I 
112TH CONGRESS 
1ST SESSION H. R. 2088 
To amend the Internal Revenue Code of 1986 to extend the exclusion from 
gross income for employer-provided health coverage for employees’ 
spouses and dependent children to coverage provided to other eligible 
designated beneficiaries of employees. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 2, 2011 
Mr. MCDERMOTT (for himself, Mr. HANNA, Ms. HAYWORTH, and Mr. 
BLUMENAUER) 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 extend 
the exclusion from gross income for employer-provided 
health coverage for employees’ spouses and dependent 
children to coverage provided to other eligible designated 
beneficiaries of employees. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Tax Parity for Health 
Plan Beneficiaries Act of 2011’’. 
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SEC. 2. APPLICATION OF ACCIDENT AND HEALTH PLANS 
TO ELIGIBLE BENEFICIARIES. 
(a) EXCLUSION OF CONTRIBUTIONS.—Section 106 of 
the Internal Revenue Code of 1986 (relating to contribu-
tions by employer to accident and health plans) is amend-
ed by adding at the end the following new subsection: 
‘‘(g) COVERAGE PROVIDED FOR ELIGIBLE BENE-
FICIARIES OF EMPLOYEES.— 
‘‘(1) IN GENERAL.—Subsection (a) shall apply 
with respect to employer-provided coverage under an 
accident or health plan for any eligible beneficiary of 
the employee. 
‘‘(2) ELIGIBLE BENEFICIARY.—For purposes of 
this subsection, the term ‘eligible beneficiary’ means 
any individual who is eligible to receive benefits or 
coverage under an accident or health plan.’’. 
(b) EXCLUSION OF AMOUNTS EXPENDED FOR MED-
ICAL CARE.—The first sentence of section 105(b) of such 
Code (relating to amounts expended for medical care) is 
amended— 
(1) by striking ‘‘and any child’’ and inserting 
‘‘any child’’, and 
(2) by inserting ‘‘and any eligible beneficiary 
(within the meaning of section 106(g)) with respect 
to the taxpayer’’ after ‘‘age 27’’. 
(c) PAYROLL TAXES.— 
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employees’ dependents and eligible beneficiaries 
(within the meaning of section 106(g))’’. 
(3) Section 3306(b)(2) of such Code is amend-
ed— 
(A) by striking ‘‘or any of his dependents’’ 
in the matter preceding subparagraph (A) and 
inserting ‘‘, any of his dependents, or any eligi-
ble beneficiary (within the meaning of section 
106(g)) with respect to the employee,’’, 
(B) by striking ‘‘or any of his dependents’’ 
in subparagraph (A) and inserting ‘‘, any of his 
dependents, or any eligible beneficiary (within 
the meaning of section 106(g)) with respect to 
the employee’’, and 
(C) by striking ‘‘and their dependents’’ 
both places it appears and inserting ‘‘and such 
employees’ dependents and eligible beneficiaries 
(within the meaning of section 106(g))’’. 
(4) Section 3401(a) of such Code is amended 
by striking ‘‘or’’ at the end of paragraph (22), by 
striking the period at the end of paragraph (23) and 
inserting ‘‘; or’’, and by inserting after paragraph 
(23) the following new paragraph: 
‘‘(24) for any payment made to or for the ben-
efit of an employee or any eligible beneficiary (within 
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the meaning of section 106(g)) if at the time of such 
payment it is reasonable to believe that the employee 
will be able to exclude such payment from income 
under section 106 or under section 105 by reference 
in section 105(b) to section 106(g).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 3. EXPANSION OF DEPENDENCY FOR PURPOSES OF 
DEDUCTION FOR HEALTH INSURANCE COSTS 
OF SELF-EMPLOYED INDIVIDUALS. 
