Amends the Internal Revenue Code to allow: (1) a tax deduction from gross income (available to taxpayers who do not itemize deductions) for insurance premiums for high deductible health plans; and (2) a tax credit for certain employment taxes related to premiums for high deductible health plans and contributions to health savings accounts.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2494 Introduced in Senate (IS)]
109th CONGRESS
2d Session
S. 2494
To amend the Internal Revenue Code of 1986 to allow a deduction for the
payment of premiums for high deductible health plans, to allow a credit
for certain employment taxes paid with respect to premiums for high
deductible health plans and contributions to health savings accounts,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 3, 2006
Mr. Burns 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 a deduction for the
payment of premiums for high deductible health plans, to allow a credit
for certain employment taxes paid with respect to premiums for high
deductible health plans and contributions to health savings accounts,
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. DEDUCTION OF PREMIUMS FOR HIGH DEDUCTIBLE 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 for individuals) is amended by redesignating section 224 as
section 225 and by inserting after section 223 the following new
section:
``SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.
``(a) Deduction Allowed.--In the case of an individual, there shall
be allowed as a deduction for the taxable year the aggregate amount
paid by such individual as premiums under a high deductible health plan
with respect to months during such year for which such individual is an
eligible individual with respect to such health plan.
``(b) Definitions.--For purposes of this section--
``(1) Eligible individual.--The term `eligible individual'
has the meaning given such term by section 223(c)(1).
``(2) High deductible health plan.--The term `high
deductible health plan' has the meaning given such term by
section 223(c)(2).
``(c) Special Rules.--
``(1) Deduction limits.--
``(A) Deduction allowable for only 1 plan.--For
purposes of this section, in the case of an individual
covered by more than 1 high deductible health plan for
any month, the individual may only take into account
amounts paid for such month for the plan with the
lowest premium.
``(B) Plans covering ineligible individuals.--If 2
or more individuals are covered by a high deductible
health plan for any month but only 1 of such
individuals is an eligible individual for such month,
only 50 percent of the aggregate amount paid by such
eligible individual as premiums under the plan with
respect to such month shall be taken into account for
purposes of this section.
``(2) Group health plan coverage.--
``(A) In general.--No deduction shall be allowed to
an individual under subsection (a) for any amount paid
for coverage under a high deductible health plan for a
month if that individual participates in any coverage
under a group health plan (within the meaning of
section 5000 without regard to section 5000(d)).
``(B) Exception for plans only providing
contributions to health savings accounts.--Subparagraph
(A) shall not apply to an individual if the
individual's only coverage under a group health plan
for a month consists of contributions by an employer to
a health savings account with respect to which the
individual is the account beneficiary.
``(C) Exception for certain permitted coverage.--
Subparagraph (A) shall not apply to an individual if
the individual's only coverage under a group health
plan for a month is coverage described in clause (i) or
(ii) of section 223(c)(1)(B).
``(3) Medical and health savings accounts.--Subsection (a)
shall not apply with respect to any amount which is paid or
distributed out of an Archer MSA or a health savings account
which is not included in gross income under section 220(f) or
223(f), as the case may be.
``(4) Coordination with deduction for health insurance of
self-employed individuals.--Any amount taken into account by
the taxpayer in computing the deduction under section 162(l)
shall not be taken into account under this section.
``(5) Coordination with medical expense deduction.--Any
amount taken into account by the taxpayer in computing the
deduction under this section shall not be taken into account
under section 213.''.
(b) Deduction Allowed Whether or Not Individual Itemizes Other
Deductions.--Subsection (a) of section 62 of such Code is amended by
inserting before the last sentence at the end the following new
paragraph:
``(21) Premiums for high deductible health plans.--The
deduction allowed by section 224.''.
(c) Coordination With Section 35 Health Insurance Costs Credit.--
Section 35(g)(2) of such Code is amended by striking ``or 213'' and
inserting ``, 213, or 224''.
(d) Clerical Amendment.--The table of sections for part VII of
subchapter B of chapter 1 of such Code is amended by redesignating the
item relating to section 224 as an item relating to section 225 and by
inserting before such item the following new item:
``Sec. 224. Premiums for high deductible health plans.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
SEC. 2. CREDIT FOR CERTAIN EMPLOYMENT TAXES PAID WITH RESPECT TO
PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS AND
CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNTS.
