Small Business Health Insurance Affordability Act of 2005 - Amends the Internal Revenue Code to: (1) allow certain small employers (employers with between two and 50 employees) a business tax credit for payment of employee health insurance costs; (2) allow private foundations to make grants to a qualified health benefit purchasing coalition. Defines "qualified health benefit purchasing coalition" as a private non-profit corporation which sells health insurance to employers through State licensed health insurance issuers.
Directs: (1) the Secretary of Health and Human Services to award demonstration grants to States to develop innovative ways to increase access to health insurance through market reforms and other means; and (2) the Small Business Administration (SBA) to award grants to States, local governments, and nonprofit organizations to provide information to small employers about the benefits of health insurance.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2002 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 2002
To amend the Internal Revenue Code of 1986 to provide tax incentives to
encourage small business health plans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 28, 2005
Mr. Moore of Kansas introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committees
on Energy and Commerce and Small Business, 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
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide tax incentives to
encourage small business health plans, 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 ``Small Business Health Insurance
Affordability Act of 2005''.
SEC. 2. 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. 45J. 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 or incurred by the taxpayer during the
taxable year for health insurance coverage for such year 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
qualified health benefit purchasing coalition (as defined in
section 9841), 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 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 later of--
``(A) the date of the enactment of this section, or
``(B) the earliest date that the employee is
covered under the plan.
``(3) Employer must bear 65 percent of cost and cover 70
percent of qualified employees.--Expenses may be taken into
account under subsection (a) only if--
``(A) at least 65 percent of the cost of the
coverage (without regard to this section) is borne by
the employer, and
``(B) the plan provides health insurance coverage
to at least 70 percent of the qualified employees of
such 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) Qualified employee.--
``(A) In general.--The term `qualified employee'
means any employee of an employer if the annual rate of
such employee's compensation (as defined in section
414(s)) does not exceed $40,000.
``(B) Treatment of certain employees.--The term
`employee' shall include a leased employee within the
meaning of section 414(n).
``(C) Reduction of credit for employees earning
more than $30,000.--If the annual rate of an employee's
compensation (as defined in section 414(s)) exceeds
$30,000, the applicable limitation under subsection
(c)(1) (determined without regard to this clause) shall
be reduced (but not below zero) by an amount which
bears the same ratio to such limitation as such excess
bears to $10,000.
``(D) Employees having family coverage.--In the
case of an employee who has family coverage--
``(i) subparagraph (A) shall be applied by
substituting `$50,000' for `$40,000', and
``(ii) subparagraph (C) shall be applied by
substituting `$40,000' for `$30,000'.
``(3) Small employer.--The term `small employer' has the
meaning given to such term by section 4980D(d)(2); except that
only qualified employees shall be taken into account.
``(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 2006, 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 2005' 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 (18), by striking the period
at the end of paragraph (19) and inserting ``, plus'', and by adding at
the end the following:
``(20) in the case of a small employer (as defined in
section 45J(d)(3)), the health insurance credit determined
under section 45J(a).''.
(c) Denial of Double Benefit.--Section 280C of such Code is amended
by adding at the end the following new subsection:
``(e) 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 45J
for the taxable year which is equal to the amount of the credit
determined for such taxable year under section 45J(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.''.
(d) 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. 45J. Small business health insurance expenses.''.
(e) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2005.
SEC. 3. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED HEALTH
BENEFIT PURCHASING COALITIONS.
(a) In General.--Section 4942 of the Internal Revenue Code of 1986
(relating to taxes on failure to distribute income) is amended by
adding at the end the following:
``(k) Certain Qualified Health Benefit Purchasing Coalition
Distributions.--
``(1) In general.--For purposes of subsection (g), sections
170, 501, 507, 509, and 2522, and this chapter, a qualified
health benefit purchasing coalition distribution by a private
foundation shall be considered to be a distribution for a
charitable purpose.
``(2) Qualified health benefit purchasing coalition
distribution.--For purposes of paragraph (1)--
``(A) In general.--The term `qualified health
benefit purchasing coalition distribution' means any
amount paid or incurred by a private foundation to or
on behalf of a qualified health benefit purchasing
coalition (as defined in section 9841) for purposes of
payment or reimbursement of amounts paid or incurred in
connection with the establishment and maintenance of
such coalition.