(a) IN GENERAL.—Paragraph (1) of section 162(l) 
of the Internal Revenue Code of 1986 is amended by strik-
ing ‘‘and’’ at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting a 
comma and by adding at the end the following new sub-
paragraphs: 
‘‘(E) any individual who— 
‘‘(i) satisfies the age requirements of 
section 152(c)(3)(A), 
‘‘(ii) bears a relationship to the tax-
payer described in section 152(d)(2)(H), 
and 
‘‘(iii) meets the requirements of sec-
tion 152(d)(1)(C), and 
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‘‘(F) one individual who— 
‘‘(i) is at least age 19, 
‘‘(ii) bears a relationship to the tax-
payer described in section 152(d)(2)(H), 
and 
‘‘(iii) is not the spouse of the taxpayer 
and does not bear any relationship to the 
taxpayer described in subparagraphs (A) 
through (G) of section 152(d)(2).’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (B) 
of section 162(l)(2) of such Code is amended by inserting 
‘‘, (E), or (F)’’ after ‘‘subparagraph (D)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 4. EXTENSION TO ELIGIBLE BENEFICIARIES OF SICK 
AND 
ACCIDENT 
BENEFITS 
PROVIDED 
TO 
MEMBERS OF A VOLUNTARY EMPLOYEES’ 
BENEFICIARY ASSOCIATION AND THEIR DE-
PENDENTS. 
(a) IN GENERAL.—Section 501(c)(9) of the Internal 
Revenue Code of 1986 (relating to list of exempt organiza-
tions) is amended by inserting ‘‘and any individual who 
is an eligible beneficiary (within the meaning of section 
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106(g)), as determined under the terms of a medical ben-
efit, health insurance, or other program’’ after ‘‘age 27’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 5. FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH 
REIMBURSEMENT ARRANGEMENTS. 
The Secretary of Treasury shall issue guidance of 
general applicability within 180 days of enactment of this 
Act providing that medical expenses that otherwise qual-
ify— 
(1) for reimbursement from a flexible spending 
arrangement under regulations in effect on the date 
of the enactment of this Act may be reimbursed 
from an employee’s flexible spending arrangement, 
notwithstanding the fact that such expenses are at-
tributable to any individual who is not the employ-
ee’s spouse or dependent (within the meaning of sec-
tion 105(b) of the Internal Revenue Code of 1986) 
but is an eligible beneficiary (within the meaning of 
section 106(g) of such Code) under the flexible 
spending arrangement with respect to the employee, 
and 
(2) for reimbursement from a health reimburse-
ment arrangement under regulations in effect on the 
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date of the enactment of this Act may be reimbursed 
from an employee’s health reimbursement arrange-
ment, notwithstanding the fact that such expenses 
are attributable to an individual who is not a spouse 
or dependent (within the meaning of section 105(b) 
of such Code) but is an eligible beneficiary (within 
the meaning of section 106(g) of such Code) under 
the health reimbursement arrangement with respect 
to the employee. 
SEC. 6. EXTENSION OF QUALIFIED MEDICAL EXPENSES 
FROM HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Subparagraph (A) of section 
223(d)(2) of the Internal Revenue Code of 1986 (relating 
to qualified medical expenses) is amended— 
(1) by striking ‘‘and any dependent’’ and in-
serting ‘‘any dependent’’, and 
(2) by inserting ‘‘, and any qualified bene-
ficiary’’ after ‘‘thereof)’’. 
(b) QUALIFIED BENEFICIARY.—Section 223(d)(2) of 
such Code is amended by inserting after subparagraph (C) 
the following new subparagraph: 
‘‘(D) QUALIFIED BENEFICIARY.—For pur-
poses of subparagraph (A), the term ‘qualified 
beneficiary’ means any individual who is de-
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scribed in subparagraph (D) or (E) of section 
162(l)(1).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 7. EXTENSION OF FUNDING MECHANISM FOR MED-
ICAL BENEFITS FOR RETIREES AND THEIR 
FAMILIES. 
(a) IN GENERAL.—Section 401(h) of the Internal 
Revenue Code of 1986 is amended by inserting ‘‘, and any 
eligible beneficiary (within the meaning of section 106(g)) 
of the retired employee’’ after ‘‘age 27’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
Æ 
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