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received from non-network providers are not
lower than those applicable to services re-
ceived from the network providers.’’.
(g) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1999.
SEC. 503. PERMITTING CONTRIBUTION TOWARDS MEDICAL
SAVINGS ACCOUNT THROUGH FEDERAL EM-
PLOYEES 
HEALTH 
BENEFITS 
PROGRAM
(FEHBP).
(a) AUTHORITY TO CONTRACT FOR CATASTROPHIC
PLANS.—Section 8902 of title 5, United States Code, is
amended by adding at the end the following:
‘‘(p)(1) The Office shall contract under this chapter for
a catastrophic plan with any qualified carrier that—
‘‘(A) offers such a plan; and
‘‘(B) as of the date of enactment of the Patients’
Bill of Rights Plus Act, offers a health benefits plan
under this chapter.
‘‘(2) The Office may contract under this chapter for
a catastrophic plan with any qualified carrier that—
‘‘(A) offers such a plan; but
‘‘(B) does not satisfy the requirement under
paragraph (1)(B).’’.
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(b) GOVERNMENT CONTRIBUTION TO MEDICAL SAV-
INGS ACCOUNT.—
(1) IN
GENERAL.—Section 8906 of title 5,
United States Code, is amended by adding at the end
the following:
‘‘(j)(1) In the case of an employee or annuitant who
is enrolled in a catastrophic plan described by section
8903(5), there shall be a Government contribution under
this subsection to a medical savings account established or
maintained for the benefit of the individual. The contribu-
tion under this subsection shall be in addition to the Gov-
ernment contribution under subsection (b).
‘‘(2) The amount of the Government contribution
under this subsection with respect to an individual is equal
to the amount by which—
‘‘(A) the maximum contribution allowed under
subsection (b)(1) with respect to any employee or an-
nuitant, exceeds
‘‘(B) the amount of the Government contribution
actually made with respect to the individual under
subsection (b) for coverage under the catastrophic
plan.
‘‘(3) The Government contributions under this sub-
section shall be paid into a medical savings account (des-
ignated by the individual involved) in a manner that is
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specified by the Office and consistent with the timing of
contributions under subsection (b).
‘‘(4) Subsections (f) and (g) shall apply to contribu-
tions under this section in the same manner as they apply
to contributions under subsection (b).
‘‘(5) For the purpose of this subsection, the term ‘med-
ical savings account’ has the meaning given such term by
section 220(d) of the Internal Revenue Code of 1986.’’.
(2) ALLOWING PAYMENT OF FULL AMOUNT OF
CHARGE
FOR
CATASTROPHIC
PLAN.—Section
8906(b)(2) of such title is amended by inserting ‘‘(or
100 percent of the subscription charge in the case of
a catastrophic plan)’’ after ‘‘75 percent of the sub-
scription charge’’.
(c) OFFERING OF CATASTROPHIC PLANS.—
(1) IN
GENERAL.—Section 8903 of title 5,
United States Code, is amended by adding at the end
the following:
‘‘(5) CATASTROPHIC PLANS.—(A) One or more
plans described in paragraph (1), (2), or (3), but
which provide benefits of the types referred to by
paragraph (5) of section 8904(a), instead of the types
referred to in paragraphs (1), (2), and (3) of such sec-
tion.
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‘‘(B) 
Nothing 
in 
this 
section 
shall 
be
considered—
‘‘(i) to prevent a carrier from simulta-
neously offering a plan described by subpara-
graph (A) and a plan described by paragraph
(1) or (2);
‘‘(ii) to require that a catastrophic plan
offer two levels of benefits; or
‘‘(iii) to allow, in any contract year, for—
‘‘(I) more than one plan to be offered
which satisfies both subparagraph (A) and
paragraph (1) (subject to clause (ii)); and
‘‘(II) more than one plan which satis-
fies both subparagraph (A) and paragraph
(2) (subject to clause (ii)).’’.
(2) TYPES
OF
BENEFITS.—Section 8904(a) of
such title is amended by inserting after paragraph (4)
the following new paragraph:
‘‘(5) CATASTROPHIC
PLANS.—Benefits of the
types named under paragraph (1) or (2) of this sub-
section or both, except that the plan shall meet the an-
nual deductible and annual out-of-pocket expenses re-
quirements under section 220(c)(2) of the Internal
Revenue Code of 1986.’’.
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(3) DETERMINING LEVEL OF GOVERNMENT CON-
TRIBUTIONS.—Section 8906(b) of such title is amend-
ed by adding at the end the following: ‘‘Subscription
charges for medical savings accounts shall be deemed
to be the amount of Government contributions made
under subsection (j)(2).’’.
(d) CONFORMING AMENDMENTS.—
(1) ADDITIONAL
HEALTH
BENEFITS
PLANS.—
Section 8903a of title 5, United States Code, is
amended by redesignating subsection (d) as subsection
(e) and by inserting after subsection (c) the following:
‘‘(d) The plans under this section may include one or
more plans, otherwise allowable under this section, that sat-
isfy the requirements of clauses (i) and (ii) of section
8903(5)(A).’’.
(2) REFERENCE.—Section 8909(d) of title 5,
United 
States 
Code, 
is 
amended 
by 
striking
‘‘8903a(d)’’ and inserting ‘‘8903a(e)’’.