``(B) Exclusions.--Such term shall not include any
amount used by a qualified health benefit purchasing
coalition (as so defined)--
``(i) for the purchase of real property,
``(ii) as payment to, or for the benefit
of, members (or employees or affiliates of such
members) of such coalition, or
``(iii) for any expense paid or incurred
more than 48 months after the date of
establishment of such coalition.
``(3) Termination.--This subsection shall not apply--
``(A) to qualified health benefit purchasing
coalition distributions paid or incurred after December
31, 2010, and
``(B) with respect to start-up costs of a coalition
which are paid or incurred after December 31, 2012.''.
(b) Qualified Health Benefit Purchasing Coalition.--
(1) In general.--Chapter 100 of such Code (relating to
group health plan requirements) is amended by adding at the end
the following new subchapter:
``Subchapter D--Qualified Health Benefit Purchasing Coalition
``Sec. 9841. Qualified health benefit purchasing coalition.
``SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.
``(a) In General.--A qualified health benefit purchasing coalition
is a private not-for-profit corporation which--
``(1) sells health insurance through State licensed health
insurance issuers in the State in which the employers to which
such coalition is providing insurance are located, and
``(2) establishes to the Secretary, under State
certification procedures or other procedures as the Secretary
may provide by regulation, that such coalition meets the
requirements of this section.
``(b) Board of Directors.--
``(1) In general.--Each purchasing coalition under this
section shall be governed by a Board of Directors.
``(2) Election.--The Secretary shall establish procedures
governing election of such Board.
``(3) Membership.--The Board of Directors shall--
``(A) be composed of representatives of the members
of the coalition, in equal number, including small
employers and employee representatives of such
employers, but
``(B) not include other interested parties, such as
health care service providers, health insurers, or
insurance agents or brokers which may have a conflict
of interest with the purposes of the coalition.
``(c) Membership of Coalition.--
``(1) In general.--A purchasing coalition shall accept all
small employers residing within the area served by the
coalition as members if such employers request such membership.
``(2) Other members.--The coalition, at the discretion of
its Board of Directors, may be open to individuals and large
employers.
``(3) Voting.--Members of a purchasing coalition shall have
voting rights consistent with the rules established by the
State.
``(d) Duties of Purchasing Coalitions.--Each purchasing coalition
shall--
``(1) enter into agreements with small employers (and, at
the discretion of its Board, with individuals and other
employers) to provide health insurance benefits to employees
and retirees of such employers,
``(2) where it is feasible and advisable, enter into
agreements with 3 or more unaffiliated, qualified licensed
health plans, to offer benefits to members,
``(3) offer to members at least 1 open enrollment period of
at least 30 days per calendar year,
``(4)(A) serve a geographical area which, under the State
certification procedures referred to in subsection (a)(2), is
significant, and
``(B) market to all eligible members in that area, and
``(5) carry out other functions provided for under this
section.
``(e) Limitation on Activities.--A purchasing coalition shall not--
``(1) perform any activity (including certification or
enforcement) relating to compliance or licensing of health
plans,
``(2) assume insurance or financial risk in relation to any
health plan, or
``(3) perform other activities identified by the State as
being inconsistent with the performance of its duties under
this section.
``(f) Additional Requirements for Purchasing Coalitions.--As
provided by the Secretary in regulations, a purchasing coalition shall
be subject to requirements similar to the requirements of a group
health plan under this chapter.
``(g) Relation to Other Laws.--
``(1) Preemption of state fictitious group laws.--
Requirements (commonly referred to as fictitious group laws)
relating to grouping and similar requirements for health
insurance coverage are preempted to the extent such
requirements impede the establishment and operation of
qualified health benefit purchasing coalitions.
``(2) Allowing savings to be passed through.--Any State law
that prohibits health insurance issuers from reducing premiums
on health insurance coverage sold through a qualified health
benefit purchasing coalition to reflect administrative savings
is preempted. This paragraph shall not be construed to preempt
State laws that impose restrictions on premiums based on health
status, claims history, industry, age, gender, or other
underwriting factors.
``(3) No waiver of hipaa requirements.--Nothing in this
section shall be construed to change the obligation of health
insurance issuers to comply with the requirements of title
XXVII of the Public Health Service Act with respect to health
insurance coverage offered to small employers in the small
group market through a qualified health benefit purchasing
coalition.
``(h) Definition of Small Employer.--For purposes of this section--
``(1) In general.--The term `small employer' means, with
respect to any calendar year, any employer if such employer
employed an average of at least 2 and not more than 50
qualified employees on business days during either of the 2
preceding calendar years. For purposes of the preceding
sentence, a preceding calendar year may be taken into account
only if the employer was in existence throughout such year.
