[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1274 Introduced in Senate (IS)]
106th CONGRESS
1st Session
S. 1274
To amend the Internal Revenue Code of 1986 to increase the
accessibility to and affordability of health care, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 24, 1999
Mr. Grams (for himself, Mr. Roth, Mr. Abraham, Mr. Ashcroft, Mr. Burns,
Mr. DeWine, Mr. Frist, Mr. Gorton, Mrs. Hutchison, Mr. Santorum, Mr.
Thomas, Mr. Nickles, Mr. Mack, Mr. Craig, Mr. Coverdell, Mr. McConnell,
Mr. Inhofe, and Mr. Bunning) 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 increase the
accessibility to and affordability of health care, and for other
purposes.
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 Care Access and Equity Act of
1999''.
SEC. 2. DEDUCTION FOR HEALTH INSURANCE COSTS FOR INDIVIDUALS NOT
ELIGIBLE TO PARTICIPATE IN EMPLOYER-SUBSIDIZED HEALTH
PLANS.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions) is amended by redesignating section 222 as section 223 and
by inserting after section 221 the following:
``SEC. 222. HEALTH INSURANCE COSTS.
``(a) In General.--In the case of an individual, there shall be
allowed as a deduction an amount equal to 100 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) Deduction not available to individuals eligible for
employer-subsidized coverage.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), subsection (a) shall not
apply to any taxpayer for any calendar month for which
the taxpayer is eligible to participate in any
subsidized health plan maintained by any employer (or
former employer) of the taxpayer or of the spouse of
the taxpayer. The preceding sentence shall be applied
separately with respect to--
``(i) plans which include coverage for
qualified long-term care services (as defined
in section 7702B(c)) or are qualified long-term
care insurance contracts (as defined in section
7702B(b)), and
``(ii) coverage under the plans which do
not include such coverage and are not such
contracts.
``(B) Certain coverage disregarded.--Subparagraph
(A) shall not apply if the subsidized health plan is
limited to--
``(i) coverage for accidents, disability,
dental care, vision care, or a specified
illness, or
``(ii) making payments of a fixed amount
per day (or other period) of hospitalization.
``(C) Continuation coverage.--Coverage shall not be
treated as subsidized for purposes of this paragraph
if--
``(i) such coverage is continuation
coverage (within the meaning of section
4980B(f)) required to be provided by the
employer, and
``(ii) the taxpayer or the taxpayer's
spouse is required to pay a premium for such
coverage in an amount not less than 100 percent
of the applicable premium (within the meaning
of section 4980B(f)(4)) for the period of such
coverage.
``(2) Limitation on long-term care premiums.--In the case
of a qualified long-term care insurance contract (as defined in
section 7702B(b)), only eligible long-term care premiums (as
defined in section 213(d)(10)) shall be taken into account
under subsection (a).
``(3) Deduction not available for payment of certain
premiums.--The following amounts shall not be taken into
account under subsection (a):
``(A) Medicare premiums.--Any amount paid as a
premium--
``(i) under part A, B, or C of title XVIII
of the Social Security Act, and
``(ii) for any medicare supplemental policy
described in section 1882 of such Act.
``(B) Ancillary coverage premiums.--Any amount paid
as a premium for insurance which provides for--
``(i) coverage for accidents, disability,
dental care, vision care, or a specified
illness, or
``(ii) making payments of a fixed amount
per day (or other period) of hospitalization.
``(C) Tangential coverage premiums.--Any amount
paid as a premium for insurance if substantially all of
the coverage provided under such insurance relates to--
``(i) liabilities incurred under workers'
compensation laws,
``(ii) tort liabilities,
``(iii) liabilities relating to ownership
or use of property, or
``(iv) such other similar liabilities as
the Secretary may specify by regulations.
``(c) Special Rules.--For purposes of this section--
``(1) Coordination with medical deduction, etc.--Any amount
paid by a taxpayer for insurance to which subsection (a)
applies shall not be taken into account in computing the amount
allowable to the taxpayer as a deduction under section 213(a).
``(2) Deduction not allowed for self-employment tax
purposes.--The deduction allowable by reason of this section
shall not be taken into account in determining an individual's
net earnings from self-employment (within the meaning of
section 1402(a)) for purposes of chapter 2.''
(b) Conforming Amendments.--
(1) Subsection (l) of section 162 of the Internal Revenue
Code of 1986 is repealed.
(2) Subsection (a) of section 62 of such Code is amended by
inserting after paragraph (17) the following:
``(18) Health insurance costs of certain individuals.--The
deduction allowed by section 222.''
(3) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by striking the last item and
inserting the following:
``Sec. 222. Health insurance costs.
