I 

110TH CONGRESS 

1ST SESSION H. R. 1802 

To amend the Internal Revenue Code of 1986 to provide a refundable tax 

credit to small businesses for the costs of qualified health insurance. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 29, 2007 

Ms. HOOLEY introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a refundable tax credit to small businesses for the costs 

of qualified health insurance. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Keeping Small Busi5 nesses Healthy Act of 2007’’. 

6 SEC. 2. REFUNDABLE CREDIT FOR SMALL BUSINESSES 

7 PROVIDING HEALTH INSURANCE COVERAGE 

8 FOR EMPLOYEES. 

9 (a) IN GENERAL.—Subpart C of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 (relating to refundable credits) is amended by redes2 ignating section 36 as section 37 and by inserting after 

3 section 35 the following new section: 

4 ‘‘SEC. 36. SMALL BUSINESS HEALTH INSURANCE EXPENSES. 

5 ‘‘(a) IN GENERAL.—There shall be allowed as a cred6 it against the tax imposed by this chapter for the taxable 

7 year an amount equal to the applicable percentage of the 

8 amounts paid during the taxable year by the taxpayer for 

9 qualified health insurance for employees of the taxpayer 

10 and spouses and dependents of such employees. 

11 ‘‘(b) APPLICABLE PERCENTAGE.—The applicable 

12 percentage shall be determined in accordance with the fol13 lowing table: 

‘‘Total number of employees 

of taxpayer: 

The applicable 

percentage is: 

25 or fewer ............................................................................... 60 percent

26 to 100 ................................................................................. 40 percent

101 or more ............................................................................. 0 percent. 

14 ‘‘(c) LIMITATIONS.—The credit allowed under this 

15 section shall be zero for any taxable year if— 

16 ‘‘(1) less than 65 percent of the cost of the cov17 erage (without regard to this section) for such year 

18 is borne by the employer, 

19 ‘‘(2) the plan provides qualified health insur20 ance to less than 75 percent of the employees of the 

21 employer for such year, 

22 ‘‘(3) the percentage of the cost of the coverage 

23 (without regard to this section) for such year which 


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1 is borne by the employer is less than the percentage 

2 of the cost of such coverage for any prior year which 

3 was borne by such employer, or 

4 ‘‘(4) the health benefits provided under the plan 

5 for such year are less than the health benefits pro6 vided under the plan for any prior year. 

7 ‘‘(d) SELF-EMPLOYED INDIVIDUALS.—For purposes 

8 of this section, a self-employed individual (within the 

9 meaning of section 401(c)) shall be treated as an em10 ployee. 

11 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur12 poses of this section, the term ‘qualified health insurance’ 

13 means insurance which constitutes medical care (as de14 fined in section 213(d)); except that such term shall not 

15 include any insurance if substantially all of its coverage 

16 is of excepted benefits described in section 9832(c). 

17 ‘‘(f) AGGREGATION RULE.—For purposes of this sec18 tion, all persons treated as a single employer under sub19 section (a) or (b) of section 52 or subsection (n) or (o) 

20 of section 414 shall be treated as one person.’’. 

21 (b) DENIAL OF DOUBLE BENEFIT.—Section 280C of 

22 such Code is amended by adding at the end the following 

23 new subsection: 

24 ‘‘(f) CREDIT FOR SMALL BUSINESS HEALTH INSUR25 ANCE EXPENSES.— 


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1 ‘‘(1) IN GENERAL.—No deduction shall be al2 lowed for that portion of the expenses (otherwise al3 lowable as a deduction) taken into account in deter4 mining the credit under section 36 for the taxable 

5 year which is equal to the amount of the credit de6 termined for such taxable year under section 36(a). 

7 ‘‘(2) CONTROLLED GROUPS.—Persons treated 

8 as one person under section 36(f) shall be treated as 

9 one person for purposes of this section.’’ 

10 (c) CONFORMING AMENDMENTS.— 

11 (1) Paragraph (2) of section 1324(b) of title 

12 31, United States Code, is amended by inserting ‘‘or 

13 36’’ after ‘‘section 35’’. 

14 (2) The table of sections for subpart C of part 

15 IV of subchapter A of chapter 1 of the Internal Rev16 enue Code of 1986 is amended by striking the item 

17 relating to section 36 and inserting the following 

18 new items: 

‘‘Sec. 36. Small business cost of providing health insurance coverage for employees. 

‘‘Sec. 37. Overpayment of taxes’’. 

19 (d) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2007. 

Æ 


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