Small Business Health Insurance Promotion Act of 2005 - Amends the Internal Revenue Code to allow certain small employers (not more than 50 employees) a business tax credit equal to 50 percent of amounts paid by such employers for the health care coverage of their employees under a qualified health pooling arrangement. Limits the period during which the tax credit may be taken to four years from the date the employer begins participating in a qualified health pooling arrangement. Defines "qualified health pooling arrangement" as a national or state arrangement that provides health benefits coverage substantially similar to that of the four largest health benefit plans offered to Federal employees.
Directs the Secretaries of Health and Human Services and Labor to provide for the offering and oversight of qualified State and national health pooling arrangements and to conduct a study, through the Institute of Medicine of the National Academy of Sciences, of the operation of such arrangements.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2073 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 2073
To amend the Internal Revenue Code of 1986 to provide tax subsidies to
encourage small employers to offer affordable health coverage to their
employees through qualified health pooling arrangements, to encourage
the establishment and operation of these arrangements, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 4, 2005
Mr. Barrow (for himself, Mr. Dingell, Mr. Rangel, Mr. Stark, Mr. Brown
of Ohio, Mr. Waxman, Ms. Pelosi, Mr. George Miller of California, Mr.
Pallone, Mr. Ackerman, Mr. Allen, Mr. Andrews, Mr. Baca, Ms. Baldwin,
Mr. Berman, Mr. Blumenauer, Mr. Boucher, Ms. Corrine Brown of Florida,
Mr. Butterfield, Mr. Carnahan, Ms. Carson, Mr. Cleaver, Mr. Crowley,
Mr. Cummings, Mrs. Davis of California, Mr. DeFazio, Ms. DeGette, Ms.
DeLauro, Mr. Doggett, Mr. Engel, Ms. Eshoo, Mr. Farr, Mr. Ford, Mr.
Gonzalez, Mr. Al Green of Texas, Mr. Gene Green of Texas, Mr. Grijalva,
Mr. Hastings of Florida, Ms. Herseth, Mr. Higgins, Mr. Hinchey, Mr.
Hinojosa, Ms. Norton, Mr. Holt, Mr. Honda, Mr. Hoyer, Ms. Jackson-Lee
of Texas, Mr. Jefferson, Mr. Kildee, Ms. Kilpatrick of Michigan, Mr.
Langevin, Mr. Lantos, Mr. Larsen of Washington, Mr. Larson of
Connecticut, Mr. Lewis of Georgia, Mr. Lynch, Mrs. Maloney, Mr. Markey,
Mrs. McCarthy, Ms. McCollum of Minnesota, Mr. McDermott, Mr. McGovern,
Mr. McNulty, Mr. Meeks of New York, Mr. Melancon, Mr. Menendez, Mr.
Michaud, Ms. Millender-McDonald, Mr. Murtha, Mr. Nadler, Mr. Oberstar,
Mr. Olver, Mr. Ortiz, Mr. Owens, Mr. Pascrell, Mr. Payne, Mr. Reyes,
Mr. Ross, Ms. Roybal-Allard, Mr. Ruppersberger, Mr. Ryan of Ohio, Mr.
Salazar, Ms. Linda T. Sanchez of California, Ms. Schakowsky, Mr.
Schiff, Ms. Schwartz of Pennsylvania, Mr. Scott of Georgia, Mr.
Serrano, Ms. Slaughter, Mr. Strickland, Mr. Stupak, Mr. Tierney, Mr.
Van Hollen, Ms. Wasserman Schultz, Mr. Weiner, and Ms. Woolsey)
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 Education and the Workforce, 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 subsidies to
encourage small employers to offer affordable health coverage to their
employees through qualified health pooling arrangements, to encourage
the establishment and operation of these arrangements, 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Small Business
Health Insurance Promotion Act of 2005''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Temporary tax credit for small employers offering health
coverage through a qualified health pooling
arrangement.
Sec. 3. Qualified State health pooling arrangements.
