II 

109TH CONGRESS 

1ST SESSION S. 38 

To enhance and improve benefits for members of the National Guard and 

Reserves who serve extended periods on active duty, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2005 

Mrs. MURRAY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To enhance and improve benefits for members of the National Guard and Reserves who serve extended periods 

on active duty, 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 ‘‘Guard and Reserve 

5 Enhanced Benefits Act of 2005’’. 

6 TITLE I—FAMILY ASSISTANCE 

7 BENEFITS 

8 SEC. 101. MILITARY FAMILY LEAVE. 

9 (a) GENERAL REQUIREMENTS FOR LEAVE.— 
2 

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1 (1) DEFINITIONS.—Section 101 of the Family 

2 and Medical Leave Act of 1993 (29 U.S.C. 2611) is 

3 amended by adding at the end the following: 

4 ‘‘(14) ACTIVE DUTY.—The term ‘active duty’ 

5 means duty under a call or order to active duty 

6 under a provision of law referred to in section 

7 101(a)(13)(B) of title 10, United States Code. 

8 ‘‘(15) QUALIFIED MEMBER.—The term ‘quali9 fied member’ means a member of the reserve compo10 nents on active duty for a period of more than 30 

11 days.’’. 

12 (2) ENTITLEMENT TO LEAVE.—Section 

13 102(a)(1) of such Act (29 U.S.C. 2612(a)) is 

14 amended by adding at the end the following: 

15 ‘‘(E) Because the spouse, son, daughter, or 

16 parent of the employee is a qualified member.’’. 

17 (3) SCHEDULE.—Section 102(b)(1) of such Act 

18 (29 U.S.C. 2612(b)(1)) is amended by inserting 

19 after the second sentence the following: ‘‘Leave 

20 under subsection (a)(1)(E) may be taken intermit21 tently or on a reduced leave schedule.’’. 

22 (4) SUBSTITUTION OF PAID LEAVE.—Section 

23 102(d)(2)(A) of such Act (29 U.S.C. 2612(d)(2)(A)) 

24 is amended by striking ‘‘(A), (B), or (C)’’ and in25 serting ‘‘(A), (B), (C), or (E)’’. 
3 

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1 (5) NOTICE.—Section 102(e) of such Act (29 

2 U.S.C. 2612(e)) is amended by adding at the end 

3 the following: 

4 ‘‘(3) NOTICE FOR MILITARY FAMILY LEAVE.— 

5 In any case in which an employee seeks leave under 

6 subsection (a)(1)(E), the employee shall provide 

7 such notice as is practicable.’’. 

8 (6) CERTIFICATION.—Section 103 of such Act 

9 (29 U.S.C. 2613) is amended by adding at the end 

10 the following: 

11 ‘‘(f) CERTIFICATION FOR MILITARY FAMILY

12 LEAVE.—An employer may require that a request for 

13 leave under section 102(a)(1)(E) be supported by a certifi14 cation issued at such time and in such manner as the Sec15 retary may by regulation prescribe.’’. 

16 (b) MILITARY FAMILY LEAVE FOR CIVIL SERVICE

17 EMPLOYEES.— 

18 (1) DEFINITIONS.—Section 6381 of title 5, 

19 United States Code, is amended— 

20 (A) in paragraph (5), by striking ‘‘and’’ at 

21 the end; 

22 (B) in paragraph (6), by striking the pe23 riod and inserting ‘‘; and’’; and 

24 (C) by adding at the end the following: 
4 

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1 ‘‘(7) the term ‘active duty’ means duty under a 

2 call or order to active duty under a provision of law 

3 referred to in section 101(a)(13)(B) of title 10, 

4 United States Code; and 

5 ‘‘(8) the term ‘qualified member’ means a mem6 ber of the reserve components on active duty for a 

7 period of more than 30 days.’’. 

8 (2) ENTITLEMENT TO LEAVE.—Section 6382(a) 

9 of such title is amended by adding at the end the 

10 following: 

11 ‘‘(E) Because the spouse, son, daughter, or par12 ent of the employee is a qualified member.’’. 

13 (3) SCHEDULE.—Section 6382(b)(1) of such 

14 title is amended by inserting after the second sen15 tence the following: ‘‘Leave under subsection 

16 (a)(1)(E) may be taken intermittently or on a re17 duced leave schedule.’’. 

18 (4) SUBSTITUTION OF PAID LEAVE.—Section 

19 6382(d) of such title is amended by striking ‘‘(A), 

20 (B), (C), or (D)’’ and inserting ‘‘(A), (B), (C), (D), 

21 or (E)’’. 

22 (5) NOTICE.—Section 6382(e) of such title is 

23 amended by adding at the end the following: 
5 

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1 ‘‘(3) In any case in which an employee seeks leave 

2 under subsection (a)(1)(E), the employee shall provide 

3 such notice as is practicable.’’. 

4 (6) CERTIFICATION.—Section 6383 of such title 

5 is amended by adding at the end the following: 

6 ‘‘(f) An employing agency may require that a request 

7 for leave under section 6382(a)(1)(E) be supported by a 

8 certification issued at such time and in such manner as 

9 the Office of Personnel Management may by regulation 

10 prescribe.’’. 

