1.
This Act may be cited as the
Small Employers Health Benefits
Program Act of 2005
.
2.
(a)
In this Act, the terms
member of family, health benefits plan,
carrier, employee organizations, and
dependent have the meanings given such terms in section 8901 of
title 5, United States Code.
(b)
In this Act:
(1)
The term
employee has the meaning given such term under
section
3(6) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(6)). Such term
shall not include an employee of the Federal Government.
(2)
The term
employer has the meaning given such term under
section
3(5) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(5)), except that
such term shall include only employers who employed an average of at least 1
but not more than 100 employees on business days during the year preceding the
date of application. Such term shall not include the Federal Government.
(3)
Health status-related factor
The term health
status-related factor has the meaning given such term in
section
2791(d)(9) of the Public Health
Service Act (42 U.S.C.
300gg–91(d)(9)).
(4)
The term Office
means the Office of Personnel Management.
(5)
The term participating
employer means an employer that—
(A)
elects to provide health
insurance coverage under this Act to its employees; and
(B)
is not offering other
comprehensive health insurance coverage to such employees.
(c)
Application of certain rules in determination of employer
size
For purposes of subsection
(b)(2):
(1)
Application of aggregation rule for employers
All persons treated as a
single employer under subsection (b), (c), (m), or (o) of section 414 of the
Internal Revenue Code of 1986 shall be treated as 1 employer.
(2)
Employers not in existence in preceding year
In the case of an employer
which was not in existence for the full year prior to the date on which the
employer applies to participate, the determination of whether such employer
meets the requirements of subsection (b)(2) shall be based on the average
number of employees that it is reasonably expected such employer will employ on
business days in the employer’s first full year.
(3)
Any reference in this
subsection to an employer shall include a reference to any predecessor of such
employer.
(d)
Waiver and continuation of participation
(1)
The Office may waive the
limitations relating to the size of an employer which may participate in the
health insurance program established under this Act on a case by case basis if
the Office determines that such employer makes a compelling case for such a
waiver. In making determinations under this paragraph, the Office may consider
the effects of the employment of temporary and seasonal workers and other
factors.
(2)
Continuation of participation
An employer participating in
the program under this Act that experiences an increase in the number of
employees so that such employer has in excess of 100 employees, may not be
excluded from participation solely as a result of such increase in
employees.
3.
Health insurance coverage for non-federal employees
(a)
The Office shall administer a
health insurance program for non-Federal employees and employers in accordance
with this Act.
(b)
Except as provided under this
Act, the Office shall prescribe regulations to apply the provisions of chapter
89 of title 5, United States Code, to the greatest extent practicable to
participating carriers, employers, and employees covered under this Act.
(c)
In no event shall the
enactment of this Act result in—
(1)
any increase in the level of
individual or Federal Government contributions required under chapter 89 of
title 5, United States Code, including copayments or deductibles;
(2)
any decrease in the types of
benefits offered under such chapter 89; or
(3)
any other change that would
adversely affect the coverage afforded under such chapter 89 to employees and
annuitants and members of family under that chapter.
(d)
The Office shall develop
methods to facilitate enrollment under this Act, including the use of the
Internet.
(e)
Contracts for administration
The Office may enter into
contracts for the performance of appropriate administrative functions under
this Act.
(f)
In the administration of this
Act, the Office shall ensure that covered employees under this Act are in a
risk pool that is separate from the risk pool maintained for covered
individuals under chapter 89 of title 5, United States Code.
(g)
Nothing in this Act shall be
construed to require a carrier that is participating in the program under
chapter 89 of title 5, United States Code, to provide health benefits plan
coverage under this Act.
4.
(a)
The Office may enter into
contracts with qualified carriers offering health benefits plans of the type
described in section 8903 or 8903a of title 5, United States Code, without
regard to section 5 of title 41, United States Code, or other statutes
requiring competitive bidding, to provide health insurance coverage to
employees of participating employers under this Act. Each contract shall be for
a uniform term of at least 1 year, but may be made automatically renewable from
term to term in the absence of notice of termination by either party. In
entering into such contracts, the Office shall ensure that health benefits
coverage is provided for individuals only, married individuals without
children, and families.