Sec. 4. Establishment of national health pooling arrangement.
Sec. 5. Funding of pooling arrangements.
Sec. 6. Institute of Medicine study and report.
SEC. 2. TEMPORARY TAX CREDIT FOR SMALL EMPLOYERS OFFERING HEALTH
COVERAGE THROUGH A QUALIFIED HEALTH POOLING ARRANGEMENT.
(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 POOL ARRANGEMENTS.
``(a) General Rule.--For purposes of section 38, in the case of an
eligible small employer, the health pool arrangement credit determined
under this section for the taxable year is an amount equal to 50
percent of amounts paid or incurred by the employer during the taxable
year as premiums for self-only or family coverage for health benefits
under a qualified health pooling arrangement for employees of such
employer.
``(b) Limitations.--
``(1) Employer must bear 50 percent of cost.--Expenses may
be taken into account under subsection (a) only if at least 50
percent of the premiums under the qualified health pooling
arrangement are paid by the employer.
``(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 first
begins participating in a qualified health pooling arrangement.
``(3) Employers offering other health benefits.--In the
case of an employer who paid or incurred any expenses for
health benefits for the employees of such employer during the
first taxable year ending on or after the date of the enactment
of this section, subsection (a) shall apply to such employer
only if such employer begins participating in a qualified
health pooling arrangement during the 2-year period beginning
on the later of--
``(A) the date of the enactment of this section, or
``(B) the first date that a qualified health
pooling arrangement exists which allows such employer
to participate.
``(4) No employees excluded.--Subsection (a) shall not
apply to an employer for any period unless at all times during
such period coverage for health benefits under a qualified
health pooling arrangement is available to all employees of
such employer under similar terms.
``(5) 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).
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Eligible small employer.--
``(A) In general.--The term `eligible small
employer' means an employer who employed, with respect
to the calendar year in which such employer first
begins participating in a qualified health pooling
arrangement, an average of not more than 50 employees
on business days during the preceding calendar year.
``(B) Employers not in existence in preceding
year.--In the case of an employer which was not in
existence throughout the preceding calendar year, the
determination of whether such employer is an eligible
small employer shall be based on the average number of
employees that it is reasonably expected such employer
will employ on business days in the current calendar
year.
``(C) Permanent status as eligible small
employer.--In the case of an employer who meets the
requirements of this subsection with respect to the
calendar year in which such employer first begins
participating in a qualified health pooling
arrangement, such employer shall not fail to be treated
as an eligible small employer for any subsequent
calendar year.
``(D) Predecessors.--The Secretary may prescribe
regulations which provide for references in this
paragraph to an employer to be treated as including
references to predecessors of such employer.
``(2) Self-employed individuals.--
``(A) Treatment as employee.--The term `employee'
includes an individual who is an employee within the
meaning of section 401(c)(1) (relating to self-employed
individuals).
``(B) Treatment as employer.--An individual who
owns the entire interest in an unincorporated trade or
business shall be treated as his own employer. A
partnership shall be treated as the employer of each
partner who is an employee within the meaning of
subparagraph (A).
``(3) Family coverage.--The term `family coverage' means
coverage for health benefits of the employee and qualified
family members of the employee (as defined in section 35(d),
but without regard to the last sentence of paragraph (1)
thereof).
``(4) Qualified health pooling arrangement.--The term
`qualified health pooling arrangement' means a qualified State
health pooling arrangement described in section 3 of the Small
Business Health Insurance Promotion Act of 2005 or the national
health pooling arrangement described in section 4 of such Act.
``(5) Certain rules made applicable.--Rules similar to the
rules of section 52 shall apply for purposes of this
section.''.
(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 an eligible small employer (as
defined in section 45J(c)), the health pool arrangement 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 Pool Arrangements.--
``(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 pool arrangements.''.
(e) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2004, for arrangements established after the date of the
enactment of this Act.
SEC. 3. QUALIFIED STATE HEALTH POOLING ARRANGEMENTS.
