[Congressional Record Volume 147, Number 38 (Wednesday, March 21, 2001)]
[Senate]
[Pages S2669-S2672]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Mr. Breaux, Mr. Frist, Mrs. 
        Lincoln, Ms. Snowe, Mr. Chafee, and Mr. Carper):
  S. 590. A bill to amend the Internal Revenue Code of 1986 to allow a 
refundable tax credit for health insurance costs, and for other 
purposes; to the Committee on Finance.
  Mr. JEFFORDS. Mr. President, today, I am pleased to join with my 
colleagues in introducing the Relief, Equity, Access, and Coverage for 
Health, REACH, Act, a bipartisan bill that will provide low and middle 
income Americans with refundable tax credits for the purchase of health 
insurance coverage.
  New Census Bureau data indicate that there are now 43 million 
Americans with no health coverage. And, for the third straight year, 
insurance premiums for employer-sponsored coverage have increased 
significantly, by as much as 10 to 13 percent. We know from past 
experience that premium increases cause people to lose their health 
insurance. By some estimates, as many as 3 million Americans will lose 
coverage for every 10 percent increase in premiums.
  With premiums increasing and the economy uncertain, the problem could 
worsen. The impact of these numbers is very real for American families. 
The uninsured often go without needed health care or face unaffordable 
medical bills. Access to health coverage for

[[Page S2670]]

the uninsured must be one of our nation's top priorities.
  The REACH tax credit is targeted to those who are most in need of 
help, Americans who earn too much to qualify for public programs, but 
nevertheless struggle to pay for health insurance. Without additional 
resources, health insurance coverage is either beyond their reach or 
only purchased by giving up other basic necessities of life.
  The REACH Act makes a refundable tax credit available to more than 20 
million Americans who do not have access to employer-sponsored 
insurance and who are ineligible for public programs. The amount of the 
credit for this group is $1,000 for individuals with adjusted gross 
incomes of up to $35,000 to purchase self-only coverage, and $2,500 for 
taxpayers with an AGI of up to $55,000 to purchase family coverage.
  We also want to help hard working Americans who have access to 
employer-subsidized insurance, but have difficulty paying for their 
share of the premiums. Over 7 million Americans decline insurance 
offered by their employers. To relieve their financial burden, the 
REACH Act provides a refundable tax credit of $400 for the purchase of 
self-only coverage and $1,000 for the purchase of family coverage under 
the employer's group health plan.
  Initial estimates indicate this legislation will provide coverage to 
more than 10 million Americans who are presently uninsured. In 
addition, it will give needed financial relief to over 60 million low 
and moderate income working Americans who are using their own scarce 
dollars to buy health insurance coverage today.
  The REACH Act provides a bipartisan, market-based solution to a 
complex problem. It will bolster the private health insurance market 
and strengthen employer-sponsored coverage, the cornerstone of our 
nation's health care system. While this legislation will not solve the 
entire problem, it is clearly a substantial step in the right 
direction. I will continue to work with my colleagues to tackle this 
problem on other fronts, including strengthening the safety net, 
working to make Medicaid and SCHIP more effective programs, and 
fighting to provide a prescription drug benefit for Medicare 
beneficiaries.
  I look forward to working with my colleagues on enacting the REACH 
Act into law this year. I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 590

       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 ``Relief, Equity, Access, and 
     Coverage for Health (REACH) Act''.

     SEC. 2. REFUNDABLE HEALTH INSURANCE COSTS CREDIT.

       (a) 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 redesignating 
     section 35 as section 36 and inserting after section 34 the 
     following new section:

