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H.R. 4356 (108th): Small Business Health Insurance Promotion Act of 2004


The text of the bill below is as of May 12, 2004 (Introduced). The bill was not enacted into law.


I

108th CONGRESS

2d Session

H. R. 4356

IN THE HOUSE OF REPRESENTATIVES

May 12, 2004

(for himself, Ms. Pelosi, Mr. Rangel, Mr. Dingell, Mr. Stark, Mr. Brown of Ohio, Mr. Pallone, Mr. Waxman, Mr. Hoyer, Mr. Menendez, Mr. Berry, Mr. George Miller of California, Mr. Gephardt, Mr. Ross, Mr. Matsui, Mr. Stenholm, Mr. Lampson, Mr. Hoeffel, Mrs. Jones of Ohio, Mr. Kildee, Mr. Grijalva, Mr. Ruppersberger, Mr. McDermott, Mr. Towns, Ms. Slaughter, Mr. Green of Texas, Mr. Markey, Mr. Lynch, Mr. Crowley, Ms. Millender-McDonald, Mr. Boucher, Mrs. Christensen, Mr. Jackson of Illinois, Ms. Roybal-Allard, Mr. Rodriguez, Mr. Nadler, Mr. Conyers, Ms. DeLauro, Ms. Kilpatrick, Mr. Serrano, Ms. Lee, Mr. Evans, Mr. Tierney, Mr. Israel, Ms. McCollum, Mr. Lantos, Mr. Gutierrez, Ms. Waters, Mr. Alexander, Ms. Woolsey, Mrs. Davis of California, Ms. Jackson-Lee of Texas, Mrs. McCarthy of New York, Mr. Hinchey, Mr. Abercrombie, Mr. Van Hollen, Ms. Linda T. Sánchez of California, Mr. Turner of Texas, Mr. Emanuel, Mr. Moore, Ms. Carson of Indiana, Mr. Stupak, Mr. Bishop of New York, Mr. Case, Mr. Weiner, Ms. Schakowsky, Ms. Solis, Mr. Frost, Mr. Wexler, Mr. Holt, Mr. Cummings, Mr. Cardoza, Mr. Bishop of Georgia, Mr. Engel, Mrs. Capps, Mr. Honda, Mr. Schiff, Mr. Michaud, Mr. Delahunt, Mr. Chandler, Mr. Clay, Mr. Olver, Mr. Reyes, Mr. Scott of Georgia, Mr. Ortiz, Mr. Capuano, and Mr. Allen) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to provide tax subsidies to encourage small employers to offer affordable health coverage to their employees through qualified health pooling arrangements, to encourage the establishment and operation of these arrangements, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the .

(b)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents

Sec. 2. Temporary tax credit for small employers offering health coverage through a qualified health pooling arrangement

Sec. 3. Qualified State health pooling arrangements

Sec. 4. Establishment of national health pooling arrangement

Sec. 5. Funding of pooling arrangements

Sec. 6. Institute of Medicine study and report

2.

Temporary tax credit for small employers offering health coverage through a qualified health pooling arrangement

(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:

45G.

Small business health pool arrangements

(a)

General rule

For purposes of section 38, in the case of an eligible small employer, the health pool arrangement credit determined under this section for the taxable year is an amount equal to 50 percent of amounts paid or incurred by the employer during the taxable year as premiums for self-only or family coverage for health benefits under a qualified health pooling arrangement for employees of such employer.

(b)

Limitations

(1)

Employer must bear 50 percent of cost

Expenses may be taken into account under subsection (a) only if at least 50 percent of the premiums under the qualified health pooling arrangement are paid by the employer.

(2)

Period of coverage

Expenses may be taken into account under subsection (a) only with respect to coverage for the 4-year period beginning on the date the employer first begins participating in a qualified health pooling arrangement.

(3)

Employers offering other health benefits

In the case of an employer who paid or incurred any expenses for health benefits for the employees of such employer during the first taxable year ending on or after the date of the enactment of this section, subsection (a) shall apply to such employer only if such employer begins participating in a qualified health pooling arrangement during the 2-year period beginning on the later of—

(A)

the date of the enactment of this section, or

(B)

the first date that a qualified health pooling arrangement exists which allows such employer to participate.

(4)

No employees excluded

Subsection (a) shall not apply to an employer for any period unless at all times during such period coverage for health benefits under a qualified health pooling arrangement is available to all employees of such employer under similar terms.

(5)

Amounts paid under salary reduction arrangements

No amount paid or incurred pursuant to a salary reduction arrangement shall be taken into account under subsection (a).

(c)

Definitions and special rules

For purposes of this section—

(1)

Eligible small employer

(A)

In general

The term eligible small employer means an employer who employed, with respect to the calendar year in which such employer first begins participating in a qualified health pooling arrangement, an average of not more than 50 employees on business days during the preceding calendar year.

