I 
109TH CONGRESS 
2D SESSION 
H. R. 5843 
To amend the COBRA continuation Act provisions to extend COBRA continu-
ation coverage from 18 months to 36 months, to provide a tax credit 
for the cost of such coverage, and to reduce the income tax rate reduction 
for families with incomes of more than a million dollars. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 19, 2006 
Mr. RYAN of Ohio (for himself and Mr. STRICKLAND) introduced the following 
bill; which was referred to the Committee on Ways and Means, and in 
addition to the Committees on Education and the Workforce, Energy and 
Commerce, and Government Reform, for a period to be subsequently de-
termined 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 COBRA continuation Act provisions to extend 
COBRA continuation coverage from 18 months to 36 
months, to provide a tax credit for the cost of such 
coverage, and to reduce the income tax rate reduction 
for families with incomes of more than a million dollars. 
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 ‘‘COBRA Enhancement 
and Healthcare Relief Act of 2006’’. 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
SEC. 2. EXTENSION OF COBRA CONTINUATION COVERAGE. 
(a) UNDER ERISA.—Section 602(2)(A) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1162(2)(A)) is amended— 
(1) by amending clause (i) to read as follows: 
‘‘(i) GENERAL RULE.—In the case of 
a qualifying event not described in section 
603(6), the date that is 36 months after 
the date of the qualifying event.’’; 
(2) by striking clauses (ii), (iv), and (v) and by 
striking the sentence beginning ‘‘In the case of a 
qualified beneficiary’’; and 
(3) by redesignating clause (iii) as clause (ii). 
(b) UNDER PHSA.—Section 2202(2)(A) of the Pub-
lic Health Service Act (42 U.S.C. 300bb–2(2)(A)) is 
amended to read as follows: 
‘‘(A) MAXIMUM REQUIRED PERIOD.—The 
date that is 36 months after the date of the 
qualifying event.’’. 
(c) UNDER IRC.—Section 4980B(f)(2)(B)(i) of the 
Internal Revenue Code of 1986 is amended— 
(1) by amending subclause (I) to read as fol-
lows: 
‘‘(I) GENERAL
RULE.—In the 
case of a qualifying event not de-
scribed in paragraph (3)(F), the date 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
that is 36 months after the date of 
the qualifying event.’’; 
(2) by striking subclauses (II), (IV), and (V) 
and by striking the sentence beginning ‘‘In the case 
of a qualified beneficiary’’; and 
(3) by redesignating subclause (III) as sub-
clause (II). 
(d) UNDER FEHBP.—Section 8905a(e) of title 5, 
United States Code, is amended— 
(1) in paragraph (1)(A), by striking ‘‘18 
months’’ and inserting ‘‘36 months’’; 
(2) in paragraph (1)(C), by striking ‘‘24 
months’’ and inserting ‘‘36 months’’; and 
(3) in paragraph (2)(C), by striking ‘‘18- 
month’’ and inserting ‘‘36-month’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualifying events occurring on 
or after the date that is 18 months before the date of the 
enactment of this Act. 
SEC. 3. TAX CREDIT FOR COST OF COBRA CONTINUATION 
COVERAGE. 
(a) IN GENERAL.—Subpart C of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 (relating 
to refundable credits) is amended by redesignating section 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
36 as section 37 and by inserting after section 35 the fol-
lowing new section: 
‘‘SEC. 36. COBRA CONTINUATION COVERAGE. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by subtitle A an amount equal to the amount paid by the 
taxpayer for coverage of the taxpayer and qualifying fam-
ily members under COBRA continuation coverage for 
months beginning in the taxable year. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
credit under subsection (a) for the taxable year shall 
not exceed the sum of the monthly limitations for 
months during such taxable year. 
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the product of the credit 
percentage for such month multiplied by the 
amounts paid by the taxpayer for such month which 
may be taken into account under subsection (a). 
‘‘(3) CREDIT
PERCENTAGE.—The credit per-
centage for any month in any period of COBRA con-
tinuation coverage is— 
‘‘(A) 100 percent, in the case of the first 
12 months of such period, 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
‘‘(B) 50 percent, in the case of the first 12 
months after the months to which subpara-
graph (A) applies, and 
‘‘(C) zero, in the case of any month there-
after. 
‘‘(c) QUALIFYING FAMILY MEMBER.—For purposes 
of this section, the term ‘qualifying family member’ means 
the taxpayer’s spouse and any dependent of the taxpayer. 
‘‘(d) COBRA CONTINUATION COVERAGE.—For pur-
poses of this section, the term ‘COBRA continuation cov-
erage’ means coverage under a COBRA continuation pro-
vision (as defined in section 9832(d)(1)). 
‘‘(e) OTHER SPECIFIED COVERAGE.—Amounts paid 
for COBRA continuation coverage of any individual for 
any month shall not be taken into account under sub-
section (a) if such individual has other specified coverage 
for such month (within the meaning of section 35(f)). 
