[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1171 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1171

To amend the Internal Revenue Code of 1986 to extend the exclusion from 
   gross income for employer-provided health coverage for employees' 
 spouses and dependent children to coverage provided to other eligible 
                 designated beneficiaries of employees.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              June 9, 2011

 Mr. Schumer (for himself, Ms. Collins, Mr. Whitehouse, Mr. Bingaman, 
  Mr. Brown of Ohio, Ms. Cantwell, Mrs. Murray, Mr. Blumenthal, Mrs. 
 Gillibrand, Mr. Merkley, Mr. Lautenberg, Mr. Wyden, Mr. Franken, Mr. 
Kerry, and Ms. Klobuchar) 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 extend the exclusion from 
   gross income for employer-provided health coverage for employees' 
 spouses and dependent children to coverage provided to other eligible 
                 designated beneficiaries of employees.

    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 ``Tax Parity for Health Plan 
Beneficiaries Act of 2011''.

SEC. 2. APPLICATION OF ACCIDENT AND HEALTH PLANS TO ELIGIBLE 
              BENEFICIARIES.

    (a) Exclusion of Contributions.--Section 106 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subsection:
    ``(g) Coverage Provided for Eligible Beneficiaries of Employees.--
            ``(1) In general.--Subsection (a) shall apply with respect 
        to employer-provided coverage under an accident or health plan 
        for any eligible beneficiary of the employee.
            ``(2) Eligible beneficiary.--For purposes of this 
        subsection, the term `eligible beneficiary' means any 
        individual who is eligible to receive benefits or coverage 
        under an accident or health plan.''.
    (b) Exclusion of Amounts Expended for Medical Care.--The first 
sentence of section 105(b) of the Internal Revenue Code of 1986 is 
amended--
            (1) by striking ``and any child'' and inserting ``any 
        child'', and
            (2) by inserting ``, and any eligible beneficiary (within 
        the meaning of section 106(g)) with respect to the taxpayer'' 
        after ``age 27''.
    (c) Payroll Taxes.--
            (1) Section 3121(a)(2) of the Internal Revenue Code of 1986 
        is amended--
                    (A) by striking ``or any of his dependents'' in the 
                matter preceding subparagraph (A) and inserting ``, any 
                of his dependents, or any eligible beneficiary (within 
                the meaning of section 106(g)) with respect to the 
                employee'',
                    (B) by striking ``or any of his dependents,'' in 
                subparagraph (A) and inserting ``, any of his 
                dependents, or any eligible beneficiary (within the 
                meaning of section 106(g)) with respect to the 
                employee,'', and
                    (C) by striking ``and their dependents'' both 
                places it appears and inserting ``and such employees' 
                dependents and eligible beneficiaries (within the 
                meaning of section 106(g))''.
            (2) Section 3231(e)(1) of such Code is amended--
                    (A) by striking ``or any of his dependents'' and 
                inserting ``, any of his dependents, or any eligible 
                beneficiary (within the meaning of section 106(g)) with 
                respect to the employee,'', and
                    (B) by striking ``and their dependents'' both 
                places it appears and inserting ``and such employees' 
                dependents and eligible beneficiaries (within the 
                meaning of section 106(g))''.
            (3) Section 3306(b)(2) of such Code is amended--
                    (A) by striking ``or any of his dependents'' in the 
                matter preceding subparagraph (A) and inserting ``, any 
                of his dependents, or any eligible beneficiary (within 
                the meaning of section 106(g)) with respect to the 
                employee,'',
                    (B) by striking ``or any of his dependents'' in 
                subparagraph (A) and inserting ``, any of his 
                dependents, or any eligible beneficiary (within the 
                meaning of section 106(g)) with respect to the 
                employee'', and
                    (C) by striking ``and their dependents'' both 
                places it appears and inserting ``and such employees' 
                dependents and eligible beneficiaries (within the 
                meaning of section 106(g))''.
            (4) Section 3401(a) of such Code is amended by striking 
        ``or'' at the end of paragraph (22), by striking the period at 
        the end of paragraph (23) and inserting ``; or'', and by 
        inserting after paragraph (23) the following new paragraph:
            ``(24) for any payment made to or for the benefit of an 
        employee or any eligible beneficiary (within the meaning of 
        section 106(g)) if at the time of such payment it is reasonable 
        to believe that the employee will be able to exclude such 
        payment from income under section 106 or under section 105 by 
        reference in section 105(b) to section 106(g).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 3. EXPANSION OF DEPENDENCY FOR PURPOSES OF DEDUCTION FOR HEALTH 
              INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 is amended by striking ``and'' at the end of 
subparagraph (C), by striking the period at the end of subparagraph (D) 
and inserting a comma and by adding at the end the following new 
subparagraphs:
                    ``(E) any individual who--
                            ``(i) satisfies the age requirements of 
                        section 152(c)(3)(A),
                            ``(ii) bears a relationship to the taxpayer 
                        described in section 152(d)(2)(H), and
                            ``(iii) meets the requirements of section 
                        152(d)(1)(C), and
                    ``(F) one individual who--
                            ``(i) is at least age 19,
                            ``(ii) bears a relationship to the taxpayer 
                        described in section 152(d)(2)(H), and
                            ``(iii) is not the spouse of the taxpayer 
                        and does not bear any relationship to the 
                        taxpayer described in subparagraphs (A) through 
                        (G) of section 152(d)(2).''.
    (b) Conforming Amendment.--Subparagraph (B) of section 162(l)(2) of 
such Code is amended by inserting ``, (E), or (F)'' after 
``subparagraph (D)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 4. EXTENSION TO ELIGIBLE BENEFICIARIES OF SICK AND ACCIDENT 
              BENEFITS PROVIDED TO MEMBERS OF A VOLUNTARY EMPLOYEES' 
              BENEFICIARY ASSOCIATION AND THEIR DEPENDENTS.

