H.R. 14 - Commitment to Defeat the Virus and Keep America Healthy Act

116TH CONGRESS
2D SESSION

H.R. 14

To increase the Federal commitment to defeating
the virus that causes COVID-19 and prepare for future
pandemics, and for other purposes.

OCTOBER 30, 2020

M_. _____ introduced the following bill; which
was referred to the Committee on _____

A BILL

To increase the Federal commitment to defeating the virus that causes COVID–19 and prepare for future pandemics, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Commitment to Defeat the Virus and Keep America Healthy Act".

SEC. 2. TABLE OF CONTENTS.

The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of Contents.

* * *

TITLE VIII — TAX INCENTIVES TO IMPROVE HEALTH CARE

Sec. 8001. Domestic medical and drug manufacturing credit.

Sec. 8002. Qualifying advanced medical manufacturing equipment credit.

Sec. 8003. New medical research expenditure component of credit for increasing research activities.

Sec. 8004. Refundable portion of research credit for small businesses engaging in specified medical research.

Sec. 8005. Exception from passive loss rules for investments in specified medical research small business pass-thru entities.

Sec. 8006. Temporary carryover for health and dependent care flexible spending arrangements.

Sec. 8007. Increase in exclusion for employer-provided dependent care assistance.

Sec. 8008. Temporary increase in contribution limits for health savings accounts.

Sec. 8009. Temporary allowance of payments for employment-related expenses under health savings accounts.

Sec. 8010. Treatment of direct primary care service arrangements.

Sec. 8011. Allow both spouses to make catch-up contributions to the same HSA account.

Sec. 8012. Repeal of ceiling on deductible and out-of-pocket expenses under a high deductible health plan.

Sec. 8013. On-site employee clinics.

Sec. 8014. Adjustment of medical expense deduction.

Sec. 8015. Healthy workplace tax credit.

TITLE IX — MEDICARE PROVISIONS

Subtitle A — Telehealth

* * *

Sec. 9005. Making permanent the safe harbor for absence of deductible for telehealth.

* * *

TITLE VIII — TAX INCENTIVES TO IMPROVE HEALTH CARE

SEC. 8001. DOMESTIC MEDICAL AND DRUG MANUFACTURING CREDIT.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

"SEC. 45U. DOMESTIC MEDICAL AND DRUG MANUFACTURING CREDIT.

"(a) IN GENERAL. — For purposes of section 38, the domestic medical and drug manufacturing credit determined under this section for any taxable year is an amount equal to 10.5 percent of the lesser of —

"(1) the qualified medical and drug manufacturing income of the taxpayer for the taxable year, or

"(2) taxable income of the taxpayer for the taxable year.

"(b) CREDIT LIMITED TO WAGES PAID. —

"(1) IN GENERAL. — The amount of the credit allowable under subsection (a) for any taxable year shall not exceed 50 percent of the W–2 wages of the taxpayer for the taxable year.

"(2) W–2 WAGES. — For purposes of this section —

"(A) IN GENERAL. — The term 'W–2 wages' means, with respect to any person for any taxable year of such person, the sum of the amounts described in paragraphs (3) and (8) of section 6051(a) paid by such person with respect to employment of employees by such person during the calendar year ending during such taxable year.

"(B) LIMITATION TO WAGES ATTRIBUTABLE TO DOMESTIC PRODUCTION. — Such term shall not include any amount which is not properly allocable to domestic medical and drug manufacturing gross receipts for purposes of subsection (c)(1).

"(C) RETURN REQUIREMENT. — Such term shall not include any amount which is not properly included in a return filed with the Social Security Administration on or before the 60th day after the due date (including extensions) for such return.

"(3) ACQUISITIONS, DISPOSITIONS, AND SHORT TAXABLE YEARS. — The Secretary shall provide for the application of this subsection in cases of a short taxable year or where the taxpayer acquires, or disposes of, the major portion of a trade or business or the major portion of a separate unit of a trade or business during the taxable year.

"(c) QUALIFIED MEDICAL AND DRUG MANUFACTURING INCOME. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualified medical and drug manufacturing income' for any taxable year means an amount equal to the excess (if any) of —

"(A) the taxpayer's domestic medical and drug manufacturing gross receipts for the taxable year, over

"(B) the sum of —

"(i) the cost of goods sold that are allocable to such receipts, and

"(ii) other expenses, losses, or deductions which are properly allocable to such receipts.

"(2) ALLOCATION METHOD. — The Secretary shall prescribe rules for the proper allocation of items described in paragraph (1)(B) for purposes of determining qualified medical and drug manufacturing income. Such rules shall provide for the proper allocation of items whether or not such items are directly allocable to domestic medical and drug manufacturing gross receipts.

"(3) SPECIAL RULES FOR DETERMINING COSTS. —

"(A) IN GENERAL. — For purposes of determining costs under clause (i) of paragraph (1)(B), any item or service brought into the United States shall be treated as acquired by purchase, and its cost shall be treated as not less than its value immediately after it entered the United States.

"(B) EXPORTS FOR FURTHER MANUFACTURE. — In the case of any property described in subparagraph (A) that had been exported by the taxpayer for further manufacture, the increase in cost or adjusted basis under subparagraph (A) shall not exceed the difference between the value of the property when exported and the value of the property when brought back into the United States after the further manufacture.

"(4) DOMESTIC MEDICAL AND DRUG MANUFACTURING GROSS RECEIPTS. —

"(A) IN GENERAL. — The term 'domestic medical and drug manufacturing gross receipts' means the gross receipts of the taxpayer which are derived from any sale, exchange, or other disposition of —

"(i) any active pharmaceutical ingredient, or

"(ii) any qualified countermeasure, which was manufactured or produced by the taxpayer in whole or in significant part within the United States.

