[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2250 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2250
To amend the Internal Revenue Code of 1986 to allow more equitable and
direct tax relief for health insurance and medical care expenses, to
give Americans more options for obtaining quality health care, and to
expand insurance coverage to the uninsured.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 20, 2001
Mr. Cooksey (for himself, Mr. Armey, Mr. Ehrlich, Mr. Fletcher, Mr.
English, Ms. Granger, Mr. Jenkins, Mr. Bryant, Mr. Traficant, Mr.
Tauzin, Mr. Jones of North Carolina, Mrs. Myrick, Mr. Doolittle, Mr.
Sessions, Mr. Shadegg, Mrs. Kelly, Mr. Goode, Mr. Cannon, Mr. Peterson
of Pennsylvania, Mr. Linder, Mrs. Cubin, Mrs. Emerson, Mr. Gibbons, Mr.
Riley, and Mr. Baker) 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 allow more equitable and
direct tax relief for health insurance and medical care expenses, to
give Americans more options for obtaining quality health care, and to
expand insurance coverage to the uninsured.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Patient Access, Choice, and Equity
Act of 2001''.
SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to refundable credits)
is amended by redesignating section 35 as section 36 and by inserting
after section 34 the following new section:
``SEC. 35. HEALTH INSURANCE COSTS.
``(a) In General.--In the case of a qualified individual, there
shall be allowed as a credit against the tax imposed by this subtitle
the fixed-amount health credit determined under subsection (b) or, if
the taxpayer elects in lieu thereof, the percentage health credit
determined under subsection (c).
``(b) Fixed Amount Health Credit.--For purposes of subsection (a)--
``(1) In general.--The fixed-amount health credit is an
amount equal to the amount paid by the taxpayer during the
taxable year for qualified health insurance for the taxpayer,
his spouse, and dependents.
``(2) Limitations.--
``(A) In general.--The amount allowed as a credit
under paragraph (1) to the taxpayer for the taxable
year shall not exceed the lesser of--
``(i) the sum of the monthly limitations
for coverage months during such taxable year
for each individual referred to in paragraph
(1), or
``(ii) $3,000.
``(B) Monthly limitation.--
``(i) In general.--The monthly limitation
for an individual for each coverage month of
such individual during the taxable year is the
amount equal to \1/12\ of--
``(I) $1,000 if such individual is
the taxpayer,
``(II) $1,000 if--
``(aa) such individual is
the spouse of the taxpayer,
``(bb) the taxpayer and
such spouse are married as of
the first day of such month,
and
``(cc) the taxpayer files a
joint return for the taxable
year, and
``(III) $500 if such individual is
an individual for whom a deduction
under section 151(c) is allowable to
the taxpayer for such taxable year.
``(ii) Special rule for married
individuals.--In the case of an individual--
``(I) who is married (within the
meaning 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,
the limitation imposed by clause (i)(III) shall
be divided equally between the individual and
the individual's spouse unless they agree on a
different division.
``(3) Denial of credit if contribution made to archer
msa.--No credit shall be allowed under this subsection with
respect to any individual who makes a contribution to an Archer
MSA (as defined in section 220(d)).
``(c) Percentage Health Credit.--For purposes of subsection (a)--
``(1) In general.--The percentage health credit is an
amount equal to the sum of--
``(A) the applicable percentage of the sum of--
``(i) 25 percent of the qualified medical
expenses incurred by the taxpayer, his spouse,
and dependents during any coverage month and
paid by such taxpayer during the taxable year
which does not exceed 5 percent of the adjusted
gross income of such taxpayer for such year,
``(ii) 40 percent of such expenses so
incurred and paid which exceeds 5 percent but
does not exceed 15 percent of such adjusted
gross income, plus
``(iii) 60 percent of such expenses so
incurred and paid which exceeds 15 percent of
such adjusted gross income, plus
``(B) 25 percent of the qualified Archer MSA
contributions.
