
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)[201(c)]]
[CITE: 26USC220]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
        PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS
 
Sec. 220. Archer MSAs


(a) Deduction allowed

    In the case of an individual who is an eligible individual for any 
month during the taxable year, 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 such individual to an Archer MSA of such 
individual.

(b) Limitations

                           (1) In general

        The amount allowable as a deduction under subsection (a) to an 
    individual for the taxable year shall not exceed the sum of the 
    monthly limitations for months during such taxable year that the 
    individual is an eligible individual.

                       (2) Monthly limitation

        The monthly limitation for any month is the amount equal to \1/
    12\ of--
            (A) in the case of an individual who has self-only coverage 
        under the high deductible health plan as of the first day of 
        such month, 65 percent of the annual deductible under such 
        coverage, and
            (B) in the case of an individual who has family coverage 
        under the high deductible health plan as of the first day of 
        such month, 75 percent of the annual deductible under such 
        coverage.

              (3) Special rule for married individuals

        In the case of individuals who are married to each other, if 
    either spouse has family coverage--
            (A) both spouses shall be treated as having only such family 
        coverage (and if such spouses each have family coverage under 
        different plans, as having the family coverage with the lowest 
        annual deductible), and
            (B) the limitation under paragraph (1) (after the 
        application of subparagraph (A) of this paragraph) shall be 
        divided equally between them unless they agree on a different 
        division.

              (4) Deduction not to exceed compensation

        (A) Employees

            The deduction allowed under subsection (a) for contributions 
        as an eligible individual described in subclause (I) of 
        subsection (c)(1)(A)(iii) shall not exceed such individual's 
        wages, salaries, tips, and other employee compensation which are 
        attributable to such individual's employment by the employer 
        referred to in such subclause.

        (B) Self-employed individuals

            The deduction allowed under subsection (a) for contributions 
        as an eligible individual described in subclause (II) of 
        subsection (c)(1)(A)(iii) shall not exceed such individual's 
        earned income (as defined in section 401(c)(1)) derived by the 
        taxpayer from the trade or business with respect to which the 
        high deductible health plan is established.

        (C) Community property laws not to apply

            The limitations under this paragraph shall be determined 
        without regard to community property laws.

     (5) Coordination with exclusion for employer contributions

        No deduction shall be allowed under this section for any amount 
    paid for any taxable year to an Archer MSA of an individual if--
            (A) any amount is contributed to any Archer MSA of such 
        individual for such year which is excludable from gross income 
        under section 106(b), or
            (B) if such individual's spouse is covered under the high 
        deductible health plan covering such individual, any amount is 
        contributed for such year to any Archer MSA of such spouse which 
        is so excludable.

                (6) Denial of deduction to dependents

        No deduction shall be allowed under this section to any 
    individual with respect to whom a deduction under section 151 is 
    allowable to another taxpayer for a taxable year beginning in the 
    calendar year in which such individual's taxable year begins.

                  (7) Medicare eligible individuals

        The limitation under this subsection for any month with respect 
    to an individual shall be zero for the first month such individual 
    is entitled to benefits under title XVIII of the Social Security Act 
    and for each month thereafter.

(c) Definitions

    For purposes of this section--

                       (1) Eligible individual

        (A) In general

            The term ``eligible individual'' means, with respect to any 
        month, any individual if--
                (i) such individual is covered under a high deductible 
            health plan as of the 1st day of such month,
                (ii) such individual is not, while covered under a high 
            deductible health plan, covered under any health plan--
                    (I) which is not a high deductible health plan, and
                    (II) which provides coverage for any benefit which 
                is covered under the high deductible health plan, and

                (iii)(I) the high deductible health plan covering such 
            individual is established and maintained by the employer of 
            such individual or of the spouse of such individual and such 
            employer is a small employer, or
                (II) such individual is an employee (within the meaning 
            of section 401(c)(1)) or the spouse of such an employee and 
            the high deductible health plan covering such individual is 
            not established or maintained by any employer of such 
            individual or spouse.

        (B) Certain coverage disregarded

            Subparagraph (A)(ii) shall be applied without regard to--
                (i) coverage for any benefit provided by permitted 
            insurance, and
                (ii) coverage (whether through insurance or otherwise) 
            for accidents, disability, dental care, vision care, or 
            long-term care.

        (C) Continued eligibility of employee and spouse establishing 
                Archer MSAs

            If, while an employer is a small employer--
                (i) any amount is contributed to an Archer MSA of an 
            individual who is an employee of such employer or the spouse 
            of such an employee, and
                (ii) such amount is excludable from gross income under 
            section 106(b) or allowable as a deduction under this 
            section,

        such individual shall not cease to meet the requirement of 
        subparagraph (A)(iii)(I) by reason of such employer ceasing to 
        be a small employer so long as such employee continues to be an 
        employee of such employer.

