To amend the Internal Revenue Code of 1986 to allow a deduction for premiums for high deductible health plans required with respect to health savings accounts.

January 4, 2005

Mr. KING of Iowa (for himself, Ms. HARRIS, Mr. PAUL, Mr. ROGERS of Michigan, Mr. SESSIONS, Mr. BURGESS, Mr. WELDON of Florida, Mr. TERRY, Mr. MILLER of Florida, Mr. GARRETT of New Jersey, Mr. SAM JOHNSON of Texas, and Mr. KLINE) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to allow a deduction for premiums for high deductible health plans required with respect to health savings accounts.

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 `Health Insurance Affordability Act of 2005'.

SEC. 2. DEDUCTION OF PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.

(a) In General- Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to additional itemized deductions for individuals) is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:

`SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.

`(a) Deduction Allowed- In the case of an individual, there shall be allowed as a deduction for the taxable year the aggregate amount paid by such individual as premiums under a high deductible health plan with respect to months during such year for which such individual is an eligible individual with respect to such health plan.

`(b) Definitions- For purposes of this section--

`(1) ELIGIBLE INDIVIDUAL- The term `eligible individual' has the meaning given such term by section 223(c)(1).

`(2) HIGH DEDUCTIBLE HEALTH PLAN- The term `high deductible health plan' has the meaning given such term by section 223(c)(2).

`(c) Special Rules-

`(1) DEDUCTION ALLOWABLE FOR ONLY 1 PLAN- For purposes of this section, in the case of an individual covered by more than 1 high deductible health plan for any month, the individual may only take into account amounts paid for 1 of such plans for such month.

`(2) EMPLOYER PROVIDED COVERAGE-

`(A) IN GENERAL- No deduction shall be allowed to an individual under subsection (a) for any amount paid for coverage under a high deductible health plan for a month if that individual participates in any coverage for such month that is excluded (in whole or in part) from the gross income of the individual or the individual's spouse under section 106.

`(B) CAFETERIA PLANS, ETC- Employer contributions to a cafeteria plan or a flexible spending or similar arrangement which are excluded from gross income under section 106 shall be treated for purposes of this section as paid by the employer.

`(3) CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNT REQUIRED- A deduction shall not be allowed under subsection (a) for a taxable year with respect to such individual if such individual is not allowed a deduction under section 223 for such taxable year.

`(4) MEDICAL AND HEALTH SAVINGS ACCOUNTS- Subsection (a) shall not apply with respect to any amount which is paid or distributed out of an Archer MSA or a health savings account which is not included in gross income under section 220(f) or 223(f), as the case may be.

`(5) COORDINATION WITH DEDUCTION FOR HEALTH INSURANCE OF SELF-EMPLOYED INDIVIDUALS- The amount taken into account by the taxpayer in computing the deduction under section 162(l) shall not be taken into account under this section.

`(6) COORDINATION WITH MEDICAL EXPENSE DEDUCTION- The amount taken into account by the taxpayer in computing the deduction under this section shall not be taken into account under section 213.'.

(b) Deduction Allowed Whether or not Individual Itemizes Other Deductions- Subsection (a) of section 62 of such Code is amended by inserting before the flush sentence at the end the following new paragraph:

`(21) PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS- The deduction allowed by section 224.'.

(c) Clerical Amendment- The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by striking the last item and inserting the following new items:

`Sec. 224. Premiums for high deductible health plans.

`Sec. 225. Cross reference.'.

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2004.

END