11 SEC. 102. CHILD CARE ASSISTANCE FOR MILITARY DE12 PENDENTS. 

13 (a) AUTHORIZATION OF APPROPRIATIONS.—Section 

14 658B of the Child Care and Development Block Grant Act 

15 of 1990 (42 U.S.C. 9858) is amended— 

16 (1) by striking ‘‘There is’’ and inserting ‘‘(a) IN

17 GENERAL.—There is’’; 

18 (2) in subsection (a), as so designated, by in19 serting ‘‘(except section 658T)’’ after ‘‘this sub20 chapter’’; and 

21 (3) by adding at the end the following: 

22 ‘‘(b) CHILD CARE FOR CERTAIN MILITARY DEPEND23 ENTS.—There is authorized to be appropriated to carry 

24 out section 658T $200,000,000 for each of fiscal years 

25 2005 through 2009.’’. 
6 

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1 (b) CHILD CARE ASSISTANCE.—The Child Care and 

2 Development Block Grant Act of 1990 (42 U.S.C. 9858 

3 et seq.) is amended by adding at the end the following: 

4 ‘‘SEC. 658T. CHILD CARE ASSISTANCE FOR MILITARY DE5 PENDENTS. 

6 ‘‘(a) IN GENERAL.—The Secretary shall make grants 

7 to eligible spouses to assist the spouses in paying for the 

8 cost of child care services provided to dependents by eligi9 ble child care providers. In making the grants, the Sec10 retary shall give priority to eligible spouses of qualified 

11 members on active duty for a period of more than 6 

12 months. 

13 ‘‘(b) DEFINITIONS.—In this section: 

14 ‘‘(1) ACTIVE DUTY.—The term ‘active duty’ 

15 means duty under a call or order to active duty 

16 under a provision of law referred to in section 

17 101(a)(13)(B) of title 10, United States Code. 

18 ‘‘(2) DEPENDENT.—The term ‘dependent’ 

19 means an individual who is— 

20 ‘‘(A) a dependent, as defined in section 

21 401 of title 37, United States Code, except that 

22 such term does not include a person described 

23 in paragraph (1) or (3) of subsection (a) of 

24 such section; and 
7 

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1 ‘‘(B) an individual described in subpara2 graphs (A) and (B) of section 658P(4). 

3 ‘‘(3) ELIGIBLE SPOUSE.—The term ‘eligible 

4 spouse’ means a person who— 

5 ‘‘(A) is a parent of one or more dependents 

6 of a qualified member; and 

7 ‘‘(B) has the primary responsibility for the 

8 care of one or more such dependents. 

9 ‘‘(4) QUALIFIED MEMBER.—The term ‘qualified 

10 member’ means a member of the reserve components 

11 on active duty for a period of more than 30 days. 

12 ‘‘(c) APPLICATIONS.—To be eligible to receive a grant 

13 under this section, a spouse shall submit an application 

14 to the Secretary, at such time, in such manner, and con15 taining such information as the Secretary may require, in16 cluding a description of the eligible child care provider who 

17 provides the child care services assisted through the grant. 

18 ‘‘(d) RULE.—The provisions of this subchapter, other 

19 than section 658P and provisions referenced in section 

20 658P, that apply to assistance provided under this sub21 chapter shall not apply to assistance provided under this 

22 section.’’. 

23 (c) CONFORMING AMENDMENTS.—Section 658O of 

24 the Child Care and Development Block Grant Act of 1990 

25 (42 U.S.C. 9858m) is amended— 
8 

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1 (1) in subsection (a)— 

2 (A) in paragraph (1), by striking ‘‘appro3 priated under this subchapter’’ and inserting 

4 ‘‘appropriated under section 658B(a)’’; and 

5 (B) in paragraph (2), by striking ‘‘appro6 priated under section 658B’’ and inserting ‘‘ap7 propriated under section 658(a)’’; and 

8 (2) in subsection (b)(1), by striking ‘‘appro9 priated under section 658B’’ and inserting ‘‘appro10 priated under section 658(a)’’. 

11 TITLE II—EDUCATION BENEFITS 

12 Subtitle A—Montgomery GI Bill 

13 Benefits 

14 SEC. 201. BASIC EDUCATIONAL ASSISTANCE FOR MEMBERS 

15 OF SELECTED RESERVE SERVING EXTENDED 

16 OR RECURRING PERIODS ON ACTIVE DUTY. 

17 (a) ENTITLEMENT.—(1) Subsection (a)(1) of section 

18 3011 of title 38, United States Code, is amended— 

19 (A) in subparagraph (B), by striking ‘‘or’’ at 

20 the end; 

21 (B) in subparagraph (C), by adding ‘‘or’’ at the 

22 end; and 

23 (C) by adding at the end the following new sub24 paragraph: 
9 

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1 ‘‘(D) after September 11, 2001, while a 

2 member of the Selected Reserve— 

3 ‘‘(i) serves at least 12 months of con4 tinuous active duty in the Armed Forces; 

5 or 

6 ‘‘(ii) during any 60-month period, 

7 serves an aggregate of 24 months of con8 tinuous active duty in the Armed Forces;’’. 

9 (2) Subsection (d)(3) of such section is amended by 

10 striking ‘‘The period of service’’ and inserting ‘‘Except in 

11 the case of an individual described in subsection (a)(1)(D), 

12 the period of service’’. 

13 (b) EXCLUSION FROM CONTRIBUTIONS FOR IN14 CREASED ASSISTANCE.—Subsection (e)(1) of such section 

15 is amended by inserting ‘‘(other than an individual de16 scribed in subsection (a)(1)(D)’’ after ‘‘Any individual’’. 

17 (c) AMOUNT OF ASSISTANCE.—Section 3015(a) of 

18 such title is amended by inserting after ‘‘three years’’ the 

19 following: ‘‘or an individual whose service on active duty 

20 on which such entitlement is based is described in clause 

21 (i) or (ii) of section 3011(a)(1)(D) of this title’’. 
10 

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1 SEC. 202. INCREASE IN AMOUNT OF EDUCATIONAL ASSIST2 ANCE FOR MEMBERS OF SELECTED RE3 SERVE. 

