II 

110TH CONGRESS 

1ST SESSION S. 1875 

To amend the Internal Revenue Code of 1986 to provide a refundable and 

advanceable credit for health insurance, to amend the Social Security 

Act to provide for improved private health insurance access and affordability, to amend the Internal Revenue Code of 1986 to repeal the 

alternative minimum tax, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2007 

Mr. DEMINT introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a refundable and advanceable credit for health insurance, 

to amend the Social Security Act to provide for improved 

private health insurance access and affordability, to 

amend the Internal Revenue Code of 1986 to repeal 

the alternative minimum tax, 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; REFERENCE; TABLE OF CON4 TENTS. 

5 (a) SHORT TITLE.—This Act may be cited as the 

6 ‘‘Healthy Tax Reform Act’’. 


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1 (b) REFERENCE.—Except as otherwise expressly pro2 vided, whenever in this Act an amendment or repeal is 

3 expressed in terms of an amendment to, or repeal of, a 

4 section or other provision, the reference shall be consid5 ered to be made to a section or other provision of the In6 ternal Revenue Code of 1986. 

7 (c) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows: 

Sec. 1. Short title; reference; table of contents. 

TITLE I—REFUNDABLE AND ADVANCEABLE CREDIT FOR 

CERTAIN HEALTH INSURANCE COVERAGE 

Sec. 101. Refundable and advanceable credit for certain health insurance coverage. 

Sec. 102. Changes to existing tax preferences for medical coverage, etc., for individuals eligible for qualified health insurance credit or standard deduction. 

TITLE II—IMPROVING PRIVATE HEALTH INSURANCE ACCESS 

AND AFFORDABILITY 

Sec. 201. Improving private health insurance access and affordability. 

Sec. 202. Expansion of Medicaid health opportunity accounts to all States. 

TITLE III—ALTERNATIVE MINIMUM TAX REPEAL 

Sec. 301. Permanent repeal of alternative minimum tax. 

9 TITLE I—REFUNDABLE AND 

10 ADVANCEABLE CREDIT FOR 

11 CERTAIN HEALTH INSUR12 ANCE COVERAGE 

13 SEC. 101. REFUNDABLE AND ADVANCEABLE CREDIT FOR 

14 CERTAIN HEALTH INSURANCE COVERAGE. 

15 (a) ADVANCEABLE CREDIT.—Subpart A of part IV 

16 of subchapter A of chapter 1 (relating to nonrefundable 


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1 personal credits) is amended by adding at the end the fol2 lowing new section: 

3 ‘‘SEC. 25E. QUALIFIED HEALTH INSURANCE CREDIT. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in5 dividual, there shall be allowed as a credit against the tax 

6 imposed by this chapter for the taxable year the sum of 

7 the monthly limitations determined under subsection (b) 

8 for the taxpayer and the taxpayer’s spouse and depend9 ents. 

10 ‘‘(b) MONTHLY LIMITATION.— 

11 ‘‘(1) IN GENERAL.—The monthly limitation for 

12 each month during the taxable year for an eligible 

individual is 1 13 ⁄12th of— 

14 ‘‘(A) the applicable adult amount, in the 

15 case that the eligible individual is the taxpayer 

16 or the taxpayer’s spouse, 

17 ‘‘(B) the applicable adult amount, in the 

18 case that the eligible individual is an adult de19 pendent, and 

20 ‘‘(C) the applicable child amount, in the 

21 case that the eligible individual is a child de22 pendent. 

23 ‘‘(2) LIMITATION ON AGGREGATE AMOUNT.— 

24 Notwithstanding paragraph (1), the aggregate 

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1 payer’s spouse and dependents for any month shall 

not exceed 1 2 ⁄12th of the applicable aggregate amount. 

3 ‘‘(3) APPLICABLE AMOUNT.—For purposes of 

4 this section— 

‘‘Calendar year Applicable adult 

amount 

Applicable child 

amount 

Applicable aggregate amount 

2009 $2,160 $1,620 $5,400 

2010 $2,220 $1,670 $5,550 

2011 $2,290 $1,710 $5,710 

2012 $2,350 $1,760 $5,880 

2013 $2,420 $1,810 $6,050 

2014 $2,490 $1,870 $6,220 

2015 $2,560 $1,920 $6,400 

2016 $2,640 $1,980 $6,590 

2017 $2,710 $2,030 $6,780 

5 ‘‘(4) NO CREDIT FOR INELIGIBLE MONTHS.— 

6 With respect to any individual, the monthly limita7 tion shall be zero for any month for which such indi8 vidual is not an eligible individual. 

9 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—In 

10 the case of a taxable year to which section 26(a)(2) does 

11 not apply, the credit allowed under subsection (a) for the 

12 taxable year shall not exceed the excess of— 

13 ‘‘(1) the sum of the regular tax liability (as de14 fined in section 26(b)) plus the tax imposed by sec15 tion 55, over 

16 ‘‘(2) the sum of the credits allowable under this 

17 subpart (other than this section) and section 27 for 

18 the taxable year. 


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1 ‘‘(d) EXCESS CREDIT REFUNDABLE TO CERTAIN

2 TAX-FAVORED ACCOUNTS.—If— 

3 ‘‘(1) the credit which would be allowable under 

4 subsection (a) if only qualified refund eligible health 

5 insurance were taken into account under this sec6 tion, exceeds 

7 ‘‘(2) the limitation imposed by section 26 or 

8 subsection (c) for the taxable year, 

9 such excess shall be paid by the Secretary into the des10 ignated account of the taxpayer. 

11 ‘‘(e) ELIGIBLE INDIVIDUAL.—For purposes of this 

12 section— 

13 ‘‘(1) IN GENERAL.—The term ‘eligible indi14 vidual’ means, with respect to any month, an indi15 vidual who— 

16 ‘‘(A) is the taxpayer, the taxpayer’s 

17 spouse, or the taxpayer’s dependent, and 

18 ‘‘(B) is covered under qualified health in19 surance as of the 1st day of such month. 

20 ‘‘(2) COVERAGE UNDER MEDICARE, MEDICAID, 

21 SCHIP, MILITARY COVERAGE.—The term ‘eligible in22 dividual’ shall not include any individual who for any 

23 month is— 

24 ‘‘(A) entitled to benefits under part A of 

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1 rolled under part B of such title, and the indi2 vidual is not a participant or beneficiary in a 

3 group health plan or large group health plan 

4 that is a primary plan (as defined in section 

5 1862(b)(2)(A) of such Act), 

6 ‘‘(B) enrolled in the program under title 

7 XIX or XXI of such Act (other than under sec8 tion 1928 of such Act), or 

9 ‘‘(C) entitled to benefits under chapter 55 

10 of title 10, United States Code, including under 

11 the TRICARE program (as defined in section 

12 1072(7) of such title). 

