I

103D CONGRESS

1ST SESSION H. R. 2077

To amend the Public Health Service Act and the Internal Revenue Code

of 1986 to establish an entitlement of certain individuals to receive

payments for attendance at certain health professions schools.

IN THE HOUSE OF REPRESENTATIVES

MAY 11, 1993

Mr. STARK introduced the following bill; which was referred jointly to the

Committees on Energy and Commerce and Ways and Means

A BILL

To amend the Public Health Service Act and the Internal

Revenue Code of 1986 to establish an entitlement of

certain individuals to receive payments for attendance

at certain health professions schools.

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 ‘‘Health Education

5 Lending Program Act’’.
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1 SEC. 2. ESTABLISHMENT OF ENTITLEMENT PROGRAM RE2 GARDING ATTENDANCE AT CERTAIN HEALTH

3 PROFESSIONS SCHOOLS.

4 Title VII of the Public Health Service Act (42 U.S.C.

5 292 et seq.), as amended by section 102 of Public Law

6 102–408, is amended by adding at the end of part A the

7 following subpart:

8 ‘‘Subpart III—Entitlement Program

9 ‘‘SEC. 735A. PAYMENTS FOR ATTENDANCE AT CERTAIN

10 HEALTH PROFESSIONS SCHOOLS.

11 ‘‘(a) IN GENERAL.—

12 ‘‘(1) PROVISION OF ASSISTANCE.—Subject to

13 the provisions of this section, in the case of an indi14 vidual described in subsection (c) who submits to the

15 Secretary an application in accordance with sub16 section (i), the Secretary shall make payments on

17 behalf of the individual for the costs related to the

18 attendance of the individual at any school of medi19 cine, osteopathic medicine, dentistry, podiatry, or op20 tometry.

21 ‘‘(2) RECAPTURE TAX.—The Secretary may not

22 approve an application for payments under para23 graph (1) unless the individual involved acknowl24 edges in writing that the individual understands that

25 receiving such payments may subject the individual
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1 to taxation under section 59B of the Internal Reve2 nue Code of 1986.

3 ‘‘(b) ENTITLEMENT STATUS OF PAYMENTS.—

4 ‘‘(1) IN GENERAL.—Subject to paragraph (3),

5 each eligible individual is entitled to payments under

6 subsection (a) on behalf of the individual in an

7 amount determined under subsection (e) and for the

8 purposes specified in such subsection. The preceding

9 sentence constitutes budget authority in advance of

10 appropriations Acts, and represents the obligation of

11 the Federal Government to make the payments.

12 ‘‘(2) TRUST FUND.—Payments under sub13 section (a) shall be made from amounts in the

14 Health Professions Education Trust Fund estab15 lished in section 9511 of the Internal Revenue Code

16 of 1986.

17 ‘‘(3) LIMITATION.—The obligation of the Fed18 eral Government to make payments under subsection

19 (a) is effective only to the extent of amounts in the

20 Fund.

21 ‘‘(c) ENROLLMENT STATUS; IMMIGRATION STA22 TUS.—For purposes of subsection (a), an individual de23 scribed in this subsection is any individual—
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1 ‘‘(1) who is enrolled or accepted for enrollment

2 as a full-time student at a designated health profes3 sions school in any of the States; and

4 ‘‘(2) for whom being in any of the States, or at5 tending an educational institution in any of the

6 States, does not constitute a violation of the Immi7 gration and Nationality Act.

8 ‘‘(d) REQUIREMENT REGARDING COMPLETION OF

9 EDUCATIONAL PROGRAM.—With respect to the program

10 of education in which an individual is enrolled or accepted

11 for enrollment at the designated health professions school

12 involved, an application agreement for payments under

13 subsection (a) for the individual is that the individual

14 will—

15 ‘‘(1) maintain an acceptable level of academic

16 standing in the program (as determined by the

17 school in accordance with standards issued by the

18 Secretary); and

19 ‘‘(2) complete the program of education.