(b)
A carrier shall be eligible
to enter into a contract under subsection (a) if such carrier—
(1)
is licensed to offer health
benefits plan coverage in each State in which the plan is offered; and
(2)
meets such other requirements
as determined appropriate by the Office.
(c)
(1)
Each contract under this Act
shall contain a detailed statement of benefits offered and shall include
information concerning such maximums, limitations, exclusions, and other
definitions of benefits as the Office considers necessary or desirable.
(2)
The Office shall develop a
benefit package that shall be offered in the case of a contract for a health
benefit plan that is to be offered on a nationwide basis.
(d)
The minimum standards
prescribed for health benefits plans under section 8902(e) of title 5, United
States Code, and for carriers offering plans, shall apply to plans and carriers
under this Act. Approval of a plan may be withdrawn by the Office only after
notice and opportunity for hearing to the carrier concerned without regard to
subchapter II of chapter 5 and chapter 7 of title 5, United States Code.
(e)
(1)
A contract may not be made or
a plan approved under this section if the carrier under such contract or plan
does not offer to each enrollee whose enrollment in the plan is ended, except
by a cancellation of enrollment, a temporary extension of coverage during which
the individual may exercise the option to convert, without evidence of good
health, to a nongroup contract providing health benefits. An enrollee who
exercises this option shall pay the full periodic charges of the nongroup
contract.
(2)
The benefits and coverage
made available under paragraph (1) may not be canceled by the carrier except
for fraud, over-insurance, or nonpayment of periodic charges.
(f)
Rates charged under health
benefits plans under this Act shall reasonably and equitably reflect the cost
of the benefits provided. Such rates shall be determined on a basis which, in
the judgment of the Office, is consistent with the lowest schedule of basic
rates generally charged for new group health benefits plans issued to large
employers. The rates determined for the first contract term shall be continued
for later contract terms, except that they may be readjusted for any later
term, based on past experience and benefit adjustments under the later
contract. Any readjustment in rates shall be made in advance of the contract
term in which they will apply and on a basis which, in the judgment of the
Office, is consistent with the general practice of carriers which issue group
health benefits plans to large employers. Rates charged for coverage under this
Act shall not vary based on health-status related factors.
(g)
Requirement of payment for or provision of health
service
Each contract entered into
under this Act shall require the carrier to agree to pay for or provide a
health service or supply in an individual case if the Office finds that the
employee, annuitant, family member, former spouse, or person having continued
coverage under section 8905a of title 5, United States Code, is entitled
thereto under the terms of the contract.
5.
An individual shall be
eligible to enroll in a plan under this Act if such individual—
(1)
is an employee of an employer
described in section 2(b)(2), or is a self employed individual as defined in
section 401(c)(1)(B) of the Internal Revenue Code of 1986; and
(2)
is not otherwise enrolled or
eligible for enrollment in a plan under chapter 89 of title 5, United States
Code.
6.
Alternative conditions to Federal employee plans
(a)
For purposes of enrollment in
a health benefits plan under this Act, an individual who had coverage under a
health insurance plan and is not a qualified beneficiary as defined under
section 4980B(g)(1) of the Internal Revenue Code of 1986 shall be treated in a
similar manner as an individual who begins employment as an employee under
chapter 89 of title 5, United States Code.
(b)
Preexisting condition exclusions
(1)
Each contract under this Act
may include a preexisting condition exclusion as defined under section
9801(b)(1) of the Internal Revenue Code of 1986.
(2)
(A)
A preexisting condition
exclusion under this subsection shall provide for coverage of a preexisting
condition to begin not later than 6 months after the date on which the coverage
of the individual under a health benefits plan commences, reduced by 1 month
for each month that the individual was covered under a health insurance plan
immediately preceding the date the individual submitted an application for
coverage under this Act.
