I

106TH CONGRESS

1ST SESSION H. R. 2185

To amend the Internal Revenue Code of 1986 to allow individuals a refundable credit against income tax for the purchase of private health insurance through a pooling arrangement.

IN THE HOUSE OF REPRESENTATIVES

JUNE 14, 1999

Mr. STARK introduced the following bill; which was referred to the Committee

on Ways and Means, and in addition to the Committee on Government

Reform, for a period to be subsequently determined by the Speaker, in

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

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 through a pooling

arrangement.

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 for

5 Americans Act of 1999’’.
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1 TITLE I—REFUNDABLE CREDIT

2 FOR HEALTH INSURANCE

3 COVERAGE

4 SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE

5 COVERAGE.

6 (a) IN GENERAL.—Subpart C of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of

8 1986 (relating to refundable credits) is amended by redes9 ignating section 35 as section 36 and by inserting after

10 section 34 the following new section:

11 ‘‘SEC. 35. HEALTH INSURANCE COSTS.

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

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

14 by this subtitle an amount equal to the amount paid dur15 ing the taxable year for qualified health insurance for the

16 taxpayer, his spouse, and dependents.

17 ‘‘(b) LIMITATIONS.—

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

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

20 taxable year shall not exceed the sum of the monthly

21 limitations for coverage months during such taxable

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

23 for whom the taxpayer paid during the taxable year

24 any amount for coverage under qualified health in25 surance.
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1 ‘‘(2) MONTHLY LIMITATION.—

2 ‘‘(A) IN GENERAL.—The monthly limita3 tion for an individual for each coverage month

4 of such individual during the taxable year is the

5 amount equal to 1/12 of—

6 ‘‘(i) $1,200 if such individual is the

7 taxpayer,

8 ‘‘(ii) $1,200 if—

9 ‘‘(I) such individual is the spouse

10 of the taxpayer,

11 ‘‘(II) the taxpayer and such

12 spouse are married as of the first day

13 of such month, and

14 ‘‘(III) the taxpayer files a joint

15 return for the taxable year, and

16 ‘‘(iii) $600 if such individual is an in17 dividual for whom a deduction under sec18 tion 151(c) is allowable to the taxpayer for

19 such taxable year.

20 ‘‘(B) LIMITATION TO 2 DEPENDENTS.—

21 Not more than 2 individuals may be taken into

22 account by the taxpayer under subparagraph

23 (A)(iii).

24 ‘‘(C) SPECIAL RULE FOR MARRIED INDI25 VIDUALS.—In the case of an individual—
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1 ‘‘(i) who is married (within the mean2 ing of section 7703) as of the close of the

3 taxable year but does not file a joint return

4 for such year, and

5 ‘‘(ii) who does not live apart from

6 such individual’s spouse at all times during

7 the taxable year,

8 the limitation imposed by subparagraph (B)

9 shall be divided equally between the individual

10 and the individual’s spouse unless they agree on

11 a different division.

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

13 subsection—

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

15 month’ means, with respect to an individual,

16 any month if—

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

18 such individual is covered by qualified

19 health insurance, and

20 ‘‘(ii) the premium for coverage under

21 such insurance for such month is paid by

22 the taxpayer.

23 ‘‘(B) EMPLOYER-SUBSIDIZED COV24 ERAGE.—Such term shall not include any

25 month for which such individual participates in
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1 any subsidized health plan (within the meaning

2 of section 162(l)(2)) maintained by any em3 ployer of the taxpayer or of the spouse of the

4 taxpayer.

5 ‘‘(C) CAFETERIA PLAN AND FLEXIBLE

6 SPENDING ACCOUNT BENEFICIARIES.—Such

7 term shall not include any month during a tax8 able year if any amount is not includible in the

9 gross income of the taxpayer for such year

10 under section 106 with respect to—

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

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

13 ‘‘(ii) a benefit provided under a flexi14 ble spending or similar arrangement.

15 ‘‘(D) MEDICARE AND MEDICAID.—Such

16 term shall not include any month with respect

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

18 month, such individual—

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

20 title XVIII of the Social Security Act, or

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

22 under title XIX of such Act.

23 ‘‘(E) CERTAIN OTHER COVERAGE.—Such

24 term shall not include any month during a tax25 able year with respect to an individual if, at any
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1 time during such year, any benefit is provided

2 to such individual under—

3 ‘‘(i) chapter 17 of title 38, United

4 States Code, or

5 ‘‘(ii) any medical care program under

6 the Indian Health Care Improvement Act.

7 ‘‘(F) PRISONERS.—Such term shall not in8 clude any month with respect to an individual

9 if, as of the first day of such month, such indi10 vidual is imprisoned under Federal, State, or

11 local authority.

