‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur-
poses of paragraph (2), the term ‘applicable dollar
amount’ means—
‘‘(A) $60,000 in the case of a taxpayer
whose qualified health insurance coverage cov-
ers more than 1 individual referred to in sub-
section (a), and
‘‘(B) $30,000—
‘‘(i) in any case not described in sub-
paragraph (A), and
‘‘(ii) in the case of a married indi-
vidual filing a separate return.
For purposes of this paragraph, marital status shall
be determined under section 7703.
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this paragraph, 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
COVERAGE
PROVIDED
UNDER
GROUP
HEALTH
PLANS, ETC.—Such term
shall not include insurance provided through any
group health plan of an employer or any other enti-
ty.
‘‘(3) 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) INDIVIDUALS WITH COBRA CONVERGE.—In
the case of continuation coverage under a group health
plan which is required to be provided by Federal law for
an individual during the period specified in section
4980B(f)(2)(B), notwithstanding subsection (d)—
‘‘(1) such coverage shall be treated as qualified
health insurance, and
‘‘(2) the term ‘eligible month’ includes months
of such coverage.
‘‘(f) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
OTHER
DEDUC-
TIONS.—No credit shall be allowed under this sec-
tion for the taxable year if any amount paid for
qualified health insurance is taken into account in
determining the deduction allowed for such year
under section 213 or 222.
‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No
credit shall be allowed under this section to any indi-
vidual with respect to whom a deduction under sec-
tion 151 is allowable to another taxpayer for a tax-
able year beginning in the calendar year in which
such individual’s taxable year begins.
‘‘(3) INFLATION ADJUSTMENT.—
‘‘(A) IN GENERAL.—In the case of a tax-
able year beginning after 2000, each dollar
amount in subsection (c)(3) shall be increased
by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
year 1999’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple
of $100, such amount shall be rounded to the
next lowest multiple of $100.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart A part IV of subchapter A of chapter 1 of
such Code is amended by inserting after the item relating
to section 25A the following new item:
‘‘Sec. 25B. Health insurance costs of previously uninsured indi-
viduals and individuals with COBRA coverage.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 302. DEDUCTION FOR HEALTH INSURANCE COSTS OF
EMPLOYEES AND SELF-EMPLOYED INDIVID-
UALS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions) is amended by redesig-
nating section 222 as section 223 and by inserting after
section 221 the following new section:
‘‘SEC. 222. COSTS OF HEALTH INSURANCE AND LONG-TERM
CARE INSURANCE.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
the sum of—
‘‘(1) the applicable health care percentage of
the amount paid during the taxable year for cov-
erage for the taxpayer, his spouse, and dependents
under qualified health insurance, and
‘‘(2) the applicable long-term care percentage of
the amount of eligible long-term care premiums (as
defined in section 213(d)(10)) paid during the tax-
able year for coverage for the taxpayer, his spouse,
and dependents under a qualified long-term care in-
surance contract (as defined in section 7702B(b)).
‘‘(b) APPLICABLE PERCENTAGES.—For purposes of
subsection (a)—
‘‘(1) APPLICABLE
HEALTH
CARE
PERCENT-
AGE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the applicable health care
percentage shall be determined in accordance
with the following table:
‘‘For taxable years beginning
The applicable health
in calendar year—
care percentage is—
2000 .............................................................................
2001 .............................................................................
2002 .............................................................................
2003 .............................................................................
2004 and thereafter .....................................................
100.
‘‘(B) SPECIAL RULE.—In the case of an
individual who is an employee within the mean-
ing of section 401(c)(1) and whose qualified
health insurance is not provided through a
group health plan of an employer, subparagraph
(A) shall be applied by substituting ‘100’ for
‘90’ but only with respect to the lesser of the
taxpayer’s earned income (within the meaning
of section 401(c)) or the payments referred to
in subsection (a)(1).
