[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 118 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 118

To amend the Internal Revenue Code of 1986 to provide a refundable tax 
credit to small businesses for the costs of qualified health insurance.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 4, 2005

  Ms. Hooley 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 provide a refundable tax 
credit to small businesses for the costs of qualified health insurance.

    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 ``Keeping Small Businesses Healthy Act 
of 2005''.

SEC. 2. REFUNDABLE CREDIT FOR SMALL BUSINESSES PROVIDING HEALTH 
              INSURANCE COVERAGE FOR EMPLOYEES.

    (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 by inserting 
after section 35 the following new section:

``SEC. 36. SMALL BUSINESS HEALTH INSURANCE EXPENSES.

    ``(a) In General.--There shall be allowed as a credit against the 
tax imposed by this chapter for the taxable year an amount equal to the 
applicable percentage of the amounts paid during the taxable year by 
the taxpayer for qualified health insurance for employees of the 
taxpayer and spouses and dependents of such employees.
    ``(b) Applicable Percentage.--The applicable percentage shall be 
determined in accordance with the following table:

``Total number of employees of            The applicable percentage is:
        taxpayer:
    25 or fewer...................................          60 percent 
    26 to 100.....................................          40 percent 
    101 or more...................................           0 percent.
    ``(c) Limitations.--The credit allowed under this section shall be 
zero for any taxable year if--
            ``(1) less than 65 percent of the cost of the coverage 
        (without regard to this section) for such year is borne by the 
        employer,
            ``(2) the plan provides qualified health insurance to less 
        than 75 percent of the employees of the employer for such year,
            ``(3) the percentage of the cost of the coverage (without 
        regard to this section) for such year which is borne by the 
        employer is less than the percentage of the cost of such 
        coverage for any prior year which was borne by such employer, 
        or
            ``(4) the health benefits provided under the plan for such 
        year are less than the health benefits provided under the plan 
        for any prior year.
    ``(d) Self-Employed Individuals.--For purposes of this section, a 
self-employed individual (within the meaning of section 401(c)) shall 
be treated as an employee.
    ``(e) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' means insurance which constitutes 
medical care (as defined in section 213(d)); except that such term 
shall not include any insurance if substantially all of its coverage is 
of excepted benefits described in section 9832(c).
    ``(f) Aggregation Rule.--For purposes of this section, all persons 
treated as a single employer under subsection (a) or (b) of section 52 
or subsection (n) or (o) of section 414 shall be treated as one 
person.''.
    (b) Denial of Double Benefit.--Section 280C of such Code is amended 
by adding at the end the following new subsection:
    ``(e) Credit for Small Business Health Insurance Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the expenses (otherwise allowable as a deduction) 
        taken into account in determining the credit under section 36 
        for the taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 36(a).
            ``(2) Controlled groups.--Persons treated as one person 
        under section 36(f) shall be treated as one person for purposes 
        of this section.''
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``or 36'' after ``section 
        35''.
            (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 36 and 
        inserting the following new items:

``36. Small business cost of providing health insurance coverage for 
                            employees.
``37. Overpayment of taxes.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.
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