[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3115 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3115

To amend the Internal Revenue Code of 1986 to provide credits to small 
     businesses and their employees for health insurance coverage.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              July 7, 2009

 Mr. Hodes (for himself and Ms. Shea-Porter) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide credits to small 
     businesses and their employees for health insurance coverage.

    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 ``Small Business Health Care 
Affordability Act of 2009''.

SEC. 2. SMALL EMPLOYERS BUSINESS CREDIT FOR PROVIDING EMPLOYEE HEALTH 
              INSURANCE.

    (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. 45R. EMPLOYEE HEALTH INSURANCE COVERAGE BY SMALL EMPLOYERS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible small employer, the health insurance credit determined under 
this section for any taxable year is an amount equal to the aggregate 
amount paid or incurred by the taxpayer for the taxable year for 
qualified health insurance for employees of the taxpayer.
    ``(b) Dollar Limitation.--
            ``(1) Annual limitation.--The amount of the credit 
        determined under this section with respect to an employee for 
        any taxable year shall not exceed the sum of the amounts paid 
        by the taxpayer for qualified health insurance for such 
        employee for coverage months of such employee during the 
        taxable year.
            ``(2) Monthly limitation.--For purposes of paragraph (1), 
        amounts paid by the taxpayer for qualified health insurance for 
        an employee for any coverage month of such individual during 
        the taxable year shall not be taken into account to the extent 
        such amounts exceed \1/12\ of the following:
                    ``(A) $1,000 in the case of coverage of the 
                employee.
                    ``(B) $1,750 in the case of two person coverage.
                    ``(C) $2,250 in the case of family coverage.
    ``(c) Eligible Small Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible small employer' 
        means, with respect to any taxable year, any employer who 
        employed an average of 50 or fewer employees on business days 
        during either of the 2 preceding taxable years. For purposes of 
        the preceding sentence, a preceding taxable year may be taken 
        into account only if the employer was in existence throughout 
        such year.
            ``(2) Employers not in existence in preceding year.--In the 
        case of an employer which was not in existence throughout the 
        1st preceding taxable year, the determination under 
        subparagraph (A) shall be based on the average number of 
        employees that it is reasonably expected such employer will 
        employ on business days in the current taxable year.
            ``(3) Certain growing employers retain treatment as small 
        employer.--The term `small employer' includes, with respect to 
        any calendar year, any employer if--
                    ``(A) such employer met the requirement of 
                paragraph (1) (determined without regard to paragraph 
                (2)) for any preceding calendar year after the date of 
                the enactment of this section,
                    ``(B) such employer provided qualified health 
                insurance for that year and each subsequent year 
                thereafter, and
                    ``(C) such employer employed an average of 200 or 
                fewer employees on business days during each preceding 
                calendar year after the date of the enactment of this 
                section.
            ``(4) Special rules.--
                    ``(A) Controlled groups.--For purposes of this 
                subsection, all persons treated as a single employer 
                under subsection (b), (c), (m), or (o) of section 414 
                shall be treated as 1 employer.
                    ``(B) Predecessors.--Any reference in this 
                paragraph to an employer shall include a reference to 
                any predecessor of such employer.
    ``(d) Coverage Month.--For purposes of this section--
            ``(1) In general.--The term `coverage month' means, with 
        respect to an individual, any month if--
                    ``(A) as of the first day of such month such 
                individual is covered by qualified health insurance, 
                and
                    ``(B) more than 50 percent of the premium for 
                coverage under such insurance for such month is paid by 
                the eligible small employer.
            ``(2) Medicare, medicaid, and schip.--The term `coverage 
        month' shall not include any month with respect to an 
        individual if, as of the first day of such month, such 
        individual--
                    ``(A) is entitled to any benefits under part A of 
                title XVIII of the Social Security Act or is enrolled 
                under part B of such title, or
                    ``(B) is enrolled in the program under title XIX or 
                XXI of such Act (other than under section 1928 of such 
                Act).
            ``(3) Certain other coverage.--The term `coverage month' 
        shall not include any month with respect to an individual if, 
        at any time during such month, any benefit is provided to such 
        individual under chapter 55 of title 10, United States Code.
            ``(4) Prisoners.--The term `coverage month' shall not 
        include any month with respect to an individual if, as of the 
        first day of such month, such individual is imprisoned under 
        Federal, State, or local authority.
            ``(5) Insufficient presence in united states.--The term 
        `coverage month' shall not include any month during a taxable 
        year with respect to an individual if such individual is 
        present in the United States on fewer than 183 days during such 
        year (determined in accordance with section 7701(b)(7)).
    ``(e) Qualified Health Insurance.--For purposes of this section--
            ``(1) In general.--The term `qualified health insurance' 
        means health insurance coverage (as defined in section 
        9832(b)(1)) which--
                    ``(A) is coverage under a group health plan (within 
                the meaning of section 5000 without regard to section 
                5000(d)), and
                    ``(B) meets the requirements of 
                paragraph (2).
        Such term does not include any insurance substantially all of 
        the coverage of which is coverage described in section 
        223(c)(1)(B).
            ``(2) Requirements.--The requirements of this paragraph are 
        as follows:
                    ``(A) Adjusted community rating or rating bands.--
                The coverage is provided in a State which--
                            ``(i) has a community rating structure that 
                        does not permit rating on gender, health status 
                        or claims experience, or
                            ``(ii) limits the permitted rate for any 
                        age group to be no more than 400 percent of the 
                        lowest rate for all adult age groups.
                    ``(B) Benefits.--The coverage is provided under a 
                plan that is at least an actuarial equivalent to the 
                standard Blue Cross-Blue Shield plan offered under the 
                Federal Employees Health Benefits Program (FEHBP).''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) of such Code (defining current year business credit) is amended 
by striking ``plus'' at the end of paragraph (34), by striking the 
period at the end of paragraph (35) and inserting ``, plus'', and by 
adding at the end the following new paragraph:
            ``(36) in the case of an eligible small employer (as 
        defined in section 45R(c)), the health insurance credit 
        determined under section 45R(a).''.
    (c) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45R. Employee health insurance coverage by small employers.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.

