COMPARISON OF REVENUE PROVISIONS IN H.R. 2990 

AS PASSED BY THE HOUSE AND THE SENATE

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

November 2, 1999

JCX-77-99
(i)

CONTENTS

Page

ND LEGISLATIVE BACKGROUND .................................................. 1

ED REVENUE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

e Deduction for Health Insurance Expenses (sec. 201 of the House bill) ....................... 2

-Percent Self-Employed Health Insurance Deduction (sec. 202 of the House bill and

 Senate amendment) ................................................................ 2

Availability of Medical Savings Accounts ............................................... 3

ailability of MSAs (sec. 203 of the House bill and sec. 502 of the Senate amendment) ............ 3

As to be offered under the FEHBP (sec. 503 of the Senate amendment) ........................ 4

n of laws regarding high deductible plans (sec. 101 of the Senate amendment) ................... 4

ating to Long-Term Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

line deduction for long-term care insurance expenses (sec. 201 of the House bill and sec. 602 of the

endment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

g-term care to be offered as part of a cafeteria plan (sec. 204 of the House bill and sec. 601 of the

endment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

 personal exemption for caretakers (sec. 205 of the House bill) ............................... 6

ng-term care needs (sec. 603 of the Senate amendment) .................................... 6

n Clinical Trials Expenses Qualifying for Orphan Drug Tax Credit (sec. 206 of the House bill) ..... 7
Page

(ii)

accines Against Streptococcus Pneumoniae to List of Taxable Vaccines

e House bill and sec. 810 of the Senate amendment) ....................................... 8

ical Testing Research Expenses Attributable to Certain Qualified Academic Institutions

e House bill) ...................................................................... 9

 Patients’ Bill of Rights to Group Health Plans (sec. 1401 of the House bill and sec. 102 of the

ment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

mation About Plans and Providers (sec. 111(b) of the Senate amendment) . . . . . . . . . . . . . . . . . . . . . . 10

lth and Cancer Rights (sec. 201 of the Senate amendment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

mation and Services (sec. 303 of the Senate amendment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Unused Benefits from Flexible Spending Arrangements (sec. 504 of the Senate amendment) . . . . . . . . 11

TIREMENT ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

me Limitation on Roth IRA Conversions (sec. 701 of the Senate amendment) . . . . . . . . . . . . . . . . . . . . 11

ET PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

n Tax Credit Carryover Rules (sec. 801 of the Senate amendment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Use of Nonaccrual Experience Method of Accounting (sec. 802 of the Senate amendment) . . . . . . . . 12

ting onCancellation of Indebtedness Income (sec. 803 of the Senate amendment) . . . . . . . . . . . . . . . . 13
Page

(iii)

RS User Fees (sec. 804 of the Senate amendment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ct to a Liability under Section 357(c) (sec. 805 of the Senate amendment) . . . . . . . . . . . . . . . . . . . . . 13

t-Dollar Life Insurance (sec. 806 of the Senate amendment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Excess Pension Assets Used for Retiree Health Benefits (sec. 807 of the Senate amendment) . . . . . . . 15

tion on Prefunding Certain Employee Benefits (sec. 808 of the Senate amendment) . . . . . . . . . . . . . . 16

ment Method and Prohibit its Use by Accrual Method Taxpayers

e Senate amendment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
nt may be cited as follows: Joint Committee on Taxation, Comparison of Revenue Provisions in H.R. 2990, as

nd the Senate (JCX-77-99), November 2, 1999.

- 1 -

INTRODUCTION AND LEGISLATIVE BACKGROUND

cument1 prepared by the staff of the Joint Committee on Taxation, provides a comparison of the revenue

n H.R. 2990 as passed by the House and as amended by the Senate.

 passed by the House on October 6, 1999. H.R. 2990 as passed by the House has two divisions. Division A is

he Uninsured Act of 1999," and Division B is the “Bipartisan Consumers Managed Care Improvement Act of

mended by the provisions of S. 1344 as amended by the Senate (the “Patients’ Bill of Rights Plus Act”), was

n October 14, 1999. 
he “Taxpayer Refund and Relief Act of 1999," was vetoed by President Clinton on September 23, 1999. 

 the provisions in H.R. 2488 may be found in H. Rept. 106-238 (July 16, 1999), S. Rept. 106-120 (July 23,

06-289 (August 4, 1999).

