I

107TH CONGRESS

1ST SESSION H. R. 1181

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

private health coverage for the previously uninsured, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 22, 2001

Mrs. JOHNSON of Connecticut (for herself, Mr. LOBIONDO, Mr. ROGERS of

Michigan, Mr. TANCREDO, Mr. MCHUGH, Mr. OTTER, Mr. MCINNIS,

Mrs. MINK of Hawaii, and 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 provide

incentives for private health coverage for the previously

uninsured, and for other purposes.

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 2001’’.

6 SEC. 2. CREDIT FOR HEALTH INSURANCE COSTS OF PRE7 VIOUSLY UNINSURED INDIVIDUALS.

8 (a) IN GENERAL.—Subpart A of part IV of sub9 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.

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

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

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

9 the amount paid during the taxable year for coverage for

10 the taxpayer, his spouse, and dependents under qualified

11 health insurance.

12 ‘‘(b) LIMITATIONS.—

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

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

15 taxable year shall not exceed the sum of the monthly

16 limitations for eligible coverage months during such

17 taxable year for each individual referred to in sub18 section (a).

19 ‘‘(2) MONTHLY LIMITATION.—

20 ‘‘(A) IN GENERAL.—The monthly limita21 tion for an individual for each eligible coverage

22 month of such individual during the taxable

year is the amount equal to 1 23 ⁄12 of $1,500.
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1 ‘‘(B) LIMITATION TO 2 INDIVIDUALS.—Not

2 more than 2 individuals may be taken into ac3 count by the taxpayer under this subsection.

4 ‘‘(C) SPECIAL RULE FOR MARRIED INDI5 VIDUALS.—In the case of an individual—

6 ‘‘(i) who is married (within the mean7 ing of section 7703) as of the close of the

8 taxable year but does not file a joint return

9 for such year, and

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

11 such individual’s spouse at all times during

12 the taxable year,

13 only such individual may be taken into account

14 under this subsection.

15 ‘‘(3) ELIGIBLE COVERAGE MONTH.—For pur16 poses of this subsection, the term ‘eligible coverage

17 month’ means, with respect to an individual, any

18 month if—

19 ‘‘(A) as of the first day of such month

20 such individual is covered by qualified health in21 surance the premium for which was paid by the

22 taxpayer, and

23 ‘‘(B) there was at least a 12-month period

24 beginning after December 31, 2001, and ending
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1 before such month throughout which the

2 individual—

3 ‘‘(i) was not covered by qualified

4 health insurance, and

5 ‘‘(ii) was not eligible to participate in

6 any employer-provided group health plan.

7 ‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN8 COME.—

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

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

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

12 below zero) by the amount determined under para13 graph (2).

14 ‘‘(2) AMOUNT OF REDUCTION.—

15 ‘‘(A) IN GENERAL.—The amount deter16 mined under this paragraph shall be the

17 amount which bears the same ratio to such ag18 gregate amount as—

19 ‘‘(i) the excess of—

20 ‘‘(I) the taxpayer’s modified ad21 justed gross income for such taxable

22 year, over

23 ‘‘(II) the applicable dollar

24 amount, bears to

25 ‘‘(ii) $10,000.
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1 ‘‘(B) MODIFIED ADJUSTED GROSS IN2 COME.—For purposes of this paragraph, the

3 term ‘modified adjusted gross income’ means

4 adjusted gross income increased by any amount

5 excluded from gross income under section 911,

6 931, or 933.

7 ‘‘(C) ROUNDING.—Any amount determined

8 under subparagraph (A) which is not a multiple

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

10 ‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur11 poses of paragraph (2), the term ‘applicable dollar

12 amount’ means—

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

14 whose qualified health insurance coverage cov15 ers more than 1 individual referred to in sub16 section (a), and

17 ‘‘(B) $30,000—

18 ‘‘(i) in any case not described in sub19 paragraph (A), and

20 ‘‘(ii) in the case of a married indi21 vidual filing a separate return.

22 For purposes of this paragraph, marital status shall

23 be determined under section 7703.

24 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur25 poses of this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified health

2 insurance’ means insurance which constitutes med3 ical care; except that such term shall not include any

4 insurance if substantially all of its coverage is of ex5 cepted benefits described in section 9832(c).

