^aWi'oUu^/tf-'/fs/HoolT^I Ccnjrev S^'o^ /-2oo|-looX I ™ « O 107t2hDfCONGRESS Hw«. K. 4>|80S\11 j. ToamendtheInternalRevenueCodeof1986toprovidea100percent deductionforthehealthinsurancecostsofindividuals. IN THE HOUSE OF REPRESENTATIVES May22,2002 Mr.CHABOTintroducedthefollowingbill;whichwasreferredtothe CommitteeonWaysandMeans A BILL To amend the Internal Revenue Code of 1986 to provide a 100 percent deduction for the health insurance costs ofindividuals. 1 BeitenactedbytheSenateandHouseofRepresenta- 2 tivesoftheUnitedStatesofAmericainCongressassembled, 3 SECTION1.SHORTTITLE. 4 ThisActmaybecitedasthe"HealthInsuranceAf- 5 fordabilityActof2002". 6 SEC. 2.DEDUCTIONFORQUALIFIEDHEALTHINSURANCE 7 COSTSOFEMPLOYEESANDSELF-EMPLOYED 8 INDIVIDUALS. — 9 (a)InGeneral. PartVIIofsubchapterBofchap- 10 ter 1 ofthe Internal Revenue Code of 1986 (relating to 1 additional itemized deductions) is amended by redesig- 2 natingsection 223 as section 224 andbyinserting after 3 section222thefollowingnewsection: 4 "SEC.223.COSTSOFQUALIFIEDHEALTHINSURANCE. — 5 "(a) In General. In the case of an individual, 6 thereshallbeallowedasadeductionanamountequalto 7 theamountpaidduringthetaxableyearforcoveragefor 8 the taxpayer, his spouse, anddependentsunderqualified 9 healthinsurance. — 10 "(b) Qualified Health Insurance. For pur- 11 posesofthissection,theterm'qualifiedhealthinsurance' 12 means insurance which constitutes medical care; except 13 thatsuchtermshallnotincludeanyinsuranceifsubstan- 14 tiallyall ofits coverage is ofexceptedbenefits described 15 insection9832(c). — 16 "(c)SpecialRules. 17 "(1) Coordination with medical deduc- — 18 TION, etc. Anyamountpaidbyataxpayerforin- 19 surance towhich subsection (a) applies shall notbe 20 taken into account in computing the amount allow- 21 able to the taxpayer as a deduction under section 22 162(1) or213(a). 23 "(2) Deduction notallowed forself-em- — 24 PLOYMENT tax purposes. The deduction allow- 25 ablebyreasonofthissectionshallnotbetakeninto •HR4801IH 1 account in determining an individual's net earnings 2 from self-employment(withinthemeaningofsection 3 1402(a))forpurposesofchapter2.". 4 (b)DeductionforHealthInsuranceCostsof — 5 Self-EmployedIndividualsIncreased. — 6 (1) In general. Section 162(1)(1) of such 7 Code (relating to special rules for health insurance 8 costs of self-employed individuals) is amended to 9 readasfollows: — 10 "(1)Allowance of deduction. In the case 11 of an individual who is an employee within the 12 meaningofsection 401(c)(1), there shallbe allowed 13 as a deduction under this section an amount equal 14 to the amount paid during the taxable year for in- 15 surance which constitutes medical care for the tax- 16 payer,thetaxpayer'sspouse,anddependents.". 17 (2) Clarification oflimitationson other — 18 COVERAGE. The first sentence of section 19 162(1)(2)(B) (relatingtoothercoverage) isamended 20 to read as follows: "Paragraph (1) shall not apply 21 to any taxpayer for any calendar month for which 22 the taxpayer participates in any subsidized health 23 planmaintainedbyanyemployer(otherthananem- 24 plover described in section 401(c)(4)) of the tax- 25 payerorthespouseofthetaxpayer. HR4801III 4 3 aOT5 Lfl5Dci t 1 (e)DeductionAllowedinComputingAdjusted 2 Gross Income.—Subsection (a) of section 62 of such 3 Code is amended by inserting after paragraph (18) the 4 followingnewparagraph: 5 "(19) Costs of qualified health insur- — 6 ANCE. Thedeductionallowedbysection223.". 7 (d) Clerical Amendment.—The table of sections 8 for partVII ofsubchapter B ofchapter 1 ofsuch Code 9 isamendedbystrikingthelastitemandinsertingthefol- 10 lowingnewitems: "Sec.223.Costsofqualifiedhealthinsurance. "Sec.224.Crossreference." 11 (e) Effective Date.—The amendments made by 12 this section shall apply to taxable years beginning after 13 December31,2002. O HR4801IH