TITLE I—REFUNDABLE CREDIT
FOR 
HEALTH 
INSURANCE
COVERAGE
SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE
COVERAGE.
(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 redes-
ignating section 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. HEALTH INSURANCE COSTS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this subtitle an amount equal to the amount paid dur-
ing the taxable year for qualified health insurance for the
taxpayer, his spouse, and dependents.
‘‘(b) LIMITATIONS.—
‘‘(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 coverage months during such taxable
year for each individual referred to in subsection (a)
for whom the taxpayer paid during the taxable year
any amount for coverage under qualified health in-
surance.
‘‘(2) MONTHLY LIMITATION.—
‘‘(A) IN GENERAL.—The monthly limita-
tion for an individual for each coverage month
of such individual during the taxable year is the
amount equal to 1/12 of—
‘‘(i) $1,000 if such individual is the
taxpayer,
‘‘(ii) $1,000 if—
‘‘(I) such individual is the spouse
of the taxpayer,
‘‘(II) the taxpayer and such
spouse are married as of the first day
of such month, and
‘‘(III) the taxpayer files a joint
return for the taxable year, and
‘‘(iii) $500 if such individual is an in-
dividual for whom a deduction under sec-
tion 151(c) is allowable to the taxpayer for
such taxable year.
‘‘(B) LIMITATION
TO
DEPENDENTS.—
Not more than 2 individuals may be taken into
account by the taxpayer under subparagraph
(A)(iii).
‘‘(C) SPECIAL RULE FOR MARRIED INDI-
VIDUALS.—In the case of an individual—
‘‘(i) who is married (within the mean-
ing of section 7703) as of the close of the
taxable year but does not file a joint return
for such year, and
‘‘(ii) who does not live apart from
such individual’s spouse at all times during
the taxable year,
the limitation imposed by subparagraph (B)
shall be divided equally between the individual
and the individual’s spouse unless they agree on
a different division.
‘‘(3) COVERAGE MONTH.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘coverage
month’ means, with respect to an individual,
any month if—
‘‘(i) as of the first day of such month
such individual is covered by qualified
health insurance, and
‘‘(ii) the premium for coverage under
such insurance for such month is paid by
the taxpayer.
‘‘(B) 
EMPLOYER-SUBSIDIZED
COV-
ERAGE.—Such term shall not include any
month for which such individual participates in
any subsidized health plan (within the meaning
of section 162(l)(2)) maintained by any em-
ployer of the taxpayer or of the spouse of the
taxpayer.
‘‘(C) CAFETERIA
PLAN
AND
FLEXIBLE
SPENDING
ACCOUNT
BENEFICIARIES.—Such
term shall not include any month during a tax-
able year if any amount is not includible in the
gross income of the taxpayer for such year
under section 106 with respect to—
‘‘(i) a benefit chosen under a cafeteria
plan (as defined in section 125(d)), or
‘‘(ii) a benefit provided under a flexi-
ble spending or similar arrangement.
‘‘(D) MEDICARE
AND
MEDICAID.—Such
term shall not include any month with respect
to an individual if, as of the first day of such
month, such individual—
‘‘(i) is entitled to any benefits under
title XVIII of the Social Security Act, or
‘‘(ii) is a participant in the program
under title XIX of such Act.
‘‘(E) CERTAIN
OTHER
COVERAGE.—Such
term shall not include any month during a tax-
able year with respect to an individual if, at any
time during such year, any benefit is provided
to such individual under—
‘‘(i) chapter 17 of title 38, United
States Code, or
‘‘(ii) any medical care program under
the Indian Health Care Improvement Act.
‘‘(F) PRISONERS.—Such term shall not in-
clude any month with respect to an individual
if, as of the first day of such month, such indi-
vidual is imprisoned under Federal, State, or
local authority.
‘‘(G) INSUFFICIENT PRESENCE IN UNITED
STATES.—Such term shall not include any
month during a taxable year with respect to an
individual if such individual is present in the
United States on fewer than 183 days during
such year (determined in accordance with sec-
tion 7701(b)(7)).
‘‘(4) COORDINATION
WITH
DEDUCTION
FOR
HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN-
DIVIDUALS.—In the case of a taxpayer who is eligi-
ble to deduct any amount under section 162(l) for
the taxable year, this section shall apply only if the
taxpayer elects not to claim any amount as a deduc-
tion under such section for such year.
‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—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
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)).
‘‘(d) 
MEDICAL
SAVINGS
ACCOUNT
CONTRIBU-
TIONS.—
‘‘(1) IN GENERAL.—If a deduction would (but
for paragraph (2)) be allowed under section 220 to
the taxpayer for a payment for the taxable year to
the medical savings account of an individual, sub-
section (a) shall be applied by treating such payment
as a payment for qualified health insurance for such
individual.
‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion shall be allowed under section 220 for that por-
tion of the payments otherwise allowable as a deduc-
tion under section 220 for the taxable year which is
equal to the amount of credit allowed for such tax-
able year by reason of this subsection.
‘‘(e) SPECIAL RULES.—
‘‘(1) COORDINATION WITH MEDICAL EXPENSE
DEDUCTION.—The amount which would (but for this
paragraph) be taken into account by the taxpayer
under section 213 for the taxable year shall be re-
duced by the credit (if any) allowed by this section
to the taxpayer for such year.
‘‘(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.—In the case of
any taxable year beginning in a calendar year after
2000, each dollar amount contained in subsection
(b)(2)(A) shall be increased by an amount equal
to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 1999’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of $50
($25 in the case of the dollar amount in subsection
(b)(2)(A)(iii)).’’
(b) INFORMATION REPORTING.—
(1) IN GENERAL.—Subpart B of part III of
subchapter A of chapter 61 of such Code (relating
to information concerning transactions with other
persons) is amended by inserting after section
6050S the following new section:
‘‘SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR
QUALIFIED HEALTH INSURANCE.
‘‘(a) IN GENERAL.—Any person who, in connection
with a trade or business conducted by such person, re-
ceives payments during any calendar year from any indi-
vidual for coverage of such individual or any other indi-
vidual under creditable health insurance, shall make the
return described in subsection (b) (at such time as the
Secretary may by regulations prescribe) with respect to
each individual from whom such payments were received.
‘‘(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
individual who was provided by such person
with coverage under creditable health insurance
by reason of such payments 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
35(c)) other than—
‘‘(1) insurance under a subsidized group health
plan maintained by an employer, or
‘‘(2) to the extent provided in regulations pre-
scribed by the Secretary, any other insurance cov-
ering an individual if no credit is allowable under
section 35 with respect to such coverage.
‘‘(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 (xi)
through (xvii) as clauses (xii) through (xviii),
respectively, and by inserting after clause (x)
the following new clause:
‘‘(xi) section 6050T (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:
‘‘(BB) section 6050T(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 6050S the fol-
lowing new item:
‘‘Sec. 6050T. 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 35 of such Code’’.
(2) The table of sections for subpart C of part
IV of subchapter A of chapter 1 of such Code is
amended by striking the last item and inserting the
following new items:
‘‘Sec. 35. Health insurance costs.
‘‘Sec. 36. Overpayments of tax.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PUR-
CHASERS OF QUALIFIED HEALTH INSUR-
ANCE.
(a) IN GENERAL.—Chapter 77 of the Internal Rev-
enue Code of 1986 (relating to miscellaneous provisions)
is amended by adding at the end the following new section: