II 109th CONGRESS 1st Session S. 1360 IN THE SENATE OF THE UNITED STATES June 30, 2005 Mr. Smith (for himself, Mr. Schumer, Mr. Jeffords, and Mr. Wyden) 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 extend the exclusion from gross income for employer-provided health coverage to designated plan beneficiaries of employees, and for other purposes.

1.

Short title

This Act may be cited as the Domestic Partner Health Benefits Equity Act.

2.

Extension of exclusion for amounts received by an employee through accident or health insurance as reimbursement for expenses for medical care

(a)

In general

Section 105(b) of the Internal Revenue Code of 1986 (relating to amounts expended for medical care) is amended by adding at the end the following new sentence: For the purposes of this subsection, the term dependents shall include any individual who is an eligible beneficiary as defined in the employer’s accident or health insurance arrangement. (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2005.

3.

Extension of exclusion for contributions by employer to accident and health plans

(a)

In general

Section 106 of the Internal Revenue Code of 1986 (relating to contributions by employer to accident and health plans) is amended by adding at the end the following new subsection: (e)

Coverage provided for eligible beneficiaries of employees

Subsection (a) shall not fail to apply by reason of the coverage of an eligible beneficiary as defined in the employer’s accident or health plan. . (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2005.

4.

Extension of deduction for health insurance costs of self-employed individuals

(a)

In general

Paragraph (1) of section 162(l) of the Internal Revenue Code of 1986 (relating to special rules for health insurance costs of self-employed individuals) is amended to read as follows: (1)

Allowance of deduction

In the case of an individual who is an employee within the meaning of section 401(c)(1), there shall be allowed as a deduction under this section an amount equal to the amount paid during the taxable year for insurance which constitutes medical care for the taxpayer, his spouse, and dependents. For the purposes of this subparagraph, the term dependents shall include any individual who is an eligible beneficiary as defined in the insurance arrangement which constitutes medical care. . (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2005.

5.

Extension of sick and accident benefits provided to members of a voluntary employees’ beneficiary association and their dependents

(a)

In general

Section 501(c)(9) of the Internal Revenue Code of 1986 (relating to list of exempt organizations) is amended by adding at the end the following new sentence: For purposes of providing for the payment of sick and accident benefits to members of such an association and their dependents, the term dependents shall include any individual who is an eligible beneficiary as determined under the terms of a medical benefit, health insurance, or other program under which members and their dependents are entitled to sick and accident benefits.. (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2005.

6.

Amendments to various definitions

(a)

FICA

(1)

In general

Section 3121 of the Internal Revenue Code of 1986 (relating to definitions) is amended by adding at the end the following new subsection: (z)

Exclusion of certain amounts from wages

For purposes of applying subsection (a) with respect to expenses described in paragraph (2)(B) of such subsection, the term dependents shall include any individual who is an eligible beneficiary as defined in the plan or system established by the employer. . (2)

Conforming amendment

Section 209 of the Social Security Act (42 U.S.C. 409) is amended by adding at the end the following new subsection: (l)For purposes of applying subsection (a) with respect to medical or hospitalization expenses described in paragraph (2) thereof, the term dependents shall include any individual who is an eligible beneficiary as defined in the plan or system established by the employer. . (b)

Railroad retirement

(1)

In general

Section 3231(e) of the Internal Revenue Code of 1986 (defining compensation) is amended by adding at the end the following new paragraph: (13)

Treatment of certain dependents

For purposes of applying this subsection with respect to medical or hospitalization expenses described in paragraph (1)(I), the term dependents shall include any individual who is an eligible beneficiary as defined in the plan or system established by the employer. . (2)

Conforming amendment

Section 1(h) of the Railroad Retirement Act of 1974 (45 U.S.C. 231(h)) is amended by adding at the end the following new paragraph: (9)For purposes of applying this subsection, with respect to medical or hospitalization expenses described in paragraph (6)(v), the term dependents shall include any individual who is an eligible beneficiary as defined in the plan or system established by the employer. . (c)

FUTA

Section 3306 of the Internal Revenue Code of 1986 (relating to definitions) is amended by adding at the end the following new subsection: (v)

Exclusion of certain amounts from wages

For purposes of applying subsection (b) with respect to expenses described in paragraph (2)(B) of such subsection, the term dependents shall include any individual who is an eligible beneficiary as defined in the plan or system established by the employer. . (d)

Effective date

The amendments made by this section shall apply to remuneration paid after December 31, 2005.