"(B) ACTIVE PHARMACEUTICAL INGREDIENT. — The term 'active pharmaceutical ingredient' means any substance or mixture of substances intended to be used in the manufacture of a drug product and (when so used) becomes an active ingredient in the drug product.

"(C) QUALIFIED COUNTERMEASURE. — The term 'qualified countermeasure' has the meaning given such term in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2))."

"(D) PARTNERSHIPS OWNED BY EXPANDED AFFILIATED GROUPS. — For purposes of this paragraph, if all of the interests in the capital and profits of a partnership are owned by members of a single expanded affiliated group at all times during the taxable year of such partnership, the partnership and all members of such group shall be treated as a single taxpayer during such period.

"(d) DEFINITIONS AND SPECIAL RULES. — For purposes of this section —

"(1) APPLICATION OF SECTION TO PASS-THRU ENTITIES. —

"(A) PARTNERSHIPS AND S CORPORATIONS. — In the case of a partnership or S corporation —

"(i) this section shall be applied at the partner or shareholder level,

"(ii) each partner or shareholder shall take into account such person's allocable share of each item described in subparagraph (A) or (B) of subsection (c)(1) (determined without regard to whether the items described in such subparagraph (A) exceed the items described in such subparagraph (B)), and

"(iii) each partner or shareholder shall be treated for purposes of subsection (b) as having W–2 wages for the taxable year in an amount equal to such person's allocable share of the W–2 wages of the partnership or S corporation for the taxable year (as determined under regulations prescribed by the Secretary).

"(B) TRUSTS AND ESTATES. — In the case of a trust or estate —

"(i) the items referred to in subparagraph (A)(ii) (as determined therein) and the W–2 wages of the trust or estate for the taxable year, shall be apportioned between the beneficiaries and the fiduciary (and among the beneficiaries) under regulations prescribed by the Secretary, and

"(ii) for purposes of paragraph (2), adjusted gross income of the trust or estate shall be determined as provided in section 67(e) with the adjustments described in such paragraph.

"(C) REGULATIONS. — The Secretary may prescribe rules requiring or restricting the allocation of items and wages under this paragraph and may prescribe such reporting requirements as the Secretary determines appropriate.

"(2) APPLICATION TO INDIVIDUALS. — In the case of an individual, subsection (a)(2) shall be applied by substituting 'adjusted gross income' for 'taxable income'. For purposes of the preceding sentence, adjusted gross income shall be determined after application of sections 86, 135, 137, 219, 221, 222, and 469.

"(3) SPECIAL RULE FOR AFFILIATED GROUPS. —

"(A) IN GENERAL. — All members of an expanded affiliated group shall be treated as a single corporation for purposes of this section.

"(B) EXPANDED AFFILIATED GROUP. — For purposes of this section, the term 'expanded affiliated group' means an affiliated group as defined in section 1504(a), determined —

"(i) by substituting 'more than 50 percent' for 'at least 80 percent' each place it appears, and

"(ii) without regard to paragraphs (2) and (4) of section 1504(b).

"(C) ALLOCATION OF CREDIT. — Except as provided in regulations, the credit under subsection (a) shall be allocated among the members of the expanded affiliated group in proportion to each member's respective amount (if any) of qualified medical and drug manufacturing income.

"(4) TRADE OR BUSINESS REQUIREMENT. — This section shall be applied by only taking into account items which are attributable to the actual conduct of a trade or business.

"(5) COORDINATION WITH MINIMUM TAX. — For purposes of determining alternative minimum taxable income under section 55, qualified medical and drug manufacturing income shall be determined without regard to any adjustments under sections 56 through 59.

"(6) UNRELATED BUSINESS TAXABLE INCOME. — For purposes of determining the tax imposed by section 511, subsection (a)(1)(B) shall be applied by substituting 'unrelated business taxable income' for 'taxable income'.

"(7) REGULATIONS. — The Secretary shall prescribe such regulations as are necessary to carry out the purposes of this section, including regulations which prevent more than 1 taxpayer from being allowed a credit under this section with respect to any activity described in subsection (c)(4)(A).".

(b) TREATMENT UNDER BASE EROSION TAX. — Section 59A(b)(1)(B)(ii) of such Code is amended by striking "plus" at the end of subclause (I), by redesignating subclause (II) as subclause (III), and by inserting after subclause (I) the following new subclause:

"(II) the credit allowed under section 38 for the taxable year which is properly allocable to the domestic medical and drug manufacturing credit determined under section 45U(a), plus".

(c) PART OF GENERAL BUSINESS CREDIT. — Section 38(b) of such Code is amended by striking "plus" at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting ", plus", and by adding at the end the following new paragraph:

"(34) the domestic medical and drug manufacturing credit determined under section 45U(a).".

(d) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX. — Section 38(c)(4)(B) of such Code is amended by redesignating clauses (x) through (xii) as clauses (xi) through (xiii), respectively, and by inserting after clause (ix) the following new clause:

"(x) the credit determined under section 45U,".

(e) CLERICAL AMENDMENT. — The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

"Sec. 45U. Domestic medical and drug manufacturing credit.".

(f) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2020.

SEC. 8002. QUALIFYING ADVANCED MEDICAL MANUFACTURING EQUIPMENT CREDIT.

(a) IN GENERAL. — Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

"SEC. 48D. QUALIFYING ADVANCED MEDICAL MANUFACTURING EQUIPMENT CREDIT.

