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Text of the Tax Equity for Domestic Partner and Health Plan Beneficiaries Act

This bill was introduced on June 6, 2007, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jun 6, 2007 (Introduced).

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Source: GPO

II

110th CONGRESS

1st Session

S. 1556

IN THE SENATE OF THE UNITED STATES

June 6, 2007

(for himself, Ms. Cantwell, Mr. Lieberman, Mr. Wyden, Mr. Kerry, Mr. Akaka, Mrs. Murray, and Mr. Dodd) 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 to designated plan beneficiaries of employees, and for other purposes.

1.

Short title

This Act may be cited as the Tax Equity for Domestic Partner and Health Plan Beneficiaries Act.

2.

Application of accident and health plans to eligible beneficiaries

(a)

Exclusion of contributions

Section 106 of the Internal Revenue Code of 1986 (relating to contributions by employer to accident and health plans) is amended by adding at the end the following new subsection:

(f)

Coverage provided for eligible beneficiaries of employees

(1)

In general

Subsection (a) shall apply with respect to an eligible beneficiary and any qualifying child who is a dependent of the eligible beneficiary.

(2)

Qualifying child; dependent

For purposes of this subsection—

(A)

Qualifying child

The term qualifying child has the meaning given such term by section 152(c).

(B)

Dependent

The term dependent has the meaning given such term by section 105(b).

.

(b)

Exclusion of amounts expended for medical care

The first sentence of section 105(b) of such Code (relating to amounts expended for medical care) is amended—

(1)

by striking and his dependents and inserting his dependents, and

(2)

by inserting before the period at the end of the first sentence the following: , an eligible beneficiary with respect to the taxpayer, and any qualifying child of an eligible beneficiary (within the meaning of section 106(f)) with respect to the taxpayer.

(c)

Payroll taxes

(1)

Section 3121(a)(2) of such Code is amended—

(A)

by striking or any of his dependents both places it appears and inserting , any of his dependents, any eligible beneficiary with respect to the employee, or any qualifying children of such eligible beneficiary (within the meaning of section 106(f)),,

(B)

by striking and their dependents the first place it appears and inserting , their dependents, eligible beneficiaries with respect to employees, and qualifying children of such eligible beneficiaries (within the meaning of section 106(f)),, and

(C)

by striking and their dependents the second place it appears and inserting , their dependents, eligible beneficiaries with respect to employees, and qualifying children of such eligible beneficiaries (within the meaning of section 106(f)).

(2)

Section 3231(e)(1) of such Code is amended—

(A)

by striking or any of his dependents and inserting , any of his dependents, any eligible beneficiary with respect to the employee, or any qualifying children of such eligible beneficiary (within the meaning of section 106(f)),,

(B)

by striking and their dependents the first place it appears and inserting , their dependents, eligible beneficiaries with respect to employees, and qualifying children of such eligible beneficiaries (within the meaning of section 106(f)),, and

(C)

by striking and their dependents the second place it appears and inserting , their dependents, eligible beneficiaries with respect to employees, and qualifying children of such eligible beneficiaries (within the meaning of section 106(f)).

(3)

Section 3306(b)(2) of such Code is amended—

(A)

by striking or any of his dependents both places it appears and inserting , any of his dependents, any eligible beneficiary with respect to the employee, or any qualifying children of such eligible beneficiary (within the meaning of section 106(f)),,

(B)

by striking and their dependents the first place it appears and inserting , their dependents, eligible beneficiaries with respect to employees, and qualifying children of such eligible beneficiaries (within the meaning of section 106(f)),, and

(C)

by striking and their dependents the second place it appears and inserting , their dependents, eligible beneficiaries with respect to employees, and qualifying children of such eligible beneficiaries (within the meaning of section 106(f)).

(4)

Section 3401(a) of such Code is amended by striking or at the end of paragraph (21), by striking the period at the end of paragraph (22) and inserting ; or, and by inserting after paragraph (22) the following new paragraph:

(23)

for any payment made to or for the benefit of an employee or his eligible beneficiary or any qualifying children of his eligible beneficiary (within the meaning of section 106(f)) 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(f) or under section 105 by reference in section 105(b) to section 106(f).

.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

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 (relating to special rules for health insurance costs of self-employed individuals) is amended to read as follows:

(1)

Allowance of deduction

In the case of a taxpayer who is an employee within the meaning of section 401(c)(1), there shall be allowed as a deduction under this section an amount equal to the amount paid during the taxable year for insurance which constitutes medical care for—

(A)

the taxpayer,

(B)

the taxpayer's spouse,

(C)

the taxpayer's dependents,

(D)

an individual—

(i)

who satisfies the age requirements of section 152(c)(3)(A),

(ii)

who 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

(E)

an individual who—

(i)

is designated by the taxpayer for purposes of this paragraph,

(ii)

bears a relationship to the taxpayer described in section 152(d)(2)(H),

(iii)

meets the requirements of section 152(d)(1)(D), and

(iv)

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).

For purposes of subparagraph (E)(i), not more than 1 person may be designated by the taxpayer for any taxable year.

.

(b)

Conforming amendment

Subparagraph (B) of section 162(l)(2) of the Internal Revenue Code of 1986 is amended by striking or of the spouse of the taxpayer and inserting , of the spouse of the taxpayer, or of any individual described in paragraph (1)(E).

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

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 (relating to list of exempt organizations) is amended by adding at the end the following new sentence: For purposes of providing for the payment of sick and accident benefits to members of such an association and their dependents, the term dependents shall include any individual who is an eligible beneficiary and any qualifying child of an eligible beneficiary (within the meaning of section 106(f)), as determined under the terms of a medical benefit, health insurance, or other program under which members and their dependents are entitled to sick and accident benefits..

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2006.

5.

Flexible spending arrangements and health reimbursement arrangements

The Secretary of Treasury shall issue guidance of general applicability providing that medical expenses that otherwise qualify—

(1)

for reimbursement from a flexible spending arrangement under regulations in effect on the date of the enactment of this Act may be reimbursed from an employee’s flexible spending arrangement, notwithstanding the fact that such expenses are attributable to any individual who is an eligible beneficiary under the flexible spending arrangement or to any qualifying child of such an eligible beneficiary (within the meaning of section 106(f) of the Internal Revenue Code of 1986), and

(2)

for reimbursement from a health reimbursement arrangement under administrative guidance in effect on the date of the enactment of this Act 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 152 of such Code but who is designated by the employee as eligible to have his or her expenses reimbursed under the health reimbursement arrangement.

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 (relating to qualified medical expenses) 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

Section 223(d)(2) of such Code is amended by inserting after subparagraph (C) 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, 2007.