I 
109TH CONGRESS 
1ST SESSION H. R. 4173 
To amend the Internal Revenue Code of 1986 to allow a refundable credit 
against income tax to subsidize the cost of COBRA continuation coverage 
for certain individuals. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 28, 2005 
Mr. MENENDEZ introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Energy 
and Commerce and Education and the Workforce, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to allow a 
refundable credit against income tax to subsidize the 
cost of COBRA continuation coverage for certain individ-
uals. 
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 Care COBRA 
OffSet Tax Savings Act of 2005’’ or the ‘‘Health Care 
COSTS Act of 2005’’ .
SEC. 2. REFUNDABLE CREDIT TO SUBSIDIZE COST OF 
COBRA CONTINUATION COVERAGE FOR CER-
TAIN INDIVIDUALS. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to refundable credits) is amended by insert-
ing after section 35 the following new section: 
‘‘SEC. 35A. CREDIT TO SUBSIDIZE COST OF COBRA CON-
TINUATION COVERAGE FOR CERTAIN INDI-
VIDUALS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli-
gible individual, there shall be allowed as a credit against 
the tax imposed by this subtitle an amount equal to 50 
percent of the amount of the premium which would (but 
for this section) be required to be paid by such individual 
during the taxable year for COBRA continuation coverage 
under a group health plan. 
‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this 
section— 
‘‘(1) IN
GENERAL.—The term ‘eligible indi-
vidual’ means any individual— 
‘‘(A) who receives COBRA continuation 
coverage under a group health plan by reason 
of a qualifying event described in section 
4980B(f)(3), and
‘‘(B) the modified adjusted gross income 
(as defined in section 221(b)(2)(C)) of whom 
for the taxable year does not exceed the applica-
ble amount. 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
paragraph (1), the applicable amount is $30,000 in-
creased by $10,000— 
‘‘(A) for the spouse of the taxpayer, and 
‘‘(B) for each individual who is a depend-
ent (as defined in section 152) of the taxpayer. 
‘‘(c) ASSIGNMENT OF CREDIT TO PLAN ADMINIS-
TRATOR.—The Secretary shall prescribe regulations which 
permit eligible individuals to assign the credit under this 
section to the administrator of the plan under which 
COBRA continuation coverage is being provided. The 
credit so assigned by an individual shall be treated by the 
administrator as a premium payment by such individual. 
‘‘(d) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) ADMINISTRATOR.—The term ‘adminis-
trator’ has the meaning given such term in section 
3(16) of the Employee Retirement Income Security 
Act of 1974. 
‘‘(2) COBRA CONTINUATION COVERAGE.—The 
term ‘COBRA continuation coverage’ means the
first 18 months of continuation coverage provided 
pursuant to— 
‘‘(A) section 4980B (other than subsection 
(f)(1) of such section insofar as it relates to pe-
diatric vaccines), 
‘‘(B) title XXII of the Public Health Serv-
ice Act, 
‘‘(C) part 6 of subtitle B of title I of the 
Employee Retirement Income Security Act of 
1974 (other than under section 609), 
‘‘(D) section 8905a of title 5, United 
States Code, or 
‘‘(E) a State program that provides con-
tinuation coverage comparable to such continu-
ation coverage. 
‘‘(3) GROUP HEALTH PLAN.—The term ‘group 
health plan’ has the meaning given such term in sec-
tion 9832(a).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for such subpart C is amended by inserting after the item 
relating to section 35 the following new item: 
‘‘Sec. 35A. Credit to subsidize cost of COBRA continuation coverage for certain 
individuals.’’. 
(c) 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. CHANGE IN COBRA NOTICE. 
(a) NOTICES.— 
(1) GENERAL NOTICES.—In the case of notices 
provided under sections 606 of the Employee Retire-
ment Income Security Act of 1974, section 2206 of 
the 
Public 
Health 
Service 
Act, 
and 
section 
4980B(f)(6) of the Internal Revenue Code of 1986 
with respect to individuals who become entitled to 
elect COBRA continuation coverage after the date of 
the enactment of this Act, such notices shall include 
an additional notification to the recipient of the 
availability of the subsidy provided under section 
35A of the Internal Revenue Code of 1986. 
(2) ALTERNATIVE
NOTICE.—In the case of 
COBRA continuation coverage to which the notice 
provisions described in paragraph (1) do not apply, 
the Secretary of Labor shall, in coordination with 
administrators of the group health plans (or other 
entities) who provide or administer the COBRA con-
tinuation coverage involved, assure provision of such 
notice. 
(3) FORM.—The requirement of the additional 
notification under this subsection may be met by 
amendment of existing notice forms or by inclusion 
of a separate document with the notice otherwise re-
quired.
(b) SPECIFIC REQUIREMENTS.—Each additional no-
tification under subsection (a) shall include— 
(1) a description of the eligibility requirements 
for premium assistance under section 35A of the In-
ternal Revenue Code of 1986, 
(2) the name, address, and telephone number 
necessary to contact the plan administrator and any 
other person maintaining relevant information in 
connection with the premium assistance, and 
(3) the following statement displayed in a 
prominent manner: ‘‘You may be eligible to receive 
assistance with payment of 50 percent of your 
COBRA continuation coverage premiums for a dura-
tion of not to exceed 18 months.’’. 
(c) MODEL NOTICES.—The Secretary of Labor shall 
prescribe models for the additional notification required 
under this section. 
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