II 

109TH CONGRESS 

1ST SESSION S. 1178 

To amend the Internal Revenue Code of 1986 to allow individuals a refundable credit against income tax for the purchase of private health insurance. 

IN THE SENATE OF THE UNITED STATES 

JUNE 7, 2005 

Mr. MARTINEZ 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 allow individuals a refundable credit against income tax for the 

purchase of private 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 ‘‘Securing Access, 

5 Value, and Equality in Health Care Act’’. 

6 SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

7 COVERAGE. 

8 (a) IN GENERAL.—Subpart C of part IV of sub9 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. HEALTH INSURANCE COSTS. 

5 ‘‘(a) IN GENERAL.—In the case of an individual, 

6 there shall be allowed as a credit against the tax imposed 

7 by this subtitle an amount equal to the amount paid dur8 ing the taxable year for qualified health insurance for the 

9 taxpayer, his spouse, and dependents. 

10 ‘‘(b) LIMITATIONS.— 

11 ‘‘(1) IN GENERAL.—The amount allowed as a 

12 credit under subsection (a) to the taxpayer for the 

13 taxable year shall not exceed the sum of the monthly 

14 limitations for coverage months during such taxable 

15 year for each individual referred to in subsection (a) 

16 for whom the taxpayer paid during the taxable year 

17 any amount for coverage under qualified health in18 surance. 

19 ‘‘(2) PHASEOUT OF AMOUNT.— 

20 ‘‘(A) REDUCTION BASED ON ADJUSTED

21 GROSS INCOME.—The amount determined under 

22 paragraph (1) for any taxable year shall be re23 duced (but not below zero) by the amount de24 termined under subparagraph (B). 
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1 ‘‘(B) AMOUNT OF REDUCTION.—The 

2 amount determined under this subparagraph 

3 with respect to any amount determined under 

4 paragraph (1) shall be the amount which bears 

5 the same ratio to such amount determined 

6 under paragraph (1) as— 

7 ‘‘(i) the excess of— 

8 ‘‘(I) the taxpayer’s adjusted 

9 gross income for such taxable year, 

10 over 

11 ‘‘(II) the applicable dollar 

12 amount, bears to 

13 ‘‘(ii) $10,000. 

14 The rules of subparagraphs (B) and (C) of sec15 tion 219(g)(2) shall apply to any reduction 

16 under this subparagraph. 

17 ‘‘(C) DEFINITIONS.—For purposes of this 

18 paragraph— 

19 ‘‘(i) adjusted gross income shall be de20 termined in the same manner as under sec21 tion 408A(c)(3)(C)(i), and 

22 ‘‘(ii) the applicable dollar amount is— 

23 ‘‘(I) in the case of a taxpayer fil24 ing a joint return, $105,000, 
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1 ‘‘(II) in the case of any other 

2 taxpayer (other than a married indi3 vidual filing a separate return), 

4 $65,000, and 

5 ‘‘(III) in the case of a married 

6 individual filing a separate return, 

7 zero. 

8 ‘‘(3) MONTHLY LIMITATION.— 

9 ‘‘(A) IN GENERAL.—The monthly limita10 tion for an individual for each coverage month 

11 of such individual during the taxable year is the 

amount equal to 1 12 ⁄12th of— 

13 ‘‘(i) the base amount, plus 

14 ‘‘(ii) 50 percent of the amount paid in 

15 excess of the base amount. 

16 ‘‘(B) BASE AMOUNT.—For purposes of this 

17 paragraph, the base amount is— 

18 ‘‘(i) $1,000 if such individual is the 

19 taxpayer, 

20 ‘‘(ii) $1,000 if— 

21 ‘‘(I) such individual is the spouse 

22 of the taxpayer, 

23 ‘‘(II) the taxpayer and such 

24 spouse are married as of the first day 

25 of such month, and 
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1 ‘‘(III) the taxpayer files a joint 

2 return for the taxable year, and 

3 ‘‘(iii) $500 if such individual is an in4 dividual for whom a deduction under sec5 tion 151(c) is allowable to the taxpayer for 

6 such taxable year. 