     ``SEC. 35. HEALTH INSURANCE COSTS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     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 the taxable year for 
     qualified health insurance for the taxpayer and the 
     taxpayer's spouse and dependents.
       ``(b) Limitations.--
       ``(1) Maximum dollar amount.--
       ``(A) In general.--The amount allowed as a credit under 
     subsection (a) to the taxpayer for the taxable year shall not 
     exceed the sum of the monthly limitations for coverage months 
     during such taxable year.
       ``(B) Monthly limitation.--The monthly limitation for each 
     coverage month during the taxable year is the amount equal to 
     \1/12\ of--
       ``(i) in the case of self-only coverage, $1,000, and
       ``(ii) in the case of family coverage, $2,500.
       ``(C) Limitation for employees with employer subsidized 
     coverage.--In the case of an individual who is eligible to 
     participate in any subsidized health plan (within the meaning 
     of section 162(l)(2)) maintained by any employer of the 
     taxpayer or of the spouse of the taxpayer for any coverage 
     month, subparagraph (B) shall be applied by substituting 
     `$400' for `$1,000' and `$1,000' for `$2,500' for such month.
       ``(2) Phaseout of credit.--
       ``(A) In general.--The amount which would (but for this 
     paragraph) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under subparagraph (B).
       ``(B) Amount of reduction.--The amount determined under 
     this subparagraph is the amount which bears the same ratio to 
     the amount which would be so taken into account for the 
     taxable year as--
       ``(i) the excess of--

       ``(I) the taxpayer's modified adjusted gross income for the 
     preceding taxable year, over
       ``(II) $35,000 ($55,000 in the case of family coverage), 
     bears to

       ``(ii) $10,000.
       ``(C) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income 
     determined--
       ``(i) without regard to this section and sections 911, 931, 
     and 933, and
       ``(ii) after application of sections 86, 135, 137, 219, 
     221, and 469.
       ``(3) Coordination with deduction for health insurance 
     costs of self-employed individuals.--In the case of a 
     taxpayer who is eligible to deduct any amount under section 
     162(l) for the taxable year, this section shall apply only if 
     the taxpayer elects not to claim any amount as a deduction 
     under such section for such year.
       ``(4) Inflation adjustment.--
       ``(A) In general.--In the case of any taxable year 
     beginning after 2002, each of the dollar amounts referred to 
     in paragraphs (1)(B), (1)(C), and (2)(B) shall be increased 
     by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2001' for `1992'.
       ``(B) Rounding.--If any amount as adjusted under 
     subparagraph (A) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Coverage Month Defined.--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) the premium for coverage under such insurance, or any 
     portion of the premium, for such month is paid by the 
     taxpayer.
       ``(2) Exclusion of months in which individual is eligible 
     for coverage under certain health programs.--Such term shall 
     not include any month during a taxable year with respect to 
     an individual if, as of the first day of such month, such 
     individual is eligible--
       ``(A) for any benefits under title XVIII of the Social 
     Security Act,
       ``(B) to participate in the program under title XIX or XXI 
     of such Act.
       ``(C) for benefits under chapter 17 of title 38, United 
     States Code,
       ``(D) for benefits under chapter 55 of title 10, United 
     States Code,
       ``(E) to participate in the program under chapter 89 of 
     title 5, United States Code, or any similar program for State 
     or local government employees, or
       ``(F) for benefits under any medical care program under the 
     Indian Health Care Improvement Act or any other provision of 
     law.
       ``(3) Exclusion of months in which individual is 
     imprisoned.--Such term 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.
       ``(d) Qualified Health Insurance.--For purposes of this 
     section, the term `qualified health insurance' means health 
     insurance coverage (as defined in section 9832(b)(1)), 
     including coverage under a COBRA continuation provision (as 
     defined in section 9832(d)(1)).
       ``(e) Medical Savings Account Contributions.--
       ``(1) In general.--If a deduction would (but for paragraph 
     (2)) be allowed under section 220 to the taxpayer for a 
     payment for the taxable year to the medical savings account 
     of an individual, subsection (a) shall be applied by treating 
     such payment as a payment for qualified health insurance for 
     such individual.
       ``(2) Denial of double benefit.--No deduction shall be 
     allowed under section 220 for that portion of the payments 
     otherwise allowable as a deduction under section 220 for the 
     taxable year which is equal to the amount of credit allowed 
     for such taxable year by reason of this subsection.
       ``(f) 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) Denial of credit to dependents.--No credit shall be 
     allowed under this section to any individual with respect to 
     whom a deduction under section 151 is allowable to another 
     taxpayer for a taxable year beginning in the calendar year in 
     which such individual's taxable year begins.
       ``(3) Coordination with advance payment.--Rules similar to 
     the rules of section 32(g) shall apply to any credit to which 
     this section applies.
       ``(g) Expenses Must Be Substantiated.--A payment for 
     insurance to which subsection (a) applies may be taken into 
     account under this section only if the taxpayer substantiates 
     such payment in such form as the Secretary may prescribe.

