II 

109TH CONGRESS 

2D SESSION S. 3745 

To amend the Internal Revenue Code of 1986 to allow a tax credit for 

certain employer-provided retiree health care coverage, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 27 (legislative day, JULY 26), 2006 

Ms. STABENOW (for herself and Mr. LEVIN) 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 allow a 

tax credit for certain employer-provided retiree health 

care coverage, 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. CREDIT FOR CERTAIN EMPLOYER-PROVIDED 

4 RETIREE HEALTH CARE COVERAGE. 

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 (relating to business-related credits) is amended by 

8 adding at the end the following: 


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1 ‘‘SEC. 45N. EMPLOYER-PROVIDED RETIREE HEALTH CARE 

2 COVERAGE. 

3 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

4 in the case of an eligible employer, the retiree health care 

5 coverage credit determined under this section for the tax6 able year is an amount equal to 10 percent of qualified 

7 retiree health care expenses paid or incurred by the tax8 payer during such taxable year in connection with the pro9 vision of qualified retiree health care coverage. 

10 ‘‘(b) ELIGIBLE EMPLOYER.—For purposes of this 

11 section, the term ‘eligible employer’ means for a taxable 

12 year any employer— 

13 ‘‘(1) which is eligible for the deduction under 

14 section 199 for such taxable year, or 

15 ‘‘(2) at least 50 percent of the gross receipts of 

16 which derived from activities within the United 

17 States for such taxable year are domestic production 

18 gross receipts (as defined in section 199(c)(4)). 

19 ‘‘(c) QUALIFIED RETIREE HEALTH CARE EX20 PENSES.—For purposes of this section, the term ‘qualified 

21 retiree health care expenses’ means any amount paid or 

22 incurred by an eligible employer for qualified retiree health 

23 care coverage to the extent such amount is attributable 

24 to coverage provided to any employee and such employee’s 

25 spouse and dependents while such employee is a qualified 

26 employee. 


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1 ‘‘(d) QUALIFIED EMPLOYEE.—For purposes of this 

2 section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified em4 ployee’ means any retired employee of an employer 

5 who, with respect to any period— 

6 ‘‘(A) has attained 55 but not 66 years of 

7 age, and 

8 ‘‘(B) is not provided health insurance cov9 erage under title XVIII of the Social Security 

10 Act. 

11 ‘‘(2) EMPLOYEE.—The term ‘employee’ does 

12 not include an employee within the meaning of sec13 tion 401(c)(1). 

14 ‘‘(e) QUALIFIED RETIREE HEALTH CARE COV15 ERAGE.—For purposes of this section, the term ‘qualified 

16 retiree health care coverage’ means health care coverage, 

17 through the purchase of insurance or otherwise, the value 

18 of which meets or exceeds on an actuarial basis the value 

19 of any service benefit plan (standard option with preferred 

20 provider organization) offered under chapter 89 of title 5, 

21 United States Code. 

22 ‘‘(f) CERTAIN RULES MADE APPLICABLE.—For pur23 poses of this section, rules similar to the rules of section 

24 52 shall apply. 

25 ‘‘(g) DENIAL OF DOUBLE BENEFITS.— 


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1 ‘‘(1) OTHER CREDITS.—No credit under any 

2 other provision of this chapter shall be allowed with 

3 respect to qualified retiree health care expenses 

4 taken into account under subsection (a). 

5 ‘‘(2) DEDUCTION.—The amount of any deduc6 tion allowable under this chapter with respect to any 

7 qualified retiree health care expenses paid or in8 curred during the taxable year shall be reduced by 

9 the amount of the credit allowed under subsection 

10 (a) with respect to such expenses for such taxable 

11 year. 

12 ‘‘(h) ELECTION.—This section shall apply to any tax13 payer for any taxable year only if such taxpayer elects (at 

14 such time and in such manner as the Secretary may by 

15 regulations prescribe) to have this section apply for such 

16 taxable year. 

17 ‘‘(i) TERMINATION.—This section shall not apply to 

18 premiums paid or incurred after December 31, 2009.’’. 

19 (b) CREDIT TO BE PART OF GENERAL BUSINESS

20 CREDIT.—Section 38(b) of the Internal Revenue Code of 

21 1986 (relating to current year business credit) is amended 

22 by striking ‘‘and’’ at the end of paragraph (29), by strik23 ing the period at the end of paragraph (30) and inserting 

24 ‘‘, plus’’, and by adding at the end the following: 


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1 ‘‘(31) the retiree health care coverage credit de2 termined under section 45N.’’. 

3 (c) CREDIT ALLOWED AGAINST THE ALTERNATIVE

4 MINIMUM TAX.—Section 38(c)(4)(B) of the Internal Rev5 enue Code of 1986 (defining specified credits) is amended 

6 by striking the period at the end of clause (ii)(II) and in7 serting ‘‘, and’’, and by adding at the end the following 

8 new clause: 

9 ‘‘(iii) the credit determined under sec10 tion 45N.’’. 

11 (d) 10-YEAR CARRYBACK AND UNLIMITED

12 CARRYFORWARD OF CREDIT.—Subsection (a) of section 

13 39 of the Internal Revenue Code of 1986 is amended by 

14 adding at the end the following new paragraph: 

15 ‘‘(4) 10-YEAR CARRYBACK AND UNLIMITED

16 CARRYFORWARD FOR PREMIUMS CREDIT.—In the 

17 case of the retiree health care coverage credit under 

18 section 45N— 

19 ‘‘(A) this section shall be applied sepa20 rately from the business credit (other than such 

21 retiree health care coverage credit), 

22 ‘‘(B) paragraph (1) shall be applied by 

23 substituting ‘10 taxable years’ for ‘1 taxable 

24 years’ in subparagraph (A) thereof and by 

25 striking ‘20’ in subparagraph (B) thereof, and 


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1 ‘‘(C) paragraph (2) shall be applied by 

2 striking ‘21’ in subparagraph (A) thereof and 

3 by striking ‘20’ in subparagraph (B) thereof.’’. 

4 (e) CONFORMING AMENDMENTS.— 

5 (1) Section 6501(m) of the Internal Revenue 

6 Code of 1986 is amended by inserting ‘‘45N(h),’’ 

7 after ‘‘45C(d)(4),’’. 

8 (2) The table of sections for subpart D of part 

9 IV of subchapter A of chapter 1 of such Code is 

10 amended by adding at the end the following: 

‘‘Sec. 45N. Employer-provided retiree health care insurance premiums.’’. 

11 (f) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to amounts paid or incurred in tax13 able years beginning after the date of the enactment of 

14 this Act. 

Æ 


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