‘‘(f) SPECIAL RULES.— 
‘‘(1) COORDINATION WITH ADVANCE PAYMENTS 
OF CREDIT.—With respect to any taxable year, the 
amount which would (but for this subsection) be al-
lowed as a credit to the taxpayer under subsection 
(a) shall be reduced (but not below zero) by the ag-
gregate amount paid on behalf of such taxpayer 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
under section 7529 for months beginning in such 
taxable year. 
‘‘(2) COORDINATION
WITH
OTHER
DEDUC-
TIONS.—Amounts taken into account under sub-
section (a) shall not be taken into account in deter-
mining any deduction allowed under section 162(l) 
or 213. 
‘‘(3) COORDINATION WITH OTHER HEALTH IN-
SURANCE COSTS CREDIT.—Amounts taken into ac-
count under subsection (a) with respect to coverage 
for any month shall not be taken into account in de-
termining the credit allowed under section 35. Any 
taxpayer who would (but for the preceding sentence) 
be allowed a credit under section 35 may elect not 
to have this section apply with respect to amounts 
paid for coverage for any month during the taxable 
year. 
‘‘(4) MEDICAL
AND
HEALTH
SAVINGS
AC-
COUNTS.—Amounts distributed from an Archer 
MSA (as defined in section 220(d)) or from a health 
savings account (as defined in section 223(d)) shall 
not be taken into account under subsection (a). 
‘‘(5) 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-
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
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. 
‘‘(6) SEPARATE RETURNS.—The spouse of the 
taxpayer shall not be treated as a qualifying family 
member for purposes of this section if the taxpayer 
files a separate return for the taxable year. 
‘‘(7) INSURANCE WHICH COVERS OTHER INDI-
VIDUALS .—For purposes of this section, rules simi-
lar to the rules of section 213(d)(6) shall apply with 
respect to any contract for COBRA continuation 
coverage under which amounts are payable for cov-
erage of an individual other than the taxpayer and 
qualifying family members. 
‘‘(8) TREATMENT
OF
PAYMENTS.—For pur-
poses of this section— 
‘‘(A) PAYMENTS
BY
SECRETARY.—Pay-
ments made by the Secretary on behalf of any 
individual under section 7529 (relating to ad-
vance payment of credit for cost of COBRA 
continuation coverage) shall be treated as hav-
ing been made by the taxpayer on the first day 
of the month for which such payment was 
made. 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
‘‘(B) PAYMENTS
BY
TAXPAYER.—Pay-
ments made by the taxpayer for coverage 
months shall be treated as having been made by 
the taxpayer on the first day of the month for 
which such payment was made. 
‘‘(9) REGULATIONS.—The Secretary may pre-
scribe such regulations and other guidance as may 
be necessary or appropriate to carry out this section, 
section 6050U, and section 7529.’’. 
(b) ADVANCE PAYMENT OF CREDIT AS PREMIUM 
PAYMENT
FOR COBRA CONTINUATION COVERAGE.— 
Chapter 77 of the Internal Revenue Code of 1986 (relat-
ing to miscellaneous provisions) is amended by adding at 
the end the following: 
‘‘SEC. 7529. ADVANCE PAYMENT OF CREDIT AS PREMIUM 
PAYMENT FOR COBRA CONTINUATION COV-
ERAGE. 
‘‘(a) IN GENERAL.—Not later than 90 days after the 
date of the enactment of this Act, the Secretary shall es-
tablish a program for making payments to providers of 
COBRA continuation coverage (as defined in section 
36(d)) on behalf of taxpayers eligible for the credit under 
section 36. 
‘‘(b) LIMITATIONS.— 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
‘‘(1) TERMINATION AFTER FIRST 12 MONTHS 
OF COVERAGE.—The Secretary shall not make any 
payment under subsection (a) with respect to any in-
dividual for COBRA continuation coverage of such 
individual for any month after the first 12 months 
of any period of COBRA continuation coverage. 
‘‘(2) DOLLAR LIMITATION.—The Secretary may 
make payments under subsection (a) only to the ex-
tent that the such payment does not exceed 100 per-
cent of the amount paid by the taxpayer for cov-
erage of the taxpayer and qualifying family members 
under COBRA continuation coverage for the months 
to which such payment relates.’’. 
(c) DISCLOSURE
OF RETURN INFORMATION
FOR 
PURPOSES OF CARRYING OUT ADVANCE PAYMENT PRO-
GRAM.— 
(1) IN
GENERAL.—Subsection (l) of section 
6103 of such Code is amended by adding at the end 
the following new paragraph: 
‘‘(21) DISCLOSURE OF RETURN INFORMATION 
FOR PURPOSES OF ADVANCE PAYMENT OF CREDIT 
AS PREMIUM PAYMENT FOR COBRA CONTINUATION 
COVERAGE.—The Secretary may, on behalf of tax-
payers eligible for the credit under section 36, dis-
close to a provider of COBRA continuation coverage 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
(as defined in section 36(d)), and persons acting on 
behalf of such provider, return information with re-
spect to any such taxpayer only to the extent nec-
essary (as prescribed by regulations issued by the 
Secretary) to carry out the program established by 
section 7529 (relating to advance payment of credit 
as premium payment for COBRA continuation cov-
erage).’’. 