[[Page S2671]]

       ``(h) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section, including regulations under which--
       ``(1) an awareness campaign is established to educate the 
     public, employers, insurance issuers, and agents or others 
     who market health insurance about the requirements and 
     procedures under this section, including--
       ``(A) criteria for insurance products and group health 
     coverage which constitute qualified health insurance under 
     this section,
       ``(B) procedures by which employers who do not offer health 
     insurance coverage to their employees may assist such 
     employees in securing qualified health insurance, and
       ``(C) guidelines for marketing schemes and practices which 
     are appropriate and acceptable in connection with the credit 
     under this section, and
       ``(2) periodic reviews or audits of health insurance 
     policies and group health plans (and related promotional 
     marketing materials) which are marketed to eligible taxpayers 
     under this section are conducted for the purpose of 
     determining--
       ``(A) whether such policies and plans constitute qualified 
     health insurance under this section, and
       ``(B) whether offenses described in section 7276 occur.''.
       (b) Information Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of such Code (relating to information concerning 
     transactions with other persons) is amended by inserting 
     after section 6050S the following new section:

     ``SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR QUALIFIED 
                   HEALTH INSURANCE.

       ``(a) In General.--Any person who, in connection with a 
     trade or business conducted by such person, receives payments 
     during any calendar year from any individual for coverage of 
     such individual or any other individual under creditable 
     health insurance, shall make the return described in 
     subsection (b) (at such time as the Secretary may by 
     regulations prescribe) with respect to each individual from 
     whom such payments were received.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom payments described in subsection (a) were received,
       ``(B) the name, address, and TIN of each individual who was 
     provided by such person with coverage under creditable health 
     insurance by reason of such payments and the period of such 
     coverage,
       ``(C) the aggregate amount of payments described in 
     subsection (a),
       ``(D) the qualified health insurance credit advance amount 
     (as defined in section 7527(e)) received by such person with 
     respect to the individual described in subparagraph (A), and
       ``(E) such other information as the Secretary may 
     reasonably prescribe.
       ``(c) Creditable Health Insurance.--For purposes of this 
     section, the term `creditable health insurance' means 
     qualified health insurance (as defined in section 35(d)) 
     other than, to the extent provided in regulations prescribed 
     by the Secretary, any insurance covering an individual if no 
     credit is allowable under section 35 with respect to such 
     coverage.
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required under subsection 
     (b)(2)(A) to be set forth in such return a written statement 
     showing--
       ``(1) the name and address of the person required to make 
     such return and the phone number of the information contact 
     for such person,
       ``(2) the aggregate amount of payments described in 
     subsection (a) received by the person required to make such 
     return from the individual to whom the statement is required 
     to be furnished,
       ``(3) the information required under subsection (b)(2)(B) 
     with respect to such payments, and
       ``(4) the qualified health insurance credit advance amount 
     (as defined in section 7527(e)) received by such person with 
     respect to the individual described in paragraph (2).

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) is required to be made.
       ``(e) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of any amount 
     received by any person on behalf of another person, only the 
     person first receiving such amount shall be required to make 
     the return under subsection (a).''.
       (2) Assessable penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code 
     (relating to definitions) is amended by redesignating clauses 
     (xi) through (xvii) as clauses (xii) through (xviii), 
     respectively, and by inserting after clause (x) the following 
     new clause:
       ``(xi) section 6050T (relating to returns relating to 
     payments for qualified health insurance),''.

       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of the next to last 
     subparagraph, by striking the period at the end of the last 
     subparagraph and inserting ``, or'', and by adding at the end 
     the following new subparagraph:
       ``(BB) section 6050T(d) (relating to returns relating to 
     payments for qualified health insurance).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of chapter 61 of such Code is 
     amended by inserting after the item relating to section 6050S 
     the following new item:

``Sec. 6050T. Returns relating to payments for qualified health 
              insurance.''.
       (c) Criminal Penalty for Fraud.--Subchapter B of chapter 75 
     of such Code (relating to other offenses) is amended by 
     adding at the end the following new section:

     ``SEC. 7276. PENALTIES FOR OFFENSES RELATING TO HEALTH 
                   INSURANCE TAX CREDIT.

