1. Short title This Act may be cited as the Qualified Health Savings Account Distribution Act of 2018 . 2. FSA and HRA terminations or conversions to fund HSAs (a) In general Section 106(e)(2) of the Internal Revenue Code of 1986 is amended to read as follows: (2) Qualified HSA distribution For purposes of this subsection— (A) In general The term qualified HSA distribution means, with respect to any employee, a distribution from a health flexible spending arrangement or health reimbursement arrangement of such employee directly to a health savings account of such employee if— (i) such distribution is made in connection with such employee establishing coverage under a high deductible health plan (as defined in section 223(c)(2)) after a significant period of not having such coverage, and (ii) such arrangement is described in section 223(c)(1)(B)(iii) with respect to the portion of the plan year after such distribution is made. (B) Dollar limitation The aggregate amount of distributions from health flexible spending arrangements and health reimbursement arrangements of any employee which may be treated as qualified HSA distributions in connection with an establishment of coverage described in subparagraph (A)(i) shall not exceed an amount equal to the sum of— (i) the dollar amount in effect under section 125(i)(1) (twice such amount in the case of coverage which is described in section 223(b)(2)(B)), plus (ii) an amount equal to the maximum unused amounts remaining at the end of a plan year in a health flexible spending arrangement which are permitted to be paid or reimbursed to plan participants for qualified medical expenses incurred during the following plan year, as provided in Internal Revenue Service Notice 2013–71 (as in effect on the date of the enactment of the Qualified Health Savings Account Distribution Act of 2018 ). . (b) Conversion to HSA-Compatible arrangement for remainder of plan year Section 223(c)(1)(B)(iii) of such Code is amended to read as follows: (iii) coverage under a health flexible