S 2337 IS
106th CONGRESS
2d Session
S. 2337
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 establish State health insurance safety-net programs.
IN THE SENATE OF THE UNITED STATES
March 30, 2000
Mr. SANTORUM (for himself and Mr. KYL) introduced the following bill; which
was read twice and referred to the Committee on Finance
A BILL
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 establish 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'.
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:
`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
and the taxpayer's spouse and dependents.
`(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.
`(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,
`(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) $1,000 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 1 DEPENDENT- Not more than 1 individual may be
taken into account by the taxpayer under subparagraph (A)(iii).
`(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 eligible to participate 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, MEDICAID, AND SCHIP- 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 or XXI 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.
`(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 2001, 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 2000' 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) MAINTENANCE OF EFFORT REQUIREMENT- Section 162 of the Internal Revenue
Code of 1986 (relating to trade or business expenses) is amended by
redesignating subsection (p) as subsection (q) and by inserting after
subsection (o) the following new subsection:
`(p) GROUP HEALTH PLAN MAINTENANCE OF EFFORT- No deduction shall be
allowed under this chapter to an employer for any amount paid or incurred in
connection with a group health plan (as defined in subsection (n)(3)) for any
taxable year in which occurs the date of introduction of the Fair Care for the
Uninsured Act unless such plan remains in effect for at least 6 months after
the date of the enactment of such Act.'.
(c) INFORMATION REPORTING-
(1) IN GENERAL- Subpart B of part III of subchapter A of chapter 61 of
the Internal Revenue Code of 1986 (relating to information concerning
transactions with other persons) is amended by inserting after section 6050S
the following:
`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
`(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:
`(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:
`(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:
`Sec. 6050T. Returns relating to payments for qualified health insurance.'.
(d) 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 the Internal Revenue Code of 1986 is amended by striking the
last item and inserting the following:
`Sec. 35. Health insurance costs.
`Sec. 36. Overpayments of tax.'.
(e) 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:
`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 the
Internal Revenue Code of 1986 is amended by adding at the end the
following:
`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--ASSURING HEALTH INSURANCE COVERAGE FOR UNINSURABLE
INDIVIDUALS
SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE SAFETY NETS.
(1) REQUIREMENT- For years beginning with 2001, each health insurer,
health maintenance organization, and health service organization shall be a
participant in a health insurance safety net (in this title referred to as a
`safety net') established by the State in which it operates.
(2) FUNCTIONS- Any safety net shall assure, in accordance with this
title, the availability of qualified health insurance coverage to
uninsurable individuals.
(3) FUNDING- Any safety net shall be funded by an assessment against
health insurers, health service organizations, and health maintenance
organizations on a pro rata basis of uninsurable individuals covered in the
State in which the safety net operates. The costs of the assessment may be
added by a health insurer, health service organization, or health
maintenance organization to the costs of its health insurance or health
coverage provided in the State.
(4) GUARANTEED RENEWABLE- Coverage under a safety net shall be
guaranteed renewable except for nonpayment of premiums, material
misrepresentation, fraud, medicare eligibility under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.), loss of dependent status, or
eligibility for other health insurance coverage.
(b) DEADLINE- Safety nets required under subsection (a) shall be
established not later than January 1, 2001.
(c) WAIVER- This title shall not apply in the case of insurers and
organizations operating in a State if the State has established a similar
comprehensive health insurance program that assures the availability of
qualified health insurance coverage to all eligible individuals residing in
the State.
(d) RECOMMENDATION FOR COMPLIANCE REQUIREMENT- Not later than January 1,
2002, the Secretary of Health and Human Services shall submit to Congress a
recommendation on appropriate sanctions for States that fail to meet the
requirement of subsection (a).
SEC. 202. UNINSURABLE INDIVIDUALS ELIGIBLE FOR COVERAGE.
(a) UNINSURABLE AND ELIGIBLE INDIVIDUAL DEFINED- In this title:
(1) UNINSURABLE INDIVIDUAL- The term `uninsurable individual' means,
with respect to a State, an eligible individual who presents proof of
uninsurability by a private insurer in accordance with subsection (b) or
proof of a condition previously recognized as uninsurable by the
State.
(A) IN GENERAL- The term `eligible individual' means, with respect to
a State, a citizen or national of the United States (or an alien lawfully
admitted) who is a resident of the State for at least 90 days.
(B) EXCEPTION- An individual is not an `eligible individual' if the
individual--
(i) is covered by or eligible for benefits under a State medicaid
plan approved under title XIX of the Social Security Act (42 U.S.C. 1396
et seq.),
(ii) has voluntarily terminated safety net coverage within the past
6 months,
(iii) has received the maximum benefit payable under the safety
net,
(iv) is an inmate in a public institution, or
(v) is eligible for other public or private health care programs
(including programs that pay for directly, or reimburse, otherwise
eligible individuals with premiums charged for safety net
coverage).
(b) PROOF OF UNINSURABILITY-
(1) IN GENERAL- The proof of uninsurability for an individual shall be
in the form of--
(A) a notice of rejection or refusal to issue substantially similar
insurance,
(B) a notice of refusal to insure except at a rate in excess of the
plan rate which applies to persons in good health, or
(C) an offer to insure only subject to a reduction or an exclusion of
coverage for a preexisting condition for a period exceeding 6
months.
(2) EXCEPTION- A State may waive the requirement of proof described in
paragraph (1) in the case of an individual who demonstrates a provable
medical or health condition.
SEC. 203. QUALIFIED HEALTH INSURANCE COVERAGE UNDER SAFETY NET.
In this title, the term `qualified health insurance coverage' means, with
respect to a State, health insurance coverage that provides benefits typical
of major medical insurance available in the individual health insurance market
in such State.
SEC. 204. FUNDING OF SAFETY NET.
(a) LIMITATIONS ON PREMIUMS-
(1) IN GENERAL- The premium established under a safety net may not
exceed 125 percent of the applicable standard risk rate, except as provided
in paragraph (2).
(2) SURCHARGE FOR AVOIDABLE HEALTH RISKS- A safety net may impose a
surcharge on premiums for individuals with avoidable high risks, such as
smoking.
(b) ADDITIONAL FUNDING- A safety net shall provide for additional funding
through an assessment on all health insurers, health service organizations,
and health maintenance organizations in the State through a nonprofit
association consisting of all such insurers and organizations doing business
in the State on an equitable and pro rata basis consistent with section
201.
SEC. 205. ADMINISTRATION.
A safety net in a State shall be administered through a contract with 1 or
more insurers or third party administrators operating in the State.
END