        (D) Limitations on eligibility

            For limitations on number of taxpayers who are eligible to 
        have Archer MSAs, see subsection (i).

                   (2) High deductible health plan

        (A) In general

            The term ``high deductible health plan'' means a health 
        plan--
                (i) in the case of self-only coverage, which has an 
            annual deductible which is not less than $1,500 and not more 
            than $2,250,
                (ii) in the case of family coverage, which has an annual 
            deductible which is not less than $3,000 and not more than 
            $4,500, and
                (iii) the annual out-of-pocket expenses required to be 
            paid under the plan (other than for premiums) for covered 
            benefits does not exceed--
                    (I) $3,000 for self-only coverage, and
                    (II) $5,500 for family coverage.

        (B) Special rules

            (i) Exclusion of certain plans

                Such term does not include a health plan if 
            substantially all of its coverage is coverage described in 
            paragraph (1)(B).
            (ii) Safe harbor for absence of preventive care 
                    deductible

                A plan shall not fail to be treated as a high deductible 
            health plan by reason of failing to have a deductible for 
            preventive care if the absence of a deductible for such care 
            is required by State law.

                       (3) Permitted insurance

        The term ``permitted insurance'' means--
            (A) insurance if substantially all of the coverage provided 
        under such insurance relates to--
                (i) liabilities incurred under workers' compensation 
            laws,
                (ii) tort liabilities,
                (iii) liabilities relating to ownership or use of 
            property, or
                (iv) such other similar liabilities as the Secretary may 
            specify by regulations,

            (B) insurance for a specified disease or illness, and
            (C) insurance paying a fixed amount per day (or other 
        period) of hospitalization.

                         (4) Small employer

        (A) In general

            The term ``small employer'' means, with respect to any 
        calendar year, any employer if such employer employed an average 
        of 50 or fewer employees on business days during either of the 2 
        preceding calendar years. For purposes of the preceding 
        sentence, a preceding calendar year may be taken into account 
        only if the employer was in existence throughout such year.

        (B) Employers not in existence in preceding year

            In the case of an employer which was not in existence 
        throughout the 1st preceding calendar year, the determination 
        under subparagraph (A) shall be based on the average number of 
        employees that it is reasonably expected such employer will 
        employ on business days in the current calendar year.

        (C) Certain growing employers retain treatment as small employer

            The term ``small employer'' includes, with respect to any 
        calendar year, any employer if--
                (i) such employer met the requirement of subparagraph 
            (A) (determined without regard to subparagraph (B)) for any 
            preceding calendar year after 1996,
                (ii) any amount was contributed to the Archer MSA of any 
            employee of such employer with respect to coverage of such 
            employee under a high deductible health plan of such 
            employer during such preceding calendar year and such amount 
            was excludable from gross income under section 106(b) or 
            allowable as a deduction under this section, and
                (iii) such employer employed an average of 200 or fewer 
            employees on business days during each preceding calendar 
            year after 1996.

        (D) Special rules

            (i) Controlled groups

                For purposes of this paragraph, all persons treated as a 
            single employer under subsection (b), (c), (m), or (o) of 
            section 414 shall be treated as 1 employer.
            (ii) Predecessors

                Any reference in this paragraph to an employer shall 
            include a reference to any predecessor of such employer.

                         (5) Family coverage

        The term ``family coverage'' means any coverage other than self-
    only coverage.

(d) Archer MSA

    For purposes of this section--

                           (1) Archer MSA

        The term ``Archer MSA'' means a trust created or organized in 
    the United States as a medical savings account exclusively for the 
    purpose of paying the qualified medical expenses of the account 
    holder, but only if the written governing instrument creating the 
    trust meets the following requirements:
            (A) Except in the case of a rollover contribution described 
        in subsection (f)(5), no contribution will be accepted--
                (i) unless it is in cash, or
                (ii) to the extent such contribution, when added to 
            previous contributions to the trust for the calendar year, 
            exceeds 75 percent of the highest annual limit deductible 
            permitted under subsection (c)(2)(A)(ii) for such calendar 
            year.

            (B) The trustee is a bank (as defined in section 408(n)), an 
        insurance company (as defined in section 816), or another person 
        who demonstrates to the satisfaction of the Secretary that the 
        manner in which such person will administer the trust will be 
        consistent with the requirements of this section.
            (C) No part of the trust assets will be invested in life 
        insurance contracts.
            (D) The assets of the trust will not be commingled with 
        other property except in a common trust fund or common 
        investment fund.
            (E) The interest of an individual in the balance in his 
        account is nonforfeitable.

