To amend the Internal Revenue Code of 1986 to simplify rules governing the inclusion in gross income of benefits provided under discriminatory group health plans, and to increase the deduction allowable for health insurance costs of self-employed individuals.

Amends Internal Revenue Code provisions relating to the new (section 89) nondiscrimination requirements for coverage and benefits under certain statutory employee benefit plans to: (1) exclude group health plans from the requirements; and (2) establish a separate framework for determining whether a group health plan discriminates in favor of highly compensated employees.

Revises the income tax deduction for the health insurance costs of self-employed individuals to: (1) increase from 25 percent to 100 percent the allowable deduction; and (2) make the deduction permanent (under current law it will expire after tax year 1989).