(e) REFERENCES.—Section 8903 of title 5, United
States Code, is amended by adding at the end (as a flush
left sentence) the following:
‘‘The Office shall prescribe regulations under which the re-
quirements of section 8902(c), 8902(n), 8909(e), and any
other provision of this chapter that applies with respect to
a plan described by paragraph (1), (2), (3), or (4) of this
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section shall apply with respect to the corresponding plan
under paragraph (5) of this section. Similar regulations
shall be prescribed with respect to any plan under section
8903a(d).’’.
(f) EFFECTIVE DATE.—The amendments made by this
section shall apply to contract terms beginning on or after
January 1, 2000.
SEC. 504. CARRYOVER OF UNUSED BENEFITS FROM CAFE-
TERIA 
PLANS, 
FLEXIBLE 
SPENDING 
AR-
RANGEMENTS, 
AND 
HEALTH 
FLEXIBLE
SPENDING ACCOUNTS.
(a) IN GENERAL.—Section 125 of the Internal Revenue
Code of 1986 (relating to cafeteria plans) is amended by
redesignating subsections (h) and (i) as subsections (i) and
(j) and by inserting after subsection (g) the following new
subsection:
‘‘(h) ALLOWANCE OF CARRYOVERS OF UNUSED BENE-
FITS TO LATER TAXABLE YEARS.—
‘‘(1) IN GENERAL.—For purposes of this title—
‘‘(A) notwithstanding subsection (d)(2), a
plan or other arrangement shall not fail to be
treated as a cafeteria plan or flexible spending or
similar arrangement, and
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‘‘(B) no amount shall be required to be in-
cluded in gross income by reason of this section
or any other provision of this chapter,
solely because under such plan or other arrangement
any nontaxable benefit which is unused as of the close
of a taxable year may be carried forward to 1 or more
succeeding taxable years.
‘‘(2) LIMITATION.—Paragraph (1) shall not
apply to amounts carried from a plan to the extent
such amounts exceed $500 (applied on an annual
basis). For purposes of this paragraph, all plans and
arrangements maintained by an employer or any re-
lated person shall be treated as 1 plan.
‘‘(3) ALLOWANCE OF ROLLOVER.—
‘‘(A) IN GENERAL.—In the case of any un-
used benefit described in paragraph (1) which
consists of amounts in a health flexible spending
account or dependent care flexible spending ac-
count, the plan or arrangement shall provide
that a participant may elect, in lieu of such car-
ryover, to have such amounts distributed to the
participant.
‘‘(B) AMOUNTS
NOT
INCLUDED
IN
IN-
COME.—Any distribution under subparagraph
(A) shall not be included in gross income to the
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under such section or any other provision of this
chapter for the taxable year of the rollover.
‘‘(4) COST-OF-LIVING ADJUSTMENT.—In the case
of any taxable year beginning in a calendar year
after 1999, the $500 amount under paragraph (2)
shall be adjusted at the same time and in the same
manner as under section 415(d)(2), except that the
base period taken into account shall be the calendar
quarter beginning October 1, 1998, and any increase
which is not a multiple of $50 shall be rounded to the
next lowest multiple of $50.
‘‘(5) 
APPLICABILITY.—This 
subsection 
shall
apply to taxable years beginning after December 31,
1999.’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1999.
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TITLE VI—PROVISIONS RELAT-
ING TO LONG-TERM CARE IN-
SURANCE
SEC. 601. INCLUSION OF QUALIFIED LONG-TERM CARE IN-
SURANCE CONTRACTS IN CAFETERIA PLANS,
FLEXIBLE SPENDING ARRANGEMENTS, AND
HEALTH FLEXIBLE SPENDING ACCOUNTS.
(a) IN GENERAL.—Section 125(f) of the Internal Rev-
enue Code of 1986 (defining qualified benefits) is amended
by striking the last sentence and inserting the following:
‘‘Such term includes any qualified long-term care insurance
contract.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1999.
SEC. 602. DEDUCTION FOR PREMIUMS FOR LONG-TERM
CARE INSURANCE.
(a) IN GENERAL.—Part VII of subchapter B of chapter
1 of the Internal Revenue Code of 1986 (relating to addi-
tional itemized deductions) is amended by redesignating
section 222 as section 223 and by inserting after section
221 the following:
‘‘SEC. 222. PREMIUMS FOR LONG-TERM CARE INSURANCE.
‘‘(a) IN GENERAL.—In the case of an eligible indi-
vidual, there shall be allowed as a deduction an amount
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equal to 100 percent of the amount paid during the taxable
year for any coverage for qualified long-term care services
(as defined in section 7702B(c)) or any qualified long-term
care insurance contract (as defined in section 7702B(b))
which constitutes medical care for the taxpayer, his spouse,
and dependents.
‘‘(b) LIMITATIONS.—
‘‘(1) DEDUCTION
NOT
AVAILABLE
TO
INDIVID-
UALS
ELIGIBLE
FOR
EMPLOYER-SUBSIDIZED
COV-
ERAGE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), subsection (a) shall not apply
to any taxpayer for any calendar month for
which the taxpayer is eligible to participate in
any plan which includes coverage for qualified
long-term care services (as so defined) or is a
qualified long-term care insurance contract (as
so defined) maintained by any employer (or
former employer) of the taxpayer or of the spouse
of the taxpayer.