                   (2) Qualified medical expenses

        (A) In general

            The term ``qualified medical expenses'' means, with respect 
        to an account holder, amounts paid by such holder 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) of such individual, but only to the extent such 
        amounts are not compensated for by insurance or otherwise.

        (B) Health insurance may not be purchased from account

            (i) In general

                Subparagraph (A) shall not apply to any payment for 
            insurance.
            (ii) Exceptions

                Clause (i) shall not apply to any expense for coverage 
            under--
                    (I) a health plan during any period of continuation 
                coverage required under any Federal law,
                    (II) a qualified long-term care insurance contract 
                (as defined in section 7702B(b)), or
                    (III) a health plan during a period in which the 
                individual is receiving unemployment compensation under 
                any Federal or State law.

        (C) Medical expenses of individuals who are not eligible 
                individuals

            Subparagraph (A) shall apply to an amount paid by an account 
        holder for medical care of an individual who is not described in 
        clauses (i) and (ii) of subsection (c)(1)(A) for the month in 
        which the expense for such care is incurred only if no amount is 
        contributed (other than a rollover contribution) to any Archer 
        MSA of such account holder for the taxable year which includes 
        such month. This subparagraph shall not apply to any expense for 
        coverage described in subclause (I) or (III) of subparagraph 
        (B)(ii).

                         (3) Account holder

        The term ``account holder'' means the individual on whose behalf 
    the Archer MSA was established.

                     (4) Certain rules to apply

        Rules similar to the following rules shall apply for purposes of 
    this section:
            (A) Section 219(d)(2) (relating to no deduction for 
        rollovers).
            (B) Section 219(f)(3) (relating to time when contributions 
        deemed made).
            (C) Except as provided in section 106(b), section 219(f)(5) 
        (relating to employer payments).
            (D) Section 408(g) (relating to community property laws).
            (E) Section 408(h) (relating to custodial accounts).

(e) Tax treatment of accounts

                           (1) In general

        An Archer MSA is exempt from taxation under this subtitle unless 
    such account has ceased to be an Archer MSA. Notwithstanding the 
    preceding sentence, any such account is subject to the taxes imposed 
    by section 511 (relating to imposition of tax on unrelated business 
    income of charitable, etc. organizations).

                      (2) Account terminations

        Rules similar to the rules of paragraphs (2) and (4) of section 
    408(e) shall apply to Archer MSAs, and any amount treated as 
    distributed under such rules shall be treated as not used to pay 
    qualified medical expenses.

(f) Tax treatment of distributions

           (1) Amounts used for qualified medical expenses

        Any amount paid or distributed out of an Archer MSA which is 
    used exclusively to pay qualified medical expenses of any account 
    holder shall not be includible in gross income.

      (2) Inclusion of amounts not used for qualified medical 
                                  expenses

        Any amount paid or distributed out of an Archer MSA which is not 
    used exclusively to pay the qualified medical expenses of the 
    account holder shall be included in the gross income of such holder.

     (3) Excess contributions returned before due date of return

        (A) In general

            If any excess contribution is contributed for a taxable year 
        to any Archer MSA of an individual, paragraph (2) shall not 
        apply to distributions from the Archer MSAs of such individual 
        (to the extent such distributions do not exceed the aggregate 
        excess contributions to all such accounts of such individual for 
        such year) if--
                (i) such distribution is received by the individual on 
            or before the last day prescribed by law (including 
            extensions of time) for filing such individual's return for 
            such taxable year, and
                (ii) such distribution is accompanied by the amount of 
            net income attributable to such excess contribution.

        Any net income described in clause (ii) shall be included in the 
        gross income of the individual for the taxable year in which it 
        is received.

        (B) Excess contribution

            For purposes of subparagraph (A), the term ``excess 
        contribution'' means any contribution (other than a rollover 
        contribution) which is neither excludable from gross income 
        under section 106(b) nor deductible under this section.

     (4) Additional tax on distributions not used for qualified 
                              medical expenses

        (A) In general

            The tax imposed by this chapter on the account holder for 
        any taxable year in which there is a payment or distribution 
        from an Archer MSA of such holder which is includible in gross 
        income under paragraph (2) shall be increased by 15 percent of 
        the amount which is so includible.

        (B) Exception for disability or death

            Subparagraph (A) shall not apply if the payment or 
        distribution is made after the account holder becomes disabled 
        within the meaning of section 72(m)(7) or dies.