(a) Defined.--For purposes of this Act, the term ``qualified State
health pooling arrangement'' means an arrangement established by a
State which meets the following requirements:
(1) Health benefits coverage.--The arrangement provides
health benefits coverage that the Secretaries of Health and
Human Services and Labor jointly determine is substantially
similar to the health benefits coverage in any of the four
largest health benefits plans (determined by enrollment)
offered under chapter 89 of title 5, United States Code.
(2) Group health plan requirements.--The health benefits
coverage provided under the arrangement meets the requirements
applicable to a group health plan under chapter 100 of the
Internal Revenue Code of 1986, part 7 of subtitle B of title I
of the Employee Retirement Income Security Act of 1974, and
State law.
(3) Guaranteed issue and renewable.--The arrangement does
not deny coverage (including renewal of coverage) with respect
to employees of any eligible small employer or qualifying
family members of such employees on the basis of health status
of such employees or family members or any other condition or
requirement that the Secretaries of Health and Human Services
and Labor jointly determine constitutes health underwriting.
(4) No preexisting condition exclusion.--The arrangement
does not permit a preexisting condition exclusion as defined
under section 9801(b)(1) of the Internal Revenue Code of 1986
and under section 701(b)(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 11(b)(1)).
(5) No underwriting; community-rated premiums.--(A) Subject
to subparagraph (B), the arrangement does not permit
underwriting, through a preexisting condition limitation,
differential benefits, or different premium levels, or
otherwise, with respect to such coverage for employees or their
qualifying family members.
(B) The premiums charged for such coverage are community-
rated for individuals without regard to health status.
(6) No riders.--The arrangement does not permit riders to
the health benefits coverage.
(7) Accessibility to eligible small employers.--The
arrangement makes such coverage available to an eligible small
employer without regard to whether a credit is available under
section 45J of the Internal Revenue Code of 1986 with respect
to such employer.
(8) Minimum of two plans offered under the arrangement.--
The arrangement makes available at least two plans for health
benefits coverage.
(b) Eligible Small Employer; Self-Employed Individual.--For
purposes of this Act, the terms ``eligible small employer'' and
``employee'' have the same meanings as when such terms are used in
section 45J of the Internal Revenue Code of 1986 and rules similar to
the rules of subsection (c) of such section shall apply for purposes of
this Act.
(c) Qualifying Family Member.--For purposes of this Act, the term
``qualifying family member'' has the meaning given such term in section
35(d) of the Internal Revenue Code of 1986, applied without regard to
the last sentence of paragraph (1) thereof.
(d) State Defined.--For purposes of this Act, the term ``State''
includes the District of Columbia, Puerto Rico, the Virgin Islands of
the United States, Guam, American Samoa, and the Northern Mariana
Islands.
(e) Construction.--Nothing in this section shall be construed as
requiring a State to establish or maintain a qualified State health
pooling arrangement.
(f) Creditable Coverage for Purposes of HIPAA.--Health benefits
coverage provided under a qualified State health pooling arrangement
under this section (and coverage provided under a National Pooling
Arrangement under section 4 of this title) shall be treated as
creditable coverage for purposes of part 7 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181 et
seq.), title XXVII of the Public Health Service Act (42 U.S.C. 300gg et
seq.), and subtitle K of the Internal Revenue Code of 1986.
(g) Oversight and Accountability.--
(1) Oversight.--The Secretaries of Health and Human
Services and Labor shall jointly oversee the offering of health
benefits coverage under qualified State health pooling
arrangements to eligible small employers.
(2) Annual reports.--
(A) In general.--Each State that offers a qualified
State health pooling arrangement under this section in
a year shall submit, in a form and manner specified
jointly by the Secretaries of Health and Human Services
and Labor, a report on the operation of the arrangement
in that year.
(B) Contents of report.--Reports required under
subparagraph (A) shall include the following:
(i) A description of the health benefits
coverage offered under the arrangement.
(ii) The number of employers that
participated in the arrangement.
