I 

111TH CONGRESS 

1ST SESSION H. R. 1495 

To amend the Internal Revenue Code of 1986 to make health care coverage 

more accessible and affordable. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 12, 2009 

Mr. PAUL 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 make 

health care coverage more accessible and affordable. 

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 ‘‘Comprehensive Health 

5 Care Reform Act of 2009’’. 

6 SEC. 2. REFUNDABLE CREDIT FOR HEALTH CARE COSTS. 

7 (a) IN GENERAL.—Section 35 of the Internal Rev8 enue Code of 1986 (relating to health insurance costs of 

9 eligible individuals) is amended to read as follows: 


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1 ‘‘SEC. 35. HEALTH INSURANCE COSTS. 

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

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

4 by this subtitle an amount equal to the sum of— 

5 ‘‘(1) the amount paid by the taxpayer for insur6 ance which constitutes medical care for the taxpayer 

7 and the taxpayer’s spouse and dependents, plus 

8 ‘‘(2) the amount contributed to a health savings 

9 account of the individual (or the individual’s 

10 spouse). 

11 ‘‘(b) LIMITATION.—The credit allowed by subsection 

12 (a) for the taxable year shall not exceed the sum of— 

13 ‘‘(1) the taxpayer’s net income tax for the tax14 able year, plus 

15 ‘‘(2) the taxpayer’s Social Security taxes (as de16 fined in section 24(d)) for such taxable year. 

17 For purposes of paragraph (1), the term ‘net income tax’ 

18 means the sum of the regular tax liability plus the tax 

19 imposed by section 55, reduced by the credits allowable 

20 under this part (other than this subpart). 

21 ‘‘(c) DENIAL OF DOUBLE BENEFIT.— 

22 ‘‘(1) IN GENERAL.—Any amount allowed as a 

23 credit under this section shall not be taken into ac24 count in determining the amount of any deduction 

25 under this chapter. 


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1 ‘‘(2) COORDINATION WITH HEALTH SAVINGS

2 ACCOUNT CONTRIBUTIONS.—For purposes of para3 graph (1), amounts taken into account under sub4 section (a) for a taxable year shall be treated as 

5 being attributable to amounts paid for insurance to 

6 the extent of such payments.’’. 

7 (b) CONFORMING AMENDMENTS.— 

8 (1) Section 223(b) of such Code, as amended by 

9 section 4, is amended by adding at the end the fol10 lowing new paragraph: 

11 ‘‘(4) COORDINATION WITH CREDIT FOR

12 HEALTH INSURANCE.—The limitation under para13 graph (1) shall be reduced by the amount treated as 

14 being taken into account under section 35(a)(2).’’. 

15 (2) Section 223(e)(3)(B) of such Code, as 

16 amended by section 4, is amended by inserting ‘‘nor 

17 treated as being taken into account under section 

18 35(a)(2)’’ before the period at the end. 

19 (3) Section 4973(g) of such Code is amended— 

20 (A) in paragraph (1) by inserting ‘‘or a 

21 credit under section 35’’ after ‘‘section 223’’, 

22 and 

23 (B) in paragraph (2)(B)(i) by striking 

24 ‘‘maximum’’ and inserting ‘‘sum of the amount 


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1 treated as being taken into account under sec2 tion 35(a)(2) plus the’’. 

3 (4) Section 162 of such Code is amended by 

4 striking subsection (l). 

5 (5) Chapter 77 of such Code is amended by 

6 striking section 7527 and by striking the item relat7 ing to section 7527 in the table of sections for such 

8 chapter. 

9 (6) Subpart B of part III of subchapter A of 

10 chapter 61 of such Code is amended by striking sec11 tion 6050T and by striking the item relating to sec12 tion 6050T in the table of sections for such chapter. 

13 (7) Section 6103(l) of such Code is amended by 

14 striking paragraph (18). 

15 (8) Section 6103(p) of such Code is amended— 

16 (A) in paragraph (3)(A) by striking ‘‘(17), 

17 or (18)’’ and inserting ‘‘or (17)’’, and 

18 (B) in paragraph (4) by striking ‘‘or (18)’’ 

19 after ‘‘any other person described in subsection 

20 (l)(10), (16)’’ each place it appears. 

21 (9) Section 7213A(a)(1)(B) of such Code is 

22 amended by striking ‘‘subsection (l)(18) or (n) of 

23 section 6103’’ and inserting ‘‘section 6103(n)’’. 

24 (10) Section 6724(d)(1)(B) of such Code is 

25 amended by striking clause (xiii). 


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1 (11) Section 6724(d)(2) of such Code is amend2 ed by striking subparagraph (DD). 

