To amend the Internal Revenue Code of 1986 to make health care coverage more accessible and affordable.

Summary: Comprehensive Health Care Reform Act of 2003 - Amends the Internal Revenue Code to: (1) allow a limited tax credit for medical insurance; (2) set forth that a plan or other arrangement shall not cease to count as a cafeteria plan solely because qualified benefits under such plan include a health flexible spending arrangement under which not more than $500 of unused health benefits may be carried forward to the next year of such arrangement or paid to or on behalf of an employee as compensation from employment; (3) provide for (among other things), with respect to Archer Medical Savings Accounts, repealing limitations on the amount that may be contributed, repealing limitations on the number of such accounts, and expanding the availability of such accounts beyond employees of small employers and the self-employed; and (4) repeal the 7.5 percent threshold on the medical expense deduction.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Comprehensive Health Care Reform Act 
of 2003''.

SEC. 2. REFUNDABLE CREDIT FOR HEALTH CARE COSTS.

    (a) In General.--Section 35 of the Internal Revenue Code of 1986 
(relating to health insurance costs of eligible individuals) is amended 
to read as follows:

``SEC. 35. HEALTH INSURANCE COSTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by subtitle A an amount 
equal to the amount paid by the taxpayer for insurance which 
constitutes medical care for the taxpayer and the taxpayer's spouse and 
dependents.
    ``(b) Limitation.--The credit allowed by subsection (a) for the 
taxable year shall not exceed the sum of--
            ``(1) the taxpayer's net income tax for the taxable year, 
        and
            ``(2) the taxpayer's social security taxes (as defined in 
        section 24(d)) for such taxable year.
For purposes of paragraph (1), the term `net income tax' means the sum 
of the regular tax liability and the tax imposed by section 55, reduced 
by the credits allowable under this part (other than this subpart).
    ``(c) Denial of Double Benefit.--Any amount allowed as a credit 
under this section shall not be taken into account in determining the 
amount of any deduction under this chapter.''
    (b) Conforming Amendments.--
            (1) Section 162(l) of such Code is hereby repealed.
            (2) Section 202 of the Trade Act of 2002, and the 
        amendments made by such section, is hereby repealed, and the 
        Internal Revenue Code of 1986 shall be applied as if such 
        section had not been enacted.
            (3) The item relating to section 35 in the table of 
        sections for subpart C of part IV of subchapter A of chapter 1 
        of such Code is amended to read as follows:

                              ``Sec. 35. Health insurance costs.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 3. DISPOSITION OF UNUSED HEALTH BENEFITS IN CAFETERIA PLANS AND 
              FLEXIBLE SPENDING ARRANGEMENTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
(relating to cafeteria plans) is amended by redesignating subsections 
(h) and (i) as subsections (i) and (j), respectively, and by inserting 
after subsection (g) the following:
    ``(h) Carryforwards or Payments of Certain Unused Health 
Benefits.--
            ``(1) In general.--For purposes of this title, a plan or 
        other arrangement shall not fail to be treated as a cafeteria 
        plan solely because qualified benefits under such plan include 
        a health flexible spending arrangement under which not more 
        than $500 of unused health benefits may be--
                    ``(A) carried forward to the succeeding plan year 
                of such health flexible spending arrangement, or
                    ``(B) paid to or on behalf of an employee as 
                compensation as of the end of such plan year or upon 
                the termination of, or failure to re-enroll in, such 
                plan or arrangement.
            ``(2) Distribution of unused health benefits on behalf of 
        employee.--For purposes of paragraph (1)(B), unused health 
        benefits paid as compensation on behalf of an employee by the 
        employer shall be--
                    ``(A) includible in gross income and wages of the 
                employee, whether or not a deduction for such payment 
                is allowable under this title to the employee, and
                    ``(B) excludable from--
                            ``(i) gross income to the extent provided 
                        under section 402(e), 457(a) (with respect to 
                        contributions to an eligible deferred 
                        compensation plan (as defined in section 
                        457(b)) of an eligible employer described in 
                        section 457(e)(1)(A)), or 220, and
                            ``(ii) wages to the extent otherwise 
                        provided for amounts so excludable.
            ``(3) Health flexible spending arrangement.--For purposes 
        of this subsection, the term `health flexible spending 
        arrangement' means a flexible spending arrangement (as defined 
        in section 106(c)) that is a qualified benefit and only permits 
        reimbursement for expenses for medical care (as defined in 
        section 213(d)(1) (without regard to subparagraphs (C) and (D) 
        thereof).
            ``(4) Unused health benefits.--For purposes of this 
        subsection, the term `unused health benefits' means the excess 
        of--
                    ``(A) the maximum amount of reimbursement allowable 
                during a plan year under a health flexible spending 
                arrangement, over
                    ``(B) the actual amount of reimbursement during 
                such year under such arrangement.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2003.