(B)
For purposes of this
paragraph, a lapse in coverage of not more than 63 days immediately preceding
the date of the submission of an application for coverage under this Act shall
not be considered a lapse in continuous coverage.
(c)
(1)
Rates charged and premiums
paid for a health benefits plan under this Act—
(A)
shall be determined in
accordance with this subsection;
(B)
may be annually adjusted and
differ from such rates charged and premiums paid for the same health benefits
plan offered under chapter 89 of title 5, United States Code;
(C)
shall be negotiated in the
same manner as rates and premiums are negotiated under such chapter 89;
and
(D)
shall be adjusted to cover
the administrative costs of the Office under this Act.
(2)
In determining rates and
premiums under this Act, the following provisions shall apply:
(A)
A carrier that enters into a
contract under this Act shall determine that amount of premiums to assess for
coverage under a health benefits plan based on an community rate that may be
annually adjusted—
(i)
for the geographic area
involved if the adjustment is based on geographical divisions that are not
smaller than a metropolitan statistical area;
(ii)
based on whether such
coverage is for an individual, a married individual with no children, or a
family; and
(iii)
based on the age of covered
individuals (subject to subparagraph (B)).
(B)
(i)
With respect to subparagraph
(A)(iii), in making adjustments based on age, a carrier may not use age
brackets in increments that are smaller than 5 years, which begin not earlier
than age 30 and end not later than age 65.
(ii)
With respect to subparagraph
(A)(iii), a carrier may develop separate rates for covered individuals who are
65 years of age or older for whom medicare is the primary payor for health
benefits coverage which is not covered under medicare.
(iii)
In making an adjustment to
premium rates under subparagraph (A)(iii), a carrier shall ensure that such
adjustment does not result in an average premium rate applicable to enrollees
under the plan involved that is more than 200 percent of the lowest rate for
all age groups.
(d)
Termination and reenrollment
If an individual who is
enrolled in a health benefits plan under this Act terminates the enrollment,
the individual shall not be eligible for reenrollment until the first open
enrollment period following the expiration of 6 months after the date of such
termination.
(e)
(1)
Health insurance or plans
(A)
Except as provided in
subparagraph (B), the terms of any contract entered into under this Act that
relate to the nature, provision, or extent of coverage or benefits shall
supersede and preempt any State or local law, or any regulation issued
thereunder, which relates to the nature, provision, or extent of coverage or
benefits.
(B)
With respect to a contract
entered into under this Act under which a carrier will offer health benefits
plan coverage in a limited geographic area, subparagraph (A) shall not apply to
the extent that a mandated benefit law is in effect in the State in which the
plan is offered. Such mandated benefit law shall continue to apply to such
health benefits plan.
(C)
The rating requirements under
subsection (c)(2) shall supercede State rating rules for qualified plans under
this Act.
(2)
Nothing in this subsection
shall be construed to preempt—
(A)
any State or local law or
regulation except those laws and regulations described in subparagraphs (A) and
(C) of paragraph (1); and
(B)
State network adequacy
laws.
(f)
Nothing in this Act shall be
construed to limit the application of the service-charge system used by the
Office for determining profits for participating carriers under chapter 89 of
title 5, United States Code.
7.
Encouraging participation by carriers through adjustments for
risk
(a)
Application of risk corridors
(1)
This section shall only apply
to carriers with respect to health benefits plans offered under this Act during
any of calendar years 2006 through 2010.
(2)
Notification of costs under the plan
In the case of a carrier that
offers a health benefits plan under this Act in any of calendar years 2006
through 2010, the carrier shall notify the Office, before such date in the
succeeding year as the Office specifies, of the total amount of costs incurred
in providing benefits under the health benefits plan for the year involved and
the portion of such costs that is attributable to administrative
expenses.
