[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1274 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1274

      To amend the Internal Revenue Code of 1986 to increase the 
   accessibility to and affordability of health care, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 24, 1999

Mr. Grams (for himself, Mr. Roth, Mr. Abraham, Mr. Ashcroft, Mr. Burns, 
 Mr. DeWine, Mr. Frist, Mr. Gorton, Mrs. Hutchison, Mr. Santorum, Mr. 
Thomas, Mr. Nickles, Mr. Mack, Mr. Craig, Mr. Coverdell, Mr. McConnell, 
 Mr. Inhofe, and Mr. Bunning) 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 increase the 
   accessibility to and affordability of health care, 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 ``Health Care Access and Equity Act of 
1999''.

SEC. 2. DEDUCTION FOR HEALTH INSURANCE COSTS FOR INDIVIDUALS NOT 
              ELIGIBLE TO PARTICIPATE IN EMPLOYER-SUBSIDIZED HEALTH 
              PLANS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions) is amended by redesignating section 222 as section 223 and 
by inserting after section 221 the following:

``SEC. 222. HEALTH INSURANCE COSTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to 100 percent of the amount 
paid during the taxable year for insurance which constitutes medical 
care for the taxpayer, his spouse, and dependents.
    ``(b) Limitations.--
            ``(1) Deduction not available to individuals eligible for 
        employer-subsidized coverage.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), subsection (a) shall not 
                apply to any taxpayer for any calendar month for which 
                the taxpayer is eligible to participate in any 
                subsidized health plan maintained by any employer (or 
                former employer) of the taxpayer or of the spouse of 
                the taxpayer. The preceding sentence shall be applied 
                separately with respect to--
                            ``(i) plans which include coverage for 
                        qualified long-term care services (as defined 
                        in section 7702B(c)) or are qualified long-term 
                        care insurance contracts (as defined in section 
                        7702B(b)), and
                            ``(ii) coverage under the plans which do 
                        not include such coverage and are not such 
                        contracts.
                    ``(B) Certain coverage disregarded.--Subparagraph 
                (A) shall not apply if the subsidized health plan is 
                limited to--
                            ``(i) coverage for accidents, disability, 
                        dental care, vision care, or a specified 
                        illness, or
                            ``(ii) making payments of a fixed amount 
                        per day (or other period) of hospitalization.
                    ``(C) Continuation coverage.--Coverage shall not be 
                treated as subsidized for purposes of this paragraph 
                if--
                            ``(i) such coverage is continuation 
                        coverage (within the meaning of section 
                        4980B(f)) required to be provided by the 
                        employer, and
                            ``(ii) the taxpayer or the taxpayer's 
                        spouse is required to pay a premium for such 
                        coverage in an amount not less than 100 percent 
                        of the applicable premium (within the meaning 
                        of section 4980B(f)(4)) for the period of such 
                        coverage.
            ``(2) Limitation on long-term care premiums.--In the case 
        of a qualified long-term care insurance contract (as defined in 
        section 7702B(b)), only eligible long-term care premiums (as 
        defined in section 213(d)(10)) shall be taken into account 
        under subsection (a).
            ``(3) Deduction not available for payment of certain 
        premiums.--The following amounts shall not be taken into 
        account under subsection (a):
                    ``(A) Medicare premiums.--Any amount paid as a 
                premium--
                            ``(i) under part A, B, or C of title XVIII 
                        of the Social Security Act, and
                            ``(ii) for any medicare supplemental policy 
                        described in section 1882 of such Act.
                    ``(B) Ancillary coverage premiums.--Any amount paid 
                as a premium for insurance which provides for--
                            ``(i) coverage for accidents, disability, 
                        dental care, vision care, or a specified 
                        illness, or
                            ``(ii) making payments of a fixed amount 
                        per day (or other period) of hospitalization.
                    ``(C) Tangential coverage premiums.--Any amount 
                paid as a premium for insurance if substantially all of 
                the coverage provided under such insurance relates to--
                            ``(i) liabilities incurred under workers' 
                        compensation laws,
                            ``(ii) tort liabilities,
                            ``(iii) liabilities relating to ownership 
                        or use of property, or
                            ``(iv) such other similar liabilities as 
                        the Secretary may specify by regulations.
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Coordination with medical deduction, etc.--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 not allowed for self-employment tax 
        purposes.--The deduction allowable by reason of this section 
        shall not be taken into account in determining an individual's 
        net earnings from self-employment (within the meaning of 
        section 1402(a)) for purposes of chapter 2.''
    (b) Conforming Amendments.--
            (1) Subsection (l) of section 162 of the Internal Revenue 
        Code of 1986 is repealed.
            (2) Subsection (a) of section 62 of such Code is amended by 
        inserting after paragraph (17) the following:
            ``(18) Health insurance costs of certain individuals.--The 
        deduction allowed by section 222.''
            (3) 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:

                              ``Sec. 222. Health insurance costs.
                              ``Sec. 223. Cross reference.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 3. FULL AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) Availability Not Limited To Accounts for Employees of Small 
Employers and Self-Employed Individuals.--
            (1) In general.--Section 220(c)(1)(A) of the Internal 
        Revenue Code of 1986 (relating to eligible individual) is 
        amended to read as follows:
                    ``(A) In general.--The term `eligible individual' 
                means, with respect to any month, any individual if--
                            ``(i) such individual is covered under a 
                        high deductible health plan as of the 1st day 
                        of such month, and
                            ``(ii) such individual is not, while 
                        covered under a high deductible health plan, 
                        covered under any health plan--
                                    ``(I) which is not a high 
                                deductible health plan, and
                                    ``(II) which provides coverage for 
                                any benefit which is covered under the 
                                high deductible health plan.''
            (2) Conforming amendments.--
                    (A) Section 220(c)(1) of such Code is amended by 
                striking subparagraphs (C) and (D).
                    (B) Section 220(c) of such Code is amended by 
                striking paragraph (4) (defining small employer) and by 
                redesignating paragraph (5) as paragraph (4).
                    (C) Section 220(b) of such Code is amended by 
                striking paragraph (4) (relating to deduction limited 
                by compensation) and by redesignating paragraphs (5), 
                (6), and (7) as paragraphs (4), (5), and (6), 
                respectively.
    (b) Removal of Limitation on Number of Taxpayers Having Medical 
Savings Accounts.--
            (1) In general.--Section 220 of the Internal Revenue Code 
        of 1986 (relating to medical savings accounts) is amended by 
        striking subsections (i) and (j).
            (2) Medicare+choice.--Section 138 of such Code (relating to 
        Medicare+Choice MSA) is amended by striking subsection (f).
    (c) Reduction in High Deductible Plan Minimum Annual Deductible.--
            (1) In general.--Section 220(c)(2)(A) of the Internal 
        Revenue Code of 1986 (relating to high deductible health plan) 
        is amended--
                    (A) by striking ``$1,500'' in clause (i) and 
                inserting ``$1,000'', and
                    (B) by striking ``$3,000'' in clause (ii) and 
                inserting ``$2,000''.
            (2) Conforming amendment.--Subsection (g) of section 220 of 
        such Code is amended--
                    (A) by striking ``1998'' and inserting ``1999''; 
                and
                    (B) by striking ``1997'' and inserting ``1998''.
    (d) Increase in Contribution Limit to 100 Percent of Annual 
Deductible.--
            (1) In general.--Section 220(b)(2) of the Internal Revenue 
        Code of 1986 (relating to monthly limitation) is amended to 
        read as follows:
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is the amount equal to \1/12\ of the annual deductible of 
        the high deductible health plan of the individual.''
            (2) Conforming amendment.--Section 220(d)(1)(A) of such 
        Code is amended by striking ``75 percent of''.
    (e) Limitation on Additional Tax on Distributions Not Used for 
Qualified Medical Expenses.--Section 220(f)(4) of the Internal Revenue 
Code of 1986 (relating to additional tax on distributions not used for 
qualified medical expenses) is amended by adding at the end the 
following:
                    ``(D) Exception in case of sufficient account 
                balance.--Subparagraph (A) shall only apply to any 
                payment or distribution in any taxable year to the 
                extent that the fair market value of the assets of the 
                medical savings account after such payment or 
                distribution is less than the annual deductible for the 
                high deductible health plan of the account holder 
                (determined as of January 1 of the calendar year in 
                which the taxable year begins).''
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 4. CARRYOVER OF UNUSED BENEFITS FROM CAFETERIA PLANS, FLEXIBLE 
              SPENDING ARRANGEMENTS, AND HEALTH FLEXIBLE SPENDING 
              ACCOUNTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
(relating to cafeteria plans) is amended by redesignating subsections 
(h) and (i) as subsections (i) and (j) and by inserting after 
subsection (g) the following:
    ``(h) Allowance of Carryovers of Unused Benefits to Later Taxable 
Years.--
            ``(1) In general.--For purposes of this title--
                    ``(A) notwithstanding subsection (d)(2), a plan or 
                other arrangement shall not fail to be treated as a 
                cafeteria plan or flexible spending or similar 
                arrangement, and
                    ``(B) no amount shall be required to be included in 
                gross income by reason of this section or any other 
                provision of this chapter,
        solely because under such plan or other arrangement any 
        nontaxable benefit which is unused as of the close of a taxable 
        year may be carried forward to 1 or more succeeding taxable 
        years.
            ``(2) Limitation.--Paragraph (1) shall not apply to amounts 
        carried from a plan to the extent such amounts exceed $500 
        (applied on an annual basis). For purposes of this paragraph, 
        all plans and arrangements maintained by an employer or any 
        related person shall be treated as 1 plan.
            ``(3) Allowance of rollover.--
                    ``(A) In general.--In the case of any unused 
                benefit described in paragraph (1) which consists of 
                amounts in a health flexible spending account or 
                dependent care flexible spending account, the plan or 
                arrangement shall provide that a participant may elect, 
                in lieu of such carryover, to have such amounts 
                distributed to the participant.
                    ``(B) Amounts not included in income.--Any 
                distribution under subparagraph (A) shall not be 
                included in gross income to the extent that such amount 
                is transferred in a trustee-to-trustee transfer, or is 
                contributed within 60 days of the date of the 
                distribution, to--
                            ``(i) a qualified cash or deferred 
                        arrangement described in section 401(k),
                            ``(ii) a plan under which amounts are 
                        contributed by an individual's employer for an 
                        annuity contract described in section 403(b),
                            ``(iii) an eligible deferred compensation 
                        plan described in section 457, or
                            ``(iv) a medical savings account (within 
                        the meaning of section 220).
                Any amount rolled over under this subparagraph shall be 
                treated as a rollover contribution for the taxable year 
                from which the unused amount would otherwise be 
                carried.
                    ``(C) Treatment of rollover.--Any amount rolled 
                over under subparagraph (B) shall be treated as an 
                eligible rollover under section 220, 401(k), 403(b), or 
                457, whichever is applicable, and shall be taken into 
                account in applying any limitation (or participation 
                requirement) on employer or employee contributions 
                under such section or any other provision of this 
                chapter for the taxable year of the rollover.
            ``(4) Cost-of-living adjustment.--In the case of any 
        taxable year beginning in a calendar year after 1999, the $500 
        amount under paragraph (2) shall be adjusted at the same time 
        and in the same manner as under section 415(d)(2), except that 
        the base period taken into account shall be the calendar 
        quarter beginning October 1, 1998, and any increase which is 
        not a multiple of $50 shall be rounded to the next lowest 
        multiple of $50.''
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 5. PERMITTING CONTRIBUTION TOWARDS MEDICAL SAVINGS ACCOUNT THROUGH 
              FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM (FEHBP).

