I

106TH CONGRESS

1ST SESSION H. R. 2261

To amend the Internal Revenue Code of 1986 to provide incentives for

health coverage.

IN THE HOUSE OF REPRESENTATIVES

JUNE 17, 1999

Mrs. JOHNSON of Connecticut (for herself and Mr. PETERSON of Pennsylvania) 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 provide

incentives for health coverage.

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 ‘‘Health Insurance Af5 fordability and Equity Act of 1999’’.

6 SEC. 2. CREDIT FOR HEALTH INSURANCE COSTS OF PRE7 VIOUSLY UNINSURED INDIVIDUALS AND IN8 DIVIDUALS WITH COBRA COVERAGE.

9 (a) IN GENERAL.—Subpart A of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of
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1 1986 (relating to nonrefundable personal credits) is

2 amended by inserting after section 25A the following new

3 section:

4 ‘‘SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UN5 INSURED INDIVIDUALS AND INDIVIDUALS

6 WITH COBRA COVERAGE.

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

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

9 by this chapter for the taxable year an amount equal to

10 60 percent of the amount paid during the taxable year

11 for coverage for the taxpayer, his spouse, and dependents

12 under qualified health insurance.

13 ‘‘(b) DOLLAR LIMITATION.—

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

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

16 taxable year shall not exceed the sum of the monthly

17 limitations for eligible months during such taxable

18 year.

19 ‘‘(2) MONTHLY LIMITATION.—The monthly lim20 itation for any eligible month is the amount equal to

1 21 ⁄12 of—

22 ‘‘(A) $1,200 if, as of the first day of such

23 month, the taxpayer has self-only coverage

24 under qualified health insurance, and
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1 ‘‘(B) $2,400 if, as of the first day of such

2 month, the taxpayer has family coverage under

3 qualified health insurance.

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

5 subsection—

6 ‘‘(A) IN GENERAL.—The term ‘eligible

7 month’ means any month which begins at least

8 1 year after the most recent month that the

9 individual—

10 ‘‘(i) was eligible to participate in any

11 group health plan of an employer which

12 provided qualified health insurance (deter13 mined without regard to subsection

14 (d)(2)), or

15 ‘‘(ii) participated in any group health

16 plan of any other entity which provided

17 such insurance.

18 ‘‘(B) JOINT RETURNS.—In the case of a

19 joint return, a month shall be treated as an eli20 gible month only if it is an eligible month of

21 each spouse, determined by applying this para22 graph separately to each spouse.

23 ‘‘(4) CERTAIN OTHER COVERAGE.—Amounts

24 paid for coverage of an individual for any month

25 shall not be taken into account under subsection (a)
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1 if, as of the first day of such month, such individual

2 is covered under any medical care program described

3 in—

4 ‘‘(A) title XVIII, XIX, or XXI of the So5 cial Security Act,

6 ‘‘(B) chapter 55 of title 10, United States

7 Code,

8 ‘‘(C) chapter 17 of title 38, United States

9 Code,

10 ‘‘(D) chapter 89 of title 5, United States

11 Code, or

12 ‘‘(E) the Indian Health Care Improvement

13 Act.

14 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID15 UALS.—In the case of an individual—

16 ‘‘(A) who is married (within the meaning

17 of section 7703) as of the close of the taxable

18 year but does not file a joint return for such

19 year, and

20 ‘‘(B) who does not live apart from such in21 dividual’s spouse at all times during the taxable

22 year,

23 the limitation under paragraph (2)(A) (and not the

24 limitation under paragraph (2)(B)) shall apply to

25 such individual.
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1 ‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN2 COME.—

3 ‘‘(1) IN GENERAL.—The aggregate amount

4 which would (but for this subsection) be allowed as

5 a credit under this section shall be reduced (but not

6 below zero) by the amount determined under para7 graph (2).

8 ‘‘(2) AMOUNT OF REDUCTION.—

9 ‘‘(A) IN GENERAL.—The amount deter10 mined under this paragraph shall be the

11 amount which bears the same ratio to such ag12 gregate amount as—

13 ‘‘(i) the excess of—

14 ‘‘(I) the taxpayer’s modified ad15 justed gross income for such taxable

16 year, over

17 ‘‘(II) the applicable dollar

18 amount, bears to

19 ‘‘(ii) $10,000.