- 2 -

EM HOUSE BILL SENATE AMENDMENT

 TAX RELIEF

Deduction for Health

sec. 201 of the

` Provides above-the-line deduction for

of health insurance costs, phased in: 25% in 2002, 2003, and 2004; 35% in2005; 65% in 2006; and 100% in 2007and thereafter.

` Deduction available only if the

taxpayer pays for at least 50% of thecost of the insurance.

` Effective for years beginning after

December 31, 2001.

` Same as sec. 501 of the conference

agreement for H.R. 2488.2

No provision.

ercent Self

urance Deduction

e bill and sec. 501 of

nt)

` Increases self-employed health

deduction to 100% beginning in 2001.

` Provides that deduction is not available

if individual participates in anemployer-subsidized health plan.

` Same as sec. 801 of the conference

agreement for H.R. 2488, except for theeffective date. 

` Increases self-employed health

deduction to 100% beginning in 2000.

` No provision. (Retains present-law

rule that deduction is not available ifindividual is eligible to participate in anemployer-subsidized health plan).
EM HOUSE BILL SENATE AMENDMENT

- 3 -

ng to Medical

MSAs”)

ty of MSAs (sec.

 and sec. 502 of the

` Makes MSAs permanent and removes

cap on number of MSAs.

` Allows all individuals covered by a

high deductible plan to have an MSA.

` Permits both employer and employee

contributions.

` Allows MSAs to be offered in a

cafeteria plan.

` Lowers minimum deductible to $1,000

($2,000 for family coverage) andallows contributions up to deductible.

` No provision.` No provision.` Effective for taxable years beginning

after December 31, 2000.

` Same as Section 503 of the House

version of H.R. 2488, except that thatbill did not extend MSAs to individualsnot covered by an employer.

` Same as House bill.` Same as House bill.` No provision.` No provision.` Same as House bill.` Provides that the 15-percent additional

tax on distributions not used formedical purposes does not apply if theremaining account balance is at leastequal to the deductible under theindividual’s high deductible plan.

` Includes rules regarding the treatment

of networked-based managed care plansas high deductible plans.

` Generally effective for taxable years

beginning after December 31, 1999.
EM HOUSE BILL SENATE AMENDMENT

- 4 -

e offered under the

the Senate

No provision. ` Permits MSAs to be offered under the

FEHBP.

` Effective for contract terms beginning

after December 31, 1999.

ws regarding high

. 101 of the Senate

No provision. ` Provides that, notwithstanding any

other provision of law, health issuersmay offer and eligible individuals maypurchase high deductible plans. Provides that, effective for 4 years afterthe date of enactment, high deductiblehealth plans are not required to providepayment for any health care items orservices that are exempt from the plan’sdeductible.
EM HOUSE BILL SENATE AMENDMENT

- 5 -

ng to Long-Term

duction for long

xpenses (sec. 201 of

c. 602 of the Senate

` Provides above-the-line deduction for a

percentage of eligible long-term careinsurance costs (subject to present-lawpremium limitations).

` Deductible percentage is 25% in 2002,

2003, and 2004; 35% in 2005; 65% in2006; and 100% in 2007 and thereafter.

` Deduction available only if taxpayer

pays at least 50% of the cost of thecoverage.

` Effective for taxable years beginning

after December 31, 2001.

` Same as section 501 of the conference

agreement for H.R. 2488.

` Provides above-the-line deduction for

100 percent of eligible long-term careinsurance costs.

` Deduction is not available if taxpayer

eligible to participate in employersubsidized long-term care plan.

` Deduction does not apply for selfemployment tax purposes.` Effective for taxable years beginning

after December 31, 1999.

care to be offered as

n (sec. 204 of the

01 of the Senate

` Permits long-term care benefits to be

offered under flexible spendingarrangements and cafeteria plans. Inthe case of long-term care insurance,the benefit cannot exceed the presentlaw premium limitations.

` Effective beginning after December 31,

2001.

` Same as sec. 502 of the conference

agreement for H.R. 2488.

` Permits long-term care benefits to be

offered under cafeteria plans (presentlaw premium limitations do not apply).

` Effective beginning after December 31,

1999.
EM HOUSE BILL SENATE AMENDMENT

- 6 -

al exemption for

5 of the House bill)

` Provides taxpayers with an additional

personal exemption for an individualwho (1) is an ancestor of the taxpayeror the taxpayer’s spouse (or the spouseof such ancestor), (2) has been certifiedas having long-term care needs, and (3)is a member of the taxpayer’shousehold for the taxpayer's entiretaxable year. 

` Effective for taxable years beginning

after December 31, 2000.

