127 
taken into account in computing the amount allow-
able to the taxpayer as a credit under section 35 or 
as a deduction under section 162(l) or 213(a). 
‘‘(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) MARRIED COUPLES MUST FILE JOINT RE-
TURN.— 
‘‘(A) IN
GENERAL.—If the taxpayer is 
married at the close of the taxable year, the 
credit shall be allowed under subsection (a) only 
if the taxpayer and his spouse file a joint return 
for the taxable year. 
‘‘(B) MARITAL STATUS; CERTAIN MARRIED 
INDIVIDUALS LIVING APART.—Rules similar to 
the rules of paragraphs (3) and (4) of section 
21(e) shall apply for purposes of this para-
graph. 
‘‘(4) VERIFICATION
OF
COVERAGE, ETC.—No 
credit shall be allowed under this section to any indi-
vidual unless such individual’s coverage under quali-
fied health insurance, and the amount paid for such
128 
coverage, are verified in such manner as the Sec-
retary may prescribe. 
‘‘(5) COORDINATION WITH ADVANCE PAYMENTS 
OF CREDIT.—With respect to any taxable year, the 
amount which would (but for this subsection) be al-
lowed as a credit to the taxpayer under subsection 
(a) shall be reduced (but not below zero) by the ag-
gregate amount paid on behalf of such taxpayer 
under section 7527A for months beginning in such 
taxable year. 
‘‘(6) COST-OF-LIVING
ADJUSTMENT.—In the 
case of any taxable year beginning in a calendar 
year after 2005, each dollar amount contained in 
subsection (b)(1)(B) 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 the calendar 
year in which the taxable year begins by sub-
stituting ‘calendar year 2004’ for ‘calendar year 
1992’ in subparagraph (B) thereof. 
Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of 
$10.’’.
129 
(b) ADVANCE PAYMENT OF CREDIT.—Chapter 77 of 
such Code (relating to miscellaneous provisions) is amend-
ed by inserting after section 7527 the following new sec-
tion: 
‘‘SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR HEALTH 
INSURANCE COSTS. 
‘‘(a) GENERAL RULE.—The Secretary shall establish 
a program for making payments on behalf of individuals 
to providers of qualified health insurance (as defined in 
section 36(c)) for such individuals. 
‘‘(b) LIMITATION ON ADVANCE PAYMENTS DURING 
ANY TAXABLE YEAR.—The Secretary may make pay-
ments under subsection (a) only to the extent that the 
total amount of such payments made on behalf of any indi-
vidual during the taxable year does not exceed the amount 
allowable as a credit to such individual for such year under 
section 36 (determined without regard to subsection (d)(5) 
thereof).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘or 
36’’ after ‘‘section 35’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by striking the item