‘‘(2) APPLICABLE LONG-TERM CARE PERCENT-
AGE.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the applicable long-
term care percentage shall be determined in ac-
cordance with the following table based on the
number of years of continuous coverage (as of
the close of the taxable year) of the individual
under a qualified long-term care insurance con-
tract (as defined in section 7702B(b)):
‘‘If the number of years of
The applicable long-term
continuous coverage is—
care percentage is—
Less than 1 ..................................................................
At least 1 but less than 2 .............................................
At least 2 but less than 3 .............................................
At least 3 but less than 4 .............................................
At least 4 but less than 5 .............................................
At least 5 ......................................................................
100.
‘‘(B) SPECIAL
RULES
FOR
INDIVIDUALS
WHO HAVE ATTAINED AGE 60.—In the case of
an individual who has attained age 60 as of the
close of the taxable year, the following table
shall be substituted for the table in subpara-
graph (A).
‘‘If the number of years of
The applicable long-term
continuous coverage is—
care percentage is—
Less than 1 ..................................................................
At least 1 but less than 2 .............................................
At least 2 but less than 3 .............................................
At least 3 ......................................................................
100.
‘‘(C) ONLY COVERAGE AFTER 1999 TAKEN
INTO
ACCOUNT.—Only coverage for periods
after December 31, 1999, shall be taken into
account under this paragraph.
‘‘(D) CONTINUOUS
COVERAGE.—An indi-
vidual shall not fail to be treated as having con-
tinuous coverage if the aggregate breaks in cov-
erage during any 1-year period are less than 60
days.
‘‘(E) SELF-EMPLOYED
INDIVIDUALS.—In
the case of an individual who is an employee
within the meaning of section 401(c)(1) and
whose qualified long-term care insurance con-
tract (as defined in section 7702B(b)) is not
provided through a group health plan of an em-
ployer, the applicable long-term care percentage
shall be—
‘‘(i) 100 percent with respect to the
lesser of—
‘‘(I) the eligible long-term care
premiums (as defined in section
213(d)(10)) referred to in subsection
(a)(2), or
‘‘(II) the excess of the taxpayer’s
earned income (within the meaning of
section 401(c)) for the taxable year
over the payments referred to in sub-
section (a)(1), and
‘‘(ii) the percentage determined under
the other provisions of this paragraph with
respect to the remainder of such premiums
(determined by treating the premiums
taken into account under clause (i) as
being attributable to individuals in the
order of their ages, beginning with the old-
est).
‘‘(c) EXCLUSION OF SUBSIDIZED COVERAGE.—Sub-
section (a) shall not apply to any taxpayer for any cal-
endar month for which the taxpayer participates in any
group health plan of an employer or any other entity if
less than 50 percent of the cost of the taxpayer’s coverage
under such plan is borne by the taxpayer. The preceding
sentence shall be applied separately with respect to para-
graphs (1) and (2) of subsection (a).
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified health
insurance’ has the meaning given such term by sec-
tion 25B(d) determined without regard to paragraph
(2) thereof.
‘‘(2) SPECIAL RULE.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is an employee within the meaning
of section 401(c)(1) and whose qualified health
insurance (without regard to this paragraph) is
not provided through a group health plan of an
employer, paragraph (3) of section 25B(d) shall
not apply for purposes of this section.
‘‘(B) LIMITATION.—The amount taken
into account under subsection (a)(1) by reason
of subparagraph (A) shall not exceed the excess
of—
‘‘(i) the taxpayer’s earned income
(within the meaning of section 401(c)),
over
‘‘(ii) the amount which would (without
regard to this paragraph) be taken into ac-
count under subsection (a)(1).
‘‘(e) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION, ETC.—Any amount paid by a taxpayer for in-
surance to which subsection (a) applies shall not be
taken into account in computing the amount allow-
able to the taxpayer as a deduction under section
213(a).
‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM-
PLOYMENT
TAX
PURPOSES.—The deduction allow-
able by reason of this section shall not be taken into
account in determining an individual’s net earnings
from self-employment (within the meaning of section
1402(a)) for purposes of chapter 2.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (l) of section 162 of such Code
is hereby repealed.
(2) Subsection (a) of section 62 of such Code
is amended by inserting after paragraph (17) the
following new item:
‘‘(18) COSTS
OF
HEALTH
INSURANCE
AND
LONG-TERM CARE INSURANCE.—The deduction al-
lowed by section 222.’’