        (C) Exception for distributions after medicare eligibility

            Subparagraph (A) shall not apply to any payment or 
        distribution after the date on which the account holder attains 
        the age specified in section 1811 of the Social Security Act.

                      (5) Rollover contribution

        An amount is described in this paragraph as a rollover 
    contribution if it meets the requirements of subparagraphs (A) and 
    (B).

        (A) In general

            Paragraph (2) shall not apply to any amount paid or 
        distributed from an Archer MSA to the account holder to the 
        extent the amount received is paid into an Archer MSA for the 
        benefit of such holder not later than the 60th day after the day 
        on which the holder receives the payment or distribution.

        (B) Limitation

            This paragraph shall not apply to any amount described in 
        subparagraph (A) received by an individual from an Archer MSA 
        if, at any time during the 1-year period ending on the day of 
        such receipt, such individual received any other amount 
        described in subparagraph (A) from an Archer MSA which was not 
        includible in the individual's gross income because of the 
        application of this paragraph.

           (6) Coordination with medical expense deduction

        For purposes of determining the amount of the deduction under 
    section 213, any payment or distribution out of an Archer MSA for 
    qualified medical expenses shall not be treated as an expense paid 
    for medical care.

             (7) Transfer of account incident to divorce

        The transfer of an individual's interest in an Archer MSA to an 
    individual's spouse or former spouse under a divorce or separation 
    instrument described in subparagraph (A) of section 71(b)(2) shall 
    not be considered a taxable transfer made by such individual 
    notwithstanding any other provision of this subtitle, and such 
    interest shall, after such transfer, be treated as an Archer MSA 
    with respect to which such spouse is the account holder.

             (8) Treatment after death of account holder

        (A) Treatment if designated beneficiary is spouse

            If the account holder's surviving spouse acquires such 
        holder's interest in an Archer MSA by reason of being the 
        designated beneficiary of such account at the death of the 
        account holder, such Archer MSA shall be treated as if the 
        spouse were the account holder.

        (B) Other cases

            (i) In general

                If, by reason of the death of the account holder, any 
            person acquires the account holder's interest in an Archer 
            MSA in a case to which subparagraph (A) does not apply--
                    (I) such account shall cease to be an Archer MSA as 
                of the date of death, and
                    (II) an amount equal to the fair market value of the 
                assets in such account on such date shall be includible 
                if such person is not the estate of such holder, in such 
                person's gross income for the taxable year which 
                includes such date, or if such person is the estate of 
                such holder, in such holder's gross income for the last 
                taxable year of such holder.
            (ii) Special rules

                (I) Reduction of inclusion for pre-death 
                        expenses

                    The amount includible in gross income under clause 
                (i) by any person (other than the estate) shall be 
                reduced by the amount of qualified medical expenses 
                which were incurred by the decedent before the date of 
                the decedent's death and paid by such person within 1 
                year after such date.
                (II) Deduction for estate taxes

                    An appropriate deduction shall be allowed under 
                section 691(c) to any person (other than the decedent or 
                the decedent's spouse) with respect to amounts included 
                in gross income under clause (i) by such person.

(g) Cost-of-living adjustment

    In the case of any taxable year beginning in a calendar year after 
1998, each dollar amount in subsection (c)(2) shall be increased by an 
amount equal to--
        (1) such dollar amount, multiplied by
        (2) the cost-of-living adjustment determined under section 
    1(f)(3) for the calendar year in which such taxable year begins by 
    substituting ``calendar year 1997'' for ``calendar year 1992'' in 
    subparagraph (B) thereof.

If any increase under the preceding sentence is not a multiple of $50, 
such increase shall be rounded to the nearest multiple of $50.

(h) Reports

    The Secretary may require the trustee of an Archer MSA to make such 
reports regarding such account to the Secretary and to the account 
holder with respect to contributions, distributions, and such other 
matters as the Secretary determines appropriate. The reports required by 
this subsection shall be filed at such time and in such manner and 
furnished to such individuals at such time and in such manner as may be 
required by the Secretary.

(i) Limitation on number of taxpayers having Archer MSAs

                           (1) In general

        Except as provided in paragraph (5), no individual shall be 
    treated as an eligible individual for any taxable year beginning 
    after the cut-off year unless--
            (A) such individual was an active MSA participant for any 
        taxable year ending on or before the close of the cut-off year, 
        or
            (B) such individual first became an active MSA participant 
        for a taxable year ending after the cut-off year by reason of 
        coverage under a high deductible health plan of an MSA-
        participating employer.

