I
106TH CONGRESS
1ST SESSION
H. R. 2261
To amend the Internal Revenue Code of 1986 to provide incentives for
health coverage.
IN THE HOUSE OF REPRESENTATIVES
JUNE 17, 1999
Mrs. JOHNSON of Connecticut (for herself and Mr. PETERSON of Pennsyl-
vania) 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
incentives for health coverage.
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 ‘‘Health Insurance Af-
fordability and Equity Act of 1999’’.
SEC. 2. CREDIT FOR HEALTH INSURANCE COSTS OF PRE-
VIOUSLY UNINSURED INDIVIDUALS AND IN-
DIVIDUALS WITH COBRA COVERAGE.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
‘‘SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UN-
INSURED INDIVIDUALS AND INDIVIDUALS
WITH COBRA COVERAGE.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this chapter for the taxable year an amount equal to
60 percent of the amount paid during the taxable year
for coverage for the taxpayer, his spouse, and dependents
under qualified health insurance.
‘‘(b) DOLLAR LIMITATION.—
‘‘(1) IN GENERAL.—The amount allowed as a
credit under subsection (a) to the taxpayer for the
taxable year shall not exceed the sum of the monthly
limitations for eligible months during such taxable
year.
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any eligible month is the amount equal to
1⁄12 of—
‘‘(A) $1,200 if, as of the first day of such
month, the taxpayer has self-only coverage
under qualified health insurance, and
‘‘(B) $2,400 if, as of the first day of such
month, the taxpayer has family coverage under
qualified health insurance.
‘‘(3) ELIGIBLE MONTH.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘eligible
month’ means any month which begins at least
1 year after the most recent month that the
individual—
‘‘(i) was eligible to participate in any
group health plan of an employer which
provided qualified health insurance (deter-
mined 
without 
regard 
to 
subsection
(d)(2)), or
‘‘(ii) participated in any group health
plan of any other entity which provided
such insurance.
‘‘(B) JOINT RETURNS.—In the case of a
joint return, a month shall be treated as an eli-
gible month only if it is an eligible month of
each spouse, determined by applying this para-
graph separately to each spouse.
‘‘(4) CERTAIN
OTHER
COVERAGE.—Amounts
paid for coverage of an individual for any month
shall not be taken into account under subsection (a)
‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.—
‘‘(1) IN
GENERAL.—The aggregate amount
which would (but for this subsection) be allowed as
a credit under this section shall be reduced (but not
below zero) by the amount determined under para-
graph (2).
‘‘(2) AMOUNT OF REDUCTION.—
‘‘(A) IN
GENERAL.—The amount deter-
mined under this paragraph shall be the
amount which bears the same ratio to such ag-
gregate amount as—
‘‘(i) the excess of—
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable
year, over
‘‘(II) 
the 
applicable 
dollar
amount, bears to
‘‘(ii) $10,000.
‘‘(B) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the
term ‘modified adjusted gross income’ means
adjusted gross income increased by any amount
excluded from gross income under section 911,
931, or 933.
‘‘(C) ROUNDING.—Any amount determined
under subparagraph (A) which is not a multiple
of $10 shall be rounded to the next lowest $10.
‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur-
poses of paragraph (2), the term ‘applicable dollar
amount’ means—
‘‘(A) $60,000 in the case of a taxpayer
whose qualified health insurance coverage cov-
ers more than 1 individual referred to in sub-
section (a), and
‘‘(B) $30,000—
‘‘(i) in any case not described in sub-
paragraph (A), and
‘‘(ii) in the case of a married indi-
vidual filing a separate return.
For purposes of this paragraph, marital status shall
be determined under section 7703.
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this paragraph, the term ‘qualified health
insurance’ means insurance which constitutes med-
ical care, as defined in section 213(d) without regard
to—
‘‘(A) paragraph (1)(C) thereof, and
‘‘(B) so much of paragraph (1)(D) thereof
as relates to qualified long-term care insurance
contracts.
‘‘(2) EXCLUSION
OF
COVERAGE
PROVIDED
UNDER
GROUP
HEALTH
PLANS, ETC.—Such term
shall not include insurance provided through any
group health plan of an employer or any other enti-
ty.
‘‘(3) EXCLUSION
OF
CERTAIN
OTHER
CON-
TRACTS.—Such term shall not include insurance if a
substantial portion of its benefits are excepted bene-
fits (as defined in section 9832(c)).
‘‘(e) INDIVIDUALS WITH COBRA COVERAGE.—In
the case of continuation coverage under a group health
plan which is required to be provided by Federal law for
an individual during the period specified in section
4980B(f)(2)(B), notwithstanding subsection (d)—
‘‘(1) such coverage shall be treated as qualified
health insurance, and
‘‘(2) the term ‘eligible month’ includes months
of such coverage.