SEC. 3. REFUNDABLE SMALL BUSINESS EMPLOYEE HEALTH PREMIUM CREDIT.

    (a) Allowance of Credit.--
            (1) In general.--Subpart C of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        refundable personal credits) is amended by inserting after 
        section 36A the following new section:

``SEC. 36B. HEALTH INSURANCE COSTS FOR SMALL BUSINESS EMPLOYEES.

    ``(a) Allowance of Credit.--In the case of an individual who is an 
eligible small business employee, there shall be allowed as a credit 
against the tax imposed by this subtitle for the taxable year an amount 
equal to the amount paid by the taxpayer during such taxable year for 
qualified health insurance for the taxpayer and the taxpayer's spouse 
and dependents.
    ``(b) Limitation.--The amount allowed as a credit under subsection 
(a) to the taxpayer for the taxable year shall not exceed the sum of 
the amounts paid by the taxpayer for qualified health insurance for 
each individual referred to in subsection (a) for coverage months of 
such individual during the taxable year.
    ``(c) Eligible Small Business Employee.--For purposes of this 
section, an individual is an eligible small business employee for a 
coverage month if such individual is enrolled in qualified health 
insurance provided through an eligible small employer for which a 
credit is allowable under section 45R.
    ``(d) Qualified Health Insurance; Coverage Month.--For purposes of 
this section, the terms `qualified health insurance' and `coverage 
month' have the same meanings given such terms by section 45R.
    ``(e) Special Rules.--
            ``(1) Coordination with medical expense deduction.--The 
        amount which would (but for this paragraph) be taken into 
        account by the taxpayer under section 213 for the taxable year 
        shall be reduced by the credit (if any) allowed by this section 
        to the taxpayer for such year.
            ``(2) Coordination with deduction for health insurance 
        costs of self-employed individuals.--No credit shall be 
        allowable under this section for a taxable year if a deduction 
        is allowed under section 162(l) for the taxable year.
            ``(3) Coordination with section 35.--If a taxpayer is 
        eligible for the credit allowed under this section and section 
        35 for any month, the taxpayer shall elect which credit is to 
        be allowed with respect to such month.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36B,'' after ``36A,''.
            (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 inserting after the item relating to section 36A 
        the following new item:

``Sec. 36B. Health insurance costs for small business employees.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.
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