Short title

This Act may be cited as the

Health Insurance Tax Credit Assistance Act of 2007

Findings

Congress makes the following findings: (1)Health care spending in the United States has grown rapidly to a rate of approximately 10 percent a year. (2)According to the Congressional Budget Office, with the cost of health care rising rapidly, spending for Medicare and Medicaid is projected to grow even faster—in the range of 7 percent to 8 percent annually. (3)More and more Americans with health insurance coverage are experiencing increases in out-of-pocket expenses for health care. (4)The rising costs of healthcare is driving more citizens to be uninsured or underinsured. According to the Bureau of the Census, Department of Commerce, the number of Americans without health insurance in 2005 increased by 800,000 to 46,600,000 from 45,800,000 in 2004. (5)Many of these uninsured, nonelderly adults face chronic conditions. (6)The rising costs of healthcare are compounded for Americans who suffer from a chronic disease that requires expensive treatments. Some of these uninsured adults with chronic conditions forgo needed medical care or prescription drugs, due to the prohibitive costs. (7)Many families who have a loved one with an expensive chronic condition often face a difficult dilemma: if they receive public assistance through State Medicaid programs, they must meet and maintain a certain income threshold and if they leave public assistance for private insurance, they must then be able to meet higher premiums, co-payments and drug costs. (8)Currently, nonprofit charitable organizations have recognized a need to develop financial assistance programs for patients with expensive chronic illnesses to access treatment and therapies to lead productive and healthy lives. (9)These patient assistance organizations (PAOs) prevent patients with expensive chronic illnesses and conditions from depleting financial resources to qualify for public assistance programs by subsidizing health insurance premiums; pharmacy and treatment co-payments; and expense associated with Medicare. (10)The Federal Government should be looking for ways to reduce the costs to public programs like Medicaid at the same time transitioning beneficiaries into the private health market. One way to do this is to create incentives for beneficiaries and their families to enter the workforce, earn a better living and ultimately, participate in the private health insurance market. (11)A targeted tax credit is one way the Federal Government could encourage citizens to donate to qualified PAOs. (12)The benefits of a tax credit provides the Federal Government with a greater savings than the cost of the tax credits themselves by transitioning patients off public programs such as Medicaid, lifting them out of poverty, and enabling them to access health insurance coverage. (13)This tax credit also contributes to PAOs that can cover the TrOOP or doughnut hole expenses that Medicare part D does not cover for disabled and senior citizens. (14)This tax credit in the end fosters a tax policy that addresses three major areas of public policy concern— (A)uninsured and underinsured citizens; (B)treatment for Medicare beneficiaries (doughnut hole); and (C)cost savings for Medicaid.

Credit for charitable contributions to certain private charities providing health insurance premium assistance and drug copayment assistance to the uninsured and underinsured

(a)

In general

Subpart A of part IV of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:

25E.

Credit for contributions to the chronically ill uninsured and underinsured

(a)

In general

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the qualified charitable contributions made by the taxpayer. (b)

Limitation

The amount allowed as a credit to the taxpayer under subsection (a) shall not exceed $1,000 ($2,000 in the case of a joint return). (c)

Qualified charitable contribution

For the purposes of this section, the term qualified charitable contribution means a charitable contribution (as defined in section 170(c)) made in cash to a qualified charity. (d)

Qualified charity

For purposes of this section— (1)

In general

The term qualified charity means an organization described in section 501(c)(3) and exempt from tax under section 501(a)— (A)which is certified by the Office of Inspector General of the Department of Health and Human Services as meeting the requirements of paragraph (2), and (B)which is organized under the laws of a State at the time the contribution is made and is exempt from income taxation (if any) by such State. (2)

Charity must work to assist chronically ill patients with health insurance premium assistance and copayment assistance

An organization meets the requirements of this paragraph only if the predominant activity of such organization is the subsidizing of health insurance premiums and pharmacy co-payments of individuals who are uninsured or cannot otherwise afford health insurance or drug treatments. (e)

Denial of double benefit

No deduction shall be allowed under any other provision of this chapter for any contribution for which a deduction or credit is allowed under subsection (a). (f)

Election to not take credit

No credit shall be allowed under subsection (a) for any contribution if the taxpayer elects to not have this section apply to such contribution.

(b)

Clerical amendments

The table of sections of such subpart is amended by inserting after the item relating to section 25D the following new item:

Sec. 25E. Credit for contributions to the chronically ill uninsured and underinsured.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.