S. 2379 – Reading Mode

109th CONGRESS

2d Session

S. 2379

IN THE SENATE OF THE UNITED STATES

March 7, 2006

Mr. Burr 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 health and long-term care insurance costs of individuals not participating in employer-subsidized health plans.

Deduction for health and long-term care insurance costs of individuals not participating in employer-subsidized health plans

(a)

In general

Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:

224.

Health and long-term care insurance costs

(a)

In general

In the case of an individual, there shall be allowed as a deduction an amount equal to the amount paid during the taxable year for insurance which constitutes medical care for the taxpayer and the taxpayer’s spouse and dependents.

(b)

Limitation based on other coverage

(1)

Coverage under certain subsidized employer plans

(A)

In general

Subsection (a) shall not apply to any taxpayer for any calendar month for which the taxpayer participates in any health plan maintained by any employer of the taxpayer or of the spouse of the taxpayer if any of the cost of coverage under such plan (determined under section 4980B and without regard to payments made with respect to any coverage described in subsection (d)) is paid or incurred by the employer.

(B)

Employer contributions to cafeteria plans, flexible spending arrangements, archer msas, and health savings accounts

Employer contributions to a cafeteria plan, a flexible spending or similar arrangement, an Archer MSA, or a health savings account which are excluded from gross income under section 106 shall be treated for purposes of subparagraph (A) as paid by the employer.

(C)

Aggregation of plans of employer

A health plan which is not otherwise described in subparagraph (A) shall be treated as described in such subparagraph if such plan would be so described if all health plans of persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 were treated as one health plan.

(D)

Separate application to health insurance and long-term care insurance

Subparagraphs (A) and (C) shall be applied separately with respect to—

(i)

plans which include primarily coverage for qualified long-term care services or are qualified long-term care insurance contracts, and

(ii)

plans which do not include such coverage and are not such contracts.

(2)

Coverage under certain Federal programs

(A)

In general

Subsection (a) shall not apply to any amount paid for any coverage for an individual for any calendar month if, as of the first day of such month, the individual is covered under any medical care program described in—

(i)

title XVIII, XIX, or XXI of the Social Security Act,

(ii)

chapter 55 of title 10, United States Code,

(iii)

chapter 17 of title 38, United States Code,

(iv)

chapter 89 of title 5, United States Code, or

(v)

the Indian Health Care Improvement Act.

(B)

Exceptions

(i)

Qualified long-term care

Subparagraph (A) shall not apply to amounts paid for coverage under a qualified long-term care insurance contract.

(ii)

Continuation coverage of fehbp

Subparagraph (A)(iv) shall not apply to coverage which is comparable to continuation coverage under section 4980B.

(c)

Long-term care deduction limited to qualified long-term care insurance contracts

In the case of a qualified long-term care insurance contract, only eligible long-term care premiums (as defined in section 213(d)(10)) may be taken into account under subsection (a).

(d)

Deduction not available for payment of ancillary coverage premiums

Any amount paid as a premium for insurance which provides for—

(1)

coverage for accidents, disability, dental care, vision care, or a specified illness, or

(2)

making payments of a fixed amount per day (or other period) by reason of being hospitalized,

shall not be taken into account under subsection (a).

(e)

Special rules

(1)

Coordination with deduction for health insurance costs of self-employed individuals

The amount taken into account by the taxpayer in computing the deduction under section 162(l) shall not be taken into account under this section.

(2)

Coordination with medical expense deduction

The amount taken into account by the taxpayer in computing the deduction under this section shall not be taken into account under section 213.

(f)

Regulations

The Secretary shall prescribe such regulations as may be appropriate to carry out this section, including regulations requiring employers to report to their employees and the Secretary such information as the Secretary determines to be appropriate.

(b)

Deduction allowed whether or not taxpayer itemizes other deductions

Subsection (a) of section 62 of the Internal Revenue Code of 1986 is amended by inserting before the last sentence the following new item:

(21)

Health and long-term care insurance costs

The deduction allowed by section 224.

(c)

Conforming amendments

(1)

Sections 86(b)(2), 135(c)(4), 137(b)(3), and 219(g)(3) of the Internal Revenue Code of 1986 are each amended by inserting 224, after 222,.

(2)

Section 221(b)(2)(C) of such Code is amended by inserting 224, before 911.

(3)

Section 469(i)(3)(F) of such Code is amended by striking and 222 and inserting , 222, and 224.

(4)

The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by striking the last item and inserting the following new items:

Sec. 224. Health and long-term care insurance costs.

Sec. 225. Cross reference.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2006.