"(a) IN GENERAL. — For purposes of section 46, the qualifying advanced medical manufacturing equipment credit determined under this section for any taxable year is the applicable percentage of the basis of any qualifying advanced medical manufacturing equipment placed in service during such taxable year.

"(b) APPLICABLE PERCENTAGE. — For purposes of subsection (a), the applicable percentage is —

"(1) 30 percent in the case of equipment which is placed in service before January 1, 2028,

"(2) 20 percent in the case of equipment which is placed in service during calendar year 2028,

"(3) 10 percent in the case of equipment which is placed in service during calendar year 2029, and

"(4) 0 percent in the case of equipment which is placed in service after December 31, 2029.

"(c) QUALIFYING ADVANCED MEDICAL MANUFACTURING EQUIPMENT. — For purposes of this section, the term 'qualifying advanced medical manufacturing equipment' means property of a character subject to the allowance for depreciation —

"(1) which is machinery or equipment that is designed and used to manufacture a —

"(A) drug (as such term is defined in section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act),

"(B) device (as such term is defined in section 201(h) of such Act), or

"(C) biological product (as such term is defined in section 351(i) of the Public Health Service Act),

"(2) which has been identified by the Secretary (after consultation with the Secretary of Health and Human Services) as machinery or equipment that —

"(A) incorporates novel technology or uses an established technique or technology in a new or innovative way, or

"(B) that can improve medical product quality, address shortages of medicines, and speed time-to-market,

"(3) which is placed in service in the United States by the taxpayer, and

"(4) with respect to which depreciation is allowable.

"(d) CERTAIN QUALIFIED PROGRESS EXPENDITURES RULES MADE APPLICABLE. — Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.

"(e) REGULATIONS. — The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including regulations which prevent abuse or fraud.".

(b) TREATMENT UNDER BASE EROSION TAX. — Section 59A(b)(1)(B)(ii) of such Code, as amended by section 8001 of this Act, is further amended by striking "plus" at the end of subclause (II), by redesignating subclause (III) as subclause (IV), and by inserting after subclause (II) the following new subclause:

"(III) the credit allowed under section 46 for the taxable year which is properly allocable to the qualifying advanced medical manufacturing equipment credit determined under section 48D(a), plus".

(c) PART OF INVESTMENT CREDIT. — Section 46 of such Code is amended by striking "and" at the end of paragraph (5), by striking the period at the end of paragraph (6) and inserting ", and", and by adding at the end the following new paragraph:

"(7) the qualifying advanced medical manufacturing equipment credit.".

(d) CLERICAL AMENDMENT. — The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

"Sec. 48D. Qualifying advanced medical manufacturing equipment credit.".

(e) EFFECTIVE DATE. — The amendments made by this section shall apply to periods after the date of the enactment of this section under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the date of the enactment for the Revenue Reconciliation Act of 1990).

SEC. 8003. NEW MEDICAL RESEARCH EXPENDITURE COMPONENT OF CREDIT FOR INCREASING RESEARCH ACTIVITIES.

(a) IN GENERAL. — Section 41(a) of the Internal Revenue Code of 1986 is amended by striking "and" at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ", and", and by adding at the end the following new paragraph:

"(4) 14 percent of specified medical research expenditures.".

(b) SPECIFIED MEDICAL RESEARCH EXPENDITURES. — Section 41(f) of such Code is amended by adding at the end the following new paragraph:

"(7) SPECIFIED MEDICAL RESEARCH EXPENDITURES. —

"(A) IN GENERAL. — The term 'specified medical research expenditures' means amounts paid or incurred for qualified research with respect to any qualified countermeasure.

"(B) QUALIFIED COUNTERMEASURE. — The term 'qualified countermeasure' has the meaning given to such term in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2)).".

(c) DENIAL OF DOUBLE BENEFIT. —

(1) TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 2021. — In the case of specified medical research expenditures (as defined in section 41(f)(7) of such Code (as added by this section)) paid or incurred in taxable years beginning before January 1, 2021 —

(A) such expenditures shall be treated in the same manner as qualified research expenses and basic research expenses under section 280C(c)(1) of such Code (as in effect on the day before the enactment of the Tax Cuts and Jobs Act), and

(B) the amount determined under section 280C(c)(2)(A) (as in effect on such day) for the taxable year shall be increased by the amount of credit determined for the taxable year under section 41(a)(4) (as added by this section).

(2) TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 2020. — Section 280C(c)(1) of such Code is amended by striking "section 41(a)(1)" and inserting "paragraphs (1) and (4) of section 41(a)".

(d) CONFORMING AMENDMENT. — Section 41(f)(1) of such Code is amended by striking "and amounts paid or incurred to energy research consortiums" each place it appears and inserting ", amounts paid or incurred to energy research consortiums, and specified medical research expenditures".

(e) EFFECTIVE DATE. — The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 8004. REFUNDABLE PORTION OF RESEARCH CREDIT FOR SMALL BUSINESSES ENGAGING IN SPECIFIED MEDICAL RESEARCH.

(a) IN GENERAL. — Section 41 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

"(i) REFUNDABLE PORTION FOR SMALL BUSINESSES ENGAGING IN SPECIFIED MEDICAL RESEARCH. —

"(1) IN GENERAL. — At the election of a medical research small business, the portion of the credit determined under this section for the taxable year which is properly allocable to specified medical research shall be treated (other than for purposes of section 280C) as a credit allowed under subpart C (and not this subpart).

"(2) MEDICAL RESEARCH SMALL BUSINESS. — For purposes of this subsection, the term 'medical research small business' means any domestic C corporation —

"(A) which conducts any specified medical research during the taxable year, and

"(B) the gross receipts of which (determined under the rules of subsection (c)) for the taxable year do not exceed $1,000,000.