``(2) Limitations.--
``(A) In general.--The credit allowed under
paragraph (1) for a taxable year shall not exceed the
sum of--
``(i) the tax imposed by this chapter for
the taxable year on the taxpayer, his spouse,
and dependents with respect to whom such credit
is allowed, reduced by the credits allowable against such tax (other
than the credits allowable under this subpart), plus
``(ii) the tax imposed by sections 1401,
3101, 3111, 3201(a), 3211(a)(1), 3221(a) for
the taxable year with respect to such taxpayer,
spouse, and dependents.
``(B) Dollar limitation.--The amount allowed as a
credit under paragraph (1)(A) for a taxable year shall
not exceed $12,500 ($6,250 in the case of a married
individual filing a separate return).
``(C) Coordination with special refund of social
security taxes.--The taxes referred to in subparagraph
(A)(ii) shall not include any amount to which the
taxpayer, his spouse, or dependents is entitled to a
special refund under section 6413(c).
``(D) Special rule.--Any amounts paid pursuant to
an agreement under section 3121(l) (relating to
agreements entered into by American employers with
respect to foreign affiliates) which are equivalent to
the taxes imposed by sections 3101, 3111, 3201(a), and
3221(a) shall be treated as taxes referred to in
subparagraph (A)(ii).
``(3) Qualified archer msa contributions.--The term
`qualified Archer MSA contributions' means a payment to an
Archer MSA if a deduction would (but for section 220(k)) be
allowed under section 220 to the taxpayer for such payment for
the taxable year to the Archer MSA of an individual.
``(4) Special rule in the case of child of divorced
parents, etc.--For purposes of this subsection, any child to
whom section 152(e) applies shall be treated as a dependent of
both parents.
``(d) Definitions.--For purposes of this section--
``(1) Qualified individual.--The term `qualified
individual' means an individual who is a citizen or national of
the United States or is a lawful permanent resident of the
United States (as defined in section 7701(b)(6)).
``(2) Qualified health insurance.--The term `qualified
health insurance' means insurance which is--
``(A) health insurance coverage, as defined by
section 9832(b)(1), or
``(B) insurance which constitutes medical care
under a group health plan (as defined by section
5000(b)(1)), other than insurance a substantial portion
of which consists of excepted benefits (as defined by
section 9832(c)).
``(3) Qualified medical expenses.--
``(A) In general.--The term `qualified medical
expenses' means, with respect to a qualified
individual, amounts paid by such individual for medical
care for such individual, the spouse of such
individual, and any dependent (as defined in section
152) of such individual, but only to the extent such
amounts are not compensated for by insurance or
otherwise.
``(B) Reduction for amounts distributed from
msa's.--Such term shall not include any distribution
from an Archer MSA which is not includible in gross
income by reason of section 220(f)(1).
``(C) Applicable rules.--For purposes of
subparagraph (A), rules similar to the rules of
subsections (b) and (c) of section 213 shall apply.
``(4) Medical care.--The term `medical care' has the
meaning given to such term in section 213(d) determined 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.
``(5) Coverage month.--
``(A) In general.--The term `coverage month' means,
with respect to an individual, any month if as of the
first day of such month such individual is covered by
qualified health insurance.
``(B) Medicare, medicaid, and state childrens'
health insurance program.--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,
``(ii) is a participant in the program
under title XIX of such Act, or
``(iii) is a participant in the program
under title XXI of such Act.
``(C) Certain other coverage.--Such term shall not
include any month during a taxable year with respect to
an individual if, at any time during such month, such
individual is enrolled in a program to receive benefits
under chapter 55 of title 10, United States Code.
``(D) Prisoners.--Such term shall not include any
month with respect to an individual if, as of the first
day of such month, such individual is imprisoned under
Federal, State, or local authority.
``(e) Special Rules.--For purposes of this section--
``(1) Nonresident aliens.--If the taxpayer is a nonresident
alien individual for any portion of the taxable year, this
section shall apply only if such individual is treated as a
resident alien of the United States for purposes of this
chapter by reason of an election under subsection (g) or (h) of
section 6013.
