for the year received).

This section expands tax-free rollover of a decedent's health savings account (HSA)—a tax-advantaged account for individuals enrolled in a high-deductible health plan to pay qualified medical expenses—to include the account holder's child, parent, or grandparent (previously limited to surviving spouse only). It further specifies that an HSA rolled over to a child who is a dependent of another taxpayer (i.e., eligible for a deduction under IRC §151) is treated as the child's HSA.

This section expands the definition of qualified medical expenses eligible for tax-free distributions from Health Savings Accounts (HSAs) to include qualified wellness expenses (i.e., amounts paid for (1) vitamins, (2) dietary supplements as defined in the Federal Food, Drug, and Cosmetic Act, (3) gym or fitness facility memberships, or (4) wearable fitness trackers). The amendments apply to taxable years beginning after the date of enactment.

This section establishes equivalent bankruptcy exemptions for health savings accounts (HSAs, as defined in IRC §223) by treating them the same as individual retirement accounts (IRAs, IRC §408) under 11 U.S.C. §522(r). (As background, in bankruptcy, individual debtors may exempt specified retirement funds in tax-exempt accounts from the estate under §522(b)(3)(C); this change applies to cases commenced after enactment.)

This section amends ERISA's definition of employer to deem qualifying health marketplace pools as employers solely for purposes of offering group health plans or group health insurance coverage, including plans or coverage providing only prescription or nonprescription (over-the-counter) drugs as the sole benefit. A health marketplace pool must (1) be formed and maintained in good faith for risk pooling to offer such coverage without conditioning membership on health status-related factors; (2) offer coverage to all members (and their employees or dependents) at policy- or product-specific rates that may vary per ERISA nondiscrimination rules; (3) provide the same coverage to all members (subject to service area and underwriting limits); (4) assume risk via self-insurance or issuer contracts; and (5) comply with eligibility, geographic, administrative services, and enrollment rules. (Thus, such pools—open to individuals, employer members, and their employees/dependents—facilitate ERISA-regulated group health arrangements outside traditional employer-employee relationships.)

This section amends definitional provisions in Section 3 of ERISA (29 U.S.C. 1002) as follows: (1) modifies the definition of "employee" to include any member of an entity meeting the requirements of section 736(b); (2) revises the definition of "fiduciary" to specify that, for a health marketplace pool (i.e., an entity meeting section 736(b) requirements) offering a group health plan or group health insurance coverage (which may cover prescription or nonprescription drugs as the only benefit), membership in the pool does not by itself make a person a fiduciary with respect to such plan or coverage; and (3) expands exclusions from the "multiple employer welfare arrangement" definition to include group health plans or group health insurance coverage offered by an entity meeting section 736(b) requirements (which may cover prescription or nonprescription drugs as the only benefit).