II 

109TH CONGRESS 

1ST SESSION S. 1360 

To amend the Internal Revenue Code of 1986 to extend the exclusion from 

gross income for employer-provided health coverage to designated plan 

beneficiaries of employees, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 30, 2005 

Mr. SMITH (for himself, Mr. SCHUMER, Mr. JEFFORDS, and Mr. WYDEN) 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 extend 

the exclusion from gross income for employer-provided 

health coverage to designated plan beneficiaries of employees, and for other purposes.

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 ‘‘Domestic Partner 

5 Health Benefits Equity Act’’. 
2

•S 1360 IS

1 SEC. 2. EXTENSION OF EXCLUSION FOR AMOUNTS RE2 CEIVED BY AN EMPLOYEE THROUGH ACCI3 DENT OR HEALTH INSURANCE AS REIM4 BURSEMENT FOR EXPENSES FOR MEDICAL 

5 CARE. 

6 (a) IN GENERAL.—Section 105(b) of the Internal 

7 Revenue Code of 1986 (relating to amounts expended for 

8 medical care) is amended by adding at the end the fol9 lowing new sentence: ‘‘For the purposes of this subsection, 

10 the term ‘dependents’ shall include any individual who is 

11 an eligible beneficiary as defined in the employer’s acci12 dent or health insurance arrangement.’’ 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2005. 

16 SEC. 3. EXTENSION OF EXCLUSION FOR CONTRIBUTIONS 

17 BY EMPLOYER TO ACCIDENT AND HEALTH 

18 PLANS. 

19 (a) IN GENERAL.—Section 106 of the Internal Rev20 enue Code of 1986 (relating to contributions by employer 

21 to accident and health plans) is amended by adding at the 

22 end the following new subsection: 

23 ‘‘(e) COVERAGE PROVIDED FOR ELIGIBLE BENE24 FICIARIES OF EMPLOYEES.—Subsection (a) shall not fail 

25 to apply by reason of the coverage of an eligible beneficiary 

26 as defined in the employer’s accident or health plan.’’. 
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•S 1360 IS

1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2005. 

4 SEC. 4. EXTENSION OF DEDUCTION FOR HEALTH INSUR5 ANCE COSTS OF SELF-EMPLOYED INDIVID6 UALS. 

7 (a) IN GENERAL.—Paragraph (1) of section 162(l) 

8 of the Internal Revenue Code of 1986 (relating to special 

9 rules for health insurance costs of self-employed individ10 uals) is amended to read as follows: 

11 ‘‘(1) ALLOWANCE OF DEDUCTION.—In the case 

12 of an individual who is an employee within the 

13 meaning of section 401(c)(1), there shall be allowed 

14 as a deduction under this section an amount equal 

15 to the amount paid during the taxable year for in16 surance which constitutes medical care for the tax17 payer, his spouse, and dependents. For the purposes 

18 of this subparagraph, the term ‘dependents’ shall in19 clude any individual who is an eligible beneficiary as 

20 defined in the insurance arrangement which con21 stitutes medical care.’’. 

22 (b) EFFECTIVE DATE.—The amendment made by 

23 this section shall apply to taxable years beginning after 

24 December 31, 2005. 
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•S 1360 IS

1 SEC. 5. EXTENSION OF SICK AND ACCIDENT BENEFITS PRO2 VIDED TO MEMBERS OF A VOLUNTARY EM3 PLOYEES’ BENEFICIARY ASSOCIATION AND 

4 THEIR DEPENDENTS. 

5 (a) IN GENERAL.—Section 501(c)(9) of the Internal 

6 Revenue Code of 1986 (relating to list of exempt organiza7 tions) is amended by adding at the end the following new 

8 sentence: ‘‘For purposes of providing for the payment of 

9 sick and accident benefits to members of such an associa10 tion and their dependents, the term ‘dependents’ shall in11 clude any individual who is an eligible beneficiary as deter12 mined under the terms of a medical benefit, health insur13 ance, or other program under which members and their 

14 dependents are entitled to sick and accident benefits.’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to taxable years beginning after 

17 December 31, 2005. 

18 SEC. 6. AMENDMENTS TO VARIOUS DEFINITIONS. 

19 (a) FICA.— 

20 (1) IN GENERAL.—Section 3121 of the Internal 

21 Revenue Code of 1986 (relating to definitions) is 

22 amended by adding at the end the following new 

23 subsection: 

24 ‘‘(z) EXCLUSION OF CERTAIN AMOUNTS FROM

25 WAGES.—For purposes of applying subsection (a) with re26 spect to expenses described in paragraph (2)(B) of such 
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•S 1360 IS

1 subsection, the term ‘dependents’ shall include any indi2 vidual who is an eligible beneficiary as defined in the plan 

3 or system established by the employer.’’. 

4 (2) CONFORMING AMENDMENT.—Section 209 

5 of the Social Security Act (42 U.S.C. 409) is amend6 ed by adding at the end the following new sub7 section: 

8 ‘‘(l) For purposes of applying subsection (a) with re9 spect to medical or hospitalization expenses described in 

10 paragraph (2) thereof, the term ‘dependents’ shall include 

11 any individual who is an eligible beneficiary as defined in 

12 the plan or system established by the employer.’’. 

13 (b) RAILROAD RETIREMENT.— 

14 (1) IN GENERAL.—Section 3231(e) of the Inter15 nal Revenue Code of 1986 (defining compensation) 

16 is amended by adding at the end the following new 

17 paragraph: 

18 ‘‘(13) TREATMENT OF CERTAIN DEPEND19 ENTS.—For purposes of applying this subsection 

20 with respect to medical or hospitalization expenses 

21 described in paragraph (1)(I), the term ‘dependents’ 

22 shall include any individual who is an eligible bene23 ficiary as defined in the plan or system established 

24 by the employer.’’. 
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•S 1360 IS

1 (2) CONFORMING AMENDMENT.—Section 1(h) 

2 of the Railroad Retirement Act of 1974 (45 U.S.C. 

3 231(h)) is amended by adding at the end the fol4 lowing new paragraph: 

5 ‘‘(9) For purposes of applying this subsection, with 

6 respect to medical or hospitalization expenses described in 

7 paragraph (6)(v), the term ‘dependents’ shall include any 

8 individual who is an eligible beneficiary as defined in the 

9 plan or system established by the employer.’’. 

10 (c) FUTA.—Section 3306 of the Internal Revenue 

11 Code of 1986 (relating to definitions) is amended by add12 ing at the end the following new subsection: 

13 ‘‘(v) EXCLUSION OF CERTAIN AMOUNTS FROM

14 WAGES.—For purposes of applying subsection (b) with re15 spect to expenses described in paragraph (2)(B) of such 

16 subsection, the term ‘dependents’ shall include any indi17 vidual who is an eligible beneficiary as defined in the plan 

18 or system established by the employer.’’. 

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

20 this section shall apply to remuneration paid after Decem21 ber 31, 2005.

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