To enhance and improve benefits for members of the National Guard and Reserves who serve extended periods on active duty, and for other purposes.

January 24, 2005

Mrs. MURRAY introduced the following bill; which was read twice and referred to the Committee on Finance

To enhance and improve benefits for members of the National Guard and Reserves who serve extended periods on active duty, and for other purposes.

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 `Guard and Reserve Enhanced Benefits Act of 2005'.

TITLE I--FAMILY ASSISTANCE BENEFITS

SEC. 101. MILITARY FAMILY LEAVE.

(a) GENERAL REQUIREMENTS FOR LEAVE-

(1) DEFINITIONS- Section 101 of the Family and Medical Leave Act of 1993 (29 U.S.C. 2611) is amended by adding at the end the following:

`(14) ACTIVE DUTY- The term `active duty' means duty under a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10, United States Code.

`(15) QUALIFIED MEMBER- The term `qualified member' means a member of the reserve components on active duty for a period of more than 30 days.'.

(2) ENTITLEMENT TO LEAVE- Section 102(a)(1) of such Act (29 U.S.C. 2612(a)) is amended by adding at the end the following:

`(E) Because the spouse, son, daughter, or parent of the employee is a qualified member.'.

(3) SCHEDULE- Section 102(b)(1) of such Act (29 U.S.C. 2612(b)(1)) is amended by inserting after the second sentence the following: `Leave under subsection (a)(1)(E) may be taken intermittently or on a reduced leave schedule.'.

(4) SUBSTITUTION OF PAID LEAVE- Section 102(d)(2)(A) of such Act (29 U.S.C. 2612(d)(2)(A)) is amended by striking `(A), (B), or (C)' and inserting `(A), (B), (C), or (E)'.

(5) NOTICE- Section 102(e) of such Act (29 U.S.C. 2612(e)) is amended by adding at the end the following:

`(3) NOTICE FOR MILITARY FAMILY LEAVE- In any case in which an employee seeks leave under subsection (a)(1)(E), the employee shall provide such notice as is practicable.'.

(6) CERTIFICATION- Section 103 of such Act (29 U.S.C. 2613) is amended by adding at the end the following:

`(f) CERTIFICATION FOR MILITARY FAMILY LEAVE- An employer may require that a request for leave under section 102(a)(1)(E) be supported by a certification issued at such time and in such manner as the Secretary may by regulation prescribe.'.

(b) MILITARY FAMILY LEAVE FOR CIVIL SERVICE EMPLOYEES-

(1) DEFINITIONS- Section 6381 of title 5, United States Code, is amended--

(A) in paragraph (5), by striking `and' at the end;

(B) in paragraph (6), by striking the period and inserting `; and'; and

(C) by adding at the end the following:

`(7) the term `active duty' means duty under a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10, United States Code; and

`(8) the term `qualified member' means a member of the reserve components on active duty for a period of more than 30 days.'.

(2) ENTITLEMENT TO LEAVE- Section 6382(a) of such title is amended by adding at the end the following:

`(E) Because the spouse, son, daughter, or parent of the employee is a qualified member.'.

(3) SCHEDULE- Section 6382(b)(1) of such title is amended by inserting after the second sentence the following: `Leave under subsection (a)(1)(E) may be taken intermittently or on a reduced leave schedule.'.

(4) SUBSTITUTION OF PAID LEAVE- Section 6382(d) of such title is amended by striking `(A), (B), (C), or (D)' and inserting `(A), (B), (C), (D), or (E)'.

(5) NOTICE- Section 6382(e) of such title is amended by adding at the end the following:

`(3) In any case in which an employee seeks leave under subsection (a)(1)(E), the employee shall provide such notice as is practicable.'.

(6) CERTIFICATION- Section 6383 of such title is amended by adding at the end the following:

`(f) An employing agency may require that a request for leave under section 6382(a)(1)(E) be supported by a certification issued at such time and in such manner as the Office of Personnel Management may by regulation prescribe.'.

SEC. 102. CHILD CARE ASSISTANCE FOR MILITARY DEPENDENTS.

