[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2558 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 2558

 To amend the Internal Revenue Code of 1986 to provide a tax credit to 
  employers for employee catastrophic health care costs and to health 
insurance companies for insurer catastrophic health care costs, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 6, 2006

 Ms. Stabenow 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 provide a tax credit to 
  employers for employee catastrophic health care costs and to health 
insurance companies for insurer catastrophic health care costs, 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 ``Keep America Competitive Tax Credit 
Act of 2006''.

SEC. 2. TAX CREDITS FOR CATASTROPHIC HEALTH CARE COSTS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45N. CATASTROPHIC HEALTH CARE COSTS.

    ``(a) General Rule.--For purposes of section 38--
            ``(1) in the case of an eligible employer, the catastrophic 
        health care employer credit determined under this section for 
        any taxable year is an amount equal to 50 percent of the 
        employee catastrophic health care costs paid or incurred by the 
        taxpayer during the taxable year, and
            ``(2) in the case of an eligible health insurance issuer, 
        the catastrophic health care pooling credit determined under 
        this section for any taxable year is an amount equal to 50 
        percent of the insurer catastrophic health care costs paid or 
        incurred by the taxpayer during the taxable year.
    ``(b) Catastrophic Health Care Costs.--For purposes of this 
section--
            ``(1) Employee catastrophic health care costs.--The term 
        `employee catastrophic health care costs' means, with respect 
        to any taxable year, costs for medical care (as defined in 
        section 9832(d)(3)) provided through a group health plan to 
        qualified employees and retired qualified employees, and 
        dependents thereof, but only with respect to such costs which 
        exceed $50,000, on an individual basis.
            ``(2) Insurer catastrophic health care costs.--The term 
        `insurer catastrophic health care costs' means, with respect to 
        any taxable year, claims for medical care (as defined in 
        section 9832(d)(3)) provided under health insurance policies 
        for customers in the large group market, small group market, 
        and the individual market, but only with respect to such claims 
        which exceed $50,000, on an individual basis.
            ``(3) Inflation adjustment.--
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2007, the $50,000 amount in paragraphs 
                (1) and (2) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2006' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $1,000, such 
                amount shall be rounded to the next lowest multiple of 
                $1,000.
    ``(c) Eligible Employer.--For purposes of this section, the term 
`eligible employer' means, with respect to any taxable year, any 
employer which--
            ``(1) offered coverage for employee catastrophic health 
        care costs during the entire preceding taxable year, and
            ``(2) make efforts to improve employees' health and 
        wellness and to reduce costs through offering wellness plans, 
        disease management, and other employee benefit programs.
    ``(d) Eligible Health Insurance Issuer.--For purposes of this 
section, the term `eligible health insurance issuer' means, with 
respect to any taxable year, any health insurance issuer which--
            ``(1) provides wellness plans to customers, and
            ``(2) provides a mechanism acceptable to the Secretary for 
        determining that such issuer has passed through the credit 
        allowed under this section with respect to any insurance line 
        to all policyholders of such insurance line.
    ``(e) Qualified Employee.--For purposes of this section--
            ``(1) In general.--The term `qualified employee' means, 
        with respect to any period, an employee of an employer if such 
        employee is not enrolled for--
                    ``(A) any benefits under title XVIII, XIX, or XXI 
                of the Social Security Act, or
                    ``(B) any other publicly-sponsored health insurance 
                program,
        which provides coverage for employee catastrophic health care 
        costs.
            ``(2) Treatment of certain employees.--For purposes of 
        paragraph (1), the term `employee'--
                    ``(A) shall not include an employee within the 
                meaning of section 401(c)(1), and
                    ``(B) shall include a leased employee within the 
                meaning of section 414(n).
    ``(f) Wellness Plan.--For purposes of this section, the term 
`wellness plan' means any employee benefit program which helps to 
reduce or to manage chronic conditions, including heart disease, 
cancer, stroke, diabetes, chronic obstructive pulmonary disease, and 
asthma.
    ``(g) Health Plan Definitions.--For purposes of this section--
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning given such term by section 607(1) of the Employee 
        Retirement Income Security Act of 1974, but does not include 
        any plan which may be offered in the small group market or the 
        individual market.
            ``(2) Other definitions.--The terms `health insurance 
        issuer', `individual market', `large group market', and `small 
        group market' have the meanings given such terms by section 
        2791 of the Public Health Service Act.
    ``(h) Portion of Credit Made Refundable.--
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the lesser of--
                    ``(A) the credit which would be allowed under 
                subsection (a)(1) without regard to this subsection and 
                the limitation under section 38(c), or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by this subpart (determined without 
                regard to this subsection) would increase if the 
                limitation imposed by section 38(c) for any taxable 
                year were increased by the amount of employer payroll 
                taxes imposed on the taxpayer during the calendar year 
                in which the taxable year begins.
        The amount of the credit allowed under this subsection shall 
        not be treated as a credit allowed under this subpart and shall 
        reduce the amount of the credit otherwise allowable under 
        subsection (a) without regard to section 38(c).
            ``(2) Employer payroll taxes.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `employer payroll 
                taxes' means the taxes imposed by--
                            ``(i) section 3111(b), and
                            ``(ii) sections 3211(a) and 3221(a) 
                        (determined at a rate equal to the rate under 
                        section 3111(b)).
                    ``(B) Special rule.--A rule similar to the rule of 
                section 24(d)(2)(C) shall apply for purposes of 
                subparagraph (A).
    ``(i) Certain Rules Made Applicable.--For purposes of this section, 
rules similar to the rules of section 52 shall apply.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``and'' at the end of paragraph (29), by 
striking the period at the end of paragraph (30) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(31) the credit determined under section 45N(a)(2).''.
    (c) Credit Allowed Against the Alternative Minimum Tax.--Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 (defining specified 
credits) is amended by striking the period at the end of clause 
(ii)(II) and inserting ``, and'', and by adding at the end the 
following new clause:
                            ``(iii) the credit determined under section 
                        45N(a)(2).''.
    (d) Conforming Amendments.--
            (1) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by adding at the end the following new item:

        ``Sec. 45N. Catastrophic health care costs.''.
            (2) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 45N(a)(1) of such Code''.
    (e) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2006.
    (f) Continuing Evaluations and Reports to Congress.--
            (1) Initial evaluation.--Not later than 1 year after the 
        first taxable year in which a credit under section 45N of the 
        Internal Revenue Code of 1986 (as added by this section) is 
        allowed, the Secretary of Labor shall review and make 
        recommendations to Congress on--
                    (A) problems that employers and insurers are having 
                in accessing such credit,
                    (B) how to expand the availability of such credit 
                to such employers and insurers, and
                    (C) how to make such credit more responsive to the 
                needs of such employers and insurers.
        Such review shall include how to make the credit more 
        accessible to employers with a high ratio of retirees to active 
        employees, with a high number of retirees not eligible for 
        Medicare, with a history of providing retiree health care 
        coverage, and with a history of employing wellness and similar 
        health benefits to reduce chronic conditions.
            (2) Continuing evaluation.--Not later than 4 years and 8 
        years after the date of the report required under paragraph 
        (1), the Secretaries of Labor and Health and Human Services 
        shall evaluate and report to Congress on the effect of the 
        credit under section 45N of such Code and include in such 
        report consideration of the following:
                    (A) Has the availability of such credit increased 
                health insurance coverage?
                    (B) Has such availability made health insurance 
                more affordable?
                    (C) Has such availability helped employers retain 
                benefits?
                    (D) Has such availability had any effect on 
                reducing chronic conditions?
                    (E) What effect has such credit had on State 
                insurance markets and State high risk pools.
                                 <all>