4 (a) INCREASE IN AMOUNTS.—Section 16131(b)(1) of 

5 title 10, United States Code, is amended— 

6 (1) in subparagraph (A), by striking ‘‘$251’’ 

7 and inserting ‘‘$400’’; 

8 (2) in subparagraph (B), by striking ‘‘$188’’ 

9 and inserting ‘‘$300’’; and 

10 (3) in subparagraph (C), by striking ‘‘$125’’ 

11 and inserting ‘‘$200’’. 

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

13 subsection (a) shall take effect on the date of the enact14 ment of this Act, and shall apply with respect to monthly 

15 rates of educational assistance for months beginning on 

16 or after that date. 

17 SEC. 203. MODIFICATION OF TIME LIMITATION FOR USE OF 

18 ENTITLEMENT TO EDUCATIONAL ASSIST19 ANCE OF MEMBERS OF SELECTED RESERVE. 

20 Section 16133(a)(2) of title 10, United States Code, 

21 is amended— 

22 (1) by inserting ‘‘that is five years after the 

23 date’’ after ‘‘on the date’’; and 

24 (2) by striking ‘‘first’’ and inserting ‘‘later’’. 
11 

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1 Subtitle B—Other Education 

2 Benefits 

3 SEC. 211. STUDENT LOAN DEFERMENTS. 

4 (a) FFEL AND DIRECT SUBSIDIZED LOANS.—Sec5 tion 428(b)(1)(M) of the Higher Education Act of 1965 

6 (20 U.S.C. 1078(b)(1)(M)) is amended— 

7 (1) in clause (ii), by striking ‘‘or’’ after the 

8 semicolon; 

9 (2) in clause (iii), by inserting ‘‘or’’ after the 

10 semicolon; and 

11 (3) by inserting after clause (iii) the following: 

12 ‘‘(iv) during which the borrower is a 

13 member of the reserve components of the 

14 Armed Forces on active duty for a period 

15 of more than 30 days under a call or order 

16 to active duty under a provision of law re17 ferred to in section 101(a)(13)(B) of title 

18 10, United States Code, and for 3 months 

19 following discharge or release from such 

20 active duty.’’. 

21 (b) CONSOLIDATION LOANS.—Section 

22 428C(b)(4)(C)(ii) of the Higher Education Act of 1965 

23 (20 U.S.C. 1078–3(b)(4)(C)(ii)) is amended— 

24 (1) in subclause (II), by striking ‘‘or’’ after the 

25 semicolon; 
12 

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1 (2) in subclause (III), by striking ‘‘or (II)’’ and 

2 inserting ‘‘, (II) or (III)’’; 

3 (3) by redesignating subclause (III) (as so 

4 amended) as subclause (IV); and 

5 (4) by inserting after subclause (II) the fol6 lowing: 

7 ‘‘(III) by the Secretary, in the case of a 

8 consolidation loan of a student who is on an ac9 tive duty deferment under section 

10 428(b)(1)(M)(iv); or’’. 

11 (c) FFEL AND DIRECT UNSUBSIDIZED LOANS.— 

12 Section 428H(e)(2) of the Higher Education Act of 1965 

13 (20 U.S.C. 1078–8(e)(2)) is amended by adding at the 

14 end the following: 

15 ‘‘(C) Notwithstanding subparagraph (A), inter16 est on loans made under this section for which pay17 ments of principal are deferred because the student 

18 is on an active duty deferment under section 

19 428(b)(1)(M)(iv) shall be paid by the Secretary.’’. 

20 (d) PERKINS LOANS.—Section 464(c)(2)(A) of the 

21 Higher Education Act of 1965 (20 U.S.C. 

22 1087dd(c)(2)(A)) is amended— 

23 (1) in clause (iii), by striking ‘‘or’’ after the 

24 semicolon; 
13 

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1 (2) in clause (iv), by inserting ‘‘or’’ after the 

2 semicolon; and 

3 (3) by inserting after clause (iv) the following: 

4 ‘‘(v) during which the borrower is a mem5 ber of the reserve components of the Armed 

6 Forces on active duty for a period of more than 

7 30 days under a call or order to active duty 

8 under a provision of law referred to in section 

9 101(a)(13)(B) of title 10, United States Code, 

10 and for 3 months following discharge or release 

11 from such active duty.’’. 

12 SEC. 212. PRESERVATION OF EDUCATIONAL STATUS AND 

13 TUITION. 

14 (a) IN GENERAL.—Title VII of the Servicemembers 

15 Civil Relief Act (50 U.S.C. App. 501 et seq.), as amended 

16 by section 1 of Public Law 108–189 (117 Stat. 2835), 

17 is further amended by adding at the end the following new 

18 section: 

19 ‘‘SEC. 707. PRESERVATION OF EDUCATIONAL STATUS AND 

20 TUITION. 

21 ‘‘(a) LEAVE OF ABSENCE.—A servicemember who is 

22 a member of the reserve components on active duty for 

23 a period of more than 30 days under a call or order to 

24 active duty under a provision of law referred to in section 

25 101(a)(13)(B) of title 10, United States Code, and who 
14 

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1 is enrolled as a student at an institution of higher edu2 cation at the time of entry into the service on active duty, 

3 shall be granted a leave of absence from the institution 

4 during the period of the service on active duty and for 

5 one year after the conclusion of the service on active duty. 

