Freedom from mandate

(a) In general Section 223 of the Internal Revenue Code of 1986, as amended by section 2, is further amended by striking subsections (c) and (g) and by redesignating subsections (d), (e), (f), and (h) as subsections (c), (d), (e), and (f), respectively. (b) Conforming amendments (1) Subsection (a) of section 223 of the Internal Revenue Code of 1986 is amended to read as follows: (a) Deduction allowed In the case of an individual, 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.. (2) Subsection (c)(1)(A) of section 223 of such Code, as amended by section 2 and redesignated by subsection (a), is further amended by striking subsection (f)(4) and inserting subsection (e)(4). (3) Subparagraph (U) of section 26(b)(2) of such Code, as amended by section 2, is further amended by striking section 223(f)(3) and inserting section 223(e)(3). (4) Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(B)(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). (5) 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). (6) Section 106(e) of such Code is amended— (A) by striking paragraphs (3) and (4) and by redesignating paragraph (5) as paragraph (4), (B) by inserting after paragraph (2) the following new paragraph: (3) Treatment as rollover contribution A qualified HSA distribution shall be treated as a rollover contribution described in section 223(e)(4)., and (C) by striking to any eligible individual covered under a high deductible health plan of the employer in paragraph (4)(B)(ii) (as so redesignated) and inserting to any employee with respect to whom a health savings account has been established. (7) Section 408(d)(9)(A) of such Code is amended by striking who is an eligible individual (as defined in section 223(c)) and. (8) Section 877A(g)(6) of such Code is amended by striking 223(f)(4) and inserting 223(e)(4). (9) Section 4973(g) of such Code is amended— (A) by striking section 223(d) and inserting section 223(c), (B) in paragraph (1), by striking or 223(f)(5) and inserting or 223(e)(5), (C) in paragraph (2)(A), by striking section 223(f)(2) and inserting section 223(e)(2), and (D) in the flush matter at the end, by striking section 223(f)(3) and inserting section 223(e)(3). (10) 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). (11) Subsection (b) of section 4980G of such Code is amended to read as follows: (b) Rules and requirements (1) In general An employer meets the requirements of this subsection for any calendar year if the employer makes available comparable contributions to the health savings accounts of all comparable participating employees for each coverage period during such calendar year. (2) Comparable contributions (A) In general For purposes of paragraph (1), the term comparable contributions means contributions— (i) which are the same amount, or (ii) if the employees are covered by a health plan, which are the same percentage of the annual deductible limit under the plan covering the employees. (B) Part-year employees In the case of an employee who is employed by the employer for only a portion of the calendar year, a contribution to the health savings account of such employee shall be treated as comparable if it is an amount which bears the same ratio to the comparable amount (determined without regard to this subparagraph) as such portion bears to the entire calendar year. (3) Comparable participating employees For purposes of paragraph (1), the term comparable participating employees means all employees who are covered (if at all) under the same health plan of the employer and have the same category of coverage. For purposes of the preceding sentence, the categories of coverage are self-only and family coverage. (4) Part-time employees (A) In general Paragraph (3) shall be applied separately with respect to part-time employees and other employees. (B) Part-time employee For purposes of subparagraph (A), the term part-time employee means any employee who is customarily employed for fewer than 30 hours per week.. (12) Section 4980G(d) of such Code is amended by striking section 4980E and inserting this section. (13) Section 6693(a)(2)(C) of such Code is amended by striking section 223(h) and inserting section 223(f). (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.