Health Care Relief Act of 2004 - Amends the Internal Revenue Code to allow: (1) taxpayers, including non-itemizing taxpayers, a tax deduction from gross income for the first $2,000 of their out-of-pocket medical expenses; (2) certain small business employers a business tax credit for amounts paid for employee health insurance coverage; and (3) a refundable tax credit up to $500 for the health insurance costs of a taxpayer and the taxpayer's spouse and dependents.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5355 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 5355
To amend the Internal Revenue Code of 1986 to provide tax incentives to
encourage small business health plans.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 9, 2004
Mr. Boswell (for himself and Mr. Osborne) introduced the following
bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide tax incentives to
encourage small business health plans.
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 Relief Act of 2004''.
SEC. 2. FIRST $2,000 OF HEALTH INSURANCE PREMIUMS FULLY DEDUCTIBLE.
(a) In General.--Subsection (a) of section 213 of the Internal
Revenue Code of 1986 (relating to medical, dental, etc., expenses) is
amended to read as follows:
``(a) Allowance of Deduction.--There shall be allowed as a
deduction the following amounts not compensated for by insurance or
otherwise--
``(1) the amount by which the amount of expenses paid
during the taxable year (reduced by the amount deductible under
paragraph (2)) for medical care of the taxpayer, the taxpayer's
spouse, and the taxpayer's dependents (as defined in section
152) exceeds 7.5 percent of adjusted gross income, plus
``(2) so much of the expenses paid during the taxable year
for insurance which constitutes medical care under subsection
(d)(1)(D) (other than for a qualified long-term care insurance
contract) for such taxpayer, spouse, and dependents as does not
exceed $2,000.''.
(b) Deduction Allowed Whether or not Taxpayer Itemizes Deduction.--
Section 62(a) of the Internal Revenue Code of 1986 (defining adjusted
gross income) is amended by inserting after paragraph (18) the
following new paragraph:
``(19) Health insurance premiums.--The deduction allowed by
section 213(a)(2).''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 3. CREDIT FOR HEALTH INSURANCE EXPENSES OF SMALL BUSINESSES.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business-related
credits) is amended by adding at the end the following:
``SEC. 45G. SMALL BUSINESS HEALTH INSURANCE EXPENSES.
``(a) General Rule.--For purposes of section 38, in the case of a
small employer, the health insurance credit determined under this
section for the taxable year is an amount equal to the applicable
percentage of the expenses paid by the taxpayer during the taxable year
for health insurance coverage for such year provided under a new health
plan for employees of such employer.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage is--
``(1) in the case of insurance purchased as a member of a
health benefit purchasing coalition (as defined in regulations
prescribed by the Secretary), 40 percent, and
``(2) in the case of insurance not described in paragraph
(1), 30 percent.
``(c) Limitations.--
``(1) Per employee dollar limitation.--The amount of
expenses taken into account under subsection (a) with respect
to any employee for any taxable year shall not exceed--
``(A) in the case of insurance purchased as a
member of a coalition referred to in subsection
(b)(1)--
``(i) $800 in the case of self-only
coverage, and
``(ii) $2,000 in the case of family
coverage, and
``(B) in any other case--
``(i) $600 in the case of self-only
coverage, and
``(ii) $1,500 in the case of family
coverage.
In the case of an employee who is covered by a new health plan
of the employer for only a portion of such taxable year, the
limitation under the preceding sentence shall be an amount
which bears the same ratio to such limitation (determined
without regard to this sentence) as such portion bears to the
entire taxable year.
``(2) Period of coverage.--Expenses may be taken into
account under subsection (a) only with respect to coverage for
the 4-year period beginning on the date the employer
establishes a new health plan.
``(3) Employer must bear 65 percent of cost.--Expenses may
be taken into account under subsection (a) only if at least 65
percent of the cost of the coverage (without regard to this
section) is borne by the employer.
``(d) Definitions.--For purposes of this section--
``(1) Health insurance coverage.--The term `health
insurance coverage' has the meaning given such term by section
9832(b)(1).
``(2) New health plan.--
``(A) In general.--The term `new health plan' means
any arrangement of the employer which provides health
insurance coverage to employees if--
``(i) such employer (and any predecessor
employer) did not establish or maintain such
arrangement (or any similar arrangement) at any
time during the 2 taxable years ending prior to
the taxable year in which the credit under this
section is first allowed, and
``(ii) such arrangement provides health
insurance coverage to at least 70 percent of
the qualified employees of such employer.