``(2) Denial of credit to dependents.--No credit shall be
allowed under this section to any individual with respect to
whom a deduction under section 151 is allowable to another
taxpayer for a taxable year beginning in the calendar year in
which such individual's taxable year begins.
``(3) No other credit allowed with respect to dependent if
fixed credit allowed.--If a credit is allowed to a taxpayer for
a taxable year under subsection (b) with respect to a
dependent, no credit with respect to such dependent shall be
allowed under this section for such taxable year to any other
taxpayer.
``(4) Identification number requirement.--No credit shall
be allowed under this section with respect to an eligible
individual who does not include on the return of tax for the
taxable year--
``(A) such individual's taxpayer identification
number,
``(B) if the individual is married (within the
meaning of section 7703), the taxpayer identification
number of such individual's spouse, and
``(C) the name, age, and taxpayer identification
number of each dependent with respect to whom a credit
is claimed under this section.
``(5) Coordination with advance payment.--Rules similar to
the rules of section 32(g) shall apply to any credit to which
this section applies.
``(6) Treatment of amounts paid by employer.--Amounts paid
by an employer for coverage under an accident or health plan
which constitutes medical care for a taxpayer, his spouse and
dependents, which would (but for section 106(d)) be excludable
from gross income shall be treated as paid by the taxpayer.
``(7) Cost-of-living adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2003, each dollar
amount contained in subsections (b)(2)(A)(ii),
(b)(2)(B), and (c)(2)(B) shall be increased by the
medical care cost adjustment of such amount for such
calendar year. If any increase determined under the
preceding sentence is not a multiple of $50, such
increase shall be rounded to the nearest multiple of
$50.
``(B) Medical care cost adjustment.--For purposes
of subparagraph (A), the medical care cost adjustment
for any calendar year is the percentage (if any) by
which--
``(i) the medical care component of the
Consumer Price Index (as defined in section
1(f)(5)) for August of the preceding calendar
year, exceeds
``(ii) such component for August of 2002.
``(f) Restrictions on Taxpayers Who Improperly Claimed Credit in
Prior Year.--
``(1) Taxpayers making prior fraudulent or reckless
claims.--
``(A) In general.--No credit shall be allowed under
this section for any taxable year in the disallowance
period.
``(B) Disallowance period.--For purposes of
subparagraph (A), the disallowance period is the period
of 2 taxable years after the most recent taxable year
for which there was a final determination that the
taxpayer's claim of credit under this section was due
to fraud or reckless or intentional disregard of rules
and regulations.
``(2) Taxpayers making improper prior claims.--In the case
of a taxpayer who is denied credit under this section for any
taxable year as a result of the deficiency procedures under
subchapter B of chapter 63, no credit shall be allowed under
this section for any subsequent taxable year unless the
taxpayer provides such information as the Secretary may require
to demonstrate eligibility for such credit.
``(g) Denial of Double Benefit.--No credit shall be allowed under
this section for any expense for which a deduction or credit is allowed
under any other provision of this chapter.''.
(b) Clerical Amendment.--The table of sections for subpart C of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by striking the item relating to section 35 and
inserting the following new items:
``Sec. 35. Health insurance costs.
``Sec. 36. Overpayments of tax.''.
(c) Appropriations for Refund.--Section 1324(b)(2) of title 31,
United States Code, is amended by inserting before the period ``, or of
section 35 of such Code''.
(d) Report on Suitable Index for Inflation Adjustment.--If the
Bureau of Labor Statistics of the Department of Commerce begins
publishing a component of the consumer price index which tracks health
insurance other than Medicare, the Secretary of the Treasury shall
submit a report to the Congress on the suitability of changing the
index referred to in section 35(e)(7)(B) of the Internal Revenue Code
of 1986 (other than for purposes of subsection (c)(2)(B) of such
section), as added by this section, to such component.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
SEC. 3. ADVANCE PAYMENT OF CREDIT FOR PURCHASERS OF QUALIFIED HEALTH
INSURANCE.