       ``Any person who knowingly misuses Department of the 
     Treasury names, symbols, titles, or initials to convey the 
     false impression of association with, or approval or 
     endorsement by, the Department of the Treasury of any 
     insurance products or group health coverage in connection 
     with the credit for health insurance costs under section 35 
     shall on conviction thereof be fined not more than $10,000, 
     or imprisoned not more than 1 year, or both.''.
       (d) Conforming Amendments.--
       (1) Section 162(l) of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new paragraph:
       ``(6) Election to have subsection apply.--No deduction 
     shall be allowed under paragraph (1) for a taxable year 
     unless the taxpayer elects to have this subsection apply for 
     such year.''.
       (2) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 35 of such Code''.
       (3) 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. 35. Health insurance costs.
``Sec. 36. Overpayments of tax.''.

       (4) The table of sections for subchapter B of chapter 75 of 
     the Internal Revenue Code of 1986 is amended by adding at the 
     end the following new item:

``Sec. 7276. Penalties for offenses relating to health insurance tax 
              credit.''.

       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2001.
       (2) Penalties.--The amendments made by subsections (c) and 
     (d)(4) shall take effect on the date of the enactment of this 
     Act.

     SEC. 3. ADVANCE PAYMENT OF CREDIT TO ISSUERS OF QUALIFIED 
                   HEALTH INSURANCE.

       (a) In General.--Chapter 77 of the Internal Revenue Code of 
     1986 (relating to miscellaneous provisions) is amended by 
     adding at the end the following new section:

     ``SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE CREDIT TO 
                   ISSUERS OF QUALIFIED HEALTH INSURANCE.

       ``(a) General Rule.--In the case of an eligible individual, 
     the Secretary shall make payments to the health insurance 
     issuer of such individual's qualified health insurance equal 
     to such individual's qualified health insurance credit 
     advance amount with respect to such issuer.
       ``(b) Eligible Individual.--For purposes of this section, 
     the term `eligible individual' means any individual--
       ``(1) who purchases qualified health insurance (as defined 
     in section 35(c)), and
       ``(2) for whom a qualified health insurance credit 
     eligibility certificate is in effect.
       ``(c) Health Insurance Issuer.--For purposes of this 
     section, the term `health insurance issuer' has the meaning 
     given such term by section 9832(b)(2) (determined without 
     regard to the last sentence thereof).
       ``(d) Qualified Health Insurance Credit Eligibility 
     Certificate.--For purposes of this section, a qualified 
     health insurance credit eligibility certificate is a 
     statement furnished by an individual to a qualified health 
     insurance issuer which--
       ``(1) certifies that the individual will be eligible to 
     receive the credit provided by section 35 for the taxable 
     year,
       ``(2) estimates the amount of such credit for such taxable 
     year, and
       ``(3) provides such other information as the Secretary may 
     require for purposes of this section.
       ``(e) Qualified Health Insurance Credit Advance Amount.--
     For purposes of this section, the term `qualified health 
     insurance credit advance amount' means, with respect to any 
     qualified health insurance issuer of qualified health 
     insurance, an estimate of the amount of credit allowable 
     under section 35 to the individual for the taxable year which 
     is attributable to the insurance provided to the individual 
     by such issuer.
       ``(f) Required Documentation for Receipt of Payments of 
     Advance Amount.--No payment of a qualified health insurance 
     credit advance amount with respect to any eligible individual 
     may be made under subsection (a) unless the health insurance 
     issuer provides to the Secretary--
       ``(1) the qualified health insurance credit eligibility 
     certificate of such individual, and

[[Page S2672]]

       ``(2) the return relating to such individual under section 
     6050T.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 of such Code is amended by adding at the end the following 
     new item:

``Sec. 7527. Advance payment of health insurance credit for purchasers 
              of qualified health insurance.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2002.

     SEC. 4. COMBINATION OF COST OF SCHIP COVERAGE FOR A TARGETED 
                   LOW-INCOME CHILD WITH REFUNDABLE HEALTH 
                   INSURANCE COSTS CREDIT TO PURCHASE FAMILY 
                   COVERAGE.

