HR 1181 IH

To amend the Internal Revenue Code of 1986 to provide incentives for private health coverage for the previously uninsured, and for other purposes.

March 22, 2001

Mrs. JOHNSON of Connecticut (for herself, Mr. LOBIONDO, Mr. ROGERS of Michigan, Mr. TANCREDO, Mr. MCHUGH, Mr. OTTER, Mr. MCINNIS, Mrs. MINK of Hawaii, and Mr. PAUL) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide incentives for private health coverage for the previously uninsured, 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 `Health Insurance Affordability and Equity Act of 2001'.

SEC. 2. CREDIT FOR HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED INDIVIDUALS.

(a) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25A the following new section:

`SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED INDIVIDUALS.

`(a) IN GENERAL- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the amount paid during the taxable year for coverage for the taxpayer, his spouse, and dependents under qualified health insurance.

`(b) LIMITATIONS-

`(1) IN GENERAL- The amount allowed as a credit under subsection (a) to the taxpayer for the taxable year shall not exceed the sum of the monthly limitations for eligible coverage months during such taxable year for each individual referred to in subsection (a).

`(2) MONTHLY LIMITATION-

`(A) IN GENERAL- The monthly limitation for an individual for each eligible coverage month of such individual during the taxable year is the amount equal to 1/12 of $1,500.

`(B) LIMITATION TO 2 INDIVIDUALS- Not more than 2 individuals may be taken into account by the taxpayer under this subsection.

`(C) 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,

only such individual may be taken into account under this subsection.

`(3) ELIGIBLE COVERAGE MONTH- For purposes of this subsection, the term `eligible coverage month' means, with respect to an individual, any month if--

`(A) as of the first day of such month such individual is covered by qualified health insurance the premium for which was paid by the taxpayer, and

`(B) there was at least a 12-month period beginning after December 31, 2001, and ending before such month throughout which the individual--

`(i) was not covered by qualified health insurance, and

`(ii) was not eligible to participate in any employer-provided group health plan.

`(c) LIMITATION BASED ON ADJUSTED GROSS INCOME-

`(1) IN GENERAL- The aggregate amount which would (but for this subsection) be allowed as a credit under this section shall be reduced (but not below zero) by the amount determined under paragraph (2).

`(2) AMOUNT OF REDUCTION-

`(A) IN GENERAL- The amount determined under this paragraph shall be the amount which bears the same ratio to such aggregate amount as--

`(i) the excess of--

`(I) the taxpayer's modified adjusted gross income for such taxable year, over

`(II) the applicable dollar amount, bears to

`(ii) $10,000.

`(B) MODIFIED ADJUSTED GROSS INCOME- For purposes of this paragraph, the term `modified adjusted gross income' means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

`(C) ROUNDING- Any amount determined under subparagraph (A) which is not a multiple of $10 shall be rounded to the next lowest $10.

`(3) APPLICABLE DOLLAR AMOUNT- For purposes of paragraph (2), the term `applicable dollar amount' means--

`(A) $60,000 in the case of a taxpayer whose qualified health insurance coverage covers more than 1 individual referred to in subsection (a), and

`(B) $30,000--

`(i) in any case not described in subparagraph (A), and

`(ii) in the case of a married individual filing a separate return.

For purposes of this paragraph, marital status shall be determined under section 7703.

`(d) QUALIFIED HEALTH INSURANCE- For purposes of this section--

`(1) IN GENERAL- The term `qualified health insurance' means insurance which constitutes medical care; except that such term shall not include any insurance if substantially all of its coverage is of excepted benefits described in section 9832(c).

`(2) CREDIT NOT ALLOWABLE FOR CERTAIN SUBSIDIZED COVERAGE- Except for purposes of subsection (b)(3)(B), the term `qualified health insurance' shall not include any coverage less than 50 percent of the cost of which is borne by the taxpayer.

`(e) DENIAL OF CREDIT FOR AMOUNTS PAID UNDER CERTAIN GOVERNMENT-PROVIDED PROGRAMS-

`(1) IN GENERAL- No credit shall be allowed under this section for amounts paid under--

`(A) title XVIII, XIX, or XXI of the Social Security Act,

`(B) chapter 55 of title 10, United States Code,

`(C) chapter 17 of title 38, United States Code, or

`(D) the Indian Health Care Improvement Act.

`(2) COVERAGE UNDER PROGRAM INCLUDED IN DETERMINING ELIGIBILITY- Coverage under any of the provisions referred to in paragraph (1) shall be treated as coverage under qualified health insurance for purposes of subsection (b)(3)(B).

`(g) SPECIAL RULES-

`(1) COORDINATION WITH OTHER DEDUCTIONS- No credit shall be allowed under this section for the taxable year if any amount paid for qualified health insurance is taken into account in determining any deduction allowed for such year under sections 162(l), 213, or 222.

`(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) INFLATION ADJUSTMENT-

`(A) IN GENERAL- In the case of a taxable year beginning after 2002, the dollar amount in subsection (b)(2)(A) and each dollar amount in subsection (c)(3) shall be increased by an amount equal to--

`(i) such dollar amount, multiplied by

`(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting `calendar year 2001' for `calendar year 1992' in subparagraph (B) thereof.

`(B) ROUNDING- If any amount as adjusted under subparagraph (A) is not a multiple of $100, such amount shall be rounded to the next lowest multiple of $100.'

(b) CLERICAL AMENDMENT- The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25A the following new item:

`Sec. 25B. Health insurance costs of previously uninsured individuals.'

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

SEC. 3. DEDUCTION FOR QUALIFIED HEALTH INSURANCE COSTS OF EMPLOYEES AND SELF-EMPLOYED INDIVIDUALS.

(a) IN GENERAL- Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to additional itemized deductions) is amended by redesignating section 222 as section 223 and by inserting after section 221 the following new section:

`SEC. 222. COSTS OF QUALIFIED HEALTH INSURANCE.

`(a) IN GENERAL- In the case of an individual, there shall be allowed as a deduction an amount equal to the amount paid during the taxable year for coverage for the taxpayer, his spouse, and dependents under qualified health insurance (as defined in section 25B(d)).

`(b) SPECIAL RULES-

`(1) COORDINATION WITH MEDICAL DEDUCTION, ETC- Any amount paid by a taxpayer for insurance to which subsection (a) applies shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 162(l) or 213(a).

`(2) DEDUCTION NOT ALLOWED FOR SELF-EMPLOYMENT TAX PURPOSES- The deduction allowable by reason of this section shall not be taken into account in determining an individual's net earnings from self-employment (within the meaning of section 1402(a)) for purposes of chapter 2.'

(b) CONFORMING AMENDMENTS-

(1) Subsection (a) of section 62 of such Code is amended by inserting after paragraph (17) the following new item:

`(18) COSTS OF QUALIFIED HEALTH INSURANCE- The deduction allowed by section 222.'

(3) 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. 222. Costs of qualified health insurance.

`Sec. 223. Cross reference.'

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

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