` Same as sec. 503 of the conference

agreement for H.R. 2488, except for theeffective date.

No provision.

m care needs (sec. 603

ndment)

No provision. Directs the Secretary of Health and

Human Services to conduct a study on thefuture demand for long-term services andlong-term options for financing suchservices.
EM HOUSE BILL SENATE AMENDMENT

- 7 -

Clinical Trials

 for Orphan Drug

of the House bill)

` Expands qualifying expenses to include

those expenses related to humanclinical testing incurred after the dateon which the taxpayer files anapplication with the FDA fordesignation of the drug under section526 of the Federal Food, Drug, andCosmetic Act as a potential treatmentfor a rare disease or disorder.

` Effective for expenditures paid or

incurred after December 31, 2000.

` Same as sec. 504 of the conference

agreement for H.R. 2488, except for theeffective date.

No provision.
EM HOUSE BILL SENATE AMENDMENT

- 8 -

ines Against

moniae to List of

ec. 207 of the House

he Senate

• Adds any conjugate vaccine against

streptococcus pneumoniae to the list oftaxable vaccines, effective day afterCDC makes final recommendation forroutine administration to children.

• Reduces rate of tax for all vaccines

from 75 cents to 50 cents per dose,effective for sales after December 31,2004.

• Requires GAO report regarding the

operation and management of theVaccine Trust Fund.

• Substantially identical to sec. 505 of

the conference agreement for H.R.2488.

• Adds any conjugate vaccine against

streptococcus pneumoniae to the list oftaxable vaccines, effective day afterCDC makes final recommendation forroutine administration to children.
EM HOUSE BILL SENATE AMENDMENT

- 9 -

al Testing Research

e to Certain

Institutions (sec. 208

• Taxpayer may claim a 40% credit for

qualified medical research expendituresmade with respect to certain humanclinical testing of any drug, biologic, ormedical device. The credit would applyto qualified medical researchexpenditures in excess of a base periodamount.

• Qualified medical research

expenditures are only those amountspaid to certain academic institutions. 

• Effective for taxable years beginning

after December 31, 2000.

• Same as sec. 1334 of the conference

agreement for H.R. 2488, except for theeffective date.

No provision.

atients’ Bill of Rights

ns (sec. 1401 of the

02 of the Senate

• Imposes an excise tax with respect to

group health plan failures to complywith the patients’ rights provisions ofthe bill.

• Generally effective for plan years

beginning on or after January 1, 2001.

` Imposes an excise tax with respect to

group health plan failures to complywith the patients’ rights provisions ofthe bill.

` Generally effective with respect to plan

years beginning on or after January 1 ofthe second calendar year following thedate of enactment.
EM HOUSE BILL SENATE AMENDMENT

- 10 -

on About Plans and

) of the Senate

No separate provision. (The patients’ billof rights provisions in the bill, see itemIII.H., above, include requirements thatplans provide certain information toparticipants.)

` Imposes an excise tax with respect to

group health plans that fail to provideparticipants with certain informationregarding the plan.

` Effective one year after the date of

enactment.

and Cancer Rights

te amendment)

No provision. ` Imposes an excise tax with respect to

group health plans that fail to meetcertain requirements relating tocoverage for minimum hospital staysfor mastectomies and lymph nodedissections for the treatment of breastcancer and coverage for secondaryconsultations.

` Effective on the date of enactment.

ion and Services

te amendment)

No provision. ` Imposes an excise tax with respect to

group health plans that fail to meetcertain requirements prohibitingdiscrimination on the basis of geneticinformation or services.

` Generally effective with respect to plan

years beginning one year after the dateof enactment.
EM HOUSE BILL SENATE AMENDMENT

- 11 -

sed Benefits from

Flexible Spending

s”) (sec. 504 of the

No provision. ` Up to $500 of unused health or

dependent care benefits can be carriedforward annually under a cafeteria planor FSA.

` Amounts carried forward can be paid to

the participant, rolled over to a section401(k) plan or similar arrangement oran MSA. 

` Effective for taxable years beginning

after December 31, 1999. 

RETIREMENT

S

Limitation on Roth

c. 701 of the Senate

No provision. ` Increases the AGI limit on conversions

of traditional IRAs to Roth IRAs from$100,000 to $1,000,000 for single andjoint filers.

` Effective for taxable years beginning

after December 31, 1999.