13 ‘‘(3) IDENTIFICATION REQUIREMENTS.—The 

14 term ‘eligible individual’ shall not include any indi15 vidual for any month unless the policy number asso16 ciated with the qualified health insurance and the 

17 TIN of each eligible individual covered under such 

18 health insurance for such month are included on the 

19 return of tax for the taxable year in which such 

20 month occurs. 

21 ‘‘(4) PRISONERS.—The term ‘eligible individual’ 

22 shall not include any individual for a month if, as 

23 of the first day of such month, such individual is im24 prisoned under Federal, State, or local authority. 


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1 ‘‘(5) ALIENS.—The term ‘eligible individual’ 

2 shall not include any alien individual who is not a 

3 lawful permanent resident of the United States. 

4 ‘‘(f) HEALTH INSURANCE.—For purposes of this sec5 tion— 

6 ‘‘(1) QUALIFIED HEALTH INSURANCE.—The 

7 term ‘qualified health insurance’ means any insur8 ance constituting medical care which (as determined 

9 under regulations prescribed by the Secretary)— 

10 ‘‘(A) has a reasonable annual and lifetime 

11 benefit maximum, and 

12 ‘‘(B) provides coverage for inpatient and 

13 outpatient care, emergency benefits, and physi14 cian care. 

15 Such term does not include any insurance substan16 tially all of the coverage of which is coverage de17 scribed in section 223(c)(1)(B). 

18 ‘‘(2) QUALIFIED REFUND ELIGIBLE HEALTH

19 INSURANCE.—The term ‘qualified refund eligible 

20 health insurance’ means any qualified health insur21 ance which is— 

22 ‘‘(A) coverage under a group health plan 

23 (as defined in section 5000(b)(1)), or 

24 ‘‘(B) coverage offered in a State which has 

25 been deemed by the Secretary of Health and 


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1 Human Services to meet the refundability re2 quirements of section 2201 of the Social Secu3 rity Act. 

4 ‘‘(g) DESIGNATED ACCOUNTS.— 

5 ‘‘(1) DESIGNATED ACCOUNT.—For purposes of 

6 this section, the term ‘designated account’ means 

7 any specified account established and maintained by 

8 the provider of the taxpayer’s qualified refund eligi9 ble health insurance— 

10 ‘‘(A) which is designated by the taxpayer 

11 (in such form and manner as the Secretary may 

12 provide) on the return of tax for the taxable 

13 year, and 

14 ‘‘(B) which, under the terms of the ac15 count, accepts the payment described in sub16 paragraph (A) on behalf of the taxpayer. 

17 ‘‘(2) SPECIFIED ACCOUNT.—For purposes of 

18 this paragraph, the term ‘specified account’ means— 

19 ‘‘(A) any health savings account under sec20 tion 223 or Archer MSA under section 220, or 

21 ‘‘(B) any health insurance reserve account. 

22 ‘‘(3) HEALTH INSURANCE RESERVE AC23 COUNT.—For purposes of this subsection, the term 

24 ‘health insurance reserve account’ means a trust cre25 ated or organized in the United States as a health 


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1 insurance reserve account exclusively for the purpose 

2 of paying the qualified medical expenses (within the 

3 meaning of section 223(d)(2)) of the account bene4 ficiary (as defined in section 223(d)(3)), but only if 

5 the written governing instrument creating the trust 

6 meets the requirements described in subparagraphs 

7 (B), (C), (D), and (E) of section 223(d)(1). Rules 

8 similar to the rules under subsections (g) and (h) of 

9 section 408 shall apply for purposes of this subpara10 graph. 

11 ‘‘(4) TREATMENT OF PAYMENT.—Any payment 

12 under subsection (d) to a designated account shall— 

13 ‘‘(A) not be taken into account with re14 spect to any dollar limitation which applies with 

15 respect to contributions to such account (or to 

16 tax benefits with respect to such contributions), 

17 ‘‘(B) be includible in the gross income of 

18 the taxpayer for the taxable year in which the 

19 payment is made (except as provided in sub20 paragraph (C)), and 

21 ‘‘(C) be taken into account in determining 

22 any deduction or exclusion from gross income in 

23 the same manner as if such contribution were 

24 made by the taxpayer. 


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1 ‘‘(h) OTHER DEFINITIONS.—For purposes of this 

2 section— 

3 ‘‘(1) DEPENDENT.—The term ‘dependent’ has 

4 the meaning given such term by section 152 (deter5 mined without regard to subsections (b)(1), (b)(2), 

6 and (d)(1)(B) thereof). An individual who is a child 

7 to whom section 152(e) applies shall be treated as 

8 a dependent of the custodial parent for a coverage 

9 month unless the custodial and noncustodial parent 

10 provide otherwise. 

11 ‘‘(2) ADULT.—The term ‘adult’ means an indi12 vidual who is not a child. 

13 ‘‘(3) CHILD.—The term ‘child’ means a quali14 fying child (as defined in section 152(c). 

15 ‘‘(i) SPECIAL RULES.— 

16 ‘‘(1) COORDINATION WITH MEDICAL DEDUC17 TION, ETC.—Any amount paid by a taxpayer for in18 surance to which subsection (a) applies shall not be 

19 taken into account in computing the amount allow20 able to the taxpayer as a credit under section 35 or 

21 as a deduction under section 213(a). 

22 ‘‘(2) MEDICAL AND HEALTH SAVINGS AC23 COUNTS.—The credit allowed under subsection (a) 

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1 fined in section 220(d)) and health savings accounts 

2 (as defined in section 223(d)) which are excludable 

3 from gross income for such taxable years by reason 

4 of being used to pay premiums for coverage of an 

5 eligible individual under qualified health insurance 

6 for any month. 

7 ‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No 

8 credit shall be allowed under this section to any indi9 vidual with respect to whom a deduction under sec10 tion 151 is allowable to another taxpayer for a tax11 able year beginning in the calendar year in which 

12 such individual’s taxable year begins. 

