II 

112TH CONGRESS 

2D SESSION S. 2227 

To amend the Internal Revenue Code of 1986 to expand and simplify the 

credit for employee health insurance expenses of small employers. 

IN THE SENATE OF THE UNITED STATES 

MARCH 22, 2012 

Mr. KERRY (for himself and Ms. LANDRIEU) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to expand 

and simplify the credit for employee health insurance 

expenses of small employers. 

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 ‘‘Small Business Health 

5 Care Tax Credit Improvement Act of 2012’’. 

6 SEC. 2. EXPANSION AND SIMPLIFICATION OF CREDIT FOR 

7 EMPLOYEE HEALTH INSURANCE EXPENSES 

8 OF SMALL EMPLOYERS. 

9 (a) INCREASE IN MAXIMUM NUMBER OF ELIGIBLE

10 FULL-TIME EMPLOYEES.—Subparagraph (A) of section 


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1 45R(d)(1) of the Internal Revenue Code of 1986 is 

2 amended by striking ‘‘25 full-time equivalent employees’’ 

3 and inserting ‘‘50 full-time equivalent employees’’. 

4 (b) MODIFICATION OF PHASEOUT OF CREDIT

5 AMOUNT.— 

6 (1) IN GENERAL.—Subsection (c) of section 

7 45R of such Code is amended to read as follows: 

8 ‘‘(c) PHASEOUT OF CREDIT AMOUNT BASED ON

9 NUMBER OF EMPLOYEES AND AVERAGE WAGES.— 

10 ‘‘(1) IN GENERAL.—The amount of the credit 

11 determined under subsection (b) shall be adjusted by 

12 multiplying— 

13 ‘‘(A) the amount determined under sub14 section (b), by 

15 ‘‘(B) the product of the amount deter16 mined under paragraph (2) and the amount de17 termined under paragraph (3). 

18 ‘‘(2) EMPLOYEE ADJUSTMENT.—The amount 

19 determined under this paragraph is a fraction (not 

20 more than 1) the numerator of which is the number 

21 by which the total number of full-time equivalent 

22 employees of the eligible employer is less than 50 

23 and the denominator of which is 30. 

24 ‘‘(3) WAGES ADJUSTMENT.—The amount deter25 mined under this paragraph is a fraction (not more 


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1 than 1) the numerator of which is the amount by 

2 which the average annual wages of the eligible em3 ployer is less than twice the dollar amount in effect 

4 under subsection (d)(3)(B) and the denominator of 

5 which is such dollar amount.’’. 

6 (2) CONFORMING AMENDMENTS.— 

7 (A) Subsection (a) of section 45R of such 

8 Code is amended by inserting ‘‘, as adjusted 

9 under subsection (c)’’ after ‘‘the amount deter10 mined under subsection (b)’’. 

11 (B) Subsection (b) of section 45R of such 

12 Code is amended by striking ‘‘Subject to sub13 section (c), the’’ and inserting ‘‘The’’. 

14 (C) Subparagraph (B) of section 

15 45R(d)(3) of such Code is amended by striking 

16 ‘‘subsection (c)(2)’’ and inserting ‘‘subsection 

17 (c)(3)’’. 

18 (c) AVERAGE ANNUAL WAGE LIMITATION IN19 CREASE.— 

20 (1) 2012 AND 2013.—Clause (i) of section 

21 45R(d)(3) of such Code is amended to read as fol22 lows: 

23 ‘‘(i) 2010, 2011, 2012, AND 2013.—The 

24 dollar amount in effect under this para25 graph is— 


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1 ‘‘(I) for taxable years beginning 

2 in 2010 or 2011, $25,000, and 

3 ‘‘(II) for taxable years beginning 

4 in 2012 or 2013, $28,500.’’. 

5 (2) SUBSEQUENT YEARS.—Clause (ii) of section 

6 45R(d)(3) of such Code is amended by striking 

7 ‘‘$25,000’’ and inserting ‘‘$28,500’’. 

8 (d) REPEAL OF UNIFORMITY REQUIREMENT FOR

9 CONTRIBUTIONS.—Paragraph (4) of section 45R(d) of 

10 such Code is amended— 

11 (1) by striking ‘‘in an amount equal to a uni12 form percentage (not less than 50 percent) of the 

13 premium cost of the qualified health plan’’, and 

14 (2) by inserting ‘‘(in an amount not less than 

15 50 percent of the premium cost of the qualified 

16 health plan)’’ after ‘‘nonelective contribution’’. 

17 (e) REPEAL OF LIMITATION BASED ON STATE AVER18 AGE PREMIUMS.— 

19 (1) IN GENERAL.—Subsection (b) of section 

20 45R of such Code is amended to read as follows: 

21 ‘‘(b) HEALTH INSURANCE CREDIT AMOUNT.—Sub22 ject to subsection (c), the amount determined under this 

23 subsection with respect to any eligible small employer is 

24 equal to 50 percent (35 percent in the case of a tax-exempt 

25 eligible small employer) of the aggregate amount of nonVerDate Mar 15 2010 04:08 Mar 23, 2012 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2227.IS S2227

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1 elective contributions the employer made on behalf of its 

2 employees during the taxable year under the arrangement 

3 described in subsection (d)(4) for premiums for qualified 

4 health plans offered by the employer to its employees 

5 through an Exchange.’’. 

6 (2) CONFORMING AMENDMENT.—Paragraph (2) 

7 of section 45R(g) of such Code is amended by in8 serting ‘‘and’’ at the end of subparagraph (A), by 

9 striking ‘‘, and’’ at the end of subparagraph (B) and 

10 inserting a period, and by striking subparagraph 

11 (C). 

12 (f) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2011. 

Æ 


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