‘‘(A) IN
GENERAL.—The term ‘coverage 
month’ means, with respect to an individual, 
any month if— 
‘‘(i) as of the first day of such month 
such individual is covered by qualified 
health insurance, and 
‘‘(ii) the premium for coverage under 
such insurance for such month is paid by 
the taxpayer. 
‘‘(B) 
EMPLOYER-SUBSIDIZED
COV-
ERAGE.— 
‘‘(i) IN
GENERAL.—Such term shall 
not include any month for which such indi-
vidual participates in any subsidized health 
plan (within the meaning of section 
162(l)(2)) maintained by any employer of 
the taxpayer or of the spouse of the tax-
payer. 
‘‘(ii) PREMIUMS
TO
NONSUBSIDIZED 
PLANS.—If an employer of the taxpayer or 
the spouse of the taxpayer maintains a 
health plan which is not a subsidized 
health plan (as so defined) and which con-
stitutes qualified health insurance, em-
ployee contributions to the plan shall be
treated as amounts paid for qualified 
health insurance. 
‘‘(C) CAFETERIA
PLAN
AND
FLEXIBLE 
SPENDING
ACCOUNT
BENEFICIARIES.—Such 
term shall not include any month during a tax-
able year if any amount is not includible in the 
gross income of the taxpayer for such year 
under section 106 with respect to— 
‘‘(i) a benefit chosen under a cafeteria 
plan (as defined in section 125(d)), or 
‘‘(ii) a benefit provided under a flexi-
ble spending or similar arrangement. 
‘‘(D) MEDICARE
AND
MEDICAID.—Such 
term shall not include any month with respect 
to an individual if, as of the first day of such 
month, such individual— 
‘‘(i) is entitled to any benefits under 
title XVIII of the Social Security Act, or 
‘‘(ii) is a participant in the program 
under title XIX or XXI of such Act. 
‘‘(E) CERTAIN
OTHER
COVERAGE.—Such 
term shall not include any month during a tax-
able year with respect to an individual if, at any 
time during such year, any benefit is provided 
to such individual under—
‘‘(i) chapter 89 of title 5, United 
States Code, 
‘‘(ii) chapter 55 of title 10, United 
States Code, 
‘‘(iii) chapter 17 of title 38, United 
States Code, or 
‘‘(iv) any medical care program under 
the Indian Health Care Improvement Act. 
‘‘(F) PRISONERS.—Such term shall not in-
clude any month with respect to an individual 
if, as of the first day of such month, such indi-
vidual is imprisoned under Federal, State, or 
local authority. 
‘‘(G) INSUFFICIENT PRESENCE IN UNITED 
STATES.—Such term shall not include any 
month during a taxable year with respect to an 
individual if such individual is present in the 
United States on fewer than 183 days during 
such year (determined in accordance with sec-
tion 7701(b)(7)). 
‘‘(5) COORDINATION
WITH
DEDUCTION
FOR 
HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN-
DIVIDUALS.—In the case of a taxpayer who is eligi-
ble to deduct any amount under section 162(l) for 
the taxable year, this section shall apply only if the
taxpayer elects not to claim any amount as a deduc-
tion under such section for such year. 
‘‘(c) REDUCED
CREDIT
FOR
PARTICIPANTS
IN 
HEALTH PLANS OF EMPLOYERS.—In the case of any indi-
vidual who participates in a subsidized health plan (within 
the meaning of section 162(l)(2)) maintained by any em-
ployer of the taxpayer or of the spouse of the taxpayer 
(not including a cafeteria plan (as defined in section 
125(d)), there shall be allowed to the taxpayer one-quarter 
of the credit that would be allowed to the taxpayer under 
subsection (a) (determined without regard to the partici-
pation in the health plan) if the monthly limitation were 
determined without the addition of the amount described 
in subsection (b)(3)(A)(ii). 
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified health 
insurance’ means insurance which constitutes med-
ical care as defined in section 213(d) without regard 
to— 
‘‘(A) paragraph (1)(C) thereof, and 
‘‘(B) so much of paragraph (1)(D) thereof 
as relates to qualified long-term care insurance 
contracts.
‘‘(2) EXCLUSION
OF
CERTAIN
OTHER
CON-
TRACTS.—Such term shall not include insurance if a 
substantial portion of its benefits are excepted bene-
fits (as defined in section 9832(c)). 
‘‘(e) MEDICAL
AND HEALTH SAVINGS ACCOUNT 
CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—If a deduction would (but 
for paragraph (2)) be allowed under section 220 or 
223 to the taxpayer for a payment for the taxable 
year to the medical or health savings account of an 
individual, subsection (a) shall be applied by treating 
such payment as a payment for qualified health in-
surance for such individual. 
‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion shall be allowed under section 220 or 223 for 
that portion of the payments otherwise allowable as 
a deduction under section 220 or 223 (as the case 
may be) for the taxable year which is equal to the 
amount of credit allowed for such taxable year by 
reason of this subsection. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) COORDINATION WITH MEDICAL EXPENSE 
DEDUCTION.—The amount which would (but for this 
paragraph) be taken into account by the taxpayer 
under section 213 for the taxable year shall be re-