I 
109TH CONGRESS 
1ST SESSION H. R. 4385 
To amend the Internal Revenue Code of 1986 to provide that employees 
of certain companies seeking bankruptcy protection are eligible for the 
health coverage tax credit, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 17, 2005 
Mr. STRICKLAND (for himself, Mr. RYAN of Ohio, and Mr. BROWN of Ohio) 
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 
that employees of certain companies seeking bankruptcy 
protection are eligible for the health coverage tax credit, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. ELIGIBILITY OF EMPLOYEES OF CORPORA-
TIONS IN BANKRUPTCY FOR HEALTH COV-
ERAGE TAX CREDIT. 
(a) IN GENERAL.—Section 35 of the Internal Rev-
enue Code of 1986 (relating to health insurance costs of
eligible individuals) is amended by adding at the end the 
following new subsection: 
‘‘(h) APPLICATION TO ELIGIBLE BANKRUPT BUSI-
NESS EMPLOYEES.— 
‘‘(1) IN GENERAL.—An eligible bankrupt busi-
ness employee shall be treated as an eligible indi-
vidual for purposes of this section and section 7527. 
‘‘(2) EMPLOYER PROVIDED HEALTH CARE.—In 
the case of an eligible bankrupt business employee 
(and any qualifying family member of such em-
ployee), for purposes of this section and section 
7527— 
‘‘(A) the term ‘qualified health insurance’ 
shall include coverage under a group health 
plan that is available through the employment 
of such employee by the corporation referred to 
in paragraph (3)(A), and 
‘‘(B) subsection (f)(1) shall not apply with 
respect to such coverage. 
‘‘(3) ELIGIBLE
BANKRUPT
BUSINESS
EM-
PLOYEE.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
bankrupt business employee’ means any indi-
vidual who is employed by a corporation on the 
date that such corporation becomes a debtor in
a case under chapter 11 of title 11, United 
States Code. 
‘‘(B) TIME LIMITATIONS.— 
‘‘(i) 
IN
GENERAL.—An 
individual 
shall be treated as an eligible bankrupt 
business employee only with respect to the 
period of months beginning with the month 
which includes the date described in sub-
paragraph (A) and ending with the month 
which includes the earliest of— 
‘‘(I) the date that such debtor re-
ceives a discharge in such case, 
‘‘(II) the date that such case is 
converted to a case under chapter 7 of 
such title, or 
‘‘(III) the date that such case is 
dismissed. 
‘‘(ii) 2 YEAR LIMITATION.—An indi-
vidual shall not be treated as an eligible 
bankrupt business employee with respect to 
any month beginning after the 2-year pe-
riod beginning on the date described in 
subparagraph (A). 
‘‘(C) COORDINATION WITH TAA AND PBGC 
RECIPIENT STATUS.—An individual shall not be
treated as an eligible bankrupt business em-
ployee with respect to any month if such indi-
vidual is an eligible TAA recipient, an eligible 
alternative TAA recipient, or an eligible PBGC 
pension recipient with respect to such month.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to months beginning after the date 
of the enactment of this Act, with respect to cases com-
menced under title 11, United State Code, before, on, or 
after such date. 
SEC. 2. OTHER HEALTH CARE TAX CREDIT IMPROVEMENTS. 
(a) DECREASE IN AGE ELIGIBILITY REQUIREMENT 
FOR PBGC PENSION RECIPIENTS.—Subparagraph (A) of 
section 35(c)(4) of the Internal Revenue Code of 1986 (de-
fining eligible PBGC pension recipient) is amended by 
striking ‘‘age 55’’ and inserting ‘‘age 50’’. 
(b) REPEAL OF 3 MONTH REQUIREMENT OF EXIST-
ING COVERAGE.—Clause (i) of section 35(e)(2)(B) of such 
Code (defining qualifying individual) is amended by strik-
ing ‘‘9801(c)’’ and inserting ‘‘9801(c) (prior to the em-
ployment separation necessary to attain the status of an 
eligible individual)’’. 
(c) ELIGIBILITY OF SPOUSE OF CERTAIN INDIVID-
UALS ENTITLED TO MEDICARE.—Subsection (b) of sec-
tion 35 of such Code (defining eligible coverage month)
is amended by adding at the end the following new para-
graph: 
‘‘(3) SPECIAL
RULE
FOR
SPOUSE
OF
INDI-
VIDUAL
ENTITLED
TO
MEDICARE.—Any month 
which would be an eligible coverage month with re-
spect to a taxpayer (determined without regard to 
subsection (f)(2)(A)) shall be an eligible coverage 
month for any spouse of such taxpayer.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to months beginning after the date 
of the enactment of this Act. 
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