SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE 
COVERAGE. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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. HEALTH INSURANCE COSTS. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by this subtitle an amount equal to the amount paid dur-
ing the taxable year for qualified health insurance for the 
taxpayer and the taxpayer’s spouse or dependent. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount allowed as a 
credit under subsection (a) to the taxpayer for the 
taxable year shall not exceed the sum of the monthly 
limitations for coverage months during such taxable 
year for the individual referred to in subsection (a) 
for whom the taxpayer paid during the taxable year 
any amount for coverage under qualified health in-
surance. 
‘‘(2) 
PARTIAL
PHASEOUT
OF
CREDIT 
AMOUNT.— 
‘‘(A) 37.5 PERCENT REDUCTION BASED ON 
ADJUSTED GROSS INCOME.—37.5 percent of the 
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amount determined under paragraph (1) for 
any taxable year shall be reduced by the 
amount determined under subparagraph (B). 
‘‘(B) 
AMOUNT
OF
REDUCTION.—The 
amount determined under this subparagraph 
shall be the amount which bears the same ratio 
to 37.5 percent of such amount determined 
under paragraph (1) as— 
‘‘(i) the excess of— 
‘‘(I) 
the 
taxpayer’s 
adjusted 
gross income for such taxable year, 
over 
‘‘(II) 
the 
applicable 
dollar 
amount, bears to 
‘‘(ii) $15,000 ($30,000 in the case of 
a joint return). 
The rule of section 219(g)(2)(C) shall apply to 
any reduction under this subparagraph. 
‘‘(C) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) adjusted gross income shall be de-
termined in the same manner as under sec-
tion 408A(c)(3)(C)(i), and 
‘‘(ii) the applicable dollar amount is— 
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‘‘(I) in the case of a taxpayer fil-
ing a joint return, $30,000, and 
‘‘(II) in the case of any other 
taxpayer, $15,000. 
‘‘(D) NO REDUCTION DURING PERIOD OF 
UNEMPLOYMENT.—In the case of any coverage 
month (not to exceed 12 consecutive coverage 
months) during which the taxpayer is unem-
ployed, this paragraph shall not apply to the 
amount otherwise determined under paragraph 
(1). In the case of a self-employed individual, 
rules similar to the rules under section 
72(t)(2)(D)(iii) shall apply for purposes of the 
preceding sentence. 
‘‘(3) MONTHLY LIMITATION.— 
‘‘(A) IN GENERAL.—The monthly limita-
tion for an individual for each coverage month 
of such individual during the taxable year is the 
amount equal to 1⁄12 of the qualified health in-
surance amount. 
‘‘(B) 
QUALIFIED
HEALTH
INSURANCE 
AMOUNT.—For purposes of this paragraph, the 
qualified health insurance amount is— 
‘‘(i) $2,000 if such individual is the 
taxpayer, and 
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‘‘(ii) $2,000 if such individual is— 
‘‘(I) the spouse of the taxpayer, 
the taxpayer and such spouse are 
married as of the first day of such 
month, and the taxpayer files a joint 
return for the taxable year, or 
‘‘(II) an individual for whom a 
deduction under section 151(c) is al-
lowable to the taxpayer for such tax-
able year. 
‘‘(C) LIMITATION TO SPOUSE OR DEPEND-
ENT.—Not more than 1 individual may be 
taken into account by the taxpayer under sub-
paragraph (B)(ii). 
‘‘(4) COVERAGE MONTH.—For purposes of this 
subsection— 
‘‘(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. 
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‘‘(B) 
EMPLOYER-SUBSIDIZED
COV-
ERAGE.— 
‘‘(i) IN
GENERAL.—Such term shall 
not include any month for which such indi-
vidual is eligible to participate in any sub-
sidized 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. 
‘‘(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— 
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‘‘(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. 
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