‘‘(B) CONTINUATION COVERAGE.—Coverage
shall not be treated as subsidized for purposes of
this paragraph if—
‘‘(i) such coverage is continuation cov-
erage (within the meaning of section
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4980B(f)) required to be provided by the
employer, and
‘‘(ii) the taxpayer or the taxpayer’s
spouse is required to pay a premium for
such coverage in an amount not less than
100 percent of the applicable premium
(within the meaning of section 4980B(f)(4))
for the period of such coverage.
‘‘(2) LIMITATION
ON
LONG-TERM
CARE
PRE-
MIUMS.—In the case of a qualified long-term care in-
surance contract (as so defined), only eligible long-
term 
care 
premiums 
(as 
defined 
in 
section
213(d)(10)) shall be taken into account under sub-
section (a)(2).
‘‘(c) SPECIAL RULES.—For purposes of this section—
‘‘(1) COORDINATION WITH MEDICAL DEDUCTION,
ETC.—Any amount paid by a taxpayer for insurance
to which subsection (a) applies shall not be taken into
account in computing the amount allowable to the
taxpayer as a deduction under section 213(a).
‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM-
PLOYMENT TAX PURPOSES.—The deduction allowable
by reason of this section shall not be taken into ac-
count in determining an individual’s net earnings
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from self-employment (within the meaning of section
1402(a)) for purposes of chapter 2.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 62 of the Internal
Revenue Code of 1986 is amended by inserting after
paragraph (17) the following:
‘‘(18) LONG-TERM CARE INSURANCE COSTS OF
CERTAIN
INDIVIDUALS.—The deduction allowed by
section 222.’’.
(2) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by
striking the last item and inserting the following:
‘‘Sec. 222. Premiums for long-term care insurance.
‘‘Sec. 223. Cross reference.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1999.
SEC. 603. STUDY OF LONG-TERM CARE NEEDS IN THE 21ST
CENTURY.
(a) IN GENERAL.—The Secretary of Health and
Human Services (referred to in this section as the ‘‘Sec-
retary’’) shall provide, in accordance with this section, for
a study in order to determine—
(1) future demand for long-term health care serv-
ices (including institutional and home and commu-
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nity-based services) in the United States in order to
meet the needs in the 21st century; and
(2) long-term options to finance the provision of
such services.
(b) DETAILS.—The study conducted under subsection
(a) shall include the following:
(1) An identification of the relevant demographic
characteristics affecting demand for long-term health
care services, at least through the year 2030.
(2) The viability and capacity of community-
based and other long-term health care services under
different federal programs, including through the
medicare and medicaid programs, grants to States,
housing services, and changes in tax policy.
(3) How to improve the quality of long-term
health care services.
(4) The integration of long-term health care serv-
ices for individuals between different classes of health
care providers (such as hospitals, nursing facilities,
and home care agencies) and different Federal pro-
grams (such as the medicare and medicaid pro-
grams).
(5) The possibility of expanding private sector
initiatives, including long-term care insurance, to
meet the need to finance such services.
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(6) An examination of the effect of enactment of
the Health Insurance Portability and Accountability
Act of 1996 on the provision and financing of long-
term health care services, including on portability
and affordability of private long-term care insurance,
the impact of insurance options on low-income older
Americans, and the options for eligibility to improve
access to such insurance.
(7) The financial impact of the provision of
long-term health care services on caregivers and other
family members.
(c) REPORT AND RECOMMENDATIONS.—
(1) IN GENERAL.—Not later than 1 year after
the date of the enactment of this Act, the Secretary
shall provide for a report on the study under this sec-
tion.
(2) 
RECOMMENDATIONS.—The 
report 
under
paragraph (1) shall include findings and rec-
ommendations regarding each of the following:
(A) The most effective and efficient manner
that the Federal government may use its re-
sources to educate the public on planning for
needs for long-term health care services.
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(B) The public, private, and joint public-
private strategies for meeting identified needs for
long-term health care services.
(C) The role of States and local commu-
nities in the financing of long-term health care
services.
(3) INCLUSION OF COST ESTIMATES.—The report
under paragraph (1) shall include cost estimates of
the various options for which recommendations are
made.
(d) CONDUCT OF STUDY.—
(1) USE OF INSTITUTE OF MEDICINE.—The Sec-
retary of Health and Human Services shall seek to
enter into an appropriate arrangement with the In-
stitute of Medicine of the National Academy of
Sciences to conduct the study under this section. If
such an arrangement cannot be made, the Secretary
may provide for the conduct of the study by any other
qualified non-governmental entity.
(2) CONSULTATION.—The study should be con-
ducted under this section in consultation with experts
from a wide-range of groups from the public and pri-
vate sectors.
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TITLE VII—INDIVIDUAL
RETIREMENT PLANS
SEC. 701. MODIFICATION OF INCOME LIMITS ON CONTRIBU-
TIONS AND ROLLOVERS TO ROTH IRAS.