‘‘(f) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
OTHER
DEDUC-
TIONS.—No credit shall be allowed under this sec-
tion for the taxable year if any amount paid for
qualified health insurance is taken into account in
determining the deduction allowed for such year
under section 213 or 222.
‘‘(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) INFLATION ADJUSTMENT.—
‘‘(A) IN GENERAL.—In the case of a tax-
able year beginning after 2000, each dollar
amount in subsection (c)(3) shall be increased
by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
year 1999’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple
of $100, such amount shall be rounded to the
next lowest multiple of $100.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart A of part IV of subchapter A of chapter 1
of such Code is amended by inserting after the item relat-
ing to section 25A the following new item:
‘‘Sec. 25B. Health insurance costs of previously uninsured indi-
viduals and individuals with COBRA coverage.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 3. DEDUCTION FOR QUALIFIED HEALTH INSURANCE
COSTS OF EMPLOYEES AND SELF-EMPLOYED
INDIVIDUALS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions) is amended by redesig-
nating section 222 as section 223 and by inserting after
section 221 the following new section:
‘‘SEC. 222. COSTS OF QUALIFIED HEALTH INSURANCE.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
the applicable percentage of the amount paid during the
taxable year for coverage for the taxpayer, his spouse, and
dependents under qualified health insurance.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a)—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the applicable percentage shall be deter-
mined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2000 .............................................................................
2001 .............................................................................
2002 .............................................................................
2003 .............................................................................
2004 and thereafter .....................................................
100.
‘‘(2) SPECIAL RULE.—In the case of an indi-
vidual who is an employee within the meaning of
section 401(c)(1) and whose qualified health insur-
ance is not provided through a group health plan of
an employer, paragraph (1) shall be applied by sub-
stituting ‘100’ for ‘90’ but only with respect to the
lesser of the taxpayer’s earned income (within the
meaning of section 401(c)) or the payments referred
to in subsection (a).
‘‘(c) EXCLUSION OF SUBSIDIZED COVERAGE.—Sub-
section (a) shall not apply to any taxpayer for any cal-
endar month for which the taxpayer participates in any
group health plan of an employer or any other entity if
less than 50 percent of the cost of the taxpayer’s coverage
under such plan is borne by the taxpayer. A rule similar
to the rule of the last sentence of section 162(l)(2)(B)
shall apply for purposes of this subsection.
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified health
insurance’ has the meaning given such term by sec-
tion 25B(d) determined without regard to paragraph
(2) thereof.
‘‘(2) SPECIAL RULE.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is an employee within the meaning
of section 401(c)(1) and whose qualified health
insurance (without regard to this paragraph) is
not provided through a group health plan of an
employer, paragraph (3) of section 25B(d) shall
not apply for purposes of this section.
‘‘(B) LIMITATION.—The amount taken
into account under subsection (a) by reason of
subparagraph (A) shall not exceed the excess
of—
‘‘(i) the taxpayer’s earned income
(within the meaning of section 401(c)),
over
‘‘(ii) the amount which would (without
regard to this paragraph) be taken into ac-
count under subsection (a).
‘‘(e) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION, ETC.—Any amount paid by a taxpayer for in-
surance to which subsection (a) applies shall not be
taken into account in computing the amount allow-
able to the taxpayer as a deduction under section
213(a).
‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM-
PLOYMENT
TAX
PURPOSES.—The deduction allow-
able by reason of this section shall not be taken into
account in determining an individual’s net earnings
from self-employment (within the meaning of section
1402(a)) for purposes of chapter 2.’’
(b) CONFORMING AMENDMENTS.—
(1)(A) Paragraph (1) of section 162(l) of such
Code is amended by striking ‘‘the amount paid’’ and
all that follows and inserting ‘‘the eligible long-term
care premiums (as defined in section 213(d)(10))
paid during the taxable year for any qualified long-
term care insurance contract (as defined in section
7702B(b)) covering the taxpayer, his spouse, and
dependents.’’
(B) Paragraph (2) of section 162(l) of such
Code is amended by striking subparagraph (C).
(2) Subsection (a) of section 62 of such Code
is amended by inserting after paragraph (17) the
following new item:
‘‘(18) COSTS
OF
QUALIFIED
HEALTH
INSUR-
ANCE.—The deduction allowed by section 222.’’
(3) 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
new items:
‘‘Sec. 222. Costs of qualified health insurance.
‘‘Sec. 223. Cross reference.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
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