(a) In General.--Chapter 77 of the Internal Revenue Code of 1986
(relating to miscellaneous provisions) is amended by adding at the end
the following new section:
``SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR PURCHASERS
OF QUALIFIED HEALTH INSURANCE.
``(a) General Rule.--
``(1) Payments by secretary.--In the case of an eligible
individual, the Secretary shall make payments--
``(A) in the case of an employee covered by
qualified health insurance of, or contributed to by,
the employer (other than insurance which constitutes a
self-insured group health plan), to the employer if the
employer elects the application of this section,
``(B) in the case of an employee covered by
qualified health insurance of, or contributed to by,
the employer which constitutes a self-insured group
health plan, to the employer, and
``(C) in any other case, to the health insurance
issuer of qualified health insurance of such
individual.
``(2) Amount of payments.--Payments under paragraph (1)
shall be made in an amount equal to the qualified health
insurance credit advance amount of such individual.
``(3) Payments to be treated as payments of withholding and
fica taxes.--
``(A) Payments made from certain taxes owed.--With
respect to any payment under paragraph (1), rules
similar to the rules of sections 3507(d) (1) and (4)
shall apply. In the case of payments to a health
insurance issuer with respect to an individual who is
not an employee of such issuer, rules under the
preceding sentence shall be applied to any amounts for
which such issuer is liable under section 3401, 3102,
and 3111.
``(B) Difference payable in cash.--In the case of
any employer or health insurance issuer, if for any
month the aggregate payment to such employer or issuer
by reason of the preceding sentence is less than the
aggregate qualified health insurance credit advance
amount, the Secretary shall pay the difference directly
to such employer or issuer (as the case may be). For
purposes of this subparagraph, the Secretary may
require the employer and the health insurance issuer to
provide such additional information as the Secretary
determines appropriate.
``(4) Transfer to trust funds.--The Secretary shall
transfer from the general fund to the Old-Age, Survivors, and
Disability Insurance Trust Fund and to the Hospital Insurance
Trust Fund amounts equivalent to the amount of the reduction in
taxes imposed by chapter 21 by reason of paragraph (3). Any
such transfer shall be made at the same time the reduced taxes
would have been deposited in either such Trust Fund.
``(b) Eligible Individual.--For purposes of this section, the term
`eligible individual' means any individual--
``(1) who purchases qualified health insurance, and
``(2) for whom a qualified health insurance credit
eligibility certificate is in effect.
``(c) Qualified Health Insurance Credit Eligibility Certificate.--
``(1) In general.--For purposes of this section, a
qualified health insurance credit eligibility certificate is a
statement furnished by an individual to the employer or the
health insurance issuer which--
``(A) certifies that the individual will be
eligible to receive the credit provided by section
35(b) for the taxable year,
``(B) estimates the amount of such credit for such
taxable year,
``(C) contains the name, address, and TIN of each
individual who is obtaining coverage under such
certificate,
``(D) certifies that no individual described in
subparagraph (C) has another health insurance credit
eligibility certificate in effect, and
``(E) provides such other information as the
Secretary may require for purposes of this section.
``(2) Certificate in effect.--A qualified health insurance
credit eligibility certificate shall take effect on the first
day of a coverage month (as defined in section 35(d)) and shall
remain in effect with respect to the individual until the
earlier of revocation by the individual, another such
certificate takes effect under this section with respect to the
individual, or cancellation of the qualified health insurance
by the issuer or the employer.
``(d) Qualified Health Insurance Credit Advance Amount.--For
purposes of this section, the term `qualified health insurance credit
advance amount' means, with respect to any employer or issuer of
qualified health insurance, the Secretary's estimate of the amount of
credit allowable under section 35(b) to the individual for the taxable
year which is attributable to the insurance provided to the individual
by such employer or issuer.
