HR 2185 IH

To amend the Internal Revenue Code of 1986 to allow individuals a refundable credit against income tax for the purchase of private health insurance through a pooling arrangement.

June 14, 1999

Mr. STARK introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Internal Revenue Code of 1986 to allow individuals a refundable credit against income tax for the purchase of private health insurance through a pooling arrangement.

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 for Americans Act of 1999'.

TITLE I--REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE

SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE.

(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 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 the amount paid during the taxable year for qualified health insurance for the taxpayer, his spouse, and dependents.

`(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 coverage months during such taxable year for each individual referred to in subsection (a) for whom the taxpayer paid during the taxable year any amount for coverage under qualified health insurance.

`(2) MONTHLY LIMITATION-

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

`(i) $1,200 if such individual is the taxpayer,

`(ii) $1,200 if--

`(I) such individual is the spouse of the taxpayer,

`(II) the taxpayer and such spouse are married as of the first day of such month, and

`(III) the taxpayer files a joint return for the taxable year, and

`(iii) $600 if such individual is an individual for whom a deduction under section 151(c) is allowable to the taxpayer for such taxable year.

`(B) LIMITATION TO 2 DEPENDENTS- Not more than 2 individuals may be taken into account by the taxpayer under subparagraph (A)(iii).

`(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,

the limitation imposed by subparagraph (B) shall be divided equally between the individual and the individual's spouse unless they agree on a different division.

`(3) COVERAGE MONTH- For purposes of this subsection--

`(A) IN GENERAL- The term `coverage month' means, with respect to an individual, any month if--

`(i) as of the first day of such month such individual is covered by qualified health insurance, and

`(ii) the premium for coverage under such insurance for such month is paid by the taxpayer.

`(B) EMPLOYER-SUBSIDIZED COVERAGE- Such term shall not include any month for which such individual participates in

any subsidized health plan (within the meaning of section 162(l)(2)) maintained by any employer of the taxpayer or of the spouse of the taxpayer.

`(C) CAFETERIA PLAN AND FLEXIBLE SPENDING ACCOUNT BENEFICIARIES- Such term shall not include any month during a taxable year if any amount is not includible in the gross income of the taxpayer for such year under section 106 with respect to--

`(i) a benefit chosen under a cafeteria plan (as defined in section 125(d)), or

`(ii) a benefit provided under a flexible spending or similar arrangement.

`(D) MEDICARE AND MEDICAID- Such term shall not include any month with respect to an individual if, as of the first day of such month, such individual--

`(i) is entitled to any benefits under title XVIII of the Social Security Act, or

`(ii) is a participant in the program under title XIX of such Act.

`(E) CERTAIN OTHER COVERAGE- Such term shall not include any month during a taxable year with respect to an individual if, at any time during such year, any benefit is provided to such individual under--

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

`(ii) any medical care program under the Indian Health Care Improvement Act.

`(F) PRISONERS- Such term shall not include any month with respect to an individual if, as of the first day of such month, such individual is imprisoned under Federal, State, or local authority.

`(G) INSUFFICIENT PRESENCE IN UNITED STATES- Such term shall not include any month during a taxable year with respect to an individual if such individual is present in the United States on fewer than 183 days during such year (determined in accordance with section 7701(b)(7)).

`(4) COORDINATION WITH DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS- In the case of a taxpayer who is eligible to deduct any amount under section 162(l) for the taxable year, this section shall apply only if the taxpayer elects not to claim any amount as a deduction under such section for such year.

`(c) QUALIFIED HEALTH INSURANCE- For purposes of this section, the term `qualified health insurance' means insurance sold through the Office of Health Insurance under title II of the Health Insurance for Americans Act of 1999.

`(d) COORDINATION WITH ADVANCE PAYMENTS OF CREDIT-

`(1) RECAPTURE OF EXCESS ADVANCE PAYMENTS- If any payment is made by the Secretary under section 7527 during any calendar year to a provider of qualified health insurance for an individual, then the tax imposed by this chapter for the individual's last taxable year beginning in such calendar year shall be increased by the aggregate amount of such payments.

`(2) RECONCILIATION OF PAYMENTS ADVANCED AND CREDIT ALLOWED- Any increase in tax under paragraph (1) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit (other than the credit allowed by subsection (a)) allowable under this subpart.

`(e) SPECIAL RULES-

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

`(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 any taxable year beginning in a calendar year after 2001, each dollar amount contained in subsection (b)(2)(A) shall be increased by an amount equal to--

`(i) such dollar amount, multiplied by

`(ii) the average of the inflation adjustments for the calendar year in which the taxable year begins and the preceding 4 calendar years.