12 ‘‘(G) INSUFFICIENT PRESENCE IN UNITED

13 STATES.—Such term shall not include any

14 month during a taxable year with respect to an

15 individual if such individual is present in the

16 United States on fewer than 183 days during

17 such year (determined in accordance with sec18 tion 7701(b)(7)).

19 ‘‘(4) COORDINATION WITH DEDUCTION FOR

20 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN21 DIVIDUALS.—In the case of a taxpayer who is eligi22 ble to deduct any amount under section 162(l) for

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

24 taxpayer elects not to claim any amount as a deduc25 tion under such section for such year.
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1 ‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur2 poses of this section, the term ‘qualified health insurance’

3 means insurance sold through the Office of Health Insur4 ance under title II of the Health Insurance for Americans

5 Act of 1999.

6 ‘‘(d) COORDINATION WITH ADVANCE PAYMENTS OF

7 CREDIT.—

8 ‘‘(1) RECAPTURE OF EXCESS ADVANCE PAY9 MENTS.—If any payment is made by the Secretary

10 under section 7527 during any calendar year to a

11 provider of qualified health insurance for an indi12 vidual, then the tax imposed by this chapter for the

13 individual’s last taxable year beginning in such cal14 endar year shall be increased by the aggregate

15 amount of such payments.

16 ‘‘(2) RECONCILIATION OF PAYMENTS AD17 VANCED AND CREDIT ALLOWED.—Any increase in

18 tax under paragraph (1) shall not be treated as tax

19 imposed by this chapter for purposes of determining

20 the amount of any credit (other than the credit al21 lowed by subsection (a)) allowable under this sub22 part.

23 ‘‘(e) SPECIAL RULES.—

24 ‘‘(1) COORDINATION WITH MEDICAL EXPENSE

25 DEDUCTION.—The amount which would (but for this
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1 paragraph) be taken into account by the taxpayer

2 under section 213 for the taxable year shall be re3 duced by the credit (if any) allowed by this section

4 to the taxpayer for such year.

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

6 credit shall be allowed under this section to any indi7 vidual with respect to whom a deduction under sec8 tion 151 is allowable to another taxpayer for a tax9 able year beginning in the calendar year in which

10 such individual’s taxable year begins.

11 ‘‘(3) INFLATION ADJUSTMENT.—

12 ‘‘(A) IN GENERAL.—In the case of any

13 taxable year beginning in a calendar year after

14 2001, each dollar amount contained in sub15 section (b)(2)(A) shall be increased by an

16 amount equal to—

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

18 ‘‘(ii) the average of the inflation ad19 justments for the calendar year in which

20 the taxable year begins and the preceding

21 4 calendar years.

22 Any increase determined under the preceding

23 sentence shall be rounded to the nearest mul24 tiple of $50.
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1 ‘‘(B) INFLATION ADJUSTMENT.—For pur2 poses of subparagraph (A), the inflation adjust3 ment for any calendar year is the percentage (if

4 any) by which—

5 ‘‘(i) the weighted average FEHBP

6 cost for the preceding calendar year, ex7 ceeds

8 ‘‘(ii) the weighted average FEHBP

9 cost for second preceding calendar year.

10 ‘‘(C) WEIGHTED AVERAGE FEHBP COST.—

11 For purposes of subparagraph (B), the weight12 ed average FEHBP cost for any calendar year

13 is the weighted average determined under sec14 tion 8906(a)(1)(A) of title 5, United States

15 Code, as of October 1 of such calendar year

16 based on the subscription charges that will be

17 in effect during the following contract year.’’

18 (b) INFORMATION REPORTING.—

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

20 subchapter A of chapter 61 of such Code (relating

21 to information concerning transactions with other

22 persons) is amended by inserting after section

23 6050S the following new section:
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1 ‘‘SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR

2 QUALIFIED HEALTH INSURANCE.

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

4 with a trade or business conducted by such person, re5 ceives payments during any calendar year from any indi6 vidual for coverage of such individual or any other indi7 vidual under creditable health insurance, shall make the

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

9 Secretary may by regulations prescribe) with respect to

10 each individual from whom such payments were received.

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

12 is described in this subsection if such return—

13 ‘‘(1) is in such form as the Secretary may pre14 scribe, and

15 ‘‘(2) contains—

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

17 individual from whom payments described in

18 subsection (a) were received,

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

20 individual who was provided by such person

21 with coverage under creditable health insurance

22 by reason of such payments and the period of

23 such coverage, and

24 ‘‘(C) such other information as the Sec25 retary may reasonably prescribe.
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1 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur2 poses of this section, the term ‘creditable health insurance’

3 means qualified health insurance (as defined in section

4 35(c)) other than—

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

6 plan maintained by an employer, or

7 ‘‘(2) to the extent provided in regulations pre8 scribed by the Secretary, any other insurance cov9 ering an individual if no credit is allowable under

10 section 35 with respect to such coverage.

