I 

112TH CONGRESS 

1ST SESSION H. R. 2088 

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 HOUSE OF REPRESENTATIVES 

JUNE 2, 2011 

Mr. MCDERMOTT (for himself, Mr. HANNA, Ms. HAYWORTH, and Mr. 

BLUMENAUER) 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 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 2011’’. 


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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 (relating to contribu5 tions by employer to accident and health plans) is amend6 ed by adding at the end the following new subsection: 

7 ‘‘(g) COVERAGE PROVIDED FOR ELIGIBLE BENE8 FICIARIES OF EMPLOYEES.— 

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

10 with respect to employer-provided coverage under an 

11 accident or health plan for any eligible beneficiary of 

12 the employee. 

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

14 this subsection, the term ‘eligible beneficiary’ means 

15 any individual who is eligible to receive benefits or 

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

17 (b) EXCLUSION OF AMOUNTS EXPENDED FOR MED18 ICAL CARE.—The first sentence of section 105(b) of such 

19 Code (relating to amounts expended for medical care) is 

20 amended— 

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

22 ‘‘any child’’, and 

23 (2) by inserting ‘‘and any eligible beneficiary 

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

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

26 (c) PAYROLL TAXES.— 


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1 (1) Section 3121(a)(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 (2) Section 3231(e)(1) of such Code is amend18 ed— 

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

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

21 eligible beneficiary (within the meaning of sec22 tion 106(g)) with respect to the employee,’’, 

23 and 

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

25 both places it appears and inserting ‘‘and such 


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1 employees’ dependents and eligible beneficiaries 

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

3 (3) Section 3306(b)(2) of such Code is amend4 ed— 

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

6 in the matter preceding subparagraph (A) and 

7 inserting ‘‘, any of his dependents, or any eligi8 ble beneficiary (within the meaning of section 

9 106(g)) with respect to the employee,’’, 

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

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

12 dependents, or any eligible beneficiary (within 

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

14 the employee’’, and 

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

16 both places it appears and inserting ‘‘and such 

17 employees’ dependents and eligible beneficiaries 

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

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

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

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

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

23 (23) the following new paragraph: 

24 ‘‘(24) for any payment made to or for the ben25 efit of an employee or any eligible beneficiary (within 


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

2 payment it is reasonable to believe that the employee 

3 will be able to exclude such payment from income 

4 under section 106 or under section 105 by reference 

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

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

7 this section shall apply to taxable years beginning after 

8 December 31, 2011. 

9 SEC. 3. EXPANSION OF DEPENDENCY FOR PURPOSES OF 

10 DEDUCTION FOR HEALTH INSURANCE COSTS 

11 OF SELF-EMPLOYED INDIVIDUALS. 

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

13 of the Internal Revenue Code of 1986 is amended by strik14 ing ‘‘and’’ at the end of subparagraph (C), by striking the 

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

16 comma and by adding at the end the following new sub17 paragraphs: 

18 ‘‘(E) any individual who— 

19 ‘‘(i) satisfies the age requirements of 

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

21 ‘‘(ii) bears a relationship to the tax22 payer described in section 152(d)(2)(H), 

23 and 

24 ‘‘(iii) meets the requirements of sec25 tion 152(d)(1)(C), and 


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1 ‘‘(F) one individual who— 

2 ‘‘(i) is at least age 19, 

3 ‘‘(ii) bears a relationship to the tax4 payer described in section 152(d)(2)(H), 

5 and 

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

7 and does not bear any relationship to the 

8 taxpayer described in subparagraphs (A) 

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

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

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

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

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2011. 

16 SEC. 4. EXTENSION TO ELIGIBLE BENEFICIARIES OF SICK 

17 AND ACCIDENT BENEFITS PROVIDED TO 

18 MEMBERS OF A VOLUNTARY EMPLOYEES’ 

19 BENEFICIARY ASSOCIATION AND THEIR DE20 PENDENTS. 

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

22 Revenue Code of 1986 (relating to list of exempt organiza23 tions) is amended by inserting ‘‘and any individual who 

24 is an eligible beneficiary (within the meaning of section 


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1 106(g)), as determined under the terms of a medical ben2 efit, health insurance, or other program’’ after ‘‘age 27’’. 

3 (b) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2011. 

6 SEC. 5. FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH 

7 REIMBURSEMENT ARRANGEMENTS. 

8 The Secretary of Treasury shall issue guidance of 

9 general applicability within 180 days of enactment of this 

10 Act providing that medical expenses that otherwise qual11 ify— 

12 (1) for reimbursement from a flexible spending 

13 arrangement under regulations in effect on the date 

14 of the enactment of this Act may be reimbursed 

15 from an employee’s flexible spending arrangement, 

16 notwithstanding the fact that such expenses are at17 tributable to any individual who is not the employ18 ee’s spouse or dependent (within the meaning of sec19 tion 105(b) of the Internal Revenue Code of 1986) 

20 but is an eligible beneficiary (within the meaning of 

21 section 106(g) of such Code) under the flexible 

22 spending arrangement with respect to the employee, 

23 and 

24 (2) for reimbursement from a health reimburse25 ment arrangement under regulations in effect on the 


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1 date of the enactment of this Act may be reimbursed 

2 from an employee’s health reimbursement arrange3 ment, notwithstanding the fact that such expenses 

4 are attributable to an individual who is not a spouse 

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

6 of such Code) but is an eligible beneficiary (within 

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

8 the health reimbursement arrangement with respect 

9 to the employee. 

10 SEC. 6. EXTENSION OF QUALIFIED MEDICAL EXPENSES 

11 FROM HEALTH SAVINGS ACCOUNTS. 

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

13 223(d)(2) of the Internal Revenue Code of 1986 (relating 

14 to qualified medical expenses) is amended— 

15 (1) by striking ‘‘and any dependent’’ and in16 serting ‘‘any dependent’’, and 

17 (2) by inserting ‘‘, and any qualified bene18 ficiary’’ after ‘‘thereof)’’. 

19 (b) QUALIFIED BENEFICIARY.—Section 223(d)(2) of 

20 such Code is amended by inserting after subparagraph (C) 

21 the following new subparagraph: 

22 ‘‘(D) QUALIFIED BENEFICIARY.—For pur23 poses of subparagraph (A), the term ‘qualified 

24 beneficiary’ means any individual who is deVerDate Mar 15 2010 21:53 Jun 07, 2011 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2088.IH H2088

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1 scribed in subparagraph (D) or (E) of section 

2 162(l)(1).’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2011. 

6 SEC. 7. EXTENSION OF FUNDING MECHANISM FOR MED7 ICAL BENEFITS FOR RETIREES AND THEIR 

8 FAMILIES. 

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

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

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

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

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2011. 

Æ 


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