` Similar to sec. 302 of the Senate

version of H.R. 2488, except for theeffective date.
EM HOUSE BILL SENATE AMENDMENT

- 12 -

FSET

Tax Credit Carryover

e Senate amendment)

No provision. ` Reduces the carryback period for

excess foreign tax credits from twoyears to one year.

` Extends the excess foreign tax credit

carryforward period from five years toseven years.

` Effective for foreign tax credits arising

in years beginning after December 31,2001.

` Same as sec. 1301 of the Senate version

of H.R. 2488, except for the effectivedate.

e of Nonaccrual

of Accounting (sec.

endment)

No provision. ` Limits use of the nonaccrual method to

receivables from the provision ofqualified personal services.

` The effect of change in method to be

taken into account over a period of upto 4 years.

` Effective for taxable years ending after

the date of enactment.

` Same as sec. 1509 of the conference

agreement for H.R. 2488.
EM HOUSE BILL SENATE AMENDMENT

- 13 -

g on Cancellation of

 (sec. 803 of the

No provision. ` Requires information reporting on

indebtedness discharged by anyorganization a significant trade orbusiness of which is the lending ofmoney. 

` Effective with respect to discharges of

indebtedness after December 31, 1999.

` Same as sec. 1501 of the conference

agreement for H.R. 2488.

 User Fees (sec. 804

ment)

No provision. ` Extends the statutory authorization for

IRS user fees through September 30,2009.

` Effective for requests made after

September 30, 2003.

` Same as sec. 1502 of the conference

agreement for H.R. 2488.

to a Liability under

805 of the Senate

No provision. ` Modify the rules regarding when a

corporation is treated as assuming aliability, and limit a corporation’s basisin property that secures the liability.

` This provision was included in H.R.

435, the Miscellaneous Trade andTechnical Corrections Act of 1999,which was signed into law on June 25,1999 (P.L. 106-36).
EM HOUSE BILL SENATE AMENDMENT

- 14 -

Dollar Life Insurance

te amendment)

No provision. ` Restates present law by denying a

charitable contribution deduction for atransfer to a charity if the charitydirectly or indirectly pays or paid anypremium on a life insurance, annuity orendowment contract in connection withthe transfer, and any direct or indirectbeneficiary under the contract is thetransferor, any member of thetransferor’s family, or any othernoncharitable person chosen by thetransferor.

` Imposes an excise tax on the charity,

equal to the amount of the premiumspaid by the charity, if the premiums arepaid in connection with a transfer forwhich a deduction is not allowable.

` Requires a charity to report annually to

the Internal Revenue Service theamount of premiums subject to thisexcise tax and information about thebeneficiaries under the contract.

` Generally effective after February 8,

1999.

` Same as sec. 1510 of the conference

agreement for H.R. 2488.
EM HOUSE BILL SENATE AMENDMENT

- 15 -

ess Pension Assets

lth Benefits (sec. 807

ment)

No provision. ` Extends through September 30, 2009,

the present-law provision permittingqualified transfers of excess definedbenefit pension plan assets to provideretiree health benefits.

` Effective for transfers occurring after

December 31, 2000, and beforeOctober 1, 2009, replaces the presentlaw minimum benefit requirement by aminimum cost requirement.

` Same as sec. 1507 of the conference

agreement for H.R. 2488, except for theeffective date with respect to theminimum cost requirement.
EM HOUSE BILL SENATE AMENDMENT

- 16 -

n on Prefunding

enefits (sec. 808 of

nt)

No provision. ` Limits the present-law exception to the

deduction limit for 10-or-moreemployer plans to plans that provideonly medical benefits, disabilitybenefits, and qualifying group-term lifeinsurance benefits. 

` An excise tax is imposed on the

employer if any portion of a welfarebenefit fund attributable tocontributions that are deductible underthe 10-or-more employer rule is usedfor a purpose other than the purpose forwhich the contributions were made.

` Effective with respect to contributions

paid or accrued after the date ofenactment, in taxable years ending aftersuch date.

` Substantially identical to sec.1503 of

the conference agreement for H.R.2488, except for the effective date.
EM HOUSE BILL SENATE AMENDMENT

- 17 -

t Method and

 Accrual Method

9 of the Senate

No provision. ` Prohibits use of installment method if

the sale would otherwise be reportedunder an accrual method of accounting.

` Any arrangement that gives the

taxpayer the right to satisfy anobligation with an installment note istreated as a pledge of the installmentnote.

` Effective for sales after the date of

enactment.

` Same as sec. 1508 of the conference

agreement for H.R. 2488.