20 ‘‘(e) AMOUNT OF PAYMENTS; AUTHORIZED EXPEND21 ITURES.—

22 ‘‘(1) AMOUNT.—

23 ‘‘(A) For purposes of subsection (b)(1), the

24 amount of payments determined under this sub25 section is, subject to subparagraph (B), the
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1 total of payments described in paragraph (2)

2 that the Secretary determines is necessary for

3 the individual to complete the program of edu4 cation in which the individual is enrolled or ac5 cepted for enrollment at the designated health

6 professions school involved.

7 ‘‘(B) The total of payments made under

8 subsection (a) during the life of the individual

9 involved may not exceed $120,000, as adjusted

10 for each academic year beginning after July

11 1994 to offset the effects of inflation occurring

12 after October 1, 1993, as indicated by changes

13 in the consumer price index for all urban con14 sumers (U.S. city average), published by the

15 Bureau of Labor Statistics.

16 ‘‘(2) AUTHORIZED EXPENDITURES.—For pur17 poses of paragraph (1)(A), the payments described

18 in this paragraph are payments for the purposes

19 of—

20 ‘‘(A) tuition and all other reasonable edu21 cational expenses of the program of education

22 involved, including fees, books, and laboratory

23 expenses; and

24 ‘‘(B) a stipend.
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1 ‘‘(3) CERTAIN CONSIDERATIONS REGARDING

2 STIPENDS.—In determining the amount of a stipend

3 that an individual is to receive under paragraph (1),

4 the Secretary shall consider the costs of living in the

5 locality involved, the costs of child care for the chil6 dren of the individual (if any), the costs involved in

7 taking examinations required by the States involved

8 as a condition of practicing the health profession

9 with respect to which payments under subsection (a)

10 are provided, and such other costs as the Secretary

11 determines to be appropriate with respect to attend12 ance at a designated health professions school.

13 ‘‘(4) TRANSFER OF LOAN BALANCES TO SEC14 RETARY.—In the case of an eligible individual to

15 whom a financial institution has made a loan for any

16 of the purposes specified in paragraph (2), the Sec17 retary may, upon the request of the individual, pay

18 the balance of the loan (except to the extent that the

19 loan was provided for other purposes). Payments

20 made under the preceding sentence on behalf of an

21 eligible individual shall be included in determining

22 the total of payments made for the individual for

23 purposes of paragraph (1)(B).

24 ‘‘(5) AGREEMENT.—An application agreement

25 for payments under subsection (a) for an individual
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1 is that the individual will expend the payments in

2 accordance with such restrictions on amount as the

3 Secretary may, under paragraph (1), establish for

4 the various categories of expenditures authorized in

5 paragraph (2).

6 ‘‘(f) AUTHORITY FOR DIRECT PAYMENTS TO

7 SCHOOLS.—The Secretary may enter into an agreement

8 with a designated health professions school under which

9 the payments made under subsection (a) on behalf of an

10 individual for the purposes specified in subsection

11 (e)(2)(A) are made directly to the school. Payments under

12 the preceding sentence are not subject to section 3324 of

13 title 31, United States Code (relating to advance pay14 ments).

15 ‘‘(g) FAILURE REGARDING SATISFACTORY COMPLE16 TION OF EDUCATIONAL PROGRAM.—

17 ‘‘(1) IN GENERAL.—An application agreement

18 for payments under subsection (a) for an individual

19 is that, if the individual fails to comply with sub20 section (d), the individual is liable to the Federal

21 Government in an amount equal to the sum of—

22 ‘‘(A) the amount of the payments that

23 have been made; and

24 ‘‘(B) an amount representing interest on

25 such payments, accruing during the period in
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1 which the payments were made and determined

2 by the Secretary of the Treasury on the basis

3 of the average of the bond equivalent of the

4 weekly 90-day auction rate of Treasury bills.