(B)

Employers not in existence in preceding year

In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is an eligible small employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.

(C)

Permanent status as eligible small employer

In the case of an employer who meets the requirements of this subsection with respect to the calendar year in which such employer first begins participating in a qualified health pooling arrangement, such employer shall not fail to be treated as an eligible small employer for any subsequent calendar year.

(D)

Predecessors

The Secretary may prescribe regulations which provide for references in this paragraph to an employer to be treated as including references to predecessors of such employer.

(2)

Self-employed individuals

(A)

Treatment as employee

The term employee includes an individual who is an employee within the meaning of section 401(c)(1) (relating to self-employed individuals).

(B)

Treatment as employer

An individual who owns the entire interest in an unincorporated trade or business shall be treated as his own employer. A partnership shall be treated as the employer of each partner who is an employee within the meaning of subparagraph (A).

(3)

Family coverage

The term family coverage means coverage for health benefits of the employee and qualified family members of the employee (as defined in section 35(d), but without regard to the last sentence of paragraph (1) thereof).

(4)

Qualified health pooling arrangement

The term qualified health pooling arrangement means a qualified State health pooling arrangement described in section 3 of or the national health pooling arrangement described in section 4 of such Act.

(5)

Certain rules made applicable

Rules similar to the rules of section 52 shall apply for purposes of this section.

.

(b)

Credit to be part of general business credit

Section 38(b) of such Code (relating to current year business credit) is amended by striking plus at the end of paragraph (13), by striking the period at the end of paragraph (14) and inserting , plus, and by adding at the end the following:

(15)

in the case of an eligible small employer (as defined in section 45G(c)), the health pool arrangement credit determined under section 45G(a).

.

(c)

No carrybacks

Subsection (d) of section 39 of such Code (relating to carryback and carryforward of unused credits) is amended by adding at the end the following:

(11)

No carryback of section 45G credit before effective date

No portion of the unused business credit for any taxable year which is attributable to the health pool arrangement credit determined under section 45G may be carried back to a taxable year beginning before January 1, 2004.

.

(d)

Denial of double benefit

Section 280C of such Code is amended by adding at the end the following new subsection:

(d)

Credit for small business health pool arrangements

(1)

In general

No deduction shall be allowed for that portion of the expenses (otherwise allowable as a deduction) taken into account in determining the credit under section 45G for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45G(a).

(2)

Controlled groups

Persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as 1 person for purposes of this section.

.

(e)

Clerical 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:

Sec. 45G. Small business health pool arrangements

.

(f)

Effective date

The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2003, for arrangements established after the date of the enactment of this Act.

3.

Qualified State health pooling arrangements

(a)

Defined

For purposes of this Act, the term qualified State health pooling arrangement means an arrangement established by a State which meets the following requirements:

(1)

Health benefits coverage

The arrangement provides health benefits coverage that the Secretaries of Health and Human Services and Labor jointly determine is substantially similar to the health benefits coverage in any of the four largest health benefits plans (determined by enrollment) offered under chapter 89 of title 5, United States Code.

(2)

Group health plan requirements

The health benefits coverage provided under the arrangement meets the requirements applicable to a group health plan under chapter 100 of the Internal Revenue Code of 1986, part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, and State law.

(3)

Guaranteed issue and renewable

The arrangement does not deny coverage (including renewal of coverage) with respect to employees of any eligible small employer or qualifying family members of such employees on the basis of health status of such employees or family members or any other condition or requirement that the Secretaries of Health and Human Services and Labor jointly determine constitutes health underwriting.

(4)

No preexisting condition exclusion

The arrangement does not permit a preexisting condition exclusion as defined under section 9801(b)(1) of the Internal Revenue Code of 1986 and under section 701(b)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 11(b)(1)).

(5)

No underwriting; community-rated premiums

(A)

Subject to subparagraph (B), the arrangement does not permit underwriting, through a preexisting condition limitation, differential benefits, or different premium levels, or otherwise, with respect to such coverage for employees or their qualifying family members.

(B)

The premiums charged for such coverage are community-rated for individuals without regard to health status.

(6)

No riders

The arrangement does not permit riders to the health benefits coverage.

(7)

Accessibility to eligible small employers

The arrangement makes such coverage available to an eligible small employer without regard to whether a credit is available under section 45G of the Internal Revenue Code of 1986 with respect to such employer.

(8)

Minimum of two plans offered under the arrangement

The arrangement makes available at least two plans for health benefits coverage.

(b)

Eligible small employer; self-employed individual

For purposes of this Act, the terms eligible small employer and employee have the same meanings as when such terms are used in section 45G of the Internal Revenue Code of 1986 and rules similar to the rules of subsection (c) of such section shall apply for purposes of this Act.