(3)
For purposes of this section,
the term allowable costs means, with respect to a health benefits
plan offered by a carrier under this Act, for a year, the total amount of costs
described in paragraph (2) for the plan and year, reduced by the portion of
such costs attributable to administrative expenses incurred in providing the
benefits described in such paragraph.
(b)
(1)
No adjustment if allowable costs within 3 percent of target
amount
If the allowable costs for
the carrier with respect to the health benefits plan involved for a calendar
year are at least 97 percent, but do not exceed 103 percent, of the target
amount for the plan and year involved, there shall be no payment adjustment
under this section for the plan and year.
(2)
Increase in payment if allowable costs above 103 percent of
target amount
(A)
Costs between 103 and 108 percent of target amount
If the allowable costs for
the carrier with respect to the health benefits plan involved for the year are
greater than 103 percent, but not greater than 108 percent, of the target
amount for the plan and year, the Office shall reimburse the carrier for such
excess costs through payment to the carrier of an amount equal to 75 percent of
the difference between such allowable costs and 103 percent of such target
amount.
(B)
Costs above 108 percent of target amount
If the allowable costs for
the carrier with respect to the health benefits plan involved for the year are
greater than 108 percent of the target amount for the plan and year, the Office
shall reimburse the carrier for such excess costs through payment to the
carrier in an amount equal to the sum of—
(i)
3.75 percent of such target
amount; and
(ii)
90 percent of the difference
between such allowable costs and 108 percent of such target amount.
(3)
Reduction in payment if allowable costs below 97 percent of
target amount
(A)
Costs between 92 and 97 percent of target amount
If the allowable costs for
the carrier with respect to the health benefits plan involved for the year are
less than 97 percent, but greater than or equal to 92 percent, of the target
amount for the plan and year, the carrier shall be required to pay into the
contingency reserve fund maintained under section 8909(b)(2) of title 5, United
States Code, an amount equal to 75 percent of the difference between 97 percent
of the target amount and such allowable costs.
(B)
Costs below 92 percent of target amount
If the allowable costs for
the carrier with respect to the health benefits plan involved for the year are
less than 92 percent of the target amount for the plan and year, the carrier
shall be required to pay into the stabilization fund under section 8909(b)(2)
of title 5, United States Code, an amount equal to the sum of—
(i)
3.75 percent of such target
amount; and
(ii)
90 percent of the difference
between 92 percent of such target amount and such allowable costs.
(4)
(A)
For purposes of this
subsection, the term target amount means, with respect to a health
benefits plan offered by a carrier under this Act in any of calendar years 2006
through 2010, an amount equal to—
(i)
the total of the monthly
premiums estimated by the carrier and approved by the Office to be paid for
enrollees in the plan under this Act for the calendar year involved; reduced
by
(ii)
the amount of administrative
expenses that the carrier estimates, and the Office approves, will be incurred
by the carrier with respect to the plan for such calendar year.
(B)
Submission of target amount
Not later than December 31,
2005, and each December 31 thereafter through calendar year 2009, a carrier
shall submit to the Office a description of the target amount for such carrier
with respect to health benefits plans provided by the carrier under this
Act.
(c)
Disclosure of information
(1)
Each contract under this Act
shall provide—
(A)
that a carrier offering a
health benefits plan under this Act shall provide the Office with such
information as the Office determines is necessary to carry out this subsection
including the notification of costs under subsection (a)(2) and the target
amount under subsection (b)(4)(B); and
(B)
that the Office has the right
to inspect and audit any books and records of the organization that pertain to
the information regarding costs provided to the Office under such
subsections.
(2)
Restriction on use of information
Information disclosed or
obtained pursuant to the provisions of this subsection may be used by officers,
employees, and contractors of the Office only for the purposes of, and to the
extent necessary in, carrying out this section.
8.
Encouraging participation by carriers through
reinsurance
(a)
The Office shall establish a
reinsurance fund to provide payments to carriers that experience one or more
catastrophic claims during a year for health benefits provided to individuals
enrolled in a health benefits plan under this Act.