"(3) SPECIFIED MEDICAL RESEARCH. — For purposes of this subsection, the term 'specified medical research' means any qualified research with respect to qualified countermeasures (as defined in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2))).

"(4) ELECTION. — Any election under this subsection for any taxable year —

"(A) shall specify the amount of the credit to which such election applies,

"(B) shall be made on or before the due date (including extensions) of the return of tax for the taxable year,

"(C) may not be made for any taxable year with respect to any portion of the credit determined under this section with respect to which an election is made under subsection (h), and

"(D) may be revoked only with the consent of the Secretary.

"(5) REGULATIONS. — The Secretary shall prescribe such regulations for purposes of this subsection as may be necessary or appropriate for determining proper allocation to specified medical research of the portion of any credit allowed to a taxpayer for a taxable year under this section.".

(b) CONFORMING AMENDMENT. — Section 1324(b) of title 31, United States Code, is amended by inserting "41(i)," after "6428,".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2020.

SEC. 8005. EXCEPTION FROM PASSIVE LOSS RULES FOR INVESTMENTS IN SPECIFIED MEDICAL RESEARCH SMALL BUSINESS PASS-THRU ENTITIES.

(a) IN GENERAL. — Subsection (c) of section 469 of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (4) through (7) as paragraphs (5) through (8), respectively, and by inserting after paragraph (3) the following new paragraph:

"(4) SPECIFIED MEDICAL RESEARCH ACTIVITIES. —

"(A) IN GENERAL. — The term 'passive activity' shall not include any qualified medical research activity of the taxpayer carried on by a specified medical research small business pass-thru entity.

"(B) TREATMENT OF LOSSES AND DEDUCTIONS. —

"(i) IN GENERAL. — Losses or deductions of a taxpayer in connection with qualified medical research activities carried on by a specified medical research small business pass-thru entity shall not be treated as losses or deductions, respectively, from a passive activity except as provided in clause (ii) and subparagraph (C).

"(ii) LIMITATION. — Clause (i) shall apply to losses and deductions of a taxpayer in connection with a specified medical small business pass-thru entity for a taxable year only to the extent that the aggregate losses and deductions of the taxpayer in connection with qualified medical research activities of such entity for such taxable year do not exceed the portion of the taxpayer's adjusted basis in the taxpayer's ownership interest in such entity that is attributable to money or other property contributed —

"(I) in exchange for such ownership interest, and

"(II) specifically for use in connection with qualified medical research activities.

For purposes of the preceding sentence, the taxpayer's basis shall not include any portion of such basis which is attributable to an increase in a partner's share of the liabilities of a partnership that is considered under section 752(a) as a contribution of money.

"(C) TREATMENT OF CARRYOVERS. — Subparagraph (B)(i) shall not apply to the portion of any loss or deduction that is carried over under subsection (b) into a taxable year other than the taxable year in which such loss or deduction arose.

"(D) QUALIFIED MEDICAL RESEARCH ACTIVITY. — For purposes of this paragraph, the term 'qualified medical research activity' means any qualified research (within the meaning of section 41(d)) with respect to qualified countermeasures (as defined in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2))).

"(E) SPECIFIED MEDICAL RESEARCH SMALL BUSINESS PASS-THRU ENTITY. — For purposes of this paragraph, the term 'specified medical research small business pass-thru entity' means any domestic pass-thru entity for any taxable year if —

"(i) more than 80 percent of such entity's expenditures on qualified research for such taxable year are paid or incurred in connection with qualified medical research activities, and

"(ii) the gross receipts (as determined under the rules of section 41(h)(3)) of such entity for the taxable year (and each preceding taxable year) is less than $1,000,000.

"(F) CAPITAL EXPENDITURES TAKEN INTO ACCOUNT FOR EXPENDITURES TEST. — An expenditure shall not fail to be taken into account under subparagraph (E)(i) merely because such expenditure is chargeable to capital account.

"(G) PASS-THRU ENTITY. — For purposes of this paragraph, the term 'pass-thru entity' means any partnership, S corporation, or other entity identified by the Secretary as a pass-thru entity for purposes of this paragraph.

"(H) AGGREGATION RULES. —

"(i) IN GENERAL. — All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414, shall be treated as a single entity for purposes of subparagraphs (E) and (F)(iii).

"(ii) LIMITATION WHERE ENTITY WOULD NOT QUALIFY. — No entity shall be treated as a specified medical research small business pass-thru entity unless such entity qualifies as such both with and without the application of clause (i).".

(b) MATERIAL PARTICIPATION NOT REQUIRED. — Paragraph (5) of section 469(c) of the Internal Revenue Code of 1986, as redesignated by subsection (a), is amended by striking "and (3)" in the heading and text and inserting ", (3), and (4)".

(c) CERTAIN RESEARCH-RELATED DEDUCTIONS AND CREDITS OF SPECIFIED MEDICAL RESEARCH SMALL BUSINESS PASS-THRU ENTITIES ALLOWED FOR PURPOSES OF DETERMINING ALTERNATIVE MINIMUM TAX. —

(1) DEDUCTION FOR RESEARCH AND EXPERIMENTAL EXPENDITURES. — Paragraph (2) of section 56(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

"(E) EXCEPTION FOR SPECIFIED MEDICAL RESEARCH SMALL BUSINESS PASS-THRU ENTITIES. — In the case of a specified medical research small business pass-thru entity (as defined in section 469(c)(4)), this paragraph shall not apply to any amount allowable as a deduction under section 174(a).".

