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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 38 Introduced in Senate (IS)]

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.

    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 ``Guard and Reserve Enhanced Benefits 
Act of 2005''.

                  TITLE I--FAMILY ASSISTANCE BENEFITS

SEC. 101. MILITARY FAMILY LEAVE.

    (a) General Requirements for Leave.--
            (1) Definitions.--Section 101 of the Family and Medical 
        Leave Act of 1993 (29 U.S.C. 2611) is amended by adding at the 
        end the following:
            ``(14) Active duty.--The term `active duty' means duty 
        under a call or order to active duty under a provision of law 
        referred to in section 101(a)(13)(B) of title 10, United States 
        Code.
            ``(15) Qualified member.--The term `qualified member' means 
        a member of the reserve components on active duty for a period 
        of more than 30 days.''.
            (2) Entitlement to leave.--Section 102(a)(1) of such Act 
        (29 U.S.C. 2612(a)) is amended by adding at the end the 
        following:
                    ``(E) Because the spouse, son, daughter, or parent 
                of the employee is a qualified member.''.
            (3) Schedule.--Section 102(b)(1) of such Act (29 U.S.C. 
        2612(b)(1)) is amended by inserting after the second sentence 
        the following: ``Leave under subsection (a)(1)(E) may be taken 
        intermittently or on a reduced leave schedule.''.
            (4) Substitution of paid leave.--Section 102(d)(2)(A) of 
        such Act (29 U.S.C. 2612(d)(2)(A)) is amended by striking 
        ``(A), (B), or (C)'' and inserting ``(A), (B), (C), or (E)''.
            (5) Notice.--Section 102(e) of such Act (29 U.S.C. 2612(e)) 
        is amended by adding at the end the following:
            ``(3) Notice for military family leave.--In any case in 
        which an employee seeks leave under subsection (a)(1)(E), the 
        employee shall provide such notice as is practicable.''.
            (6) Certification.--Section 103 of such Act (29 U.S.C. 
        2613) is amended by adding at the end the following:
    ``(f) Certification for Military Family Leave.--An employer may 
require that a request for leave under section 102(a)(1)(E) be 
supported by a certification issued at such time and in such manner as 
the Secretary may by regulation prescribe.''.
    (b) Military Family Leave for Civil Service Employees.--
            (1) Definitions.--Section 6381 of title 5, United States 
        Code, is amended--
                    (A) in paragraph (5), by striking ``and'' at the 
                end;
                    (B) in paragraph (6), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(7) the term `active duty' means duty under a call or 
        order to active duty under a provision of law referred to in 
        section 101(a)(13)(B) of title 10, United States Code; and
            ``(8) the term `qualified member' means a member of the 
        reserve components on active duty for a period of more than 30 
        days.''.
            (2) Entitlement to leave.--Section 6382(a) of such title is 
        amended by adding at the end the following:
            ``(E) Because the spouse, son, daughter, or parent of the 
        employee is a qualified member.''.
            (3) Schedule.--Section 6382(b)(1) of such title is amended 
        by inserting after the second sentence the following: ``Leave 
        under subsection (a)(1)(E) may be taken intermittently or on a 
        reduced leave schedule.''.
            (4) Substitution of paid leave.--Section 6382(d) of such 
        title is amended by striking ``(A), (B), (C), or (D)'' and 
        inserting ``(A), (B), (C), (D), or (E)''.
            (5) Notice.--Section 6382(e) of such title is amended by 
        adding at the end the following:
    ``(3) In any case in which an employee seeks leave under subsection 
(a)(1)(E), the employee shall provide such notice as is practicable.''.
            (6) Certification.--Section 6383 of such title is amended 
        by adding at the end the following:
    ``(f) An employing agency may require that a request for leave 
under section 6382(a)(1)(E) be supported by a certification issued at 
such time and in such manner as the Office of Personnel Management may 
by regulation prescribe.''.

SEC. 102. CHILD CARE ASSISTANCE FOR MILITARY DEPENDENTS.

    (a) Authorization of Appropriations.--Section 658B of the Child 
Care and Development Block Grant Act of 1990 (42 U.S.C. 9858) is 
amended--
            (1) by striking ``There is'' and inserting ``(a) In 
        General.--There is'';
            (2) in subsection (a), as so designated, by inserting 
        ``(except section 658T)'' after ``this subchapter''; and
            (3) by adding at the end the following:
    ``(b) Child Care for Certain Military Dependents.--There is 
authorized to be appropriated to carry out section 658T $200,000,000 
for each of fiscal years 2005 through 2009.''.
    (b) Child Care Assistance.--The Child Care and Development Block 
Grant Act of 1990 (42 U.S.C. 9858 et seq.) is amended by adding at the 
end the following:

``SEC. 658T. CHILD CARE ASSISTANCE FOR MILITARY DEPENDENTS.