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.

`(B) INFLATION ADJUSTMENT- For purposes of subparagraph (A), the inflation adjustment for any calendar year is the percentage (if any) by which--

`(i) the weighted average FEHBP cost for the preceding calendar year, exceeds

`(ii) the weighted average FEHBP cost for second preceding calendar year.

`(C) WEIGHTED AVERAGE FEHBP COST- For purposes of subparagraph (B), the weighted average FEHBP cost for any calendar year is the weighted average determined under section 8906(a)(1)(A) of title 5, United States Code, as of October 1 of such calendar year based on the subscription charges that will be in effect during the following contract year.'

(b) INFORMATION REPORTING-

(1) IN GENERAL- Subpart B of part III of subchapter A of chapter 61 of such Code (relating to information concerning transactions with other persons) is amended by inserting after section 6050S the following new section:

`SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR QUALIFIED HEALTH INSURANCE.

`(a) IN GENERAL- Any person who, in connection with a trade or business conducted by such person, receives payments during any calendar year from any individual for coverage of such individual or any other individual under creditable health insurance, shall make the return described in subsection (b) (at such time as the Secretary may by regulations prescribe) with respect to each individual from whom such payments were received.

`(b) FORM AND MANNER OF RETURNS- A return is described in this subsection if such return--

`(1) is in such form as the Secretary may prescribe, and

`(2) contains--

`(A) the name, address, and TIN of the individual from whom payments described in subsection (a) were received,

`(B) the name, address, and TIN of each individual who was provided by such person with coverage under creditable health insurance by reason of such payments and the period of such coverage, and

`(C) such other information as the Secretary may reasonably prescribe.

`(c) CREDITABLE HEALTH INSURANCE- For purposes of this section, the term `creditable health insurance' means qualified health insurance (as defined in section 35(c)) other than--

`(1) insurance under a subsidized group health plan maintained by an employer, or

`(2) to the extent provided in regulations prescribed by the Secretary, any other insurance covering an individual if no credit is allowable under section 35 with respect to such coverage.

`(d) STATEMENTS TO BE FURNISHED TO INDIVIDUALS WITH RESPECT TO WHOM INFORMATION IS REQUIRED- Every person required to make a return under subsection (a) shall furnish to each individual whose name is required under subsection (b)(2)(A) to be set forth in such return a written statement showing--

`(1) the name and address of the person required to make such return and the phone number of the information contact for such person,

`(2) the aggregate amount of payments described in subsection (a) received by the person required to make such return from the individual to whom the statement is required to be furnished, and

`(3) the information required under subsection (b)(2)(B) with respect to such payments.

The written statement required under the preceding sentence shall be furnished on or before January 31 of the year following the calendar year for which the return under subsection (a) is required to be made.

`(e) RETURNS WHICH WOULD BE REQUIRED TO BE MADE BY 2 OR MORE PERSONS- Except to the extent provided in regulations prescribed by the Secretary, in the case of any amount received by any person on behalf of another person, only the person first receiving such amount shall be required to make the return under subsection (a).'.

(2) ASSESSABLE PENALTIES-

(A) Subparagraph (B) of section 6724(d)(1) of such Code (relating to definitions) is amended by redesignating clauses (xi) through (xvii) as clauses (xii) through (xviii), respectively, and by inserting after clause (x) the following new clause:

`(xi) section 6050T (relating to returns relating to payments for qualified health insurance),'.

(B) Paragraph (2) of section 6724(d) of such Code is amended by striking `or' at the end of the next to last subparagraph, by striking the period at the end of the last

subparagraph and inserting `, or', and by adding at the end the following new subparagraph:

`(BB) section 6050T(d) (relating to returns relating to payments for qualified health insurance).'.

(3) CLERICAL AMENDMENT- The table of sections for subpart B of part III of subchapter A of chapter 61 of such Code is amended by inserting after the item relating to section 6050S the following new item:

`Sec. 6050T. Returns relating to payments for qualified health insurance.'.

(c) 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 35 of such Code'.

(2) 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.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PURCHASERS OF QUALIFIED HEALTH INSURANCE.

(a) IN GENERAL- Chapter 77 of the Internal Revenue Code of 1986 (relating to miscellaneous provisions) is amended by adding at the end the following new section:

`SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR PURCHASERS OF QUALIFIED HEALTH INSURANCE.

`(a) GENERAL RULE- In the case of an eligible individual, the Secretary shall make payments to the provider of such individual's qualified health insurance equal to such individual's qualified health insurance credit advance amount with respect to such provider.