(2) ALLOWANCE OF CERTAIN RESEARCH-RELATED CREDITS. — Subparagraph (B) of section 38(c)(4) of such Code is amended by redesignating clauses (ii) through (ix) as clauses (iii) through (x), respectively, and by inserting after clause (i) the following new clause:

"(ii) the credit of an individual taxpayer determined under section 41 to the extent attributable to a specified medical research small business pass-thru entity (as defined in section 469(c)(4)),".

(d) EXCEPTION TO LIMITATION ON PASS-THRU OF RESEARCH CREDIT. — Subsection (g) of section 41 of such Code is amended by adding at the end the following: "Paragraphs (2) and (4) shall not apply with respect to any specified medical research small business pass-thru entity (as defined in section 469(c)(4)).".

(e) EFFECTIVE DATE. — The amendments made by this section shall apply to losses and credits arising in taxable years beginning after December 31, 2020.

SEC. 8006. TEMPORARY CARRYOVER FOR HEALTH AND DEPENDENT CARE FLEXIBLE SPENDING ARRANGEMENTS.

(a) IN GENERAL. — With respect to the 2020 plan year for any health flexible spending arrangement or any dependent care flexible spending arrangement, an employer may elect to amend its cafeteria plan to permit any unused amounts remaining in such flexible spending arrangement at the end of such plan year to be carried over to the 2021 plan year, pursuant to rules similar to the rules established for health flexible spending arrangements under Internal Revenue Service Notice 2013–71.

(b) RETROACTIVE APPLICATION. — An employer shall be permitted to amend its cafeteria plan to effectuate the rule described in subsection (a), provided that such amendment —

(1) is adopted before January 1, 2021; and

(2) provides that the rule described in such subsection shall be in effect as of the first day of the 2020 plan year.

(c) DEFINITIONS. — Any term used in this section which is also used in section 125 of the Internal Revenue Code of 1986 or the regulations thereunder shall have the same meaning as when used in such section or regulations.

SEC. 8007. INCREASE IN EXCLUSION FOR EMPLOYER-PROVIDED DEPENDENT CARE ASSISTANCE.

(a) IN GENERAL. — Section 129(a)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

"(D) SPECIAL RULE FOR 2020 AND 2021. — In the case of any taxable year beginning during 2020 or 2021, subparagraph (A) shall be applied by substituting '$10,500 ($5,250' for '$5,000 ($2,500'.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2019.

(c) RETROACTIVE PLAN AMENDMENTS. — A plan or other arrangement that otherwise satisfies all applicable requirements of sections 106, 125, and 129 of the Internal Revenue Code of 1986 (including any rules or regulations thereunder) shall not fail to be treated as a cafeteria plan or dependent care flexible spending arrangement merely because such plan or arrangement is amended pursuant to a provision under this section and such amendment is retroactive, if —

(1) such amendment is adopted no later than the last day of the plan year in which the amendment is effective, and

(2) the plan or arrangement is operated consistent with the terms of such amendment during the period beginning on the effective date of the amendment and ending on the date the amendment is adopted.

SEC. 8008. TEMPORARY INCREASE IN CONTRIBUTION LIMITS FOR HEALTH SAVINGS ACCOUNTS.

(a) IN GENERAL. — Section 223(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

"(9) INCREASE IN MONTHLY LIMITATIONS FOR TAXABLE YEARS 2020 AND 2021. — In the case of any month during a taxable year which begins after December 31, 2019, and before January 1, 2022, the dollar amount in effect under subparagraph (A) or (B) of paragraph (2) for such month shall be twice the amount otherwise applicable under such subparagraph, as determined —

"(A) before application of paragraph (3),

"(B) after application of subsection (g), and

"(C) without regard to this paragraph.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply with respect to taxable years beginning after December 31, 2019.

SEC. 8009. TEMPORARY ALLOWANCE OF PAYMENTS FOR EMPLOYMENT-RELATED EXPENSES UNDER HEALTH SAVINGS ACCOUNTS.

(a) IN GENERAL. — Section 223(d)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

"(E) INCLUSION OF EMPLOYMENT-RELATED EXPENSES FOR TAXABLE YEARS 2020 AND 2021. — In the case of any taxable year which begins after December 31, 2019, and before January 1, 2022, the term 'qualified medical expenses' includes, with respect to an account beneficiary, any amounts paid by such beneficiary for employment-related expenses (as defined in section 21(b)(2)) which are incurred during such taxable year.".

(b) CONFORMING AMENDMENT. — Section 21(c) of the Internal Revenue Code of 1986 is amended by inserting "and any amounts paid or distributed out of a health savings account which are used exclusively to pay expenses described in section 223(d)(2)(E) which are incurred by the taxpayer during such taxable year" before the period at the end of the second sentence.

(c) EFFECTIVE DATE. — The amendments made by this section shall apply with respect to taxable years beginning after December 31, 2019.

SEC. 8010. TREATMENT OF DIRECT PRIMARY CARE SERVICE ARRANGEMENTS.

(a) IN GENERAL. — Section 223(c)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

"(D) TREATMENT OF DIRECT PRIMARY CARE SERVICE ARRANGEMENTS. —

"(i) IN GENERAL. — A direct primary care service arrangement shall not be treated as a health plan for purposes of subparagraph (A)(ii).

"(ii) DIRECT PRIMARY CARE SERVICE ARRANGEMENT. — For purposes of this paragraph —

"(I) IN GENERAL. — The term 'direct primary care service arrangement' means, with respect to any individual, an arrangement under which such individual is provided medical care (as defined in section 213(d)) consisting solely of primary care services provided by primary care practitioners (as defined in section 1833(x)(2)(A) of the Social Security Act, determined without regard to clause (ii) thereof), if the sole compensation for such care is a fixed periodic fee.

