S.Amdt. 2994

SA 2994. Mr. SCHUMER (for himself, Mr. Akaka, Mr. Brown, Mr.
Lautenberg, Mr. Merkley, Ms. Cantwell, Mr. Kerry, Mr. Leahy, Mr.
Menendez, and Mr. Whitehouse) submitted an amendment intended to be
proposed to amendment SA 2786 proposed by Mr.

[[Page S12640]]

Reid (for himself, Mr. Baucus, Mr. Dodd, and Mr. Harkin) to the bill
H.R. 3590, to amend the Internal Revenue Code of 1986 to modify the
first-time homebuyers credit in the case of members of the Armed Forces
and certain other Federal employees, and for other purposes; which was
ordered to lie on the table; as follows:

On page 2074, after line 25, insert the following:

Subtitle C--Tax Equity for Health Plan Beneficiaries

SEC. 9031. APPLICATION OF ACCIDENT AND HEALTH PLANS TO
ELIGIBLE BENEFICIARIES.

(a) Exclusion of Contributions.--Section 106 of the
Internal Revenue Code of 1986, as amended by section 9003, is
amended by adding at the end the following new subsection:
``(g) Coverage Provided for Eligible Beneficiaries of
Employees.--
``(1) In general.--Subsection (a) shall apply with respect
to any eligible beneficiary of the employee.
``(2) Eligible beneficiary.--For purposes of this
subsection, the term `eligible beneficiary' means any
individual who is eligible to receive benefits or coverage
under an accident or health plan.''.
(b) Exclusion of Amounts Expended for Medical Care.--The
first sentence of section 105(b) of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``and his dependents'' and inserting ``his
dependents'', and
(2) by inserting before the period the following: ``and any
eligible beneficiary (within the meaning of section 106(g))
with respect to the taxpayer''.
(c) Payroll Taxes.--
(1) Section 3121(a)(2) of the Internal Revenue Code of 1986
is amended--
(A) by striking ``or any of his dependents'' in the matter
preceding subparagraph (A) and inserting ``, any of his
dependents, or any eligible beneficiary (within the meaning
of section 106(g)) with respect to the employee'',
(B) by striking ``or any of his dependents,'' in
subparagraph (A) and inserting ``, any of his dependents, or
any eligible beneficiary (within the meaning of section
106(g)) with respect to the employee,'', and
(C) by striking ``and their dependents'' both places it
appears and inserting ``and such employees' dependents and
eligible beneficiaries (within the meaning of section
106(g))''.
(2) Section 3231(e)(1) of such Code is amended--
(A) by striking ``or any of his dependents'' and inserting
``, any of his dependents, or any eligible beneficiary
(within the meaning of section 106(g)) with respect to the
employee,'', and
(B) by striking ``and their dependents'' both places it
appears and inserting ``and such employees' dependents and
eligible beneficiaries (within the meaning of section
106(g))''.
(3) Section 3306(b)(2) of such Code is amended--
(A) by striking ``or any of his dependents'' in the matter
preceding subparagraph (A) and inserting ``, any of his
dependents, or any eligible beneficiary (within the meaning
of section 106(g)) with respect to the employee,'',
(B) by striking ``or any of his dependents'' in
subparagraph (A) and inserting ``, any of his dependents, or
any eligible beneficiary (within the meaning of section
106(g)) with respect to the employee'', and
(C) by striking ``and their dependents'' both places it
appears and inserting ``and such employees' dependents and
eligible beneficiaries (within the meaning of section
106(g))''.
(4) Section 3401(a) of such Code is amended by striking
``or'' at the end of paragraph (22), by striking the period
at the end of paragraph (23) and inserting ``; or'', and by
inserting after paragraph (23) the following new paragraph:
``(24) for any payment made to or for the benefit of an
employee or any eligible beneficiary (within the meaning of
section 106(g)) if at the time of such payment it is
reasonable to believe that the employee will be able to
exclude such payment from income under section 106 or under
section 105 by reference in section 105(b) to section
106(g).''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2009.

SEC. 9032. EXPANSION OF DEPENDENCY FOR PURPOSES OF DEDUCTION
FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED
INDIVIDUALS.

(a) In General.--Paragraph (1) of section 162(l) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(1) Allowance of deduction.--In the case of a taxpayer
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to the amount paid during the taxable year for
insurance which constitutes medical care for--
``(A) the taxpayer,
``(B) the taxpayer's spouse,
``(C) the taxpayer's dependents, and
``(D) any individual who--
``(i) satisfies the age requirements of section
152(c)(3)(A),
``(ii) bears a relationship to the taxpayer described in
section 152(d)(2)(H), and
``(iii) meets the requirements of section 152(d)(1)(C), and
``(E) not more than one individual who--
``(i) does not satisfy the age requirements of section
152(c)(3)(A),
``(ii) bears a relationship to the taxpayer described in
section 152(d)(2)(H),
``(iii) meets the requirements of section 152(d)(1)(D), and
``(iv) is not the spouse of the taxpayer and does not bear
any relationship to the taxpayer described in subparagraphs
(A) through (G) of section 152(d)(2).''.
(b) Conforming Amendment.--Subparagraph (B) of section
162(l)(2) of the Internal Revenue Code of 1986 is amended by
inserting ``, any dependent, or individual described in
subparagraph (D) or (E) of paragraph (1) with respect to''
after ``spouse''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2009.

SEC. 9033. EXTENSION TO ELIGIBLE BENEFICIARIES OF SICK AND
ACCIDENT BENEFITS PROVIDED TO MEMBERS OF A
VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION
AND THEIR DEPENDENTS.

(a) In General.--Section 501(c)(9) of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new sentence: ``For purposes of providing for the payment of
sick and accident benefits to members of such an association
and their dependents, the term `dependents' shall include any
individual who is an eligible beneficiary (within the meaning
of section 106(g)), as determined under the terms of a
medical benefit, health insurance, or other program under
which members and their dependents are entitled to sick and
accident benefits.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2009.

SEC. 9034. FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH
REIMBURSEMENT ARRANGEMENTS.

The Secretary of Treasury shall issue guidance of general
applicability providing that medical expenses that otherwise
qualify--
(1) for reimbursement from a flexible spending arrangement
under regulations in effect on the date of the enactment of
this Act may be reimbursed from an employee's flexible
spending arrangement, notwithstanding the fact that such
expenses are attributable to any individual who is not the
employee's spouse or dependent (within the meaning of section
105(b) of the Internal Revenue Code of 1986) but is an
eligible beneficiary (within the meaning of section 106(g) of
such Code) under the flexible spending arrangement with
respect to the employee, and
(2) for reimbursement from a health reimbursement
arrangement under regulations in effect on the date of the
enactment of this Act may be reimbursed from an employee's
health reimbursement arrangement, notwithstanding the fact
that such expenses are attributable to an individual who is
not a spouse or dependent (within the meaning of section
105(b) of such Code) but is an eligible beneficiary (within
the meaning of section 106(g) of such Code) under the health
reimbursement arrangement with respect to the employee.
______