I
107TH CONGRESS
1ST SESSION
H. R. 1127
To amend the Internal Revenue Code of 1986 to allow a deduction for
amounts paid for health insurance and prescription drug costs of individuals.
IN THE HOUSE OF REPRESENTATIVES
MARCH 20, 2001
Mr. STEARNS 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 allow a
deduction for amounts paid for health insurance and
prescription drug costs of individuals.
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 Tax De-
duction Act of 2001’’.
SEC. 2. DEDUCTION FOR HEALTH INSURANCE AND PRE-
SCRIPTION DRUG COSTS OF INDIVIDUALS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended
by redesignating section 222 as section 223 and by insert-
ing after section 221 the following new section:
‘‘SEC. 222. HEALTH INSURANCE AND PRESCRIPTION DRUG
COSTS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
the sum of the amount paid during the taxable year for—
‘‘(1) insurance which constitutes medical care
for the taxpayer and the taxpayer’s spouse and de-
pendents, plus
‘‘(2) unreimbursed prescription drug expenses
paid by the taxpayer for the taxpayer and the tax-
payer’s spouse and dependents.
‘‘(b) LIMITATIONS AND SPECIAL RULES.—
‘‘(1) EMPLOYER
CONTRIBUTIONS
TO
CAFE-
TERIA PLANS, FLEXIBLE SPENDING ARRANGEMENTS,
AND MEDICAL SAVINGS ACCOUNTS.—Employer con-
tributions to a cafeteria plan, a flexible spending or
similar arrangement, or a medical savings account
which are excluded from gross income under section
106 shall be treated for purposes of subsection (a)
as paid by the employer.
‘‘(2) DEDUCTION
NOT
AVAILABLE
FOR
PAY-
MENT OF ANCILLARY COVERAGE PREMIUMS.—Any
amount paid as a premium for insurance which pro-
vides for—
‘‘(A) coverage for accidents, disability, den-
tal care, vision care, or a specified illness, or
‘‘(B) making payments of a fixed amount
per day (or other period) by reason of being
hospitalized,
shall not be taken into account under subsection (a).
‘‘(3) COORDINATION
WITH
DEDUCTION
FOR
HEALTH
INSURANCE
AND
PRESCRIPTION
DRUG
COSTS
OF
SELF-EMPLOYED
INDIVIDUALS.—The
amount taken into account by the taxpayer in com-
puting the deduction under section 162(l) shall not
be taken into account under this section.
‘‘(4) COORDINATION WITH MEDICAL EXPENSE
DEDUCTION.—The amount taken into account by
the taxpayer in computing the deduction under this
section shall not be taken into account under section
213.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) MEDICAL CARE.—
‘‘(A) IN
GENERAL.—The term ‘medical
care’ has the meaning given such term by sec-
tion 213(d) without regard to—
‘‘(i) paragraph (1)(C) thereof, and
‘‘(ii) so much of paragraph (1)(D)
thereof as relates to qualified long-term
care insurance contracts.
‘‘(B) EXCLUSION OF CERTAIN OTHER CON-
TRACTS.—The term ‘medical care’ shall not in-
clude insurance if a substantial portion of its
benefits are excepted benefits (as defined in sec-
tion 9832(c)).
‘‘(2) UNREIMBURSED PRESCRIPTION DRUG EX-
PENSES.—The term ‘unreimbursed prescription drug
expenses’ means amounts paid or incurred for a pre-
scribed drug (as defined by section 213(d)(3)) the
cost of which to the taxpayer is not reimbursed by
insurance or otherwise.
‘‘(d) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out this
section.’’.
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)
of section 62 of such Code is amended by inserting after
paragraph (17) the following new item:
‘‘(18) HEALTH INSURANCE AND PRESCRIPTION
DRUG
COSTS.—The deduction allowed by section
222.’’.
(c) CLERICAL AMENDMENTS.—The table of sections
for part VII of subchapter B of chapter 1 of such Code
is amended by striking the last item and inserting the fol-
lowing new items:
‘‘Sec. 222. Health insurance and prescription drug costs.
‘‘Sec. 223. Cross reference.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 3. DEDUCTION FOR 100 PERCENT OF HEALTH INSUR-
ANCE AND PRESCRIPTION DRUG COSTS OF
SELF-EMPLOYED INDIVIDUALS.
(a) IN GENERAL.—Paragraph (1) of section 162(l)
of the Internal Revenue Code of 1986 (relating to general
rule for allowance of deduction for health insurance costs
of self-employed individuals) is amended to read as fol-
lows:
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case
of an individual who is an employee within the
meaning of section 401(c)(1), there shall be allowed
as a deduction under this section an amount equal
to the sum of—
‘‘(A) 100 percent of the amount paid dur-
ing the taxable year for insurance which con-
stitutes medical care for the taxpayer and the
taxpayer’s spouse and dependents, plus
‘‘(B) unreimbursed prescription drug ex-
penses 
(within 
the 
meaning 
of 
section
222(c)(2)) paid during the taxable year by the
taxpayer for the taxpayer and the taxpayer’s
spouse and dependents.’’.
(b) CLARIFICATION OF LIMITATIONS ON OTHER COV-
ERAGE.—The first sentence of section 162(l)(2)(B) of
such Code is amended to read as follows: ‘‘Paragraph (1)
shall not apply to any taxpayer for any calendar month
for which the taxpayer participates in any subsidized
health plan maintained by any employer (other than an
employer described in section 401(c)(4)) of the taxpayer
or the spouse of the taxpayer.’’.
(c) CLERICAL AMENDMENT.—The heading for sec-
tion 162(l) of such Code is amended by inserting ‘‘AND
PRESCRIPTION DRUG’’ after ‘‘INSURANCE’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
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