20 ‘‘(B) MODIFIED ADJUSTED GROSS IN21 COME.—For purposes of this paragraph, the

22 term ‘modified adjusted gross income’ means

23 adjusted gross income increased by any amount

24 excluded from gross income under section 911,

25 931, or 933.
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1 ‘‘(C) ROUNDING.—Any amount determined

2 under subparagraph (A) which is not a multiple

3 of $10 shall be rounded to the next lowest $10.

4 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur5 poses of paragraph (2), the term ‘applicable dollar

6 amount’ means—

7 ‘‘(A) $60,000 in the case of a taxpayer

8 whose qualified health insurance coverage cov9 ers more than 1 individual referred to in sub10 section (a), and

11 ‘‘(B) $30,000—

12 ‘‘(i) in any case not described in sub13 paragraph (A), and

14 ‘‘(ii) in the case of a married indi15 vidual filing a separate return.

16 For purposes of this paragraph, marital status shall

17 be determined under section 7703.

18 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur19 poses of this section—

20 ‘‘(1) IN GENERAL.—Except as otherwise pro21 vided in this paragraph, the term ‘qualified health

22 insurance’ means insurance which constitutes med23 ical care, as defined in section 213(d) without regard

24 to—

25 ‘‘(A) paragraph (1)(C) thereof, and
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1 ‘‘(B) so much of paragraph (1)(D) thereof

2 as relates to qualified long-term care insurance

3 contracts.

4 ‘‘(2) EXCLUSION OF COVERAGE PROVIDED

5 UNDER GROUP HEALTH PLANS, ETC.—Such term

6 shall not include insurance provided through any

7 group health plan of an employer or any other enti8 ty.

9 ‘‘(3) EXCLUSION OF CERTAIN OTHER CON10 TRACTS.—Such term shall not include insurance if a

11 substantial portion of its benefits are excepted bene12 fits (as defined in section 9832(c)).

13 ‘‘(e) INDIVIDUALS WITH COBRA COVERAGE.—In

14 the case of continuation coverage under a group health

15 plan which is required to be provided by Federal law for

16 an individual during the period specified in section

17 4980B(f)(2)(B), notwithstanding subsection (d)—

18 ‘‘(1) such coverage shall be treated as qualified

19 health insurance, and

20 ‘‘(2) the term ‘eligible month’ includes months

21 of such coverage.

22 ‘‘(f) SPECIAL RULES.—

23 ‘‘(1) COORDINATION WITH OTHER DEDUC24 TIONS.—No credit shall be allowed under this sec25 tion for the taxable year if any amount paid for
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1 qualified health insurance is taken into account in

2 determining the deduction allowed for such year

3 under section 213 or 222.

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

5 credit shall be allowed under this section to any indi6 vidual with respect to whom a deduction under sec7 tion 151 is allowable to another taxpayer for a tax8 able year beginning in the calendar year in which

9 such individual’s taxable year begins.

10 ‘‘(3) INFLATION ADJUSTMENT.—

11 ‘‘(A) IN GENERAL.—In the case of a tax12 able year beginning after 2000, each dollar

13 amount in subsection (c)(3) shall be increased

14 by an amount equal to—

15 ‘‘(i) such dollar amount, multiplied by

16 ‘‘(ii) the cost-of-living adjustment de17 termined under section 1(f)(3) for the cal18 endar year in which the taxable year be19 gins, determined by substituting ‘calendar

20 year 1999’ for ‘calendar year 1992’ in sub21 paragraph (B) thereof.

22 ‘‘(B) ROUNDING.—If any amount as ad23 justed under subparagraph (A) is not a multiple

24 of $100, such amount shall be rounded to the

25 next lowest multiple of $100.’’
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for subpart A of part IV of subchapter A of chapter 1

3 of such Code is amended by inserting after the item relat4 ing to section 25A the following new item:

‘‘Sec. 25B. Health insurance costs of previously uninsured individuals and individuals with COBRA coverage.’’

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

6 this section shall apply to taxable years beginning after

7 December 31, 1999.

8 SEC. 3. DEDUCTION FOR QUALIFIED HEALTH INSURANCE

9 COSTS OF EMPLOYEES AND SELF-EMPLOYED

10 INDIVIDUALS.

11 (a) IN GENERAL.—Part VII of subchapter B of chap12 ter 1 of the Internal Revenue Code of 1986 (relating to

13 additional itemized deductions) is amended by redesig14 nating section 222 as section 223 and by inserting after

15 section 221 the following new section:

16 ‘‘SEC. 222. COSTS OF QUALIFIED HEALTH INSURANCE.

