[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1698 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1698

 To amend the Internal Revenue Code of 1986 to assist families in the 
 purchase of coverage for children under school-based health insurance 
                   programs, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 21, 1997

  Mr. Stark introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
     Education and the Workforce, and Commerce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to assist families in the 
 purchase of coverage for children under school-based health insurance 
                   programs, 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; FINDINGS; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``School-Based 
Children Health Insurance Act of 1997''.
    (b) Findings.--Congress finds that--
            (1) it is in the national interest to ensure that every 
        American child has access to affordable health care;
            (2) no family should be forced to choose between health 
        care for its children and other essential needs;
            (3) 10,500,000 children in the United States under the age 
        of 19 have no health insurance coverage, and 90 percent of 
        these children have parents who work, and too many of these 
        children go without needed health care;
            (4) families have an obligation to contribute to the cost 
        of health insurance coverage for their children, consistent 
        with their ability to pay; and
            (5) the Federal Government has an obligation to help 
        families provide health insurance coverage for children; and
            (6) local public and private schools can provide a means 
        for providing efficient and effective access to health 
        insurance for the nation's children.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; findings; table of contents.
Sec. 2. Refundable credit for purchase of school-based health insurance 
                            coverage for children.
Sec. 3. Employer may not discriminate against subsidy eligible 
                            individuals.
Sec. 4. Grants to States for health insurance outreach and information 
                            programs.

SEC. 2. REFUNDABLE CREDIT FOR PURCHASE OF SCHOOL-BASED HEALTH INSURANCE 
              COVERAGE FOR CHILDREN.

    (a) General Rule.--Subpart C of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 is amended by redesignating 
section 35 as section 36 and by inserting after section 34 the 
following new section:

``SEC. 35. PURCHASE OF SCHOOL-BASED HEALTH INSURANCE COVERAGE FOR 
              CHILDREN.

