I
107TH CONGRESS
1ST SESSION
H. R. 1181
To amend the Internal Revenue Code of 1986 to provide incentives for
private health coverage for the previously uninsured, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 22, 2001
Mrs. JOHNSON of Connecticut (for herself, Mr. LOBIONDO, Mr. ROGERS of
Michigan, Mr. TANCREDO, Mr. MCHUGH, Mr. OTTER, Mr. MCINNIS,
Mrs. MINK of Hawaii, and Mr. PAUL) 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 provide
incentives for private health coverage for the previously
uninsured, and for other purposes.
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 Insurance Af-
fordability and Equity Act of 2001’’.
SEC. 2. CREDIT FOR HEALTH INSURANCE COSTS OF PRE-
VIOUSLY UNINSURED INDIVIDUALS.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
‘‘SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UN-
INSURED INDIVIDUALS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this chapter for the taxable year an amount equal to
the amount paid during the taxable year for coverage for
the taxpayer, his spouse, and dependents under qualified
health insurance.
‘‘(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 eligible coverage months during such
taxable year for each individual referred to in sub-
section (a).
‘‘(2) MONTHLY LIMITATION.—
‘‘(A) IN GENERAL.—The monthly limita-
tion for an individual for each eligible coverage
month of such individual during the taxable
year is the amount equal to 1⁄12 of $1,500.
‘‘(B) LIMITATION TO 2 INDIVIDUALS.—Not
more than 2 individuals may be taken into ac-
count by the taxpayer under this subsection.
‘‘(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,
only such individual may be taken into account
under this subsection.
‘‘(3) ELIGIBLE COVERAGE MONTH.—For pur-
poses of this subsection, the term ‘eligible coverage
month’ means, with respect to an individual, any
month if—
‘‘(A) as of the first day of such month
such individual is covered by qualified health in-
surance the premium for which was paid by the
taxpayer, and
‘‘(B) there was at least a 12-month period
beginning after December 31, 2001, and ending
before such month throughout which the
individual—
‘‘(i) was not covered by qualified
health insurance, and
‘‘(ii) was not eligible to participate in
any employer-provided group health plan.
‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.—
‘‘(1) IN
GENERAL.—The aggregate amount
which would (but for this subsection) be allowed as
a credit under this section shall be reduced (but not
below zero) by the amount determined under para-
graph (2).
‘‘(2) AMOUNT OF REDUCTION.—
‘‘(A) IN
GENERAL.—The amount deter-
mined under this paragraph shall be the
amount which bears the same ratio to such ag-
gregate amount as—
‘‘(i) the excess of—
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable
year, over
‘‘(II) 
the 
applicable 
dollar
amount, bears to
‘‘(ii) $10,000.
‘‘(B) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the
term ‘modified adjusted gross income’ means
adjusted gross income increased by any amount
excluded from gross income under section 911,
931, or 933.
‘‘(C) ROUNDING.—Any amount determined
under subparagraph (A) which is not a multiple
of $10 shall be rounded to the next lowest $10.
‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur-
poses of paragraph (2), the term ‘applicable dollar
amount’ means—
‘‘(A) $60,000 in the case of a taxpayer
whose qualified health insurance coverage cov-
ers more than 1 individual referred to in sub-
section (a), and
‘‘(B) $30,000—
‘‘(i) in any case not described in sub-
paragraph (A), and
‘‘(ii) in the case of a married indi-
vidual filing a separate return.
For purposes of this paragraph, marital status shall
be determined under section 7703.
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified health
insurance’ means insurance which constitutes med-
ical care; except that such term shall not include any
insurance if substantially all of its coverage is of ex-
cepted benefits described in section 9832(c).
‘‘(2) CREDIT
NOT
ALLOWABLE
FOR
CERTAIN
SUBSIDIZED
COVERAGE.—Except for purposes of
subsection (b)(3)(B), the term ‘qualified health in-
surance’ shall not include any coverage less than 50
percent of the cost of which is borne by the tax-
payer.
‘‘(e) DENIAL OF CREDIT FOR AMOUNTS PAID UNDER
CERTAIN GOVERNMENT-PROVIDED PROGRAMS.—
‘‘(1) IN GENERAL.—No credit shall be allowed
under this section for amounts paid under—
‘‘(A) title XVIII, XIX, or XXI of the So-
cial Security Act,
‘‘(B) chapter 55 of title 10, United States
Code,
‘‘(C) chapter 17 of title 38, United States
Code, or
‘‘(D) the Indian Health Care Improvement
Act.
‘‘(2) COVERAGE UNDER PROGRAM INCLUDED IN
DETERMINING ELIGIBILITY.—Coverage under any of
the provisions referred to in paragraph (1) shall be
treated as coverage under qualified health insurance
for purposes of subsection (b)(3)(B).
‘‘(g) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
OTHER
DEDUC-
TIONS.—No credit shall be allowed under this sec-
tion for the taxable year if any amount paid for
qualified health insurance is taken into account in
determining any deduction allowed for such year
under sections 162(l), 213, or 222.
‘‘(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.—
‘‘(A) IN GENERAL.—In the case of a tax-
able year beginning after 2002, the dollar
amount in subsection (b)(2)(A) and each dollar
amount in subsection (c)(3) shall be increased
by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
year 2001’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple
of $100, such amount shall be rounded to the
next lowest multiple of $100.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart A of part IV of subchapter A of chapter 1
of such Code is amended by inserting after the item relat-
ing to section 25A the following new item:
‘‘Sec. 25B. Health insurance costs of previously uninsured indi-
viduals.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 3. DEDUCTION FOR QUALIFIED HEALTH INSURANCE
COSTS OF EMPLOYEES AND SELF-EMPLOYED
INDIVIDUALS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions) is amended by redesig-
nating section 222 as section 223 and by inserting after
section 221 the following new section:
‘‘SEC. 222. COSTS OF QUALIFIED HEALTH INSURANCE.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
the amount paid during the taxable year for coverage for
the taxpayer, his spouse, and dependents under qualified
health insurance (as defined in section 25B(d)).
‘‘(b) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION, ETC.—Any amount paid by a taxpayer for in-
surance to which subsection (a) applies shall not be
taken into account in computing the amount allow-
able to the taxpayer as a deduction under section
162(l) or 213(a).
‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM-
PLOYMENT
TAX
PURPOSES.—The deduction allow-
able by reason of this section shall not be taken into
account in determining an individual’s net earnings
from self-employment (within the meaning of section
1402(a)) for purposes of chapter 2.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 62 of such Code
is amended by inserting after paragraph (17) the
following new item:
‘‘(18) COSTS
OF
QUALIFIED
HEALTH
INSUR-
ANCE.—The deduction allowed by section 222.’’
(3) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by
striking the last item and inserting the following
new items:
‘‘Sec. 222. Costs of qualified health insurance.
‘‘Sec. 223. Cross reference.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
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