6 ‘‘(b) EDUCATIONAL STATUS.— 

7 ‘‘(1) IN GENERAL.—A servicemember on a leave 

8 of absence from an institution of higher education 

9 under subsection (a) shall be entitled, upon comple10 tion of the leave of absence, to be restored to the 

11 educational status the servicemember had attained 

12 before entering into the service on active duty as de13 scribed in that subsection without loss of academic 

14 credits earned, scholarships or grants awarded, or, 

15 subject to paragraph (2), tuition and other fees paid 

16 before the entry of the servicemember into the serv17 ice on active duty. 

18 ‘‘(2) TUITION.— 

19 ‘‘(A) REFUND.—An institution of higher 

20 education shall refund tuition or fees paid or 

21 credit the tuition and fees to the next period of 

22 enrollment after a servicemember returns from 

23 the leave of absence, at the option of the 

24 servicemember. Notwithstanding the 180-day 

25 limitation referred to in subsection (a)(2)(B) of 
15 

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1 section 484B of the Higher Education Act of 

2 1965 (20 U.S.C. 1091b), a servicemember on a 

3 leave of absence under this section shall not be 

4 treated as having withdrawn for purposes of 

5 such section 484B unless the servicemember 

6 fails to return upon the completion of the leave 

7 of absence. 

8 ‘‘(B) AMOUNT OF REFUND.—If a 

9 servicemember requests a refund for a period of 

10 enrollment, the percentage of the tuition and 

11 fees that shall be refunded shall be equal to 100 

12 percent minus— 

13 ‘‘(i) the percentage of the period of 

14 enrollment (for which the tuition and fees 

15 were paid) that was completed (as deter16 mined in accordance with subsection (d) of 

17 such section 484B) as of the day the 

18 servicemember withdrew, provided that 

19 such date occurs on or before the comple20 tion of 60 percent of the period of enroll21 ment; or 

22 ‘‘(ii) 100 percent, if the day the per23 son withdrew occurs after the 

24 servicemember has completed 60 percent of 

25 the period of enrollment.’’. 
16 

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1 (b) CLERICAL AMENDMENT.—The table of contents 

2 of that Act is amended by adding at the end the following 

3 new item: 

‘‘Sec. 707. Preservation of educational status and tuition.’’. 

4 TITLE III—COMPENSATION AND 

5 RETIREMENT BENEFITS 

6 SEC. 301. NONREDUCTION IN PAY FOR FEDERAL EMPLOY7 EES WHO ARE RESERVES SERVING ON AC8 TIVE DUTY IN THE UNIFORMED SERVICES 

9 FOR EXTENDED PERIODS. 

10 (a) IN GENERAL.—Subchapter IV of chapter 55 of 

11 title 5, United States Code, is amended by adding at the 

12 end the following: 

13 ‘‘§ 5538. Nonreduction in pay of Reserves on active 

14 duty in the uniformed services for ex15 tended periods 

16 ‘‘(a) An employee who is absent from a position of 

17 employment with the Federal Government in order to per18 form active duty in the uniformed services for a period 

19 of more than 30 days pursuant to a call or order to active 

20 duty under a provision of law referred to in section 

21 101(a)(13)(B) of title 10 shall be entitled, while serving 

22 on active duty, to receive, for each pay period described 

23 in subsection (b), an amount equal to the amount by 

24 which— 
17 

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1 ‘‘(1) the amount of basic pay which would oth2 erwise have been payable to such employee for such 

3 pay period if such employee’s civilian employment 

4 with the Government had not been interrupted by 

5 that service, exceeds (if at all) 

6 ‘‘(2) the amount of pay and allowances which 

7 (as determined under subsection (d))— 

8 ‘‘(A) is payable to such employee for that 

9 service; and 

10 ‘‘(B) is allocable to such pay period. 

11 ‘‘(b)(1) Amounts under this section shall be payable 

12 with respect to each pay period (which would otherwise 

13 apply if the employee’s civilian employment had not been 

14 interrupted)— 

15 ‘‘(A) during which such employee is entitled to 

16 reemployment rights under chapter 43 of title 38 

17 with respect to the position from which such em18 ployee is absent (as referred to in subsection (a)); 

19 and 

20 ‘‘(B) for which such employee does not other21 wise receive basic pay (including by taking any an22 nual, military, or other paid leave) to which such 

23 employee is entitled by virtue of such employee’s ci24 vilian employment with the Government. 
18 

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1 ‘‘(2) For purposes of this section, the period during 

2 which an employee is entitled to reemployment rights 

3 under chapter 43 of title 38— 

4 ‘‘(A) shall be determined disregarding the provi5 sions of section 4312(d) of title 38; and 

6 ‘‘(B) shall include any period of time specified 

7 in section 4312(e) of title 38 within which an em8 ployee may report or apply for employment or reem9 ployment following completion of the service on ac10 tive duty to which called or ordered as described in 

11 subsection (a). 

12 ‘‘(c) Any amount payable under this section to an em13 ployee shall be paid— 

14 ‘‘(1) by such employee’s employing agency; 

15 ‘‘(2) from the appropriation or fund which 

16 would be used to pay the employee if such employee 

17 were in a pay status; and 

18 ‘‘(3) to the extent practicable, at the same time 

19 and in the same manner as would basic pay if such 

20 employee’s civilian employment had not been inter21 rupted. 

22 ‘‘(d) The Office of Personnel Management shall, in 

23 consultation with Secretary of Defense, prescribe any reg24 ulations necessary to carry out the preceding provisions 

25 of this section. 
19 

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1 ‘‘(e)(1) The head of each agency referred to in section 

2 2302(a)(2)(C)(ii) shall, in consultation with the Office, 

3 prescribe procedures to ensure that the rights under this 

4 section apply to the employees of such agency. 