7 ‘‘(C) LIMITATION TO 2 DEPENDENTS.—

8 Not more than 2 individuals may be taken into 

9 account by the taxpayer under subparagraph 

10 (B)(iii). 

11 ‘‘(D) SPECIAL RULE FOR MARRIED INDI12 VIDUALS.—In the case of an individual— 

13 ‘‘(i) who is married (within the mean14 ing of section 7703) as of the close of the 

15 taxable year but does not file a joint return 

16 for such year, and 

17 ‘‘(ii) who does not live apart from 

18 such individual’s spouse at all times during 

19 the taxable year, the limitation imposed by 

20 subparagraph (C) shall be divided equally 

21 between the individual and the individual’s 

22 spouse unless they agree on a different di23 vision. 

24 ‘‘(4) COVERAGE MONTH.—For purposes of this 

25 subsection— 
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1 ‘‘(A) IN GENERAL.—The term ‘coverage 

2 month’ means, with respect to an individual, 

3 any month if— 

4 ‘‘(i) as of the first day of such month 

5 such individual is covered by qualified 

6 health insurance, and 

7 ‘‘(ii) the premium for coverage under 

8 such insurance for such month is paid by 

9 the taxpayer. 

10 ‘‘(B) EMPLOYER-SUBSIDIZED COV11 ERAGE.— 

12 ‘‘(i) IN GENERAL.—Such term shall 

13 not include any month for which such indi14 vidual participates in any subsidized health 

15 plan (within the meaning of section 

16 162(l)(2)) maintained by any employer of 

17 the taxpayer or of the spouse of the tax18 payer. 

19 ‘‘(ii) PREMIUMS TO NONSUBSIDIZED

20 PLANS.—If an employer of the taxpayer or 

21 the spouse of the taxpayer maintains a 

22 health plan which is not a subsidized 

23 health plan (as so defined) and which con24 stitutes qualified health insurance, em25 ployee contributions to the plan shall be 
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1 treated as amounts paid for qualified 

2 health insurance. 

3 ‘‘(C) CAFETERIA PLAN AND FLEXIBLE

4 SPENDING ACCOUNT BENEFICIARIES.—Such 

5 term shall not include any month during a tax6 able year if any amount is not includible in the 

7 gross income of the taxpayer for such year 

8 under section 106 with respect to— 

9 ‘‘(i) a benefit chosen under a cafeteria 

10 plan (as defined in section 125(d)), or 

11 ‘‘(ii) a benefit provided under a flexi12 ble spending or similar arrangement. 

13 ‘‘(D) MEDICARE AND MEDICAID.—Such 

14 term shall not include any month with respect 

15 to an individual if, as of the first day of such 

16 month, such individual— 

17 ‘‘(i) is entitled to any benefits under 

18 title XVIII of the Social Security Act, or 

19 ‘‘(ii) is a participant in the program 

20 under title XIX or XXI of such Act. 

21 ‘‘(E) CERTAIN OTHER COVERAGE.—Such 

22 term shall not include any month during a tax23 able year with respect to an individual if, at any 

24 time during such year, any benefit is provided 

25 to such individual under— 
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1 ‘‘(i) chapter 89 of title 5, United 

2 States Code, 

3 ‘‘(ii) chapter 55 of title 10, United 

4 States Code, 

5 ‘‘(iii) chapter 17 of title 38, United 

6 States Code, or 

7 ‘‘(iv) any medical care program under 

8 the Indian Health Care Improvement Act. 

9 ‘‘(F) PRISONERS.—Such term shall not in10 clude any month with respect to an individual 

11 if, as of the first day of such month, such indi12 vidual is imprisoned under Federal, State, or 

13 local authority. 

