[Congressional Record Volume 147, Number 81 (Tuesday, June 12, 2001)]
[Senate]
[Pages S6139-S6140]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WARNER:
  S. 1022. A bill to amend the Internal Revenue Code of 1986 to allow 
Federal civilian and military retirees to pay health insurance premiums 
on a pretax basis and to allow a deduction for TRICARE supplemental 
premiums; to the Committee on Finance.
  Mr. WARNER. Mr. President, today I am pleased to join my colleague in 
the House of Representatives, Congressman Tom Davis, in introducing 
legislation that will enable Federal and military retirees to take 
advantage of premium conversion. Premium conversion allows individuals 
to pay their health insurance premiums with pre-tax dollars.
  This tax benefit was extended last year under a Presidential 
directive to

[[Page S6140]]

current Federal employees who participate in the Federal Employees 
Health Benefits Program, saving an average of over $400 per year on 
their Federal income taxes. It is a benefit already available to many 
private sector employees, and State and local government employees.
  Although extending this benefit to Federal annuitants has broad 
support, it requires a legislative change in the tax laws. The 
legislation I am introducing today will do just that.
  The Federal Employees Health Insurance Premium Conversion Act will 
provide that the same health insurance premium conversion arrangement 
afforded to employees in the Executive and Judicial branches of the 
Federal government, be made available to Federal annuitants.
  This year, retirees under the Civil Service Retirement System 
received a 3.5 percent cost of living adjustment, and those who receive 
an annuity under the Federal Employees Retirement System received a 2.5 
percent adjustment.
  This increase in benefits is nearly offset by severe increases in 
FEHB premiums. In 2000, health premiums increased by an average of 9.3 
percent. The Office of Personnel Management reports that a similar 
increase is expected again this year.
  I am deeply concerned about increases in Federal Employee Health 
Benefit premiums in recent years. Health care coverage is provided to 
over 9 million Federal employees, retirees and their families under 
FEHBP. Ensuring affordable health care coverage for all Federal 
employees and their dependents must remain a priority for Congress.
  In addition, I am pleased that this bill will also allow uniformed 
services retiree beneficiaries, their family members and survivors to 
pay their TRICARE Prime enrollment fees and TRICARE Standard 
supplemental insurance premiums with pre-tax dollars. TRICARE Standard 
supplemental insurance premiums paid by active duty personnel are also 
covered by the legislation which allows for an above the line deduction 
to benefit active duty personnel and their families.
  This is a critical issue to many retirees, especially those living on 
a fixed income. Extending premium conversion will provide much needed 
relief from the increasing cost of health care insurance. It will help 
to ensure that more Federal retirees are able to afford continued 
coverage under the Federal Employees Health Benefits program.
  I encourage my colleagues to support this critical legislation and 
show their support of these Federal civilian and military retirees for 
their dedicated service. 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. 1022

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PRETAX PAYMENT OF HEALTH INSURANCE PREMIUMS BY 
                   FEDERAL CIVILIAN AND MILITARY RETIREES.

       (a) In General.--Subsection (g) of section 125 of the 
     Internal Revenue Code of 1986 (relating to cafeteria plans) 
     is amended by adding at the end the following new paragraph:
       ``(5) Health insurance premiums of federal civilian and 
     military retirees.--
       ``(A) FEHBP premiums.--Nothing in this section shall 
     prevent the benefits of this section from being allowed to an 
     annuitant, as defined in paragraph (3) of section 8901, title 
     5, United States Code, with respect to a choice between the 
     annuity or compensation referred to such paragraph and 
     benefits under the health benefits program established by 
     chapter 89 of such title 5.
       ``(B) TRICARE premiums.--Nothing in this section shall 
     prevent the benefits of this section from being allowed to an 
     individual receiving retired or retainer pay by reason of 
     being a member or former member of the uniformed services of 
     the United States with respect to a choice between such pay 
     and benefits under the health benefits program established by 
     chapter 55 of title 10, United States Code.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 2. DEDUCTION FOR TRICARE SUPPLEMENTAL PREMIUMS.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 223 as section 224 and by inserting 
     after section 222 the following new section:

     ``SEC. 223. TRICARE SUPPLEMENTAL PREMIUMS OR ENROLLMENT FEES.

       ``(a) Allowance of Deduction.--In the case of an 
     individual, there shall be allowed as a deduction the amounts 
     paid during the taxable year by the taxpayer for insurance 
     purchased as supplemental coverage to the health benefits 
     programs established by chapter 55 of title 10, United States 
     Code, for the taxpayer and the taxpayer's spouse and 
     dependents.
       ``(b) Coordination With Medical Deduction.--Any amount 
     allowed as a deduction under subsection (a) shall not be 
     taken into account in computing the amount allowable to the 
     taxpayer as a deduction under section 213(a).''
       (b) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--Subsection (a) of section 62 of such Code 
     is amended by inserting after paragraph (18) the following 
     new paragraph:
       ``(19) Tricare supplemental premiums or enrollment fees.--
     The deduction allowed by section 223.''
       (c) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 of such Code is amended by 
     striking the last item and inserting the following new items:

``Sec. 223. TRICARE supplemental premiums or enrollment fees.
``Sec. 224. Cross reference.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

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