                          (2) Cut-off year

        For purposes of paragraph (1), the term ``cut-off year'' means 
    the earlier of--
            (A) calendar year 2002, or
            (B) the first calendar year before 2002 for which the 
        Secretary determines under subsection (j) that the numerical 
        limitation for such year has been exceeded.

                     (3) Active MSA participant

        For purposes of this subsection--

        (A) In general

            The term ``active MSA participant'' means, with respect to 
        any taxable year, any individual who is the account holder of 
        any Archer MSA into which any contribution was made which was 
        excludable from gross income under section 106(b), or allowable 
        as a deduction under this section, for such taxable year.

        (B) Special rule for cut-off years before 2002

            In the case of a cut-off year before 2002--
                (i) an individual shall not be treated as an eligible 
            individual for any month of such year or an active MSA 
            participant under paragraph (1)(A) unless such individual 
            is, on or before the cut-off date, covered under a high 
            deductible health plan, and
                (ii) an employer shall not be treated as an MSA-
            participating employer unless the employer, on or before the 
            cut-off date, offered coverage under a high deductible 
            health plan to any employee.

        (C) Cut-off date

            For purposes of subparagraph (B)--
            (i) In general

                Except as otherwise provided in this subparagraph, the 
            cut-off date is October 1 of the cut-off year.
            (ii) Employees with enrollment periods after October 
                    1

                In the case of an individual described in subclause (I) 
            of subsection (c)(1)(A)(iii), if the regularly scheduled 
            enrollment period for health plans of the individual's 
            employer occurs during the last 3 months of the cut-off 
            year, the cut-off date is December 31 of the cut-off year.
            (iii) Self-employed individuals

                In the case of an individual described in subclause (II) 
            of subsection (c)(1)(A)(iii), the cut-off date is November 1 
            of the cut-off year.
            (iv) Special rules for 1997

                If 1997 is a cut-off year by reason of subsection 
            (j)(1)(A)--
                    (I) each of the cut-off dates under clauses (i) and 
                (iii) shall be 1 month earlier than the date determined 
                without regard to this clause, and
                    (II) clause (ii) shall be applied by substituting 
                ``4 months'' for ``3 months''.

                   (4) MSA-participating employer

        For purposes of this subsection, the term ``MSA-participating 
    employer'' means any small employer if--
            (A) such employer made any contribution to the Archer MSA of 
        any employee during the cut-off year or any preceding calendar 
        year which was excludable from gross income under section 
        106(b), or
            (B) at least 20 percent of the employees of such employer 
        who are eligible individuals for any month of the cut-off year 
        by reason of coverage under a high deductible health plan of 
        such employer each made a contribution of at least $100 to their 
        Archer MSAs for any taxable year ending with or within the cut-
        off year which was allowable as a deduction under this section.

            (5) Additional eligibility after cut-off year

        If the Secretary determines under subsection (j)(2)(A) that the 
    numerical limit for the calendar year following a cut-off year 
    described in paragraph (2)(B) has not been exceeded--
            (A) this subsection shall not apply to any otherwise 
        eligible individual who is covered under a high deductible 
        health plan during the first 6 months of the second calendar 
        year following the cut-off year (and such individual shall be 
        treated as an active MSA participant for purposes of this 
        subsection if a contribution is made to any Archer MSA with 
        respect to such coverage), and
            (B) any employer who offers coverage under a high deductible 
        health plan to any employee during such 6-month period shall be 
        treated as an MSA-participating employer for purposes of this 
        subsection if the requirements of paragraph (4) are met with 
        respect to such coverage.

    For purposes of this paragraph, subsection (j)(2)(A) shall be 
    applied for 1998 by substituting ``750,000'' for ``600,000''.

(j) Determination of whether numerical limits are exceeded

        (1) Determination of whether limit exceeded for 1997

        The numerical limitation for 1997 is exceeded if, based on the 
    reports required under paragraph (4), the number of Archer MSAs 
    established as of--
            (A) April 30, 1997, exceeds 375,000, or
            (B) June 30, 1997, exceeds 525,000.

    (2) Determination of whether limit exceeded for 1998, 1999, 
                                   or 2001

        (A) In general

            The numerical limitation for 1998, 1999, or 2001 is exceeded 
        if the sum of--
                (i) the number of MSA returns filed on or before April 
            15 of such calendar year for taxable years ending with or 
            within the preceding calendar year, plus
                (ii) the Secretary's estimate (determined on the basis 
            of the returns described in clause (i)) of the number of MSA 
            returns for such taxable years which will be filed after 
            such date,

        exceeds 750,000 (600,000 in the case of 1998). For purposes of 
        the preceding sentence, the term ``MSA return'' means any return 
        on which any exclusion is claimed under section 106(b) or any 
        deduction is claimed under this section.

