I

107TH CONGRESS

1ST SESSION H. R. 2005

To amend the Internal Revenue Code of 1986, the Employee Retirement

Income Security Act of 1974, and the Public Health Service Act to

extend the basic period for health care continuation coverage from 18

months to 5 years, to permit a further extension of continuation coverage

for individuals age 55 or older, and to provide for a 50 percent refundable tax credit towards premiums for COBRA continuation coverage.

IN THE HOUSE OF REPRESENTATIVES

MAY 24, 2001

Mr. STARK (for himself and Mr. MOAKLEY) introduced the following bill;

which was referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce and Energy and

Commerce, 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, the Employee

Retirement Income Security Act of 1974, and the Public

Health Service Act to extend the basic period for health

care continuation coverage from 18 months to 5 years,

to permit a further extension of continuation coverage

for individuals age 55 or older, and to provide for a

50 percent refundable tax credit towards premiums for

COBRA continuation coverage.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘COBRA Coverage Ex3 tension and Affordability Act of 2001’’.

4 SEC. 2. EXTENSION OF BASIC COBRA CONTINUATION PE5 RIOD FROM 18 MONTHS TO 5 YEARS.

6 (a) INTERNAL REVENUE CODE AMENDMENTS.—Sec7 tion 4980B(f)(2) of the Internal Revenue Code of 1986

8 is amended—

9 (1) by amending subclause (I) of subparagraph

10 (B)(i) to read as follows:

11 ‘‘(I) GENERAL RULE.—In the

12 case of a qualifying event not de13 scribed in paragraph (3)(F), the date

14 which is 60 months after the date of

15 the qualifying event.’’;

16 (2) in subparagraph (B)(i)—

17 (A) by striking subclause (II);

18 (B) by striking subclauses (IV) and all

19 that follows;

20 (C) by redesignating subclause (III) as

21 subclause (II); and

22 (D) in subclause (II), as so redesignated,

23 by inserting before the period at the end the

24 following: ‘‘or, in such case and if later, 60

25 months after the date of the qualifying event’’;

26 and
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1 (3) by striking the last sentence in subpara2 graph (C).

3 (b) ERISA AMENDMENTS.—Section 602 of the Em4 ployee Retirement Income Security Act of 1974 (29

5 U.S.C. 1162) is amended—

6 (1) by amending clause (i) of paragraph (2)(A)

7 to read as follows:

8 ‘‘(i) GENERAL RULE.—In the case of

9 a qualifying event not described in section

10 603(6), the date which is 60 months after

11 the date of the qualifying event.’’;

12 (2) in paragraph (2)(A)—

13 (A) by striking clause (ii);

14 (B) by striking clause (iv) and all that fol15 lows;

16 (C) by redesignating clause (iii) as clause

17 (ii); and

18 (D) in clause (ii), as so redesignated, by

19 striking ‘‘36 months after the date of the death

20 of the covered employee’’ and inserting ‘‘the

21 later of (I) 36 months after the date of the

22 death of the covered employee, or (II) 60

23 months after the date of the qualifying event’’;

24 and
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1 (3) by striking the last sentence in paragraph

2 (3).

3 (c) PHSA AMENDMENTS.—Section 2202 of the Pub4 lic Health Service Act 429 U.S.C. 300bb–2) is amended—

5 (1) by amending subparagraph (A) of para6 graph (2)(A) to read as follows:

7 ‘‘(A) MAXIMUM REQUIRED PERIOD.—The

8 date which is 60 months after the date of the

9 qualifying event.’’; and

10 (2) by striking the last sentence of paragraph

11 (3).

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

13 this section shall apply to plan years beginning on or after

14 January 1, 2002, with respect to individuals whose period

15 of extended coverage has not otherwise expired as of the

16 first day of the first such plan year.

17 SEC. 3. FURTHER EXTENSION OF COBRA CONTINUATION

18 COVERAGE FOR INDIVIDUALS AGE 55 OR

19 OLDER.

20 (a) INTERNAL REVENUE CODE AMENDMENTS.—Sec21 tion 4980B(f)(2) of the Internal Revenue Code of 1986

22 is amended—

23 (1) in subparagraph (B)(i), by inserting ‘‘.—

24 Subject to subparagraph (F)(i)—’’ after ‘‘PERIOD’’;
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1 (2) in subparagraph (C)(i), by inserting ‘‘sub2 ject to subparagraph (F)(ii),’’ after ‘‘(i)’’; and

3 (3) by adding at the end the following new sub4 paragraph:

5 ‘‘(F) EXTENSION OF COVERAGE FOR INDI6 VIDUALS AGE 55 OR OLDER.—In the case of an

7 individual who attains the age of 55 on the date

8 the period of extended coverage under this sec9 tion would otherwise end by virtue of the appli10 cation of a durational limitation in subpara11 graph (B)(i)—

12 ‘‘(i) such durational limitations shall

13 no longer apply to the individual; and

14 ‘‘(ii) during the period of any ex15 tended coverage solely by reason of the ap16 plication of clause (i), in applying subpara17 graph (C)(i) any reference in such sub18 paragraph to ‘102 percent’ is deemed a

19 reference to ‘125 percent’.’’.