    (a) In General.--Section 501(c)(9) of the Internal Revenue Code of 
1986 is amended by inserting : ``and any individual who is an eligible 
beneficiary (within the meaning of section 106(g)), as determined under 
the terms of a medical benefit, health insurance, or other program'' 
after ``age 27''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2011.

SEC. 5. FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH REIMBURSEMENT 
              ARRANGEMENTS.

    The Secretary of Treasury shall issue guidance of general 
applicability within 180 days after the date of the enactment of this 
Act providing that medical expenses that otherwise qualify--
            (1) for reimbursement from a flexible spending arrangement 
        under regulations in effect on such date of enactment may be 
        reimbursed from an employee's flexible spending arrangement, 
        notwithstanding the fact that such expenses are attributable to 
        any individual who is not the employee's spouse or dependent 
        (within the meaning of section 105(b) of the Internal Revenue 
        Code of 1986) but is an eligible beneficiary (within the 
        meaning of section 106(g) of such Code) under the flexible 
        spending arrangement with respect to the employee, and
            (2) for reimbursement from a health reimbursement 
        arrangement under regulations in effect on such date of 
        enactment may be reimbursed from an employee's health 
        reimbursement arrangement, notwithstanding the fact that such 
        expenses are attributable to an individual who is not a spouse 
        or dependent (within the meaning of section 105(b) of such 
        Code) but is an eligible beneficiary (within the meaning of 
        section 106(g) of such Code) under the health reimbursement 
        arrangement with respect to the employee.

SEC. 6. EXTENSION OF QUALIFIED MEDICAL EXPENSES FROM HEALTH SAVINGS 
              ACCOUNTS.

    (a) In General.--Subparagraph (A) of section 223(d)(2) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``and any dependent'' and inserting ``any 
        dependent'', and
            (2) by inserting ``, and any qualified beneficiary'' after 
        ``thereof)''.
    (b) Qualified Beneficiary.--Paragraph (2) of section 223(d) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subparagraph:
                    ``(D) Qualified beneficiary.--For purposes of 
                subparagraph (A), the term `qualified beneficiary' 
                means any individual who is described in subparagraph 
                (D) or (E) of section 162(l)(1).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 7. EXTENSION OF FUNDING MECHANISM FOR MEDICAL BENEFITS FOR 
              RETIREES AND THEIR FAMILIES.

    (a) In General.--Section 401(h) of the Internal Revenue Code of 
1986 is amended by inserting ``, and any eligible beneficiary (within 
the meaning of section 106(g)) of the retired employee'' after ``age 
27''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2011.
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