5 ‘‘(2) The Administrator of the Federal Aviation Ad6 ministration shall, in consultation with the Office, pre7 scribe procedures to ensure that the rights under this sec8 tion apply to the employees of that agency. 

9 ‘‘(f) In this section— 

10 ‘‘(1) the terms ‘employee’, ‘Federal Govern11 ment’, and ‘uniformed services’ have the same re12 spective meanings as given them in section 4303 of 

13 title 38; 

14 ‘‘(2) the term ‘employing agency’, as used with 

15 respect to an employee entitled to any payments 

16 under this section, means the agency or other entity 

17 of the Government (including an agency referred to 

18 in section 2302(a)(2)(C)(ii)) with respect to which 

19 such employee has reemployment rights under chap20 ter 43 of title 38; and 

21 ‘‘(3) the term ‘basic pay’ includes any amount 

22 payable under section 5304.’’. 

23 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

24 The table of sections for chapter 55 of title 5, United 
20 

•S 38 IS 

1 States Code, is amended by inserting after the item relat2 ing to section 5537 the following: 

‘‘5538. Nonreduction in pay of Reserves on active duty in the uniformed services 

for extended periods.’’ 

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

4 this section shall apply with respect to pay periods (as de5 scribed in section 5538(b) of title 5, United States Code, 

6 as added by this section) beginning on or after the date 

7 of enactment of this Act. 

8 SEC. 302. CREDIT FOR INCOME DIFFERENTIAL FOR EM9 PLOYMENT OF ACTIVATED MILITARY RE10 SERVIST AND REPLACEMENT PERSONNEL. 

11 (a) IN GENERAL.—Subpart B of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of 

13 1986 (relating to foreign tax credit, etc.) is amended by 

14 adding at the end the following new section: 

15 ‘‘SEC. 30B. EMPLOYER WAGE CREDIT FOR ACTIVATED MILI16 TARY RESERVISTS. 

17 ‘‘(a) GENERAL RULE.—There shall be allowed as a 

18 credit against the tax imposed by this chapter for the tax19 able year an amount equal to the sum of— 

20 ‘‘(1) in the case of a small business employer, 

21 the employment credit with respect to all qualified 

22 employees and qualified replacement employees of 

23 the taxpayer, plus 
21 

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1 ‘‘(2) the self-employment credit of a qualified 

2 self-employed taxpayer. 

3 ‘‘(b) EMPLOYMENT CREDIT.—For purposes of this 

4 section— 

5 ‘‘(1) QUALIFIED EMPLOYEES.— 

6 ‘‘(A) IN GENERAL.—The employment cred7 it with respect to a qualified employee of the 

8 taxpayer for any taxable year is equal to the 

9 lesser of— 

10 ‘‘(i) the excess, if any, of— 

11 ‘‘(I) the qualified employee’s av12 erage daily qualified compensation for 

13 the taxable year, over 

14 ‘‘(II) the average daily military 

15 pay and allowances received by the 

16 qualified employee during the taxable 

17 year, 

18 while participating in qualified reserve 

19 component duty to the exclusion of the 

20 qualified employee’s normal employment 

21 duties for the number of days the qualified 

22 employee participates in qualified reserve 

23 component duty during the taxable year, 

24 including time spent in a travel status, or 

25 ‘‘(ii) $15,000. 
22 

•S 38 IS 

1 The employment credit, with respect to all 

2 qualified employees, is equal to the sum of the 

3 employment credits for each qualified employee 

4 under this subsection. 

5 ‘‘(B) AVERAGE DAILY QUALIFIED COM6 PENSATION AND AVERAGE DAILY MILITARY PAY

7 AND ALLOWANCES.—As used with respect to a 

8 qualified employee— 

9 ‘‘(i) the term ‘average daily qualified 

10 compensation’ means the qualified com11 pensation of the qualified employee for the 

12 taxable year divided by the difference be13 tween— 

14 ‘‘(I) 365, and 

15 ‘‘(II) the number of days the 

16 qualified employee participates in 

17 qualified reserve component duty dur18 ing the taxable year, including time 

19 spent in a travel status, and 

20 ‘‘(ii) the term ‘average daily military 

21 pay and allowances’ means— 

22 ‘‘(I) the amount paid to the 

23 qualified employee during the taxable 

24 year as military pay and allowances 

25 on account of the qualified employee’s 
23 

•S 38 IS 

1 participation in qualified reserve com2 ponent duty, divided by 

3 ‘‘(II) the total number of days 

4 the qualified employee participates in 

5 qualified reserve component duty, in6 cluding time spent in travel status. 

7 ‘‘(C) QUALIFIED COMPENSATION.—When 

8 used with respect to the compensation paid or 

9 that would have been paid to a qualified em10 ployee for any period during which the qualified 

11 employee participates in qualified reserve com12 ponent duty, the term ‘qualified compensation’ 

13 means— 

14 ‘‘(i) compensation which is normally 

15 contingent on the qualified employee’s 

16 presence for work and which would be de17 ductible from the taxpayer’s gross income 

18 under section 162(a)(1) if the qualified 

19 employee were present and receiving such 

20 compensation, 

21 ‘‘(ii) compensation which is not char22 acterized by the taxpayer as vacation or 

23 holiday pay, or as sick leave or pay, or as 

24 any other form of pay for a nonspecific 

25 leave of absence, and with respect to which 
24 

•S 38 IS 

1 the number of days the qualified employee 

2 participates in qualified reserve component 

3 duty does not result in any reduction in 

4 the amount of vacation time, sick leave, or 

5 other nonspecific leave previously credited 

6 to or earned by the qualified employee, and 

7 ‘‘(iii) group health plan costs (if any) 

8 with respect to the qualified employee. 

9 ‘‘(D) QUALIFIED EMPLOYEE.—The term 

10 ‘qualified employee’ means a person who— 

11 ‘‘(i) has been an employee of the tax12 payer for the 91-day period immediately 

13 preceding the period during which the em14 ployee participates in qualified reserve 

15 component duty, and 

16 ‘‘(ii) is a member of the Ready Re17 serve of a reserve component of an Armed 

18 Force of the United States as defined in 

19 sections 10142 and 10101 of title 10, 

20 United States Code. 

21 ‘‘(2) QUALIFIED REPLACEMENT EMPLOYEES.— 

22 ‘‘(A) IN GENERAL.—The employment cred23 it with respect to a qualified replacement em24 ployee of the taxpayer for any taxable year is 

25 equal to the lesser of— 
25 

•S 38 IS 

1 ‘‘(i) the individual’s qualified com2 pensation attributable to service rendered 

3 as a qualified replacement employee, or 

4 ‘‘(ii) $15,000. 

5 The employment credit, with respect to all 

6 qualified replacement employees, is equal to the 

7 sum of the employment credits for each quali8 fied replacement employee under this sub9 section. 

10 ‘‘(B) QUALIFIED COMPENSATION.—When 

11 used with respect to the compensation paid to 

12 a qualified replacement employee, the term 

13 ‘qualified compensation’ means— 

14 ‘‘(i) compensation which is normally 

15 contingent on the qualified replacement 

16 employee’s presence for work and which is 

17 deductible from the taxpayer’s gross in18 come under section 162(a)(1), 

19 ‘‘(ii) compensation which is not char20 acterized by the taxpayer as vacation or 

21 holiday pay, or as sick leave or pay, or as 

22 any other form of pay for a nonspecific 

23 leave of absence, and 
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1 ‘‘(iii) group health plan costs (if any) 

2 with respect to the qualified replacement 

3 employee. 

4 ‘‘(C) QUALIFIED REPLACEMENT EM5 PLOYEE.—The term ‘qualified replacement em6 ployee’ means an individual who is hired to re7 place a qualified employee or a qualified self8 employed taxpayer, but only with respect to the 

9 period during which such employee or taxpayer 

10 participates in qualified reserve component 

11 duty, including time spent in travel status. 

12 ‘‘(c) SELF-EMPLOYMENT CREDIT.—For purposes of 

13 this section— 

14 ‘‘(1) IN GENERAL.—The self-employment credit 

15 of a qualified self-employed taxpayer for any taxable 

16 year is equal to the lesser of— 

17 ‘‘(A) the excess, if any, of— 

18 ‘‘(i) the self-employed taxpayer’s aver19 age daily self-employment income for the 

20 taxable year over 

21 ‘‘(ii) the average daily military pay 

22 and allowances received by the taxpayer 

23 during the taxable year, while participating 

24 in qualified reserve component duty to the 

25 exclusion of the taxpayer’s normal self-em-
27 

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1 ployment duties for the number of days the 

2 taxpayer participates in qualified reserve 

3 component duty during the taxable year, 

4 including time spent in a travel status, or 

5 ‘‘(B) $15,000. 

6 ‘‘(2) AVERAGE DAILY SELF-EMPLOYMENT IN7 COME AND AVERAGE DAILY MILITARY PAY AND AL8 LOWANCES.—As used with respect to a self-em9 ployed taxpayer— 

10 ‘‘(A) the term ‘average daily self-employ11 ment income’ means the self-employment in12 come (as defined in section 1402(b)) of the tax13 payer for the taxable year plus the amount paid 

14 for insurance which constitutes medical care for 

15 the taxpayer for such year (within the meaning 

16 of section 162(l)) divided by the difference be17 tween— 

18 ‘‘(i) 365, and 

19 ‘‘(ii) the number of days the taxpayer 

20 participates in qualified reserve component 

21 duty during the taxable year, including 

22 time spent in a travel status, and 

23 ‘‘(B) the term ‘average daily military pay 

24 and allowances’ means— 
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1 ‘‘(i) the amount paid to the taxpayer 

2 during the taxable year as military pay 

3 and allowances on account of the tax4 payer’s participation in qualified reserve 

5 component duty, divided by 

6 ‘‘(ii) the total number of days the tax7 payer participates in qualified reserve com8 ponent duty, including time spent in travel 

9 status. 

10 ‘‘(3) QUALIFIED SELF-EMPLOYED TAXPAYER.— 

11 The term ‘qualified self-employed taxpayer’ means a 

12 taxpayer who— 

13 ‘‘(A) has net earnings from self-employ14 ment (as defined in section 1402(a)) for the 

15 taxable year, and 

16 ‘‘(B) is a member of the Ready Reserve of 

17 a reserve component of an Armed Force of the 

18 United States. 

19 ‘‘(d) COORDINATION WITH OTHER CREDITS.—The 

20 amount of credit otherwise allowable under sections 51(a) 

21 and 1396(a) with respect to any employee shall be reduced 

22 by the credit allowed by this section with respect to such 

23 employee. 

