I 

109TH CONGRESS 

1ST SESSION H. R. 2089

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 HOUSE OF REPRESENTATIVES 

MAY 4, 2005

Ms. GRANGER (for herself, Mr. WYNN, Mr. BURGESS, Mr. FITZPATRICK of 

Pennsylvania, Mrs. JOHNSON of Connecticut, Mr. NORWOOD, Mr. SIMPSON, Mr. BOOZMAN, Mr. BONILLA, Mr. MARCHANT, Mr. NEUGEBAUER, 

Mr. CUNNINGHAM, Mr. GOODE, Mr. MCHUGH, and Mr. SANDERS) 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 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’’. 
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1 SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

2 COVERAGE. 

3 (a) IN GENERAL.—Subpart C of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986 (relating to refundable credits) is amended by redes6 ignating section 36 as section 37 and by inserting after 

7 section 35 the following new section: 

8 ‘‘SEC. 36. HEALTH INSURANCE COSTS. 

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

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

11 by this chapter an amount equal to the amount paid dur12 ing the taxable year for qualified health insurance for the 

13 taxpayer, his spouse, and dependents. 

14 ‘‘(b) LIMITATIONS.—

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

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

17 taxable year shall not exceed the sum of the monthly 

18 limitations for coverage months during such taxable 

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

20 for whom the taxpayer paid during the taxable year 

21 any amount for coverage under qualified health in22 surance. 

23 ‘‘(2) PHASEOUT OF AMOUNT.—

24 ‘‘(A) REDUCTION BASED ON ADJUSTED

25 GROSS INCOME.—The amount determined under 

26 paragraph (1) for any taxable year shall be re-
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1 duced (but not below zero) by the amount de2 termined under subparagraph (B). 

3 ‘‘(B) AMOUNT OF REDUCTION.—The 

4 amount determined under this subparagraph 

5 with respect to any amount determined under 

6 paragraph (1) shall be the amount which bears 

7 the same ratio to such amount determined 

8 under paragraph (1) as—

9 ‘‘(i) the excess of—

10 ‘‘(I) the taxpayer’s adjusted 

11 gross income for such taxable year, 

12 over 

13 ‘‘(II) the applicable dollar 

14 amount, bears to 

15 ‘‘(ii) $10,000. 

16 The rules of subparagraphs (B) and (C) of sec17 tion 219(g)(2) shall apply to any reduction 

18 under this subparagraph. 

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

20 paragraph—

21 ‘‘(i) adjusted gross income shall be de22 termined in the same manner as under sec23 tion 408A(c)(3)(C)(i), and 

24 ‘‘(ii) the applicable dollar amount is—
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1 ‘‘(I) in the case of a taxpayer fil2 ing a joint return, $105,000, 

3 ‘‘(II) in the case of any other 

4 taxpayer (other than a married indi5 vidual filing a separate return), 

6 $65,000, and 

7 ‘‘(III) in the case of a married 

8 individual filing a separate return, 

9 zero. 

10 ‘‘(3) MONTHLY LIMITATION.—

11 ‘‘(A) IN GENERAL.—The monthly limita12 tion for an individual for each coverage month 

13 of such individual during the taxable year is the 

amount equal to 1 14 ⁄12th of—

15 ‘‘(i) the base amount, plus 

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

17 excess of the base amount. 

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

19 paragraph, the base amount is—

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

21 taxpayer, 

22 ‘‘(ii) $1,000 if—

23 ‘‘(I) such individual is the spouse 

24 of the taxpayer, 
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1 ‘‘(II) the taxpayer and such 

2 spouse are married as of the first day 

3 of such month, and 

4 ‘‘(III) the taxpayer files a joint 

5 return for the taxable year, and 

6 ‘‘(iii) $500 if such individual is an in7 dividual for whom a deduction under sec8 tion 151(c) is allowable to the taxpayer for 

9 such taxable year. 

10 ‘‘(C) LIMITATION TO 2 DEPENDENTS.—

11 Not more than 2 individuals may be taken into 

12 account by the taxpayer under subparagraph 

13 (B)(iii). 

14 ‘‘(D) SPECIAL RULE FOR MARRIED INDI15 VIDUALS.—In the case of an individual—

16 ‘‘(i) who is married (within the mean17 ing of section 7703) as of the close of the 

18 taxable year but does not file a joint return 

19 for such year, and 

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

21 such individual’s spouse at all times during 

22 the taxable year, 

23 the limitation imposed by subparagraph (C) 

24 shall be divided equally between the individual 
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1 and the individual’s spouse unless they agree on 

2 a different division. 