6 ‘‘(2) CREDIT NOT ALLOWABLE FOR CERTAIN

7 SUBSIDIZED COVERAGE.—Except for purposes of

8 subsection (b)(3)(B), the term ‘qualified health in9 surance’ shall not include any coverage less than 50

10 percent of the cost of which is borne by the tax11 payer.

12 ‘‘(e) DENIAL OF CREDIT FOR AMOUNTS PAID UNDER

13 CERTAIN GOVERNMENT-PROVIDED PROGRAMS.—

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

15 under this section for amounts paid under—

16 ‘‘(A) title XVIII, XIX, or XXI of the So17 cial Security Act,

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

19 Code,

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

21 Code, or

22 ‘‘(D) the Indian Health Care Improvement

23 Act.

24 ‘‘(2) COVERAGE UNDER PROGRAM INCLUDED IN

25 DETERMINING ELIGIBILITY.—Coverage under any of
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1 the provisions referred to in paragraph (1) shall be

2 treated as coverage under qualified health insurance

3 for purposes of subsection (b)(3)(B).

4 ‘‘(g) SPECIAL RULES.—

5 ‘‘(1) COORDINATION WITH OTHER DEDUC6 TIONS.—No credit shall be allowed under this sec7 tion for the taxable year if any amount paid for

8 qualified health insurance is taken into account in

9 determining any deduction allowed for such year

10 under sections 162(l), 213, or 222.

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

12 credit shall be allowed under this section to any indi13 vidual with respect to whom a deduction under sec14 tion 151 is allowable to another taxpayer for a tax15 able year beginning in the calendar year in which

16 such individual’s taxable year begins.

17 ‘‘(3) INFLATION ADJUSTMENT.—

18 ‘‘(A) IN GENERAL.—In the case of a tax19 able year beginning after 2002, the dollar

20 amount in subsection (b)(2)(A) and each dollar

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

22 by an amount equal to—

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

24 ‘‘(ii) the cost-of-living adjustment de25 termined under section 1(f)(3) for the cal-
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1 endar year in which the taxable year be2 gins, determined by substituting ‘calendar

3 year 2001’ for ‘calendar year 1992’ in sub4 paragraph (B) thereof.

5 ‘‘(B) ROUNDING.—If any amount as ad6 justed under subparagraph (A) is not a multiple

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

8 next lowest multiple of $100.’’

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

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

11 of such Code is amended by inserting after the item relat12 ing to section 25A the following new item:

‘‘Sec. 25B. Health insurance costs of previously uninsured individuals.’’

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

14 this section shall apply to taxable years beginning after

15 December 31, 2001.

16 SEC. 3. DEDUCTION FOR QUALIFIED HEALTH INSURANCE

17 COSTS OF EMPLOYEES AND SELF-EMPLOYED

18 INDIVIDUALS.

19 (a) IN GENERAL.—Part VII of subchapter B of chap20 ter 1 of the Internal Revenue Code of 1986 (relating to

21 additional itemized deductions) is amended by redesig22 nating section 222 as section 223 and by inserting after

23 section 221 the following new section:
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1 ‘‘SEC. 222. COSTS OF QUALIFIED HEALTH INSURANCE.

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

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

4 the amount paid during the taxable year for coverage for

5 the taxpayer, his spouse, and dependents under qualified

6 health insurance (as defined in section 25B(d)).

7 ‘‘(b) SPECIAL RULES.—

8 ‘‘(1) COORDINATION WITH MEDICAL DEDUC9 TION, ETC.—Any amount paid by a taxpayer for in10 surance to which subsection (a) applies shall not be

11 taken into account in computing the amount allow12 able to the taxpayer as a deduction under section

13 162(l) or 213(a).

14 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM15 PLOYMENT TAX PURPOSES.—The deduction allow16 able by reason of this section shall not be taken into

17 account in determining an individual’s net earnings

18 from self-employment (within the meaning of section

19 1402(a)) for purposes of chapter 2.’’

20 (b) CONFORMING AMENDMENTS.—

21 (1) Subsection (a) of section 62 of such Code

22 is amended by inserting after paragraph (17) the

23 following new item:

24 ‘‘(18) COSTS OF QUALIFIED HEALTH INSUR25 ANCE.—The deduction allowed by section 222.’’
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1 (3) The table of sections for part VII of sub2 chapter B of chapter 1 of such Code is amended by

3 striking the last item and inserting the following

4 new items:

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

‘‘Sec. 223. Cross reference.’’

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

6 this section shall apply to taxable years beginning after

7 December 31, 2001.

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