        (B) Alternative computation of limitation

            The numerical limitation for 1998, 1999, or 2001 is also 
        exceeded if the sum of--
                (i) 90 percent of the sum determined under subparagraph 
            (A) for such calendar year, plus
                (ii) the product of 2.5 and the number of Archer MSAs 
            established during the portion of such year preceding July 1 
            (based on the reports required under paragraph (4)) for 
            taxable years beginning in such year,

        exceeds 750,000.

        (C) No limitation for 2000

            The numerical limitation shall not apply for 2000.

        (3) Previously uninsured individuals not included in 
                                determination

        (A) In general

            The determination of whether any calendar year is a cut-off 
        year shall be made by not counting the Archer MSA of any 
        previously uninsured individual.

        (B) Previously uninsured individual

            For purposes of this subsection, the term ``previously 
        uninsured individual'' means, with respect to any Archer MSA, 
        any individual who had no health plan coverage (other than 
        coverage referred to in subsection (c)(1)(B)) at any time during 
        the 6-month period before the date such individual's coverage 
        under the high deductible health plan commences.

                    (4) Reporting by MSA trustees

        (A) In general

            Not later than August 1 of 1997, 1998, 1999, and 2001, each 
        person who is the trustee of an Archer MSA established before 
        July 1 of such calendar year shall make a report to the 
        Secretary (in such form and manner as the Secretary shall 
        specify) which specifies--
                (i) the number of Archer MSAs established before such 
            July 1 (for taxable years beginning in such calendar year) 
            of which such person is the trustee,
                (ii) the name and TIN of the account holder of each such 
            account, and
                (iii) the number of such accounts which are accounts of 
            previously uninsured individuals.

        (B) Additional report for 1997

            Not later than June 1, 1997, each person who is the trustee 
        of an Archer MSA established before May 1, 1997, shall make an 
        additional report described in subparagraph (A) but only with 
        respect to accounts established before May 1, 1997.

        (C) Penalty for failure to file report

            The penalty provided in section 6693(a) shall apply to any 
        report required by this paragraph, except that--
                (i) such section shall be applied by substituting 
            ``$25'' for ``$50'', and
                (ii) the maximum penalty imposed on any trustee shall 
            not exceed $5,000.

        (D) Aggregation of accounts

            To the extent practicable, in determining the number of 
        Archer MSAs on the basis of the reports under this paragraph, 
        all Archer MSAs of an individual shall be treated as 1 account 
        and all accounts of individuals who are married to each other 
        shall be treated as 1 account.

                  (5) Date of making determinations

        Any determination under this subsection that a calendar year is 
    a cut-off year shall be made by the Secretary and shall be published 
    not later than October 1 of such year.

(Added Pub. L. 104-191, title III, Sec. 301(a), Aug. 21, 1996, 110 Stat. 
2037; amended Pub. L. 105-33, title IV, Sec. 4006(b)(2), Aug. 5, 1997, 
111 Stat. 333; Pub. L. 105-34, title XVI, Sec. 1602(a)(2), (3), Aug. 5, 
1997, 111 Stat. 1093, 1094; Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Secs. 201(a), (b), 202(a)(4), (b)(2)(B), (3)-(8), (10), (11)], Dec. 21, 
2000, 114 Stat. 2763, 2763A-628, 2763A-629.)

 Adjustment of Annual Deductible Amounts for Tax Years Beginning in 2001

        For adjustment of annual deductible amounts in determining 
    ``high deductible health plan'' under subsec. (c)(2)(A) of this 
    section for tax years beginning in 2001, see section 3.11 of Revenue 
    Procedure 2001-13, set out as a note under section 1 of this title.

                       References in Text

    The Social Security Act, referred to in subsecs. (b)(7) and 
(f)(4)(C), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. 
Title XVIII of the Act is classified generally to subchapter XVIII 
(Sec. 1395 et seq.) of chapter 7 of Title 42, The Public Health and 
Welfare. Section 1811 of the Act is classified to section 1395c of Title 
42. For complete classification of this Act to the Code, see section 
1305 of Title 42 and Tables.