(b)
To be eligible for a payment
from the reinsurance fund for a plan year, a carrier under this Act shall
submit to the Office an application that contains—
(1)
a certification by the
carrier that the carrier paid for at least one episode of care during the year
for covered health benefits for an individual in an amount that is in excess of
$50,000; and
(2)
such other information
determined appropriate by the Office.
(c)
(1)
The amount of a payment from
the reinsurance fund to a carrier under this section for a catastrophic episode
of care shall be determined by the Office but shall not exceed an amount equal
to 80 percent of the applicable catastrophic claim amount.
(2)
Applicable catastrophic claim amount
For purposes of paragraph
(1), the applicable catastrophic episode of care amount shall be equal to the
difference between—
(A)
the amount of the
catastrophic claim; and
(B)
$50,000.
(3)
In determining the amount of
a payment under paragraph (1), if the amount of the catastrophic claim exceeds
the amount that would be paid for the healthcare items or services involved
under title XVIII of the Social Security
Act (42
U.S.C. 1395 et seq.), the Office shall use the amount that
would be paid under such title XVIII for purposes of paragraph (2)(A).
(d)
In this section, the term
catastrophic claim means a claim submitted to a carrier, by or on
behalf of an enrollee in a health benefits plan under this Act, that is in
excess of $50,000.
9.
Beginning on October 1, 2010,
the Office may use amounts appropriated under section 14(a) that remain
unobligated to establish a contingency reserve fund to provide assistance to
carriers offering health benefits plans under this Act that experience
unanticipated financial hardships (as determined by the Office).
10.
(a)
The Office shall prescribe
regulations providing for employer participation under this Act, including the
offering of health benefits plans under this Act to employees.
(b)
Enrollment and offering of other coverage
(1)
A participating employer
shall ensure that each eligible employee has an opportunity to enroll in a plan
under this Act.
(2)
Prohibition on offering other comprehensive health benefit
coverage
A participating employer may
not offer a health insurance plan providing comprehensive health benefit
coverage to employees other than a health benefits plan that—
(A)
meets the requirements
described in section 4(a); and
(B)
is offered only through the
enrollment process established by the Office under section 3.
(3)
Offer of supplemental coverage options
(A)
A participating employer may
offer supplementary coverage options to employees.
(B)
In subparagraph (A), the term
supplementary coverage means benefits described as excepted
benefits under section 2791(c) of the Public Health Service Act (42
U.S.C. 300gg–91(c)).
(c)
Except as provided in section
15, nothing in this Act shall be construed to require that an employer make
premium contributions on behalf of employees.
11.
Administration through regional administrative
entities
(a)
In order to provide for the
administration of the benefits under this Act with maximum efficiency and
convenience for participating employers and health care providers and other
individuals and entities providing services to such employers, the Office is
authorized to enter into contracts with eligible entities to perform, on a
regional basis, one or more of the following:
(1)
Collect and maintain all
information relating to individuals, families, and employers participating in
the program under this Act in the region served.
(2)
Receive, disburse, and
account for payments of premiums to participating employers by individuals in
the region served, and for payments by participating employers to
carriers.
(3)
Serve as a channel of
communication between carriers, participating employers, and individuals
relating to the administration of this Act.
(4)
Otherwise carry out such
activities for the administration of this Act, in such manner, as may be
provided for in the contract entered into under this section.
(5)
The processing of grievances
and appeals.
(b)
To be eligible to receive a
contract under subsection (a), an entity shall prepare and submit to the Office
an application at such time, in such manner, and containing such information as
the Office may require.
(c)
(1)
All contracts under this
section shall be awarded through a competitive bidding process on a bi-annual
basis.
(2)
No contract shall be entered
into with any entity under this section unless the Office finds that such
entity will perform its obligations under the contract efficiently and
effectively and will meet such requirements as to financial responsibility,
legal authority, and other matters as the Office finds pertinent.