24 ‘‘(e) LIMITATIONS.— 
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1 ‘‘(1) APPLICATION WITH OTHER CREDITS.— 

2 The credit allowed under subsection (a) for any tax3 able year shall not exceed the excess (if any) of— 

4 ‘‘(A) the regular tax for the taxable year 

5 reduced by the sum of the credits allowable 

6 under subpart A and sections 27, 29, and 30, 

7 over 

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

9 taxable year. 

10 ‘‘(2) DISALLOWANCE FOR FAILURE TO COMPLY

11 WITH EMPLOYMENT OR REEMPLOYMENT RIGHTS OF

12 MEMBERS OF THE RESERVE COMPONENTS OF THE

13 ARMED FORCES OF THE UNITED STATES.—No credit 

14 shall be allowed under subsection (a) to a taxpayer 

15 for— 

16 ‘‘(A) any taxable year, beginning after the 

17 date of the enactment of this section, in which 

18 the taxpayer is under a final order, judgment, 

19 or other process issued or required by a district 

20 court of the United States under section 4323 

21 of title 38 of the United States Code with re22 spect to a violation of chapter 43 of such title, 

23 and 

24 ‘‘(B) the 2 succeeding taxable years. 
30 

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1 ‘‘(3) DISALLOWANCE WITH RESPECT TO PER2 SONS ORDERED TO ACTIVE DUTY FOR TRAINING.— 

3 No credit shall be allowed under subsection (a) to a 

4 taxpayer with respect to any period by taking into 

5 account any person who is called or ordered to active 

6 duty for any of the following types of duty: 

7 ‘‘(A) Active duty for training under any 

8 provision of title 10, United States Code. 

9 ‘‘(B) Training at encampments, maneu10 vers, outdoor target practice, or other exercises 

11 under chapter 5 of title 32, United States Code. 

12 ‘‘(C) Full-time National Guard duty, as 

13 defined in section 101(d)(5) of title 10, United 

14 States Code. 

15 ‘‘(f) GENERAL DEFINITIONS AND SPECIAL RULES.— 

16 For purposes of this section— 

17 ‘‘(1) SMALL BUSINESS EMPLOYER.— 

18 ‘‘(A) IN GENERAL.—The term ‘small busi19 ness employer’ means, with respect to any tax20 able year, any employer who employed an aver21 age of 50 or fewer employees on business days 

22 during such taxable year. 

23 ‘‘(B) CONTROLLED GROUPS.—For pur24 poses of subparagraph (A), all persons treated 

25 as a single employer under subsection (b), (c), 
31 

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1 (m), or (o) of section 414 shall be treated as a 

2 single employer. 

3 ‘‘(2) MILITARY PAY AND ALLOWANCES.—The 

4 term ‘military pay’ means pay as that term is de5 fined in section 101(21) of title 37, United States 

6 Code, and the term ‘allowances’ means the allow7 ances payable to a member of the Armed Forces of 

8 the United States under chapter 7 of that title. 

9 ‘‘(3) QUALIFIED RESERVE COMPONENT

10 DUTY.—The term ‘qualified reserve component duty’ 

11 means active duty performed for a period not less 

12 than 180 days under a call or order to active duty 

13 under a provision of law referred to in section 

14 101(a)(13)(B) of title 10, United States Code. 

15 ‘‘(4) CARRYBACK AND CARRYFORWARD AL16 LOWED.— 

17 ‘‘(A) IN GENERAL.—If the credit allowable 

18 under subsection (a) for a taxable year exceeds 

19 the amount of the limitation under subsection 

20 (e)(1) for such taxable year (in this paragraph 

21 referred to as the ‘unused credit year’), such 

22 excess shall be a credit carryback to each of the 

23 3 taxable years preceding the unused credit 

24 year and a credit carryforward to each of the 
32 

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1 20 taxable years following the unused credit 

2 year. 

3 ‘‘(B) RULES.—Rules similar to the rules of 

4 section 39 shall apply with respect to the credit 

5 carryback and credit carryforward under sub6 paragraph (A). 

7 ‘‘(5) CERTAIN RULES TO APPLY.—Rules similar 

8 to the rules of subsections (c), (d), and (e) of section 

9 52 shall apply.’’. 

10 (b) NO DEDUCTION FOR COMPENSATION TAKEN

11 INTO ACCOUNT FOR CREDIT.—Section 280C(a) of the In12 ternal Revenue Code of 1986 (relating to rule for employ13 ment credits) is amended— 

14 (1) by inserting ‘‘or compensation’’ after ‘‘sala15 ries’’, and 

16 (2) by inserting ‘‘30B,’’ before ‘‘45A(a)’’. 

17 (c) CONFORMING AMENDMENT.—Section 55(c)(2) of 

18 the Internal Revenue Code of 1986 is amended by insert19 ing ‘‘30B(e)(1),’’ after ‘‘30(b)(3),’’. 

20 (d) CLERICAL AMENDMENT.—The table of sections 

21 for subpart B of part IV of subchapter A of chapter 1 

22 of the Internal Revenue Code of 1986 is amended by add23 ing at the end 30A the following new item: 

‘‘Sec. 30B. Employer wage credit for activated military reservists.’’. 
33 

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

2 this section shall apply to amounts paid after the date of 

3 the enactment of this Act, in taxable years ending after 

4 such date. 

5 SEC. 303. REDUCED MINIMUM AGE FOR ELIGIBILITY FOR 

6 NON-REGULAR SERVICE RETIRED PAY. 

7 Section 12731(a)(1) of title 10, United States Code, 

8 is amended by striking ‘‘60 years of age’’ and inserting 

9 ‘‘55 years of age’’. 

