I 
109TH CONGRESS 
1ST SESSION 
H. R. 994
To amend the Internal Revenue Code of 1986 to allow Federal civilian 
and military retirees to pay health insurance premiums on a pretax 
basis and to allow a deduction for TRICARE supplemental premiums. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 1, 2005
Mr. TOM DAVIS of Virginia (for himself, Mr. PORTER, Mr. WAXMAN, Mr. 
DAVIS of Illinois, Mr. MORAN of Virginia, Mr. HOYER, Mr. VAN HOLLEN, 
Mr. WOLF, Ms. NORTON, Mrs. JO ANN DAVIS of Virginia, Mr. COBLE, 
Mr. KOLBE, and Mr. WYNN) introduced the following bill; which was re-
ferred to the Committee on Ways and Means, and in addition to the 
Committees on Government Reform and Armed Services, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to allow Fed-
eral civilian and military retirees to pay health insurance 
premiums on a pretax basis and to allow a deduction 
for TRICARE supplemental premiums.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. PRETAX PAYMENT OF HEALTH INSURANCE 
PREMIUMS BY FEDERAL CIVILIAN AND MILI-
TARY RETIREES. 
(a) IN GENERAL.—Subsection (g) of section 125 of 
the Internal Revenue Code of 1986 (relating to cafeteria 
plans) is amended by adding at the end the following new 
paragraph: 
‘‘(5) HEALTH INSURANCE PREMIUMS OF FED-
ERAL CIVILIAN AND MILITARY RETIREES.—
‘‘(A) FEHBP PREMIUMS.—Nothing in this 
section shall prevent the benefits of this section 
from being allowed to an annuitant, as defined 
in paragraph (3) of section 8901 of title 5, 
United States Code, with respect to a choice be-
tween the annuity or compensation referred to 
in such paragraph and benefits under the 
health benefits program established by chapter 
89 of such title 5. 
‘‘(B) TRICARE PREMIUMS.—Nothing in 
this section shall prevent the benefits of this 
section from being allowed to an individual re-
ceiving retired or retainer pay by reason of 
being a member or former member of the uni-
formed services of the United States with re-
spect to a choice between such pay and benefits
under the health benefits programs established 
by chapter 55 of title 10, United States Code.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 2. DEDUCTION FOR TRICARE SUPPLEMENTAL PRE-
MIUMS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions for individuals) is amended 
by redesignating section 224 as section 225 and by insert-
ing after section 223 the following new section: 
‘‘SEC. 224. TRICARE SUPPLEMENTAL PREMIUMS OR EN-
ROLLMENT FEES. 
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 
individual, there shall be allowed as a deduction the 
amounts paid during the taxable year by the taxpayer for 
insurance purchased as supplemental coverage to the 
health benefits programs established by chapter 55 of title 
10, United States Code, for the taxpayer and the tax-
payer’s spouse and dependents. 
‘‘(b) COORDINATION WITH MEDICAL DEDUCTION.—
Any amount allowed as a deduction under subsection (a) 
shall not be taken into account in computing the amount
allowable to the taxpayer as a deduction under section 
213(a).’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 
of section 62 of such Code is amended by inserting before 
the last sentence at the end the following new paragraph: 
‘‘(21) TRICARE SUPPLEMENTAL
PREMIUMS 
OR ENROLLMENT FEES.—The deduction allowed by 
section 224.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for part VII of subchapter B of chapter 1 of such Code 
is amended by striking the last item and inserting the fol-
lowing new items:
‘‘Sec. 224. TRICARE supplemental premiums or enrollment fees. 
‘‘Sec. 225. Cross reference.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 3. IMPLEMENTATION. 
(a) FEHBP PREMIUM CONVERSION OPTION
FOR 
FEDERAL CIVILIAN RETIREES.—The Director of the Of-
fice of Personnel Management shall take such actions as 
the Director considers necessary so that the option made 
possible by section 125(g)(5)(A) of the Internal Revenue 
Code of 1986 shall be offered beginning with the first open 
enrollment period afforded under chapter 89 of title 5,
United States Code, which begins not less than 90 days 
after the date of the enactment of this Act. 
(b) TRICARE PREMIUM CONVERSION OPTION FOR 
MILITARY RETIREES.—The Secretary of Defense, after 
consulting with the other administering Secretaries (as 
specified in section 1073 of title 10, United States Code), 
shall take such actions as the Secretary considers nec-
essary so that the option made possible by section 
125(g)(5)(B) of the Internal Revenue Code of 1986 shall 
be offered beginning with the first open enrollment period 
afforded under health benefits programs established under 
chapter 55 of such title which begins not less than 90 days 
after the date of the enactment of this Act.
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