"(II) LIMITATION. — With respect to any individual for any month, such term shall not include any arrangement if the aggregate fees for all direct primary care service arrangements (determined without regard to this subclause) with respect to such individual for such month exceed $150 (twice such dollar amount in the case of an individual with any direct primary care service arrangement (as so determined) that covers more than one individual).

"(iii) CERTAIN SERVICES SPECIFICALLY EXCLUDED FROM TREATMENT AS PRIMARY CARE SERVICES. — For purposes of this subparagraph, the term 'primary care services' shall not include —

"(I) procedures that require the use of general anesthesia, and

"(II) laboratory services not typically administered in an ambulatory primary care setting.

The Secretary, after consultation with the Secretary of Health and Human Services, shall issue regulations or other guidance regarding the application of this clause.".

(b) DIRECT PRIMARY CARE SERVICE ARRANGEMENT FEES TREATED AS MEDICAL EXPENSES. — Section 223(d)(2)(C) of the Internal Revenue Code of 1986 is amended by striking "or" at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ", or", and by adding at the end the following new clause:

"(v) any direct primary care service arrangement.".

(c) INFLATION ADJUSTMENT. — Section 223(g)(1) of the Internal Revenue Code of 1986 is amended —

(1) by inserting ", (c)(1)(D)(ii)(II)," after "(b)(2)," each place such term appears, and

(2) in subparagraph (B), by inserting "and (iii)" after "clause (ii)" in clause (i), by striking "and" at the end of clause (i), by striking the period at the end of clause (ii) and inserting ", and", and by inserting after clause (ii) the following new clause:

"(iii) in the case of the dollar amount in subsection (c)(1)(D)(ii)(II) for taxable years beginning in calendar years after 2020, 'calendar year 2019'.".

(d) REPORTING OF DIRECT PRIMARY CARE SERVICE ARRANGEMENT FEES ON W–2. — Section 6051(a) of the Internal Revenue Code of 1986 is amended by striking "and" at the end of paragraph (16), by striking the period at the end of paragraph (17) and inserting ", and", and by inserting after paragraph (17) the following new paragraph:

"(18) in the case of a direct primary care service arrangement (as defined in section 223(c)(1)(D)(ii)) which is provided in connection with employment, the aggregate fees for such arrangement for such employee.".

(e) EFFECTIVE DATE. —

(1) IN GENERAL. — Except as provided under paragraph (2), the amendments made by this section shall apply to months beginning after December 31, 2019, in taxable years ending after such date.

(2) INFLATION ADJUSTMENT. — The amendments made by subsection (c) shall apply to taxable years beginning in calendar years beginning after December 31, 2020.

SEC. 8011. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME HSA ACCOUNT.

(a) IN GENERAL. — Paragraph (5) of section 223(b) of the Internal Revenue Code of 1986 is amended to read as follows:

"(5) SPECIAL RULE FOR MARRIED INDIVIDUALS WITH FAMILY COVERAGE. —

"(A) IN GENERAL. — In the case of individuals who are married to each other, if both spouses are eligible individuals and either spouse has family coverage under a high deductible health plan as of the first day of any month —

"(i) the limitation under paragraph (1) shall be applied by not taking into account any other high deductible health plan coverage of either spouse (and if such spouses both have family coverage under separate high deductible health plans, only one such coverage shall be taken into account),

"(ii) such limitation (after application of clause (i)) shall be reduced by the aggregate amount paid to Archer MSAs of such spouses for the taxable year, and

"(iii) such limitation (after application of clauses (i) and (ii)) shall be divided equally between such spouses unless they agree on a different division.

"(B) TREATMENT OF ADDITIONAL CONTRIBUTION AMOUNTS. — If both spouses referred to in subparagraph (A) have attained age 55 before the close of the taxable year, the limitation referred to in subparagraph (A)(iii) which is subject to division between the spouses shall include the additional contribution amounts determined under paragraph (3) for both spouses. In any other case, any additional contribution amount determined under paragraph (3) shall not be taken into account under subparagraph (A)(iii) and shall not be subject to division between the spouses.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2019.

SEC. 8012. REPEAL OF CEILING ON DEDUCTIBLE AND OUTOF-POCKET EXPENSES UNDER A HIGH DEDUCTIBLE HEALTH PLAN.

(a) IN GENERAL. — Subparagraph (A) of section 223(c)(2) of the Internal Revenue Code of 1986 is amended to read as follows:

"(A) HIGH DEDUCTIBLE HEALTH PLAN. — The term 'high deductible health plan' means a health plan which has an annual deductible which is not less than —

"(i) $1,000 for self-only coverage, and

"(ii) twice the dollar amount in clause

(i) for family coverage.".

(b) CONFORMING AMENDMENTS. —

(1) Subparagraph (D) of section 223(c)(2) of the Internal Revenue Code of 1986 is amended to read as follows:

"(D) SPECIAL RULE FOR NETWORK PLANS. — In the case of a plan using a network of providers, such plan's annual deductible for services provided outside of such network shall not be taken into account for purposes of subsection (b)(2).".

(2) Clause (ii) of section 223(g)(1)(B) of such Code is amended by striking "each dollar amount in subsection (c)(2)(A)" and inserting "the dollar amount in subsection (c)(2)(A)(i)".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply with respect to taxable years beginning after December 31, 2019.

SEC. 8013. ON-SITE EMPLOYEE CLINICS.