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

18 there shall be allowed as a deduction an amount equal to

19 the applicable percentage of the amount paid during the

20 taxable year for coverage for the taxpayer, his spouse, and

21 dependents under qualified health insurance.

22 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

23 subsection (a)—
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), the applicable percentage shall be deter3 mined in accordance with the following table:

‘‘For taxable years beginning The applicable

in calendar year— percentage is—

2000 ............................................................................. 60

2001 ............................................................................. 70

2002 ............................................................................. 80

2003 ............................................................................. 90

2004 and thereafter ..................................................... 100.

4 ‘‘(2) SPECIAL RULE.—In the case of an indi5 vidual who is an employee within the meaning of

6 section 401(c)(1) and whose qualified health insur7 ance is not provided through a group health plan of

8 an employer, paragraph (1) shall be applied by sub9 stituting ‘100’ for ‘90’ but only with respect to the

10 lesser of the taxpayer’s earned income (within the

11 meaning of section 401(c)) or the payments referred

12 to in subsection (a).

13 ‘‘(c) EXCLUSION OF SUBSIDIZED COVERAGE.—Sub14 section (a) shall not apply to any taxpayer for any cal15 endar month for which the taxpayer participates in any

16 group health plan of an employer or any other entity if

17 less than 50 percent of the cost of the taxpayer’s coverage

18 under such plan is borne by the taxpayer. A rule similar

19 to the rule of the last sentence of section 162(l)(2)(B)

20 shall apply for purposes of this subsection.

21 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur22 poses of this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified health

2 insurance’ has the meaning given such term by sec3 tion 25B(d) determined without regard to paragraph

4 (2) thereof.

5 ‘‘(2) SPECIAL RULE.—

6 ‘‘(A) IN GENERAL.—In the case of an indi7 vidual who is an employee within the meaning

8 of section 401(c)(1) and whose qualified health

9 insurance (without regard to this paragraph) is

10 not provided through a group health plan of an

11 employer, paragraph (3) of section 25B(d) shall

12 not apply for purposes of this section.

13 ‘‘(B) LIMITATION.—The amount taken

14 into account under subsection (a) by reason of

15 subparagraph (A) shall not exceed the excess

16 of—

17 ‘‘(i) the taxpayer’s earned income

18 (within the meaning of section 401(c)),

19 over

20 ‘‘(ii) the amount which would (without

21 regard to this paragraph) be taken into ac22 count under subsection (a).

23 ‘‘(e) SPECIAL RULES.—

24 ‘‘(1) COORDINATION WITH MEDICAL DEDUC25 TION, ETC.—Any amount paid by a taxpayer for in-
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1 surance to which subsection (a) applies shall not be

2 taken into account in computing the amount allow3 able to the taxpayer as a deduction under section

4 213(a).

5 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM6 PLOYMENT TAX PURPOSES.—The deduction allow7 able by reason of this section shall not be taken into

8 account in determining an individual’s net earnings

9 from self-employment (within the meaning of section

10 1402(a)) for purposes of chapter 2.’’

11 (b) CONFORMING AMENDMENTS.—

12 (1)(A) Paragraph (1) of section 162(l) of such

13 Code is amended by striking ‘‘the amount paid’’ and

14 all that follows and inserting ‘‘the eligible long-term

15 care premiums (as defined in section 213(d)(10))

16 paid during the taxable year for any qualified long17 term care insurance contract (as defined in section

18 7702B(b)) covering the taxpayer, his spouse, and

19 dependents.’’

20 (B) Paragraph (2) of section 162(l) of such

21 Code is amended by striking subparagraph (C).

22 (2) Subsection (a) of section 62 of such Code

23 is amended by inserting after paragraph (17) the

24 following new item:
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1 ‘‘(18) COSTS OF QUALIFIED HEALTH INSUR2 ANCE.—The deduction allowed by section 222.’’

3 (3) The table of sections for part VII of sub4 chapter B of chapter 1 of such Code is amended by

5 striking the last item and inserting the following

6 new items:

‘‘Sec. 222. Costs of qualified health insurance.

‘‘Sec. 223. Cross reference.’’

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

8 this section shall apply to taxable years beginning after

9 December 31, 1999.

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