13 ‘‘(4) MARRIED COUPLES MUST FILE JOINT RE14 TURN.— 

15 ‘‘(A) IN GENERAL.—If the taxpayer is 

16 married at the close of the taxable year, the 

17 credit shall be allowed under subsection (a) only 

18 if the taxpayer and his spouse file a joint return 

19 for the taxable year. 

20 ‘‘(B) MARITAL STATUS; CERTAIN MARRIED

21 INDIVIDUALS LIVING APART.—Rules similar to 

22 the rules of paragraphs (3) and (4) of section 

23 21(e) shall apply for purposes of this para24 graph. 


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1 ‘‘(5) VERIFICATION OF COVERAGE, ETC.—No 

2 credit shall be allowed under this section with re3 spect to any individual unless such individual’s cov4 erage (and such related information as the Secretary 

5 may require) is verified in such manner as the Sec6 retary may prescribe. 

7 ‘‘(6) INSURANCE WHICH COVERS OTHER INDI8 VIDUALS; TREATMENT OF PAYMENTS.—Rules similar 

9 to the rules of paragraphs (7) and (8) of section 

10 35(g) shall apply for purposes of this section. 

11 ‘‘(j) COORDINATION WITH ADVANCE PAYMENTS.— 

12 ‘‘(1) REDUCTION IN CREDIT FOR ADVANCE PAY13 MENTS.—With respect to any taxable year, the 

14 amount which would (but for this subsection) be al15 lowed as a credit to the taxpayer under subsection 

16 (a) shall be reduced (but not below zero) by the ag17 gregate amount paid on behalf of such taxpayer 

18 under section 7527A for months beginning in such 

19 taxable year. 

20 ‘‘(2) RECAPTURE OF EXCESS ADVANCE PAY21 MENTS.—If the aggregate amount paid on behalf of 

22 the taxpayer under section 7527A for months begin23 ning in the taxable year exceeds the sum of the 

24 monthly limitations determined under subsection (b) 

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1 pendents for such months, then the tax imposed by 

2 this chapter for such taxable year shall be increased 

3 by the sum of— 

4 ‘‘(A) such excess, plus 

5 ‘‘(B) interest on such excess determined at 

6 the underpayment rate established under sec7 tion 6621 for the period from the date of the 

8 payment under section 7527A to the date such 

9 excess is paid. 

10 For purposes of subparagraph (B), an equal part of 

11 the aggregate amount of the excess shall be deemed 

12 to be attributable to payments made under section 

13 7527A on the first day of each month beginning in 

14 such taxable year, unless the taxpayer establishes 

15 the date on which each such payment giving rise to 

16 such excess occurred, in which case subparagraph 

17 (B) shall be applied with respect to each date so es18 tablished. 

19 ‘‘(k) COST-OF-LIVING ADJUSTMENTS.— 

20 ‘‘(1) IN GENERAL.—In the case of any taxable 

21 year beginning in a calendar year after 2017, each 

22 of the dollar amounts contained in the last row of 

23 the table under subsection (b)(3) shall be increased 

24 by an amount equal to such dollar amount multi25 plied by the blended cost-of-living adjustment. 


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1 ‘‘(2) BLENDED COST-OF-LIVING ADJUST2 MENT.—For purposes of paragraph (1), the blended 

3 cost-of-living adjustment means one-half of the sum 

4 of— 

5 ‘‘(A) the cost-of-living adjustment deter6 mined under section 1(f)(3) for the calendar 

7 year in which the taxable year begins by sub8 stituting ‘calendar year 2016’ for ‘calendar year 

9 1992’ in subparagraph (B) thereof, plus 

10 ‘‘(B) the cost-of-living adjustment deter11 mined under section 213(d)(10)(B)(ii) for the 

12 calendar year in which the taxable year begins 

13 by substituting ‘2016’ for ‘1996’ in subclause 

14 (II) thereof. 

15 ‘‘(3) ROUNDING.—Any increase determined 

16 under paragraph (2) shall be rounded to the nearest 

17 multiple of $10.’’. 

18 (b) ADVANCE PAYMENT OF CREDIT.—Chapter 77 

19 (relating to miscellaneous provisions) is amended by in20 serting after section 7527 the following new section: 

21 ‘‘SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR QUALI22 FIED REFUND ELIGIBLE HEALTH INSUR23 ANCE. 

24 ‘‘(a) IN GENERAL.—The Secretary shall establish a 

25 program for making payments on behalf of individuals to 


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1 providers of qualified refund eligible health insurance (as 

2 defined in section 25E(f)(2)) for such individuals. 

3 ‘‘(b) LIMITATION.—The Secretary may make pay4 ments under subsection (a) only to the extent that the Sec5 retary determines that the amount of such payments made 

6 on behalf of any taxpayer for any month does not exceed 

7 the sum of the monthly limitations determined under sec8 tion 25E(b) for the taxpayer and taxpayer’s spouse and 

9 dependents for such month.’’. 

10 (c) INFORMATION REPORTING.— 

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

12 subchapter A of chapter 61 (relating to information 

13 concerning transactions with other persons) is 

14 amended by inserting after section 6050V the fol15 lowing new section: 

16 ‘‘SEC. 6050W. RETURNS RELATING TO CREDIT FOR QUALI17 FIED REFUND ELIGIBLE HEALTH INSUR18 ANCE. 

19 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 

20 who is entitled to receive payments for any month of any 

21 calendar year under section 7527A (relating to advance 

22 payment of credit for qualified refund eligible health insur23 ance) with respect to any individual shall, at such time 

24 as the Secretary may prescribe, make the return described 

25 in subsection (b) with respect to each such individual. 


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

2 is described in this subsection if such return— 

3 ‘‘(1) is in such form as the Secretary may pre4 scribe, and 

5 ‘‘(2) contains, with respect to each individual 

6 referred to in subsection (a)— 

7 ‘‘(A) the name, address, and TIN of each 

8 such individual, 

9 ‘‘(B) the months for which amounts pay10 ments under section 7527A were received, 

11 ‘‘(C) the amount of each such payment, 

12 ‘‘(D) the type of insurance coverage pro13 vide by such person with respect to such indi14 vidual and the policy number associated with 

15 such coverage, 

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

17 spouse and each dependent covered under such 

18 coverage, and 

19 ‘‘(F) such other information as the Sec20 retary may prescribe. 

