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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1702 Introduced in Senate (IS)]

108th CONGRESS
  1st Session
                                S. 1702

To amend the Internal Revenue Code of 1986 to extend the exclusion from 
 gross income for employer-provided health coverage to designated plan 
          beneficiaries of employees, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 2, 2003

Mr. Smith (for himself, Mr. Graham of Florida, Mrs. Boxer, Mr. Chafee, 
 Mr. Corzine, and Mr. Wyden) 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 extend the exclusion from 
 gross income for employer-provided health coverage to designated plan 
          beneficiaries of employees, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

     This Act may be cited as the ``Domestic Partner Health Benefits 
Equity Act''.

SEC. 2. EXTENSION OF EXCLUSION FOR AMOUNTS RECEIVED BY AN EMPLOYEE 
              THROUGH ACCIDENT OR HEALTH INSURANCE AS REIMBURSEMENT FOR 
              EXPENSES FOR MEDICAL CARE.

    (a) In General.--Section 105(b) of the Internal Revenue Code of 
1986 (relating to amounts expended for medical care) is amended--
            (1) by striking ``Except in the case'' and inserting the 
        following:
            ``(1) In general.--Except in the case'',
            (2) by adding at the end of paragraph (1) as redesignated 
        in paragraph (1) the following new sentence: ``For the purposes 
        of this subsection, the term `dependents' shall include any 
        individual who is an eligible beneficiary as defined in the 
        employer's accident or health insurance arrangement.'', and
            (3) by adding at the end the following new paragraph:
            ``(2) Applicable percentage of exclusion for certain 
        amounts.--
                    ``(A) In general.--In the case of taxable years 
                beginning after December 31, 2004, and before January 
                1, 2011, the exclusion from income applicable by reason 
                of the third sentence of paragraph (1) shall be equal 
                to the applicable percentage of the amount which would 
                (but for this paragraph) be the amount of such 
                exclusion.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage shall be 
                determined in accordance with the following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 3. EXTENSION OF EXCLUSION FOR CONTRIBUTIONS BY EMPLOYER TO 
              ACCIDENT AND HEALTH PLANS.

    (a) In General.--Section 106 of the Internal Revenue Code of 1986 
(relating to contributions by employer to accident and health plans) is 
amended by adding at the end the following new subsection:
    ``(d) Coverage Provided for Eligible Beneficiaries of Employees.--
            ``(1) In general.--Subsection (a) shall not fail to apply 
        by reason of the coverage of an eligible beneficiary as defined 
        in the employer's accident or health plan.
            ``(2) Applicable percentage of exclusion for certain 
        coverage.--
                    ``(A) In general.--In the case of taxable years 
                beginning after December 31, 2004, and before January 
                1, 2011, the exclusion from income applicable by reason 
                of paragraph (1) shall be equal to the applicable 
                percentage of the amount which would (but for this 
                paragraph) be the amount of such exclusion.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage shall be 
                determined in accordance with the following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 4. EXTENSION OF DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
              EMPLOYED INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 (relating to special rules for health insurance 
costs of self-employed individuals) is amended to read as follows:
            ``(1) Allowance of deduction.--
                    ``(A) In general.--In the case of an individual who 
                is an employee within the meaning of section 401(c)(1), 
                there shall be allowed as a deduction under this 
                section an amount equal to the amount paid during the 
                taxable year for insurance which constitutes medical 
                care for the taxpayer, his spouse, and dependents. For 
                the purposes of this subparagraph, the term 
                `dependents' shall include any individual who is an 
                eligible beneficiary as defined in the insurance 
                arrangement which constitutes medical care.
                    ``(B) Applicable percentage of deduction for 
                certain amounts.--
                            ``(i) In general.--In the case of taxable 
                        years beginning after December 31, 2004, and 
                        before January 1, 2011, the deduction 
                        applicable by reason of the second sentence of 
                        subparagraph (A) shall be equal to the 
                        applicable percentage of the amount which would 
                        (but for this subparagraph) be the amount of 
                        such deduction.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage shall 
                        be determined in accordance with the following 
                        table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2004.

SEC. 5. EXTENSION OF SICK AND ACCIDENT BENEFITS PROVIDED TO MEMBERS OF 
              A VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION AND THEIR 
              DEPENDENTS.

    (a) In General.--Section 501(c)(9) of the Internal Revenue Code of 
1986 (relating to list of exempt organizations) is amended by adding at 
the end the following new sentence: ``For purposes of providing for the 
payment of sick and accident benefits to members of such an association 
and their dependents, the term `dependents' shall include any 
individual who is an eligible beneficiary as determined under the terms 
of a medical benefit, health insurance, or other program under which 
members and their dependents are entitled to sick and accident 
benefits.''.
    (b) Applicable Percentage of Payment of Certain Sick and Accident 
Benefits.--Section 501 of the Internal Revenue Code of 1986 (relating 
to exemption from tax on corporations, certain trusts, etc.) is amended 
by redesignating subsection (p) as subsection (q) and by inserting 
after subsection (o) the following new subsection:
    ``(p) Applicable Percentage of Payment of Certain Sick and Accident 
Benefits.--
            ``(1) In general.--In the case of taxable years beginning 
        after December 31, 2004, and before January 1, 2011, the 
        exemption from tax applicable by reason of the second sentence 
        of subsection (c)(9) shall be equal to the applicable 
        percentage of the amount which would (but for this subsection) 
        be the amount of such exemption.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be determined in 
        accordance with the following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 6. AMENDMENTS TO VARIOUS DEFINITIONS.