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

4 subsection—

5 ‘‘(A) IN GENERAL.—The term ‘coverage 

6 month’ means, with respect to an individual, 

7 any month if—

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

9 such individual is covered by qualified 

10 health insurance, and 

11 ‘‘(ii) the premium for coverage under 

12 such insurance for such month is paid by 

13 the taxpayer. 

14 ‘‘(B) EMPLOYER-SUBSIDIZED COV15 ERAGE.—

16 ‘‘(i) IN GENERAL.—Such term shall 

17 not include any month for which such indi18 vidual participates in any subsidized health 

19 plan (within the meaning of section 

20 162(l)(2)) maintained by any employer of 

21 the taxpayer or of the spouse of the tax22 payer. 

23 ‘‘(ii) PREMIUMS TO NONSUBSIDIZED

24 PLANS.—If an employer of the taxpayer or 

25 the spouse of the taxpayer maintains a 
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1 health plan which is not a subsidized 

2 health plan (as so defined) and which con3 stitutes qualified health insurance, em4 ployee contributions to the plan shall be 

5 treated as amounts paid for qualified 

6 health insurance. 

7 ‘‘(C) CAFETERIA PLAN AND FLEXIBLE

8 SPENDING ACCOUNT BENEFICIARIES.—Such 

9 term shall not include any month during a tax10 able year if any amount is not includible in the 

11 gross income of the taxpayer for such year 

12 under section 106 with respect to—

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

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

15 ‘‘(ii) a benefit provided under a flexi16 ble spending or similar arrangement. 

17 ‘‘(D) MEDICARE AND MEDICAID.—Such 

18 term shall not include any month with respect 

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

20 month, such individual—

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

22 title XVIII of the Social Security Act, or 

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

24 under title XIX or XXI of such Act. 
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1 ‘‘(E) CERTAIN OTHER COVERAGE.—Such 

2 term shall not include any month during a tax3 able year with respect to an individual if, at any 

4 time during such year, any benefit is provided 

5 to such individual under—

6 ‘‘(i) chapter 89 of title 5, United 

7 States Code, 

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

9 States Code, 

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

11 States Code, or 

12 ‘‘(iv) any medical care program under 

13 the Indian Health Care Improvement Act. 

14 ‘‘(F) PRISONERS.—Such term shall not in15 clude any month with respect to an individual 

16 if, as of the first day of such month, such indi17 vidual is imprisoned under Federal, State, or 

18 local authority. 

19 ‘‘(G) INSUFFICIENT PRESENCE IN UNITED

20 STATES.—Such term shall not include any 

21 month during a taxable year with respect to an 

22 individual if such individual is present in the 

23 United States on fewer than 183 days during 

24 such year (determined in accordance with sec25 tion 7701(b)(7)). 
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1 ‘‘(5) COORDINATION WITH DEDUCTION FOR

2 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN3 DIVIDUALS.—In the case of a taxpayer who is eligi4 ble to deduct any amount under section 162(l) for 

5 the taxable year, this section shall apply only if the 

6 taxpayer elects not to claim any amount as a deduc7 tion under such section for such year. 

8 ‘‘(c) REDUCED CREDIT FOR PARTICIPANTS IN

9 HEALTH PLANS OF EMPLOYERS.—In the case of any indi10 vidual who participates in a subsidized health plan (within 

11 the meaning of section 162(l)(2)) maintained by any em12 ployer of the taxpayer or of the spouse of the taxpayer 

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

14 125(d)), there shall be allowed to the taxpayer one-quarter 

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

16 subsection (a) (determined without regard to the partici17 pation in the health plan) if the monthly limitation were 

18 determined without the addition of the amount described 

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

20 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur21 poses of this section—

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

23 insurance’ means insurance which constitutes med24 ical care as defined in section 213(d) without regard 

25 to—
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1 ‘‘(A) paragraph (1)(C) thereof, and 

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

3 as relates to qualified long-term care insurance 

4 contracts. 

5 ‘‘(2) EXCLUSION OF CERTAIN OTHER CON6 TRACTS.—Such term shall not include insurance if a 

7 substantial portion of its benefits are excepted bene8 fits (as defined in section 9832(c)). 

9 ‘‘(e) MEDICAL AND HEALTH SAVINGS ACCOUNT

10 CONTRIBUTIONS.—

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

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

13 223 to the taxpayer for a payment for the taxable 

14 year to the medical or health savings account of an 

15 individual, subsection (a) shall be applied by treating 

16 such payment as a payment for qualified health in17 surance for such individual. 