    (a) Government Contribution to Medical Savings Account.--
            (1) In general.--Section 8906 of title 5, United States 
        Code, is amended by adding at the end the following:
    ``(j)(1) In the case of an employee or annuitant who is enrolled in 
a catastrophic plan described by section 8903(5), there shall be a 
Government contribution under this subsection to a medical savings 
account established or maintained for the benefit of the individual. 
The contribution under this subsection shall be in addition to the 
Government contribution under subsection (b).
    ``(2) The amount of the Government contribution under this 
subsection with respect to an individual is equal to the amount by 
which--
            ``(A) the maximum contribution allowed under subsection 
        (b)(1) with respect to any employee or annuitant, exceeds
            ``(B) the amount of the Government contribution actually 
        made with respect to the individual under subsection (b) for 
        coverage under the catastrophic plan.
    ``(3) The Government contributions under this subsection shall be 
paid into a medical savings account (designated by the individual 
involved) in a manner that is specified by the Office and consistent 
with the timing of contributions under subsection (b).
    ``(4) Subsections (f) and (g) shall apply to contributions under 
this section in the same manner as they apply to contributions under 
subsection (b).
    ``(5) For the purpose of this subsection, the term `medical savings 
account' has the meaning given such term by section 220(d) of the 
Internal Revenue Code of 1986.''
            (2) Allowing payment of full amount of charge for 
        catastrophic plan.--Section 8906(b)(2) of such title is amended 
        by inserting ``(or 100 percent of the subscription charge in 
        the case of a catastrophic plan)'' after ``75 percent of the 
        subscription charge''.
    (b) Offering of Catastrophic Plans.--
            (1) In general.--Section 8903 of title 5, United States 
        Code, is amended by adding at the end the following:
            ``(5) Catastrophic plans.--One or more plans described in 
        paragraph (1), (2), or (3), but which provide benefits of the 
        types referred to by paragraph (5) of section 8904(a), instead 
        of the types referred to in paragraphs (1), (2), and (3) of 
        such section.''
            (2) Types of benefits.--Section 8904(a) of such title is 
        amended by inserting after paragraph (4) the following:
            ``(5) Catastrophic plans.--Benefits of the types named 
        under paragraph (1) or (2) of this subsection or both, to the 
        extent expenses covered by the plan exceed $500.''
            (3) Determining level of government contributions.--Section 
        8906(b) of such title is amended by adding at the end the 
        following: ``Subscription charges for medical savings accounts 
        shall be deemed to be the amount of Government contributions 
        made under subsection (j)(2).''
    (c) Effective Date.--The amendments made by this section shall 
apply to contract terms beginning on or after January 1, 2000.

SEC. 6. INCLUSION OF QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS IN 
              CAFETERIA PLANS, FLEXIBLE SPENDING ARRANGEMENTS, AND 
              HEALTH FLEXIBLE SPENDING ACCOUNTS.

    (a) In General.--Section 125(f) of the Internal Revenue Code of 
1986 (defining qualified benefits) is amended by striking the last 
sentence and inserting the following: ``Such term includes any 
qualified long-term care insurance contract.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.
                                 <all>