‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return—
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains—
‘‘(A) the name, address, and TIN of the 
individual from whom payments described in 
subsection (a) were received, 
‘‘(B) the name, address, and TIN of each 
dependent child (as so defined) who was pro-
vided by such person with coverage under cred-
itable health insurance by reason of such pay-
ments and the period of such coverage, and 
‘‘(C) such other information as the Sec-
retary may reasonably prescribe. 
‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur-
poses of this section, the term ‘creditable health insurance’ 
means qualified health insurance (as defined in section 
36(c)). 
‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each individual whose name 
is required under subsection (b)(2)(A) to be set forth in 
such return a written statement showing—
‘‘(1) the name and address of the person re-
quired to make such return and the phone number 
of the information contact for such person, 
‘‘(2) the aggregate amount of payments de-
scribed in subsection (a) received by the person re-
quired to make such return from the individual to 
whom the statement is required to be furnished, and 
‘‘(3) the information required under subsection 
(b)(2)(B) with respect to such payments. 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
year following the calendar year for which the return 
under subsection (a) is required to be made. 
‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE 
MADE BY 2 OR MORE PERSONS.—Except to the extent 
provided in regulations prescribed by the Secretary, in the 
case of any amount received by any person on behalf of 
another person, only the person first receiving such 
amount shall be required to make the return under sub-
section (a).’’. 
(2) ASSESSABLE PENALTIES.—
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) of such Code (relating to defini-
tions) is amended by redesignating clauses (xiii) 
through (xviii) as clauses (xiv) through (xix),
respectively, and by inserting after clause (xii) 
the following new clause: 
‘‘(xiii) section 6050U (relating to re-
turns relating to payments for qualified 
health insurance),’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code is amended by striking ‘‘or’’ at the 
end of the next to last subparagraph, by strik-
ing the period at the end of the last subpara-
graph and inserting ‘‘, or’’, and by adding at 
the end the following new subparagraph: 
‘‘(CC) section 6050U(d) (relating to re-
turns relating to payments for qualified health 
insurance).’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 of such Code is amended by inserting 
after the item relating to section 6050T the fol-
lowing new item:
‘‘6050U. Returns relating to payments for qualified health insurance.’’.
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 36 of such Code’’. 
(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 last 
item and inserting the following new items:
‘‘36. Health insurance coverage of children. 
‘‘37. Overpayments of tax.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
SEC. 302. FORFEITURE OF PERSONAL EXEMPTION FOR ANY 
CHILD NOT COVERED BY HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Section 151(d) of the Internal 
Revenue Code of 1986 (relating to exemption amount) is 
amended by adding at the end the following new para-
graph: 
‘‘(5) REDUCTION OF EXEMPTION AMOUNT FOR 
ANY
CHILD
NOT
COVERED
BY
HEALTH
INSUR-
ANCE.—
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, the exemption 
amount otherwise determined under this sub-
section for any dependent child (as defined in 
section 36(b)) for any taxable year shall be re-
duced by the same percentage as the percentage 
of such taxable year during which such depend-
ent child was not covered by qualified health in-
surance (as defined in section 36(c)).
‘‘(B) FULL REDUCTION IF NO PROOF OF 
COVERAGE IS PROVIDED.—For purposes of sub-
paragraph (A), in the case of any taxpayer who 
fails to attach to the return of tax for any tax-
able year a copy of the statement furnished to 
such taxpayer under section 6050U, the per-
centage reduction under such subparagraph 
shall be deemed to be 100 percent. 
‘‘(C) NONAPPLICATION OF PARAGRAPH TO 
TAXPAYERS IN LOWEST TAX BRACKET.—This 
paragraph shall not apply to any taxpayer 
whose taxable income for the taxable year does 
not exceed the initial bracket amount deter-
mined under section 1(i)(1)(B).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
TITLE IV—MISCELLANEOUS 
SEC. 401. REQUIREMENT FOR GROUP MARKET HEALTH IN-
SURERS TO OFFER DEPENDENT COVERAGE 
OPTION FOR WORKERS WITH CHILDREN. 
(a) ERISA.—
(1) IN GENERAL.—Subpart B of part 7 of sub-
title B of title I of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1185 et seq.) is 
amended by adding at the end the following: 
‘‘SEC. 714. REQUIREMENT TO OFFER OPTION TO PURCHASE 
DEPENDENT COVERAGE FOR CHILDREN. 
‘‘(a) REQUIREMENTS
FOR
COVERAGE.—A group 
health plan, and a health insurance issuer providing health 
insurance coverage in connection with a group health plan, 
shall offer an individual who is enrolled in such coverage 
the option to purchase dependent coverage for a child of 
the individual. 
‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An 
employer shall not be required to contribute to the cost 
of purchasing dependent coverage for a child by an indi-
vidual who is an employee of such employer. 
‘‘(c) DEFINITION OF CHILD.—In this section, the 
term ‘child’ means an individual who has not attained 21 
years of age.’’. 
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1001) is 
amended by inserting after the item relating to sec-
tion 713 the following:
‘‘714. Requirement to offer option to purchase dependent coverage for chil-
dren.’’.
(b) PUBLIC HEALTH SERVICE ACT.—Subpart 2 of 
part A of title XXVII of the Public Health Service Act
(42 U.S.C. 300gg–4 et seq.) is amended by adding at the 
end the following: 
‘‘SEC. 2707. REQUIREMENT TO OFFER OPTION TO PUR-
CHASE DEPENDENT COVERAGE FOR CHIL-
DREN. 
‘‘(a) REQUIREMENTS
FOR
COVERAGE.—A group 
health plan, and a health insurance issuer providing health 
insurance coverage in connection with a group health plan, 
shall offer an individual who is enrolled in such coverage 
the option to purchase dependent coverage for a child of 
the individual. 
‘‘(b) NO EMPLOYER CONTRIBUTION REQUIRED.—An 
employer shall not be required to contribute to the cost 
of purchasing dependent coverage for a child by an indi-
vidual who is an employee of such employer. 
‘‘(c) DEFINITION OF CHILD.—In this section, the 
term ‘child’ means an individual who has not attained 21 
years of age.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning on or after January 1, 2006. 
SEC. 402. EFFECTIVE DATE. 
Unless otherwise provided, the amendments made by 
this Act shall take effect on October 1, 2005, and shall 
apply to child health assistance and medical assistance
provided on or after that date without regard to whether 
or not final regulations to carry out such amendments 
have been promulgated by such date.
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