To amend the Internal Revenue Code of 1986 to allow medicare beneficiaries a refundable credit against income tax for the purchase of outpatient prescription drugs.

April 30, 2003

Mr. WARNER (for himself, Mr. DAYTON, and Ms. COLLINS) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to allow medicare beneficiaries a refundable credit against income tax for the purchase of outpatient prescription drugs.

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 `Older Americans Prescription Drug Tax Relief Act'.

SEC. 2. REFUNDABLE CREDIT FOR OUTPATIENT PRESCRIPTION DRUGS FOR MEDICARE BENEFICIARIES.

(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 36 as section 37 and by inserting after section 35 the following new section:

`SEC. 36. OUTPATIENT PRESCRIPTION DRUGS FOR MEDICARE BENEFICIARIES.

`(a) IN GENERAL- In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle an amount equal to 50 percent of the amount paid during the taxable year, not compensated for by insurance or otherwise, for qualified outpatient prescription drugs for such individual.

`(b) LIMITATIONS-

`(1) DOLLAR LIMITATION- The amount paid for qualified outpatient prescription drugs which may be taken into account under subsection (a) for any taxable year with respect to any eligible individual shall not exceed $1,000.

`(2) INCOME LIMITATION- The amount allowable as a credit under subsection (a) for any taxable year shall be reduced (but not below zero) by $100 for each $1,000 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year exceeds $75,000 ($150,000 in the case of a joint return).

`(c) ELIGIBLE INDIVIDUAL- For purposes of this section, the term `eligible individual' means, with respect to any taxable year, any individual entitled to any benefits under title XVIII of the Social Security Act during such taxable year.

`(d) QUALIFIED OUTPATIENT PRESCRIPTION DRUGS- For purposes of this section, the term `qualified outpatient prescription drugs' means, with respect to any taxable year, any prescription drug other than a prescription drug any portion of the cost of which is covered under title XVIII of the Social Security Act during such taxable year.

`(e) COORDINATION WITH MEDICAL EXPENSE DEDUCTION- The amount which would (but for this paragraph) be taken into account by the taxpayer under section 162(l) or 213 for the taxable year shall be reduced by the credit (if any) allowed by this section to the taxpayer for such year.'.

(b) CONFORMING AMENDMENTS-

(1) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting before the period `, or from section 36 of such Code'.

(2) 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 last item and inserting the following new items:

`Sec. 36. Outpatient prescription drugs for medicare beneficiaries.

`Sec. 37. Overpayments of tax.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2002.

END