    ``(a) General Rule.--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 amount (if any) by which--
            ``(1) the amount owed by the taxpayer during the taxable 
        year for qualified school-based health insurance coverage for a 
        qualifying child of the taxpayer; exceeds
            ``(2) the sum of--
                    ``(A) the required contribution amount for such 
                child,
                    ``(B) the amount (if any) of an employer 
                contribution that is made (or offered to be made) on 
                behalf of the individual toward the premium for the 
                insurance coverage for periods during such year, and
                    ``(C) the amount of any credit under section 30B 
                sought by the entity offering the qualified school-
                based program with respect to the qualifying child.
    ``(b) Limitations Based on Adjusted Gross Income; Required 
Contribution Level.--
            ``(1) Limitation based on agi.--
                    ``(A) In general.--No credit shall be allowed under 
                subsection (a) for any taxable year for which the 
                taxpayer's adjusted gross income exceeds the applicable 
                dollar amount by $10,000 or more.
                    ``(B) Phaseout.--If the taxpayer's adjusted gross 
                income for the taxable year exceeds the applicable 
                dollar amount by less than $10,000, the credit which 
                would (but for this paragraph) be allowed under 
                subsection (a) shall be reduced (but not below zero) by 
                an amount which bears the same ratio to such credit as 
                such excess bears to $10,000. Any reduction under the 
                preceding sentence which is not a multiple of $10 shall 
                be rounded to the next lowest $10.
                    ``(C) Applicable dollar amount.--The term 
                `applicable dollar amount' means the sum of--
                            ``(i) $15,000, plus
                            ``(ii) $5,000 for each qualifying child of 
                        the taxpayer who is covered by the insurance 
                        referred to in subsection (a).
            ``(2) Required contribution amount.--For purposes of 
        subsection (a), the required contribution amount for a child of 
        a taxpayer who has obtained qualified school-based health 
        insurance coverage is equal to the minimum contribution amount 
        established with respect to such coverage under subsection 
        (d)(4)(A)(i) plus the same proportion of the excess by which 
        the reference premium amount exceeds such minimum contribution 
        amount as the proportion that (A) the excess of the taxpayer's 
        adjusted gross income over the phaseout amount described in 
        paragraph (1)(B), bears to (B) such phaseout amount.
    ``(c) Qualifying Child.--
            ``(1) In general.--Subject to paragraph (2), for the 
        purposes of this section, the term `qualifying child' has the 
        meaning given such term by section 32(c)(3).
            ``(2) Exceptions.--Such term does not include--
                    ``(A) an individual who has applied and been 
                determined eligible for medical assistance under title 
                XIX of the Social Security Act, until such time as the 
                individual is no longer eligible for such assistance; 
                and
                    ``(B) an individual who is residing in a State (as 
                defined for purposes of such title) that the Secretary 
                of Health and Human Services determines has reduced 
                eligibility requirements for children under a State 
                plan under such title below that in effect as of 
                January 1, 1997, until such time as such Secretary 
                determines the State no longer has reduced such 
                requirements.
    ``(d) Qualified School-Based Health Insurance Coverage.--For 
purposes of this section--
            ``(1) In general.--The term `qualified school-based health 
        insurance coverage' means health insurance coverage (as defined 
        in section 9805(b)(1)) that the Secretary of Health and Human 
        Services certifies to the Secretary meets the following 
        requirements:
                    ``(A) The coverage is offered by a qualified 
                school-based program.
                    ``(B) The coverage is made available to all 
                children under 19 years of age who reside in the area 
                served by the program.
                    ``(C) The coverage provides the approximate 
                comprehensive benefits described in paragraph (3).
                    ``(D) The coverage does not impose any lifetime 
                maximum benefit limit with respect to a child that is 
                less than $1,000,000.
                    ``(E) The coverage does not impose any cost sharing 
                for covered preventive care.
                    ``(F) The program offering the coverage does not 
                impose any pre-existing condition exclusion (as defined 
                in section 9801(b)(1)) and does not vary the coverage, 
                benefits under the coverage, or premiums charged for 
                such coverage based on the presence of a pre-existing 
                condition or based upon any health-status related 
                factor described in section 9802(a)(1).
                    ``(G) The premiums charged for such coverage are 
                established consistent with paragraph (4).
                    ``(H) The program offering the coverage does not 
                engage in any activity in relation to the coverage that 
                directly or indirectly would have the effect of 
                discriminating against an individual on the basis of 
                race, national origin, religion, gender, sexual 
                orientation, language, health status, anticipated need 
                for health services, age (with respect to qualified 
                children), or, except as provided with respect to 
                premiums under paragraph (4), socio-economic status.
            ``(2) Qualified school-based program.--
                    ``(A) In general.--The term `qualified school-based 
                program' means a program that is operated directly by, 
                or under the control of one or more of the following 
                (or any combination thereof, whether or not in the same 
                State):
                            ``(i) A local educational agency (as 
                        defined in section 14101 of the Elementary and 
                        Secondary Education Act of 1965).
                            ``(ii) A State educational agency (as 
                        defined in such section).
                            ``(iii) Another public or private nonprofit 
                        organization that operates one or more private 
                        elementary or secondary schools (as such term 
                        is used in such Act).
                    ``(B) Construction.--Nothing in this section shall 
                be construed as preventing a State agency from 
                providing support and assistance in the operation of a 
                qualified school-based program, including assistance in 
                the filing of reports required under section 6050S.
            ``(3) Comprehensive benefits.--The comprehensive benefits 
        described in this paragraph include the following (as defined 
        by Secretary of Health and Human Services):
                    ``(A) Well-baby and well-child care, including 
                immunizations.
                    ``(B) Physicians services, including primary and 
                specialty services and medical and surgical procedures.
                    ``(C) Laboratory tests.
                    ``(D) Inpatient and outpatient hospital services.
                    ``(E) Emergency services and emergency medical 
                transportation.
                    ``(F) Prescription drugs and biologicals, including 
                immunizations.
                    ``(G) Vision screening and glasses.
                    ``(H) Hearing screening and hearing aids.
                    ``(I) Dental screening and basic dental care.
                    ``(J) Physical therapy.
                    ``(K) Mental health services.
                    ``(L) Pre-natal care and delivery.
        Nothing in this section shall be construed as requiring 
        coverage of benefits for items and services that are not 
        medically necessary or reasonable. Nothing in this section 
        shall be construed to compel any child to undergo any medical 
        screening, examination, diagnosis, or treatment or to accept 
        any other health care or services provided under a school-based 
        program for any purpose if the parent or guardian of the child 
        objects thereto on the basis of religious belief or moral 
        convictions or to require a school-based program that is 
        operated by a religious organization to cover benefits for 
        items or services to which the organization objects thereto on 
        the basis of religious belief or moral convictions.
            ``(4) Establishment of premiums.--
                    ``(A) In general.--The premiums charged by a 
                school-based program with respect to coverage of a 
                child who is a dependent of a taxpayer are established 
                consistent with this paragraph if the following 
                conditions are met:
                            ``(i) Establishment of minimum contribution 
                        amount.--The program sets a minimum 
                        contribution amount which is not less than 10 
                        percent, and not more than 20 percent, of the 
                        reference premium amount.
                            ``(ii) Fully-subsidized children.--In the 
                        case of a child of a taxpayer whose adjusted 
                        gross income does not exceed the applicable 
                        dollar amount (as defined in subsection 
                        (b)(1)(C)), the premium charged may not exceed 
                        80 percent of the reference premium amount.
                            ``(iii) Partially-subsidized children.--In 
                        the case of a child of a taxpayer whose 
                        adjusted gross income exceeds such applicable 
                        dollar amount by less than the phaseout amount 
                        specified in subsection (b)(1)(B), the premium 
                        may not exceed 80 percent of the reference 
                        premium amount, plus 20 percent of such 
                        reference premium amount multiplied by the 
                        phaseout ratio.
                            ``(iv) Phaseout ratio.--For purposes of 
                        clause (iii), the phaseout ratio for a taxpayer 
                        is the ratio of (I) the amount by which the 
                        taxpayer's adjusted gross income exceeds the 
                        phaseout amount specified in subsection 
                        (b)(1)(B)), to (II) such phaseout amount.
                    ``(B) Reference premium amount.--For purposes of 
                this paragraph, the term `reference premium amount' 
                means the premium charged with respect to a child with 
                respect to whom no credit is allowed under subsection 
                (a).
    ``(e) Special Rules.--
            ``(1) Only qualifying children may be covered by 
        insurance.--No amount shall be treated as paid for insurance 
        under subsection (a) if any individual other than a qualifying 
        child of the taxpayer is covered under such insurance. The 
        principles of section 213(d)(6) shall apply for purposes of the 
        preceding sentence.
            ``(2) Certain rules to apply.--Rules similar to the rules 
        of subsections (d), (e), and (h) of section 32, and section 
        213(d)(6), shall apply for purposes of this section.
            ``(3) Disqualification of certain insurance.--If the 
        Secretary of Health and Human Services determines, based on 
        information provided by a State or otherwise, that an issuer of 
insurance under this section has engaged in a pattern of abuse or 
misrepresentation of such insurance, this section shall not apply to 
insurance issued by such issuer until such Secretary is satisfied that 
such pattern has been remedied and will not recur.
    ``(f) Coordination With Other Provisions.--
            ``(1) Deduction for medical expenses.--The amount taken 
        into account in computing the credit under subsection (a) shall 
        not be taken into account in computing the amount allowable to 
        the taxpayer as a deduction under section 213(a).
            ``(2) Deduction for health insurance costs of self-employed 
        individuals.--No amount taken into account under section 162(l) 
        may be taken into account under this section.
    ``(g) Construction.--Nothing in title XIX of the Social Security 
Act shall be construed to prevent a State plan under such title from 
providing medical assistance, in part, through the purchase of 
qualified school-based health insurance coverage.''
    (b) Application Through Tax Credit for Qualified School-Based 
Programs.--Subpart B of part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to other credits) is amended by 
adding at the end the following:

``SEC. 30B. CHILDREN'S HEALTH COVERAGE SUBSIDY CREDIT FOR QUALIFIED 
              SCHOOL-BASED PROGRAMS.

    ``(a) Determination of Amount.--There shall be allowed as a credit 
against the applicable tax for the taxable year an amount equal to the 
eligible premium subsidies provided by an entity that operates a 
qualified school-based program for qualified school-based health 
insurance coverage during the taxable year.
    ``(b) Applicable Tax.--For purposes of this section, the term 
`applicable tax' means the excess (if any) of--
            ``(1) the sum of--
                    ``(A) the tax imposed under this chapter (other 
                than the taxes imposed under the provisions described 
                in subparagraphs (C) through (O) of section 26(b)(1)), 
                plus
                    ``(B) the tax imposed under chapter 21, over
            ``(2) the credits allowable under subparts B and D of this 
        part.
    ``(c) Eligible Premium Subsidies.--For purposes of this section, 
the term `eligible premium subsidies' means, with respect to the entity 
operating a qualified school-based program, the amount of the excess 
described in section 35(a) (determined without regard to this section) 
for qualifying children (as defined in section 35(c)) enrolled in the 
program.
    ``(d) Other Definitions.--For purposes of this section, the terms 
`qualifying child', `qualified school-based health insurance coverage', 
and `qualified school-based program' have the meanings given such terms 
in section 35.''.
    (c) Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code is amended by adding at the end the 
        following new section:

``SEC. 6050S. RETURNS RELATING TO PREMIUMS OWED FOR HEALTH INSURANCE 
              COVERAGE FOR CHILDREN.

