Health Insurance Tax Relief Act of 2007 - Amends the Internal Revenue Code to: (1) allow individual taxpayers a refundable tax credit for health insurance costs paid for the benefit of the taxpayer, the taxpayer's spouse, and dependents; (2) require business taxpayers who receive payments for certain employee health insurance coverage to file informational returns; and (3) direct the Secretary of the Treasury to make advance payments of health insurance tax credit amounts to health insurance providers.
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3515 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 3515
To amend the Internal Revenue Code of 1986 to allow individuals a
refundable credit against income tax for the purchase of private health
insurance.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 10, 2007
Mr. McHugh 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 allow individuals a
refundable credit against income tax for the purchase of private health
insurance.
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 Insurance Tax Relief Act of
2007''.
SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE.
(a) In General.--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. HEALTH INSURANCE COSTS.
``(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this chapter an amount
equal to the amount paid during the taxable year for qualified health
insurance for the taxpayer, his spouse, and dependents.
``(b) Limitations.--
``(1) In general.--The amount allowed as a credit under
subsection (a) to the taxpayer for the taxable year shall not
exceed the sum of the monthly limitations for coverage months
during such taxable year for each individual referred to in
subsection (a) for whom the taxpayer paid during the taxable
year any amount for coverage under qualified health insurance.
``(2) Phaseout of amount.--
``(A) Reduction based on adjusted gross income.--
The amount determined under paragraph (1) for any
taxable year shall be reduced (but not below zero) by
the amount determined under subparagraph (B).
``(B) Amount of reduction.--The amount determined
under this subparagraph with respect to any amount
determined under paragraph (1) shall be the amount
which bears the same ratio to such amount determined
under paragraph (1) as--
``(i) the excess of--
``(I) the taxpayer's adjusted gross
income for such taxable year, over
``(II) the applicable dollar
amount, bears to
``(ii) $10,000.
The rules of subparagraphs (B) and (C) of section
219(g)(2) shall apply to any reduction under this
subparagraph.
``(C) Definitions.--For purposes of this
paragraph--
``(i) adjusted gross income shall be
determined in the same manner as under section
408A(c)(3)(C)(i), and
``(ii) the applicable dollar amount is--
``(I) in the case of a taxpayer
filing a joint return, $105,000,
``(II) in the case of any other
taxpayer (other than a married
individual filing a separate return),
$65,000, and
``(III) in the case of a married
individual filing a separate return,
zero.
``(3) Monthly limitation.--
``(A) In general.--The monthly limitation for an
individual for each coverage month of such individual
during the taxable year is the amount equal to \1/12\
of--
``(i) the base amount, plus
``(ii) 50 percent of the amount paid in
excess of the base amount.
``(B) Base amount.--For purposes of this paragraph,
the base amount is--
``(i) $2,000 if such individual is the
taxpayer,
``(ii) $2,000 if--
``(I) such individual is the spouse
of the taxpayer,
``(II) the taxpayer and such spouse
are married as of the first day of such
month, and
``(III) the taxpayer files a joint
return for the taxable year, and
``(iii) $1,000 if such individual is an
individual for whom a deduction under section
151(c) is allowable to the taxpayer for such
taxable year.
``(C) Limitation to 2 dependents.--Not more than 2
individuals may be taken into account by the taxpayer
under subparagraph (B)(iii).
``(D) Special rule for married individuals.--In the
case of an individual--
``(i) who is married (within the meaning of
section 7703) as of the close of the taxable
year but does not file a joint return for such
year, and
``(ii) who does not live apart from such
individual's spouse at all times during the
taxable year,
the limitation imposed by subparagraph (C) shall be
divided equally between the individual and the
individual's spouse unless they agree on a different
division.
``(4) Coverage month.--For purposes of this subsection--
``(A) In general.--The term `coverage month' means,
with respect to an individual, any month if--
``(i) as of the first day of such month
such individual is covered by qualified health
insurance, and
``(ii) the premium for coverage under such
insurance for such month is paid by the
taxpayer.
``(B) Employer-subsidized coverage.--
``(i) In general.--Such term shall not
include any month for which such individual
participates in any subsidized health plan
(within the meaning of section 162(l)(2))
maintained by any employer of the taxpayer or
of the spouse of the taxpayer.
