I 

111TH CONGRESS 

1ST SESSION H. R. 3115 

To amend the Internal Revenue Code of 1986 to provide credits to small 

businesses and their employees for health insurance coverage. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 7, 2009 

Mr. HODES (for himself and Ms. SHEA-PORTER) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

credits to small businesses and their employees for health 

insurance coverage. 

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 ‘‘Small Business Health 

5 Care Affordability Act of 2009’’. 

6 SEC. 2. SMALL EMPLOYERS BUSINESS CREDIT FOR PRO7 VIDING EMPLOYEE HEALTH INSURANCE. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 (relating to business related credits) is amended by 

2 adding at the end the following new section: 

3 ‘‘SEC. 45R. EMPLOYEE HEALTH INSURANCE COVERAGE BY 

4 SMALL EMPLOYERS. 

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

6 in the case of an eligible small employer, the health insur7 ance credit determined under this section for any taxable 

8 year is an amount equal to the aggregate amount paid 

9 or incurred by the taxpayer for the taxable year for quali10 fied health insurance for employees of the taxpayer. 

11 ‘‘(b) DOLLAR LIMITATION.— 

12 ‘‘(1) ANNUAL LIMITATION.—The amount of the 

13 credit determined under this section with respect to 

14 an employee for any taxable year shall not exceed 

15 the sum of the amounts paid by the taxpayer for 

16 qualified health insurance for such employee for cov17 erage months of such employee during the taxable 

18 year. 

19 ‘‘(2) MONTHLY LIMITATION.—For purposes of 

20 paragraph (1), amounts paid by the taxpayer for 

21 qualified health insurance for an employee for any 

22 coverage month of such individual during the taxable 

23 year shall not be taken into account to the extent 

such amounts exceed 1 24 ⁄12 of the following: 


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1 ‘‘(A) $1,000 in the case of coverage of the 

2 employee. 

3 ‘‘(B) $1,750 in the case of two person cov4 erage. 

5 ‘‘(C) $2,250 in the case of family coverage. 

6 ‘‘(c) ELIGIBLE SMALL EMPLOYER.—For purposes of 

7 this section— 

8 ‘‘(1) IN GENERAL.—The term ‘eligible small 

9 employer’ means, with respect to any taxable year, 

10 any employer who employed an average of 50 or 

11 fewer employees on business days during either of 

12 the 2 preceding taxable years. For purposes of the 

13 preceding sentence, a preceding taxable year may be 

14 taken into account only if the employer was in exist15 ence throughout such year. 

16 ‘‘(2) EMPLOYERS NOT IN EXISTENCE IN PRE17 CEDING YEAR.—In the case of an employer which 

18 was not in existence throughout the 1st preceding 

19 taxable year, the determination under subparagraph 

20 (A) shall be based on the average number of employ21 ees that it is reasonably expected such employer will 

22 employ on business days in the current taxable year. 

23 ‘‘(3) CERTAIN GROWING EMPLOYERS RETAIN

24 TREATMENT AS SMALL EMPLOYER.—The term 


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1 ‘small employer’ includes, with respect to any cal2 endar year, any employer if— 

3 ‘‘(A) such employer met the requirement of 

4 paragraph (1) (determined without regard to 

5 paragraph (2)) for any preceding calendar year 

6 after the date of the enactment of this section, 

7 ‘‘(B) such employer provided qualified 

8 health insurance for that year and each subse9 quent year thereafter, and 

10 ‘‘(C) such employer employed an average 

11 of 200 or fewer employees on business days 

12 during each preceding calendar year after the 

13 date of the enactment of this section. 

14 ‘‘(4) SPECIAL RULES.— 

15 ‘‘(A) CONTROLLED GROUPS.—For pur16 poses of this subsection, all persons treated as 

17 a single employer under subsection (b), (c), 

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

19 employer. 

20 ‘‘(B) PREDECESSORS.—Any reference in 

21 this paragraph to an employer shall include a 

22 reference to any predecessor of such employer. 

23 ‘‘(d) COVERAGE MONTH.—For purposes of this sec24 tion— 


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1 ‘‘(1) IN GENERAL.—The term ‘coverage month’ 

2 means, with respect to an individual, any month if— 

3 ‘‘(A) as of the first day of such month 

4 such individual is covered by qualified health in5 surance, and 

6 ‘‘(B) more than 50 percent of the premium 

7 for coverage under such insurance for such 

8 month is paid by the eligible small employer. 

9 ‘‘(2) MEDICARE, MEDICAID, AND SCHIP.—The 

10 term ‘coverage month’ shall not include any month 

11 with respect to an individual if, as of the first day 

12 of such month, such individual— 

13 ‘‘(A) is entitled to any benefits under part 

14 A of title XVIII of the Social Security Act or 

15 is enrolled under part B of such title, or 

16 ‘‘(B) is enrolled in the program under title 

17 XIX or XXI of such Act (other than under sec18 tion 1928 of such Act). 

19 ‘‘(3) CERTAIN OTHER COVERAGE.—The term 

20 ‘coverage month’ shall not include any month with 

21 respect to an individual if, at any time during such 

22 month, any benefit is provided to such individual 

23 under chapter 55 of title 10, United States Code. 

24 ‘‘(4) PRISONERS.—The term ‘coverage month’ 

25 shall not include any month with respect to an indiVerDate Nov 24 2008 02:53 Jul 08, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3115.IH H3115

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1 vidual if, as of the first day of such month, such in2 dividual is imprisoned under Federal, State, or local 

3 authority. 