    ``(a) In General.--The Secretary shall make grants to eligible 
spouses to assist the spouses in paying for the cost of child care 
services provided to dependents by eligible child care providers. In 
making the grants, the Secretary shall give priority to eligible 
spouses of qualified members on active duty for a period of more than 6 
months.
    ``(b) Definitions.--In this section:
            ``(1) Active duty.--The term `active duty' means duty under 
        a call or order to active duty under a provision of law 
        referred to in section 101(a)(13)(B) of title 10, United States 
        Code.
            ``(2) Dependent.--The term `dependent' means an individual 
        who is--
                    ``(A) a dependent, as defined in section 401 of 
                title 37, United States Code, except that such term 
                does not include a person described in paragraph (1) or 
                (3) of subsection (a) of such section; and
                    ``(B) an individual described in subparagraphs (A) 
                and (B) of section 658P(4).
            ``(3) Eligible spouse.--The term `eligible spouse' means a 
        person who--
                    ``(A) is a parent of one or more dependents of a 
                qualified member; and
                    ``(B) has the primary responsibility for the care 
                of one or more such dependents.
            ``(4) Qualified member.--The term `qualified member' means 
        a member of the reserve components on active duty for a period 
        of more than 30 days.
    ``(c) Applications.--To be eligible to receive a grant under this 
section, a spouse shall submit an application to the Secretary, at such 
time, in such manner, and containing such information as the Secretary 
may require, including a description of the eligible child care 
provider who provides the child care services assisted through the 
grant.
    ``(d) Rule.--The provisions of this subchapter, other than section 
658P and provisions referenced in section 658P, that apply to 
assistance provided under this subchapter shall not apply to assistance 
provided under this section.''.
    (c) Conforming Amendments.--Section 658O of the Child Care and 
Development Block Grant Act of 1990 (42 U.S.C. 9858m) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``appropriated 
                under this subchapter'' and inserting ``appropriated 
                under section 658B(a)''; and
                    (B) in paragraph (2), by striking ``appropriated 
                under section 658B'' and inserting ``appropriated under 
                section 658(a)''; and
            (2) in subsection (b)(1), by striking ``appropriated under 
        section 658B'' and inserting ``appropriated under section 
        658(a)''.

                      TITLE II--EDUCATION BENEFITS

                Subtitle A--Montgomery GI Bill Benefits

SEC. 201. BASIC EDUCATIONAL ASSISTANCE FOR MEMBERS OF SELECTED RESERVE 
              SERVING EXTENDED OR RECURRING PERIODS ON ACTIVE DUTY.

    (a) Entitlement.--(1) Subsection (a)(1) of section 3011 of title 
38, United States Code, is amended--
            (A) in subparagraph (B), by striking ``or'' at the end;
            (B) in subparagraph (C), by adding ``or'' at the end; and
            (C) by adding at the end the following new subparagraph:
                    ``(D) after September 11, 2001, while a member of 
                the Selected Reserve--
                            ``(i) serves at least 12 months of 
                        continuous active duty in the Armed Forces; or
                            ``(ii) during any 60-month period, serves 
                        an aggregate of 24 months of continuous active 
                        duty in the Armed Forces;''.
    (2) Subsection (d)(3) of such section is amended by striking ``The 
period of service'' and inserting ``Except in the case of an individual 
described in subsection (a)(1)(D), the period of service''.
    (b) Exclusion From Contributions for Increased Assistance.--
Subsection (e)(1) of such section is amended by inserting ``(other than 
an individual described in subsection (a)(1)(D)'' after ``Any 
individual''.
    (c) Amount of Assistance.--Section 3015(a) of such title is amended 
by inserting after ``three years'' the following: ``or an individual 
whose service on active duty on which such entitlement is based is 
described in clause (i) or (ii) of section 3011(a)(1)(D) of this 
title''.

SEC. 202. INCREASE IN AMOUNT OF EDUCATIONAL ASSISTANCE FOR MEMBERS OF 
              SELECTED RESERVE.