20 (b) ERISA AMENDMENTS.—Section 602 of the Em21 ployee Retirement Income Security Act of 1974 (29

22 U.S.C. 1162) is amended—

23 (1) in paragraph (2)(A), by inserting ‘‘Subject

24 to paragraph (6)(A)—’’ after ‘‘PERIOD.—’’;
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1 (2) in paragraph (3)(A), by inserting ‘‘subject

2 to paragraph (6)(B),’’ after ‘‘(A)’’; and

3 (3) by adding at the end the following new

4 paragraph:

5 ‘‘(6) EXTENSION OF COVERAGE FOR INDIVID6 UALS AGE 55 OR OLDER.—In the case of an indi7 vidual who attains the age of 55 on the date the pe8 riod of extended coverage under this section would

9 otherwise end by virtue of the application of a

10 durational limitation in paragraph (2)(A)—

11 ‘‘(A) such durational limitations shall no

12 longer apply to the individual; and

13 ‘‘(B) during the period of any extended

14 coverage solely by reason of the application of

15 subparagraph (A), in applying paragraph

16 (3)(A) any reference in such paragraph to ‘102

17 percent’ is deemed a reference to ‘125 per18 cent’.’’.

19 (c) PHSA AMENDMENTS.—Section 2202 of the Pub20 lic Health Service Act (42 U.S.C. 300bb–2) is amended—

21 (1) in paragraph (2)(A), by inserting ‘‘Subject

22 to paragraph (6)(A)—’’ after ‘‘PERIOD.—’’;

23 (2) in paragraph (3)(A), by inserting ‘‘subject

24 to paragraph (6)(B),’’ after ‘‘(A)’’; and
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1 (3) by adding at the end the following new

2 paragraph:

3 ‘‘(6) EXTENSION OF COVERAGE FOR INDIVID4 UALS AGE 55 OR OLDER.—In the case of an indi5 vidual who attains the age of 55 on the date the pe6 riod of extended coverage under this section would

7 otherwise end by virtue of the application of a

8 durational limitation in paragraph (2)(A)—

9 ‘‘(A) such durational limitations shall no

10 longer apply to the individual; and

11 ‘‘(B) during the period of any extended

12 coverage solely by reason of the application of

13 subparagraph (A), in applying paragraph

14 (3)(A) any reference in such paragraph to ‘102

15 percent’ is deemed a reference to ‘125 per16 cent’.’’.

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

18 this section apply with respect to plan years beginning on

19 or after January 1, 2002, with respect to individuals

20 whose period of extended coverage otherwise ends on or

21 after first day of the first such plan year.
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1 SEC. 4. 50 PERCENT REFUNDABLE TAX CREDIT TOWARDS

2 PREMIUMS FOR COBRA CONTINUATION COV3 ERAGE.

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of

6 1986 (relating to nonrefundable personal credits) is

7 amended by inserting after section 25A the following new

8 section:

9 ‘‘SEC. 25B. COBRA CONTINUATION COVERAGE PREMIUMS.

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

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

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

13 50 percent of the amount paid during such year as con14 tinuation health coverage premiums.

15 ‘‘(b) CONTINUATION HEALTH COVERAGE PREMIUMS

16 DEFINED.—For purposes of this section, the term ‘con17 tinuation health coverage premiums’ means, for any pe18 riod, premiums paid for continuation coverage (as defined

19 in section 4980B(f)) under a group health plan for such

20 period but only if failure to offer such coverage to the tax21 payer for such period would constitute a failure by such

22 health plan to meet the requirements of section

23 4980B(f).’’

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

25 for subpart A of part IV of subchapter A of chapter 1
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1 of such Code is amended by inserting after the item relat2 ing to section 25A the following new item:

‘‘Sec. 25B. COBRA continuation coverage premiums.’’

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

4 this section shall apply to taxable years beginning after

5 December 31, 2001, for premiums for months beginning

6 with January 2002.

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