A bill to amend the Internal Revenue Code of 1986 to establish Small Business Health Accounts.

Small Business Health Account Act of 2018

This bill amends the Internal Revenue Code to allow tax-exempt savings accounts (small business health accounts) for the health expenses of small business employees.

Individuals who are employed by a small business and have not made or received contributions for a health savings account (excluding certain contributions rolled over to a small business health account) during the month are eligible to contribute to an account. Individuals who are eligible for Medicare may not make contributions.

The bill allows a deduction for cash contributions to an account and specifies contribution limits, which must be adjusted for inflation after 2019. Tax-exempt distributions from an account may be used for qualified medical expenses, including: (1) medical care for the individual or a spouse or dependent of the individual, and (2) coverage under a health plan.

The bill sets forth rules and penalties for excess contributions to an account and distributions that are not used for qualified medical expenses.