10 TITLE IV—HEALTH CARE 

11 BENEFITS 

12 SEC. 401. EXPANDED ELIGIBILITY OF READY RESERVE 

13 MEMBERS UNDER TRICARE PROGRAM. 

14 (a) UNCONDITIONAL ELIGIBILITY.—Subsection (a) 

15 of section 1076b of title 10, United States Code, is amend16 ed by striking ‘‘and receive benefits’’ and all that follows 

17 through ‘‘an employer-sponsored health benefits plan’’. 

18 (b) PERMANENT AUTHORITY.—Subsection (l) of such 

19 section is repealed. 

20 (c) CONFORMING AMENDMENTS.—Such section is 

21 further amended— 

22 (1) by striking subsections (i) and (j); and 

23 (2) by redesignating subsection (k) as sub24 section (i). 
34 

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1 SEC. 402. CONTINUATION OF NON-TRICARE HEALTH BENE2 FITS PLAN COVERAGE FOR CERTAIN RE3 SERVES CALLED OR ORDERED TO ACTIVE 

4 DUTY AND THEIR DEPENDENTS. 

5 (a) REQUIRED CONTINUATION.—(1) Chapter 55 of 

6 title 10, United States Code, is amended by inserting after 

7 section 1078a the following new section: 

8 ‘‘§ 1078b. Continuation of non-TRICARE health bene9 fits plan coverage for dependents of cer10 tain Reserves called or ordered to active 

11 duty 

12 ‘‘(a) PAYMENT OF PREMIUMS.—The Secretary con13 cerned shall pay the applicable premium to continue in 

14 force any qualified health benefits plan coverage for the 

15 members of the family of an eligible reserve component 

16 member for the benefits coverage continuation period if 

17 timely elected by the member in accordance with regula18 tions prescribed under subsection (g). 

19 ‘‘(b) ELIGIBLE MEMBER; FAMILY MEMBERS.—(1) A 

20 member of a reserve component is eligible for payment of 

21 the applicable premium for continuation of qualified 

22 health benefits plan coverage under subsection (a) while 

23 serving on active duty for a period of more than 30 days 

24 pursuant to a call or order issued under a provision of 

25 law referred to in section 101(a)(13)(B) of this title dur-
35 

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1 ing a war or a national emergency declared by the Presi2 dent or Congress. 

3 ‘‘(2) For the purposes of this section, the members 

4 of the family of an eligible reserve component member in5 clude only the member’s dependents described in subpara6 graphs (A), (D), and (I) of section 1072(2) of this title. 

7 ‘‘(c) QUALIFIED HEALTH BENEFITS PLAN COV8 ERAGE.—For the purposes of this section, health benefits 

9 plan coverage for the members of the family of a reserve 

10 component member called or ordered to active duty is 

11 qualified health benefits plan coverage if— 

12 ‘‘(1) the coverage was in force on the date on 

13 which the Secretary notified the reserve component 

14 member that issuance of the call or order was pend15 ing or, if no such notification was provided, the date 

16 of the call or order; 

17 ‘‘(2) on such date, the coverage applied to the 

18 reserve component member and members of the fam19 ily of the reserve component member; and 

20 ‘‘(3) the coverage has not lapsed. 

21 ‘‘(d) APPLICABLE PREMIUM.—The applicable pre22 mium payable under this section for continuation of health 

23 benefits plan coverage for the family members of a reserve 

24 component member is the amount of the premium payable 

25 by the member for the coverage of the family members. 
36 

•S 38 IS 

1 ‘‘(e) BENEFITS COVERAGE CONTINUATION PE2 RIOD.—The benefits coverage continuation period under 

3 this section for qualified health benefits plan coverage for 

4 the family members of an eligible reserve component mem5 ber called or ordered to active duty is the period that— 

6 ‘‘(1) begins on the date of the call or order; and 

7 ‘‘(2) ends at the end of the day on which the 

8 active duty terminates. 

9 ‘‘(f) EXTENSION OF PERIOD OF COBRA COV10 ERAGE.—Notwithstanding any other provision of law— 

11 ‘‘(1) any period of coverage under a COBRA 

12 continuation provision (as defined in section 

13 9832(d)(1) of the Internal Revenue Code of 1986) 

14 for an eligible reserve component member under this 

15 section shall be deemed to be equal to the benefits 

16 coverage continuation period for such member under 

17 this section; and 

18 ‘‘(2) with respect to the election of any period 

19 of coverage under a COBRA continuation provision 

20 (as so defined), rules similar to the rules under sec21 tion 4980B(f)(5)(C) of such Code shall apply. 

22 ‘‘(g) REGULATIONS.—The Secretary of Defense shall 

23 prescribe regulations for carrying out this section. The 

24 regulations shall include such requirements for making an 
37 

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1 election of payment of applicable premiums as the Sec2 retary considers appropriate.’’. 

3 (2) The table of sections at the beginning of such 

4 chapter is amended by inserting after the item relating 

5 to section 1078a the following new item: 

‘‘1078b. Continuation of non-TRICARE health benefits plan coverage for dependents of certain Reserves called or ordered to active duty.’’. 

6 (b) APPLICABILITY.—Section 1078b of title 10, 

7 United States Code (as added by subsection (a)), shall 

8 apply with respect to calls or orders of members of reserve 

9 components of the Armed Forces to active duty as de10 scribed in subsection (b) of such section, that are issued 

11 by the Secretary of a military department before, on, or 

12 after the date of the enactment of this Act, but only with 

13 respect to qualified health benefits plan coverage (as de14 scribed in subsection (c) of such section) that is in effect 

15 on or after the date of the enactment of this Act. 

Æ