I

106TH CONGRESS

1ST SESSION H. R. 1819

To amend the Internal Revenue Code of 1986 to allow individuals who

are not eligible to participate in employer-subsidized health plans a

refundable credit for their health insurance costs.

IN THE HOUSE OF REPRESENTATIVES

MAY 14, 1999

Mr. MCDERMOTT (for himself, Mr. ROGAN, Mr. STARK, Mr. GRAHAM, Mr.

MATSUI, Mr. LEWIS of Georgia, Mr. NEAL of Massachusetts, Mrs. THURMAN, Mrs. EMERSON, Ms. KILPATRICK, Mr. FROST, Mr. INSLEE, Mr.

SHOWS, Mr. MCHUGH, and Ms. PELOSI) 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 who are not eligible to participate in employersubsidized health plans a refundable credit for their

health insurance costs.

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 ‘‘Working Uninsured

5 Tax Equity Act of 1999’’.
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1 SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE

2 COSTS.

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 personal credits) is amended

6 by redesignating section 35 as section 36 and by inserting

7 after section 34 the following new section:

8 ‘‘SEC. 35. 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 subtitle an amount equal to 30 percent of the

12 amount paid during the taxable year for insurance which

13 constitutes medical care for the taxpayer, his spouse, and

14 dependents.

15 ‘‘(b) LIMITATIONS.—

16 ‘‘(1) LIMITATION BASED ON EARNED IN17 COME.—The payments taken into account under

18 subsection (a) for any taxable year shall not exceed

19 the sum of—

20 ‘‘(A) the taxpayer’s wages, salaries, tips,

21 and other employee compensation includible in

22 gross income, plus

23 ‘‘(B) the taxpayer’s earned income (as de24 fined in section 401(c)(2)).

25 ‘‘(2) LIMITATION BASED ON OTHER COV26 ERAGE.—Subsection (a) shall not apply to—
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1 ‘‘(A) any taxpayer for any calendar month

2 for which the taxpayer is eligible to participate

3 in any subsidized health plan maintained by

4 any employer of the taxpayer or of the spouse

5 of the taxpayer, or

6 ‘‘(B) amounts paid for coverage under—

7 ‘‘(i) part B of title XVIII of the Social

8 Security Act, or

9 ‘‘(ii) a Medicare supplemental policy

10 (within the meaning of section 1882(g)(1)

11 of the Social Security Act (42 U.S.C.

12 1395ss(g)(1))) or similar supplemental

13 coverage provided under a group health

14 plan.

15 The rule of the last sentence of section 162(l)(2)(B)

16 shall apply for purposes of subparagraph (A).

17 ‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN18 COME.—

19 ‘‘(1) IN GENERAL.—No credit shall be allowed

20 under subsection (a) for any taxable year for which

21 the taxpayer’s adjusted gross income exceeds the ap22 plicable dollar amount by $10,000 or more.

23 ‘‘(2) PHASEOUT.—If the taxpayer’s adjusted

24 gross income for the taxable year exceeds the appli25 cable dollar amount by less than $10,000, the credit
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1 which would (but for this subsection and subsection

2 (d)) be allowed under subsection (a) shall be reduced

3 (but not below zero) by an amount which bears the

4 same ratio to such credit as such excess bears to

5 $10,000. Any reduction under the preceding sen6 tence which is not a multiple of $10 shall be round7 ed to the next lowest $10.

8 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—The term

9 ‘applicable dollar amount’ means—

10 ‘‘(A) in the case of a taxpayer filing a joint

11 return, $50,000,

12 ‘‘(B) in the case of any other taxpayer

13 (other than a married individual filing a sepa14 rate return), $30,000, and

15 ‘‘(C) in the case of a married individual fil16 ing a separate return, zero.

17 ‘‘(4) SPECIAL RULE FOR MARRIED INDIVIDUALS

18 FILING SEPARATELY AND LIVING APART.—A hus19 band and wife who—

20 ‘‘(A) file separate returns for any taxable

21 year, and

22 ‘‘(B) live apart at all times during such

23 taxable year,

24 shall not be treated as married individuals for pur25 poses of this paragraph.
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1 ‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—

2 ‘‘(1) IN GENERAL.—The credit allowed by sub3 section (a) for the taxable year (determined after the

4 application of subsections (b) and (c)) shall not ex5 ceed the sum of—

6 ‘‘(A) the tax imposed by this chapter for

7 the taxable year (reduced by the credits allow8 able against such tax other than the credits al9 lowable under this subpart), and

10 ‘‘(B) the taxpayer’s social security taxes

11 for such taxable year.

12 ‘‘(2) SOCIAL SECURITY TAXES.—For purposes

13 of paragraph (1)—

14 ‘‘(A) IN GENERAL.—The term ‘social secu15 rity taxes’ means, with respect to any taxpayer

16 for any taxable year—

17 ‘‘(i) the amount of the taxes imposed

18 by sections 3101, 3111, 3201(a), and

19 3221(a) on amounts received by the tax20 payer during the calendar year in which

21 the taxable year begins,

22 ‘‘(ii) the taxes imposed by section

23 1401 on the self-employment income of the

24 taxpayer for the taxable year, and
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1 ‘‘(iii) the taxes imposed by section

2 3211(a)(1) on amounts received by the

3 taxpayer during the calendar year in which

4 the taxable year begins.

5 ‘‘(B) COORDINATION WITH SPECIAL RE6 FUND OF SOCIAL SECURITY TAXES.—The term

7 ‘social security taxes’ shall not include any

8 taxes to the extent the taxpayer is entitled to

9 a special refund of such taxes under section

10 6413(c).

11 ‘‘(C) SPECIAL RULE.—Any amounts paid

12 pursuant to an agreement under section 3121(l)

13 (relating to agreements entered into by Amer14 ican employers with respect to foreign affiliates)

15 which are equivalent to the taxes referred to in

16 subparagraph (A)(i) shall be treated as taxes

17 referred to in such subparagraph.

18 ‘‘(e) COORDINATION WITH OTHER PROVISIONS.—

19 ‘‘(1) DEDUCTION FOR MEDICAL EXPENSES.—

20 The amount taken into account in computing the

21 credit under subsection (a) shall not be taken into

22 account in computing the amount allowable to the

23 taxpayer as a deduction under section 213(a).

24 ‘‘(2) SELF-EMPLOYED INDIVIDUALS ALLOWED

25 EITHER DEDUCTION OR CREDIT FOR HEALTH IN-
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1 SURANCE.—No credit shall be allowed under this

2 section to a taxpayer for a taxable year if any

3 amount is allowed as a deduction to such taxpayer

4 for such year under section 162(l).

5 ‘‘(f) EXPENSES MUST BE SUBSTANTIATED.—A pay6 ment for insurance to which subsection (a) applies may

7 be taken into account under this section only if the tax8 payer substantiates such payment in such form as the Sec9 retary may prescribe.

10 ‘‘(g) SECTION NOT TO APPLY TO LONG-TERM CARE

11 INSURANCE.—This section shall not apply to insurance

12 which constitutes medical care by reason of section

13 213(d)(1)(C).’’

14 (b) CLERICAL AMENDMENT.—The table of sections

15 for subpart C of part IV of subchapter A of chapter 1

16 of such Code is amended by striking the last item and

17 inserting the following new items:

‘‘Sec. 35. Health insurance costs.

‘‘Sec. 36. Overpayments of tax.’’

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

19 this section shall apply to taxable years beginning after

20 the date of the enactment of this Act.

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