II 

113TH CONGRESS 

1ST SESSION S. 728 

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

gross income for employer-provided health coverage for employees’ 

spouses and dependent children to coverage provided to other eligible 

designated beneficiaries of employees. 

IN THE SENATE OF THE UNITED STATES 

APRIL 15, 2013 

Mr. SCHUMER (for himself, Ms. COLLINS, and Mr. CARDIN) 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 for employees’ spouses and dependent 

children to coverage provided to other eligible designated 

beneficiaries of employees. 

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 ‘‘Tax Parity for Health 

5 Plan Beneficiaries Act of 2013’’. 


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1 SEC. 2. APPLICATION OF ACCIDENT AND HEALTH PLANS 

2 TO ELIGIBLE BENEFICIARIES. 

3 (a) EXCLUSION OF CONTRIBUTIONS.—Section 106 of 

4 the Internal Revenue Code of 1986 is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(g) COVERAGE PROVIDED FOR ELIGIBLE BENE7 FICIARIES OF EMPLOYEES.— 

8 ‘‘(1) IN GENERAL.—Subsection (a) shall apply 

9 with respect to employer-provided coverage under an 

10 accident or health plan for any eligible beneficiary of 

11 the employee. 

12 ‘‘(2) ELIGIBLE BENEFICIARY.—For purposes of 

13 this subsection, the term ‘eligible beneficiary’ means 

14 any individual who is eligible to receive benefits or 

15 coverage under an accident or health plan.’’. 

16 (b) EXCLUSION OF AMOUNTS EXPENDED FOR MED17 ICAL CARE.—The first sentence of section 105(b) of the 

18 Internal Revenue Code of 1986 is amended— 

19 (1) by striking ‘‘and any child’’ and inserting 

20 ‘‘any child’’, and 

21 (2) by inserting ‘‘, and any eligible beneficiary 

22 (within the meaning of section 106(g)) with respect 

23 to the taxpayer’’ after ‘‘age 27’’. 

24 (c) PAYROLL TAXES.— 

25 (1) Section 3121(a)(2) of the Internal Revenue 

26 Code of 1986 is amended— 


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1 (A) by striking ‘‘or any of his dependents’’ 

2 in the matter preceding subparagraph (A) and 

3 inserting ‘‘, any of his dependents, or any eligi4 ble beneficiary (within the meaning of section 

5 106(g)) with respect to the employee’’, 

6 (B) by striking ‘‘or any of his dependents,’’ 

7 in subparagraph (A) and inserting ‘‘, any of his 

8 dependents, or any eligible beneficiary (within 

9 the meaning of section 106(g)) with respect to 

10 the employee,’’, and 

11 (C) by striking ‘‘and their dependents’’ 

12 both places it appears and inserting ‘‘and such 

13 employees’ dependents and eligible beneficiaries 

14 (within the meaning of section 106(g))’’. 

15 (2) Section 3231(e)(1) of such Code is amend16 ed— 

17 (A) by striking ‘‘or any of his dependents’’ 

18 and inserting ‘‘, any of his dependents, or any 

19 eligible beneficiary (within the meaning of sec20 tion 106(g)) with respect to the employee,’’, 

21 and 

22 (B) by striking ‘‘and their dependents’’ 

23 both places it appears and inserting ‘‘and such 

24 employees’ dependents and eligible beneficiaries 

25 (within the meaning of section 106(g))’’. 


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1 (3) Section 3306(b)(2) of such Code is amend2 ed— 

3 (A) by striking ‘‘or any of his dependents’’ 

4 in the matter preceding subparagraph (A) and 

5 inserting ‘‘, any of his dependents, or any eligi6 ble beneficiary (within the meaning of section 

7 106(g)) with respect to the employee,’’, 

8 (B) by striking ‘‘or any of his dependents’’ 

9 in subparagraph (A) and inserting ‘‘, any of his 

10 dependents, or any eligible beneficiary (within 

11 the meaning of section 106(g)) with respect to 

12 the employee’’, and 

13 (C) by striking ‘‘and their dependents’’ 

14 both places it appears and inserting ‘‘and such 

15 employees’ dependents and eligible beneficiaries 

16 (within the meaning of section 106(g))’’. 

17 (4) Section 3401(a) of such Code is amended 

18 by striking ‘‘or’’ at the end of paragraph (22), by 

19 striking the period at the end of paragraph (23) and 

20 inserting ‘‘; or’’, and by inserting after paragraph 

21 (23) the following new paragraph: 

22 ‘‘(24) for any payment made to or for the ben23 efit of an employee or any eligible beneficiary (within 

24 the meaning of section 106(g)) if at the time of such 

25 payment it is reasonable to believe that the employee 


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1 will be able to exclude such payment from income 

2 under section 106 or under section 105 by reference 

3 in section 105(b) to section 106(g).’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2013. 

