I 111th CONGRESS 1st Session H. R. 3115 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.

1.

Short title

This Act may be cited as the Small Business Health Care Affordability Act of 2009.

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:

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.

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:

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.