11 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID12 UALS WITH RESPECT TO WHOM INFORMATION IS RE13 QUIRED.—Every person required to make a return under

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

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

16 such return a written statement showing—

17 ‘‘(1) the name and address of the person re18 quired to make such return and the phone number

19 of the information contact for such person,

20 ‘‘(2) the aggregate amount of payments de21 scribed in subsection (a) received by the person re22 quired to make such return from the individual to

23 whom the statement is required to be furnished, and

24 ‘‘(3) the information required under subsection

25 (b)(2)(B) with respect to such payments.
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1 The written statement required under the preceding sen2 tence shall be furnished on or before January 31 of the

3 year following the calendar year for which the return

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

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

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

7 provided in regulations prescribed by the Secretary, in the

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

9 another person, only the person first receiving such

10 amount shall be required to make the return under sub11 section (a).’’.

12 (2) ASSESSABLE PENALTIES.—

13 (A) Subparagraph (B) of section

14 6724(d)(1) of such Code (relating to defini15 tions) is amended by redesignating clauses (xi)

16 through (xvii) as clauses (xii) through (xviii),

17 respectively, and by inserting after clause (x)

18 the following new clause:

19 ‘‘(xi) section 6050T (relating to re20 turns relating to payments for qualified

21 health insurance),’’.

22 (B) Paragraph (2) of section 6724(d) of

23 such Code is amended by striking ‘‘or’’ at the

24 end of the next to last subparagraph, by strik25 ing the period at the end of the last subpara-
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1 graph and inserting ‘‘, or’’, and by adding at

2 the end the following new subparagraph:

3 ‘‘(BB) section 6050T(d) (relating to re4 turns relating to payments for qualified health

5 insurance).’’.

6 (3) CLERICAL AMENDMENT.—The table of sec7 tions for subpart B of part III of subchapter A of

8 chapter 61 of such Code is amended by inserting

9 after the item relating to section 6050S the fol10 lowing new item:

‘‘Sec. 6050T. Returns relating to payments for qualified health

insurance.’’.

11 (c) CONFORMING AMENDMENTS.—

12 (1) Paragraph (2) of section 1324(b) of title

13 31, United States Code, is amended by inserting be14 fore the period ‘‘, or from section 35 of such Code’’.

15 (2) The table of sections for subpart C of part

16 IV of subchapter A of chapter 1 of such Code is

17 amended by striking the last item and inserting the

18 following new items:

‘‘Sec. 35. Health insurance costs.

‘‘Sec. 36. Overpayments of tax.’’.

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

20 this section shall apply to taxable years beginning after

21 December 31, 2000.
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1 SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PUR2 CHASERS OF QUALIFIED HEALTH INSUR3 ANCE.

4 (a) IN GENERAL.—Chapter 77 of the Internal Rev5 enue Code of 1986 (relating to miscellaneous provisions)

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

7 ‘‘SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE

8 CREDIT FOR PURCHASERS OF QUALIFIED

9 HEALTH INSURANCE.

10 ‘‘(a) GENERAL RULE.—In the case of an eligible indi11 vidual, the Secretary shall make payments to the provider

12 of such individual’s qualified health insurance equal to

13 such individual’s qualified health insurance credit advance

14 amount with respect to such provider.

15 ‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this

16 section, the term ‘eligible individual’ means any

17 individual—

18 ‘‘(1) who purchases qualified health insurance

19 (as defined in section 35(c)), and

20 ‘‘(2) for whom a qualified health insurance

21 credit eligibility certificate is in effect.

22 ‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI23 BILITY CERTIFICATE.—For purposes of this section, a

24 qualified health insurance credit eligibility certificate is a

25 statement furnished by an individual to the Secretary

26 which—
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1 ‘‘(1) certifies that the individual will be eligible

2 to receive the credit provided by section 35 for the

3 taxable year,

4 ‘‘(2) estimates the amount of such credit for

5 such taxable year, and

6 ‘‘(3) provides such other information as the

7 Secretary may require for purposes of this section.

8 ‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT AD9 VANCE AMOUNT.—For purposes of this section, the term

10 ‘qualified health insurance credit advance amount’ means,

11 with respect to any provider of qualified health insurance,

12 the Secretary’s estimate of the amount of credit allowable

13 under section 35 to the individual for the taxable year

14 which is attributable to the insurance provided to the indi15 vidual by such provider.