(a) AUTHORIZATION OF APPROPRIATIONS- Section 658B of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858) is amended--

(1) by striking `There is' and inserting `(a) IN GENERAL- There is';

(2) in subsection (a), as so designated, by inserting `(except section 658T)' after `this subchapter'; and

(3) by adding at the end the following:

`(b) CHILD CARE FOR CERTAIN MILITARY DEPENDENTS- There is authorized to be appropriated to carry out section 658T $200,000,000 for each of fiscal years 2005 through 2009.'.

(b) CHILD CARE ASSISTANCE- The Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.) is amended by adding at the end the following:

`SEC. 658T. CHILD CARE ASSISTANCE FOR MILITARY DEPENDENTS.

`(a) IN GENERAL- The Secretary shall make grants to eligible spouses to assist the spouses in paying for the cost of child care services provided to dependents by eligible child care providers. In making the grants, the Secretary shall give priority to eligible spouses of qualified members on active duty for a period of more than 6 months.

`(b) DEFINITIONS- In this section:

`(1) ACTIVE DUTY- The term `active duty' means duty under a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10, United States Code.

`(2) DEPENDENT- The term `dependent' means an individual who is--

`(A) a dependent, as defined in section 401 of title 37, United States Code, except that such term does not include a person described in paragraph (1) or (3) of subsection (a) of such section; and

`(B) an individual described in subparagraphs (A) and (B) of section 658P(4).

`(3) ELIGIBLE SPOUSE- The term `eligible spouse' means a person who--

`(A) is a parent of one or more dependents of a qualified member; and

`(B) has the primary responsibility for the care of one or more such dependents.

`(4) QUALIFIED MEMBER- The term `qualified member' means a member of the reserve components on active duty for a period of more than 30 days.

`(c) APPLICATIONS- To be eligible to receive a grant under this section, a spouse shall submit an application to the Secretary, at such time, in such manner, and containing such information as the Secretary may require, including a description of the eligible child care provider who provides the child care services assisted through the grant.

`(d) RULE- The provisions of this subchapter, other than section 658P and provisions referenced in section 658P, that apply to assistance provided under this subchapter shall not apply to assistance provided under this section.'.

(c) CONFORMING AMENDMENTS- Section 658O of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858m) is amended--

(1) in subsection (a)--

(A) in paragraph (1), by striking `appropriated under this subchapter' and inserting `appropriated under section 658B(a)'; and

(B) in paragraph (2), by striking `appropriated under section 658B' and inserting `appropriated under section 658(a)'; and

(2) in subsection (b)(1), by striking `appropriated under section 658B' and inserting `appropriated under section 658(a)'.

TITLE II--EDUCATION BENEFITS

Subtitle A--Montgomery GI Bill Benefits

SEC. 201. BASIC EDUCATIONAL ASSISTANCE FOR MEMBERS OF SELECTED RESERVE SERVING EXTENDED OR RECURRING PERIODS ON ACTIVE DUTY.

(a) ENTITLEMENT- (1) Subsection (a)(1) of section 3011 of title 38, United States Code, is amended--

(A) in subparagraph (B), by striking `or' at the end;

(B) in subparagraph (C), by adding `or' at the end; and

(C) by adding at the end the following new subparagraph:

`(D) after September 11, 2001, while a member of the Selected Reserve--

`(i) serves at least 12 months of continuous active duty in the Armed Forces; or

`(ii) during any 60-month period, serves an aggregate of 24 months of continuous active duty in the Armed Forces;'.

(2) Subsection (d)(3) of such section is amended by striking `The period of service' and inserting `Except in the case of an individual described in subsection (a)(1)(D), the period of service'.

(b) EXCLUSION FROM CONTRIBUTIONS FOR INCREASED ASSISTANCE- Subsection (e)(1) of such section is amended by inserting `(other than an individual described in subsection (a)(1)(D)' after `Any individual'.

(c) AMOUNT OF ASSISTANCE- Section 3015(a) of such title is amended by inserting after `three years' the following: `or an individual whose service on active duty on which such entitlement is based is described in clause (i) or (ii) of section 3011(a)(1)(D) of this title'.