14 ‘‘(G) INSUFFICIENT PRESENCE IN UNITED

15 STATES.—Such term shall not include any 

16 month during a taxable year with respect to an 

17 individual if such individual is present in the 

18 United States on fewer than 183 days during 

19 such year (determined in accordance with sec20 tion 7701(b)(7)). 

21 ‘‘(5) COORDINATION WITH DEDUCTION FOR

22 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN23 DIVIDUALS.—In the case of a taxpayer who is eligi24 ble to deduct any amount under section 162(l) for 

25 the taxable year, this section shall apply only if the 
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1 taxpayer elects not to claim any amount as a deduc2 tion under such section for such year. 

3 ‘‘(c) REDUCED CREDIT FOR PARTICIPANTS IN

4 HEALTH PLANS OF EMPLOYERS.—In the case of any indi5 vidual who participates in a subsidized health plan (within 

6 the meaning of section 162(l)(2)) maintained by any em7 ployer of the taxpayer or of the spouse of the taxpayer 

8 (not including a cafeteria plan (as defined in section 

9 125(d)), there shall be allowed to the taxpayer one-quarter 

10 of the credit that would be allowed to the taxpayer under 

11 subsection (a) (determined without regard to the partici12 pation in the health plan) if the monthly limitation were 

13 determined without the addition of the amount described 

14 in subsection (b)(3)(A)(ii). 

15 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur16 poses of this section— 

17 ‘‘(1) IN GENERAL.—The term ‘qualified health 

18 insurance’ means insurance which constitutes med19 ical care as defined in section 213(d) without regard 

20 to— 

21 ‘‘(A) paragraph (1)(C) thereof, and 

22 ‘‘(B) so much of paragraph (1)(D) thereof 

23 as relates to qualified long-term care insurance 

24 contracts. 
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1 ‘‘(2) EXCLUSION OF CERTAIN OTHER CON2 TRACTS.—Such term shall not include insurance if a 

3 substantial portion of its benefits are excepted bene4 fits (as defined in section 9832(c)). 

5 ‘‘(e) MEDICAL SAVINGS ACCOUNT AND HEALTH SAV6 INGS ACCOUNT CONTRIBUTIONS.— 

7 ‘‘(1) IN GENERAL.—If a deduction would (but 

8 for paragraph (2)) be allowed under section 220 or 

9 223 to the taxpayer for a payment for the taxable 

10 year to the medical savings account or health sav11 ings account of an individual, subsection (a) shall be 

12 applied by treating such payment as a payment for 

13 qualified health insurance for such individual. 

14 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc15 tion shall be allowed under section 220 or 223 for 

16 that portion of the payments otherwise allowable as 

17 a deduction under section 220 or 223 for the taxable 

18 year which is equal to the amount of credit allowed 

19 for such taxable year by reason of this subsection. 

20 ‘‘(f) SPECIAL RULES.— 

21 ‘‘(1) COORDINATION WITH MEDICAL EXPENSE

22 DEDUCTION.—The amount which would (but for this 

23 paragraph) be taken into account by the taxpayer 

24 under section 213 for the taxable year shall be re-
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1 duced by the credit (if any) allowed by this section 

2 to the taxpayer for such year. 

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

4 credit shall be allowed under this section to any indi5 vidual with respect to whom a deduction under sec6 tion 151 is allowable to another taxpayer for a tax7 able year beginning in the calendar year in which 

8 such individual’s taxable year begins. 

9 ‘‘(3) DENIAL OF DOUBLE BENEFIT.—No credit 

10 shall be allowed under subsection (a) if the credit 

11 under section 35 is allowed and no credit shall be al12 lowed under 35 if a credit is allowed under this sec13 tion 35. 

14 ‘‘(4) ELECTION NOT TO CLAIM CREDIT.—This 

15 section shall not apply to a taxpayer for any taxable 

16 year if such taxpayer elects to have this section not 

17 apply for such taxable year. 

