I 

110TH CONGRESS 

1ST SESSION H. R. 2737 

To amend the Internal Revenue Code of 1986 to allow previously uninsured 

individuals a refundable credit for health insurance costs and to provide 

tax incentives to encourage small business health plans. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 15, 2007 

Mr. BOSWELL (for himself and Mr. BISHOP of Georgia) 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 allow previously uninsured individuals a refundable credit for 

health insurance costs and to provide tax incentives to 

encourage small business health plans. 

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 ‘‘Health Care Relief 

5 Act of 2007’’. 

mstockstill on PROD1PC66 with BILLS

2 

•HR 2737 IH

1 SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

2 COSTS OF PREVIOUSLY UNINSURED INDIVID3 UALS. 

4 (a) ALLOWANCE OF CREDIT.— 

5 (1) IN GENERAL.—Subpart C of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code 

7 of 1986 (relating to refundable personal credits) is 

8 amended by redesignating section 36 as section 37 

9 and by inserting after section 35 the following new 

10 section: 

11 ‘‘SEC. 36. HEALTH INSURANCE COSTS OF PREVIOUSLY UN12 INSURED INDIVIDUALS. 

13 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a pre14 viously uninsured individual, there shall be allowed as a 

15 credit against the tax imposed by this subtitle for the tax16 able year an amount equal to the amount paid by the tax17 payer during such taxable year for health insurance cov18 erage for the taxpayer and the taxpayer’s spouse and de19 pendents. 

20 ‘‘(b) LIMITATION.—The amount allowed as a credit 

21 under subsection (a) for the taxable year shall not exceed 

22 $1,000 ($2,000 in the case of a joint return filed by 2 

23 previously uninsured individuals). 

24 ‘‘(c) DEFINITIONS.—For purposes of this section— 

25 ‘‘(1) PREVIOUSLY UNINSURED INDIVIDUAL.— 

26 The term ‘previously uninsured individual’ means 

mstockstill on PROD1PC66 with BILLS

3 

•HR 2737 IH

1 any individual who had no health insurance coverage 

2 at any time during the 6-month period before the 

3 earliest date that such individual has health insur4 ance coverage by reason of the payments taken into 

5 account under subsection (a). 

6 ‘‘(2) HEALTH INSURANCE COVERAGE.—The 

7 term ‘health insurance coverage’ has the meaning 

8 given to such term by section 9832(b)(1). 

9 ‘‘(d) SPECIAL RULES.— 

10 ‘‘(1) COORDINATION WITH OTHER BENEFITS.— 

11 The amount which would (but for this paragraph) be 

12 taken into account by the taxpayer under sections 

13 35, 162(l), 213, 220, or 223 for the taxable year 

14 shall be reduced by the credit allowed by this section 

15 to the taxpayer for such year. 

16 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No 

17 credit shall be allowed under this section to any indi18 vidual with respect to whom a deduction under sec19 tion 151 is allowable to another taxpayer for a tax20 able year beginning in the calendar year in which 

21 such individual’s taxable year begins.’’. 

22 (b) CONFORMING AMENDMENTS.— 

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

24 31, United States Code, is amended by inserting ‘‘, 

25 36,’’ after ‘‘35’’. 

mstockstill on PROD1PC66 with BILLS

4 

•HR 2737 IH

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

2 IV of subchapter A of chapter 1 of the Internal Rev3 enue Code of 1986 is amended by striking the last 

4 item and inserting the following: 

‘‘Sec. 36. Health insurance costs of previously uninsured individuals. 

‘‘Sec. 37. Overpayments of tax.’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to taxable years beginning after 

7 December 31, 2007. 

8 SEC. 3. CREDIT FOR HEALTH INSURANCE EXPENSES OF 

9 SMALL BUSINESSES. 

10 (a) IN GENERAL.—Subpart D of part IV of sub11 chapter A of chapter 1 of the Internal Revenue Code of 

12 1986 (relating to business-related credits) is amended by 

13 adding at the end the following: 

14 ‘‘SEC. 45O. SMALL BUSINESS HEALTH INSURANCE EX15 PENSES. 

16 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

17 in the case of a small employer, the health insurance credit 

18 determined under this section for the taxable year is an 

19 amount equal to 35 percent of the expenses paid by the 

20 taxpayer during the taxable year for health insurance cov21 erage for such year provided under a new health plan for 

22 employees of such employer. 

23 ‘‘(b) LIMITATIONS.— 

mstockstill on PROD1PC66 with BILLS

5 

•HR 2737 IH

1 ‘‘(1) PER EMPLOYEE DOLLAR LIMITATION.— 

2 The amount of expenses taken into account under 

3 subsection (a) with respect to any employee for any 

4 taxable year shall not exceed— 

5 ‘‘(A) $800 in the case of self-only coverage, 

6 and 

7 ‘‘(B) $2,000 in the case of family coverage. 

8 In the case of an employee who is covered by a new 

9 health plan of the employer for only a portion of 

10 such taxable year, the limitation under the preceding 

11 sentence shall be an amount which bears the same 

12 ratio to such limitation (determined without regard 

13 to this sentence) as such portion bears to the entire 

14 taxable year. 