SEC. 202. INCREASE IN AMOUNT OF EDUCATIONAL ASSISTANCE FOR MEMBERS OF SELECTED RESERVE.

(a) INCREASE IN AMOUNTS- Section 16131(b)(1) of title 10, United States Code, is amended--

(1) in subparagraph (A), by striking `$251' and inserting `$400';

(2) in subparagraph (B), by striking `$188' and inserting `$300'; and

(3) in subparagraph (C), by striking `$125' and inserting `$200'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall take effect on the date of the enactment of this Act, and shall apply with respect to monthly rates of educational assistance for months beginning on or after that date.

SEC. 203. MODIFICATION OF TIME LIMITATION FOR USE OF ENTITLEMENT TO EDUCATIONAL ASSISTANCE OF MEMBERS OF SELECTED RESERVE.

Section 16133(a)(2) of title 10, United States Code, is amended--

(1) by inserting `that is five years after the date' after `on the date'; and

(2) by striking `first' and inserting `later'.

Subtitle B--Other Education Benefits

SEC. 211. STUDENT LOAN DEFERMENTS.

(a) FFEL AND DIRECT SUBSIDIZED LOANS- Section 428(b)(1)(M) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) is amended--

(1) in clause (ii), by striking `or' after the semicolon;

(2) in clause (iii), by inserting `or' after the semicolon; and

(3) by inserting after clause (iii) the following:

`(iv) during which the borrower is a member of the reserve components of the Armed Forces on active duty for a period of more than 30 days under a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10, United States Code, and for 3 months following discharge or release from such active duty.'.

(b) CONSOLIDATION LOANS- Section 428C(b)(4)(C)(ii) of the Higher Education Act of 1965 (20 U.S.C. 1078-3(b)(4)(C)(ii)) is amended--

(1) in subclause (II), by striking `or' after the semicolon;

(2) in subclause (III), by striking `or (II)' and inserting `, (II) or (III)';

(3) by redesignating subclause (III) (as so amended) as subclause (IV); and

(4) by inserting after subclause (II) the following:

`(III) by the Secretary, in the case of a consolidation loan of a student who is on an active duty deferment under section 428(b)(1)(M)(iv); or'.

(c) FFEL AND DIRECT UNSUBSIDIZED LOANS- Section 428H(e)(2) of the Higher Education Act of 1965 (20 U.S.C. 1078-8(e)(2)) is amended by adding at the end the following:

`(C) Notwithstanding subparagraph (A), interest on loans made under this section for which payments of principal are deferred because the student is on an active duty deferment under section 428(b)(1)(M)(iv) shall be paid by the Secretary.'.

(d) PERKINS LOANS- Section 464(c)(2)(A) of the Higher Education Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is amended--

(1) in clause (iii), by striking `or' after the semicolon;

(2) in clause (iv), by inserting `or' after the semicolon; and

(3) by inserting after clause (iv) the following:

`(v) during which the borrower is a member of the reserve components of the Armed Forces on active duty for a period of more than 30 days under a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10, United States Code, and for 3 months following discharge or release from such active duty.'.

SEC. 212. PRESERVATION OF EDUCATIONAL STATUS AND TUITION.

(a) IN GENERAL- Title VII of the Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.), as amended by section 1 of Public Law 108-189 (117 Stat. 2835), is further amended by adding at the end the following new section:

`SEC. 707. PRESERVATION OF EDUCATIONAL STATUS AND TUITION.

`(a) LEAVE OF ABSENCE- A servicemember who is a member of the reserve components on active duty for a period of more than 30 days under a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10, United States Code, and who is enrolled as a student at an institution of higher education at the time of entry into the service on active duty, shall be granted a leave of absence from the institution during the period of the service on active duty and for one year after the conclusion of the service on active duty.

