S 1556 ISCommentsClose CommentsPermalink

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.CommentsClose CommentsPermalink

June 6, 2007

Mr. SMITH (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 FinanceCommentsClose CommentsPermalink

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.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE.

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

SEC. 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:CommentsClose CommentsPermalink





`(f) Coverage Provided for Eligible Beneficiaries of Employees-CommentsClose CommentsPermalink





`(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.CommentsClose CommentsPermalink





`(2) QUALIFYING CHILD; DEPENDENT- For purposes of this subsection--CommentsClose CommentsPermalink





`(A) QUALIFYING CHILD- The term `qualifying child' has the meaning given such term by section 152(c).CommentsClose CommentsPermalink





`(B) DEPENDENT- The term `dependent' has the meaning given such term by section 105(b).'.CommentsClose CommentsPermalink





(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--CommentsClose CommentsPermalink





(1) by striking `and his dependents' and inserting `his dependents', andCommentsClose CommentsPermalink





(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'.CommentsClose CommentsPermalink





(c) Payroll Taxes-CommentsClose CommentsPermalink





(1) Section 3121(a)(2) of such Code is amended--CommentsClose CommentsPermalink





(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)),',CommentsClose CommentsPermalink





(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)),', andCommentsClose CommentsPermalink





(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))'.CommentsClose CommentsPermalink





(2) Section 3231(e)(1) of such Code is amended--CommentsClose CommentsPermalink





(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)),',CommentsClose CommentsPermalink





(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)),', andCommentsClose CommentsPermalink





(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))'.CommentsClose CommentsPermalink





(3) Section 3306(b)(2) of such Code is amended--CommentsClose CommentsPermalink





(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)),',CommentsClose CommentsPermalink





(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)),', andCommentsClose CommentsPermalink





(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))'.CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink





`(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).'.CommentsClose CommentsPermalink





(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.CommentsClose CommentsPermalink

SEC. 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:CommentsClose CommentsPermalink





`(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--CommentsClose CommentsPermalink





`(A) the taxpayer,CommentsClose CommentsPermalink





`(B) the taxpayer's spouse,CommentsClose CommentsPermalink





`(C) the taxpayer's dependents,CommentsClose CommentsPermalink





`(D) an individual--CommentsClose CommentsPermalink





`(i) who satisfies the age requirements of section 152(c)(3)(A),CommentsClose CommentsPermalink





`(ii) who bears a relationship to the taxpayer described in section 152(d)(2)(H), andCommentsClose CommentsPermalink





`(iii) meets the requirements of section 152(d)(1)(C), andCommentsClose CommentsPermalink





`(E) an individual who--CommentsClose CommentsPermalink





`(i) is designated by the taxpayer for purposes of this paragraph,CommentsClose CommentsPermalink





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





`(iii) meets the requirements of section 152(d)(1)(D), andCommentsClose CommentsPermalink





`(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).CommentsClose CommentsPermalink





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





(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)'.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.CommentsClose CommentsPermalink

SEC. 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.'.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2006.CommentsClose CommentsPermalink

SEC. 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--CommentsClose CommentsPermalink





(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), andCommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink

SEC. 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--CommentsClose CommentsPermalink





(1) by striking `and any dependent' and inserting `any dependent', andCommentsClose CommentsPermalink





(2) by inserting `, and any qualified beneficiary' after `thereof)'.CommentsClose CommentsPermalink





(b) Qualified Beneficiary- Section 223(d)(2) of such Code is amended by inserting after subparagraph (C) the following new subparagraph:CommentsClose CommentsPermalink





`(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).'.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2007.CommentsClose CommentsPermalink