``(2) Employers not in existence in preceding year.--In the
case of an employer which was not in existence throughout the
1st preceding calendar year, the determination under paragraph
(1) shall be based on the average number of qualified employees
that it is reasonably expected such employer will employ on
business days in the current calendar year.''.
(2) Conforming amendment.--The table of subchapters for
chapter 100 of such Code is amended by adding at the end the
following item:
``subchapter d. qualified health benefit purchasing coalition''.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2004.
SEC. 4. STATE GRANT PROGRAM FOR MARKET INNOVATION.
(a) In General.--The Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') shall establish a
program (in this section referred to as the ``program'') to award
demonstration grants under this section to States to allow States to
demonstrate the effectiveness of innovative ways to increase access to
health insurance through market reforms and other innovative means.
Such innovative means may include (and are not limited to) any of the
following:
(1) Alternative group purchasing or pooling arrangements,
such as a purchasing cooperatives for small businesses,
reinsurance pools, or high risk pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both, in
obtaining health insurance.
(b) Scope; Duration.--The program shall be limited to not more than
10 States and to a total period of 5 years, beginning on the date the
first demonstration grant is made.
(c) Conditions for Demonstration Grants.--
(1) In general.--The Secretary may not provide for a
demonstration grant to a State under the program unless the
Secretary finds that under the proposed demonstration grant--
(A) the State will provide for demonstrated
increase of access for some portion of the existing
uninsured population through a market innovation (other
than merely through a financial expansion of a program
initiated before the date of the enactment of this
Act);
(B) the State will comply with applicable Federal
laws;
(C) the State will not discriminate among
participants on the basis of any health status-related
factor (as defined in section 2791(d)(9) of the Public
Health Service Act), except to the extent a State
wishes to focus on populations that otherwise would not
obtain health insurance because of such factors; and
(D) the State will provide for such evaluation, in
coordination with the evaluation required under
subsection (d), as the Secretary may specify.
(2) Application.--The Secretary shall not provide a
demonstration grant under the program to a State unless--
(A) the State submits to the Secretary such an
application, in such a form and manner, as the
Secretary specifies;
(B) the application includes information regarding
how the demonstration grant will address issues such as
governance, targeted population, expected cost, and
continuation after the completion of the demonstration
grant period; and
(C) the Secretary determines that the demonstration
grant will be used in a manner consistent with this
section.
(3) Focus.--A demonstration grant proposal under this
section need not cover all uninsured individuals in a State or
all health care benefits with respect to such individuals.
(d) Evaluation.--The Secretary shall enter into a contract with an
appropriate entity outside the Department of Health and Human Services
to conduct an overall evaluation of the program at the end of the
program period. Such evaluation shall include an analysis of
improvements in access, costs, quality of care, or choice of coverage,
under different demonstration grants.
(e) Option to Provide for Initial Planning Grants.--The Secretary
may provide for a portion of the amounts appropriated under subsection
(f) (not to exceed $5,000,000) to be made available to any State for
initial planning grants to permit States to develop demonstration grant
proposals under this section.
(f) Authorization of Appropriations.--There are authorized to be
appropriated $100,000,000 for each fiscal year to carry out this
section. Amounts appropriated under this subsection shall remain
available until expended.
(g) State Defined.--For purposes of this section, the term
``State'' has the meaning given such term for purposes of title XIX of
the Social Security Act.
SEC. 5. GRANT PROGRAM TO FACILITATE HEALTH BENEFITS INFORMATION FOR
SMALL EMPLOYERS.
(a) In General.--The Small Business Administration shall award
grants to 1 or more States, local governments, and non-profit
organizations for the purposes of--
(1) demonstrating new and effective ways to provide
information about the benefits of health insurance to small
employers, including tax benefits, increased productivity of
employees, and decreased turnover of employees,
(2) making employers aware of their current rights in the
marketplace under State and Federal health insurance reforms,
and
(3) making employers aware of the tax treatment of
insurance premiums.
(b) Authorization.--There is authorized to be appropriated
$10,000,000 for each of the first 5 fiscal years beginning after the
date of the enactment of this Act for grants under subsection (a).
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Small Business, 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.
Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Small Business, 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.
Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Small Business, 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.
Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Small Business, 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.
Referred to the Subcommittee on Health, for a period to be subsequently determined by the Chairman.
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