18 ‘‘(5) INFLATION ADJUSTMENT.—In the case of 

19 any taxable year beginning in a calendar year after 

20 2006, each dollar amount contained in subsection 

21 (b)(3)(B) shall be increased by an amount equal 

22 to— 

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

24 ‘‘(B) the cost-of-living adjustment deter25 mined under section 1(f)(3) for the calendar 
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1 year in which the taxable year begins, deter2 mined by substituting ‘calendar year 2005’ for 

3 ‘calendar year 1992’ in subparagraph (B) 

4 thereof. 

5 Any increase determined under the preceding sen6 tence shall be rounded to the nearest multiple of $50 

7 ($25 in the case of the dollar amount in subsection 

8 (b)(3)(B)(iii)).’’. 

9 (b) INFORMATION REPORTING.— 

10 (1) IN GENERAL.—Subpart B of part III of 

11 subchapter A of chapter 61 of such Code (relating 

12 to information concerning transactions with other 

13 persons) is amended by inserting after section 

14 6050T the following new section: 

15 ‘‘SEC. 6050U. RETURNS RELATING TO PAYMENTS FOR 

16 QUALIFIED HEALTH INSURANCE. 

17 ‘‘(a) IN GENERAL.—Any person who, in connection 

18 with a trade or business conducted by such person, re19 ceives payments during any calendar year from any indi20 vidual for coverage of such individual or any other indi21 vidual under creditable health insurance, shall make the 

22 return described in subsection (b) (at such time as the 

23 Secretary may by regulations prescribe) with respect to 

24 each individual from whom such payments were received. 
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1 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

2 is described in this subsection if such return— 

3 ‘‘(1) is in such form as the Secretary may pre4 scribe, and 

5 ‘‘(2) contains— 

6 ‘‘(A) the name, address, and TIN of the 

7 individual from whom payments described in 

8 subsection (a) were received, 

9 ‘‘(B) the name, address, and TIN of each 

10 individual who was provided by such person 

11 with coverage under creditable health insurance 

12 by reason of such payments and the period of 

13 such coverage, and 

14 ‘‘(C) such other information as the Sec15 retary may reasonably prescribe. 

16 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur17 poses of this section, the term ‘creditable health insurance’ 

18 means qualified health insurance (as defined in section 

19 36(d)) other than— 

20 ‘‘(1) insurance under a subsidized group health 

21 plan maintained by an employer, or 

22 ‘‘(2) to the extent provided in regulations pre23 scribed by the Secretary, any other insurance cov24 ering an individual if no credit is allowable under 

25 section 36 with respect to such coverage. 
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1 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID2 UALS WITH RESPECT TO WHOM INFORMATION IS RE3 QUIRED.—Every person required to make a return under 

4 subsection (a) shall furnish to each individual whose name 

5 is required under subsection (b)(2)(A) to be set forth in 

6 such return a written statement showing— 

7 ‘‘(1) the name and address of the person re8 quired to make such return and the phone number 

9 of the information contact for such person, 

10 ‘‘(2) the aggregate amount of payments de11 scribed in subsection (a) received by the person re12 quired to make such return from the individual to 

13 whom the statement is required to be furnished, and 

14 ‘‘(3) the information required under subsection 

15 (b)(2)(B) with respect to such payments. 

16 The written statement required under the preceding sen17 tence shall be furnished on or before January 31 of the 

18 year following the calendar year for which the return 

19 under subsection (a) is required to be made. 

20 ‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE

21 MADE BY 2 OR MORE PERSONS.—Except to the extent 

22 provided in regulations prescribed by the Secretary, in the 

23 case of any amount received by any person on behalf of 

24 another person, only the person first receiving such 
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1 amount shall be required to make the return under sub2 section (a).’’. 

3 (2) ASSESSABLE PENALTIES.— 

4 (A) Subparagraph (B) of section 

5 6724(d)(1) of such Code (relating to defini6 tions) is amended by redesignating clauses (xii) 

7 through (xviii) as clauses (xiii) through (xix), 

8 respectively, and by inserting after clause (xi) 

9 the following new clause: 

10 ‘‘(xii) section 6050U (relating to re11 turns relating to payments for qualified 

12 health insurance),’’. 