21 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID22 UALS WITH RESPECT TO WHOM INFORMATION IS RE23 QUIRED.—Every person required to make a return under 

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


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1 is required to be set forth in such return a written state2 ment showing— 

3 ‘‘(1) the name and address of the person re4 quired to make such return and the phone number 

5 of the information contact for such person, and 

6 ‘‘(2) the information required to be shown on 

7 the return with respect to such individual. 

8 The written statement required under the preceding sen9 tence shall be furnished on or before January 31 of the 

10 year following the calendar year for which the return 

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

12 ‘‘(d) RETURNS WHICH WOULD BE REQUIRED TO BE

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

14 provided in regulations prescribed by the Secretary, in the 

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

16 another person, only the person first receiving such 

17 amount shall be required to make the return under sub18 section (a).’’. 

19 (2) ASSESSABLE PENALTIES.— 

20 (A) Subparagraph (B) of section 

21 6724(d)(1) (relating to definitions) is amended 

22 by redesignating clauses (xv) through (xxi) as 

23 clauses (xvi) through (xxii), respectively, and by 

24 inserting after clause (xiv) the following new 

25 clause: 


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1 ‘‘(xv) section 6050W (relating to re2 turns relating to credit for qualified refund 

3 eligible health insurance),’’. 

4 (B) Paragraph (2) of section 6724(d) is 

5 amended by striking the period at the end of 

6 subparagraph (CC) and inserting ‘‘, or’’ and by 

7 inserting after subparagraph (CC) the following 

8 new subparagraph: 

9 ‘‘(DD) section 6050W (relating to returns 

10 relating to credit for qualified refund eligible 

11 health insurance).’’. 

12 (d) CONFORMING AMENDMENTS.— 

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

14 31, United States Code, is amended by inserting ‘‘or 

15 25E’’ after ‘‘section 35’’. 

16 (2)(A) Section 23(b)(4)(B) is amended by in17 serting ‘‘and section 25D’’ after ‘‘this section’’. 

18 (B) Section 24(b)(3)(B) is amended by striking 

19 ‘‘and 25B’’ and inserting ‘‘, 25B, and 25D’’. 

20 (C) Section 25B(g)(2) is amended by striking 

21 ‘‘section 23’’ and inserting ‘‘sections 23 and 25D’’. 

22 (D) Section 26(a)(1) is amended by striking 

23 ‘‘and 25B’’ and inserting ‘‘25B, and 25D’’. 

24 (3) The table of sections for subpart A of part 

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1 serting after the item relating to section 25D the 

2 following new item: 

‘‘Sec. 25E. Qualified health insurance credit.’’. 

3 (4) The table of sections for chapter 77 is 

4 amended by inserting after the item relating to sec5 tion 7527 the following new item: 

‘‘Sec. 7527A. Advance payment of credit for qualified refund eligible health insurance.’’. 

6 (5) The table of sections for subpart B of part 

7 III of subchapter A of chapter 61 is amended by 

8 adding at the end the following new item: 

‘‘Sec. 6050W. Returns relating to credit for qualified refund eligible health insurance.’’. 

9 (e) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to taxable years beginning after 

11 December 31, 2008. 

12 SEC. 102. CHANGES TO EXISTING TAX PREFERENCES FOR 

13 MEDICAL COVERAGE, ETC., FOR INDIVIDUALS 

14 ELIGIBLE FOR QUALIFIED HEALTH INSUR15 ANCE CREDIT OR STANDARD DEDUCTION. 

16 (a) EXCLUSION FOR CONTRIBUTIONS BY EMPLOYER

17 TO ACCIDENT AND HEALTH PLANS.— 

18 (1) IN GENERAL.—Section 106 (relating to con19 tributions by employer to accident and health plans) 

20 is amended by adding at the end the following new 

21 subsection: 


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1 ‘‘(f) NO EXCLUSION FOR INDIVIDUALS ELIGIBLE

2 FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub3 section (a) shall not apply with respect to any employer4 provided coverage under an accident or health plan for any 

5 individual for any month unless such individual is de6 scribed in paragraph (2) or (5) of section 25E(e) for such 

7 month. The amount includible in gross income by reason 

8 of this subsection shall be determined under rules similar 

9 to the rules of section 4980B(f)(4).’’. 

10 (2) CONFORMING AMENDMENTS.— 

11 (A) Section 106(b)(1) is amended— 

12 (i) by inserting ‘‘gross income does 

13 not include’’ before ‘‘amounts contrib14 uted’’, and 

15 (ii) by striking ‘‘shall be treated as 

16 employer-provided coverage for medical ex17 penses under an accident or health plan’’. 

18 (B) Section 106(d)(1) is amended— 

19 (i) by inserting ‘‘gross income does 

20 not include’’ before ‘‘amounts contrib21 uted’’, and 

22 (ii) by striking ‘‘shall be treated as 

23 employer-provided coverage for medical ex24 penses under an accident or health plan’’. 


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1 (b) AMOUNTS RECEIVED UNDER ACCIDENT AND

2 HEALTH PLANS.—Section 105 (relating to amounts re3 ceived under accident and health plans) is amended by 

4 adding at the end the following new subsection: 

5 ‘‘(f) NO EXCLUSION FOR INDIVIDUALS ELIGIBLE

6 FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub7 section (b) shall not apply with respect to any employer8 provided coverage under an accident or health plan for any 

9 individual for any month unless such individual is de10 scribed in paragraph (2) or (5) of section 25E(e) for such 

11 month.’’. 

12 (c) SPECIAL RULES FOR HEALTH INSURANCE COSTS

13 OF SELF-EMPLOYED INDIVIDUALS.—Subsection (l) of 

14 section 162 (relating to special rules for health insurance 

15 costs of self-employed individuals) is amended by adding 

16 at the end the following new paragraph: 

17 ‘‘(6) NO DEDUCTION TO INDIVIDUALS ELIGIBLE

18 FOR QUALIFIED HEALTH INSURANCE.—Paragraph 

19 (1) shall not apply for any individual for any month 

20 unless such individual is described in paragraph (2) 

21 or (5) of section 25E(e) for such month.’’. 

22 (d) EARNED INCOME CREDIT UNAFFECTED BY RE23 PEALED EXCLUSIONS.—Subparagraph (B) of section 

24 32(c)(2) is amended by redesignating clauses (v) and (vi) 


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1 as clauses (vi) and (vii), respectively, and by inserting 

2 after clause (iv) the following new clause: 

3 ‘‘(v) the earned income of an indi4 vidual shall be computed without regard to 

5 sections 105(f) and 106(f),’’. 