3 (12) The item relating to section 35 in the table 

4 of sections for subpart C of part IV of subchapter 

5 A of chapter 1 of such Code is amended to read as 

6 follows: 

‘‘Sec. 35. Health insurance costs.’’. 

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

8 this section shall apply to taxable years beginning after 

9 December 31, 2009. 

10 SEC. 3. DISPOSITION OF UNUSED HEALTH BENEFITS IN 

11 CAFETERIA PLANS AND FLEXIBLE SPENDING 

12 ARRANGEMENTS. 

13 (a) IN GENERAL.—Section 125 of the Internal Rev14 enue Code of 1986 (relating to cafeteria plans) is amended 

15 by redesignating subsections (i) and (j) as subsections (j) 

16 and (k), respectively, and by inserting after subsection (h) 

17 the following: 

18 ‘‘(h) CARRYFORWARDS OR PAYMENTS OF CERTAIN

19 UNUSED HEALTH BENEFITS.— 

20 ‘‘(1) IN GENERAL.—For purposes of this title, 

21 a plan or other arrangement shall not fail to be 

22 treated as a cafeteria plan solely because qualified 

23 benefits under such plan include a health flexible 

24 spending arrangement under which not more than 

25 $500 of unused health benefits may be— 


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1 ‘‘(A) carried forward to the succeeding 

2 plan year of such health flexible spending ar3 rangement, or 

4 ‘‘(B) paid to or on behalf of an employee 

5 as compensation as of the end of such plan year 

6 or upon the termination of, or failure to re-en7 roll in, such plan or arrangement. 

8 ‘‘(2) DISTRIBUTION OF UNUSED HEALTH BENE9 FITS ON BEHALF OF EMPLOYEE.—For purposes of 

10 paragraph (1)(B), unused health benefits paid as 

11 compensation on behalf of an employee by the em12 ployer shall be— 

13 ‘‘(A) includible in gross income and wages 

14 of the employee, whether or not a deduction for 

15 such payment is allowable under this title to the 

16 employee, and 

17 ‘‘(B) excludable from— 

18 ‘‘(i) gross income to the extent pro19 vided under section 402(e), 457(a) (with 

20 respect to contributions to an eligible de21 ferred compensation plan (as defined in 

22 section 457(b)) of an eligible employer de23 scribed in section 457(e)(1)(A)), or 220, 

24 and 


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1 ‘‘(ii) wages to the extent otherwise 

2 provided for amounts so excludable. 

3 ‘‘(3) HEALTH FLEXIBLE SPENDING ARRANGE4 MENT.—For purposes of this subsection, the term 

5 ‘health flexible spending arrangement’ means a flexi6 ble spending arrangement (as defined in section 

7 106(c)) that is a qualified benefit and only permits 

8 reimbursement for expenses for medical care (as de9 fined in section 213(d)(1)) (without regard to sub10 paragraphs (C) and (D) thereof). 

11 ‘‘(4) UNUSED HEALTH BENEFITS.—For pur12 poses of this subsection, the term ‘unused health 

13 benefits’ means the excess of— 

14 ‘‘(A) the maximum amount of reimburse15 ment allowable during a plan year under a 

16 health flexible spending arrangement, over 

17 ‘‘(B) the actual amount of reimbursement 

18 during such year under such arrangement.’’. 

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

20 subsection (a) shall apply to taxable years beginning after 

21 December 31, 2009. 

22 SEC. 4. STRENGTHENING HEALTH SAVINGS ACCOUNTS. 

23 (a) REPEAL OF REQUIREMENT FOR COVERAGE

24 UNDER HIGH DEDUCTIBLE HEALTH PLAN.— 


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1 (1) IN GENERAL.—Section 223 of the Internal 

2 Revenue Code of 1986 (relating to health savings ac3 counts) is amended by striking subsections (a), (b), 

4 and (c) and inserting the following: 

5 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi6 vidual, there shall be allowed as a deduction for the tax7 able year an amount equal to the aggregate amount paid 

8 in cash during such taxable year by or on behalf of such 

9 individual to a health savings account of such individual. 

10 ‘‘(b) LIMITATIONS.— 

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

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

13 taxable year shall not exceed $8,000 ($16,000 in the 

14 case of a joint return). 

15 ‘‘(2) COORDINATION WITH OTHER CONTRIBU16 TIONS.—The limitation which would (but for this 

17 paragraph) apply under this subsection to a tax18 payer for any taxable year shall be reduced (but not 

19 below zero) by the sum of— 

20 ‘‘(A) the aggregate amount paid for such 

21 taxable year to Archer MSAs of the taxpayer, 

22 and 

23 ‘‘(B) the aggregate amount contributed to 

24 health savings accounts of the taxpayer which is 

25 excludable from the taxpayer’s gross income for 


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1 such taxable year under section 106(d) (and 

2 such amount shall not be allowed as a deduc3 tion under subsection (a)). 

