[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3816 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3816

 To amend the Internal Revenue Code of 1986 to allow the deduction for 
contributions to medical savings accounts, and the deduction for health 
insurance costs, to employees of small employers that do not offer any 
                 group health plan to their employees.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 7, 1998

 Mr. Lipinski 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 the deduction for 
contributions to medical savings accounts, and the deduction for health 
insurance costs, to employees of small employers that do not offer any 
                 group health plan to their employees.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. MSA AND HEALTH INSURANCE DEDUCTIONS FOR EMPLOYEES OF SMALL 
              EMPLOYERS WHICH DO NOT OFFER ANY GROUP HEALTH PLAN TO 
              THEIR EMPLOYEES.

    (a) Waiver of Requirement That High Deductible Health Plan Be 
Provided by Employer.--Subparagraph (A) of section 220(c)(1) of the 
Internal Revenue Code of 1986 (defining eligible individual) is amended 
by adding at the end the following flush sentence:
                ``In the case of a small employer which does not 
                maintain a group health plan for its employees, clause 
                (iii)(I) shall not apply to employees of such employer 
                (nor to spouses of such employees), and the limitations 
                of subsections (i) and (j) shall not apply to such 
                employees (and spouses).''.
    (b) Deduction for Health Insurance Costs.--
            (1) In general.--Part VII of subchapter B of chapter 1 of 
        such Code (relating to additional itemized deductions) is 
        amended by redesignating section 222 as section 223 and by 
        inserting after section 221 the following new section:

``SEC. 222. HEALTH INSURANCE COSTS OF EMPLOYEES OF CERTAIN SMALL 
              EMPLOYERS.

    ``(a) In General.--In the case of an eligible individual, there 
shall be allowed as a deduction an amount equal to applicable 
percentage (as defined in section 162(l)) of the amount paid during the 
taxable year for insurance which constitutes medical care for the 
taxpayer, his spouse, and dependents.
    ``(b) Limitations.--
            ``(1) Limitation based on earned income from small 
        employer.--No deduction shall be allowed under subsection (a) 
        to the extent that the amount of such deduction exceeds the 
        taxpayer's wages, salaries, tips, and other employee 
        compensation includible in gross income which are attributable 
        to employment by an employer referred to in subsection (c) 
        during the period that the individual is an eligible 
        individual.
            ``(2) Employees with self-employment income ineligible.--No 
        deduction shall be allowed under subsection (a) for an amount 
        paid for insurance referred to in subsection (a) to the extent 
        that such amount is allocable to coverage for a month for which 
        the individual has earned income (as defined in section 
        401(c)(2)).
    ``(c) Eligible Individual.--For purposes of subsection (a), the 
term `eligible individual' means, with respect to any period, any 
individual who for such period is an employee of a small employer (as 
defined in section 220(c)(4)) which does not maintain a group health 
plan for its employees for such period.
    ``(d) Coordination With Medical Deduction.--Any amount paid by a 
taxpayer for insurance to which subsection (a) applies shall not be 
taken into account in computing the amount allowable to the taxpayer as 
a deduction under section 213(a).''
            (2) Deduction allowed whether or not taxpayer itemizes 
        other deductions.--Subsection (a) of section 62 of such Code is 
        amended by inserting after paragraph (17) the following new 
        paragraph:
            ``(18) Health insurance costs of employees of certain small 
        employers.--The deduction allowed by section 222.''.
            (3) Clerical amendment.--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. 222. Health insurance costs of 
                                        employees of certain small 
                                        employers.
                              ``Sec. 223. Cross reference.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.
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