16 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

17 such regulations as may be necessary to carry out the pur18 poses of this section.’’.

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

20 for chapter 77 of such Code is amended by adding at the

21 end the following new item:

‘‘Sec. 7527. Advance payment of health insurance credit for purchasers of qualified health insurance.’’.

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

23 this section shall take effect on January 1, 2001.
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1 TITLE II—MAKING HEALTH IN2 SURANCE COVERAGE AVAIL3 ABLE

4 SEC. 201. REQUIREMENT FOR OFFERING BY CARRIERS

5 PARTICIPATING IN THE FEDERAL EMPLOY6 EES’ HEALTH BENEFITS PROGRAM (FEHBP).

7 (a) IN GENERAL.—As a condition for entering into

8 a contract for the offering of a health benefits plan under

9 FEHBP on and after January 1, 2001, if the carrier of10 fering the plan is a health insurance issuer the carrier of11 fering the plan—

12 (1) shall make available qualified health insur13 ance under this title to qualified individuals;

14 (2) shall provide for an annual open enrollment

15 period (consistent with section 202(c)) during which

16 such individuals may enroll in such insurance; and

17 (3) shall permit enrollment at other times and

18 may impose (with respect to enrollment at such

19 times) a waiting period of not longer than 60 days.

20 (b) QUALIFIED HEALTH INSURANCE DEFINED.—

21 For purposes of this title, the term ‘‘qualified health insur22 ance’’ means, with respect to a carrier, health insurance

23 coverage—

24 (1) that provides benefits that are the same as

25 (or actuarially equivalent to) the benefits offered by
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1 the carrier under a health benefits plan under

2 FEHBP;

3 (2) for which there is no pre-existing exclusion

4 or waiting period (except as permitted under sub5 section (a)(3)); and

6 (3) for which the premiums charged and quality

7 of care standards are negotiated between the carrier

8 and the Office of Health Insurance established

9 under section 202 and for such which the premiums

10 are established and applied on a uniform, commu11 nity-rated basis.

12 (c) VARIATION IN BENEFITS.—The benefits offered

13 under qualified health insurance may vary from those of14 fered by the carrier under FEHBP but only insofar as

15 the Director of the Office of Health Insurance determines

16 that such variation does not result in improper favorable

17 selection. Such variation shall be permitted to enable the

18 carrier to offer health insurance coverage the premium for

19 which is equal to the credit amount available under section

20 35 of the Internal Revenue Code of 1986 and which does

21 not require a premium payment by the qualified indi22 vidual.

23 (d) QUALIFIED INDIVIDUAL DEFINED.—For pur24 poses of this title, the term ‘‘qualified individual’’ means

25 an individual who is eligible for an income tax credit under
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1 section 35 of the Internal Revenue Code of 1986 for the

2 purchase of qualified health insurance.

3 (e) ADDITIONAL DEFINITIONS.—For purposes of this

4 title:

5 (1) CARRIER.—The term ‘‘carrier’’ has the

6 meaning given such term in section 8901 of title 5,

7 United States Code.

8 (2) FEHBP.—The term ‘‘FEHBP’’ means the

9 program of health benefits offered under chapter 89

10 of title 5, United States Code.

11 (3) HEALTH INSURANCE COVERAGE; HEALTH

12 INSURANCE ISSUER.—The terms ‘‘health insurance

13 coverage’’ and ‘‘health insurance issuer’’ have the

14 meanings given such terms in paragraphs (1) and

15 (2) of section 9832(b) of the Internal Revenue Code

16 of 1986.

17 SEC. 202. OFFICE OF HEALTH INSURANCE.

18 (a) ESTABLISHMENT.—The Secretary of Health and

19 Human Services shall establish an Office of Health Insur20 ance (in this title referred to as the ‘‘Office’’), to be head21 ed by a Director (in this title referred to as the ‘‘Direc22 tor’’) appointed by the Secretary.

23 (b) FUNCTIONS.—In relation to carrying out section

24 201, the Office and the Director shall have the same au25 thorities as the Office of Personnel Management and the
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1 Director of such Office have in carrying out FEHBP. The

2 Office shall be responsible for the offering to qualified in3 dividuals of qualified health insurance made available

4 under such section.

5 (c) PROVISION OF INFORMATION.—The Director

6 shall be responsible for the distribution of such informa7 tion (including information in comparative form) and the

8 conduct of a coordinated annual open enrollment period

9 in a manner designed to encourage competition and facili10 tate consumer choice among the qualified health insurance

11 offered under this title.

12 SEC. 203. EFFECTIVE DATE.

13 This title takes effect on January 1, 2001.

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