``Sec. 223. Cross reference.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 3. FULL AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) Availability Not Limited To Accounts for Employees of Small
Employers and Self-Employed Individuals.--
(1) In general.--Section 220(c)(1)(A) of the Internal
Revenue Code of 1986 (relating to eligible individual) is
amended to read as follows:
``(A) In general.--The term `eligible individual'
means, with respect to any month, any individual if--
``(i) such individual is covered under a
high deductible health plan as of the 1st day
of such month, and
``(ii) such individual is not, while
covered under a high deductible health plan,
covered under any health plan--
``(I) which is not a high
deductible health plan, and
``(II) which provides coverage for
any benefit which is covered under the
high deductible health plan.''
(2) Conforming amendments.--
(A) Section 220(c)(1) of such Code is amended by
striking subparagraphs (C) and (D).
(B) Section 220(c) of such Code is amended by
striking paragraph (4) (defining small employer) and by
redesignating paragraph (5) as paragraph (4).
(C) Section 220(b) of such Code is amended by
striking paragraph (4) (relating to deduction limited
by compensation) and by redesignating paragraphs (5),
(6), and (7) as paragraphs (4), (5), and (6),
respectively.
(b) Removal of Limitation on Number of Taxpayers Having Medical
Savings Accounts.--
(1) In general.--Section 220 of the Internal Revenue Code
of 1986 (relating to medical savings accounts) is amended by
striking subsections (i) and (j).
(2) Medicare+choice.--Section 138 of such Code (relating to
Medicare+Choice MSA) is amended by striking subsection (f).
(c) Reduction in High Deductible Plan Minimum Annual Deductible.--
(1) In general.--Section 220(c)(2)(A) of the Internal
Revenue Code of 1986 (relating to high deductible health plan)
is amended--
(A) by striking ``$1,500'' in clause (i) and
inserting ``$1,000'', and
(B) by striking ``$3,000'' in clause (ii) and
inserting ``$2,000''.
(2) Conforming amendment.--Subsection (g) of section 220 of
such Code is amended--
(A) by striking ``1998'' and inserting ``1999'';
and
(B) by striking ``1997'' and inserting ``1998''.
(d) Increase in Contribution Limit to 100 Percent of Annual
Deductible.--
(1) In general.--Section 220(b)(2) of the Internal Revenue
Code of 1986 (relating to monthly limitation) is amended to
read as follows:
``(2) Monthly limitation.--The monthly limitation for any
month is the amount equal to \1/12\ of the annual deductible of
the high deductible health plan of the individual.''
(2) Conforming amendment.--Section 220(d)(1)(A) of such
Code is amended by striking ``75 percent of''.
(e) Limitation on Additional Tax on Distributions Not Used for
Qualified Medical Expenses.--Section 220(f)(4) of the Internal Revenue
Code of 1986 (relating to additional tax on distributions not used for
qualified medical expenses) is amended by adding at the end the
following:
``(D) Exception in case of sufficient account
balance.--Subparagraph (A) shall only apply to any
payment or distribution in any taxable year to the
extent that the fair market value of the assets of the
medical savings account after such payment or
distribution is less than the annual deductible for the
high deductible health plan of the account holder
(determined as of January 1 of the calendar year in
which the taxable year begins).''
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 4. CARRYOVER OF UNUSED BENEFITS FROM CAFETERIA PLANS, FLEXIBLE
SPENDING ARRANGEMENTS, AND HEALTH FLEXIBLE SPENDING
ACCOUNTS.
(a) In General.--Section 125 of the Internal Revenue Code of 1986
(relating to cafeteria plans) is amended by redesignating subsections
(h) and (i) as subsections (i) and (j) and by inserting after
subsection (g) the following:
``(h) Allowance of Carryovers of Unused Benefits to Later Taxable
Years.--
``(1) In general.--For purposes of this title--
``(A) notwithstanding subsection (d)(2), a plan or
other arrangement shall not fail to be treated as a
cafeteria plan or flexible spending or similar
arrangement, and
``(B) no amount shall be required to be included in
gross income by reason of this section or any other
provision of this chapter,
solely because under such plan or other arrangement any
nontaxable benefit which is unused as of the close of a taxable
year may be carried forward to 1 or more succeeding taxable
years.
``(2) Limitation.--Paragraph (1) shall not apply to amounts
carried from a plan to the extent such amounts exceed $500
(applied on an annual basis). For purposes of this paragraph,
all plans and arrangements maintained by an employer or any
related person shall be treated as 1 plan.