    (a) FICA.--
            (1) In general.--Section 3121 of the Internal Revenue Code 
        of 1986 (relating to definitions) is amended by adding at the 
        end the following new subsection:
    ``(z) Exclusion of Certain Amounts From Wages.--
            ``(1) In general.--For purposes of applying subsection (a) 
        with respect to expenses described in paragraph (2)(B) of such 
        subsection, the term `dependents' shall include any individual 
        who is an eligible beneficiary as defined in the plan or system 
        established by the employer.
            ``(2) Applicable percentage of exclusion from wages.--
                    ``(A) In general.--In the case of taxable years 
                beginning after December 31, 2004, and before January 
                1, 2011, the exclusion from wages applicable by reason 
                of paragraph (1) shall be equal to the applicable 
                percentage of the amount which would (but for this 
                paragraph) be the amount of such exclusion.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage shall be 
                determined in accordance with the following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
            (2) Conforming amendment.--Section 209 of the Social 
        Security Act (42 U.S.C. 409) is amended by adding at the end 
        the following new subsection:
    ``(l)(1) For purposes of applying subsection (a) with respect to 
medical or hospitalization expenses described in paragraph (2) thereof, 
the term `dependents' shall include any individual who is an eligible 
beneficiary as defined in the plan or system established by the 
employer.
    ``(2)(A) In the case of taxable years beginning after December 31, 
2004, and before January 1, 2011, the exclusion from wages applicable 
by reason of paragraph (1) shall be equal to the applicable percentage 
of the amount which would (but for this paragraph) be the amount of 
such exclusion.
    ``(B) For purposes of subparagraph (A), the applicable percentage 
shall be determined in accordance with the following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
    (b) Railroad Retirement.--
            (1) In general.--Section 3231(e) of the Internal Revenue 
        Code of 1986 (defining compensation) is amended by adding at 
        the end the following new paragraph:
            ``(11) Treatment of certain dependents.--
                    ``(A) In general.--For purposes of applying this 
                subsection with respect to medical or hospitalization 
                expenses described in paragraph (1)(i), the term 
                `dependents' shall include any individual who is an 
                eligible beneficiary as defined in the plan or system 
                established by the employer.
                    ``(B) Applicable percentage of exclusion from 
                compensation.--
                            ``(i) In general.--In the case of taxable 
                        years beginning after December 31, 2004, and 
                        before January 1, 2011, the exclusion from 
                        compensation applicable by reason of 
                        subparagraph (A) shall be equal to the 
                        applicable percentage of the amount which would 
                        (but for this subparagraph) be the amount of 
                        such exclusion.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage shall 
                        be determined in accordance with the following 
                        table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
            (2) Conforming amendment.--Section 1(h) of the Railroad 
        Retirement Act of 1974 (45 U.S.C. 231(h)) is amended by adding 
        at the end the following new paragraph:
    ``(9)(A) For purposes of applying this subsection, with respect to 
medical or hospitalization expenses described in paragraph (6)(v), the 
term `dependents' shall include any individual who is an eligible 
beneficiary as defined in the plan or system established by the 
employer.
    ``(B)(i) In the case of taxable years beginning after December 31, 
2004, and before January 1, 2011, the exclusion from compensation 
applicable by reason of subparagraph (A) shall be equal to the 
applicable percentage of the amount which would (but for this 
subparagraph) be the amount of such exclusion.
    ``(ii) For purposes of clause (i), the applicable percentage shall 
be determined in accordance with the following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
    (c) FUTA.--Section 3306 of the Internal Revenue Code of 1986 
(relating to definitions) is amended by adding at the end the following 
new subsection:
    ``(v) Exclusion of Certain Amounts From Wages.--
            ``(1) In general.--For purposes of applying subsection (b) 
        with respect to expenses described in paragraph (2)(B) of such 
        subsection, the term `dependents' shall include any individual 
        who is an eligible beneficiary as defined in the plan or system 
        established by the employer.
            ``(2) Applicable percentage of exclusion from wages.--
                    ``(A) In general.--In the case of taxable years 
                beginning after December 31, 2004, and before January 
                1, 2011, the exclusion from wages applicable by reason 
                of paragraph (1) shall be equal to the applicable 
                percentage of the amount which would (but for this 
                paragraph) be the amount of such exclusion.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage shall be 
                determined in accordance with the following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2005, 2006, or 2007...........................                  25 
    2008, 2009, 2010..............................               50.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 2004.
                                 <all>
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