(2) CONFIDENTIALITY
OF
INFORMATION.— 
Paragraph (3) of section 6103(a) of such Code is 
amended by striking ‘‘or (20)’’ and inserting ‘‘(20), 
or (21)’’. 
(3) UNAUTHORIZED
DISCLOSURE.—Paragraph 
(2) of section 7213(a) of such Code is amended by 
striking ‘‘or (20)’’ and inserting ‘‘(20), or (21)’’. 
(d) 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 
6050T the following new section: 
‘‘SEC. 6050U. RETURNS RELATING TO CREDIT FOR COBRA 
CONTINUATION COVERAGE. 
‘‘(a) REQUIREMENT OF REPORTING.—Every person 
who is entitled to receive payments for any month of any 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
calendar year under section 7529 (relating to advance pay-
ment of credit as premium payment for COBRA continu-
ation coverage) with respect to any individual shall, at 
such time as the Secretary may prescribe, make the return 
described in subsection (b) with respect to each such indi-
vidual. 
‘‘(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 each 
individual referred to in subsection (a), 
‘‘(B) the number of months for which 
amounts were entitled to be received with re-
spect to such individual under section 7529 (re-
lating to advance payment of credit as premium 
payment for COBRA continuation coverage), 
‘‘(C) the amount entitled to be received for 
each such month, and 
‘‘(D) such other information as the Sec-
retary may prescribe. 
‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
subsection (a) shall furnish to each individual whose name 
is required to be set forth in such return a written state-
ment 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, and 
‘‘(2) the information required to be shown on 
the return with respect to such individual. 
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.’’. 
(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 credit for COBRA con-
tinuation coverage),’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code is amended by striking ‘‘or’’ at the 
end of subparagraph (AA), by striking the pe-
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
riod at the end of subparagraph (BB) and in-
serting ‘‘, or’’, and by adding after subpara-
graph (BB) the following new subparagraph: 
‘‘(CC) section 6050U (relating to returns 
relating to credit for COBRA continuation cov-
erage).’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘or 
section 36’’ after ‘‘section 35’’. 
(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 redesignating the 
item relating to section 36 as an item relating to 
section 37 and by inserting after the item relating 
to section 35 the following new item: 
‘‘Sec. 36. COBRA continuation coverage.’’. 
(3) The table of sections for subpart B of part 
III of subchapter A of chapter 61 of such Code is 
amended by adding at the end the following new 
item: 
‘‘Sec. 6050U. Returns relating to credit for COBRA continuation coverage.’’. 
(4) The table of sections for chapter 77 of such 
Code is amended by adding at the end the following 
new item: 
VerDate Aug 31 2005 
05:52 Jul 22, 2006
Jkt 049200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
‘‘Sec. 7529. Advance payment of credit as premium payment for COBRA con-
tinuation coverage.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid for coverage 
months beginning after the date of the enactment of this 
Act, in taxable years ending after such date. 
SEC. 4. REDUCTION IN BENEFIT OF RATE REDUCTION FOR 
FAMILIES WITH INCOMES OVER $1,000,000. 
(a) GENERAL RULE.—Section 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(j) REDUCTION IN BENEFIT OF RATE REDUCTION 
FOR FAMILIES WITH INCOMES OVER $1,000,000.— 
‘‘(1) IN GENERAL.—If the adjusted gross in-
come of a taxpayer exceeds the threshold amount, 
the tax imposed by this section (determined without 
regard to this subsection) shall be increased by an 
amount equal to the applicable percentage of so 
much of the adjusted gross income as exceeds the 
threshold amount. 
‘‘(2) THRESHOLD AMOUNTS.—For purposes of 
this 
subsection, 
the 
term 
‘threshold 
amount’ 
means— 
‘‘(A) $1,000,000 in the case of a joint re-
turn, and 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
‘‘(B) $500,000 in the case of any other re-
turn. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxable year, such per-
centage as is estimated by the Secretary to result in 
an increase in the revenues to the Treasury for such 
taxable year which is equal to the decrease (if any) 
in the revenues to the Treasury that the Secretary 
estimates results from the application of sections 36 
and 7529 for such taxable year. 
‘‘(4) TAX
NOT
TO
APPLY
TO
ESTATES
AND 
TRUSTS.—This subsection shall not apply to an es-
tate or trust. 
‘‘(5) SPECIAL RULE.—For purposes of section 
55, the amount of the regular tax shall be deter-
mined without regard to this subsection.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
(c) APPLICATION
OF
EGTRRA SUNSET.—The 
amendment made by this section shall be subject to title 
IX of the Economic Growth and Tax Relief Reconciliation 
Act of 2001 to the same extent and in the same manner 
as section 101 of such Act. 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS
(d) SECTION 15 NOT TO APPLY.—The amendment 
made by subsection (a) shall not be treated as a change 
in a rate of tax for purposes of section 15 of the Internal 
Revenue Code of 1986. 
Æ 
VerDate Aug 31 2005 
00:39 Jul 21, 2006
Jkt 049200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6301
E:\BILLS\H5843.IH
H5843
jcorcoran on PROD1PC62 with BILLS