5 ‘‘(2) WAIVER.—The Secretary may waive the

6 right of the Federal Government to recover amounts

7 pursuant to paragraph (1) if compliance by the indi8 vidual with the agreement made under subsection

9 (d) is impossible or would involve extreme hardship

10 and if enforcement of the agreement with respect to

11 any individual would be unconscionable.

12 ‘‘(3) BANKRUPTCY.—The liability of an individ13 ual pursuant to paragraph (1) may be released by

14 a discharge in bankruptcy under title 11, United

15 States Code, only if such discharge is granted after

16 the expiration of the 7-year period beginning on the

17 first date that payments pursuant to such liability

18 are required, and only if the bankruptcy court finds

19 that nondischarge of the obligation would be uncon20 scionable.

21 ‘‘(h) CHOICE OF SCHOOL.—The entitlement estab22 lished pursuant to subsection (a) regarding an individual

23 applies to any designated health professions school with

24 respect to which the requirements of this section are met.

25 Application agreements made under this section may not
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1 be construed as prohibiting an individual from transfer2 ring between schools.

3 ‘‘(i) APPLICATION FOR PAYMENTS.—For purposes of

4 subsection (a), an application for payments under such

5 subsection is in accordance with this subsection if—

6 ‘‘(1) the application is submitted to the Sec7 retary by the date established by the Secretary re8 garding payments for the academic year involved;

9 ‘‘(2) the application contains the acknowledg10 ment required in subsection (a)(2);

11 ‘‘(3) the application contains assurances satis12 factory to the Secretary that the individual involved

13 is an individual described in subsection (c);

14 ‘‘(4) the application contains each application

15 agreement described in this section; and

16 ‘‘(5) the application is in writing, is signed by

17 such individual, and otherwise is in such form as the

18 Secretary may require.

19 ‘‘(j) DENTAL RESIDENCIES.—The entitlement estab20 lished pursuant to subsection (b) applies to the costs relat21 ed to participation in a residency training program in den22 tistry to the same extent and in the same manner as the

23 entitlement applies to the costs related to attendance at

24 a designated health professions school. For purposes of

25 subsection (e)(1)(B), the preceding sentence does not af-
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1 fect the limitation on the total of payments under sub2 section (a) that may be made to an individual during the

3 life of the individual.

4 ‘‘(k) DEFINITIONS.—For purposes of this section:

5 ‘‘(1) The term ‘application agreement’, with re6 spect to payments under subsection (a) for an indi7 vidual, means that the Secretary may not make the

8 payments unless the individual makes the agreement

9 involved.

10 ‘‘(2) The term ‘costs’, in the case of the costs

11 related to the attendance of an individual at a des12 ignated health professions school, means the costs

13 for which payments may be made for purposes of

14 subsection (e)(2).

15 ‘‘(3) The term ‘designated health professions

16 school’ means a school specified in subsection (a)(1).

17 ‘‘(4) The term ‘eligible individual’ means an in18 dividual described in subsection (c) who submits to

19 the Secretary an application in accordance with sub20 section (i).

21 ‘‘(5) The term ‘Fund’ means the Health Profes22 sions Education Trust Fund established in section

23 9511 of the Internal Revenue Code of 1986.’’.
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1 SEC. 3. FINANCING OF ENTITLEMENT PROGRAM.

2 (a) HEALTH PROFESSIONS ASSISTANCE RECAPTURE

3 TAX.—

4 (1) IN GENERAL.—Subchapter A of chapter 1

5 of the Internal Revenue Code of 1986 (relating to

6 determination of tax liability) is amended by adding

7 at the end thereof the following new part:

8 ‘‘PART III—HEALTH PROFESSIONS ASSISTANCE

9 RECAPTURE TAX

‘‘Sec. 59B. Imposition of additional tax.

10 ‘‘SEC. 59B. IMPOSITION OF ADDITIONAL TAX.

11 ‘‘(a) GENERAL RULE.—In the case of any individual

12 to whom this section applies, there is hereby imposed (in

13 addition to any other tax imposed by this subtitle) a tax

14 equal to 1 percent of the recapture income of such individ15 ual for the taxable year.

16 ‘‘(b) HIGHER TAX RATE WHERE ASSISTANCE EX17 CEEDS CERTAIN AMOUNT.—If the aggregate amount of

18 payments made to the taxpayer (or spouse of the tax19 payer) under section 735A of the Public Health Service

20 Act exceeds an amount equal to 50 percent of the amount

21 in effect for purposes of subsection (e)(1)(B) of such sec22 tion (as of the time the taxpayer completes the program

23 of education with respect to which such payments were

24 provided), subsection (a) shall be applied by substituting

25 ‘2 percent’ for ‘1 percent’.
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1 ‘‘(c) INDIVIDUALS TO WHOM SECTION APPLIES.—

2 ‘‘(1) IN GENERAL.—Except as otherwise pro3 vided in this subsection, this section shall apply to

4 an individual who—

5 ‘‘(A) received payments under section

6 735A of the Public Health Service Act, and

7 ‘‘(B) before the close of the taxable year,

8 successfully completed the program of education

9 with respect to which such payments were pro10 vided.

11 ‘‘(2) THREE-YEAR RESIDENCY FORBEAR12 ANCE.—If an individual is enrolled in a residency

13 training program in medicine, dentistry, or podiatry,

14 this section shall not apply to the individual for a

15 taxable year—

16 ‘‘(A) which includes any portion of the pe17 riod beginning on the date on which the individ18 ual begins participation in the program and

19 ending on the earlier of the date on which the

20 individual completes the program or the date

21 that is 3 years after the individual begins such

22 participation; and

23 ‘‘(B) for which the individual participates

24 in the program in accordance with the terms of

25 the program.
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1 ‘‘(3) SERVICES IN HEALTH PROFESSIONAL

2 SHORTAGE AREAS.—With respect to an individual

3 who completes a residency training program in medi4 cine, dentistry, or podiatry and who continues or be5 gins practice as a provider of primary health services

6 (as defined in section 331(a)(3)(D) of the Public

7 Health Service Act), this section shall not apply to

8 the individual for a taxable year during which, for

9 not less than 6 months, the individual provides such

10 services in a health professional shortage area (as

11 designated under section 332 of such Act).

12 ‘‘(4) TAXPAYERS NOT REQUIRED TO FILE RE13 TURN.—This section shall not apply to any individ14 ual for any taxable year if such individual is not re15 quired to file a return of the tax imposed by this

16 chapter for such taxable year.

17 ‘‘(5) INDIVIDUALS WHO HAVE ATTAINED AGE

18 67.—This section shall not apply to any individual

19 for any taxable year if such individual has attained

20 age 67 before the close of such taxable year.

21 ‘‘(d) RECAPTURE INCOME.—For purposes of this sec22 tion—

23 ‘‘(1) IN GENERAL.—Except as provided in para24 graph (2), the term ‘recapture income’ means modi-
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1 fied adjusted gross income (as defined in section

2 86(b)(2)).

3 ‘‘(2) TREATMENT OF MARRIED INDIVIDUALS.—

4 ‘‘(A) JOINT RETURNS.—In the case of a

5 joint return where only 1 spouse is an individ6 ual to whom this section applies, the term ‘re7 capture income’ means the sum of—

8 ‘‘(i) the portion of the modified ad9 justed gross income of the individuals fil10 ing such return which is attributable to

11 earned income (as defined in section

12 911(d)(2)) of the individual to whom this

13 section applies, plus

14 ‘‘(ii) 50 percent of the portion of such

15 modified adjusted gross income which is

16 not described in clause (i) and is not at17 tributable to the earned income (as so de18 fined) of the other spouse.