15 ‘‘(2) PERIOD OF COVERAGE.—Expenses may be 

16 taken into account under subsection (a) only with 

17 respect to coverage for the 4-year period beginning 

18 on the date the employer establishes a new health 

19 plan. 

20 ‘‘(3) EMPLOYER MUST BEAR 65 PERCENT OF

21 COST.—Expenses may be taken into account under 

22 subsection (a) only if at least 65 percent of the cost 

23 of the coverage (without regard to this section) is 

24 borne by the employer. 

25 ‘‘(c) DEFINITIONS.—For purposes of this section— 

mstockstill on PROD1PC66 with BILLS

6 

•HR 2737 IH

1 ‘‘(1) HEALTH INSURANCE COVERAGE.—The 

2 term ‘health insurance coverage’ has the meaning 

3 given such term by section 9832(b)(1). 

4 ‘‘(2) NEW HEALTH PLAN.— 

5 ‘‘(A) IN GENERAL.—The term ‘new health 

6 plan’ means any arrangement of the employer 

7 which provides health insurance coverage to em8 ployees if— 

9 ‘‘(i) such employer (and any prede10 cessor employer) did not establish or main11 tain such arrangement (or any similar ar12 rangement) at any time during the 2 tax13 able years ending prior to the taxable year 

14 in which the credit under this section is 

15 first allowed, and 

16 ‘‘(ii) such arrangement provides 

17 health insurance coverage to at least 70 

18 percent of the qualified employees of such 

19 employer. 

20 ‘‘(B) QUALIFIED EMPLOYEE.—The term 

21 ‘qualified employee’ means any employee of an 

22 employer and shall include a leased employee 

23 within the meaning of section 414(n). 

mstockstill on PROD1PC66 with BILLS

7 

•HR 2737 IH

1 ‘‘(3) SMALL EMPLOYER.—The term ‘small em2 ployer’ has the meaning given to such term by sec3 tion 4980D(d)(2); except that— 

4 ‘‘(A) only qualified employees shall be 

5 taken into account, and 

6 ‘‘(B) such section shall be applied by sub7 stituting ‘100 employees’ for ‘50 employees’. 

8 ‘‘(d) SPECIAL RULES.— 

9 ‘‘(1) CERTAIN RULES MADE APPLICABLE.—For 

10 purposes of this section, rules similar to the rules of 

11 section 52 shall apply. 

12 ‘‘(2) AMOUNTS PAID UNDER SALARY REDUC13 TION ARRANGEMENTS.—No amount paid or incurred 

14 pursuant to a salary reduction arrangement shall be 

15 taken into account under subsection (a). 

16 ‘‘(3) INFLATION ADJUSTMENT.—In the case of 

17 any taxable year beginning in a calendar year after 

18 2008, each dollar amount contained in subsection 

19 (b) shall be increased by an amount equal to— 

20 ‘‘(A) such dollar amount, multiplied by 

21 ‘‘(B) the cost-of-living adjustment deter22 mined under section 1(f)(3) for the calendar 

23 year in which the taxable year begins, deter24 mined by substituting ‘calendar year 2006’ for 

mstockstill on PROD1PC66 with BILLS

8 

•HR 2737 IH

1 ‘calendar year 1992’ in subparagraph (B) 

2 thereof. 

3 Any increase determined under the preceding sen4 tence shall be rounded to the nearest multiple of 

5 $50. 

6 ‘‘(e) TERMINATION.—This section shall not apply to 

7 expenses paid or incurred by an employer with respect to 

8 any arrangement established on or after January 1, 

9 2014.’’. 

10 (b) CREDIT TO BE PART OF GENERAL BUSINESS

11 CREDIT.—Section 38(b) of such Code (relating to current 

12 year business credit) is amended by striking ‘‘plus’’ at the 

13 end of paragraph (30), by striking the period at the end 

14 of paragraph (31) and inserting ‘‘, plus’’, and by adding 

15 at the end the following: 

16 ‘‘(32) in the case of a small employer (as de17 fined in section 45O(c)(3)), the health insurance 

18 credit determined under section 45O(a).’’. 

19 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C of 

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

21 new subsection: 

22 ‘‘(e) CREDIT FOR SMALL BUSINESS HEALTH INSUR23 ANCE EXPENSES.— 

24 ‘‘(1) IN GENERAL.—No deduction shall be al25 lowed for that portion of the expenses (otherwise almstockstill on PROD1PC66 with BILLS

9 

•HR 2737 IH

1 lowable as a deduction) taken into account in deter2 mining the credit under section 45O for the taxable 

3 year which is equal to the amount of the credit de4 termined for such taxable year under section 

5 45O(a). 

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

7 as a single employer under subsection (a) or (b) of 

8 section 52 shall be treated as 1 person for purposes 

9 of this section.’’. 

10 (d) CLERICAL AMENDMENT.—The table of sections 

11 for subpart D of part IV of subchapter A of chapter 1 

12 of such Code is amended by adding at the end the fol13 lowing: 

‘‘Sec. 45O. Small business health insurance expenses.’’. 

14 (e) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to amounts paid or incurred in tax16 able years beginning after December 31, 2007, for ar17 rangements established after the date of the enactment 

18 of this Act. 

Æ 

mstockstill on PROD1PC66 with BILLS