HR 2362 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, and to provide for a report on State health insurance safety-net programs.

June 25, 1999

Mr. ARMEY introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Commerce, 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, and to provide for a report on State health insurance safety-net programs.

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 `Fair Care for the Uninsured 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) $1,000 if such individual is the taxpayer,

`(ii) $1,000 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) $500 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--

`(1) IN GENERAL- The term `qualified health insurance' means insurance which constitutes medical care as defined in section 213(d) without regard to--

`(A) paragraph (1)(C) thereof, and

`(B) so much of paragraph (1)(D) thereof as relates to qualified long-term care insurance contracts.

`(2) EXCLUSION OF CERTAIN OTHER CONTRACTS- Such term shall not include insurance if a substantial portion of its benefits are excepted benefits (as defined in section 9832(c)).

`(d) MEDICAL SAVINGS ACCOUNT CONTRIBUTIONS-

`(1) IN GENERAL- If a deduction would (but for paragraph (2)) be allowed under section 220 to the taxpayer for a payment for the taxable year to the medical savings account of an individual, subsection (a) shall be applied by treating such payment as a payment for qualified health insurance for such individual.

`(2) DENIAL OF DOUBLE BENEFIT- No deduction shall be allowed under section 220 for that portion of the payments otherwise allowable as a deduction under section 220 for the taxable year which is equal to the amount of credit allowed for such taxable year by reason of this subsection.

`(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- In the case of any taxable year beginning in a calendar year after 2000, each dollar amount contained in subsection (b)(2)(A) shall be increased by an amount equal to--

`(A) such dollar amount, multiplied by

`(B) 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 1999' for `calendar year 1992' in subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50 ($25 in the case of the dollar amount in subsection (b)(2)(A)(iii)).'

(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, 1999.

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, 2000.

TITLE II--STUDY OF SAFETY-NET HEALTH INSURANCE PROGRAMS FOR THE MEDICALLY UNINSURABLE

SEC. 201. STUDY OF STATE SAFETY-NET HEALTH INSURANCE PROGRAMS FOR THE MEDICALLY UNINSURABLE.

(a) STUDY-

(1) IN GENERAL- The Secretary of Health and Human Services shall provide for a study on the current state of all existing State safety-net health insurance programs (as defined in subsection (c)). The study shall determine which forms of such programs are the most successful in making health insurance available to all willing payers regardless of their health status.

(2) CONSULTATION- In conducting the study the Secretary shall consult with representatives of the National Governors Association, the National Association of Insurance Commissioners, national associations representing health insurers, insurance companies that administer and participate in State safety-net health insurance programs, and individuals who receive their health insurance through such programs.

(b) REPORT- The Secretary shall submit to Congress, by not later than October 1, 2000, a detailed report on the study conducted under subsection (a). The report shall include recommendations on how Congress can best strengthen State safety-net health insurance programs where they currently exist and can encourage their establishment in States where they do not exist.

(c) STATE SAFETY-NET HEALTH INSURANCE PROGRAM DEFINED- For purposes of this section, the term `State safety-net health insurance program' means a high risk pool or similar arrangement provided under State law for providing access of medically uninsurable individuals to health insurance coverage. Such term may include such other arrangements as the Secretary finds appropriate for assuring the provision of health insurance coverage to such individuals.

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