    ``(a) Requirement of Reporting.--Any entity that operates a 
qualified school-based program (as defined in section 35(d)(2)) who is 
owed by any individual any premium for coverage to which section 35 
applies shall make a return, according to the forms or regulations 
prescribed by the Secretary, setting forth--
            ``(1) the aggregate amount of such premiums owed from such 
        individual during any calendar year,
            ``(2) the name, address, and TIN of such individual, and
            ``(3) such other information as the Secretary may 
        prescribe.
    ``(b) 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 to be set forth in such return a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person required to make such return, 
        and
            ``(2) the aggregate amount of premiums described in 
        subsection (a) owed to such person by such individual.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.''
            (2) Penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code is amended by redesignating clauses (x) through 
                (xv) as clauses (xi) through (xvi), respectively, and 
                by inserting after clause (ix) the following new 
                clause:
                            ``(x) section 6050S (relating to reporting 
                        of premiums owed for health insurance coverage 
                        for children),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by redesignating subparagraph (R) and the 
                succeeding subparagraphs as subparagraphs (S) and 
                following, respectively, and by inserting after 
                subparagraph (Q) the following new subparagraph:
                    ``(R) section 6050S(b) (relating to reporting of 
                premiums owed for health insurance coverage for 
                children),''.
    (d) Technical and 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 35 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 item relating to section 35 and 
        inserting the following new items:

                              ``Sec. 35. Purchase of school-based 
                                        health insurance coverage for 
                                        children.
                              ``Sec. 36. Overpayments of tax.''
            (3) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 30B. Children's health coverage 
                                        subsidy credit for qualified 
                                        school-based programs.''
            (4) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 6050S. Returns relating to 
                                        premiums owed for health 
                                        insurance coverage for 
                                        children.''
    (e) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 1997, for amounts 
        owed for coverage periods beginning after such date.
            (2) Program credit.--The amendment made by subsection (b) 
        shall apply to amounts owed for coverage periods beginning 
        after December 31, 1997.
            (3) Reporting.--The amendment made by subsection (c) shall 
        apply to amounts owed after December 31, 1997.

SEC. 3. EMPLOYER MAY NOT DISCRIMINATE AGAINST SUBSIDY ELIGIBLE 
              INDIVIDUALS.

    (a) General Rule.--Any employer which elects to make employer 
contributions on behalf of an individual who is an employee of such 
employer, or who is a dependent of such employee, for health insurance 
coverage shall not condition, or vary, such contributions with respect 
to any such individual by reason of such individual's status as an 
individual eligible for a tax credit under section 35 of the Internal 
Revenue Code of 1986 (as added by section 3 of this Act).
    (b) Elimination of Contributions.--An employer shall not be treated 
as failing to meet the requirements of subsection (a) if the employer 
ceases to make employer contributions for health insurance coverage for 
all its employees.

SEC. 4. GRANTS TO STATES FOR HEALTH INSURANCE OUTREACH AND INFORMATION 
              PROGRAMS.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall provide financial 
assistance to States in order to operate outreach and information 
programs that meet the requirements specified in subsection (b).
    (b) Requirements for Outreach and Information Programs.--Each 
outreach and information program shall--
            (1) target individuals eligible for access to school-based 
        health insurance coverage described in section 35 of the 
        Internal Revenue Code of 1986;
            (2) provide comparative information on the policies offered 
        by issuers in the State under such section;
            (3) assist individuals in purchasing policies under such 
        section; and
            (4) forward to the Secretary any findings by the State of a 
        pattern of abuse or misrepresentation by the issuer of 
        insurance for which a tax credit is available under section 35 
        of such Code.
The Secretary shall consider findings forwarded under paragraph (4) in 
determining whether a insurance continues to qualify for purposes of 
obtaining a tax credit under section 35 of such Code.
    (c) Amount of Assistance.--The Secretary shall determine the amount 
of financial assistance provided to a State under this section. In 
determining such amount, the Secretary shall take into account the 
number of qualifying children (as defined in section 35(c) of such 
Code) in the State.
    (d) Application Required.--No State is eligible for assistance 
under this section unless the State submits to the Secretary an 
application that is in such form, is made in such manner, and contains 
such agreements, assurances, and information as the Secretary 
determines to be necessary to carry out this section.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated for each fiscal year (beginning with fiscal year 1998) 
such sums as may be necessary to carry out this section.
                                 <all>