(a) INCREASE IN AGI LIMIT FOR ROLLOVER CON-
TRIBUTIONS.—Clause (i) of section 408A(c)(3)(A) of the In-
ternal Revenue Code of 1986 (relating to rollover from
IRA), as redesignated by subsection (a), is amended by
striking ‘‘$100,000’’ and inserting ‘‘$1,000,000’’.
(b) CONFORMING AMENDMENTS.—
(1)(A) Subparagraph (B) of section 408A(c)(3)
of the Internal Revenue Code of 1986, as redesignated
by subsection (a), is amended to read as follows:
‘‘(B) DEFINITION OF ADJUSTED GROSS IN-
COME.—For purposes of subparagraph (A), ad-
justed gross income shall be determined—
‘‘(i) after application of sections 86
and 469, and
‘‘(ii) without regard to sections 135,
137, 221, and 911, the deduction allowable
under section 219, or any amount included
in gross income under subsection (d)(3).’’.
(B) EFFECTIVE
DATE.—The amendment made
by this paragraph shall apply to taxable years begin-
ning after December 31, 1999.
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(2)(A) Subparagraph (B) of section 408A(c)(3)
of such Code, as amended by paragraph (1), is
amended to read as follows:
‘‘(B) DEFINITION OF ADJUSTED GROSS IN-
COME.—For purposes of subparagraph (A), ad-
justed gross income shall be determined—
‘‘(i) after application of sections 86
and 469, and
‘‘(ii) without regard to sections 135,
137, 221, and 911, the deduction allowable
under section 219, or any amount included
in gross income under subsection (d)(3) or
by reason of a required distribution under
a provision described in paragraph (5).’’.
(B) EFFECTIVE
DATE.—The amendment made
by this paragraph shall apply to taxable years begin-
ning after December 31, 2004.
(c) EFFECTIVE DATE.—Except as otherwise provided
in this section, the amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
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TITLE VIII—REVENUE
PROVISIONS
SEC. 
801. 
MODIFICATION 
TO 
FOREIGN 
TAX 
CREDIT
CARRYBACK AND CARRYOVER PERIODS.
(a) IN GENERAL.—Section 904(c) of the Internal Rev-
enue Code of 1986 (relating to limitation on credit) is
amended—
(1) by striking ‘‘in the second preceding taxable
year,’’, and
(2) by striking ‘‘or fifth’’ and inserting ‘‘fifth,
sixth, or seventh’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to credits arising in taxable years
beginning after December 31, 2001.
SEC. 802. LIMITATION ON USE OF NON-ACCRUAL EXPERI-
ENCE METHOD OF ACCOUNTING.
(a) IN GENERAL.—Section 448(d)(5) of the Internal
Revenue Code of 1986 (relating to special rule for services)
is amended—
(1) by inserting ‘‘in fields described in para-
graph (2)(A)’’ after ‘‘services by such person’’, and
(2) by inserting ‘‘CERTAIN
PERSONAL’’ before
‘‘SERVICES’’ in the heading.
(b) EFFECTIVE DATE.—
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(1) IN
GENERAL.—The amendments made by
this section shall apply to taxable years ending after
the date of the enactment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by the amendments
made by this section to change its method of account-
ing for its first taxable year ending after the date of
the enactment of this Act—
(A) such change shall be treated as initiated
by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treasury,
and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
of 1986 shall be taken into account over a period
(not greater than 4 taxable years) beginning
with such first taxable year.
SEC. 803. RETURNS RELATING TO CANCELLATIONS OF IN-
DEBTEDNESS BY ORGANIZATIONS LENDING
MONEY.
(a) IN GENERAL.—Paragraph (2) of section 6050P(c)
of the Internal Revenue Code of 1986 (relating to definitions
and special rules) is amended by striking ‘‘and’’ at the end
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of subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ‘‘, and’’, and by inserting
after subparagraph (C) the following new subparagraph:
‘‘(D) any organization a significant trade
or business of which is the lending of money.’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to discharges of indebtedness after
December 31, 1999.
SEC. 804. EXTENSION OF INTERNAL REVENUE SERVICE
USER FEES.
(a) IN GENERAL.—Chapter 77 of the Internal Revenue
Code of 1986 (relating to miscellaneous provisions) is
amended by adding at the end the following new section:
‘‘SEC. 7527. INTERNAL REVENUE SERVICE USER FEES.
‘‘(a) GENERAL RULE.—The Secretary shall establish
a program requiring the payment of user fees for—
‘‘(1) requests to the Internal Revenue Service for
ruling letters, opinion letters, and determination let-
ters, and
‘‘(2) other similar requests.
‘‘(b) PROGRAM CRITERIA.—
‘‘(1) IN GENERAL.—The fees charged under the
program required by subsection (a)—
‘‘(A) shall vary according to categories (or
subcategories) established by the Secretary,
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‘‘(B) shall be determined after taking into
account the average time for (and difficulty of)
complying with requests in each category (and
subcategory), and
‘‘(C) shall be payable in advance.
‘‘(2) EXEMPTIONS, ETC.—The Secretary shall
provide for such exemptions (and reduced fees) under
such program as the Secretary determines to be ap-
propriate.
‘‘(3) AVERAGE FEE REQUIREMENT.—The average
fee charged under the program required by subsection
(a) shall not be less than the amount determined
under the following table:
‘‘Category
Average Fee
Employee plan ruling and opinion ..............................................