(3)
Publication of standards and criteria
The Office shall publish in
the Federal Register standards and criteria for the efficient and effective
performance of contract obligations under this section, and opportunity shall
be provided for public comment prior to implementation. In establishing such
standards and criteria, the Office shall provide for a system to measure an
entity’s performance of responsibilities.
(4)
Each contract under this
section shall be for a term of at least 1 year, and may be made automatically
renewable from term to term in the absence of notice by either party of
intention to terminate at the end of the current term, except that the Office
may terminate any such contract at any time (after such reasonable notice and
opportunity for hearing to the entity involved as the Office may provide in
regulations) if the Office finds that the entity has failed substantially to
carry out the contract or is carrying out the contract in a manner inconsistent
with the efficient and effective administration of the program established by
this Act.
(d)
A contract entered into under
this section shall include—
(1)
a description of the duties
of the contracting entity;
(2)
an assurance that the entity
will furnish to the Office such timely information and reports as the Office
determines appropriate;
(3)
an assurance that the entity
will maintain such records and afford such access thereto as the Office finds
necessary to assure the correctness and verification of the information and
reports under paragraph (2) and otherwise to carry out the purposes of this
Act;
(4)
an assurance that the entity
shall comply with such confidentiality and privacy protection guidelines and
procedures as the Office may require; and
(5)
such other terms and
conditions not inconsistent with this section as the Office may find necessary
or appropriate.
12.
Coordination with social security benefits
Benefits under this Act shall,
with respect to an individual who is entitled to benefits under part A of title
XVIII of the Social Security Act, be
offered (for use in coordination with those medicare benefits) to the same
extent and in the same manner as if coverage were under chapter 89 of title 5,
United States Code.
13.
Public education campaign
(a)
In carrying out this Act, the
Office shall develop and implement an educational campaign to provide
information to employers and the general public concerning the health insurance
program developed under this Act.
(b)
Not later than 1 year and 2
years after the implementation of the campaign under subsection (a), the Office
shall submit to the appropriate committees of Congress a report that describes
the activities of the Office under subsection (a), including a determination by
the office of the percentage of employers with knowledge of the health benefits
programs provided for under this Act.
(c)
Public education campaign
There is authorized to be
appropriated to carry out this section, such sums as may be necessary for each
of fiscal years 2006 and 2007.
14.
(a)
There are authorized to be
appropriated, and there are appropriated, to carry out sections 7 and 8—
(1)
$4,000,000,000 for fiscal
year 2006;
(2)
$4,000,000,000 for fiscal
year 2007;
(3)
$4,000,000,000 for fiscal
year 2008;
(4)
$3,000,000,000 for fiscal
year 2009; and
(5)
$3,000,000,000 for fiscal
year 2010.
(b)
There are authorized to be
appropriated to the Office, such sums as may be necessary in each fiscal year
for the development and administration of the program under this Act.
15.
Refundable credit for small business employee health insurance
expenses
(a)
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
inserting after section 35 the following new section:
36.
Small business employee health insurance expenses
(a)
In the case of a qualified
small employer, there shall be allowed as a credit against the tax imposed by
this subtitle for the taxable year an amount equal to the sum of—
(1)
the expense amount
described in subsection (b), and
(2)
the expense amount
described in subsection (c), paid by the taxpayer during the taxable
year.
(b)
Subsection (b) expense
amount
For purposes of this
section—
(1)
The expense amount
described in this subsection is the applicable percentage of the amount of
qualified employee health insurance expenses of each qualified employee.
(2)
For purposes of paragraph
(1)—
(A)
The applicable percentage
is equal to—
(i)
25 percent in the case of
self-only coverage,
(ii)
35 percent in the case of
family coverage (as defined in section 220(c)(5)), and
(iii)
30 percent in the case of
coverage for married adults with no children.
