I 
109TH CONGRESS 
1ST SESSION H. R. 3075 
To amend the Internal Revenue Code of 1986 to make health care coverage 
more accessible and affordable. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 27, 2005 
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 make 
health care coverage more accessible and affordable. 
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 ‘‘Comprehensive Health 
Care Reform Act of 2005’’. 
SEC. 2. REFUNDABLE CREDIT FOR HEALTH CARE COSTS. 
(a) IN GENERAL.—Section 35 of the Internal Rev-
enue Code of 1986 (relating to health insurance costs of 
eligible individuals) is amended to read as follows:
‘‘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 subtitle A an amount equal to the amount paid by the 
taxpayer for insurance which constitutes medical care for 
the taxpayer and the taxpayer’s spouse and dependents. 
‘‘(b) LIMITATION.—The credit allowed by subsection 
(a) for the taxable year shall not exceed the sum of— 
‘‘(1) the taxpayer’s net income tax for the tax-
able year, plus 
‘‘(2) the taxpayer’s social security taxes (as de-
fined in section 24(d)) for such taxable year. 
For purposes of paragraph (1), the term ‘net income tax’ 
means the sum of the regular tax liability plus the tax 
imposed by section 55, reduced by the credits allowable 
under this part (other than this subpart). 
‘‘(c) DENIAL OF DOUBLE BENEFIT.—Any amount 
allowed as a credit under this section shall not be taken 
into account in determining the amount of any deduction 
under this chapter.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 162 of such Code is amended by 
striking subsection (l). 
(2) Chapter 77 of such Code is amended by 
striking section 7527 and by striking the item relat-
ing to section 7527 in the table of sections for such 
chapter. 
(3) Subpart B of part III of subchapter A of 
chapter 61 of such Code is amended by striking sec-
tion 6050T and by striking the item relating to sec-
tion 6050T in the table of sections for such chapter. 
(4) Section 6103(l) of such Code is amended by 
striking paragraph (18). 
(5) Section 6103(p) of such Code is amended— 
(A) in paragraph (3)(A) by striking ‘‘(17), 
or (18)’’ and inserting ‘‘or (17)’’, and 
(B) in paragraph (4) by striking ‘‘or (17)’’ 
after ‘‘any other person described in subsection 
(l)(16)’’ each place it appears. 
(6) Section 7213A(a)(1)(B) of such Code is 
amended by striking ‘‘subsection (l)(18) or (n) of 
section 6103’’ and inserting ‘‘section 6103(n)’’. 
(7) Section 6724(d)(1)(B) of such Code is 
amended by striking clause (xi). 
(8) Section 6724(d)(2) of such Code is amend-
ed by striking subparagraph (BB). 
(9) The item relating to section 35 in the table 
of sections for subpart C of part IV of subchapter 
A of chapter 1 of such Code is amended to read as 
follows: 
‘‘Sec. 35 Health insurance costs.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 3. DISPOSITION OF UNUSED HEALTH BENEFITS IN 
CAFETERIA PLANS AND FLEXIBLE SPENDING 
ARRANGEMENTS. 
(a) IN GENERAL.—Section 125 of the Internal Rev-
enue Code of 1986 (relating to cafeteria plans) is amended 
by redesignating subsections (h) and (i) as subsections (i) 
and (j), respectively, and by inserting after subsection (g) 
the following: 
‘‘(h) CARRYFORWARDS OR PAYMENTS OF CERTAIN 
UNUSED HEALTH BENEFITS.— 
‘‘(1) IN GENERAL.—For purposes of this title, 
a plan or other arrangement shall not fail to be 
treated as a cafeteria plan solely because qualified 
benefits under such plan include a health flexible 
spending arrangement under which not more than 
$500 of unused health benefits may be— 
‘‘(A) carried forward to the succeeding 
plan year of such health flexible spending ar-
rangement, or 
‘‘(B) paid to or on behalf of an employee 
as compensation as of the end of such plan year
or upon the termination of, or failure to re-en-
roll in, such plan or arrangement. 
‘‘(2) DISTRIBUTION OF UNUSED HEALTH BENE-
FITS ON BEHALF OF EMPLOYEE.—For purposes of 
paragraph (1)(B), unused health benefits paid as 
compensation on behalf of an employee by the em-
ployer shall be— 
‘‘(A) includible in gross income and wages 
of the employee, whether or not a deduction for 
such payment is allowable under this title to the 
employee, and 
‘‘(B) excludable from— 
‘‘(i) gross income to the extent pro-
vided under section 402(e), 457(a) (with 
respect to contributions to an eligible de-
ferred compensation plan (as defined in 
section 457(b)) of an eligible employer de-
scribed in section 457(e)(1)(A)), or 220, 
and 
‘‘(ii) wages to the extent otherwise 
provided for amounts so excludable. 
‘‘(3) HEALTH FLEXIBLE SPENDING ARRANGE-
MENT.—For purposes of this subsection, the term 
‘health flexible spending arrangement’ means a flexi-
ble spending arrangement (as defined in section