4 ‘‘(5) INSUFFICIENT PRESENCE IN UNITED

5 STATES.—The term ‘coverage month’ shall not in6 clude any month during a taxable year with respect 

7 to an individual if such individual is present in the 

8 United States on fewer than 183 days during such 

9 year (determined in accordance with section 

10 7701(b)(7)). 

11 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur12 poses of this section— 

13 ‘‘(1) IN GENERAL.—The term ‘qualified health 

14 insurance’ means health insurance coverage (as de15 fined in section 9832(b)(1)) which— 

16 ‘‘(A) is coverage under a group health plan 

17 (within the meaning of section 5000 without re18 gard to section 5000(d)), and 

19 ‘‘(B) meets the requirements of 

20 paragraph (2). 

21 Such term does not include any insurance substan22 tially all of the coverage of which is coverage de23 scribed in section 223(c)(1)(B). 

24 ‘‘(2) REQUIREMENTS.—The requirements of 

25 this paragraph are as follows: 


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1 ‘‘(A) ADJUSTED COMMUNITY RATING OR

2 RATING BANDS.—The coverage is provided in a 

3 State which— 

4 ‘‘(i) has a community rating structure 

5 that does not permit rating on gender, 

6 health status or claims experience, or 

7 ‘‘(ii) limits the permitted rate for any 

8 age group to be no more than 400 percent 

9 of the lowest rate for all adult age groups. 

10 ‘‘(B) BENEFITS.—The coverage is pro11 vided under a plan that is at least an actuarial 

12 equivalent to the standard Blue Cross-Blue 

13 Shield plan offered under the Federal Employ14 ees Health Benefits Program (FEHBP).’’. 

15 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI16 NESS CREDIT.—Section 38(b) of such Code (defining cur17 rent year business credit) is amended by striking ‘‘plus’’ 

18 at the end of paragraph (34), by striking the period at 

19 the end of paragraph (35) and inserting ‘‘, plus’’, and by 

20 adding at the end the following new paragraph: 

21 ‘‘(36) in the case of an eligible small employer 

22 (as defined in section 45R(c)), the health insurance 

23 credit determined under section 45R(a).’’. 

24 (c) CONFORMING AMENDMENT.—The table of sec25 tions for subpart D of part IV of subchapter A of chapter 


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1 1 of such Code is amended by adding at the end the fol2 lowing new item: 

‘‘Sec. 45R. Employee health insurance coverage by small employers.’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2009. 

6 SEC. 3. REFUNDABLE SMALL BUSINESS EMPLOYEE 

7 HEALTH PREMIUM CREDIT. 

8 (a) ALLOWANCE OF CREDIT.— 

9 (1) IN GENERAL.—Subpart C of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code 

11 of 1986 (relating to refundable personal credits) is 

12 amended by inserting after section 36A the following 

13 new section: 

14 ‘‘SEC. 36B. HEALTH INSURANCE COSTS FOR SMALL BUSI15 NESS EMPLOYEES. 

16 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in17 dividual who is an eligible small business employee, there 

18 shall be allowed as a credit against the tax imposed by 

19 this subtitle for the taxable year an amount equal to the 

20 amount paid by the taxpayer during such taxable year for 

21 qualified health insurance for the taxpayer and the tax22 payer’s spouse and dependents. 

23 ‘‘(b) LIMITATION.—The amount allowed as a credit 

24 under subsection (a) to the taxpayer for the taxable year 

25 shall not exceed the sum of the amounts paid by the taxVerDate Nov 24 2008 02:53 Jul 08, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3115.IH H3115

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1 payer for qualified health insurance for each individual re2 ferred to in subsection (a) for coverage months of such 

3 individual during the taxable year. 

4 ‘‘(c) ELIGIBLE SMALL BUSINESS EMPLOYEE.—For 

5 purposes of this section, an individual is an eligible small 

6 business employee for a coverage month if such individual 

7 is enrolled in qualified health insurance provided through 

8 an eligible small employer for which a credit is allowable 

9 under section 45R. 

10 ‘‘(d) QUALIFIED HEALTH INSURANCE; COVERAGE

11 MONTH.—For purposes of this section, the terms ‘quali12 fied health insurance’ and ‘coverage month’ have the same 

13 meanings given such terms by section 45R. 

14 ‘‘(e) SPECIAL RULES.— 

15 ‘‘(1) COORDINATION WITH MEDICAL EXPENSE

16 DEDUCTION.—The amount which would (but for this 

17 paragraph) be taken into account by the taxpayer 

18 under section 213 for the taxable year shall be re19 duced by the credit (if any) allowed by this section 

20 to the taxpayer for such year. 

21 ‘‘(2) COORDINATION WITH DEDUCTION FOR

22 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN23 DIVIDUALS.—No credit shall be allowable under this 

24 section for a taxable year if a deduction is allowed 

25 under section 162(l) for the taxable year. 


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1 ‘‘(3) COORDINATION WITH SECTION 35.—If a 

2 taxpayer is eligible for the credit allowed under this 

3 section and section 35 for any month, the taxpayer 

4 shall elect which credit is to be allowed with respect 

5 to such month. 

6 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

7 such regulations as may be necessary to carry out the pur8 poses of this section.’’. 

9 (b) CONFORMING AMENDMENTS.— 

10 (1) Paragraph (2) of section 1324(b) of title 

11 31, United States Code, is amended by inserting 

12 ‘‘36B,’’ after ‘‘36A,’’. 

13 (2) The table of sections for subpart C of part 

14 IV of subchapter A of chapter 1 of the Internal Rev15 enue Code of 1986 is amended by inserting after the 

16 item relating to section 36A the following new item: 

‘‘Sec. 36B. Health insurance costs for small business employees.’’. 

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2009. 

Æ 


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