4 ‘‘(3) DENIAL OF DEDUCTION TO DEPEND5 ENTS.—No deduction shall be allowed under this 

6 section to any individual with respect to whom a de7 duction under section 151 is allowable to another 

8 taxpayer for a taxable year beginning in the cal9 endar year in which such individual’s taxable year 

10 begins.’’. 

11 (2) CONFORMING AMENDMENTS.— 

12 (A) Section 223 of such Code is amended 

13 by redesignating subsections (d), (e), (f), (g), 

14 and (h) as subsections (c), (d), (e), (f), and (g), 

15 respectively. 

16 (B) Section 223(f) of such Code (as redes17 ignated by subparagraph (A)) is amended to 

18 read as follows: 

19 ‘‘(f) COST-OF-LIVING ADJUSTMENT.— 

20 ‘‘(1) IN GENERAL.—In the case of any taxable 

21 year beginning in a calendar year after 2010, each 

22 dollar amount in subsection (b)(1) shall be increased 

23 by an amount equal to— 

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


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1 ‘‘(B) the cost-of-living adjustment deter2 mined under section 1(f)(3) for the calendar 

3 year in which such taxable year begins, deter4 mined by substituting ‘calendar year 2009’ for 

5 ‘calendar year 1992’ in subparagraph (B) 

6 thereof. 

7 ‘‘(2) ROUNDING.—If any increase under para8 graph (1) is not a multiple of $50, such increase 

9 shall be rounded to the nearest multiple of $50.’’. 

10 (C) Section 26(b)(2)(S) of such Code is 

11 amended by striking ‘‘section 223(f)(4)’’ and 

12 inserting ‘‘section 223(e)(4)’’. 

13 (D) Each of the following sections of such 

14 Code is amended by striking ‘‘section 223(d)’’ 

15 and inserting ‘‘section 223(c)’’: 

16 (i) Section 35(g)(3). 

17 (ii) Section 106(d)(1). 

18 (iii) Section 220(f)(5)(A). 

19 (iv) Section 848(e)(1)(B)(v). 

20 (v) Section 4973(a)(5). 

21 (vi) Section 4973(g). 

22 (vii) Section 4975(c)(6). 

23 (viii) Section 4975(e)(1)(E). 

24 (ix) Section 6051(a)(12). 


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1 (E) Section 4973(g) of such Code is 

2 amended— 

3 (i) in paragraph (1) by striking ‘‘sec4 tion 223(f)(5)’’ and inserting ‘‘section 

5 223(e)(5)’’, 

6 (ii) in paragraph (2)(A) by striking 

7 ‘‘section 223(f)(2)’’ and inserting ‘‘section 

8 223(e)(2)’’, and 

9 (iii) in the matter following paragraph 

10 (2) by striking ‘‘section 223(f)(3)’’ and in11 serting ‘‘section 223(e)(3)’’. 

12 (F) Section 4975(c)(6) of such Code is 

13 amended by striking ‘‘section 223(e)(2)’’ and 

14 inserting ‘‘section 223(d)(2)’’. 

15 (G) Section 6693(a)(2)(C) of such Code is 

16 amended by striking ‘‘section 223(h)’’ and in17 serting ‘‘section 223(g)’’. 

18 (b) DEDUCTION ALLOWED FOR PREMIUM PAYMENTS

19 FOR HIGH DEDUCTIBLE POLICIES.—Section 223(c)(2)(C) 

20 of such Code (as amended by subsection (a)) is amended 

21 by striking ‘‘or’’ at the end of clause (iii), by striking the 

22 period at the end of clause (iv) and inserting ‘‘, or’’, and 

23 by inserting after clause (iv) the following new clause: 

24 ‘‘(v) a high deductible health plan.’’. 


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1 (c) PURCHASE OF MEDIGAP POLICIES PER2 MITTED.—Clause (iv) of section 223(c)(2)(C) of such 

3 Code (as amended by this section) is amended by striking 

4 ‘‘other than’’ and inserting ‘‘, including’’. 

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

6 this section shall apply to taxable years beginning after 

7 December 31, 2009. 

8 SEC. 5. REPEAL OF 7.5 PERCENT THRESHOLD ON DEDUC9 TION FOR MEDICAL EXPENSES. 

10 (a) IN GENERAL.—Subsection (a) of section 213 of 

11 the Internal Revenue Code of 1986 (relating to deduction 

12 for medical expenses) is amended by striking ‘‘to the ex13 tent that such expenses exceed 7.5 percent of adjusted 

14 gross income’’. 

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2009. 

Æ 


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