(a) IN GENERAL. — Paragraph (1) of section 223(c) of the Internal Revenue Code of 1986, as amended by section 8010 of this Act, is amended by adding at the end the following new subparagraph:

"(E) SPECIAL RULE FOR QUALIFIED ITEMS AND SERVICES. —

"(i) IN GENERAL. — For purposes of subparagraph (A)(ii), an individual shall not be treated as covered under a health plan described in subclauses (I) and (II) of such subparagraph merely because the individual is eligible to receive, or receives, qualified items and services —

"(I) at a healthcare facility located at a facility owned or leased by the employer of the individual (or of the individual's spouse), or

"(II) at a healthcare facility operated primarily for the benefit of employees of the employer of the individual (or of the individual's spouse).

"(ii) QUALIFIED ITEMS AND SERVICES DEFINED. — For purposes of this subparagraph, the term 'qualified items and services' means the following:

"(I) Physical examination.

"(II) Immunizations, including injections of antigens provided by employees.

"(III) Drugs or biologicals other than a prescribed drug (as such term is defined in section 213(d)(3)).

"(IV) Treatment for injuries occurring in the course of employment.

"(V) Preventive care for chronic conditions (as defined in clause (iv)).

"(VI) Drug testing.

"(VII) Hearing or vision screenings and related services.

"(iii) AGGREGATION. — For purposes of clause (i), all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer.

"(iv) PREVENTIVE CARE FOR CHRONIC CONDITIONS. — For purposes of this subparagraph, the term 'preventive care for chronic conditions' means any item or service specified in the Appendix of Internal Revenue Service Notice 2019–45 which is prescribed to treat an individual diagnosed with the associated chronic condition specified in such Appendix for the purpose of preventing the exacerbation of such chronic condition or the development of a secondary condition, including any amendment, addition, removal, or other modification made by the Secretary (pursuant to the authority granted to the Secretary under paragraph (2)(C)) to the items or services specified in such Appendix subsequent to the date of enactment of this subparagraph.".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to months in taxable years beginning after the date of enactment of this Act.

SEC. 8014. ADJUSTMENT OF MEDICAL EXPENSE DEDUCTION.

(a) IN GENERAL. — Section 213 of the Internal Revenue Code of 1986 is amended —

(1) in subsection (a), by striking "10 percent" and inserting "7.5 percent", and

(2) by striking subsection (f) and inserting the following:

"(f) TEMPORARY SPECIAL RULE. — In the case of any taxable year beginning after December 31, 2019, and ending before January 1, 2022, subsection (a) shall be applied with respect to a taxpayer by substituting '5 percent' for '7.5 percent'.".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2019.

SEC. 8015. HEALTHY WORKPLACE TAX CREDIT.

(a) IN GENERAL. — In the case of an employer, there shall be allowed as a credit against applicable employment taxes for each calendar quarter an amount equal to 50 percent of the sum of —

(1) the qualified employee protection expenses paid or incurred by the employer during such calendar quarter,

(2) the qualified workplace reconfiguration expenses paid or incurred by the employer during such calendar quarter,

(3) the qualified workplace technology expenses paid or incurred by the employer during such calendar quarter, and

(4) the qualified workplace training expenses paid or incurred by the employer during such calendar quarter.

(b) LIMITATIONS AND REFUNDABILITY. —

(1) OVERALL DOLLAR LIMITATION ON CREDIT. —

(A) IN GENERAL. — The amount of the credit allowed under subsection (a) with respect to any employer for any calendar quarter shall not exceed the excess (if any) of —

(i) the applicable dollar limit with respect to such employer for such calendar quarter, over

(ii) the aggregate credits allowed under subsection (a) with respect to such employer for all preceding calendar quarters.

(B) APPLICABLE DOLLAR LIMIT. — The term "applicable dollar limit" means, with respect to any employer for any calendar quarter, the sum of —

(i) $1,000, multiplied so much of the average number of employees employed by such employer during such calendar quarter as does not exceed 500, plus

(ii) $750, multiplied by so much of such average number of employees as exceeds 500 but does not exceed 1,000, plus

(iii) $500, multiplied by so much of such average number of employees as exceeds 1,000.

(2) CREDIT LIMITED TO EMPLOYMENT TAXES. — The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the applicable employment taxes (reduced by any credits allowed under subsections (e) and (f) of section 3111 of the Internal Revenue Code of 1986, sections 7001 and 7003 of the Families First Coronavirus Response Act, and section 2301 of the CARES Act) on the wages paid with respect to the employment of all the employees of the eligible employer for such calendar quarter.

(3) REFUNDABILITY OF EXCESS CREDIT. —

(A) IN GENERAL. — If the amount of the credit under subsection (a) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b) of the Internal Revenue Code of 1986.

(B) TREATMENT OF PAYMENTS. — For purposes of section 1324 of title 31, United States Code, any amounts due to the employer under this paragraph shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

(c) QUALIFIED EMPLOYEE PROTECTION EXPENSES. — For purposes of this section, the term "qualified employee protection expenses" means amounts paid or incurred by the employer for —

(1) testing employees of the employer for COVID–19 (including on a periodic basis),

(2) equipment to protect employees of the employer from contracting COVID–19, including masks, gloves, and disinfectants, and

(3) cleaning products or services (whether provided by an employee of the taxpayer or a cleaning service provider) related to preventing the spread of COVID–19.