6 (e) MODIFICATION OF DEDUCTION FOR MEDICAL

7 EXPENSES.—Subsection (d) of section 213 is amended by 

8 adding at the end the following new paragraph: 

9 ‘‘(12) PREMIUMS FOR QUALIFIED HEALTH IN10 SURANCE.—The term ‘medical care’ does not include 

11 any amount paid as a premium for coverage of an 

12 eligible individual (as defined in section 25E(e)) 

13 under qualified health insurance (as defined in sec14 tion 25E(f)) for any month.’’. 

15 (f) DEFINITION OF WAGES FOR EMPLOYMENT TAX

16 PURPOSES.— 

17 (1) FEDERAL INSURANCE CONTRIBUTIONS

18 ACT.—Subsection (a) of section 3121 is amended— 

19 (A) by striking ‘‘sickness or’’ each place it 

20 appears in paragraph (2), and 

21 (B) by inserting after paragraph (2) the 

22 following new paragraph: 

23 ‘‘(3) any payment made to or for the benefit of 

24 an employee if at the time of such payment it is rea25 sonable to believe that the employee will be able to 


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1 exclude such payment from income under section 

2 104, 105, or 106;’’. 

3 (2) RAILROAD RETIREMENT TAX.—Subsection 

4 (e) of section 3231 is amended— 

5 (A) by striking ‘‘sickness or’’ each place it 

6 appears in paragraph (1), and 

7 (B) by adding at the end the following new 

8 paragraph: 

9 ‘‘(13) The term ‘compensation’ shall not include 

10 any payment made to or for the benefit of an em11 ployee if at the time of such payment it is reason12 able to believe that the employee will be able to ex13 clude such payment from income under section 104, 

14 105, or 106.’’. 

15 (3) UNEMPLOYMENT TAX.—Subsection (b) of 

16 section 3306 is amended— 

17 (A) by striking ‘‘sickness or’’ each place it 

18 appears in paragraph (2), and 

19 (B) by inserting after paragraph (2) the 

20 following new paragraph: 

21 ‘‘(3) any payment made to or for the benefit of 

22 an employee if at the time of such payment it is rea23 sonable to believe that the employee will be able to 

24 exclude such payment from income under section 

25 104, 105, or 106;’’. 


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1 (g) REPORTING REQUIREMENT.—Subsection (a) of 

2 section 6051 is amended by striking ‘‘and’’ at the end of 

3 paragraph (12), by striking the period at the end of para4 graph (13) and inserting ‘‘and’’, and by inserting after 

5 paragraph (13) the following new paragraph: 

6 ‘‘(14) the total amount of employer-provided 

7 coverage under an accident or health plan which is 

8 includible in gross income by reason of sections 

9 105(f) and 106(f).’’. 

10 (h) RETIRED PUBLIC SAFETY OFFICERS.—Section 

11 402(l)(4)(D) is amended by adding at the end the fol12 lowing: ‘‘Such term shall not include any premium for cov13 erage by an accident or health insurance plan for any 

14 month unless such individual is described in paragraph (2) 

15 or (5) of section 25E(e) for such month.’’. 

16 (i) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2008. 

19 TITLE II—IMPROVING PRIVATE 

20 HEALTH INSURANCE ACCESS 

21 AND AFFORDABILITY 

22 SEC. 201. IMPROVING PRIVATE HEALTH INSURANCE AC23 CESS AND AFFORDABILITY. 

24 The Social Security Act is amended by adding at the 

25 end the following new title: 


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1 ‘‘TITLE XXII—REFUNDABILITY 

2 DEEMING; STATE HEALTH IN3 SURANCE EXCHANGES 

4 ‘‘Subtitle A—Refundability 

5 Deeming 

6 ‘‘SEC. 2201. REFUNDABILITY DEEMING. 

7 ‘‘(a) IN GENERAL.—For purposes of section 25E of 

8 the Internal Revenue Code of 1986, the Secretary shall 

9 deem whether a State (as defined for purposes of title 

10 XIX) has taken efforts to provide its citizens with greater 

11 access to affordable private health insurance. Those ef12 forts may include, but are not limited to, the following 

13 initiatives: 

14 ‘‘(1) The establishment of a State health insur15 ance exchange. 

16 ‘‘(2) The establishment of a high risk solution, 

17 such as a high risk pool, reinsurance mechanism, or 

18 other State-designed high risk solution. 

19 ‘‘(3) The availability of affordable coverage (as 

20 defined in section 2212(b)(2), determined without 

21 regard to whether such coverage is qualified ex22 change-based health insurance coverage (as defined 

23 in section 2214). 

24 ‘‘(b) MORE INDIVIDUALS COVERED.—A State shall 

25 demonstrate to the Secretary that an initiative under subVerDate Aug 31 2005 04:39 Jul 26, 2007 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S1875.IS S1875

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1 section (a) is reasonably designed to operate in a manner 

2 so as to result, in combination with the qualified health 

3 insurance tax credit, in a reduction in the number of eligi4 ble individuals (as defined in section 2213) in the State 

5 who do not have health insurance coverage, as measured 

6 by the Secretary based upon information obtained in the 

7 Current Population Survey. 

8 ‘‘(c) REFERENCE TO REFUNDABILITY REQUIREMENT

9 FOR APPLICATION OF REFUNDABILITY OF QUALIFIED

10 HEALTH INSURANCE TAX CREDIT.—For rules relating to 

11 limitations on the refundability of the qualified health in12 surance credit under section 25E of the Internal Revenue 

13 Code of 1986 in relation to initiatives described in sub14 section (a), see section 25E(d). In this title, the term 

15 ‘qualified health insurance tax credit’ means the tax credit 

16 provided under such section. 

17 ‘‘Subtitle B—State Health 

18 Insurance Exchanges 

19 ‘‘SEC. 2211. STATE HEALTH INSURANCE EXCHANGES. 

20 ‘‘(a) IN GENERAL.—The Secretary shall provide a 

21 process for the review and certification of applications of 

22 each State of a State-based program as a certified health 

23 insurance exchange for the State (each in this subtitle re24 ferred to as a ‘certified State health insurance exchange’ 

25 or an ‘exchange’). A program shall not be treated as a 


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1 certified State health insurance exchange unless the Sec2 retary, in consultation with the Secretary of the Treasury, 

3 determines that the program meets the requirements for 

4 an exchange under this subtitle. 