``(e) Required Documentation for Receipt of Payments of Advance
Amount.--No payment of a qualified health insurance credit advance
amount with respect to any eligible individual may be made under
subsection (a) unless the employer or health insurance issuer (as the
case may be)--
``(1) provides to the Secretary the qualified health
insurance credit eligibility certificate of such individual,
and
``(2) agrees to provide the return relating to such
individual under section 6050T (or with respect to such
employer or issuer, an agreement relating to such individual is
in effect under section 6050T(e)).
``(f) Qualified Health Insurance.--For purposes of this section,
the term `qualified health insurance' has the meaning given to such
term by section 35(d).
``(g) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for chapter 77 of
such Code is amended by adding at the end the following new item:
``Sec. 7527. Advance payment of health
insurance credit for purchasers
of qualified health
insurance.''.
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 2003.
SEC. 4. INFORMATION REPORTING.
(a) In General.--Subpart B of part III of subchapter A of chapter
61 of the Internal Revenue Code of 1986 (relating to information
concerning transactions with other persons) is amended by inserting
after section 6050S the following new section:
``SEC. 6050T. 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, receives payments during any
calendar year--
``(1) from any person for coverage of such person or any
other person under qualified health insurance, or
``(2) under section 7527 with respect to a qualified health
insurance credit eligibility certificate,
shall make the return described in subsection (b) (at such time as the
Secretary may by regulations prescribe) with respect to each person
from whom any such payment is received.
``(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 prescribe, and
``(2) contains--
``(A) the name, address, and TIN of the person from
whom payments described in subsection (a) were
received, and the aggregate amounts of such payments,
``(B) the name, address, and TIN of each individual
who was provided by such person with coverage under
qualified health insurance by reason of such payments
and the period of such coverage,
``(C) the coverage months (as defined in section
35(d)) of each individual described in subparagraph (A)
and (B),
``(D) the amounts advanced to such person from the
Secretary under section 7527 as premium payments for
such insurance, and
``(E) such other information as the Secretary may
reasonably prescribe.
``(c) Qualified Health Insurance.--For purposes of this section,
the term `qualified health insurance' means qualified health insurance
(as defined in section 35(d)) other than, to the extent provided in
regulations prescribed by the Secretary, any other insurance covering
an individual if no credit is allowable under section 35 with respect
to such coverage.
``(d) Statements To Be Furnished to Individuals With Respect to
Whom Information Is Required.--Every person required to make a return
under subsection (a) shall furnish to each individual whose name is
required under subsection (b)(2)(A) to be set forth in such return a
written statement showing--
``(1) the name and address of the person required to make
such return and the phone number of the information contact for
such person,
``(2) the aggregate amount of payments described in
subsection (a) received by the person required to make such
return from the individual to whom the statement is required to
be furnished, and
``(3) the information required under subsections (b)(2)(B),
(C), (D), and (E) with respect to such payments.
The written statement required under the preceding sentence 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.
``(e) Returns Which Would Be Required To Be Made by 2 or More
Persons.--A person required to make a return under subsection (a) (but
for this subsection) shall not be required to make such return if,
under such regulations as the Secretary shall prescribe, such person
has entered into an agreement with another person to make the return
required by subsection (a).''.
(b) Assessable Penalties.--
(1) Subparagraph (B) of section 6724(d)(1) of such Code
(relating to definitions) is amended by redesignating clauses
(xi) through (xvii) as clauses (xii) through (xviii),
respectively, and by inserting after clause (x) the following
new clause:
``(xi) section 6050T (relating to returns
relating to payments for qualified health
insurance),''.
(2) Paragraph (2) of section 6724(d) of such Code is
amended by striking ``or'' at the end of the next to last
subparagraph, by striking the period at the end of the last
subparagraph and inserting ``, or'', and by adding at the end
the following new subparagraph:
``(BB) section 6050T(d) (relating to returns
relating to payments for qualified health
insurance).''.