``(ii) Premiums to nonsubsidized plans.--If
an employer of the taxpayer or the spouse of
the taxpayer maintains a health plan which is
not a subsidized health plan (as so defined)
and which constitutes qualified health
insurance, employee contributions to the plan
shall be treated as amounts paid for qualified
health insurance.
``(C) Cafeteria plan and flexible spending account
beneficiaries.--Such term shall not include any month
during a taxable year if any amount is not includible
in the gross income of the taxpayer for such year under
section 106 with respect to--
``(i) a benefit chosen under a cafeteria
plan (as defined in section 125(d)), or
``(ii) a benefit provided under a flexible
spending or similar arrangement.
``(D) Medicare and medicaid.--Such term shall not
include any month with respect to an individual if, as
of the first day of such month, such individual--
``(i) is entitled to any benefits under
title XVIII of the Social Security Act, or
``(ii) is a participant in the program
under title XIX or XXI of such Act.
``(E) Certain other coverage.--Such term shall not
include any month during a taxable year with respect to
an individual if, at any time during such year, any
benefit is provided to such individual under--
``(i) chapter 89 of title 5, United States
Code,
``(ii) chapter 55 of title 10, United
States Code,
``(iii) chapter 17 of title 38, United
States Code, or
``(iv) any medical care program under the
Indian Health Care Improvement Act.
``(F) Prisoners.--Such term shall not include any
month with respect to an individual if, as of the first
day of such month, such individual is imprisoned under
Federal, State, or local authority.
``(G) Insufficient presence in united states.--Such
term shall not include any month during a taxable year
with respect to an individual if such individual is
present in the United States on fewer than 183 days
during such year (determined in accordance with section
7701(b)(7)).
``(5) 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.
``(c) Reduced Credit for Participants in Health Plans of
Employers.--In the case of any individual who participates in a
subsidized health plan (within the meaning of section 162(l)(2))
maintained by any employer of the taxpayer or of the spouse of the
taxpayer (not including a cafeteria plan (as defined in section
125(d)), there shall be allowed to the taxpayer one-quarter of the
credit that would be allowed to the taxpayer under subsection (a)
(determined without regard to the participation in the health plan) if
the monthly limitation were determined without the addition of the
amount described in subsection (b)(3)(A)(ii).
``(d) Qualified Health Insurance.--For purposes of this section--
``(1) In general.--The term `qualified health insurance'
means insurance which constitutes medical care as defined in
section 213(d) without regard to--
``(A) paragraph (1)(C) thereof, and
``(B) so much of paragraph (1)(D) thereof as
relates to qualified long-term care insurance
contracts.
``(2) Exclusion of certain other contracts.--Such term
shall not include insurance if a substantial portion of its
benefits are excepted benefits (as defined in section 9832(c)).
``(e) Medical and Health Savings Account Contributions.--
``(1) In general.--If a deduction would (but for paragraph
(2)) be allowed under section 220 or 223 to the taxpayer for a
payment for the taxable year to the medical or health savings
account of an individual, subsection (a) shall be applied by
treating such payment as a payment for qualified health
insurance for such individual.
``(2) Denial of double benefit.--No deduction shall be
allowed under section 220 or 223 for that portion of the
payments otherwise allowable as a deduction under section 220
or 223 (as the case may be) for the taxable year which is equal
to the amount of credit allowed for such taxable year by reason
of this subsection.
``(f) 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) 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.
``(3) Denial of double benefit.--No credit shall be allowed
under subsection (a) if the credit under section 35 is allowed
and no credit shall be allowed under 35 if a credit is allowed
under this section.
``(4) Election not to claim credit.--This section shall not
apply to a taxpayer for any taxable year if such taxpayer
elects to have this section not apply for such taxable year.
``(5) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2006, each dollar
amount contained in subsection (b)(3)(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 ($25 in the case of the
dollar amount in subsection (b)(3)(B)(iii)).''.
(b) Information Reporting.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of such Code (relating to information concerning
transactions with other persons) is amended by inserting after
section 6050T the following new section:
``SEC. 6050U. RETURNS RELATING TO PAYMENTS FOR QUALIFIED HEALTH
INSURANCE.
``(a) In General.--Any person who, in connection with a trade or
business conducted by such person, receives payments during any
calendar year from any individual for coverage of such individual or
any other individual under creditable health insurance, shall make the
return described in subsection (b) (at such time as the Secretary may
by regulations prescribe) with respect to each individual from whom
such payments were received.