7 SEC. 3. EXPANSION OF DEPENDENCY FOR PURPOSES OF 

8 DEDUCTION FOR HEALTH INSURANCE COSTS 

9 OF SELF-EMPLOYED INDIVIDUALS. 

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

11 of the Internal Revenue Code of 1986 is amended by strik12 ing ‘‘and’’ at the end of subparagraph (C), by striking the 

13 period at the end of subparagraph (D) and inserting a 

14 comma and by adding at the end the following new sub15 paragraphs: 

16 ‘‘(E) any individual who— 

17 ‘‘(i) satisfies the age requirements of 

18 section 152(c)(3)(A), 

19 ‘‘(ii) bears a relationship to the tax20 payer described in section 152(d)(2)(H), 

21 and 

22 ‘‘(iii) meets the requirements of sec23 tion 152(d)(1)(C), and 

24 ‘‘(F) one individual who— 

25 ‘‘(i) is at least age 19, 


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1 ‘‘(ii) bears a relationship to the tax2 payer described in section 152(d)(2)(H), 

3 and 

4 ‘‘(iii) is not the spouse of the taxpayer 

5 and does not bear any relationship to the 

6 taxpayer described in subparagraphs (A) 

7 through (G) of section 152(d)(2).’’. 

8 (b) CONFORMING AMENDMENT.—Subparagraph (B) 

9 of section 162(l)(2) of such Code is amended by inserting 

10 ‘‘, (E), or (F)’’ after ‘‘subparagraph (D)’’. 

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

12 this section shall apply to taxable years beginning after 

13 December 31, 2013. 

14 SEC. 4. EXTENSION TO ELIGIBLE BENEFICIARIES OF SICK 

15 AND ACCIDENT BENEFITS PROVIDED TO 

16 MEMBERS OF A VOLUNTARY EMPLOYEES’ 

17 BENEFICIARY ASSOCIATION AND THEIR DE18 PENDENTS. 

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

20 Revenue Code of 1986 is amended by inserting : ‘‘and any 

21 individual who is an eligible beneficiary (within the mean22 ing of section 106(g)), as determined under the terms of 

23 a medical benefit, health insurance, or other program’’ 

24 after ‘‘age 27’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2013. 

4 SEC. 5. FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH 

5 REIMBURSEMENT ARRANGEMENTS. 

6 The Secretary of Treasury shall issue guidance of 

7 general applicability within 180 days after the date of the 

8 enactment of this Act providing that medical expenses that 

9 otherwise qualify— 

10 (1) for reimbursement from a flexible spending 

11 arrangement under regulations in effect on such 

12 date of enactment may be reimbursed from an em13 ployee’s flexible spending arrangement, notwith14 standing the fact that such expenses are attributable 

15 to any individual who is not the employee’s spouse 

16 or dependent (within the meaning of section 105(b) 

17 of the Internal Revenue Code of 1986) but is an eli18 gible beneficiary (within the meaning of section 

19 106(g) of such Code) under the flexible spending ar20 rangement with respect to the employee, and 

21 (2) for reimbursement from a health reimburse22 ment arrangement under regulations in effect on 

23 such date of enactment may be reimbursed from an 

24 employee’s health reimbursement arrangement, not25 withstanding the fact that such expenses are attribVerDate Mar 15 2010 04:22 Apr 19, 2013 Jkt 029200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S728.IS S728

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1 utable to an individual who is not a spouse or de2 pendent (within the meaning of section 105(b) of 

3 such Code) but is an eligible beneficiary (within the 

4 meaning of section 106(g) of such Code) under the 

5 health reimbursement arrangement with respect to 

6 the employee. 

7 SEC. 6. EXTENSION OF QUALIFIED MEDICAL EXPENSES 

8 FROM HEALTH SAVINGS ACCOUNTS. 

9 (a) IN GENERAL.—Subparagraph (A) of section 

10 223(d)(2) of the Internal Revenue Code of 1986 is amend11 ed— 

12 (1) by striking ‘‘and any dependent’’ and in13 serting ‘‘any dependent’’, and 

14 (2) by inserting ‘‘, and any qualified bene15 ficiary’’ after ‘‘thereof)’’. 

16 (b) QUALIFIED BENEFICIARY.—Paragraph (2) of 

17 section 223(d) of the Internal Revenue Code of 1986 is 

18 amended by adding at the end the following new subpara19 graph: 

20 ‘‘(D) QUALIFIED BENEFICIARY.—For pur21 poses of subparagraph (A), the term ‘qualified 

22 beneficiary’ means any individual who is de23 scribed in subparagraph (D) or (E) of section 

24 162(l)(1).’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2013. 

4 SEC. 7. EXTENSION OF FUNDING MECHANISM FOR MED5 ICAL BENEFITS FOR RETIREES AND THEIR 

6 FAMILIES. 

7 (a) IN GENERAL.—Section 401(h) of the Internal 

8 Revenue Code of 1986 is amended by inserting ‘‘, and any 

9 eligible beneficiary (within the meaning of section 106(g)) 

10 of the retired employee’’ after ‘‘age 27’’. 

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

12 this section shall apply to taxable years beginning after 

13 December 31, 2013. 

Æ 


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