18 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc19 tion shall be allowed under section 220 or 223 for 

20 that portion of the payments otherwise allowable as 

21 a deduction under section 220 or 223 (as the case 

22 may be) for the taxable year which is equal to the 

23 amount of credit allowed for such taxable year by 

24 reason of this subsection. 

25 ‘‘(f) SPECIAL RULES.—
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1 ‘‘(1) COORDINATION WITH MEDICAL EXPENSE

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

3 paragraph) be taken into account by the taxpayer 

4 under section 213 for the taxable year shall be re5 duced by the credit (if any) allowed by this section 

6 to the taxpayer for such year. 

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

8 credit shall be allowed under this section to any indi9 vidual with respect to whom a deduction under sec10 tion 151 is allowable to another taxpayer for a tax11 able year beginning in the calendar year in which 

12 such individual’s taxable year begins. 

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

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

15 under section 35 is allowed and no credit shall be al16 lowed under 35 if a credit is allowed under this sec17 tion. 

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

19 section shall not apply to a taxpayer for any taxable 

20 year if such taxpayer elects to have this section not 

21 apply for such taxable year. 

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

23 any taxable year beginning in a calendar year after 

24 2005, each dollar amount contained in subsection 
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1 (b)(3)(B) shall be increased by an amount equal 

2 to—

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

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3) for the calendar 

6 year in which the taxable year begins, deter7 mined by substituting ‘calendar year 2004’ for 

8 ‘calendar year 1992’ in subparagraph (B) 

9 thereof. 

10 Any increase determined under the preceding sen11 tence shall be rounded to the nearest multiple of $50 

12 ($25 in the case of the dollar amount in subsection 

13 (b)(3)(B)(iii)).’’. 

14 (b) INFORMATION REPORTING.—

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

16 subchapter A of chapter 61 of such Code (relating 

17 to information concerning transactions with other 

18 persons) is amended by inserting after section 

19 6050T the following new section: 

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

21 QUALIFIED HEALTH INSURANCE. 

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

23 with a trade or business conducted by such person, re24 ceives payments during any calendar year from any indi25 vidual for coverage of such individual or any other indi-
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1 vidual under creditable health insurance, shall make the 

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

3 Secretary may by regulations prescribe) with respect to 

4 each individual from whom such payments were received. 

5 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

6 is described in this subsection if such return—

7 ‘‘(1) is in such form as the Secretary may pre8 scribe, and 

9 ‘‘(2) contains—

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

11 individual from whom payments described in 

12 subsection (a) were received, 

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

14 individual who was provided by such person 

15 with coverage under creditable health insurance 

16 by reason of such payments and the period of 

17 such coverage, and 

18 ‘‘(C) such other information as the Sec19 retary may reasonably prescribe. 

20 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur21 poses of this section, the term ‘creditable health insurance’ 

22 means qualified health insurance (as defined in section 

23 36(d)) other than—

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

25 plan maintained by an employer, or 
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1 ‘‘(2) to the extent provided in regulations pre2 scribed by the Secretary, any other insurance cov3 ering an individual if no credit is allowable under 

4 section 36 with respect to such coverage. 

5 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID6 UALS WITH RESPECT TO WHOM INFORMATION IS RE7 QUIRED.—Every person required to make a return under 

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

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

10 such return a written statement showing—

11 ‘‘(1) the aggregate amount of payments de12 scribed in subsection (a) received by the person re13 quired to make such return from the individual to 

14 whom the statement is required to be furnished, and 

15 ‘‘(2) the information required under subsection 

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

17 The written statement required under the preceding sen18 tence shall be furnished on or before January 31 of the 

19 year following the calendar year for which the return 

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

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

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

23 provided in regulations prescribed by the Secretary, in the 

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

25 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 (xiii) 

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

8 respectively, and by inserting after clause (xii) 

9 the following new clause: 

10 ‘‘(xiii) 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 redesignating the item relating to sec10 tion 36 as an item relating to section 37 and by in11 serting after section 35 the following new item:

‘‘Sec. 36. Health insurance costs.’’.

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2004. 

15 SEC. 3. ADVANCE PAYMENT OF CREDIT FOR PURCHASERS 

16 OF QUALIFIED HEALTH INSURANCE. 

17 (a) IN GENERAL.—Chapter 77 of the Internal Rev18 enue Code of 1986 (relating to miscellaneous provisions) 

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

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

21 CREDIT FOR PURCHASERS OF QUALIFIED 

22 HEALTH INSURANCE. 

23 ‘‘(a) GENERAL RULE.—In the case of an eligible indi24 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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