``(b) Form and Manner of Returns.--A return is described in this
subsection if such return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains--
``(A) the name, address, and TIN of the individual
from whom payments described in subsection (a) were
received,
``(B) the name, address, and TIN of each individual
who was provided by such person with coverage under
creditable health insurance by reason of such payments
and the period of such coverage, and
``(C) such other information as the Secretary may
reasonably prescribe.
``(c) Creditable Health Insurance.--For purposes of this section,
the term `creditable health insurance' means qualified health insurance
(as defined in section 36(d)) other than--
``(1) insurance under a subsidized group health plan
maintained by an employer, or
``(2) to the extent provided in regulations prescribed by
the Secretary, any other insurance covering an individual if no
credit is allowable under section 36 with respect to such
coverage.
``(d) Statements To Be Furnished to Individuals With Respect to
Whom Information Is Required.--Every person required to make a return
under subsection (a) shall furnish to each individual whose name is
required under subsection (b)(2)(A) to be set forth in such return a
written statement showing--
``(1) the aggregate amount of payments described in
subsection (a) received by the person required to make such
return from the individual to whom the statement is required to
be furnished, and
``(2) the information required under subsection (b)(2)(B)
with respect to such payments.
The written statement required under the preceding sentence shall be
furnished on or before January 31 of the year following the calendar
year for which the return under subsection (a) is required to be made.
``(e) Returns Which Would Be Required To Be Made by 2 or More
Persons.--Except to the extent provided in regulations prescribed by
the Secretary, in the case of any amount received by any person on
behalf of another person, only the person first receiving such amount
shall be required to make the return under subsection (a).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of such
Code (relating to definitions) is amended by
redesignating clauses (xiii) through (xviii) as clauses
(xiv) through (xix), respectively, and by inserting
after clause (xii) the following new clause:
``(xiii) section 6050U (relating to returns
relating to payments for qualified health
insurance),''.
(B) Paragraph (2) of section 6724(d) of such Code
is amended by striking ``or'' at the end of the next to
last subparagraph, by striking the period at the end of
the last subparagraph and inserting ``, or'', and by
adding at the end the following new subparagraph:
``(CC) section 6050U(d) (relating to returns relating to
payments for qualified health insurance).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61 of such Code is
amended by inserting after the item relating to section 6050T
the following new item:
``Sec. 6050U. Returns relating to payments for qualified health
insurance.''.
(c) Conforming Amendments.--
(1) 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''.
(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 redesignating the item relating to section 36 as
an item relating to section 37 and by inserting after section
35 the following new item:
``Sec. 36. Health insurance costs.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2005.
SEC. 3. ADVANCE PAYMENT OF CREDIT FOR PURCHASERS OF QUALIFIED HEALTH
INSURANCE.
(a) In General.--Chapter 77 of the Internal Revenue Code of 1986
(relating to miscellaneous provisions) is amended by adding at the end
the following new section:
``SEC. 7529. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT FOR PURCHASERS
OF QUALIFIED HEALTH INSURANCE.
``(a) General Rule.--In the case of an eligible individual, the
Secretary shall make payments to the provider of such individual's
qualified health insurance equal to such individual's qualified health
insurance credit advance amount with respect to such provider.
``(b) Eligible Individual.--For purposes of this section, the term
`eligible individual' means any individual--
``(1) who purchases qualified health insurance (as defined
in section 36(d)), and
``(2) for whom a qualified health insurance credit
eligibility certificate is in effect.
``(c) Qualified Health Insurance Credit Eligibility Certificate.--
For purposes of this section, a qualified health insurance credit
eligibility certificate is a statement furnished by an individual to
the Secretary which--
``(1) certifies that the individual will be eligible to
receive the credit provided by section 36 for the taxable year,
``(2) estimates the amount of such credit for such taxable
year, and
``(3) provides such other information as the Secretary may
require for purposes of this section.
``(d) Qualified Health Insurance Credit Advance Amount.--For
purposes of this section, the term `qualified health insurance credit
advance amount' means, with respect to any provider of qualified health
insurance, the Secretary's estimate of the amount of credit allowable
under section 36 to the individual for the taxable year which is
attributable to the insurance provided to the individual by such
provider.
``(e) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for chapter 77 of
such Code is amended by adding at the end the following new item:
``Sec. 7529. Advance payment of health insurance credit for purchasers
of qualified health insurance.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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