S. 2994 (106th): Health Insurance Equity Act of 2000

106th Congress, 1999–2000. Text as of Jul 27, 2000 (Introduced).

Status & Summary | PDF | Source: GPO

S 2994 IS

106th CONGRESS

2d Session

S. 2994

To amend the Internal Revenue Code of 1986 to provide tax incentives to encourage small business health plans, and for other purposes.

IN THE SENATE OF THE UNITED STATES

July 27, 2000

Mr. ROBB 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 provide tax incentives to encourage small business health plans, and for other purposes.

    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 ‘Health Insurance Equity Act of 2000’.

SEC. 2. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED HEALTH BENEFIT PURCHASING COALITIONS.

    (a) IN GENERAL- Section 4942 of the Internal Revenue Code of 1986 (relating to taxes on failure to distribute income) is amended by adding at the end the following:

    ‘(k) CERTAIN QUALIFIED HEALTH BENEFIT PURCHASING COALITION DISTRIBUTIONS-

      ‘(1) IN GENERAL- For purposes of subsection (g) and section 4945(d)(5), a qualified health benefit purchasing coalition distribution by a private foundation shall be considered to be a distribution for a charitable purpose.

      ‘(2) QUALIFIED HEALTH BENEFIT PURCHASING COALITION DISTRIBUTION- For purposes of paragraph (1)--

        ‘(A) IN GENERAL- The term ‘qualified health benefit purchasing coalition distribution’ means any amount paid by a private foundation to or on behalf of a qualified health benefit purchasing coalition (as defined in section 9841) for purposes of payment or reimbursement of start-up costs paid or incurred in connection with the establishment and maintenance of such coalition.

        ‘(B) EXCLUSIONS- Such term shall not include any amount used by a qualified health benefit purchasing coalition (as so defined)--

          ‘(i) for the purchase of real property,

          ‘(ii) as payment to, or for the benefit of, members (or employees or affiliates of such members) of such coalition, or

          ‘(iii) for start-up costs paid or incurred more than 24 months after the date of establishment of such coalition.

      ‘(3) TERMINATION- This subsection shall not apply--

        ‘(A) to qualified health benefit purchasing coalition distributions paid or incurred after December 31, 2008, and

        ‘(B) with respect to start-up costs of a coalition which are paid or incurred after December 31, 2010.’.

    (b) EFFECTIVE DATE- The amendment made by this subsection shall apply to qualified health benefit purchasing coalition distributions, as defined in section 4942(k)(2) of the Internal Revenue Code of 1986, as added by subsection (a), paid in taxable years beginning after December 31, 2000.

SEC. 3. SMALL BUSINESS HEALTH PLAN TAX CREDIT.

    (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:

‘SEC. 45D. EMPLOYEE HEALTH INSURANCE EXPENSES.

    ‘(a) GENERAL RULE- For purposes of section 38, in the case of a small employer (as defined in section 4980D(d)(2)), the employee health insurance expenses credit determined under this section for the taxable year is an amount equal to the applicable percentage of the amount paid by the taxpayer during the taxable year for qualified employee health insurance expenses.

    ‘(b) APPLICABLE PERCENTAGE- For purposes of subsection (a), the applicable percentage is--

      ‘(1) in the case of insurance purchased as a member of a qualified health benefit purchasing coalition (as defined in section 9841), 25 percent, and

      ‘(2) in the case of insurance not described in paragraph (1), 20 percent.

    ‘(c) PER EMPLOYEE DOLLAR LIMITATION-

      ‘(1) IN GENERAL- The amount of qualified employee health insurance expenses taken into account under subsection (a) with respect to any qualified employee for any taxable year shall not exceed the sum of the monthly limitations for coverage months of such employee during such taxable year.

      ‘(2) MONTHLY LIMITATION- The monthly limitation for each coverage month during the taxable year is equal to 1/12 of--

        ‘(A) $2,000 in the case of self-only coverage, and

        ‘(B) $5,000 in the case of family coverage.