13 (B) Paragraph (2) of section 6724(d) of 

14 such Code is amended by striking ‘‘or’’ at the 

15 end of the next to last subparagraph, by strik16 ing the period at the end of the last subpara17 graph and inserting ‘‘, or’’, and by adding at 

18 the end the following new subparagraph: 

19 ‘‘(CC) section 6050U(d) (relating to re20 turns relating to payments for qualified health 

21 insurance).’’. 

22 (3) CLERICAL AMENDMENT.—The table of sec23 tions for subpart B of part III of subchapter A of 

24 chapter 61 of such Code is amended by inserting 
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1 after the item relating to section 6050T the fol2 lowing new item:

‘‘Sec. 6050U. Returns relating to payments for qualified health insurance.’’.

3 (c) CONFORMING AMENDMENTS.— 

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

5 31, United States Code, is amended by inserting be6 fore the period ‘‘, or from section 36 of such Code’’. 

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

8 IV of subchapter A of chapter 1 of such Code is 

9 amended by striking the last item and inserting the 

10 following new items:

‘‘Sec. 36. Health insurance costs. 

‘‘Sec. 37. Overpayments of tax.’’.

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

12 this section shall apply to taxable years beginning after 

13 December 31, 2005. 

14 SEC. 3. ADVANCE PAYMENT OF CREDIT FOR PURCHASERS 

15 OF QUALIFIED HEALTH INSURANCE. 

16 (a) IN GENERAL.—Chapter 77 of the Internal Rev17 enue Code of 1986 (relating to miscellaneous provisions) 

18 is amended by adding at the end the following new section: 

19 ‘‘SEC. 7529. ADVANCE PAYMENT OF HEALTH INSURANCE 

20 CREDIT FOR PURCHASERS OF QUALIFIED 

21 HEALTH INSURANCE. 

22 ‘‘(a) GENERAL RULE.—In the case of an eligible indi23 vidual, the Secretary shall make payments to the provider 
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1 of such individual’s qualified health insurance equal to 

2 such individual’s qualified health insurance credit advance 

3 amount with respect to such provider. 

4 ‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this 

5 section, the term ‘eligible individual’ means any indi6 vidual— 

7 ‘‘(1) who purchases qualified health insurance 

8 (as defined in section 36(d)), and 

9 ‘‘(2) for whom a qualified health insurance 

10 credit eligibility certificate is in effect. 

11 ‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI12 BILITY CERTIFICATE.—For purposes of this section, a 

13 qualified health insurance credit eligibility certificate is a 

14 statement furnished by an individual to the Secretary 

15 which— 

16 ‘‘(1) certifies that the individual will be eligible 

17 to receive the credit provided by section 36 for the 

18 taxable year, 

19 ‘‘(2) estimates the amount of such credit for 

20 such taxable year, and 

21 ‘‘(3) provides such other information as the 

22 Secretary may require for purposes of this section. 

23 ‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT AD24 VANCE AMOUNT.—For purposes of this section, the term 

25 ‘qualified health insurance credit advance amount’ means, 
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1 with respect to any provider of qualified health insurance, 

2 the Secretary’s estimate of the amount of credit allowable 

3 under section 36 to the individual for the taxable year 

4 which is attributable to the insurance provided to the indi5 vidual by such provider. 

6 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

7 such regulations as may be necessary to carry out the pur8 poses of this section.’’. 

9 (b) CLERICAL AMENDMENT.—The table of sections 

10 for chapter 77 of such Code is amended by adding at the 

11 end the following new item:

‘‘Sec. 7529. Advance payment of health insurance credit for purchasers of 

qualified health insurance.’’.

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

13 this section shall apply to taxable year beginning after the 

14 date of the enactment of this Act.

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