(B)
Bonus for payment of greater percentage of premiums
The applicable percentage
otherwise specified in subparagraph (A) shall be increased by 5 percentage
points for each additional 10 percent of the qualified employee health
insurance expenses of each qualified employee exceeding 60 percent which are
paid by the qualified small employer.
(c)
Subsection (c) expense
amount
For purposes of this
section—
(1)
The expense amount
described in this subsection is, with respect to the first credit year of a
qualified small employer which is an eligible employer, 10 percent of the
qualified employee health insurance expenses of each qualified employee.
(2)
For purposes of paragraph
(1), the term first credit year means the taxable year which
includes the date that the health insurance coverage to which the qualified
employee health insurance expenses relate becomes effective.
(3)
For purposes of paragraph
(1), the term eligible employer shall not include a qualified
small employer if, during the 3-taxable year period immediately preceding the
first credit year, the employer or any member of any controlled group including
the employer (or any predecessor of either) established or maintained health
insurance coverage for substantially the same employees as are the qualified
employees to which the qualified employee health insurance expenses
relate.
(d)
Limitation based on wages
(1)
The percentage which would
(but for this subsection) be taken into account as the percentage for purposes
of subsection (b)(2) or (c)(1) for the taxable year shall be reduced (but not
below zero) by the percentage determined under paragraph (2).
(2)
(A)
The percentage determined
under this paragraph is the percentage which bears the same ratio to the
percentage which would be so taken into account as—
(i)
the excess of—
(I)
the qualified employee’s
wages at an annual rate during such taxable year, over
(II)
$25,000, bears to
(ii)
$5,000.
(B)
For each taxable year after
2006, the dollar amounts specified for the preceding taxable year (after the
application of this subparagraph) shall be increased by the same percentage as
the average percentage increase in premiums under the Federal Employees Health
Benefits Program under chapter 89 of title 5, United States Code for the
calendar year in which such taxable year begins over the preceding calendar
year.
(e)
For purposes of this
section—
(1)
The term qualified
small employer means any employer (as defined in section 2(b)(2) of the
Small Employers Health Benefits Program Act of 2005) which—
(A)
is a participating employer
(as defined in section 2(b)(5) of such Act), and
(B)
pays or incurs at least 60
percent of the qualified employee health insurance expenses of each qualified
employee.
(2)
Qualified employee health insurance expenses
(A)
The term qualified
employee health insurance expenses means any amount paid by an employer
for health insurance coverage under such Act to the extent such amount is
attributable to coverage provided to any employee while such employee is a
qualified employee.
(B)
Exception for amounts paid under salary reduction
arrangements
No amount paid or incurred
for health insurance coverage pursuant to a salary reduction arrangement shall
be taken into account under subparagraph (A).
(3)
(A)
The term qualified
employee means, with respect to any period, an employee (as defined in
section 2(b)(1) of such Act) of an employer if the total amount of wages paid
or incurred by such employer to such employee at an annual rate during the
taxable year exceeds $5,000.
(B)
The term wages
has the meaning given such term by section 3121(a) (determined without regard
to any dollar limitation contained in such section).
(f)
Certain rules made applicable
For purposes of this
section, rules similar to the rules of section 52 shall apply.
(g)
Credits for nonprofit organizations
Any credit which would be
allowable under subsection (a) with respect to a qualified small business if
such qualified small business were not exempt from tax under this chapter shall
be treated as a credit allowable under this subpart to such qualified small
business.
.
(b)
(1)
Paragraph (2) of section
1324(b) of title 31, United States Code, is amended by inserting before the
period , or from section 36 of such Code
.
(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 last item and inserting the following new
items:
Sec. 36. Small business
employee health insurance expenses
Sec. 37. Overpayments of
tax
.
(c)
The amendments made by this
section shall apply to amounts paid or incurred in taxable years beginning
after December 31, 2005.
16.
Except as provided in section
10(e), this Act shall take effect on the date of enactment of this Act and
shall apply to contracts that take effect with respect to calendar year 2006
and each calendar year thereafter.