       (a) In General.--Section 2105(c)(3) of the Social Security 
     Act (42 U.S.C. 1397ee(c)(3)) is amended--
       (1) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively, and indenting such clauses 
     appropriately;
       (2) by striking ``Payment'' and inserting the following:
       ``(A) In general.--Payment''; and
       (3) by adding at the end the following new subparagraph:
       ``(B) Combination of cost of providing child health 
     assistance with refundable health insurance costs tax 
     credit.--
       ``(i) In general.--In the case of a targeted low-income 
     child who is eligible for child health assistance and whose 
     parent is eligible for the refundable health insurance costs 
     tax credit provided under section 35 of the Internal Revenue 
     Code of 1986, payment may be made to a State under subsection 
     (a)(1) for payment by the State to a health insurance issuer 
     that receives advance payment of such credit on behalf of the 
     parent under section 7527 of the Internal Revenue Code of 
     1986, of an amount equal to the estimated cost of providing 
     the child with child health assistance for a calendar year, 
     but only if--

       ``(I) the health insurance issuer uses the State payment 
     made under this subparagraph and the advance credit payment 
     to provide family coverage for the parent and the targeted 
     low-income child; and
       ``(II) the State establishes to the satisfaction of the 
     Secretary that the conditions set forth in clauses (i) and 
     (ii) of subparagraph (A) are met.

       ``(ii) Definition of health insurance issuer.--In this 
     subparagraph, the term `health insurance issuer' has the 
     meaning given such term in section 9832(b)(2) of the Internal 
     Revenue Code of 1986 (determined without regard to the last 
     sentence thereof).''.
       (b) Effective Date.--The amendments made by this section 
     take effect on January 1, 2002.

  Mr. FRIST. Mr. President, I am pleased to join Senator Jeffords and 
my colleagues today in a bipartisan effort to address the growing 
number of individuals and families without health insurance coverage in 
this country.
  The problem has been made clear. Despite last year's decline in 
America's uninsured population, there are still more than 43 million 
americans--one-sixth of our Nation's population, who do not have health 
insurance. We know that the majority of the uninsured, 32 of the 44 
million, earn an annual income of under $50,000. We also know that the 
rising cost of health insurance is the single most important reason 
given for the lack of purchasing coverage. Many Americans simply cannot 
afford to buy health insurance.
  The solutions are becoming clearer as well. A one-size-fits-all 
approach to expand health coverage and access to health care does not 
meet the various needs of the uninsured population. However, because 
our workforce is growing and evolving out of the older traditional 
models, we must look to common features of the uninsured population. 
Although more than 80 percent of the uninsured individuals come from 
families with at least one employed member, the majority of uninsured 
Americans do not have access to employer-sponsored health coverage. An 
additional seven million Americans have access to employer-provided 
health insurance but are, in many cases, unable to afford it. 
Therefore, my colleagues and I today are introducing the Relief, 
Equity, Access, and Coverage for Health, REACH, Act to build upon the 
current system of employer-based coverage which continues to be the 
main source of coverage for most Americans.
  Our goal is to fill the coverage gaps that exist in the current 
system while also complementing and expanding the reach of the 
employment-based system. The central tenet of our proposal is a 
refundable tax credit for low-income Americans who are not offered a 
contribution for their insurance through their employer and do not 
receive coverage through Federal programs such as Medicaid or Medicare. 
For example, our proposal will help hard working Americans who cannot 
afford to buy coverage on their own, such as the part-time worker who 
is not offered employer-sponsored health insurance. We provide that 
worker with a $1,000 tax credit to purchase coverage. We help a young 
family with two children earning less than $50,000 a year by providing 
them with a $2,500 credit to purchase a health insurance policy for 
themselves and their children. In addition, the REACH Act also is 
designed to assist those Americans who do have access to employer-
subsidized health insurance but, too often, decline it because they 
cannot afford the cost-sharing components. We provide these individuals 
and families with up to $400 annually for single coverage or $1,000 for 
themselves and their families. Overall it is estimated that these 
provisions would expand new health insurance to as many as 17 million 
previously uninsured Americans.
  I appreciate the work my colleagues have done on this bill, and I 
look forward to seeing the REACH Act passed into law this year.
                                 ______