`(b) ELIGIBLE INDIVIDUAL- For purposes of this section, the term `eligible individual' means any individual--

`(1) who purchases qualified health insurance (as defined in section 35(c)), and

`(2) for whom a qualified health insurance credit eligibility certificate is in effect.

`(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGIBILITY CERTIFICATE- For purposes of this section, a qualified health insurance credit eligibility certificate is a statement furnished by an individual to the Secretary which--

`(1) certifies that the individual will be eligible to receive the credit provided by section 35 for the taxable year,

`(2) estimates the amount of such credit for such taxable year, and

`(3) provides such other information as the Secretary may require for purposes of this section.

`(d) QUALIFIED HEALTH INSURANCE CREDIT ADVANCE AMOUNT- For purposes of this section, the term `qualified health insurance credit advance amount' means, with respect to any provider of qualified health insurance, the Secretary's estimate of the amount of credit allowable under section 35 to the individual for the taxable year which is attributable to the insurance provided to the individual by such provider.

`(e) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.'.

(b) CLERICAL AMENDMENT- The table of sections for chapter 77 of such Code is amended by adding at the end the following new item:

`Sec. 7527. Advance payment of health insurance credit for purchasers of qualified health insurance.'.

(c) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 2001.

TITLE II--MAKING HEALTH INSURANCE COVERAGE AVAILABLE

SEC. 201. REQUIREMENT FOR OFFERING BY CARRIERS PARTICIPATING IN THE FEDERAL EMPLOYEES' HEALTH BENEFITS PROGRAM (FEHBP).

(a) IN GENERAL- As a condition for entering into a contract for the offering of a health benefits plan under FEHBP on and after January 1, 2001, if the carrier offering the plan is a health insurance issuer the carrier offering the plan--

(1) shall make available qualified health insurance under this title to qualified individuals;

(2) shall provide for an annual open enrollment period (consistent with section 202(c)) during which such individuals may enroll in such insurance; and

(3) shall permit enrollment at other times and may impose (with respect to enrollment at such times) a waiting period of not longer than 60 days.

(b) QUALIFIED HEALTH INSURANCE DEFINED- For purposes of this title, the term `qualified health insurance' means, with respect to a carrier, health insurance coverage--

(1) that provides benefits that are the same as (or actuarially equivalent to) the benefits offered by

the carrier under a health benefits plan under FEHBP;

(2) for which there is no pre-existing exclusion or waiting period (except as permitted under subsection (a)(3)); and

(3) for which the premiums charged and quality of care standards are negotiated between the carrier and the Office of Health Insurance established under section 202 and for such which the premiums are established and applied on a uniform, community-rated basis.

(c) VARIATION IN BENEFITS- The benefits offered under qualified health insurance may vary from those offered by the carrier under FEHBP but only insofar as the Director of the Office of Health Insurance determines that such variation does not result in improper favorable selection. Such variation shall be permitted to enable the carrier to offer health insurance coverage the premium for which is equal to the credit amount available under section 35 of the Internal Revenue Code of 1986 and which does not require a premium payment by the qualified individual.

(d) QUALIFIED INDIVIDUAL DEFINED- For purposes of this title, the term `qualified individual' means an individual who is eligible for an income tax credit under section 35 of the Internal Revenue Code of 1986 for the purchase of qualified health insurance.

(e) ADDITIONAL DEFINITIONS- For purposes of this title:

(1) CARRIER- The term `carrier' has the meaning given such term in section 8901 of title 5, United States Code.

(2) FEHBP- The term `FEHBP' means the program of health benefits offered under chapter 89 of title 5, United States Code.

(3) HEALTH INSURANCE COVERAGE; HEALTH INSURANCE ISSUER- The terms `health insurance coverage' and `health insurance issuer' have the meanings given such terms in paragraphs (1) and (2) of section 9832(b) of the Internal Revenue Code of 1986.

SEC. 202. OFFICE OF HEALTH INSURANCE.

(a) ESTABLISHMENT- The Secretary of Health and Human Services shall establish an Office of Health Insurance (in this title referred to as the `Office'), to be headed by a Director (in this title referred to as the `Director') appointed by the Secretary.

(b) FUNCTIONS- In relation to carrying out section 201, the Office and the Director shall have the same authorities as the Office of Personnel Management and the Director of such Office have in carrying out FEHBP. The Office shall be responsible for the offering to qualified individuals of qualified health insurance made available under such section.

(c) PROVISION OF INFORMATION- The Director shall be responsible for the distribution of such information (including information in comparative form) and the conduct of a coordinated annual open enrollment period in a manner designed to encourage competition and facilitate consumer choice among the qualified health insurance offered under this title.

SEC. 203. EFFECTIVE DATE.

This title takes effect on January 1, 2001.

END