$250
Exempt organization ruling .........................................................
$350
Employee plan determination ......................................................
$300
Exempt organization determination ............................................
$275
Chief counsel ruling .......................................................................
$200.
‘‘(c) TERMINATION.—No fee shall be imposed under
this section with respect to requests made after September
30, 2009.’’.
(b) CONFORMING AMENDMENTS.—
(1) The table of sections for chapter 77 of the In-
ternal Revenue Code of 1986 is amended by adding
at the end the following new item:
‘‘Sec. 7527. Internal Revenue Service user fees.’’.
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(2) Section 10511 of the Revenue Act of 1987 is
repealed.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to requests made after the date of the
enactment of this Act.
SEC. 805. PROPERTY SUBJECT TO A LIABILITY TREATED IN
SAME MANNER AS ASSUMPTION OF LIABIL-
ITY.
(a) REPEAL OF PROPERTY SUBJECT TO A LIABILITY
TEST.—
(1) SECTION 357.—Section 357(a)(2) of the Inter-
nal Revenue Code of 1986 (relating to assumption of
liability) is amended by striking ‘‘, or acquires from
the taxpayer property subject to a liability’’.
(2) SECTION
358.—Section 358(d)(1) of such
Code (relating to assumption of liability) is amended
by striking ‘‘or acquired from the taxpayer property
subject to a liability’’.
(3) SECTION 368.—
(A) Section 368(a)(1)(C) of such Code is
amended by striking ‘‘, or the fact that property
acquired is subject to a liability,’’.
(B) 
The 
last 
sentence 
of 
section
368(a)(2)(B) of such Code is amended by strik-
ing ‘‘, and the amount of any liability to which
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any property acquired from the acquiring cor-
poration is subject,’’.
(b) CLARIFICATION OF ASSUMPTION OF LIABILITY.—
(1) IN GENERAL.—Section 357 of the Internal
Revenue Code of 1986 is amended by adding at the
end the following new subsection:
‘‘(d) DETERMINATION OF AMOUNT OF LIABILITY AS-
SUMED.—
‘‘(1) IN GENERAL.—For purposes of this section,
section 358(d), section 362(d), section 368(a)(1)(C),
and section 368(a)(2)(B), except as provided in
regulations—
‘‘(A) a recourse liability (or portion thereof)
shall be treated as having been assumed if, as de-
termined on the basis of all facts and cir-
cumstances, the transferee has agreed to, and is
expected to, satisfy such liability (or portion),
whether or not the transferor has been relieved of
such liability, and
‘‘(B) except to the extent provided in para-
graph (2), a nonrecourse liability shall be treated
as having been assumed by the transferee of any
asset subject to such liability.
‘‘(2) EXCEPTION
FOR
NONRECOURSE
LIABIL-
ITY.—The amount of the nonrecourse liability treated
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as described in paragraph (1)(B) shall be reduced by
the lesser of—
‘‘(A) the amount of such liability which an
owner of other assets not transferred to the trans-
feree and also subject to such liability has agreed
with the transferee to, and is expected to, satisfy,
or
‘‘(B) the fair market value of such other as-
sets (determined without regard to section
7701(g)).
‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection and section 362(d).
The Secretary may also prescribe regulations which
provide that the manner in which a liability is treat-
ed as assumed under this subsection is applied, where
appropriate, elsewhere in this title.’’.
(2) LIMITATION
ON
BASIS
INCREASE
ATTRIB-
UTABLE TO ASSUMPTION OF LIABILITY.—Section 362
of such Code is amended by adding at the end the fol-
lowing new subsection:
‘‘(d) LIMITATION ON BASIS INCREASE ATTRIBUTABLE
TO ASSUMPTION OF LIABILITY.—
‘‘(1) IN GENERAL.—In no event shall the basis of
any property be increased under subsection (a) or (b)
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above the fair market value of such property (deter-
mined without regard to section 7701(g)) by reason of
any gain recognized to the transferor as a result of
the assumption of a liability.
‘‘(2) TREATMENT
OF
GAIN
NOT
SUBJECT
TO
TAX.—Except as provided in regulations, if—
‘‘(A) gain is recognized to the transferor as
a result of an assumption of a nonrecourse li-
ability by a transferee which is also secured by
assets not transferred to such transferee, and
‘‘(B) no person is subject to tax under this
title on such gain,
then, for purposes of determining basis under sub-
sections (a) and (b), the amount of gain recognized by
the transferor as a result of the assumption of the li-
ability shall be determined as if the liability assumed
by the transferee equaled such transferee’s ratable por-
tion of such liability determined on the basis of the
relative fair market values (determined without re-
gard to section 7701(g)) of all of the assets subject to
such liability.’’.
(c) APPLICATION TO PROVISIONS OTHER THAN SUB-
CHAPTER C.—
(1) SECTION 584.—Section 584(h)(3) of the Inter-
nal Revenue Code of 1986 is amended—
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(A) by striking ‘‘, and the fact that any
property transferred by the common trust fund is
subject to a liability,’’ in subparagraph (A), and
(B) by striking clause (ii) of subparagraph
(B) and inserting:
‘‘(ii) ASSUMED LIABILITIES.—For pur-
poses of clause (i), the term ‘assumed liabil-
ities’ means any liability of the common
trust fund assumed by any regulated invest-
ment company in connection with the
transfer referred to in paragraph (1)(A).
‘‘(C) ASSUMPTION.—For purposes of this
paragraph, in determining the amount of any li-
ability assumed, the rules of section 357(d) shall
apply.’’.
(2) SECTION 1031.—The last sentence of section
1031(d) of such Code is amended—
(A) by striking ‘‘assumed a liability of the
taxpayer or acquired from the taxpayer property
subject to a liability’’ and inserting ‘‘assumed
(as determined under section 357(d)) a liability
of the taxpayer’’, and
(B) by striking ‘‘or acquisition (in the
amount of the liability)’’.
(d) CONFORMING AMENDMENTS.—
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person (other than an organization described in
subsection (c)) designated by the transferor.
‘‘(C) APPLICATION TO CHARITABLE REMAIN-
DER TRUSTS.—In the case of a transfer to a
trust referred to in subparagraph (E), references
in subparagraphs (A) and (F) to an organiza-
tion described in subsection (c) shall be treated
as a reference to such trust.
‘‘(D) EXCEPTION
FOR
CERTAIN
ANNUITY
CONTRACTS.—If, in connection with a transfer to
or for the use of an organization described in
subsection (c), such organization incurs an obli-
gation to pay a charitable gift annuity (as de-
fined in section 501(m)) and such organization
purchases any annuity contract to fund such ob-
ligation, persons receiving payments under the
charitable gift annuity shall not be treated for
purposes of subparagraph (B) as indirect bene-
ficiaries under such contract if—
‘‘(i) such organization possesses all of
the incidents of ownership under such con-
tract,
‘‘(ii) such organization is entitled to
all the payments under such contract, and
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‘‘(iii) the timing and amount of pay-
ments under such contract are substantially
the same as the timing and amount of pay-
ments to each such person under such obli-
gation (as such obligation is in effect at the
time of such transfer).
‘‘(E) EXCEPTION FOR CERTAIN CONTRACTS
HELD BY CHARITABLE REMAINDER TRUSTS.—A
person shall not be treated for purposes of sub-
paragraph (B) as an indirect beneficiary under
any life insurance, annuity, or endowment con-
tract held by a charitable remainder annuity
trust or a charitable remainder unitrust (as de-
fined in section 664(d)) solely by reason of being
entitled to any payment referred to in para-
graph (1)(A) or (2)(A) of section 664(d) if—
‘‘(i) such trust possesses all of the inci-
dents of ownership under such contract, and
‘‘(ii) such trust is entitled to all the
payments under such contract.
‘‘(F) EXCISE TAX ON PREMIUMS PAID.—
‘‘(i) IN GENERAL.—There is hereby im-
posed on any organization described in sub-
section (c) an excise tax equal to the pre-
miums paid by such organization on any
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life insurance, annuity, or endowment con-
tract if the payment of premiums on such
contract is in connection with a transfer for
which a deduction is not allowable under
subparagraph (A), determined without re-
gard to when such transfer is made.
‘‘(ii) 
PAYMENTS
BY
OTHER
PER-
SONS.—For purposes of clause (i), pay-
ments made by any other person pursuant
to an understanding or expectation referred
to in subparagraph (A) shall be treated as
made by the organization.
‘‘(iii) REPORTING.—Any organization
on which tax is imposed by clause (i) with
respect to any premium shall file an annual
return which includes—
‘‘(I) the amount of such premiums
paid during the year and the name
and TIN of each beneficiary under the
contract to which the premium relates,
and
‘‘(II) such other information as
the Secretary may require.
The penalties applicable to returns required
under section 6033 shall apply to returns
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required under this clause. Returns required
under this clause shall be furnished at such
time and in such manner as the Secretary
shall by forms or regulations require.
‘‘(iv) CERTAIN RULES TO APPLY.—The
tax imposed by this subparagraph shall be
treated as imposed by chapter 42 for pur-
poses of this title other than subchapter B
of chapter 42.
‘‘(G) SPECIAL
RULE
WHERE
STATE
RE-
QUIRES SPECIFICATION OF CHARITABLE GIFT AN-
NUITANT IN CONTRACT.—In the case of an obli-
gation to pay a charitable gift annuity referred
to in subparagraph (D) which is entered into
under the laws of a State which requires, in
order for the charitable gift annuity to be exempt
from insurance regulation by such State, that
each beneficiary under the charitable gift annu-
ity be named as a beneficiary under an annuity
contract issued by an insurance company au-
thorized to transact business in such State, the
requirements of clauses (i) and (ii) of subpara-
graph (D) shall be treated as met if—
‘‘(i) such State law requirement was in
effect on February 8, 1999,
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‘‘(ii) each such beneficiary under the
charitable gift annuity is a bona fide resi-
dent of such State at the time the obligation
to pay a charitable gift annuity is entered
into, and
‘‘(iii) the only persons entitled to pay-
ments under such contract are persons enti-
tled to payments as beneficiaries under such
obligation on the date such obligation is en-
tered into.
‘‘(H) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this
paragraph, including regulations to prevent the
avoidance of such purposes.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided
in this section, the amendment made by this section
shall apply to transfers made after February 8, 1999.
