I 
108TH CONGRESS 
1ST SESSION 
H. R. 450
To amend the Internal Revenue Code of 1986 to provide incentives to small 
businesses to provide health insurance to their employees. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 29, 2003
Ms. DUNN (for herself and Mr. NEAL of Massachusetts) 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 
incentives to small businesses to provide health insurance 
to their employees.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Health 
Insurance Affordability Act of 2003’’.
SEC. 2. REFUNDABLE CREDIT FOR SMALL BUSINESSES 
PROVIDING HEALTH INSURANCE COVERAGE 
FOR EMPLOYEES. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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1986 (relating to refundable credits) is amended by redes-
ignating section 36 as section 37 and by inserting after 
section 35 the following new section: 
‘‘SEC. 36. SMALL BUSINESS COST OF PROVIDING HEALTH 
INSURANCE COVERAGE FOR EMPLOYEES. 
‘‘(a) IN GENERAL.—At the election of the employer, 
there shall be allowed as a credit against the tax imposed 
by this chapter for the taxable year an amount equal to 
the applicable percentage of the qualified premiums paid 
during the taxable year by the taxpayer. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
subsection (a), the applicable percentage shall be deter-
mined in accordance with the following table:
‘‘Total number of employees 
of taxpayer: 
The applicable percentage is: 
10 or fewer ...............................................................................
50 percent. 
11 to 15 ...................................................................................
25 percent. 
16 or more ...............................................................................
0 percent.
‘‘(c) LIMITATIONS.—
‘‘(1) MAXIMUM
EMPLOYEE
COMPENSATION.—
No amount paid for a qualified premium shall be 
taken into account under subsection (a) if such 
amount is paid or incurred with respect to any em-
ployee to whom the taxpayer paid wages of $40,000 
or more for the calendar year ending with or in the 
taxable year of the taxpayer. 
‘‘(2) 
MINIMUM
EMPLOYEE
SERVICE.—No 
amount paid for a qualified premium shall be taken 
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into account under subsection (a) if such amount is 
paid or incurred with respect to any employee unless 
such employee has performed at least 400 hours of 
service for the employer during the taxable year of 
the employer. 
‘‘(3) INFLATION ADJUSTMENT.—In the case of 
a calendar year after 2004, the dollar amount con-
tained in paragraph (1) shall be increased by an 
amount equal to—
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2003’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
Any increase under this paragraph which is not a 
multiple of $100 shall be rounded to the next lowest 
multiple of $100. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) QUALIFIED PREMIUMS.—The term ‘quali-
fied premiums’ means premiums paid by the tax-
payer for qualified health insurance for any em-
ployee of the taxpayer, and the employee’s spouse 
and dependents, but only if the employer pays not 
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