5 ‘‘(b) CONTINUED CERTIFICATION.—Upon certifi6 cation of a program under subsection (a), the program 

7 shall remain so certified unless the Secretary determines 

8 that the program has failed to meet any of the require9 ments for an exchange under this subtitle. 

10 ‘‘SEC. 2212. REQUIREMENTS FOR EXCHANGE CERTIFI11 CATION. 

12 ‘‘(a) GENERAL REQUIREMENTS.— 

13 ‘‘(1) IN GENERAL.—The exchange shall be a 

14 means to pool individual consumers purchasing pri15 vate health insurance, to provide them with greater 

16 negotiating leverage, and to provide a market where 

17 private health insurance plans can compete to offer 

18 coverage for these individuals. 

19 ‘‘(2) ADMINISTRATION.—Nothing in this sub20 title shall prohibit a State from either directly con21 tracting with the health insurance plans partici22 pating in the exchange or a third party adminis23 trator to operate the exchange. 

24 ‘‘(3) PLAN PARTICIPATION.—No State may re25 strict or otherwise limit the ability of health insurVerDate Aug 31 2005 04:39 Jul 26, 2007 Jkt 059200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S1875.IS S1875

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1 ance plans to participate in and offer health insur2 ance products through an exchange, so long as the 

3 providers of these plans are duly licensed under 

4 State insurance laws applicable to all health insur5 ance providers in the State and comply with the re6 quirements under this subtitle. 

7 ‘‘(4) BENEFITS.—A State shall not impose re8 quirements that health insurance plans participating 

9 in the exchange provide any benefits, beyond those 

10 requirements that the State imposes upon all li11 censed health insurance providers operating in the 

12 State. 

13 ‘‘(5) PRICING.—A State shall not set prices for 

14 any products offered through the exchange. 

15 ‘‘(6) PREMIUMS COLLECTION METHOD.—A 

16 State shall ensure the existence of an effective and 

17 efficient method for the collection of premiums owed 

18 for qualified exchange-based health insurance cov19 erage. 

20 ‘‘(7) MULTI-STATE POOLING ARRANGEMENTS.— 

21 Nothing in this subtitle shall prohibit State health 

22 insurance exchanges from organizing into a multi23 state pooling arrangement. 


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•S 1875 IS

1 ‘‘(b) OFFERING OF AFFORDABLE QUALIFIED EX2 CHANGE-BASED HEALTH INSURANCE COVERAGE TO ELI3 GIBLE INDIVIDUALS.— 

4 ‘‘(1) AFFORDABLE AND BENCHMARK COV5 ERAGE.—The exchange must have one or more 

6 health insurance plans participating in the offering 

7 to each eligible individual (as defined in section 

8 2213(a)) of qualified exchange-based health insur9 ance coverage (as defined in section 2214)— 

10 ‘‘(A) at least one of which is affordable as 

11 determined under paragraph (2); and 

12 ‘‘(B) at least one of which provides bench13 mark benefits coverage described in section 

14 2113(b). 

15 Private health insurance providers, duly licensed in 

16 the State, may enter into agreements with the ex17 change to provide qualified exchange-based health 

18 insurance coverage and increase the choices available 

19 to eligible individuals. 

20 ‘‘(2) AFFORDABLE COVERAGE.— 

21 ‘‘(A) IN GENERAL.—Subject to subpara22 graph (B), a State through an exchange shall 

23 meet the requirement under paragraph (1)(A) 

24 in a year by using its funds to supplement the 

25 premiums of the lowest cost plan participating 


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•S 1875 IS

1 in the exchange (as determined by a method2 ology to be specified by the Secretary), so that 

3 the average premium for individuals enrolling in 

4 the plan will not exceed 6 percent of the State’s 

5 median income. 

6 ‘‘(B) EXCEPTION.—A State is not required 

7 under subparagraph (A) to provide any supple8 mental payments if there is at least one plan 

9 available in all areas of the State with average 

10 premiums that are below 6 percent of the 

11 State’s median income. 

12 ‘‘(C) NO USE OF PRICE FIXING.—The im13 plementation of this paragraph shall comply 

14 with subsection (a)(5). 

15 ‘‘(D) APPLICATION.— 

16 ‘‘(i) DISREGARDING LATE ENROLL17 MENT PENALTIES AND RELATED PREMIUM

18 DISINCENTIVES.—The amount of premium 

19 under subparagraph (A) shall not take into 

20 account any increase in premium resulting 

21 from the State’s application of methods 

22 permitted under subsection (a)(6). 

23 ‘‘(ii) APPLICATION TO SUB-STATE

24 AREAS.—A State may apply subparagraph 


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•S 1875 IS

1 (A) separately for different areas within 

2 the State. 

3 ‘‘(c) ENROLLMENT OF ELIGIBLE INDIVIDUALS.— 

4 ‘‘(1) ENROLLMENT MECHANISMS.—Health in5 surance plans participating in the exchange in State 

6 shall have uniform mechanisms designed to encour7 age and facilitate the enrollment of all eligible indi8 viduals in qualified exchange-based health insurance 

9 coverage. 

10 ‘‘(2) ENROLLMENT OPPORTUNITIES.— 

11 ‘‘(A) IN GENERAL.—Health insurance 

12 plans participating in the exchange in a State 

13 shall permit the enrollment and changes of en14 rollment of individuals at the time they become 

15 eligible individuals in the State, such as 

16 through loss of group-based qualifying health 

17 insurance coverage, changes in residency or 

18 family composition, and other circumstances 

19 specified by the Secretary. 

20 ‘‘(B) ANNUAL OPEN ENROLLMENT PERI21 ODS.—Health insurance plans participating in 

22 the exchange in a State shall permit eligible in23 dividuals to change enrollment among such 

24 plans in an annual manner, subject to subpara25 graph (A). 


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1 ‘‘(3) LIMITATION ON PREEXISTING CONDITION

2 EXCLUSIONS.—Qualified exchange-based health in3 surance coverage shall meet the requirements of sec4 tion 9801 of the Internal Revenue Code of 1986 in 

5 the same manner as if it were a group health plan. 

6 ‘‘(d) PATHWAY FOR ENROLLMENT BY MEDICAID AND

7 SCHIP BENEFICIARIES.—A State through an exchange 

8 shall include a pathway for eligible individuals who are en9 rolled (or eligible to enroll) under title XIX or XXI in such 

10 State to enroll in qualified exchange-based health insur11 ance coverage. A State may use the program under section 

12 1938 in developing such a pathway. 