(d) QUALIFIED WORKPLACE RECONFIGURATION EXPENSES. — For purposes of this section —

(1) IN GENERAL. — The term "qualified workplace reconfiguration expenses" means amounts paid or incurred by the employer to design and reconfigure retail space, work areas, break areas, or other areas that employees or customers regularly use in the ordinary course of the employer's trade or business if such design and reconfiguration —

(A) has a primary purpose of preventing the spread of COVID–19,

(B) is with respect to an area that is located in the United States and that is leased or owned by the employer,

(C) is consistent with the purpose of the property immediately before the reconfiguration,

(D) is commensurate with the risks faced by the employees or customers or is consistent with recommendations made by the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration,

(E) is completed pursuant to a reconfiguration plan and no comparable reconfiguration plan was in place before March 13, 2020, and

(F) is completed before January 1, 2021.

(2) REGULATIONS. — The Secretary shall prescribe such regulations and other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including guidance defining primary purpose and reconfiguration plan.

(e) QUALIFIED WORKPLACE TECHNOLOGY EXPENSES. — For purposes of this section —

(1) IN GENERAL. — The term "qualified workplace technology expenses" means amounts paid or incurred by the employer for technology systems that employees or customers use in the ordinary course of the employer's trade or business if such technology system —

(A) has a primary purpose of preventing the spread of COVID–19,

(B) is used for limiting physical contact between customers and employees in the United States,

(C) is commensurate with the risks faced by the employees or customers or is consistent with recommendations made by the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration,

(D) is acquired by the taxpayer after March 12, 2020, and is not acquired pursuant to a written binding contract entered into before such date, and

(E) is placed in service by the taxpayer before January 1, 2021.

(2) TECHNOLOGY SYSTEMS. — The term "technology systems" means computer software (as defined in section 167(f)(1)) and qualified technological equipment (as defined in section 168(i)(2)).

(3) REGULATIONS. — The Secretary shall prescribe such regulations and other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including guidance defining primary purpose.

(f) QUALIFIED WORKPLACE TRAINING EXPENSES. — For purposes of this section, the term "qualified workplace training expenses" means amounts paid or incurred by the employer for education and training with respect to industry best practices that ensure —

(1) the health and safety of employees in the workplace with respect to COVID–19, and

(2) the prevention of the spread of COVID–19 in the workplace.

(g) OTHER DEFINITIONS. — For purposes of this section —

(1) APPLICABLE EMPLOYMENT TAXES. — The term "applicable employment taxes" means the following:

(A) The taxes imposed under section 3111(a) of the Internal Revenue Code of 1986.

(B) So much of the taxes imposed under section 3221(a) of such Code as are attributable to the rate in effect under section 3111(a) of such Code.

(2) COVID–19. — Except where the context clearly indicates otherwise, any reference in this section to COVID–19 shall be treated as including a reference to the virus which causes COVID–19.

(3) SECRETARY. — The term "Secretary" means the Secretary of the Treasury or the Secretary's delegate.

(4) OTHER TERMS. — Any term used in this section (other than subsection (b)(1)(B)) which is also used in chapter 21 or 22 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such chapter.

(h) CERTAIN GOVERNMENTAL EMPLOYERS. — This credit shall not apply to the Government of the United States, the government of any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing.

(i) SPECIAL RULES. —

(1) AGGREGATION RULE. — All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986, or subsection (m) or (o) of section 414 of such Code, shall be treated as one employer for purposes of this section.

(2) DENIAL OF DOUBLE BENEFIT. —

(A) IN GENERAL. — Rules similar to the rules of paragraphs (1) and (2) of section 280C(b) shall apply for purposes of this section.

(B) EXPENSES NOT TAKEN INTO ACCOUNT MORE THAN ONCE. — Any qualified workplace reconfiguration expense or qualified workplace technology expense shall not be treated as a qualified employee protection expense and any qualified workplace technology expense shall not be treated as a qualified workplace reconfiguration expense.

(3) THIRD-PARTY PAYORS. — Any credit allowed under this section shall be treated as a credit described in section 3511(d)(2) of such Code.

(4) ELECTION NOT TO HAVE SECTION APPLY. — This section shall not apply with respect to any eligible employer for any calendar quarter if such employer elects (at such time and in such manner as the Secretary may prescribe) not to have this section apply.

(j) TRANSFERS TO CERTAIN TRUST FUNDS. — There are hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) and the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason of this section (without regard to this subsection). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund or Account had this section not been enacted.

(k) TREATMENT OF DEPOSITS. — The Secretary shall waive any penalty under section 6656 of the Internal Revenue Code of 1986 for any failure to make a deposit of any applicable employment taxes if the Secretary determines that such failure was due to the reasonable anticipation of the credit allowed under this section.

(l) REGULATIONS AND GUIDANCE. — The Secretary shall prescribe such regulations and other guidance as may be necessary or appropriate to carry out the purposes of this section, including —

(1) with respect to the application of the credit under subsection (a) to third-party payors (including professional employer organizations, certified professional employer organizations, or agents under section 3504 of the Internal Revenue Code of 1986), regulations or other guidance allowing such payors to submit documentation necessary to substantiate the amount of the credit allowed under subsection (a), and

(2) regulations or other guidance to prevent abusive transactions.

(m) APPLICATION. — This section shall only apply to amounts paid or incurred after March 12, 2020, and before January 1, 2021.

TITLE IX — MEDICARE

Subtitle A — Telehealth

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SEC. 9005. MAKING PERMANENT THE SAFE HARBOR FOR ABSENCE OF DEDUCTIBLE FOR TELEHEALTH.

(a) IN GENERAL.—Section 223(c)(2)(E) of the Internal Revenue Code of 1986 is amended by striking "In the case of plan years beginning on or before December 31, 2021, a" and inserting "A".

(b) CERTAIN COVERAGE DISREGARDED. — Section 223(c)(1)(B)(ii) of the Internal Revenue Code of 1986 is amended by striking "(in the case of plan years beginning on or before December 31, 2021)".

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