(c) Clerical Amendment.--The table of sections for subpart B of
part III of subchapter A of chapter 61 of such Code is amended by
inserting after the item relating to section 6050S the following new
item:
``Sec. 6050T. Returns relating to
payments for qualified health
insurance.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
SEC. 5. CREDIT FOR CERTAIN EMPLOYMENT TAXES WITH RESPECT TO FORMERLY
EXCLUDABLE HEALTH INSURANCE COSTS.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of such Code (relating to business related credits) is amended by
adding at the end the following:
``SEC. 45G. CREDIT FOR CERTAIN EMPLOYMENT TAXES WITH RESPECT TO
FORMERLY EXCLUDABLE HEALTH INSURANCE COSTS.
``(a) General Rule.--For purposes of section 38, in the case of an
employer, the former health exclusion credit determined under this
section for the taxable year is the aggregate of the creditable
employee amounts.
``(b) Creditable Employee Amount.--For purposes of subsection (a)--
``(1) In general.--The term `creditable employee amount'
means, with respect to each qualified employee, the employer
tax on the formerly excludable health costs of the qualified
employee's wages or compensation (as the case may be).
``(2) Employer tax on the formerly excludable health
costs.--The term `employer tax on the formerly excludable
health costs' means the amount equal to the excess of--
``(A) the tax imposed under section 3111 or 3221(a)
on wages or compensation (as the case may be) of the
employee for the calendar year ending in or with the
end of the taxable year of the employer, over
``(B) such tax for such calendar year which would
be imposed on--
``(i) wages or compensation (as the case
may be) of such employee, if such wages or
compensation were reduced by
``(ii) the total amount of the employer-
provided coverage under an accident or health
plan which would have been excludable from the
gross income of such employee under section 106
but for section 106(d).
``(3) Qualified employee.--The term `qualified employee'
means an individual who is covered continuously during the
coverage period by employer-provided health coverage of the
employer.
``(4) Employer-provided health coverage.--The term
`employer-provided health coverage' means an accident or health
plan provided by an employer which is excludable from gross
income under section 106 (or would be so excludable but for
section 106(d)).
``(5) Coverage period.--The term `coverage period' means,
with respect to the calendar year ending in or with the taxable
year of the employer, the period--
``(A) beginning on January 1, 2002, and
``(B) ending on the earlier of--
``(i) the last day of such calendar year,
or
``(ii) the day before the first day in such
calendar year that such person is not covered
by employer-provided coverage of such employer.
``(6) Wages and compensation.--The terms `wages' and
`compensation' shall have the meaning given to such terms by
sections 3121(a) and 3231(e), respectively.
``(c) Special Rules.--
``(1) Special rule concerning self-employed.--The term
`employer' shall not include an individual who is an employee
within the meaning of section 401(c)(1).
``(2) Certain rules made applicable.--For purposes of this
section, rules similar to the rules of paragraphs (1) and (2)
of section 41(f) shall apply.
``(d) Notice of Value of Health Insurance Coverage.--No credit
shall be allowed under subsection (a) to an employer for taxable years
beginning in 2003 unless such employer notifies (in the manner the
Secretary shall provide) each individual who is an employee of the
employer during calendar year 2002 of the aggregate value of the
applicable premiums (as defined by section 4980B(f)(4)) provided to the
employee during such calendar year.''.
(b) Current Year Business Credit Calculation.--Section 38(b) of
such Code (relating to current year business credit) is amended by
striking ``plus'' at the end of paragraph (14), by striking the period
at the end of paragraph (15) and inserting ``, plus'', and by adding at
the end the following:
``(16) the former health exclusion credit determined under
section 45G(a).''.
(c) Limitation on Carryback.--Subsection (d) of section 39 of such
Code (relating to carryback and carryforward of unused credits) is
amended by adding at the end the following:
``(11) No carryback of former health exclusion credit
before effective date.--No amount of unused business credit
available under section 45G may be carried back to a taxable
year beginning on or before the date of the enactment of this
paragraph.''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 45F the following:
``Sec. 45G. Credit for certain employment
taxes with respect to formerly
excludable health insurance
costs.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
SEC. 6. ADDITIONAL PROVISIONS.