(3) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by
striking the last item and inserting the following
new items:
‘‘Sec. 222. Costs of health insurance and long-term care insur-
ance.
‘‘Sec. 223. Cross reference.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 303. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE
NEEDS.
(a) ALLOWANCE OF CREDIT.—
(1) IN GENERAL.—Section 24(a) of the Internal
Revenue Code of 1986 (relating to allowance of child
tax credit) is amended to read as follows:
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the sum of—
‘‘(1) $500 multiplied by the number of quali-
fying children of the taxpayer, plus
‘‘(2) $1,000 multiplied by the number of appli-
cable individuals with respect to whom the taxpayer
is an eligible caregiver for the taxable year.
In any case in which the applicable individual and the eli-
gible caregiver are the same individual, the credit allowed
by paragraph (2) with respect to such individual shall not
exceed the aggregate amount paid by the taxpayer during
the taxable year (not compensated for by insurance or oth-
erwise) for qualified long-term care services (as defined
in section 7702B(c)) for such individual.’’
(2) ADDITIONAL CREDIT FOR TAXPAYER WITH
3 OR MORE SEPARATE CREDIT AMOUNTS.—So much
of section 24(d) of such Code as precedes paragraph
(1)(A) thereof is amended to read as follows:
‘‘(d) ADDITIONAL CREDIT FOR TAXPAYERS WITH 3
OR MORE SEPARATE CREDIT AMOUNTS.—
‘‘(1) IN GENERAL.—If the sum of the number
of qualifying children of the taxpayer and the num-
ber of applicable individuals with respect to which
the taxpayer is an eligible caregiver is 3 or more for
any taxable year, the aggregate credits allowed
under subpart C shall be increased by the lesser
of—’’.
(3) CONFORMING AMENDMENTS.—
(A) The heading for section 32(n) of such
Code is amended by striking ‘‘CHILD’’ and in-
serting ‘‘FAMILY CARE’’.
(B) The heading for section 24 is amended
to read as follows:
‘‘SEC. 24. FAMILY CARE CREDIT.’’
(C) The table of sections for subpart A of
part IV of subchapter A of chapter 1 of such
Code is amended by striking the item relating
to section 24 and inserting the following new
item:
‘‘Sec. 24. Family care credit.’’.
(b) DEFINITIONS.—Section 24(c) of such Code (de-
fining qualifying child) is amended to read as follows:
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFYING CHILD.—
‘‘(A) IN GENERAL.—The term ‘qualifying
child’ means any individual if—
‘‘(i) the taxpayer is allowed a deduc-
tion under section 151 with respect to such
individual for the taxable year,
‘‘(ii) such individual has not attained
the age of 17 as of the close of the cal-
endar year in which the taxable year of the
taxpayer begins, and
‘‘(iii) such individual bears a relation-
ship to the taxpayer described in section
32(c)(3)(B).
‘‘(B) EXCEPTION FOR CERTAIN NONCITI-
ZENS.—The term ‘qualifying child’ shall not in-
clude any individual who would not be a de-
pendent if the first sentence of section
152(b)(3) were applied without regard to all
that follows ‘resident of the United States’.
‘‘(2) APPLICABLE INDIVIDUAL.—
‘‘(A) IN GENERAL.—The term ‘applicable
individual’ means, with respect to any taxable
year, any individual who has been certified, be-
fore the due date for filing the return of tax for
the taxable year (without extensions), by a phy-
sician (as defined in section 1861(r)(1) of the
Social Security Act) as being an individual with
long-term care needs described in subparagraph
(B) for a period—
‘‘(i) which is at least 180 consecutive
days, and
‘‘(ii) a portion of which occurs within
the taxable year.
Such term shall not include any individual oth-
erwise meeting the requirements of the pre-
ceding sentence unless within the 391⁄2 month
period ending on such due date (or such other
period as the Secretary prescribes) a physician
(as so defined) has certified that such indi-
vidual meets such requirements.
