[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2359 Introduced in Senate (IS)]
108th CONGRESS
2d Session
S. 2359
To amend the Internal Revenue Code of 1986 to provide a refundable tax
credit for small business health insurance costs, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 28, 2004
Mr. Reid 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 provide a refundable tax
credit for small business health insurance costs, 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 ``Healthy Employees, Healthy Small
Businesses Act of 2004''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) In 2002, 44,000,000 Americans were without health
insurance for the entire year, and the vast majority of these
uninsured people are in working families.
(2) The number of employees in a business greatly affects
the likelihood of whether or not its employees are offered
health insurance. In 2003, 98 percent of firms with over 200
employees offered health benefits, while only 55 percent of
firms with under 10 workers did.
(3) Among uninsured workers in 2001, over half held jobs
with companies having fewer than 100 employees.
(4) The cost of health insurance for employers is very
high. On average, in 2003, the total cost of an individual
health plan was $3,383, of which the employee paid an average
of $508 and the employer paid an average of $2875. For a family
policy, the average cost was $9,068, with the employer bearing
$6,656 and the employee shouldering $2,412.
SEC. 3. REFUNDABLE CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH INSURANCE
EXPENSES.
(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 inserting
after section 35 the following new section:
``SEC. 36. SMALL BUSINESS EMPLOYEE HEALTH INSURANCE EXPENSES.
``(a) Determination of Amount.--In the case of a qualified small
employer, there shall be allowed as a credit against the tax imposed by
this subtitle for the taxable year an amount equal to the expense
amount described in subsection (b) paid by the taxpayer during the
taxable year.
``(b) Subsection (b) Expense Amount.--For purposes of this
section--
``(1) In general.--The expense amount described in this
subsection is the applicable percentage of the amount of
qualified employee health insurance expenses of each qualified
employee.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage is equal to--
``(A) for any qualified small employer described in
subparagraph (A) of paragraph (4), 50 percent,
``(B) for any qualified small employer described in
subparagraph (B) of paragraph (4), 35 percent, and
``(C) for any qualified small employer described in
subparagraph (C) of paragraph (4), 25 percent.
``(3) Per employee dollar limitation.--
``(A) In general.--The amount of qualified employee
health insurance expenses taken into account under
paragraph (1) with respect to any qualified employee
for any taxable year shall not exceed--
``(i) for any qualified small employer
described in subparagraph (A) of paragraph
(4)--
``(I) $1,500 in the case of self-
only coverage, and
``(II) $3,400 in the case of family
coverage,
``(ii) for any qualified small employer
described in subparagraph (B) of paragraph
(4)--
``(I) $1,100 in the case of self-
only coverage, and
``(II) $2,400 in the case of family
coverage, and
``(iii) for any qualified small employer
described in subparagraph (C) of paragraph
(4)--
``(I) $750 in the case of self-only
coverage, and
``(II) $1,700 in the case of family
coverage.
``(B) Inflation adjustment.--
``(i) In general.--In the case of any
taxable year beginning after 2006, each dollar
amount referred to in subparagraph (A) shall be
increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
(1)(f)(3) for the calendar year in
which the taxable year begins, by
substituting `2005' for `1992'.
``(ii) Rounding.--If any amount as adjusted
under clause (i) is not a multiple of $100,
such amount shall be rounded to the next lowest
multiple of $100.
``(4) Qualified small employers described.--A qualified
small employer is described in--
``(A) this subparagraph if such employer employed
an average of 9 or fewer employees (as determined under
subsection (c)(1)(A)(ii)),
``(B) this subparagraph if such employer employed
an average of more than 9 but less than 25 employees
(as so determined), and
``(C) this subparagraph if such employer employed
an average of more than 24 but not more than 50
employees (as so determined).
``(c) Definitions.--For purposes of this section--
``(1) Qualified small employer.--
``(A) In general.--The term `qualified small
employer' means, with respect to any calendar year, any
employer if--
``(i) such employer pays or incurs at least
75 percent of the qualified employee health
insurance expenses of each qualified employee
(determined without regard to subsection
(b)(3)), and
``(ii) such employer employed an average of
50 or fewer employees on business days during
either of the 2 preceding calendar years.
For purposes of clause (ii), a preceding calendar year
may be taken into account only if the employer was in
existence throughout such year.
``(B) 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 subparagraph (A)(ii) 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.
``(2) Qualified employee health insurance expenses.--
``(A) In general.--The term `qualified employee
health insurance expenses' means any amount paid by an
employer for health insurance coverage (as defined in
section 9832(b)(1)) to the extent such amount is
attributable to coverage provided to any employee while
such employee is a qualified employee.
``(B) Exception for amounts paid under salary
reduction arrangements.--No amount paid or incurred for
health insurance coverage pursuant to a salary
reduction arrangement shall be taken into account under
subparagraph (A).
``(3) Qualified employee.--
``(A) In general.--The term `qualified employee'
means, with respect to any period, an employee of an
employer if--
``(i) the annual amount of hours in the
employ of such employer by such employee is at
least 400 hours,
``(ii) the total amount of wages paid or
incurred by such employer to such employee at
an annual rate during the taxable year is at
least $5,000, and
``(iii) such employee is not eligible for--
``(I) any benefits under title
XVIII, XIX, or XXI of the Social
Security Act, or
``(II) any other publicly-sponsored
health insurance program.
``(B) Treatment of certain employees.--For purposes
of subparagraph (A), the term `employee'--
``(i) shall not include an employee within
the meaning of section 401(c)(1), and
``(ii) shall include a leased employee
within the meaning of section 414(n).
``(C) Wages.--The term `wages' has the meaning
given such term by section 3121(a) (determined without
regard to any dollar limitation contained in such
section).
``(d) Certain Rules Made Applicable.--For purposes of this section,
rules similar to the rules of section 52 shall apply.
``(e) 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.''.
(b) 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 striking the last item and inserting the
following new items:
``Sec. 36. Small business employee health
insurance expenses.
``Sec. 37. Overpayments of tax.''.
(e) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2004.
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