(a) Allowance of Credit.--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 36 as section 37 and by
inserting after section 35 the following new section:
``SEC. 36. EMPLOYMENT TAXES PAID WITH RESPECT TO PREMIUMS FOR HIGH
DEDUCTIBLE HEALTH PLANS AND CONTRIBUTIONS TO HEALTH
SAVINGS ACCOUNTS.
``(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 product of--
``(1) the sum of the rates of tax in effect under sections
3101(a), 3101(b), 3111(a), and 3111(b) for the calendar year in
which the taxable year begins, multiplied by
``(2) the sum of--
``(A) the aggregate amount paid by such individual
as premiums under a high deductible health plan which
is allowed as a deduction under section 224 for the
taxable year, and
``(B) the aggregate amount paid to a health savings
account of such individual which is allowed as a
deduction under section 223 for the taxable year.
``(b) Credit Limited to Certain Employment Taxes.--
``(1) In general.--The credit allowed under subsection (a)
with respect to any individual for any taxable year shall not
exceed the specified employment taxes with respect to such
individual for such taxable year.
``(2) Specified employment taxes.--For purposes of this
subsection, the term `specified employment taxes' means, with
respect to any individual for any taxable year, the sum of--
``(A) the taxes imposed under sections 3101(a),
3101(b), 3111(a), 3111(b), 3201(a), 3211(a), and
3221(a) (taking into account any adjustments or refunds
under section 6413) with respect to wages and
compensation received by such individual during the
calendar year in which such taxable year begins, and
``(B) the taxes imposed under subsections (a) and
(b) of section 1401 with respect to the self-employment
income of such individual for such taxable year.
``(c) Special Rule for Employment Compensation in Excess of Social
Security Contribution Base.--
``(1) In general.--If the aggregate amount of employment
compensation received by any individual during the calendar
year in which the taxable year begins exceeds the contribution
and benefit base (as determined under section 230 of the Social
Security Act), the amount of the credit determined under
subsection (a) (determined before application of subsection
(b)) shall be equal to the sum of--
``(A) the amount determined under subsection (a) by
only taking into account so much of the amount
determined under subsection (a)(2) as does not exceed
such excess and by only taking into account the rates
of tax in effect under section 3101(b) and 3111(b), and
``(B) the amount determined under subsection (a) by
only taking into account so much of the amount
determined under subsection (a)(2) as is not taken into
account under subparagraph (A) and by taking into
account each of the rates of tax referred to in
subsection (a)(1).
``(2) Employment compensation.--For purposes of this
subsection, the term `employment compensation' means, with
respect to any individual for any taxable year, the sum of--
``(A) the wages (as defined in section 3121(a)) and
compensation (as defined in section 3231(e)) received
by such individual during the calendar year in which
such taxable year begins, and
``(B) the self-employment income (as defined in
section 1402(b)) of such individual for such taxable
year.''.
(b) Increase in Additional Tax on Distributions Not Used for
Qualified Medical Expenses.--Paragraph (4) of section 223(f) of such
Code (relating to additional tax on distributions not used for
qualified medical expenses) is amended to read as follows:
``(4) Additional tax on distributions not used for
qualified medical expenses.--
``(A) In general.--The tax imposed by this chapter
on the account beneficiary for any taxable year in
which there is a payment or distribution from a health
savings account of such beneficiary which is includible
in gross income under paragraph (2) shall be increased
by 30 percent of the amount which is so includible.
``(B) Exception for disability or death.--In the
case of payments or distributions made after the
account beneficiary becomes disabled within the meaning
of section 72(m)(7) or dies, subparagraph (A) shall be
applied by substituting `15 percent' for `30 percent'.
``(C) Exception for distributions after medicare
eligibility.--In the case of payments or distributions
made after the date on which the account beneficiary
attains the age specified in section 1811 of the Social
Security Act, subparagraph (A) shall be applied by
substituting `15 percent' for `30 percent'.''.
(c) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``or section 36'' after
``section 35''.
(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 item relating to section 36 and by
inserting after the item relating to section 35 the following
new items:
``Sec. 36. Employment taxes paid with respect to premiums for
high deductible health plans and
contributions to health savings accounts.
``Sec. 37. Overpayments of tax.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S2732)
Sponsor introductory remarks on measure. (text of measure as introduced: CR S2732-2733)
Read twice and referred to the Committee on Finance.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line