(c)

Qualifying family member

For purposes of this Act, the term qualifying family member has the meaning given such term in section 35(d) of the Internal Revenue Code of 1986, applied without regard to the last sentence of paragraph (1) thereof.

(d)

State defined

For purposes of this Act, the term State includes the District of Columbia, Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, and the Northern Mariana Islands.

(e)

Construction

Nothing in this section shall be construed as requiring a State to establish or maintain a qualified State health pooling arrangement.

(f)

Creditable coverage for purposes of HIPAA

Health benefits coverage provided under a qualified State health pooling arrangement under this section (and coverage provided under a National Pooling Arrangement under section 4 of this title) shall be treated as creditable coverage for purposes of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181 et seq.), title XXVII of the Public Health Service Act (42 U.S.C. 300gg et seq.), and subtitle K of the Internal Revenue Code of 1986.

(g)

Oversight and Accountability

(1)

Oversight

The Secretaries of Health and Human Services and Labor shall jointly oversee the offering of health benefits coverage under qualified State health pooling arrangements to eligible small employers.

(2)

Annual reports

(A)

In general

Each State that offers a qualified State health pooling arrangement under this section in a year shall submit, in a form and manner specified jointly by the Secretaries of Health and Human Services and Labor, a report on the operation of the arrangement in that year.

(B)

Contents of report

Reports required under subparagraph (A) shall include the following:

(i)

A description of the health benefits coverage offered under the arrangement.

(ii)

The number of employers that participated in the arrangement.

(iii)

The number of employees and qualifying family members of employees who received health benefits coverage under the arrangement.

(iv)

The premiums charged for the health benefits coverage under the arrangement.

(3)

Certification

Each State that offers a qualified State health pooling arrangement under this section in a year shall submit, in a form and manner specified jointly by the Secretaries of Health and Human Services and Labor, a certification that the arrangement meets the requirements of this Act.

(h)

Coordination of complaints with State insurance commissioners

The Secretaries of Health and Human Services and Labor shall coordinate with the insurance commissioners for the various States in establishing a process for handling and resolving any complaints relating to health benefits coverage offered under this Act, to the extent necessary to augment processes otherwise available under State law.

(i)

No preemption of state law

Nothing in this section shall be construed as preempting provisions of State law that provide protections in excess of the protections required under this section.

4.

Establishment of national health pooling arrangement

(a)

In general

The Secretaries of Health and Human Services and Labor, jointly in consultation with the Director of the Office of Personnel Management, shall provide for the offering and oversight of a national health pooling arrangement to eligible small employers.

(b)

National health pooling arrangement defined

For purposes of this section, the term national health pooling arrangement means an arrangement under which health plans are offered under terms and conditions that meet the requirements of section 3(a).

(c)

Use of FEHBP model

The Secretaries of Health and Human Services and Labor shall jointly provide for the national health pooling arrangement using the model of the Federal employees health benefits program under chapter 89 of title 5, United States Code, to the extent practicable and consistent with the provisions of this Act. In carrying out such model, the Secretaries shall, to the maximum extent practicable, negotiate the most affordable and substantial coverage possible for small employers.

5.

Funding of pooling arrangements

(a)

Funding of States to establish and operate qualified State health pooling arrangements

There are authorized to be appropriated to the Secretaries of Health and Human Services and Labor such sums as may be necessary to provide grants to States to establish and operate qualified State health pooling arrangements described in section 3.

(b)

Funding of national health pooling arrangement

There are authorized to be appropriated to the Secretaries of Health and Human Services and Labor such sums as may be necessary to provide for the offering and operation of the national health pooling arrangement under section 4.

6.

Institute of Medicine study and report

(a)

Study

The Secretaries of Health and Human Services and Labor shall jointly enter into an arrangement under which the Institute of Medicine of the National Academy of Sciences shall conduct a study on the operation of qualified State health pooling arrangements under section 3 and the national health pooling arrangement under section 4.

(b)

Matters studied

The study conducted under subsection (a) shall include the following:

(1)

An assessment of the success of the arrangements.

(2)

A determination of the affordability of health benefits coverage under the arrangements for employers and employees.

(3)

A determination of the access of small employers to health benefits coverage.

(4)

A determination of the extent to which the tax credit under section 45G of the Internal Revenue Code of 1986 provides a subsidy for eligible small employers that provided (or would have provided) health benefits coverage in the absence of such credit.

(5)

Recommendations with respect to—

(A)

extension of the period for which the tax credit under section 45G of the Internal Revenue Code of 1986 is available to employers or an appropriate phase-out of such credit over time;

(B)

expansion of categories of persons eligible for such tax credit;

(C)

expansion of persons eligible for health benefits coverage under the arrangements; and

(D)

such other matters as the Institute determines appropriate.

(c)

Report

Not later than January 1, 2009, the Comptroller General shall submit to Congress a report on the study conducted under subsection (a).