`(b) EDUCATIONAL STATUS-

`(1) IN GENERAL- A servicemember on a leave of absence from an institution of higher education under subsection (a) shall be entitled, upon completion of the leave of absence, to be restored to the educational status the servicemember had attained before entering into the service on active duty as described in that subsection without loss of academic credits earned, scholarships or grants awarded, or, subject to paragraph (2), tuition and other fees paid before the entry of the servicemember into the service on active duty.

`(2) TUITION-

`(A) REFUND- An institution of higher education shall refund tuition or fees paid or credit the tuition and fees to the next period of enrollment after a servicemember returns from the leave of absence, at the option of the servicemember. Notwithstanding the 180-day limitation referred to in subsection (a)(2)(B) of section 484B of the Higher Education Act of 1965 (20 U.S.C. 1091b), a servicemember on a leave of absence under this section shall not be treated as having withdrawn for purposes of such section 484B unless the servicemember fails to return upon the completion of the leave of absence.

`(B) AMOUNT OF REFUND- If a servicemember requests a refund for a period of enrollment, the percentage of the tuition and fees that shall be refunded shall be equal to 100 percent minus--

`(i) the percentage of the period of enrollment (for which the tuition and fees were paid) that was completed (as determined in accordance with subsection (d) of such section 484B) as of the day the servicemember withdrew, provided that such date occurs on or before the completion of 60 percent of the period of enrollment; or

`(ii) 100 percent, if the day the person withdrew occurs after the servicemember has completed 60 percent of the period of enrollment.'.

(b) CLERICAL AMENDMENT- The table of contents of that Act is amended by adding at the end the following new item:

`Sec. 707. Preservation of educational status and tuition.'.

TITLE III--COMPENSATION AND RETIREMENT BENEFITS

SEC. 301. NONREDUCTION IN PAY FOR FEDERAL EMPLOYEES WHO ARE RESERVES SERVING ON ACTIVE DUTY IN THE UNIFORMED SERVICES FOR EXTENDED PERIODS.

(a) IN GENERAL- Subchapter IV of chapter 55 of title 5, United States Code, is amended by adding at the end the following:

`Sec. 5538. Nonreduction in pay of Reserves on active duty in the uniformed services for extended periods

`(a) An employee who is absent from a position of employment with the Federal Government in order to perform active duty in the uniformed services for a period of more than 30 days pursuant to a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10 shall be entitled, while serving on active duty, to receive, for each pay period described in subsection (b), an amount equal to the amount by which--

`(1) the amount of basic pay which would otherwise have been payable to such employee for such pay period if such employee's civilian employment with the Government had not been interrupted by that service, exceeds (if at all)

`(2) the amount of pay and allowances which (as determined under subsection (d))--

`(A) is payable to such employee for that service; and

`(B) is allocable to such pay period.

`(b)(1) Amounts under this section shall be payable with respect to each pay period (which would otherwise apply if the employee's civilian employment had not been interrupted)--

`(A) during which such employee is entitled to reemployment rights under chapter 43 of title 38 with respect to the position from which such employee is absent (as referred to in subsection (a)); and

`(B) for which such employee does not otherwise receive basic pay (including by taking any annual, military, or other paid leave) to which such employee is entitled by virtue of such employee's civilian employment with the Government.

`(2) For purposes of this section, the period during which an employee is entitled to reemployment rights under chapter 43 of title 38--

`(A) shall be determined disregarding the provisions of section 4312(d) of title 38; and

`(B) shall include any period of time specified in section 4312(e) of title 38 within which an employee may report or apply for employment or reemployment following completion of the service on active duty to which called or ordered as described in subsection (a).

`(c) Any amount payable under this section to an employee shall be paid--

`(1) by such employee's employing agency;

`(2) from the appropriation or fund which would be used to pay the employee if such employee were in a pay status; and

`(3) to the extent practicable, at the same time and in the same manner as would basic pay if such employee's civilian employment had not been interrupted.

`(d) The Office of Personnel Management shall, in consultation with Secretary of Defense, prescribe any regulations necessary to carry out the preceding provisions of this section.

`(e)(1) The head of each agency referred to in section 2302(a)(2)(C)(ii) shall, in consultation with the Office, prescribe procedures to ensure that the rights under this section apply to the employees of such agency.