                            Prior Provisions

    A prior section 220 was renumbered 222 of this title.
    Another prior section 220, added Pub. L. 100-647, title VI, 
Sec. 6007(a), Nov. 10, 1988, 102 Stat. 3687, related to jury duty pay 
remitted to employer, prior to repeal by Pub. L. 101-508, title XI, 
Sec. 11802(e)(2), Nov. 5, 1990, 104 Stat. 1388-530.
    Another prior section 220, added Pub. L. 94-455, title XV, 
Sec. 1501(a), Oct. 4, 1976, 90 Stat. 1734; amended Pub. L. 95-600, title 
I, Secs. 156(c)(3), 157(a)(2), (b)(2), title VII, Sec. 703(c)(2), (3), 
Nov. 6, 1978, 92 Stat. 2803, 2804, 2939; Pub. L. 96-222, title I, 
Sec. 101(a)(14)(B), Apr. 1, 1980, 94 Stat. 204, related to retirement 
savings for certain married individuals, prior to repeal by Pub. L. 97-
34, title III, Sec. 311(e), Aug. 13, 1981, 95 Stat. 280, applicable to 
taxable years beginning after Dec. 31, 1981, and deductions allowed 
under section 220 of this title, as in effect prior to its repeal, 
treated as deductions under section 219 of this title.


                               Amendments

    2000--Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(b)(8)], 
substituted ``Archer MSAs'' for ``Medical savings accounts'' in section 
catchline.
    Subsecs. (a), (b)(5). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(10)], substituted ``an Archer MSA'' for ``a Archer MSA''.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(a)(4)], 
substituted ``Archer MSA'' for ``medical savings account'' wherever 
appearing.
    Subsec. (c)(1)(C). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(7)], substituted ``Archer MSAs'' for ``medical savings 
accounts'' in heading.
    Subsec. (c)(1)(C)(i). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(10)], substituted ``an Archer MSA'' for ``a Archer MSA''.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(a)(4)], 
substituted ``Archer MSA'' for ``medical savings account''.
    Subsec. (c)(1)(D). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(2)(B)], substituted ``Archer MSAs'' for ``medical savings 
accounts''.
    Subsec. (c)(4)(C)(ii). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(a)(4)], substituted ``Archer MSA'' for ``medical savings 
account''.
    Subsec. (d). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(4)], substituted ``Archer MSA'' for ``Medical savings 
account'' in heading.
    Subsec. (d)(1). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(5)], substituted ``Archer MSA'' for ``Medical savings 
account'' in heading.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(a)(4), (b)(3)], in 
introductory provisions, substituted ``Archer MSA'' for ``medical 
savings account'' and inserted ``as a medical savings account'' after 
``United States''.
    Subsec. (d)(2)(C), (3). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(a)(4)], substituted ``Archer MSA'' for ``medical savings 
account''.
    Subsec. (e)(1). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(10), (11)], substituted ``An Archer MSA is exempt'' for ``A 
Archer MSA is exempt'' and ``ceased to be an Archer MSA'' for ``ceased 
to be a Archer MSA''.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(a)(4)], 
substituted ``Archer MSA'' for ``medical savings account'' in two 
places.
    Subsec. (e)(2). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(2)(B)], substituted ``Archer MSAs'' for ``medical savings 
accounts''.
    Subsec. (f). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(10)], substituted ``an Archer MSA'' for ``a Archer MSA'' 
wherever appearing.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(a)(4), (b)(2)(B)], 
substituted ``Archer MSA'' for ``medical savings account'' wherever 
appearing and ``Archer MSAs'' for ``medical savings accounts'' in 
introductory provisions of par. (3)(A).
    Subsec. (h). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(10)], substituted ``an Archer MSA'' for ``a Archer MSA''.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(a)(4)], 
substituted ``Archer MSA'' for ``medical savings account''.
    Subsec. (i). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(6)], substituted ``Archer MSAs'' for ``medical savings 
accounts'' in heading.
    Subsec. (i)(2)(A), (B). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 201(a)], substituted ``2002'' for ``2000''.
    Subsec. (i)(3)(A). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(a)(4)], substituted ``Archer MSA'' for ``medical savings 
account''.
    Subsec. (i)(3)(B). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 201(a)], substituted ``2002'' for ``2000'' in heading and 
introductory provisions.
    Subsec. (i)(4)(A). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(a)(4)], substituted ``Archer MSA'' for ``medical savings 
account''.
    Subsec. (i)(4)(B). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(2)(B)], substituted ``Archer MSAs'' for ``medical savings 
accounts''.
    Subsec. (i)(5)(A). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(a)(4)], substituted ``Archer MSA'' for ``medical savings 
account''.
    Subsec. (j)(1). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(2)(B)], substituted ``Archer MSAs'' for ``medical savings 
accounts'' in introductory provisions.
    Subsec. (j)(2). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 201(b)(1)(A)], substituted ``1998, 1999, or 2001'' for ``1998 or 
1999'' in heading and in introductory provisions of subpars. (A) and 
(B).
    Subsec. (j)(2)(A). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 201(b)(1)(B)], substituted ``750,000 (600,000 in the case of 
1998)'' for ``600,000 (750,000 in the case of 1999)'' in concluding 
provisions.
    Subsec. (j)(2)(B)(ii). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(2)(B)], substituted ``Archer MSAs'' for ``medical savings 
accounts''.
    Subsec. (j)(2)(C). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 201(b)(1)(C)], added subpar. (C).
    Subsec. (j)(3)(A), (B). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(a)(4)], substituted ``Archer MSA'' for ``medical savings 
account''.
    Subsec. (j)(4)(A). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(10)], substituted ``an Archer MSA'' for ``a Archer MSA'' in 
introductory provisions.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Secs. 201(b)(2), 
202(a)(4)], in introductory provisions, substituted ``1999, and 2001'' 
for ``and 1999'' and ``Archer MSA'' for ``medical savings account''.
    Subsec. (j)(4)(A)(i). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(2)(B)], substituted ``Archer MSAs'' for ``medical savings 
accounts''.
    Subsec. (j)(4)(B). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(10)], substituted ``an Archer MSA'' for ``a Archer MSA''.
    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 202(a)(4)], 
substituted ``Archer MSA'' for ``medical savings account''.
    Subsec. (j)(4)(D). Pub. L. 106-554, Sec. 1(a)(7) [title II, 
Sec. 202(b)(2)(B)], substituted ``Archer MSAs'' for ``medical savings 
accounts'' in two places.
    1997--Subsec. (b)(7). Pub. L. 105-33 added par. (7).
    Subsec. (c)(3). Pub. L. 105-34, Sec. 1602(a)(2), redesignated 
subpars. (B) to (D) as (A) to (C), respectively, and struck out former 
subpar. (A) which read as follows: ``Medicare supplemental insurance,''.
    Subsec. (d)(2)(C). Pub. L. 105-34, Sec. 1602(a)(3), substituted 
``described in clauses (i) and (ii) of subsection (c)(1)(A)'' for ``an 
eligible individual''.