(2) EXCISE TAX.—Except as provided in para-
graph (3) of this subsection, section 170(f)(10)(F) of
the Internal Revenue Code of 1986 (as added by this
section) shall apply to premiums paid after the date
of the enactment of this Act.
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(3) REPORTING.—Clause (iii) of such section
170(f)(10)(F) shall apply to premiums paid after
February 8, 1999 (determined as if the tax imposed
by such section applies to premiums paid after such
date).
SEC. 807. TRANSFER OF EXCESS DEFINED BENEFIT PLAN
ASSETS FOR RETIREE HEALTH BENEFITS.
(a) EXTENSION.—
(1) IN GENERAL.—Section 420(b)(5) of the Inter-
nal Revenue Code of 1986 (relating to expiration) is
amended by striking ‘‘in any taxable year beginning
after December 31, 2000’’ and inserting ‘‘made after
September 30, 2009’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 101(e)(3) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C.
1021(e)(3)) is amended by striking ‘‘1995’’ and
inserting ‘‘2001’’.
(B) Section 403(c)(1) of such Act (29 U.S.C.
1103(c)(1)) is amended by striking ‘‘1995’’ and in-
serting ‘‘2001’’.
(C) Paragraph (13) of section 408(b) of such Act
(29 U.S.C. 1108(b)(13)) is amended—
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(i) by striking ‘‘in a taxable year beginning
before January 1, 2001’’ and inserting ‘‘made
before October 1, 2009’’, and
(ii) by striking ‘‘1995’’ and inserting
‘‘2001’’.
(b) APPLICATION
OF
MINIMUM
COST
REQUIRE-
MENTS.—
(1) IN GENERAL.—Section 420(c)(3) of the Inter-
nal Revenue Code of 1986 is amended to read as fol-
lows:
‘‘(3) MINIMUM COST REQUIREMENTS.—
‘‘(A) IN
GENERAL.—The requirements of
this paragraph are met if each group health plan
or arrangement under which applicable health
benefits are provided provides that the applicable
employer cost for each taxable year during the
cost maintenance period shall not be less than
the higher of the applicable employer costs for
each of the 2 taxable years immediately pre-
ceding the taxable year of the qualified transfer.
‘‘(B) APPLICABLE
EMPLOYER
COST.—For
purposes of this paragraph, the term ‘applicable
employer cost’ means, with respect to any tax-
able year, the amount determined by dividing—
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‘‘(i) the qualified current retiree health
liabilities of the employer for such taxable
year determined—
‘‘(I) without regard to any reduc-
tion under subsection (e)(1)(B), and
‘‘(II) in the case of a taxable year
in which there was no qualified trans-
fer, in the same manner as if there had
been such a transfer at the end of the
taxable year, by
‘‘(ii) the number of individuals to
whom coverage for applicable health benefits
was provided during such taxable year.
‘‘(C) ELECTION TO COMPUTE COST SEPA-
RATELY.—An employer may elect to have this
paragraph applied separately with respect to in-
dividuals eligible for benefits under title XVIII of
the Social Security Act at any time during the
taxable year and with respect to individuals not
so eligible.
‘‘(D) COST
MAINTENANCE
PERIOD.—For
purposes of this paragraph, the term ‘cost main-
tenance period’ means the period of 5 taxable
years beginning with the taxable year in which
the qualified transfer occurs. If a taxable year is
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in 2 or more overlapping cost maintenance peri-
ods, this paragraph shall be applied by taking
into account the highest applicable employer cost
required to be provided under subparagraph (A)
for such taxable year.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 420(b)(1)(C)(iii) of such Code is
amended by striking ‘‘benefits’’ and inserting
‘‘cost’’.
(B) Section 420(e)(1)(D) of such Code is
amended by striking ‘‘and shall not be subject to
the minimum benefit requirements of subsection
(c)(3)’’ and inserting ‘‘or in calculating applica-
ble employer cost under subsection (c)(3)(B)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to qualified transfers occurring after De-
cember 31, 2000, and before October 1, 2009.
SEC. 808. LIMITATIONS ON WELFARE BENEFIT FUNDS OF 10
OR MORE EMPLOYER PLANS.
(a) BENEFITS TO WHICH EXCEPTION APPLIES.—Sec-
tion 419A(f)(6)(A) of the Internal Revenue Code of 1986
(relating to exception for 10 or more employer plans) is
amended to read as follows:
‘‘(A) IN GENERAL.—This subpart shall not
apply to a welfare benefit fund which is part of
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a 10 or more employer plan if the only benefits
provided through the fund are 1 or more of the
following:
‘‘(i) Medical benefits.
‘‘(ii) Disability benefits.
‘‘(iii) Group term life insurance bene-
fits which do not provide for any cash sur-
render value or other money that can be
paid, assigned, borrowed, or pledged for col-
lateral for a loan.
The preceding sentence shall not apply to any
plan which maintains experience-rating arrange-
ments with respect to individual employers.’’.
