HR 1819 IH

To amend the Internal Revenue Code of 1986 to allow individuals who are not eligible to participate in employer-subsidized health plans a refundable credit for their health insurance costs.

May 14, 1999

Mr. MCDERMOTT (for himself, Mr. ROGAN, Mr. STARK, Mr. GRAHAM, Mr. MATSUI, Mr. LEWIS of Georgia, Mr. NEAL of Massachusetts, Mrs. THURMAN, Mrs. EMERSON, Ms. KILPATRICK, Mr. FROST, Mr. INSLEE, Mr. SHOWS, Mr. MCHUGH, and Ms. PELOSI) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to allow individuals who are not eligible to participate in employer-subsidized health plans a refundable credit for their health insurance costs.

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 `Working Uninsured Tax Equity Act of 1999'.

SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE COSTS.

(a) IN GENERAL- Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable personal credits) is amended by redesignating section 35 as section 36 and by inserting after section 34 the following new section:

`SEC. 35. HEALTH INSURANCE COSTS.

`(a) IN GENERAL- In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle an amount equal to 30 percent of the amount paid during the taxable year for insurance which constitutes medical care for the taxpayer, his spouse, and dependents.

`(b) LIMITATIONS-

`(1) LIMITATION BASED ON EARNED INCOME- The payments taken into account under subsection (a) for any taxable year shall not exceed the sum of--

`(A) the taxpayer's wages, salaries, tips, and other employee compensation includible in gross income, plus

`(B) the taxpayer's earned income (as defined in section 401(c)(2)).

`(2) LIMITATION BASED ON OTHER COVERAGE- Subsection (a) shall not apply to--

`(A) any taxpayer for any calendar month for which the taxpayer is eligible to participate in any subsidized health plan maintained by any employer of the taxpayer or of the spouse of the taxpayer, or

`(B) amounts paid for coverage under--

`(i) part B of title XVIII of the Social Security Act, or

`(ii) a Medicare supplemental policy (within the meaning of section 1882(g)(1) of the Social Security Act (42 U.S.C. 1395ss(g)(1))) or similar supplemental coverage provided under a group health plan.

The rule of the last sentence of section 162(l)(2)(B) shall apply for purposes of subparagraph (A).

`(c) LIMITATION BASED ON ADJUSTED GROSS INCOME-

`(1) IN GENERAL- No credit shall be allowed under subsection (a) for any taxable year for which the taxpayer's adjusted gross income exceeds the applicable dollar amount by $10,000 or more.

`(2) PHASEOUT- If the taxpayer's adjusted gross income for the taxable year exceeds the applicable dollar amount by less than $10,000, the credit which would (but for this subsection and subsection (d)) be allowed under subsection (a) shall be reduced (but not below zero) by an amount which bears the same ratio to such credit as such excess bears to $10,000. Any reduction under the preceding sentence which is not a multiple of $10 shall be rounded to the next lowest $10.

`(3) APPLICABLE DOLLAR AMOUNT- The term `applicable dollar amount' means--

`(A) in the case of a taxpayer filing a joint return, $50,000,

`(B) in the case of any other taxpayer (other than a married individual filing a separate return), $30,000, and

`(C) in the case of a married individual filing a separate return, zero.

`(4) SPECIAL RULE FOR MARRIED INDIVIDUALS FILING SEPARATELY AND LIVING APART- A husband and wife who--

`(A) file separate returns for any taxable year, and

`(B) live apart at all times during such taxable year,

shall not be treated as married individuals for purposes of this paragraph.

`(d) LIMITATION BASED ON AMOUNT OF TAX-

`(1) IN GENERAL- The credit allowed by subsection (a) for the taxable year (determined after the application of subsections (b) and (c)) shall not exceed the sum of--

`(A) the tax imposed by this chapter for the taxable year (reduced by the credits allowable against such tax other than the credits allowable under this subpart), and

`(B) the taxpayer's social security taxes for such taxable year.

`(2) SOCIAL SECURITY TAXES- For purposes of paragraph (1)--

`(A) IN GENERAL- The term `social security taxes' means, with respect to any taxpayer for any taxable year--

`(i) the amount of the taxes imposed by sections 3101, 3111, 3201(a), and 3221(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins,

`(ii) the taxes imposed by section 1401 on the self-employment income of the taxpayer for the taxable year, and

`(iii) the taxes imposed by section 3211(a)(1) on amounts received by the taxpayer during the calendar year in which the taxable year begins.

`(B) COORDINATION WITH SPECIAL REFUND OF SOCIAL SECURITY TAXES- The term `social security taxes' shall not include any taxes to the extent the taxpayer is entitled to a special refund of such taxes under section 6413(c).

`(C) SPECIAL RULE- Any amounts paid pursuant to an agreement under section 3121(l) (relating to agreements entered into by American employers with respect to foreign affiliates) which are equivalent to the taxes referred to in subparagraph (A)(i) shall be treated as taxes referred to in such subparagraph.

`(e) COORDINATION WITH OTHER PROVISIONS-

`(1) DEDUCTION FOR MEDICAL EXPENSES- The amount taken into account in computing the credit under subsection (a) shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 213(a).

`(2) SELF-EMPLOYED INDIVIDUALS ALLOWED EITHER DEDUCTION OR CREDIT FOR HEALTH INSURANCE- No credit shall be allowed under this section to a taxpayer for a taxable year if any amount is allowed as a deduction to such taxpayer for such year under section 162(l).

`(f) EXPENSES MUST BE SUBSTANTIATED- A payment for insurance to which subsection (a) applies may be taken into account under this section only if the taxpayer substantiates such payment in such form as the Secretary may prescribe.

`(g) SECTION NOT TO APPLY TO LONG-TERM CARE INSURANCE- This section shall not apply to insurance which constitutes medical care by reason of section 213(d)(1)(C).'

(b) CLERICAL AMENDMENT- The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by striking the last item and inserting the following new items:

`Sec. 35. Health insurance costs.

`Sec. 36. Overpayments of tax.'

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

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