13 ‘‘(e) METHODS TO REDUCE ADVERSE SELECTION.— 

14 Health insurance plans participating in the exchange in 

15 a State shall have a mechanism to reduce adverse selection 

16 in the enrollment of eligible individuals. This mechanism 

17 shall be uniform for all such plans and may include wait18 ing periods and premium surcharges for late enrollees (or 

19 individuals who otherwise do not have periods of creditable 

20 coverage before enrolling through the exchange) and other 

21 devices reasonably designed to reduce adverse selection in 

22 the enrollment of eligible individuals consistent with the 

23 requirements of subpart 1 of part B of title XXVII of the 

24 Public Health Service Act (relating to portability, access, 


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•S 1875 IS

1 and renewability requirements for health insurance cov2 erage in the individual market). 

3 ‘‘(f) REINSURANCE OR OTHER RISK REDISTRIBU4 TION MECHANISM.—Health insurance plans participating 

5 in the exchange in a State may have a uniform mechanism 

6 that protects entities offering qualified exchange-based 

7 health insurance coverage to manage risk. Such a mecha8 nism may include reinsurance, a high risk pool, or other 

9 mechanism approved by the Secretary. 

10 ‘‘(g) DISSEMINATION OF COVERAGE INFORMA11 TION.—Health insurance plans participating in the ex12 change in a State shall ensure that there is wide dissemi13 nation of information about health insurance coverage op14 tions, including the plans offered and premiums and bene15 fits for such plans, to eligible individuals and to employers 

16 that provide financial assistance in purchasing such cov17 erage. 

18 ‘‘(h) INFORMATION COORDINATION.—Health insur19 ance plans participating in the exchange in a State shall 

20 report to the Secretary of the Treasury such information 

21 as is required under the Internal Revenue Code of 1986 

22 to carry out the qualified health insurance tax credit. 

23 ‘‘SEC. 2213. ELIGIBLE INDIVIDUAL. 

24 ‘‘(a) ELIGIBLE INDIVIDUAL.—In this subtitle— 


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•S 1875 IS

1 ‘‘(1) IN GENERAL.—The term ‘eligible indi2 vidual’ means, with respect to a State and a month, 

3 an individual who, as of the first day of the month— 

4 ‘‘(A) is a resident of the State (as deter5 mined in accordance with guidelines specified 

6 by the Secretary); 

7 ‘‘(B) is citizen or national of the United 

8 States, an alien lawfully admitted to the United 

9 States for permanent residence or otherwise re10 siding in the United States under color of law, 

11 or an alien otherwise lawfully residing in the 

12 United States under color of law for such pe13 riod as the Secretary shall specify; and 

14 ‘‘(C) is not covered under group-based 

15 qualifying health insurance coverage. 

16 ‘‘(2) GROUP-BASED QUALIFYING HEALTH IN17 SURANCE COVERAGE.—The term ‘group-based quali18 fying health insurance coverage’ means any of the 

19 following:: 

20 ‘‘(A) GROUP HEALTH PLAN COVERAGE.— 

21 ‘‘(i) IN GENERAL.—Subject to clause 

22 (ii), coverage under a group health plan 

23 (as defined in section 9832(a) of the Inter24 nal Revenue Code of 1986). 


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1 ‘‘(ii) EXCEPTION.—Clause (i) shall 

2 not include— 

3 ‘‘(I) a health plan if substantially 

4 all of its coverage is coverage de5 scribed in section 223(c)(1)(B) of the 

6 Internal Revenue Code of 1986; or 

7 ‘‘(II) coverage under a group 

8 health plan insofar as the plan bene9 fits consist (other than coverage de10 scribed in subclause (I)) of contribu11 tion towards a qualified exchange12 based health insurance coverage. 

13 ‘‘(B) MEDICARE.— 

14 ‘‘(i) IN GENERAL.—Subject to clause 

15 (ii), coverage under any part of the Medi16 care program under title XVIII. 

17 ‘‘(ii) EXCEPTION.—Clause (i) shall 

18 not apply if all the coverage under Medi19 care is, through the direct or indirect ap20 plication of section 1862(b), secondary to 

21 coverage under a group health plan. 

22 ‘‘(C) MILITARY HEALTH CARE.—Coverage 

23 under the military health program under chap24 ter 55 of title 10, United States Code, including 


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•S 1875 IS

1 under the TRICARE program (as defined in 

2 section 1072(7) of such title). 

3 ‘‘(D) FEHBP.—Coverage under the Fed4 eral employees health benefit program under 

5 chapter 89 of title 5, United States Code. 

6 ‘‘(E) FULL VETERANS COVERAGE.—Cov7 erage through the Department of Veterans Af8 fairs if such coverage is based on enrollment of 

9 an individual who is described in paragraph (1) 

10 of section 1705(a) of title 38, United States 

11 Code (relating to veterans with service-con12 nected disabilities rated 50 percent or greater). 

13 ‘‘(b) RELATION TO MEDICAID/SCHIP.—Except as a 

14 State may otherwise provide, an individual is not disquali15 fied from being an eligible individual merely because the 

16 individual is enrolled under title XIX or XXI. 

17 ‘‘SEC. 2214. QUALIFIED EXCHANGE-BASED HEALTH INSUR18 ANCE COVERAGE. 

19 ‘‘In this subtitle, the term ‘qualified exchange-based 

20 health insurance coverage’ means qualified health insur21 ance (as defined in section 25E(f)(1) of the Internal Rev22 enue Code of 1986) offered by a private entity through 

23 an exchange. 


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1 ‘‘SEC. 2215. FLEXIBILITY IN APPLICATION TO LOWER-IN2 COME INDIVIDUALS. 

3 ‘‘(a) STATE SUPPLEMENTATION.—Nothing in this 

4 subtitle shall be construed as preventing a State from pro5 viding, under a certified State health insurance exchange 

6 and at the State’s own expense, additional assistance to 

7 eligible individuals with respect to subsidizing premium 

8 and cost-sharing costs for qualified exchange-based health 

9 insurance coverage. 

10 ‘‘(b) TREATMENT OF CERTAIN MEDICAID AND

11 SCHIP BENEFICIARIES.—Nothing in this subtitle shall be 

12 construed as preventing a State Medicaid or children’s 

13 health insurance program under title XIX or XXI from 

14 permitting individuals eligible for medical assistance or 

15 child health assistance under the respective titles from ob16 taining such assistance through enrollment in qualified ex17 change-based health insurance coverage.’’. 