SEC. 4. EXPANSION OF AVAILABILITY OF ARCHER MEDICAL SAVINGS ACCOUNTS.

    (a) Repeal of Dollar Limitations on Amount That May Be Contributed 
to Archer MSA.--
            (1) In general.--Subsection (b) of section 220 of the 
        Internal Revenue Code of 1986 (relating to limitations) is 
        amended by striking paragraphs (1), (2), and (3) and by 
        redesignating paragraphs (4) through (7) as (1) through (4), 
        respectively.
            (2) Conforming amendment.--Paragraph (1) of section 106(b) 
        of such Code is amended by striking ``to the extent'' and all 
        that follows and inserting a period.
    (b) Repeal of Limitations on Number of Medical Savings Accounts.--
            (1) In general.--Subsections (i) and (j) of section 220 of 
        the Internal Revenue Code of 1986 are hereby repealed.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 220(c) of such Code is 
                amended by striking subparagraph (D).
                    (B) Section 138 of such Code is amended by striking 
                subsection (f).
    (c) Availability Not Limited to Accounts for Employees of Small 
Employers and Self-Employed Individuals.--
            (1) In general.--Subparagraph (A) of section 220(c)(1) of 
        such Code (relating to eligible individual) is amended to read 
        as follows:
                    ``(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, and
                            ``(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.''.
            (2) Conforming amendments.--
                    (A) Section 220(c)(1) of such Code is amended by 
                striking subparagraph (C).
                    (B) Section 220(c) of such Code is amended by 
                striking paragraph (4) (defining small employer) and by 
                redesignating paragraph (5) as paragraph (4).
                    (C) Section 220(b) of such Code is amended by 
                striking paragraph (4) (relating to deduction limited 
                by compensation) and by redesignating paragraphs (5), 
                (6), and (7) as paragraphs (4), (5), and (6), 
                respectively.
    (d) Both Employers and Employees May Contribute to Medical Savings 
Accounts.--Paragraph (4) of section 220(b) of such Code (as 
redesignated by subsection (b)(2)(C)) is amended to read as follows:
            ``(4) Coordination with exclusion for employer 
        contributions.--The limitation which would (but for this 
        paragraph) apply under this subsection to the taxpayer for any 
        taxable year shall be reduced (but not below zero) by the 
        amount which would (but for section 106(b)) be includible in 
        the taxpayer's gross income for such taxable year.''.
    (e) Reduction of Permitted Deductibles Under High Deductible Health 
Plans.--
            (1) In general.--Subparagraph (A) of section 220(c)(2) of 
        such Code (defining high deductible health plan) is amended--
                    (A) by striking ``$1,500'' in clause (i) and 
                inserting ``$1,000''; and
                    (B) by striking ``$3,000'' in clause (ii) and 
                inserting ``$2,000''.
            (2) Conforming amendment.--Subsection (g) of section 220 of 
        such Code is amended to read as follows:
    ``(g) Cost-of-Living Adjustment.--
            ``(1) In general.--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--
                    ``(A) such dollar amount, multiplied by
                    ``(B) 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.
            ``(2) Special rules.--In the case of the $1,000 amount in 
        subsection (c)(2)(A)(i) and the $2,000 amount in subsection 
        (c)(2)(A)(ii), paragraph (1)(B) shall be applied by 
        substituting `calendar year 2002' for `calendar year 1997'.
            ``(3) Rounding.--If any increase under paragraph (1) or (2) 
        is not a multiple of $50, such increase shall be rounded to the 
        nearest multiple of $50.''.
    (f) Providing Incentives for Preferred Provider Organizations To 
Offer Medical Savings Accounts.--Clause (ii) of section 220(c)(2)(B) of 
such Code is amended by striking ``preventive care if'' and all that 
follows and inserting ``preventive care.''
    (g) Medical Savings Accounts May Be Offered Under Cafeteria 
Plans.--Subsection (f) of section 125 of such Code is amended by 
striking ``106(b),''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 5. REPEAL OF 7.5 PERCENT THRESHOLD ON DEDUCTION FOR MEDICAL 
              EXPENSES.

    (a) In General.--Subsection (a) of section 213 of the Internal 
Revenue Code of 1986 (relating to deduction for medical expenses) is 
amended by striking ``to the extent that such expenses exceed 7.5 
percent of adjusted gross income''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2003.