To make COBRA continuing coverage more affordable for laid-off American workers.

July 24, 2003

Mr. SCHIFF (for himself, Mr. ANDREWS, Mr. HINCHEY, Mr. GEORGE MILLER of California, Ms. JACKSON-LEE of Texas, Mr. WEINER, Mr. KILDEE, Mr. MCNULTY, Ms. CARSON of Indiana, Mr. BRADY of Pennsylvania, Mr. FROST, Mr. WEXLER, Mr. OWENS, Mr. ACKERMAN, Ms. WOOLSEY, Mr. ABERCROMBIE, Mr. FRANK of Massachusetts, Mr. PAYNE, Mr. GRIJALVA, Mrs. JONES of Ohio, and Mr. VAN HOLLEN) introduced the following bill; which was referred to the Committee on Ways and Means

To make COBRA continuing coverage more affordable for laid-off American workers.

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 `COBRA Coverage Act of 2003'.

SEC. 2. CREDIT FOR EMPLOYER-PROVIDED COBRA COVERAGE.

(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by adding at the end the following new section:

`SEC. 45G. EMPLOYER-PROVIDED COBRA COVERAGE.

`(a) IN GENERAL- For purposes of section 38, the employer-provided COBRA coverage credit determined under this section for the taxable year is an amount equal to the COBRA premiums paid or incurred by the taxpayer for continuation coverage during the taxable year of any individual who is a qualified beneficiary by reason of--

`(1) being a covered employee with respect to the taxpayer, or

`(2) bearing a relationship to such a covered employee.

`(b) DOLLAR LIMITATION- The credit determined under subsection (a) for coverage for any month with respect to each qualified beneficiary shall not exceed whichever of the following is the least:

`(1) 50 percent of the COBRA premium for continuation coverage for such month.

`(2) $110 in the case of self-only coverage and $290 in the case of family coverage for such month.

`(c) COBRA PREMIUMS- For purposes of this section, the term `COBRA premiums' means, with respect to any period of continuation coverage for a qualified beneficiary, the cost of such coverage for such period to the extent such cost does not exceed the maximum amount which (without regard to this section) may be required under section 4980B(f)(2)(C) to be paid for such coverage for such beneficiary.

`(d) OTHER DEFINITIONS- Terms used in this section which are also used in section 4980B shall have the respective meanings given such terms by section 4980B.'

(b) DENIAL OF DOUBLE BENEFIT- Section 280C of such Code (relating to certain expenses for which credits are allowable) is amended by adding at the end the following new subsection:

`(d) CREDIT FOR EMPLOYER-PROVIDED COBRA COVERAGE- No deduction shall be allowed for that portion of the COBRA premiums (as defined in section 45G(c)) otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit allowable for the taxable year under section 45G (determined without regard to section 38(c)).'

(c) CONFORMING AMENDMENTS-

(1) Subsection (b) of section 38 of such Code 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 employer-provided COBRA coverage credit determined under section 45G.'.

(2) The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

`Sec. 45G. Employer-provided COBRA coverage.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

END