19 ‘‘(B) SEPARATE RETURNS.—In the case of

20 a married couple where only 1 of the spouses is

21 an individual to whom this section applies (de22 termined without regard to this subparagraph)

23 and where the spouses file separate returns for

24 the taxable year—
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1 ‘‘(i) both spouses shall be treated as

2 individuals to whom this section applies,

3 and

4 ‘‘(ii) the recapture income of each of

5 such spouses shall be determined under the

6 rules of subparagraph (A); except that

7 clause (i) of this subparagraph shall not

8 apply for purposes of subparagraph (A)(i).

9 ‘‘(e) CREDITS NOT ALLOWABLE; ETC.—The tax im10 posed by this section shall not be treated as a tax imposed

11 by this chapter for purposes of determining—

12 ‘‘(1) the amount of any credit allowable under

13 this chapter, or

14 ‘‘(2) the amount of the minimum tax imposed

15 by section 55.

16 ‘‘(f) MARITAL STATUS.—For purposes of this section,

17 marital status shall be determined under section 7703.’’

18 (2) CLERICAL AMENDMENT.—The table of

19 parts for subchapter A of chapter 1 of such Code is

20 amended by adding at the end thereof the following

21 new item:

‘‘Part VIII. Health professions assistance recapture tax.’’

22 (3) EFFECTIVE DATE.—The amendments made

23 by this subsection shall apply to taxable years end24 ing after the date of the enactment of this Act.
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1 (b) HEALTH PROFESSIONS EDUCATION TRUST

2 FUND.—

3 (1) IN GENERAL.—Subchapter A of chapter 98

4 of such Code (relating to Trust Fund Code) is

5 amended by adding at the end thereof the following

6 new section:

7 ‘‘SEC. 9511. HEALTH PROFESSIONS EDUCATION TRUST

8 FUND.

9 ‘‘(a) CREATION OF TRUST FUND.—There is hereby

10 established in the Treasury of the United States a trust

11 fund to be known as the ‘Health Professions Education

12 Trust Fund’, consisting of such amounts as may be appro13 priated to credited to such Trust Fund as provided in this

14 section or section 9602(b).

15 ‘‘(b) TRANSFER TO TRUST FUND OF AMOUNTS

16 EQUIVALENT TO CERTAIN TAXES.—There are hereby ap17 propriated to the Health Professions Education Trust

18 Fund amounts equivalent to the taxes received in the

19 Treasury under section 59B.

20 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

21 in the Health Professions Education Trust Fund shall be

22 available, as provided by appropriation Acts, for making

23 payments under section 735A of the Public Health Service

24 Act.

25 ‘‘(d) AUTHORITY TO BORROW.—
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1 ‘‘(1) IN GENERAL.—There are authorized to be

2 appropriated to the Health Professions Education

3 Trust Fund, as repayable advances, such sums as

4 may be necessary to make payments under section

5 735A of the Public Health Service Act.

6 ‘‘(2) REPAYMENT OF ADVANCES.—Advances

7 made to the Health Professions Education Trust

8 Fund shall be repaid, and interest on such advances

9 shall be paid, to the general fund of the Treasury

10 when the Secretary determines that moneys are

11 available for such purposes in such Trust Fund.

12 ‘‘(3) INTEREST.—Interest on advances made

13 under this subsection shall be at a rate determined

14 by the Secretary of the Treasury (as of the close of

15 the calendar month preceding the calendar month in

16 which the advance is made) to equal to the current

17 average market yield on outstanding marketable ob18 ligations of the United States with remaining peri19 ods to maturity comparable to the anticipated period

20 during which the advance will be outstanding. Such

21 interest shall be compounded annually.’’

22 (2) CLERICAL AMENDMENT.—The table of sec23 tions for subchapter A of chapter 98 of such Code

24 is amended by adding at the end thereof the follow25 ing new item:

‘‘Sec. 9511. Health Professions Education Trust Fund.’’
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