``(3) Allowance of rollover.--
``(A) In general.--In the case of any unused
benefit described in paragraph (1) which consists of
amounts in a health flexible spending account or
dependent care flexible spending account, the plan or
arrangement shall provide that a participant may elect,
in lieu of such carryover, to have such amounts
distributed to the participant.
``(B) Amounts not included in income.--Any
distribution under subparagraph (A) shall not be
included in gross income to the extent that such amount
is transferred in a trustee-to-trustee transfer, or is
contributed within 60 days of the date of the
distribution, to--
``(i) a qualified cash or deferred
arrangement described in section 401(k),
``(ii) a plan under which amounts are
contributed by an individual's employer for an
annuity contract described in section 403(b),
``(iii) an eligible deferred compensation
plan described in section 457, or
``(iv) a medical savings account (within
the meaning of section 220).
Any amount rolled over under this subparagraph shall be
treated as a rollover contribution for the taxable year
from which the unused amount would otherwise be
carried.
``(C) Treatment of rollover.--Any amount rolled
over under subparagraph (B) shall be treated as an
eligible rollover under section 220, 401(k), 403(b), or
457, whichever is applicable, and shall be taken into
account in applying any limitation (or participation
requirement) on employer or employee contributions
under such section or any other provision of this
chapter for the taxable year of the rollover.
``(4) Cost-of-living adjustment.--In the case of any
taxable year beginning in a calendar year after 1999, the $500
amount under paragraph (2) shall be adjusted at the same time
and in the same manner as under section 415(d)(2), except that
the base period taken into account shall be the calendar
quarter beginning October 1, 1998, and any increase which is
not a multiple of $50 shall be rounded to the next lowest
multiple of $50.''
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 5. PERMITTING CONTRIBUTION TOWARDS MEDICAL SAVINGS ACCOUNT THROUGH
FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM (FEHBP).
(a) Government Contribution to Medical Savings Account.--
(1) In general.--Section 8906 of title 5, United States
Code, is amended by adding at the end the following:
``(j)(1) In the case of an employee or annuitant who is enrolled in
a catastrophic plan described by section 8903(5), there shall be a
Government contribution under this subsection to a medical savings
account established or maintained for the benefit of the individual.
The contribution under this subsection shall be in addition to the
Government contribution under subsection (b).
``(2) The amount of the Government contribution under this
subsection with respect to an individual is equal to the amount by
which--
``(A) the maximum contribution allowed under subsection
(b)(1) with respect to any employee or annuitant, exceeds
``(B) the amount of the Government contribution actually
made with respect to the individual under subsection (b) for
coverage under the catastrophic plan.
``(3) The Government contributions under this subsection shall be
paid into a medical savings account (designated by the individual
involved) in a manner that is specified by the Office and consistent
with the timing of contributions under subsection (b).
``(4) Subsections (f) and (g) shall apply to contributions under
this section in the same manner as they apply to contributions under
subsection (b).
``(5) For the purpose of this subsection, the term `medical savings
account' has the meaning given such term by section 220(d) of the
Internal Revenue Code of 1986.''
(2) Allowing payment of full amount of charge for
catastrophic plan.--Section 8906(b)(2) of such title is amended
by inserting ``(or 100 percent of the subscription charge in
the case of a catastrophic plan)'' after ``75 percent of the
subscription charge''.
(b) Offering of Catastrophic Plans.--
(1) In general.--Section 8903 of title 5, United States
Code, is amended by adding at the end the following:
``(5) Catastrophic plans.--One or more plans described in
paragraph (1), (2), or (3), but which provide benefits of the
types referred to by paragraph (5) of section 8904(a), instead
of the types referred to in paragraphs (1), (2), and (3) of
such section.''
(2) Types of benefits.--Section 8904(a) of such title is
amended by inserting after paragraph (4) the following:
``(5) Catastrophic plans.--Benefits of the types named
under paragraph (1) or (2) of this subsection or both, to the
extent expenses covered by the plan exceed $500.''
(3) Determining level of government contributions.--Section
8906(b) of such title is amended by adding at the end the
following: ``Subscription charges for medical savings accounts
shall be deemed to be the amount of Government contributions
made under subsection (j)(2).''
(c) Effective Date.--The amendments made by this section shall
apply to contract terms beginning on or after January 1, 2000.
SEC. 6. INCLUSION OF QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS IN
CAFETERIA PLANS, FLEXIBLE SPENDING ARRANGEMENTS, AND
HEALTH FLEXIBLE SPENDING ACCOUNTS.
(a) In General.--Section 125(f) of the Internal Revenue Code of
1986 (defining qualified benefits) is amended by striking the last
sentence and inserting the following: ``Such term includes any
qualified long-term care insurance contract.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 1999.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S7593-7595)
Read twice and referred to the Committee on Finance.
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