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.