                    Effective Date of 2000 Amendment

    Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec. 201(c)], Dec. 21, 
2000, 114 Stat. 2763, 2763A-628, provided that: ``The amendments made by 
this section [amending this section] shall take effect on the date of 
the enactment of this Act [Dec. 21, 2000].''


                    Effective Date of 1997 Amendments

    Amendment by Pub. L. 105-34 effective as if included in the 
provisions of the Health Insurance Portability and Accountability Act of 
1996, Pub. L. 104-191, to which such amendment relates, see section 
1602(i) of Pub. L. 105-34, set out as a note under section 26 of this 
title.
    Amendment by Pub. L. 105-33 applicable to taxable years beginning 
after Dec. 31, 1998, see section 4006(c) of Pub. L. 105-33, set out as 
an Effective Date note under section 138 of this title.


                             Effective Date

    Section applicable to taxable years beginning after Dec. 31, 1996, 
see section 301(j) of Pub. L. 104-191, set out as an Effective Date of 
1996 Amendment note under section 62 of this title.


         Monitoring of Participation in Medical Savings Accounts

    Section 301(k) of Pub. L. 104-191 provided that: ``The Secretary of 
the Treasury or his delegate shall--
        ``(1) during 1997, 1998, 1999, and 2000, regularly evaluate the 
    number of individuals who are maintaining medical savings accounts 
    and the reduction in revenues to the United States by reason of such 
    accounts, and
        ``(2) provide such reports of such evaluations to Congress as 
    such Secretary determines appropriate.''


   Study of Effects of Medical Savings Accounts on Small Group Market

    Section 301(l) of Pub. L. 104-191 provided that: ``The Comptroller 
General of the United States shall enter into a contract with an 
organization with expertise in health economics, health insurance 
markets, and actuarial science to conduct a comprehensive study 
regarding the effects of medical savings accounts in the small group 
market on--
        ``(1) selection, including adverse selection,
        ``(2) health costs, including any impact on premiums of 
    individuals with comprehensive coverage,
        ``(3) use of preventive care,
        ``(4) consumer choice,
        ``(5) the scope of coverage of high deductible plans purchased 
    in conjunction with such accounts, and
        ``(6) other relevant items.
A report on the results of the study conducted under this subsection 
shall be submitted to the Congress no later than January 1, 1999.''

                  Section Referred to in Other Sections

    This section is referred to in sections 26, 62, 106, 138, 530, 848, 
4973, 4975, 4980E, 6051, 6693 of this title; title 42 section 300e.