`(2) The Administrator of the Federal Aviation Administration shall, in consultation with the Office, prescribe procedures to ensure that the rights under this section apply to the employees of that agency.

`(f) In this section--

`(1) the terms `employee', `Federal Government', and `uniformed services' have the same respective meanings as given them in section 4303 of title 38;

`(2) the term `employing agency', as used with respect to an employee entitled to any payments under this section, means the agency or other entity of the Government (including an agency referred to in section 2302(a)(2)(C)(ii)) with respect to which such employee has reemployment rights under chapter 43 of title 38; and

`(3) the term `basic pay' includes any amount payable under section 5304.'.

(b) TECHNICAL AND CONFORMING AMENDMENT- The table of sections for chapter 55 of title 5, United States Code, is amended by inserting after the item relating to section 5537 the following:

`5538. Nonreduction in pay of Reserves on active duty in the uniformed services for extended periods.'

(c) EFFECTIVE DATE- The amendments made by this section shall apply with respect to pay periods (as described in section 5538(b) of title 5, United States Code, as added by this section) beginning on or after the date of enactment of this Act.

SEC. 302. CREDIT FOR INCOME DIFFERENTIAL FOR EMPLOYMENT OF ACTIVATED MILITARY RESERVIST AND REPLACEMENT PERSONNEL.

(a) IN GENERAL- Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to foreign tax credit, etc.) is amended by adding at the end the following new section:

`SEC. 30B. EMPLOYER WAGE CREDIT FOR ACTIVATED MILITARY RESERVISTS.

`(a) GENERAL RULE- There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of--

`(1) in the case of a small business employer, the employment credit with respect to all qualified employees and qualified replacement employees of the taxpayer, plus

`(2) the self-employment credit of a qualified self-employed taxpayer.

`(b) EMPLOYMENT CREDIT- For purposes of this section--

`(1) QUALIFIED EMPLOYEES-

`(A) IN GENERAL- The employment credit with respect to a qualified employee of the taxpayer for any taxable year is equal to the lesser of--

`(i) the excess, if any, of--

`(I) the qualified employee's average daily qualified compensation for the taxable year, over

`(II) the average daily military pay and allowances received by the qualified employee during the taxable year,

while participating in qualified reserve component duty to the exclusion of the qualified employee's normal employment duties for the number of days the qualified employee participates in qualified reserve component duty during the taxable year, including time spent in a travel status, or

`(ii) $15,000.

The employment credit, with respect to all qualified employees, is equal to the sum of the employment credits for each qualified employee under this subsection.

`(B) AVERAGE DAILY QUALIFIED COMPENSATION AND AVERAGE DAILY MILITARY PAY AND ALLOWANCES- As used with respect to a qualified employee--

`(i) the term `average daily qualified compensation' means the qualified compensation of the qualified employee for the taxable year divided by the difference between--

`(I) 365, and

`(II) the number of days the qualified employee participates in qualified reserve component duty during the taxable year, including time spent in a travel status, and

`(ii) the term `average daily military pay and allowances' means--

`(I) the amount paid to the qualified employee during the taxable year as military pay and allowances on account of the qualified employee's participation in qualified reserve component duty, divided by

`(II) the total number of days the qualified employee participates in qualified reserve component duty, including time spent in travel status.

`(C) QUALIFIED COMPENSATION- When used with respect to the compensation paid or that would have been paid to a qualified employee for any period during which the qualified employee participates in qualified reserve component duty, the term `qualified compensation' means--

`(i) compensation which is normally contingent on the qualified employee's presence for work and which would be deductible from the taxpayer's gross income under section 162(a)(1) if the qualified employee were present and receiving such compensation,

`(ii) compensation which is not characterized by the taxpayer as vacation or holiday pay, or as sick leave or pay, or as any other form of pay for a nonspecific leave of absence, and with respect to which the number of days the qualified employee participates in qualified reserve component duty does not result in any reduction in the amount of vacation time, sick leave, or other nonspecific leave previously credited to or earned by the qualified employee, and

`(iii) group health plan costs (if any) with respect to the qualified employee.