      ‘(3) COVERAGE MONTH- For purposes of this subsection, 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 the taxpayer’s new health plan, and

        ‘(B) the premium for coverage under such plan for such month is paid by the taxpayer.

    ‘(d) DEFINITIONS- For purposes of this section--

      ‘(1) QUALIFIED EMPLOYEE-

        ‘(A) IN GENERAL- The term ‘qualified employee’ means, with respect to any period, an employee of an employer if--

          ‘(i) the total amount of wages paid or incurred by such employer with respect to such employee for the taxable year exceeds $10,000, and

          ‘(ii) the employee is not a highly compensated employee.

        ‘(B) TREATMENT OF CERTAIN EMPLOYEES- For purposes of subparagraph (A), the term ‘employee’ shall include--

          ‘(i) an employee within the meaning of section 401(c)(1), and

          ‘(ii) a leased employee within the meaning of section 414(n).

        ‘(C) EXCLUSION OF CERTAIN EMPLOYEES-

          ‘(i) IN GENERAL- If a plan--

            ‘(I) prescribes minimum age and service requirements as a condition of coverage, and

            ‘(II) excludes all employees not meeting such requirements from coverage,

          then such employees shall be excluded from consideration for purposes of this paragraph.

          ‘(ii) COLLECTIVE BARGAINING AGREEMENT- For purposes of this paragraph, there shall be excluded from consideration employees who are included in a unit of employees covered by an agreement between employee representatives and one or more employers, if there is evidence that health insurance benefits were the subject of good faith bargaining between such employee representatives and such employer.

          ‘(iii) LIMITS ON MINIMUM REQUIREMENTS- Rules similar to the rules of section 410(a) shall apply with respect to minimum age and service requirements under clause (i).

        ‘(D) WAGES- The term ‘wages’--

          ‘(i) has the meaning given such term by section 3121(a) (determined without

regard to any dollar limitation contained in such section), and

          ‘(ii) in the case of an employee described in subparagraph (B)(i), includes the net earnings from self-employment (as defined in section 1402(a) and as so determined).

      ‘(2) QUALIFIED EMPLOYEE HEALTH INSURANCE EXPENSES-

        ‘(A) IN GENERAL- The term ‘qualified employee health insurance expenses’ means any amount paid or incurred by an employer during the applicable period for health insurance coverage provided under a new health plan to the extent such amount is attributable to coverage provided to any employee who is not a highly compensated employee.

        ‘(B) EXCEPTION FOR AMOUNTS PAID UNDER SALARY REDUCTION ARRANGEMENTS- No amount paid or incurred for health insurance coverage pursuant to a salary reduction arrangement shall be taken into account under subparagraph (A).

        ‘(C) HEALTH INSURANCE COVERAGE- The term ‘health insurance coverage’ has the meaning given such term by section 9832(b)(1).

        ‘(D) NEW HEALTH PLAN- For purposes of this paragraph, the term ‘new health plan’ means any arrangement of the employer which provides health insurance coverage to employees if--

          ‘(i) such employer (or predecessor employer) did not establish or maintain such arrangement (or any similar arrangement) at any time during the 2 taxable years ending prior to the taxable year in which the credit under this section is first allowed, and

          ‘(ii) such arrangement covers at least 70 percent of the qualified employees of such employer who are not otherwise covered by health insurance.

        ‘(E) APPLICABLE PERIOD- For purposes of subparagraph (A), the applicable period with respect to an employer shall be the 4-year period beginning on the date such employer establishes a new health plan.

      ‘(3) HIGHLY COMPENSATED EMPLOYEE- The term ‘highly compensated employee’ means an employee who for the preceding year had compensation from the employer in excess of $75,000.

    ‘(e) CERTAIN RULES MADE APPLICABLE- For purposes of this section, rules similar to the rules of section 52 shall apply.

    ‘(f) DISALLOWANCE OF DEDUCTION- No deduction shall be allowed for that portion of the qualified employee health insurance expenses for the taxable year which is equal to the amount of the credit determined under subsection (a).