‘‘(B) INDIVIDUALS WITH LONG-TERM CARE
NEEDS.—An individual is described in this sub-
paragraph if the individual meets any of the fol-
lowing requirements:
‘‘(i) The individual is at least 6 years
of age and—
‘‘(I) is unable to perform (with-
out substantial assistance from an-
other individual) at least 3 activities
of daily living (as defined in section
7702B(c)(2)(B)) due to a loss of
functional capacity, or
‘‘(II) requires substantial super-
vision to protect such individual from
threats to health and safety due to se-
vere cognitive impairment and is un-
able to preform, without reminding or
cuing assistance, at least 1 activity of
at least 1 activity of daily living (as so
defined) or to the extent provided in
regulations prescribed by the Sec-
retary (in consultation with the Sec-
retary of Health and Human Serv-
ices), is unable to engage in age ap-
propriate activities.
‘‘(ii) The individual is at least 2 but
not 6 years of age and is unable due to a
loss of functional capacity to perform
(without substantial assistance from an-
other individual) at least 2 of the following
activities: eating, transferring, or mobility.
‘‘(iii) The individual is under 2 years
of age and requires specific durable med-
ical equipment by reason of a severe health
condition or requires a skilled practitioner
trained to address the individual’s condi-
tion to be available if the individual’s par-
ents or guardians are absent.
‘‘(3) ELIGIBLE CAREGIVER.—
‘‘(A) IN GENERAL.—A taxpayer shall be
treated as an eligible caregiver for any taxable
year with respect to the following individuals:
‘‘(i) The taxpayer.
‘‘(ii) The taxpayer’s spouse.
‘‘(iii) An individual with respect to
whom the taxpayer is allowed a deduction
under section 151 for the taxable year.
‘‘(iv) An individual who would be de-
scribed in clause (iii) for the taxable year
if section 151(c)(1)(A) were applied by
substituting for the exemption amount an
amount equal to the sum of the exemption
amount, the standard deduction under sec-
tion 63(c)(2)(C), and any additional stand-
ard deduction under section 63(c)(3) which
would be applicable to the individual if
clause (iii) applied.
‘‘(v) An individual who would be de-
scribed in clause (iii) for the taxable year
if—
‘‘(I) the requirements of clause
(iv) are met with respect to the indi-
vidual, and
‘‘(II) the requirements of sub-
paragraph (B) are met with respect to
the individual in lieu of the support
test of section 152(a).
‘‘(B) RESIDENCY
TEST.—The require-
ments of this subparagraph are met if an indi-
vidual has as his principal place of abode the
home of the taxpayer and—
‘‘(i) in the case of an individual who
is an ancestor or descendant of the tax-
payer or the taxpayer’s spouse, is a mem-
ber of the taxpayer’s household for over
half the taxable year, or
‘‘(ii) in the case of any other indi-
vidual, is a member of the taxpayer’s
household for the entire taxable year.
‘‘(C) SPECIAL RULES WHERE MORE THAN
1 ELIGIBLE CAREGIVER.—
‘‘(i) IN GENERAL.—If more than 1 in-
dividual is an eligible caregiver with re-
spect to the same applicable individual for
taxable years ending with or within the
same calendar year, a taxpayer shall be
treated as the eligible caregiver if each
such individual (other than the taxpayer)
files a written declaration (in such form
and manner as the Secretary may pre-
scribe) that such individual will not claim
such applicable individual for the credit
under this section.
‘‘(ii) NO AGREEMENT.—If each indi-
vidual required under clause (i) to file a
written declaration under clause (i) does
not do so, the individual with the highest
modified adjusted gross income (as defined
in section 32(c)(5)) shall be treated as the
eligible caregiver.
‘‘(iii) MARRIED
INDIVIDUALS
FILING
SEPARATELY.—In the case of married indi-
viduals filing separately, the determination
under this subparagraph as to whether the
husband or wife is the eligible caregiver
shall be made under the rules of clause (ii)
(whether or not one of them has filed a
written declaration under clause (i)).’’.
(c) IDENTIFICATION REQUIREMENTS.—