`(D) QUALIFIED EMPLOYEE- The term `qualified employee' means a person who--

`(i) has been an employee of the taxpayer for the 91-day period immediately preceding the period during which the employee participates in qualified reserve component duty, and

`(ii) is a member of the Ready Reserve of a reserve component of an Armed Force of the United States as defined in sections 10142 and 10101 of title 10, United States Code.

`(2) QUALIFIED REPLACEMENT EMPLOYEES-

`(A) IN GENERAL- The employment credit with respect to a qualified replacement employee of the taxpayer for any taxable year is equal to the lesser of--

`(i) the individual's qualified compensation attributable to service rendered as a qualified replacement employee, or

`(ii) $15,000.

The employment credit, with respect to all qualified replacement employees, is equal to the sum of the employment credits for each qualified replacement employee under this subsection.

`(B) QUALIFIED COMPENSATION- When used with respect to the compensation paid to a qualified replacement employee, the term `qualified compensation' means--

`(i) compensation which is normally contingent on the qualified replacement employee's presence for work and which is deductible from the taxpayer's gross income under section 162(a)(1),

`(ii) compensation which is not characterized by the taxpayer as vacation or holiday pay, or as sick leave or pay, or as any other form of pay for a nonspecific leave of absence, and

`(iii) group health plan costs (if any) with respect to the qualified replacement employee.

`(C) QUALIFIED REPLACEMENT EMPLOYEE- The term `qualified replacement employee' means an individual who is hired to replace a qualified employee or a qualified self-employed taxpayer, but only with respect to the period during which such employee or taxpayer participates in qualified reserve component duty, including time spent in travel status.

`(c) SELF-EMPLOYMENT CREDIT- For purposes of this section--

`(1) IN GENERAL- The self-employment credit of a qualified self-employed taxpayer for any taxable year is equal to the lesser of--

`(A) the excess, if any, of--

`(i) the self-employed taxpayer's average daily self-employment income for the taxable year over

`(ii) the average daily military pay and allowances received by the taxpayer during the taxable year, while participating in qualified reserve component duty to the exclusion of the taxpayer's normal self-employment duties for the number of days the taxpayer participates in qualified reserve component duty during the taxable year, including time spent in a travel status, or

`(B) $15,000.

`(2) AVERAGE DAILY SELF-EMPLOYMENT INCOME AND AVERAGE DAILY MILITARY PAY AND ALLOWANCES- As used with respect to a self-employed taxpayer--

`(A) the term `average daily self-employment income' means the self-employment income (as defined in section 1402(b)) of the taxpayer for the taxable year plus the amount paid for insurance which constitutes medical care for the taxpayer for such year (within the meaning of section 162(l)) divided by the difference between--

`(i) 365, and

`(ii) the number of days the taxpayer participates in qualified reserve component duty during the taxable year, including time spent in a travel status, and

`(B) the term `average daily military pay and allowances' means--

`(i) the amount paid to the taxpayer during the taxable year as military pay and allowances on account of the taxpayer's participation in qualified reserve component duty, divided by

`(ii) the total number of days the taxpayer participates in qualified reserve component duty, including time spent in travel status.

`(3) QUALIFIED SELF-EMPLOYED TAXPAYER- The term `qualified self-employed taxpayer' means a taxpayer who--

`(A) has net earnings from self-employment (as defined in section 1402(a)) for the taxable year, and

`(B) is a member of the Ready Reserve of a reserve component of an Armed Force of the United States.

`(d) COORDINATION WITH OTHER CREDITS- The amount of credit otherwise allowable under sections 51(a) and 1396(a) with respect to any employee shall be reduced by the credit allowed by this section with respect to such employee.

`(e) LIMITATIONS-

`(1) APPLICATION WITH OTHER CREDITS- The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of--

`(A) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 29, and 30, over

`(B) the tentative minimum tax for the taxable year.