18 SEC. 202. EXPANSION OF MEDICAID HEALTH OPPORTUNITY 

19 ACCOUNTS TO ALL STATES. 

20 Section 1938 of the Social Security Act (42 U.S.C. 

21 1396u–8) is amended— 

22 (1) in subsection (a)— 

23 (A) by striking paragraph (1) and insert24 ing the following: 

25 ‘‘(1) IN GENERAL.—Notwithstanding any other 

26 provision of this title, the Secretary shall establish a 


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•S 1875 IS

1 program under which States may provide under 

2 their State plans under this title (including such a 

3 plan operating under a statewide waiver under sec4 tion 1115) in accordance with this section for the 

5 provision of alternative benefits consistent with sub6 section (c) for eligible population groups in one or 

7 more geographic areas of the State specified by the 

8 State. An amendment under the previous sentence is 

9 referred to in this section as a ‘State health oppor10 tunity accounts program’.’’; and 

11 (B) in paragraph (2)— 

12 (i) by striking the paragraph heading 

13 and inserting ‘‘IMPLEMENTATION.—’’; 

14 (ii) by striking subparagraph (A) and 

15 inserting the following: 

16 ‘‘(A) IN GENERAL.—The program estab17 lished under this section shall begin on January 

18 1, 2008.’’; and 

19 (iii) in subparagraph (B)— 

20 (I) by striking clause (i) and in21 serting the following: 

22 ‘‘(i) IN GENERAL.—Not later than 

23 March 31, 2013, the Comptroller General 

24 of the United States shall submit a report 


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•S 1875 IS

1 to Congress evaluating the programs con2 ducted under this section .’’; and 

3 (II) in clause (ii), by striking 

4 ‘‘2010’’ and inserting ‘‘2013’’; and 

5 (C) in paragraph (3)(E), by inserting 

6 ‘‘that include plan comparison information in 

7 language that is easily understood’’ before the 

8 period; 

9 (2) in subsection (b)— 

10 (A) in paragraph (1), by striking ‘‘con11 sistent with paragraphs (2) and (3)’’; 

12 (B) by striking paragraphs (2) through (4) 

13 and inserting the following: 

14 ‘‘(2) LIMITATION ON ENROLLEES IN MEDICAID

15 MANAGED CARE ORGANIZATIONS.—Insofar as the 

16 State provides for eligibility of individuals who are 

17 enrolled in Medicaid managed care organizations, 

18 such individuals may participate in the State health 

19 opportunity account program only if the State pro20 vides assurances satisfactory to the Secretary that 

21 the following conditions are met with respect to any 

22 such organization: 

23 ‘‘(A) In no case may the number of such 

24 individuals enrolled in the organization who 

25 participate in the program exceed 5 percent of 


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•S 1875 IS

1 the total number of individuals enrolled in such 

2 organization. 

3 ‘‘(B) The proportion of enrollees in the or4 ganization who so participate is not signifi5 cantly disproportionate to the proportion of 

6 such enrollees in other such organizations who 

7 participate. 

8 ‘‘(C) The State has provided for an appro9 priate adjustment in the per capita payments to 

10 the organization to account for such participa11 tion, taking into account differences in the like12 ly use of health services between enrollees who 

13 so participate and enrollees who do not so par14 ticipate.’’; and 

15 (C) by redesignating paragraphs (5) and 

16 (6) as paragraphs (3) and (4), respectively; 

17 (3) in subsection (d)— 

18 (A) in paragraph (2)(C)(i)— 

19 (i) in subclause (II), by striking 

20 ‘‘and’’ at the end; 

21 (ii) in subclause (III), by striking the 

22 period at the end and inserting ‘‘; and’’; 

23 and 

24 (iii) by adding at the end the fol25 lowing: 


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•S 1875 IS

1 ‘‘(IV) shall provide contributions 

2 into such an account on a sliding-scale 

3 based on income.’’; and 

4 (B) in paragraph (3)(B)(ii)— 

5 (i) in subclause (I), by striking ‘‘and’’ 

6 at the end; 

7 (ii) by redesignating subclause (II) as 

8 subclause (III); and 

9 (iii) by inserting after subclause (I), 

10 the following: 

11 ‘‘(II) may be transferred into a 

12 health savings account established 

13 under section 223 of the Internal Rev14 enue Code of 1986 and such transfer 

15 shall be treated as a rollover contribu16 tion described in section 223(f) of the 

17 Internal Revenue Code of 1986; and’’; 

18 and 

19 (4) by striking ‘‘State demonstration program’’ 

20 each place it appears and inserting ‘‘State health op21 portunity accounts program’’. 


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•S 1875 IS

1 TITLE III—ALTERNATIVE 

2 MINIMUM TAX REPEAL 

3 SEC. 301. PERMANENT REPEAL OF ALTERNATIVE MINIMUM 

4 TAX. 

5 (a) IN GENERAL.—Section 55(a) (relating to alter6 native minimum tax imposed) is amended by adding at 

7 the end the following new flush sentence: 

8 ‘‘For purposes of this title, the tentative minimum tax on 

9 any taxpayer for any taxable year beginning after Decem10 ber 31, 2006, shall be zero.’’. 

11 (b) MODIFICATION OF LIMITATION ON USE OF

12 CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY.— 

13 Subsection (c) of section 53 (relating to credit for prior 

14 year minimum tax liability) is amended to read as follows: 

15 ‘‘(c) LIMITATION.— 

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graph (2), the credit allowable under subsection (a) 

18 for any taxable year shall not exceed the excess (if 

19 any) of— 

20 ‘‘(A) the regular tax liability of the tax21 payer for such taxable year reduced by the sum 

22 of the credits allowable under subparts A, B, D, 

23 E, and F of this part, over 

24 ‘‘(B) the tentative minimum tax for the 

25 taxable year. 


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•S 1875 IS

1 ‘‘(2) TAXABLE YEARS BEGINNING AFTER

2 2006.—In the case of any taxable year beginning 

3 after December 31, 2006, the credit allowable under 

4 subsection (a) to a taxpayer other than a corpora5 tion for any taxable year shall not exceed 90 percent 

6 of the regular tax liability of the taxpayer for such 

7 taxable year reduced by the sum of the credits allow8 able under subparts A, B, D, E, and F of this 

9 part.’’. 

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2006. 

Æ 


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