    (a) Increase in Amounts.--Section 16131(b)(1) of title 10, United 
States Code, is amended--
            (1) in subparagraph (A), by striking ``$251'' and inserting 
        ``$400'';
            (2) in subparagraph (B), by striking ``$188'' and inserting 
        ``$300''; and
            (3) in subparagraph (C), by striking ``$125'' and inserting 
        ``$200''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of the enactment of this Act, and shall apply 
with respect to monthly rates of educational assistance for months 
beginning on or after that date.

SEC. 203. MODIFICATION OF TIME LIMITATION FOR USE OF ENTITLEMENT TO 
              EDUCATIONAL ASSISTANCE OF MEMBERS OF SELECTED RESERVE.

    Section 16133(a)(2) of title 10, United States Code, is amended--
            (1) by inserting ``that is five years after the date'' 
        after ``on the date''; and
            (2) by striking ``first'' and inserting ``later''.

                  Subtitle B--Other Education Benefits

SEC. 211. STUDENT LOAN DEFERMENTS.

    (a) FFEL and Direct Subsidized Loans.--Section 428(b)(1)(M) of the 
Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) is amended--
            (1) in clause (ii), by striking ``or'' after the semicolon;
            (2) in clause (iii), by inserting ``or'' after the 
        semicolon; and
            (3) by inserting after clause (iii) the following:
                            ``(iv) during which the borrower is a 
                        member of the reserve components of the Armed 
                        Forces on active duty for a period of more than 
                        30 days under a call or order to active duty 
                        under a provision of law referred to in section 
                        101(a)(13)(B) of title 10, United States Code, 
                        and for 3 months following discharge or release 
                        from such active duty.''.
    (b) Consolidation Loans.--Section 428C(b)(4)(C)(ii) of the Higher 
Education Act of 1965 (20 U.S.C. 1078-3(b)(4)(C)(ii)) is amended--
            (1) in subclause (II), by striking ``or'' after the 
        semicolon;
            (2) in subclause (III), by striking ``or (II)'' and 
        inserting ``, (II) or (III)'';
            (3) by redesignating subclause (III) (as so amended) as 
        subclause (IV); and
            (4) by inserting after subclause (II) the following:
                    ``(III) by the Secretary, in the case of a 
                consolidation loan of a student who is on an active 
                duty deferment under section 428(b)(1)(M)(iv); or''.
    (c) FFEL and Direct Unsubsidized Loans.--Section 428H(e)(2) of the 
Higher Education Act of 1965 (20 U.S.C. 1078-8(e)(2)) is amended by 
adding at the end the following:
            ``(C) Notwithstanding subparagraph (A), interest on loans 
        made under this section for which payments of principal are 
        deferred because the student is on an active duty deferment 
        under section 428(b)(1)(M)(iv) shall be paid by the 
        Secretary.''.
    (d) Perkins Loans.--Section 464(c)(2)(A) of the Higher Education 
Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is amended--
            (1) in clause (iii), by striking ``or'' after the 
        semicolon;
            (2) in clause (iv), by inserting ``or'' after the 
        semicolon; and
            (3) by inserting after clause (iv) the following:
                    ``(v) during which the borrower is a member of the 
                reserve components of the Armed Forces on active duty 
                for a period of more than 30 days under a call or order 
                to active duty under a provision of law referred to in 
                section 101(a)(13)(B) of title 10, United States Code, 
                and for 3 months following discharge or release from 
                such active duty.''.

SEC. 212. PRESERVATION OF EDUCATIONAL STATUS AND TUITION.

    (a) In General.--Title VII of the Servicemembers Civil Relief Act 
(50 U.S.C. App. 501 et seq.), as amended by section 1 of Public Law 
108-189 (117 Stat. 2835), is further amended by adding at the end the 
following new section:

``SEC. 707. PRESERVATION OF EDUCATIONAL STATUS AND TUITION.

