II 

109TH CONGRESS 

1ST SESSION S. 484 

To amend the Internal Revenue Code of 1986 to allow Federal civilian 

and military retirees to pay health insurance premiums on a pretax 

basis and to allow a deduction for TRICARE supplemental premiums. 

IN THE SENATE OF THE UNITED STATES 

MARCH 1, 2005 

Mr. WARNER (for himself and Ms. COLLINS) 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 Federal civilian and military retirees to pay health insurance 

premiums on a pretax basis and to allow a deduction 

for TRICARE supplemental premiums.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. PRETAX PAYMENT OF HEALTH INSURANCE 

4 PREMIUMS BY FEDERAL CIVILIAN AND MILI5 TARY RETIREES. 

6 (a) IN GENERAL.—Subsection (g) of section 125 of 

7 the Internal Revenue Code of 1986 (relating to cafeteria 
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1 plans) is amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(5) HEALTH INSURANCE PREMIUMS OF FED4 ERAL CIVILIAN AND MILITARY RETIREES.— 

5 ‘‘(A) FEHBP PREMIUMS.—Nothing in this 

6 section shall prevent the benefits of this section 

7 from being allowed to an annuitant, as defined 

8 in paragraph (3) of section 8901, title 5, 

9 United States Code, with respect to a choice be10 tween the annuity or compensation referred to 

11 in such paragraph and benefits under the 

12 health benefits program established by chapter 

13 89 of such title 5. 

14 ‘‘(B) TRICARE PREMIUMS.—Nothing in 

15 this section shall prevent the benefits of this 

16 section from being allowed to an individual re17 ceiving retired or retainer pay by reason of 

18 being a member or former member of the uni19 formed services of the United States with re20 spect to a choice between such pay and benefits 

21 under the health benefits programs established 

22 by chapter 55 of title 10, United States Code.’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 this section shall apply to taxable years beginning after 

25 the date of the enactment of this Act. 
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1 SEC. 2. DEDUCTION FOR TRICARE SUPPLEMENTAL PRE2 MIUMS. 

3 (a) IN GENERAL.—Part VII of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1986 (relating to 

5 additional itemized deductions for individuals) is amended 

6 by redesignating section 224 as section 225 and by insert7 ing after section 223 the following new section: 

8 ‘‘SEC. 224. TRICARE SUPPLEMENTAL PREMIUMS OR EN9 ROLLMENT FEES. 

10 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 

11 individual, there shall be allowed as a deduction the 

12 amounts paid during the taxable year by the taxpayer for 

13 insurance purchased as supplemental coverage to the 

14 health benefits programs established by chapter 55 of title 

15 10, United States Code, for the taxpayer and the tax16 payer’s spouse and dependents. 

17 ‘‘(b) COORDINATION WITH MEDICAL DEDUCTION.—

18 Any amount allowed as a deduction under subsection (a) 

19 shall not be taken into account in computing the amount 

20 allowable to the taxpayer as a deduction under section 

21 213(a).’’. 

22 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI23 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

24 of section 62 of the Internal Revenue Code of 1986 (defin25 ing adjusted gross income) is amended by redesignating 

26 paragraph (19) (as added by section 703(a) of the Amer-
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1 ican Jobs Creation Act of 2004) as paragraph (20) and 

2 by inserting after paragraph (20) (as so redesignated) the 

3 following new paragraph: 

4 ‘‘(21) TRICARE SUPPLEMENTAL PREMIUMS

5 OR ENROLLMENT FEES.—The deduction allowed by 

6 section 224.’’. 

7 (c) CLERICAL AMENDMENT.—The table of sections 

8 for part VII of subchapter B of chapter 1 of the Internal 

9 Revenue Code of 1986 is amended by striking the last 

10 item and inserting the following new items:

‘‘Sec. 224. TRICARE supplemental premiums or enrollment fees. 

‘‘Sec. 225. Cross reference.’’.

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

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 SEC. 3. IMPLEMENTATION. 

15 (a) FEHBP PREMIUM CONVERSION OPTION FOR

16 FEDERAL CIVILIAN RETIREES.—The Director of the Of17 fice of Personnel Management shall take such actions as 

18 the Director considers necessary so that the option made 

19 possible by section 125(g)(5)(A) of the Internal Revenue 

20 Code of 1986 shall be offered beginning with the first open 

21 enrollment period, afforded under section 8905(g)(1) of 

22 title 5, United States Code, which begins not less than 

23 90 days after the date of the enactment of this Act. 
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1 (b) TRICARE PREMIUM CONVERSION OPTION FOR

2 MILITARY RETIREES.—The Secretary of Defense, after 

3 consulting with the other administering Secretaries (as 

4 specified in section 1073 of title 10, United States Code), 

5 shall take such actions as the Secretary considers nec6 essary so that the option made possible by section 

7 125(g)(5)(B) of the Internal Revenue Code of 1986 shall 

8 be offered beginning with the first open enrollment period 

9 afforded under health benefits programs established under 

10 chapter 55 of such title, which begins not less than 90 

11 days after the date of the enactment of this Act.

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