`(2) DISALLOWANCE FOR FAILURE TO COMPLY WITH EMPLOYMENT OR REEMPLOYMENT RIGHTS OF MEMBERS OF THE RESERVE COMPONENTS OF THE ARMED FORCES OF THE UNITED STATES- No credit shall be allowed under subsection (a) to a taxpayer for--

`(A) any taxable year, beginning after the date of the enactment of this section, in which the taxpayer is under a final order, judgment, or other process issued or required by a district court of the United States under section 4323 of title 38 of the United States Code with respect to a violation of chapter 43 of such title, and

`(B) the 2 succeeding taxable years.

`(3) DISALLOWANCE WITH RESPECT TO PERSONS ORDERED TO ACTIVE DUTY FOR TRAINING- No credit shall be allowed under subsection (a) to a taxpayer with respect to any period by taking into account any person who is called or ordered to active duty for any of the following types of duty:

`(A) Active duty for training under any provision of title 10, United States Code.

`(B) Training at encampments, maneuvers, outdoor target practice, or other exercises under chapter 5 of title 32, United States Code.

`(C) Full-time National Guard duty, as defined in section 101(d)(5) of title 10, United States Code.

`(f) GENERAL DEFINITIONS AND SPECIAL RULES- For purposes of this section--

`(1) SMALL BUSINESS EMPLOYER-

`(A) IN GENERAL- The term `small business employer' means, with respect to any taxable year, any employer who employed an average of 50 or fewer employees on business days during such taxable year.

`(B) CONTROLLED GROUPS- For purposes of subparagraph (A), all persons treated as a single employer under subsection (b), (c),

(m), or (o) of section 414 shall be treated as a single employer.

`(2) MILITARY PAY AND ALLOWANCES- The term `military pay' means pay as that term is defined in section 101(21) of title 37, United States Code, and the term `allowances' means the allowances payable to a member of the Armed Forces of the United States under chapter 7 of that title.

`(3) QUALIFIED RESERVE COMPONENT DUTY- The term `qualified reserve component duty' means active duty performed for a period not less than 180 days under a call or order to active duty under a provision of law referred to in section 101(a)(13)(B) of title 10, United States Code.

`(4) CARRYBACK AND CARRYFORWARD ALLOWED-

`(A) IN GENERAL- If the credit allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (e)(1) for such taxable year (in this paragraph referred to as the `unused credit year'), such excess shall be a credit carryback to each of the 3 taxable years preceding the unused credit year and a credit carryforward to each of the

20 taxable years following the unused credit year.

`(B) RULES- Rules similar to the rules of section 39 shall apply with respect to the credit carryback and credit carryforward under subparagraph (A).

`(5) CERTAIN RULES TO APPLY- Rules similar to the rules of subsections (c), (d), and (e) of section 52 shall apply.'.

(b) NO DEDUCTION FOR COMPENSATION TAKEN INTO ACCOUNT FOR CREDIT- Section 280C(a) of the Internal Revenue Code of 1986 (relating to rule for employment credits) is amended--

(1) by inserting `or compensation' after `salaries', and

(2) by inserting `30B,' before `45A(a)'.

(c) CONFORMING AMENDMENT- Section 55(c)(2) of the Internal Revenue Code of 1986 is amended by inserting `30B(e)(1),' after `30(b)(3),'.

(d) CLERICAL AMENDMENT- The table of sections for subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end 30A the following new item:

`Sec. 30B. Employer wage credit for activated military reservists.'.

(e) EFFECTIVE DATE- The amendments made by this section shall apply to amounts paid after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 303. REDUCED MINIMUM AGE FOR ELIGIBILITY FOR NON-REGULAR SERVICE RETIRED PAY.

Section 12731(a)(1) of title 10, United States Code, is amended by striking `60 years of age' and inserting `55 years of age'.

TITLE IV--HEALTH CARE BENEFITS

SEC. 401. EXPANDED ELIGIBILITY OF READY RESERVE MEMBERS UNDER TRICARE PROGRAM.

(a) UNCONDITIONAL ELIGIBILITY- Subsection (a) of section 1076b of title 10, United States Code, is amended by striking `and receive benefits' and all that follows through `an employer-sponsored health benefits plan'.

