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 or XXI 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 89 of title 5, United 
States Code, 
‘‘(ii) chapter 55 of title 10, United 
States Code, 
‘‘(iii) chapter 17 of title 38, United 
States Code, or
‘‘(iv) 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-
TACTS.—Such term shall not include insurance if a 
substantial portion of its benefits are excepted bene-
fits (as defined in section 9832(c)). 
‘‘(d) 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) 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). 
‘‘(3) COORDINATION
WITH
TAA
AND
PBGC 
HEALTH INSURANCE CREDIT.—No credit shall be al-
lowed under this section to any taxpayer with re-
spect to any month if, as of the first day of such 
month, the taxpayer or the taxpayer’s spouse is an 
eligible individual (as defined in section 35(c)). 
‘‘(4) 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. 
‘‘(5) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year after 
2006, 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 2005’ 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) MAINTENANCE
OF EFFORT REQUIREMENT.— 
Section 162 of such Code (relating to trade or business 
expenses) is amended by redesignating subsection (q) as 
subsection (r) and by inserting after subsection (p) the 
following new subsection: 
‘‘(q) GROUP HEALTH PLAN MAINTENANCE OF EF-
FORT.—No deduction shall be allowed under this chapter 
to an employer for any amount paid or incurred in connec-
tion with a group health plan (as defined in subsection 
(n)(3)) for any taxable year in which occurs the date of 
introduction of the Fair Care for the Uninsured Act of 
2005 unless such plan remains in effect for at least 60 
months after the date of the enactment of such Act.’’. 
(c) 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 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-