[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 484 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 484

 To amend the Internal Revenue Code of 1986 to allow Federal civilian 
  and military retirees to pay health insurance premiums on a pretax 
   basis and to allow a deduction for TRICARE supplemental premiums.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 1, 2005

Mr. Warner (for himself and Ms. Collins) 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 allow Federal civilian 
  and military retirees to pay health insurance premiums on a pretax 
   basis and to allow a deduction for TRICARE supplemental premiums.

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

SECTION 1. PRETAX PAYMENT OF HEALTH INSURANCE PREMIUMS BY FEDERAL 
              CIVILIAN AND MILITARY RETIREES.

    (a) In General.--Subsection (g) of section 125 of the Internal 
Revenue Code of 1986 (relating to cafeteria plans) is amended by adding 
at the end the following new paragraph:
            ``(5) Health insurance premiums of federal civilian and 
        military retirees.--
                    ``(A) FEHBP premiums.--Nothing in this section 
                shall prevent the benefits of this section from being 
                allowed to an annuitant, as defined in paragraph (3) of 
                section 8901, title 5, United States Code, with respect 
                to a choice between the annuity or compensation 
                referred to in such paragraph and benefits under the 
                health benefits program established by chapter 89 of 
                such title 5.
                    ``(B) TRICARE premiums.--Nothing in this section 
                shall prevent the benefits of this section from being 
                allowed to an individual receiving retired or retainer 
                pay by reason of being a member or former member of the 
                uniformed services of the United States with respect to 
                a choice between such pay and benefits under the health 
                benefits programs established by chapter 55 of title 
                10, United States Code.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 2. DEDUCTION FOR TRICARE SUPPLEMENTAL PREMIUMS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 224 as 
section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. TRICARE SUPPLEMENTAL PREMIUMS OR ENROLLMENT FEES.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction the amounts paid during the taxable 
year by the taxpayer for insurance purchased as supplemental coverage 
to the health benefits programs established by chapter 55 of title 10, 
United States Code, for the taxpayer and the taxpayer's spouse and 
dependents.
    ``(b) Coordination With Medical Deduction.--Any amount allowed as a 
deduction under subsection (a) shall not be taken into account in 
computing the amount allowable to the taxpayer as a deduction under 
section 213(a).''.
    (b) Deduction Allowed Whether or Not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62 of the Internal Revenue Code 
of 1986 (defining adjusted gross income) is amended by redesignating 
paragraph (19) (as added by section 703(a) of the American Jobs 
Creation Act of 2004) as paragraph (20) and by inserting after 
paragraph (20) (as so redesignated) the following new paragraph:
            ``(21) TRICARE supplemental premiums or enrollment fees.--
        The deduction allowed by section 224.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by striking the last item and inserting the following new 
items:

``Sec. 224. TRICARE supplemental premiums or enrollment fees.
``Sec. 225. Cross reference.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. IMPLEMENTATION.

    (a) FEHBP Premium Conversion Option for Federal Civilian 
Retirees.--The Director of the Office of Personnel Management shall 
take such actions as the Director considers necessary so that the 
option made possible by section 125(g)(5)(A) of the Internal Revenue 
Code of 1986 shall be offered beginning with the first open enrollment 
period, afforded under section 8905(g)(1) of title 5, United States 
Code, which begins not less than 90 days after the date of the 
enactment of this Act.
    (b) TRICARE Premium Conversion Option for Military Retirees.--The 
Secretary of Defense, after consulting with the other administering 
Secretaries (as specified in section 1073 of title 10, United States 
Code), shall take such actions as the Secretary considers necessary so 
that the option made possible by section 125(g)(5)(B) of the Internal 
Revenue Code of 1986 shall be offered beginning with the first open 
enrollment period afforded under health benefits programs established 
under chapter 55 of such title, which begins not less than 90 days 
after the date of the enactment of this Act.
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