(b) PERMANENT AUTHORITY- Subsection (l) of such section is repealed.

(c) CONFORMING AMENDMENTS- Such section is further amended--

(1) by striking subsections (i) and (j); and

(2) by redesignating subsection (k) as subsection (i).

SEC. 402. CONTINUATION OF NON-TRICARE HEALTH BENEFITS PLAN COVERAGE FOR CERTAIN RESERVES CALLED OR ORDERED TO ACTIVE DUTY AND THEIR DEPENDENTS.

(a) REQUIRED CONTINUATION- (1) Chapter 55 of title 10, United States Code, is amended by inserting after section 1078a the following new section:

`Sec. 1078b. Continuation of non-TRICARE health benefits plan coverage for dependents of certain Reserves called or ordered to active duty

`(a) PAYMENT OF PREMIUMS- The Secretary concerned shall pay the applicable premium to continue in force any qualified health benefits plan coverage for the members of the family of an eligible reserve component member for the benefits coverage continuation period if timely elected by the member in accordance with regulations prescribed under subsection (g).

`(b) ELIGIBLE MEMBER; FAMILY MEMBERS- (1) A member of a reserve component is eligible for payment of the applicable premium for continuation of qualified health benefits plan coverage under subsection (a) while serving on active duty for a period of more than 30 days pursuant to a call or order issued under a provision of law referred to in section 101(a)(13)(B) of this title during a war or a national emergency declared by the President or Congress.

`(2) For the purposes of this section, the members of the family of an eligible reserve component member include only the member's dependents described in subparagraphs (A), (D), and (I) of section 1072(2) of this title.

`(c) QUALIFIED HEALTH BENEFITS PLAN COVERAGE- For the purposes of this section, health benefits plan coverage for the members of the family of a reserve component member called or ordered to active duty is qualified health benefits plan coverage if--

`(1) the coverage was in force on the date on which the Secretary notified the reserve component member that issuance of the call or order was pending or, if no such notification was provided, the date of the call or order;

`(2) on such date, the coverage applied to the reserve component member and members of the family of the reserve component member; and

`(3) the coverage has not lapsed.

`(d) APPLICABLE PREMIUM- The applicable premium payable under this section for continuation of health benefits plan coverage for the family members of a reserve component member is the amount of the premium payable by the member for the coverage of the family members.

`(e) BENEFITS COVERAGE CONTINUATION PERIOD- The benefits coverage continuation period under this section for qualified health benefits plan coverage for the family members of an eligible reserve component member called or ordered to active duty is the period that--

`(1) begins on the date of the call or order; and

`(2) ends at the end of the day on which the active duty terminates.

`(f) EXTENSION OF PERIOD OF COBRA COVERAGE- Notwithstanding any other provision of law--

`(1) any period of coverage under a COBRA continuation provision (as defined in section 9832(d)(1) of the Internal Revenue Code of 1986) for an eligible reserve component member under this section shall be deemed to be equal to the benefits coverage continuation period for such member under this section; and

`(2) with respect to the election of any period of coverage under a COBRA continuation provision (as so defined), rules similar to the rules under section 4980B(f)(5)(C) of such Code shall apply.

`(g) REGULATIONS- The Secretary of Defense shall prescribe regulations for carrying out this section. The regulations shall include such requirements for making an election of payment of applicable premiums as the Secretary considers appropriate.'.

(2) The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 1078a the following new item:

`1078b. Continuation of non-TRICARE health benefits plan coverage for dependents of certain Reserves called or ordered to active duty.'.

(b) APPLICABILITY- Section 1078b of title 10, United States Code (as added by subsection (a)), shall apply with respect to calls or orders of members of reserve components of the Armed Forces to active duty as described in subsection (b) of such section, that are issued by the Secretary of a military department before, on, or after the date of the enactment of this Act, but only with respect to qualified health benefits plan coverage (as described in subsection (c) of such section) that is in effect on or after the date of the enactment of this Act.

END