(iii) The number of employees and
qualifying family members of employees who
received health benefits coverage under the
arrangement.
(iv) The premiums charged for the health
benefits coverage under the arrangement.
(3) Certification.--Each State that offers a qualified
State health pooling arrangement under this section in a year
shall submit, in a form and manner specified jointly by the
Secretaries of Health and Human Services and Labor, a
certification that the arrangement meets the requirements of
this Act.
(h) Coordination of Complaints With State Insurance
Commissioners.--The Secretaries of Health and Human Services and Labor
shall coordinate with the insurance commissioners for the various
States in establishing a process for handling and resolving any
complaints relating to health benefits coverage offered under this Act,
to the extent necessary to augment processes otherwise available under
State law.
(i) No Preemption of State Law.--Nothing in this section shall be
construed as preempting provisions of State law that provide
protections in excess of the protections required under this section.
SEC. 4. ESTABLISHMENT OF NATIONAL HEALTH POOLING ARRANGEMENT.
(a) In General.--The Secretaries of Health and Human Services and
Labor, jointly in consultation with the Director of the Office of
Personnel Management, shall provide for the offering and oversight of a
national health pooling arrangement to eligible small employers.
(b) National Health Pooling Arrangement Defined.--For purposes of
this section, the term ``national health pooling arrangement'' means an
arrangement under which health plans are offered under terms and
conditions that meet the requirements of section 3(a).
(c) Use of FEHBP Model.--The Secretaries of Health and Human
Services and Labor shall jointly provide for the national health
pooling arrangement using the model of the Federal employees health
benefits program under chapter 89 of title 5, United States Code, to
the extent practicable and consistent with the provisions of this Act.
In carrying out such model, the Secretaries shall, to the maximum
extent practicable, negotiate the most affordable and substantial
coverage possible for small employers.
SEC. 5. FUNDING OF POOLING ARRANGEMENTS.
(a) Funding of States to Establish and Operate Qualified State
Health Pooling Arrangements.--There are authorized to be appropriated
to the Secretaries of Health and Human Services and Labor such sums as
may be necessary to provide grants to States to establish and operate
qualified State health pooling arrangements described in section 3.
(b) Funding of National Health Pooling Arrangement.--There are
authorized to be appropriated to the Secretaries of Health and Human
Services and Labor such sums as may be necessary to provide for the
offering and operation of the national health pooling arrangement under
section 4.
SEC. 6. INSTITUTE OF MEDICINE STUDY AND REPORT.
(a) Study.--The Secretaries of Health and Human Services and Labor
shall jointly enter into an arrangement under which the Institute of
Medicine of the National Academy of Sciences shall conduct a study on
the operation of qualified State health pooling arrangements under
section 3 and the national health pooling arrangement under section 4.
(b) Matters Studied.--The study conducted under subsection (a)
shall include the following:
(1) An assessment of the success of the arrangements.
(2) A determination of the affordability of health benefits
coverage under the arrangements for employers and employees.
(3) A determination of the access of small employers to
health benefits coverage.
(4) A determination of the extent to which the tax credit
under section 45J of the Internal Revenue Code of 1986 provides
a subsidy for eligible small employers that provided (or would
have provided) health benefits coverage in the absence of such
credit.
(5) Recommendations with respect to--
(A) extension of the period for which the tax
credit under section 45J of the Internal Revenue Code
of 1986 is available to employers or an appropriate
phase-out of such credit over time;
(B) expansion of categories of persons eligible for
such tax credit;
(C) expansion of persons eligible for health
benefits coverage under the arrangements; and
(D) such other matters as the Institute determines
appropriate.
(c) Report.--Not later than January 1, 2010, the Comptroller
General shall submit to Congress a report on the study conducted 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 Education and the Workforce, 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 Education and the Workforce, 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 Education and the Workforce, 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 Education and the Workforce, 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 Employer-Employee Relations.
Referred to the Subcommittee on Health, for a period to be subsequently determined by the Chairman.
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