    ``(a) Leave of Absence.--A servicemember who is a member of the 
reserve components on active duty for a period of more than 30 days 
under a call or order to active duty under a provision of law referred 
to in section 101(a)(13)(B) of title 10, United States Code, and who is 
enrolled as a student at an institution of higher education at the time 
of entry into the service on active duty, shall be granted a leave of 
absence from the institution during the period of the service on active 
duty and for one year after the conclusion of the service on active 
duty.
    ``(b) Educational Status.--
            ``(1) In general.--A servicemember on a leave of absence 
        from an institution of higher education under subsection (a) 
        shall be entitled, upon completion of the leave of absence, to 
        be restored to the educational status the servicemember had 
        attained before entering into the service on active duty as 
        described in that subsection without loss of academic credits 
        earned, scholarships or grants awarded, or, subject to 
        paragraph (2), tuition and other fees paid before the entry of 
        the servicemember into the service on active duty.
            ``(2) Tuition.--
                    ``(A) Refund.--An institution of higher education 
                shall refund tuition or fees paid or credit the tuition 
                and fees to the next period of enrollment after a 
                servicemember returns from the leave of absence, at the 
                option of the servicemember. Notwithstanding the 180-
                day limitation referred to in subsection (a)(2)(B) of 
                section 484B of the Higher Education Act of 1965 (20 
                U.S.C. 1091b), a servicemember on a leave of absence 
                under this section shall not be treated as having 
                withdrawn for purposes of such section 484B unless the 
                servicemember fails to return upon the completion of 
                the leave of absence.
                    ``(B) Amount of refund.--If a servicemember 
                requests a refund for a period of enrollment, the 
                percentage of the tuition and fees that shall be 
                refunded shall be equal to 100 percent minus--
                            ``(i) the percentage of the period of 
                        enrollment (for which the tuition and fees were 
                        paid) that was completed (as determined in 
                        accordance with subsection (d) of such section 
                        484B) as of the day the servicemember withdrew, 
                        provided that such date occurs on or before the 
                        completion of 60 percent of the period of 
                        enrollment; or
                            ``(ii) 100 percent, if the day the person 
                        withdrew occurs after the servicemember has 
                        completed 60 percent of the period of 
                        enrollment.''.
    (b) Clerical Amendment.--The table of contents of that Act is 
amended by adding at the end the following new item:

``Sec. 707. Preservation of educational status and tuition.''.

            TITLE III--COMPENSATION AND RETIREMENT BENEFITS

SEC. 301. NONREDUCTION IN PAY FOR FEDERAL EMPLOYEES WHO ARE RESERVES 
              SERVING ON ACTIVE DUTY IN THE UNIFORMED SERVICES FOR 
              EXTENDED PERIODS.

    (a) In General.--Subchapter IV of chapter 55 of title 5, United 
States Code, is amended by adding at the end the following:
``Sec. 5538. Nonreduction in pay of Reserves on active duty in the 
              uniformed services for extended periods
    ``(a) An employee who is absent from a position of employment with 
the Federal Government in order to perform active duty in the uniformed 
services for a period of more than 30 days pursuant to a call or order 
to active duty under a provision of law referred to in section 
101(a)(13)(B) of title 10 shall be entitled, while serving on active 
duty, to receive, for each pay period described in subsection (b), an 
amount equal to the amount by which--
            ``(1) the amount of basic pay which would otherwise have 
        been payable to such employee for such pay period if such 
        employee's civilian employment with the Government had not been 
        interrupted by that service, exceeds (if at all)
            ``(2) the amount of pay and allowances which (as determined 
        under subsection (d))--
                    ``(A) is payable to such employee for that service; 
                and
                    ``(B) is allocable to such pay period.
    ``(b)(1) Amounts under this section shall be payable with respect 
to each pay period (which would otherwise apply if the employee's 
civilian employment had not been interrupted)--
            ``(A) during which such employee is entitled to 
        reemployment rights under chapter 43 of title 38 with respect 
        to the position from which such employee is absent (as referred 
        to in subsection (a)); and
            ``(B) for which such employee does not otherwise receive 
        basic pay (including by taking any annual, military, or other 
        paid leave) to which such employee is entitled by virtue of 
        such employee's civilian employment with the Government.
    ``(2) For purposes of this section, the period during which an 
employee is entitled to reemployment rights under chapter 43 of title 
38--
            ``(A) shall be determined disregarding the provisions of 
        section 4312(d) of title 38; and
            ``(B) shall include any period of time specified in section 
        4312(e) of title 38 within which an employee may report or 
        apply for employment or reemployment following completion of 
        the service on active duty to which called or ordered as 
        described in subsection (a).
    ``(c) Any amount payable under this section to an employee shall be 
paid--
            ``(1) by such employee's employing agency;
            ``(2) from the appropriation or fund which would be used to 
        pay the employee if such employee were in a pay status; and
            ``(3) to the extent practicable, at the same time and in 
        the same manner as would basic pay if such employee's civilian 
        employment had not been interrupted.
    ``(d) The Office of Personnel Management shall, in consultation 
with Secretary of Defense, prescribe any regulations necessary to carry 
out the preceding provisions of this section.
    ``(e)(1) The head of each agency referred to in section 
2302(a)(2)(C)(ii) shall, in consultation with the Office, prescribe 
procedures to ensure that the rights under this section apply to the 
employees of such agency.
    ``(2) The Administrator of the Federal Aviation Administration 
shall, in consultation with the Office, prescribe procedures to ensure 
that the rights under this section apply to the employees of that 
agency.
    ``(f) In this section--
            ``(1) the terms `employee', `Federal Government', and 
        `uniformed services' have the same respective meanings as given 
        them in section 4303 of title 38;
            ``(2) the term `employing agency', as used with respect to 
        an employee entitled to any payments under this section, means 
        the agency or other entity of the Government (including an 
        agency referred to in section 2302(a)(2)(C)(ii)) with respect 
        to which such employee has reemployment rights under chapter 43 
        of title 38; and
            ``(3) the term `basic pay' includes any amount payable 
        under section 5304.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 55 of title 5, United States Code, is amended by inserting 
after the item relating to section 5537 the following:

``5538. Nonreduction in pay of Reserves on active duty in the uniformed 
                            services for extended periods.''
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to pay periods (as described in section 5538(b) of 
title 5, United States Code, as added by this section) beginning on or 
after the date of enactment of this Act.

SEC. 302. CREDIT FOR INCOME DIFFERENTIAL FOR EMPLOYMENT OF ACTIVATED 
              MILITARY RESERVIST AND REPLACEMENT PERSONNEL.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to foreign tax credit, 
etc.) is amended by adding at the end the following new section:

``SEC. 30B. EMPLOYER WAGE CREDIT FOR ACTIVATED MILITARY RESERVISTS.

    ``(a) General Rule.--There shall be allowed as a credit against the 
tax imposed by this chapter for the taxable year an amount equal to the 
sum of--
            ``(1) in the case of a small business employer, the 
        employment credit with respect to all qualified employees and 
        qualified replacement employees of the taxpayer, plus
            ``(2) the self-employment credit of a qualified self-
        employed taxpayer.
    ``(b) Employment Credit.--For purposes of this section--
            ``(1) Qualified employees.--
                    ``(A) In general.--The employment credit with 
                respect to a qualified employee of the taxpayer for any 
                taxable year is equal to the lesser of--
                            ``(i) the excess, if any, of--
                                    ``(I) the qualified employee's 
                                average daily qualified compensation 
                                for the taxable year, over
                                    ``(II) the average daily military 
                                pay and allowances received by the 
                                qualified employee during the taxable 
                                year,
                        while participating in qualified reserve 
                        component duty to the exclusion of the 
                        qualified employee's normal employment duties 
                        for the number of days the qualified employee 
                        participates in qualified reserve component 
                        duty during the taxable year, including time 
                        spent in a travel status, or
                            ``(ii) $15,000.
                The employment credit, with respect to all qualified 
                employees, is equal to the sum of the employment 
                credits for each qualified employee under this 
                subsection.
                    ``(B) Average daily qualified compensation and 
                average daily military pay and allowances.--As used 
                with respect to a qualified employee--
                            ``(i) the term `average daily qualified 
                        compensation' means the qualified compensation 
                        of the qualified employee for the taxable year 
                        divided by the difference between--
                                    ``(I) 365, and
                                    ``(II) the number of days the 
                                qualified employee participates in 
                                qualified reserve component duty during 
                                the taxable year, including time spent 
                                in a travel status, and
                            ``(ii) the term `average daily military pay 
                        and allowances' means--
                                    ``(I) the amount paid to the 
                                qualified employee during the taxable 
                                year as military pay and allowances on 
                                account of the qualified employee's 
                                participation in qualified reserve 
                                component duty, divided by
                                    ``(II) the total number of days the 
                                qualified employee participates in 
                                qualified reserve component duty, 
                                including time spent in travel status.
                    ``(C) Qualified compensation.--When used with 
                respect to the compensation paid or that would have 
                been paid to a qualified employee for any period during 
                which the qualified employee participates in qualified 
                reserve component duty, the term `qualified 
                compensation' means--
                            ``(i) compensation which is normally 
                        contingent on the qualified employee's presence 
                        for work and which would be deductible from the 
                        taxpayer's gross income under section 162(a)(1) 
                        if the qualified employee were present and 
                        receiving such compensation,
                            ``(ii) compensation which is not 
                        characterized by the taxpayer as vacation or 
                        holiday pay, or as sick leave or pay, or as any 
                        other form of pay for a nonspecific leave of 
                        absence, and with respect to which the number 
                        of days the qualified employee participates in 
                        qualified reserve component duty does not 
                        result in any reduction in the amount of 