``(B) Qualified employee.--
``(i) In general.--The term `qualified
employee' means any employee of an employer and
shall include a leased employee within the
meaning of section 414(n).
``(3) Small employer.--The term `small employer' has the
meaning given to such term by section 4980D(d)(2); except
that--
``(A) only qualified employees shall be taken into
account, and
``(B) such section shall be applied by substituting
`100 employees' for `50 employees'.
``(e) Special Rules.--
``(1) Certain rules made applicable.--For purposes of this
section, rules similar to the rules of section 52 shall apply.
``(2) Amounts paid under salary reduction arrangements.--No
amount paid or incurred pursuant to a salary reduction
arrangement shall be taken into account under subsection (a).
``(3) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2004, each dollar
amount contained in subsections (c)(1) and (d)(2)(B) 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 2003' for `calendar year 1992' in
subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $50.
``(f) Termination.--This section shall not apply to expenses paid
or incurred by an employer with respect to any arrangement established
on or after January 1, 2010.''.
(b) Credit to Be Part of General Business Credit.--Section 38(b) of
such Code (relating to current year business credit) is amended by
striking ``plus'' at the end of paragraph (13), by striking the period
at the end of paragraph (14) and inserting ``, plus'', and by adding at
the end the following:
``(15) in the case of a small employer (as defined in
section 45G(d)(3)), the health insurance credit determined
under section 45G(a).''.
(c) No Carrybacks.--Subsection (d) of section 39 of such Code
(relating to carryback and carryforward of unused credits) is amended
by adding at the end the following:
``(11) No carryback of section 45g credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the employee health insurance
expenses credit determined under section 45G may be carried
back to a taxable year beginning before January 1, 2004.''.
(d) Denial of Double Benefit.--Section 280C of such Code is amended
by adding at the end the following new subsection:
``(d) Credit for Small Business Health Insurance Expenses.--
``(1) In general.--No deduction shall be allowed for that
portion of the expenses (otherwise allowable as a deduction)
taken into account in determining the credit under section 45G
for the taxable year which is equal to the amount of the credit
determined for such taxable year under section 45G(a).
``(2) Controlled groups.--Persons treated as a single
employer under subsection (a) or (b) of section 52 shall be
treated as 1 person for purposes of this section.''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following:
``Sec. 45G. Small business health insurance expenses.''.
(f) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2003, for arrangements established after the date of the
enactment of this Act.
SEC. 4. REFUNDABLE HEALTH INSURANCE COSTS CREDIT.
(a) Allowance of Credit.--
(1) 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 36 as section 37 and by inserting after section 35 the
following new section:
``SEC. 36. HEALTH INSURANCE COSTS FOR UNINSURED INDIVIDUALS.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this subtitle
for the taxable year an amount equal to the amount paid by the taxpayer
during such taxable year for qualified health insurance for the
taxpayer and the taxpayer's spouse and dependents.
``(b) Limitation.--The amount allowed as a credit under subsection
(a) for a taxable year shall not exceed $500.
``(c) Qualified Health Insurance.--For purposes of this section,
the term `qualified health insurance' means health insurance coverage
(as defined in section 9832(b)(1)).
``(d) 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) 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.
``(3) Coordination with deduction for archer msas and
hsas.--In the case of a taxpayer who is eligible to deduct any
amount under section 220 or 223 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.
``(4) 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.
``(5) Coordination with section 35.--If a taxpayer is
eligible for the credit allowed under this section and section
35 for any taxable year, the taxpayer shall elect which credit
is to be allowed.
``(e) 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.
``(f) Regulations.--The Secretary may prescribe such regulations as
may be necessary to carry out the purposes of this section.''.
(b) Conforming Amendments.--
(1) Section 162(l) of the Internal Revenue Code of 1986 is
amended by adding at the end the following:
``(6) Election to have subsection apply.--No deduction
shall be allowed under paragraph (1) for a taxable year unless
the taxpayer elects to have this subsection apply for such
year.''.
(2) Section 220(b) of such Code is amended by adding at the
end the following:
``(8) Election to have subsection apply.--No deduction
shall be allowed under subsection (a) for a taxable year unless
the taxpayer elects to have this section apply for such
year.''.
(3) Section 223(b) of such Code is amended by adding at the
end the following:
``(8) Election to have subsection apply.--No deduction
shall be allowed under subsection (a) for a taxable year unless
the taxpayer elects to have this section apply for such
year.''.
(4) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``, or
from section 36 of such Code''.
(5) 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. 36. Health insurance costs for uninsured individuals.
``Sec. 37. Overpayments of tax.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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