    ‘(g) TERMINATION- This section shall not apply to expenses paid or incurred by an employer with respect to any arrangement established on or after January 1, 2009.’.

    (b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT- Section 38(b) of the Internal Revenue Code of

1986 (relating to current year business credit) is amended by striking ‘plus’ at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting ‘, plus’, and by adding at the end the following:

      ‘(13) the employee health insurance expenses credit determined under section 45D.’

    (c) NO CARRYBACKS- Subsection (d) of section 39 of the Internal Revenue Code of 1986 (relating to carryback and carryforward of unused credits) is amended by adding at the end the following:

      ‘(9) NO CARRYBACK OF SECTION 45D CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the employee health insurance expenses credit determined under section 45D may be carried back to a taxable year ending before the date of the enactment of section 45D.’

    (d) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

‘Sec. 45D. Employee health insurance expenses.’

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2000, for arrangements established after the date of the enactment of this Act.

SEC. 4. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.

    (a) IN GENERAL- Chapter 100 of the Internal Revenue Code of 1986 (relating to group health plan requirements) is amended by adding at the end the following new subchapter:

‘Subchapter D--Qualified Health Benefit Purchasing Coalition

‘Sec. 9841. Qualified health benefit purchasing coalition.

‘SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.

    ‘(a) IN GENERAL- A qualified health benefit purchasing coalition is a private not-for-profit corporation which--

      ‘(1) is licensed to provide health insurance in the State in which the employers to which such coalition is providing insurance is located, and

      ‘(2) establishes to the Secretary, under State certification procedures or other procedures as the Secretary may provide by regulation, that such coalition meets the requirements of this section.

    ‘(b) BOARD OF DIRECTORS-

      ‘(1) IN GENERAL- Each purchasing coalition under this section shall be governed by a Board of Directors.

      ‘(2) ELECTION- The Secretary shall establish procedures governing election of such Board.

      ‘(3) MEMBERSHIP- The Board of Directors shall--

        ‘(A) be composed of small employers and employee representatives of such employers, but

        ‘(B) not include other interested parties, such as service providers, health insurers, or insurance agents or brokers which may have a conflict of interest with the purposes of the coalition.

    ‘(c) MEMBERSHIP OF COALITION-

      ‘(1) IN GENERAL- A purchasing coalition--

        ‘(A) shall accept all small employers residing within the area served by the coalition as members if such employers request such membership, and

        ‘(B) may accept any other employers residing with such area.

      ‘(2) VOTING- Members of a purchasing coalition shall have voting rights consistent with the rules established by the State.

    ‘(d) DUTIES OF PURCHASING COALITIONS- Each purchasing coalition shall--

      ‘(1) enter into agreements with employers to provide health insurance benefits to employees of such employers,

      ‘(2) enter into agreements with 3 or more unaffiliated, qualified licensed health plans, to offer benefits to members,

      ‘(3) offer to members at least 1 open enrollment period per calendar year,

      ‘(4) serve a significant geographical area, and

      ‘(5) carry out other functions provided for under this section.

    ‘(e) LIMITATION ON ACTIVITIES- A purchasing coalition shall not--

      ‘(1) perform any activity (including certification or enforcement) relating to compliance or licensing of health plans,

      ‘(2) assume insurance or financial risk in relation to any health plan, or

      ‘(3) perform other activities identified by the State as being inconsistent with the performance of its duties under this section.

    ‘(f) ADDITIONAL REQUIREMENTS FOR PURCHASING COALITIONS- As provided by the Secretary in regulations, a purchasing coalition shall be subject to requirements similar to the requirements of a group health plan under this chapter.

    ‘(g) DEFINITION OF SMALL EMPLOYER- The term ‘small employer’ has the meaning given such term by section 4980D(d)(2).’.

    (b) CONFORMING AMENDMENT- The table of subchapters for chapter 100 of the Internal Revenue Code of 1986 is amended by adding at the end the following item:

‘Subchapter D. Qualified health benefit purchasing coalition.’.