(b) LIMITATION ON USE OF AMOUNTS FOR OTHER
PURPOSES.—Section 4976(b) of the Internal Revenue Code
of 1986 (defining disqualified benefit) is amended by add-
ing at the end the following new paragraph:
‘‘(5) SPECIAL RULE FOR 10 OR MORE EMPLOYER
PLANS EXEMPTED FROM PREFUNDING LIMITS.—For
purposes of paragraph (1)(C), if—
‘‘(A) subpart D of part I of subchapter D
of chapter 1 does not apply by reason of section
419A(f)(6) to contributions to provide 1 or more
welfare benefits through a welfare benefit fund
under a 10 or more employer plan, and
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‘‘(B) any portion of the welfare benefit fund
attributable to such contributions is used for a
purpose other than that for which the contribu-
tions were made,
then such portion shall be treated as reverting to the
benefit of the employers maintaining the fund.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to contributions paid or accrued after
the date of the enactment of this Act, in taxable years end-
ing after such date.
SEC. 809. MODIFICATION OF INSTALLMENT METHOD AND
REPEAL OF INSTALLMENT METHOD FOR AC-
CRUAL METHOD TAXPAYERS.
(a) REPEAL OF INSTALLMENT METHOD FOR ACCRUAL
BASIS TAXPAYERS.—
(1) IN GENERAL.—Subsection (a) of section 453
of the Internal Revenue Code of 1986 (relating to in-
stallment method) is amended to read as follows:
‘‘(a) USE OF INSTALLMENT METHOD.—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this section, income from an installment sale shall
be taken into account for purposes of this title under
the installment method.
‘‘(2) ACCRUAL METHOD TAXPAYER.—The install-
ment method shall not apply to income from an in-
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stallment sale if such income would be reported under
an accrual method of accounting without regard to
this section. The preceding sentence shall not apply to
a disposition described in subparagraph (A) or (B) of
subsection (l)(2).’’.
(2) 
CONFORMING
AMENDMENTS.—Sections
453(d)(1), 453(i)(1), and 453(k) of such Code are each
amended by striking ‘‘(a)’’ each place it appears and
inserting ‘‘(a)(1)’’.
(b) MODIFICATION OF PLEDGE RULES.—Paragraph
(4) of section 453A(d) of the Internal Revenue Code of 1986
(relating to pledges, etc., of installment obligations) is
amended by adding at the end the following: ‘‘A payment
shall be treated as directly secured by an interest in an
installment obligation to the extent an arrangement allows
the taxpayer to satisfy all or a portion of the indebtedness
with the installment obligation.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to sales or other dispositions occurring
on or after the date of the enactment of this Act.
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SEC. 810. INCLUSION OF CERTAIN VACCINES AGAINST
STREPTOCOCCUS PNEUMONIAE TO LIST OF
TAXABLE VACCINES.
(a) IN GENERAL.—Section 4132(a)(1) of the Internal
Revenue Code of 1986 (defining taxable vaccine) is amended
by adding at the end the following new subparagraph:
‘‘(L) Any conjugate vaccine against strepto-
coccus pneumoniae.’’.
(b) EFFECTIVE DATE.—
(1) SALES.—The amendment made by this sec-
tion shall apply to vaccine sales beginning on the day
after the date on which the Centers for Disease Con-
trol makes a final recommendation for routine ad-
ministration to children of any conjugate vaccine
against streptococcus pneumoniae.
(2) DELIVERIES.—For purposes of paragraph
(1), in the case of sales on or before the date described
in such paragraph for which delivery is made after
such date, the delivery date shall be considered the
sale date.
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TITLE IX—MISCELLANEOUS
PROVISIONS
SEC. 901. MEDICARE COMPETITIVE PRICING DEMONSTRA-
TION PROJECT.
(a) FINDING.—The Senate finds that implementing
competitive pricing in the medicare program under title
XVIII of the Social Security Act is an important goal.
(b) PROHIBITION ON IMPLEMENTATION OF PROJECT IN
CERTAIN AREAS.—Notwithstanding subsection (b) of sec-
tion 4011 of the Balanced Budget Act of 1997 (Public Law
105–33)), the Secretary of Health and Human Services
may not implement the Medicare Competitive Pricing Dem-
onstration Project (operated by the Secretary of Health and
Human Services pursuant to such section) in Kansas City,
Missouri or Kansas City, Kansas, or in any area in Ari-
zona.
(c) MORATORIUM ON IMPLEMENTATION OF PROJECT IN
ANY AREA UNTIL JANUARY, 1, 2001.—Notwithstanding any
provision of section 4011 of the Balanced Budget Act of
1997 (Public Law 105–33)), the Secretary of Health and
Human Services may not implement the Medicare Competi-
tive Pricing Demonstration Project in any area before Jan-
uary 1, 2001.
(d) STUDY AND REPORT TO CONGRESS.—
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(1) STUDY.—The Secretary of Health and
Human Services, in conjunction with the Competitive
Pricing Advisory Committee, shall conduct a study on
the different approaches of implementing the Medicare
Competitive Pricing Demonstration Project on a vol-
untary basis.
(2) REPORT.—Not later than June 30, 2000, the
Secretary of Health and Human Services shall sub-
mit a report to Congress which shall contain a de-
tailed description of the study conducted under para-
graph (1), together with the recommendations of the
Secretary and the Competitive Pricing Advisory Com-
mittee regarding the implementation of the Medicare
Competitive Pricing Demonstration Project.
Attest:
Secretary.
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