(a) Termination of Exclusion From Gross Income for Employer-
Provided Health Care Coverage.--Section 106 of the Internal Revenue
Code of 1986 (relating to contributions by employer to accident and
health plans) is amended by adding at the end the following new
subsection:
``(d) Inclusion of Insurance Constituting Medical Care (Other Than
Long-Term Care Insurance).--
``(1) In general.--Subsection (a) shall not apply to--
``(A) any employer-provided coverage under an
accident or health plan which constitutes medical care,
and
``(B) any employer contribution to an Archer MSA
which is treated by subsection (b) as employer-provided
coverage for medical expenses under an accident or
health plan.
``(2) Exception for individuals entitled to medicare.--
Paragraph (1) shall not apply to any employee who, as of the
time such employer-provided coverage was provided, is entitled
to any benefits under title XVIII of the Social Security Act.
``(3) Medical care defined.--For purposes of paragraph (1),
the term `medical care' has the meaning given to such term in
section 213(d) determined 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.
``(4) Special rule for valuation of inclusion of employer-
provided health coverage.--The amount included in gross income
by reason of paragraph (1) shall be the cost to the employer of
the employer-provided coverage under an accident or health plan
with respect to the employee for the calendar year. Such cost
shall be the applicable premium (as defined by section
4980B(f)(4)).''.
(b) Disallowance of Deduction for Health Insurance Costs of Self-
Employed Individuals.--Section 162(l) of such Code is amended by adding
at the end the following new paragraph:
``(6) Termination of deduction for health insurance.--In
the case of taxable years beginning after December 31, 2002,
this subsection shall only apply to amounts paid for qualified
long-term care insurance contracts.''.
(c) Medical Care Deduction Limited to Qualified Long-Term Care and
Individuals Entitled to Medicare.--Section 213 of such Code (relating
to medical, dental, etc., expenses) is amended by adding at the end the
following new subsection:
``(f) Termination.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), subsection (a) shall not apply to any taxable year
beginning after December 31, 2002.
``(2) Exception for individuals entitled to medicare.--
Paragraph (1) shall not apply to expenses paid for medical care
provided for any individual who, as of the time such medical
care was provided, is entitled to any benefits under title
XVIII of the Social Security Act.
``(3) Exception for qualified long-term care.--Paragraph
(1) shall not apply to expenses paid for medical care described
in paragraph (1)(C) of subsection (d) and so much of paragraph
(1)(D) of such subsection as relates to qualified long-term
care insurance contracts.''.
(d) Archer MSAs.--
(1) Termination of deduction.--
(A) In general.--Section 220 of such Code (relating
to medical savings accounts) is amended by adding at
the end the following:
``(k) Termination.--No deduction shall be allowed for a
contribution to an Archer MSA made after December 31, 2002.''.
(B) Conforming amendment.--Section 220(a) of such
Code is amended by striking ``In'' and inserting
``Except as provided in subsection (k), in''.
(2) Both employers and employees may contribute to archer
msas.--Paragraph (5) of section 220(b) of such Code is amended
to read as follows:
``(5) Coordination with exclusion for employer
contributions.--The limitation which would (but for this
paragraph) apply under this subsection to the taxpayer for any
taxable year shall be reduced (but not below zero) by the
amount which would (but for section 106(b), without regard to
subsection (d) thereof) be includible in the taxpayer's gross
income for such taxable year.''.
(3) Penalty for excess contributions.--
(A) Paragraph (1) of section 4973(d) of such Code
is amended to read as follows:
``(1) the aggregate amount contributed for the taxable year
to the accounts (other than rollover contributions described in
section 220(f)(5)) for which a credit is not allowed under
section 35(c)(1)(B), and''.
(B) Clause (i) of section 4973(d)(2)(B) of such
Code is amended to read as follows:
``(i) the maximum amount allowable as a
deduction under section 220(b)(1) (determined
without regard to section 220(k)) for the
taxable year, over''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Referred to the Subcommittee on Health.
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