                        vacation time, sick leave, or other nonspecific 
                        leave previously credited to or earned by the 
                        qualified employee, and
                            ``(iii) group health plan costs (if any) 
                        with respect to the qualified employee.
                    ``(D) Qualified employee.--The term `qualified 
                employee' means a person who--
                            ``(i) has been an employee of the taxpayer 
                        for the 91-day period immediately preceding the 
                        period during which the employee participates 
                        in qualified reserve component duty, and
                            ``(ii) is a member of the Ready Reserve of 
                        a reserve component of an Armed Force of the 
                        United States as defined in sections 10142 and 
                        10101 of title 10, United States Code.
            ``(2) Qualified replacement employees.--
                    ``(A) In general.--The employment credit with 
                respect to a qualified replacement employee of the 
                taxpayer for any taxable year is equal to the lesser 
                of--
                            ``(i) the individual's qualified 
                        compensation attributable to service rendered 
                        as a qualified replacement employee, or
                            ``(ii) $15,000.
                The employment credit, with respect to all qualified 
                replacement employees, is equal to the sum of the 
                employment credits for each qualified replacement 
                employee under this subsection.
                    ``(B) Qualified compensation.--When used with 
                respect to the compensation paid to a qualified 
                replacement employee, the term `qualified compensation' 
                means--
                            ``(i) compensation which is normally 
                        contingent on the qualified replacement 
                        employee's presence for work and which is 
                        deductible from the taxpayer's gross income 
                        under section 162(a)(1),
                            ``(ii) compensation which is not 
                        characterized by the taxpayer as vacation or 
                        holiday pay, or as sick leave or pay, or as any 
                        other form of pay for a nonspecific leave of 
                        absence, and
                            ``(iii) group health plan costs (if any) 
                        with respect to the qualified replacement 
                        employee.
                    ``(C) Qualified replacement employee.--The term 
                `qualified replacement employee' means an individual 
                who is hired to replace a qualified employee or a 
                qualified self-employed taxpayer, but only with respect 
                to the period during which such employee or taxpayer 
                participates in qualified reserve component duty, 
                including time spent in travel status.
    ``(c) Self-Employment Credit.--For purposes of this section--
            ``(1) In general.--The self-employment credit of a 
        qualified self-employed taxpayer for any taxable year is equal 
        to the lesser of--
                    ``(A) the excess, if any, of--
                            ``(i) the self-employed taxpayer's average 
                        daily self-employment income for the taxable 
                        year over
                            ``(ii) the average daily military pay and 
                        allowances received by the taxpayer during the 
                        taxable year, while participating in qualified 
                        reserve component duty to the exclusion of the 
                        taxpayer's normal self-employment duties for 
                        the number of days the taxpayer participates in 
                        qualified reserve component duty during the 
                        taxable year, including time spent in a travel 
                        status, or
                    ``(B) $15,000.
            ``(2) Average daily self-employment income and average 
        daily military pay and allowances.--As used with respect to a 
        self-employed taxpayer--
                    ``(A) the term `average daily self-employment 
                income' means the self-employment income (as defined in 
                section 1402(b)) of the taxpayer for the taxable year 
                plus the amount paid for insurance which constitutes 
                medical care for the taxpayer for such year (within the 
                meaning of section 162(l)) divided by the difference 
                between--
                            ``(i) 365, and
                            ``(ii) the number of days the taxpayer 
                        participates in qualified reserve component 
                        duty during the taxable year, including time 
                        spent in a travel status, and
                    ``(B) the term `average daily military pay and 
                allowances' means--
                            ``(i) the amount paid to the taxpayer 
                        during the taxable year as military pay and 
                        allowances on account of the taxpayer's 
                        participation in qualified reserve component 
                        duty, divided by
                            ``(ii) the total number of days the 
                        taxpayer participates in qualified reserve 
                        component duty, including time spent in travel 
                        status.
            ``(3) Qualified self-employed taxpayer.--The term 
        `qualified self-employed taxpayer' means a taxpayer who--
                    ``(A) has net earnings from self-employment (as 
                defined in section 1402(a)) for the taxable year, and
                    ``(B) is a member of the Ready Reserve of a reserve 
                component of an Armed Force of the United States.
    ``(d) Coordination With Other Credits.--The amount of credit 
otherwise allowable under sections 51(a) and 1396(a) with respect to 
any employee shall be reduced by the credit allowed by this section 
with respect to such employee.
    ``(e) Limitations.--
            ``(1) Application with other credits.--The credit allowed 
        under subsection (a) for any taxable year shall not exceed the 
        excess (if any) of--
                    ``(A) the regular tax for the taxable year reduced 
                by the sum of the credits allowable under subpart A and 
                sections 27, 29, and 30, over
                    ``(B) the tentative minimum tax for the taxable 
                year.
            ``(2) Disallowance for failure to comply with employment or 
        reemployment rights of members of the reserve components of the 
        armed forces of the united states.--No credit shall be allowed 
        under subsection (a) to a taxpayer for--
                    ``(A) any taxable year, beginning after the date of 
                the enactment of this section, in which the taxpayer is 
                under a final order, judgment, or other process issued 
                or required by a district court of the United States 
                under section 4323 of title 38 of the United States 
                Code with respect to a violation of chapter 43 of such 
                title, and
                    ``(B) the 2 succeeding taxable years.
            ``(3) Disallowance with respect to persons ordered to 
        active duty for training.--No credit shall be allowed under 
        subsection (a) to a taxpayer with respect to any period by 
        taking into account any person who is called or ordered to 
        active duty for any of the following types of duty:
                    ``(A) Active duty for training under any provision 
                of title 10, United States Code.
                    ``(B) Training at encampments, maneuvers, outdoor 
                target practice, or other exercises under chapter 5 of 
                title 32, United States Code.
                    ``(C) Full-time National Guard duty, as defined in 
                section 101(d)(5) of title 10, United States Code.
    ``(f) General Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Small business employer.--
                    ``(A) In general.--The term `small business 
                employer' means, with respect to any taxable year, any 
                employer who employed an average of 50 or fewer 
                employees on business days during such taxable year.
                    ``(B) Controlled groups.--For purposes of 
                subparagraph (A), all persons treated as a single 
                employer under subsection (b), (c), (m), or (o) of 
section 414 shall be treated as a single employer.
            ``(2) Military pay and allowances.--The term `military pay' 
        means pay as that term is defined in section 101(21) of title 
        37, United States Code, and the term `allowances' means the 
        allowances payable to a member of the Armed Forces of the 
        United States under chapter 7 of that title.
            ``(3) Qualified reserve component duty.--The term 
        `qualified reserve component duty' means active duty performed 
        for a period not less than 180 days under a call or order to 
        active duty under a provision of law referred to in section 
        101(a)(13)(B) of title 10, United States Code.
            ``(4) Carryback and carryforward allowed.--
                    ``(A) In general.--If the credit allowable under 
                subsection (a) for a taxable year exceeds the amount of 
                the limitation under subsection (e)(1) for such taxable 
                year (in this paragraph referred to as the `unused 
                credit year'), such excess shall be a credit carryback 
                to each of the 3 taxable years preceding the unused 
                credit year and a credit carryforward to each of the 20 
taxable years following the unused credit year.
                    ``(B) Rules.--Rules similar to the rules of section 
                39 shall apply with respect to the credit carryback and 
                credit carryforward under subparagraph (A).
            ``(5) Certain rules to apply.--Rules similar to the rules 
        of subsections (c), (d), and (e) of section 52 shall apply.''.
    (b) No Deduction for Compensation Taken Into Account for Credit.--
Section 280C(a) of the Internal Revenue Code of 1986 (relating to rule 
for employment credits) is amended--
            (1) by inserting ``or compensation'' after ``salaries'', 
        and
            (2) by inserting ``30B,'' before ``45A(a)''.
    (c) Conforming Amendment.--Section 55(c)(2) of the Internal Revenue 
Code of 1986 is amended by inserting ``30B(e)(1),'' after 
``30(b)(3),''.
    (d) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end 30A the following new item:

                              ``Sec. 30B. Employer wage credit for 
                                        activated military 
                                        reservists.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to amounts paid after the date of the enactment of this Act, in 
taxable years ending after such date.

SEC. 303. REDUCED MINIMUM AGE FOR ELIGIBILITY FOR NON-REGULAR SERVICE 
              RETIRED PAY.

    Section 12731(a)(1) of title 10, United States Code, is amended by 
striking ``60 years of age'' and inserting ``55 years of age''.

                     TITLE IV--HEALTH CARE BENEFITS

SEC. 401. EXPANDED ELIGIBILITY OF READY RESERVE MEMBERS UNDER TRICARE 
              PROGRAM.

    (a) Unconditional Eligibility.--Subsection (a) of section 1076b of 
title 10, United States Code, is amended by striking ``and receive 
benefits'' and all that follows through ``an employer-sponsored health 
benefits plan''.
    (b) Permanent Authority.--Subsection (l) of such section is 
repealed.
    (c) Conforming Amendments.--Such section is further amended--
            (1) by striking subsections (i) and (j); and
            (2) by redesignating subsection (k) as subsection (i).

SEC. 402. CONTINUATION OF NON-TRICARE HEALTH BENEFITS PLAN COVERAGE FOR 
              CERTAIN RESERVES CALLED OR ORDERED TO ACTIVE DUTY AND 
              THEIR DEPENDENTS.

    (a) Required Continuation.--(1) Chapter 55 of title 10, United 
States Code, is amended by inserting after section 1078a the following 
new section:
``Sec. 1078b. Continuation of non-TRICARE health benefits plan coverage 
              for dependents of certain Reserves called or ordered to 
              active duty
    ``(a) Payment of Premiums.--The Secretary concerned shall pay the 
applicable premium to continue in force any qualified health benefits 
plan coverage for the members of the family of an eligible reserve 
component member for the benefits coverage continuation period if 
timely elected by the member in accordance with regulations prescribed 
under subsection (g).
    ``(b) Eligible Member; Family Members.--(1) A member of a reserve 
component is eligible for payment of the applicable premium for 
continuation of qualified health benefits plan coverage under 
subsection (a) while serving on active duty for a period of more than 
30 days pursuant to a call or order issued under a provision of law 
referred to in section 101(a)(13)(B) of this title during a war or a 
national emergency declared by the President or Congress.
    ``(2) For the purposes of this section, the members of the family 
of an eligible reserve component member include only the member's 
dependents described in subparagraphs (A), (D), and (I) of section 
1072(2) of this title.
    ``(c) Qualified Health Benefits Plan Coverage.--For the purposes of 
this section, health benefits plan coverage for the members of the 
family of a reserve component member called or ordered to active duty 
is qualified health benefits plan coverage if--
            ``(1) the coverage was in force on the date on which the 
        Secretary notified the reserve component member that issuance 
        of the call or order was pending or, if no such notification 
        was provided, the date of the call or order;
            ``(2) on such date, the coverage applied to the reserve 
        component member and members of the family of the reserve 
        component member; and
            ``(3) the coverage has not lapsed.
    ``(d) Applicable Premium.--The applicable premium payable under 
this section for continuation of health benefits plan coverage for the 
family members of a reserve component member is the amount of the 
premium payable by the member for the coverage of the family members.
    ``(e) Benefits Coverage Continuation Period.--The benefits coverage 
continuation period under this section for qualified health benefits 
plan coverage for the family members of an eligible reserve component 
member called or ordered to active duty is the period that--
            ``(1) begins on the date of the call or order; and
            ``(2) ends at the end of the day on which the active duty 
        terminates.
    ``(f) Extension of Period of COBRA Coverage.--Notwithstanding any 
other provision of law--
            ``(1) any period of coverage under a COBRA continuation 
        provision (as defined in section 9832(d)(1) of the Internal 
        Revenue Code of 1986) for an eligible reserve component member 
        under this section shall be deemed to be equal to the benefits 
        coverage continuation period for such member under this 
        section; and
            ``(2) with respect to the election of any period of 
        coverage under a COBRA continuation provision (as so defined), 
        rules similar to the rules under section 4980B(f)(5)(C) of such 
        Code shall apply.
    ``(g) Regulations.--The Secretary of Defense shall prescribe 
regulations for carrying out this section. The regulations shall 
include such requirements for making an election of payment of 
applicable premiums as the Secretary considers appropriate.''.
    (2) The table of sections at the beginning of such chapter is 
amended by inserting after the item relating 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.''.
    (b) Applicability.--Section 1078b of title 10, United States Code 
(as added by subsection (a)), shall apply with respect to calls or 
orders of members of reserve components of the Armed Forces to active 
duty as described in subsection (b) of such section, that are issued by 
the Secretary of a military department before, on, or after the date of 
the enactment of this Act, but only with respect to qualified health 
benefits plan coverage (as described in subsection (c) of such section) 
that is in effect on or after the date of the enactment of this Act.
                                 <all>
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