text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Health Insurance Affordability and 
  Equity Act of 1999''.
  
  SEC. 2. CREDIT FOR HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED 
                INDIVIDUALS AND INDIVIDUALS WITH COBRA COVERAGE.
  
      (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
  of the Internal Revenue Code of 1986 (relating to nonrefundable 
  personal credits) is amended by inserting after section 25A the 
  following new section:
  
  ``SEC. 25B. HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED INDIVIDUALS 
                AND INDIVIDUALS WITH COBRA COVERAGE.
  
      ``(a) In General.--In the case of an individual, there shall be 
  allowed as a credit against the tax imposed by this chapter for the 
  taxable year an amount equal to 60 percent of the amount paid during 
  the taxable year for coverage for the taxpayer, his spouse, and 
  dependents under qualified health insurance.
      ``(b) Dollar Limitation.--
              ``(1) In general.--The amount allowed as a credit under 
          subsection (a) to the taxpayer for the taxable year shall not 
          exceed the sum of the monthly limitations for eligible months 
          during such taxable year.
              ``(2) Monthly limitation.--The monthly limitation for any 
          eligible month is the amount equal to \1/12\ of--
                      ``(A) $1,200 if, as of the first day of such month, 
                  the taxpayer has self-only coverage under qualified 
                  health insurance, and
                      ``(B) $2,400 if, as of the first day of such month, 
                  the taxpayer has family coverage under qualified health 
                  insurance.
              ``(3) Eligible month.--For purposes of this subsection--
                      ``(A) In general.--The term `eligible month' means 
                  any month which begins at least 1 year after the most 
                  recent month that the individual--
                              ``(i) was eligible to participate in any 
                          group health plan of an employer which provided 
                          qualified health insurance (determined without 
                          regard to subsection (d)(2)), or
                              ``(ii) participated in any group health 
                          plan of any other entity which provided such 
                          insurance.
                      ``(B) Joint returns.--In the case of a joint 
                  return, a month shall be treated as an eligible month 
                  only if it is an eligible month of each spouse, 
                  determined by applying this paragraph separately to 
                  each spouse.
              ``(4) Certain other coverage.--Amounts paid for coverage of 
          an individual for any month shall not be taken into account 
          under subsection (a) if, as of the first day of such month, 
          such individual is covered under any medical care program 
          described in--
                      ``(A) title XVIII, XIX, or XXI of the Social 
                  Security Act,
                      ``(B) chapter 55 of title 10, United States Code,
                      ``(C) chapter 17 of title 38, United States Code,
                      ``(D) chapter 89 of title 5, United States Code, or
                      ``(E) the Indian Health Care Improvement Act.
              ``(5) Special rule for married individuals.--In the case of 
          an individual--
                      ``(A) who is married (within the meaning of section 
                  7703) as of the close of the taxable year but does not 
                  file a joint return for such year, and
                      ``(B) who does not live apart from such 
                  individual's spouse at all times during the taxable 
                  year,
          the limitation under paragraph (2)(A) (and not the limitation 
          under paragraph (2)(B)) shall apply to such individual.
      ``(c) Limitation Based on Adjusted Gross Income.--
              ``(1) In general.--The aggregate amount which would (but 
          for this subsection) be allowed as a credit under this section 
          shall be reduced (but not below zero) by the amount determined 
          under paragraph (2).
              ``(2) Amount of reduction.--
                      ``(A) In general.--The amount determined under this 
                  paragraph shall be the amount which bears the same 
                  ratio to such aggregate amount as--
                              ``(i) the excess of--
                                      ``(I) the taxpayer's modified 
                                  adjusted gross income for such taxable 
                                  year, over
                                      ``(II) the applicable dollar 
                                  amount, bears to
                              ``(ii) $10,000.
                      ``(B) Modified adjusted gross income.--For purposes 
                  of this paragraph, the term `modified adjusted gross 
                  income' means adjusted gross income increased by any 
                  amount excluded from gross income under section 911, 
                  931, or 933.
                      ``(C) Rounding.--Any amount determined under 
                  subparagraph (A) which is not a multiple of $10 shall 
                  be rounded to the next lowest $10.
              ``(3) Applicable dollar amount.--For purposes of paragraph 
          (2), the term `applicable dollar amount' means--
                      ``(A) $60,000 in the case of a taxpayer whose 
                  qualified health insurance coverage covers more than 1 
                  individual referred to in subsection (a), and
                      ``(B) $30,000--
                              ``(i) in any case not described in 
                          subparagraph (A), and
                              ``(ii) in the case of a married individual 
                          filing a separate return.
          For purposes of this paragraph, marital status shall be 
          determined under section 7703.
      ``(d) Qualified Health Insurance.--For purposes of this section--
              ``(1) In general.--Except as otherwise provided in this 
          paragraph, the term `qualified health insurance' means 
          insurance which constitutes medical care, as defined in section 
          213(d) without regard to--
                      ``(A) paragraph (1)(C) thereof, and
                      ``(B) so much of paragraph (1)(D) thereof as 
                  relates to qualified long-term care insurance 
                  contracts.
              ``(2) Exclusion of coverage provided under group health 
          plans, etc.--Such term shall not include insurance provided 
          through any group health plan of an employer or any other 
          entity.
              ``(3) Exclusion of certain other contracts.--Such term 
          shall not include insurance if a substantial portion of its 
          benefits are excepted benefits (as defined in section 9832(c)).
      ``(e) Individuals With COBRA Coverage.--In the case of continuation 
  coverage under a group health plan which is required to be provided by 
  Federal law for an individual during the period specified in section 
  4980B(f)(2)(B), notwithstanding subsection (d)--
              ``(1) such coverage shall be treated as qualified health 
          insurance, and
              ``(2) the term `eligible month' includes months of such 
          coverage.
      ``(f) Special Rules.--
              ``(1) Coordination with other deductions.--No credit shall 
          be allowed under this section for the taxable year if any 
          amount paid for qualified health insurance is taken into 
          account in determining the deduction allowed for such year 
          under section 213 or 222.
              ``(2) Denial of credit to dependents.--No credit shall be 
          allowed under this section to any individual with respect to 
          whom a deduction under section 151 is allowable to another 
          taxpayer for a taxable year beginning in the calendar year in 
          which such individual's taxable year begins.
              ``(3) Inflation adjustment.--
                      ``(A) In general.--In the case of a taxable year 
                  beginning after 2000, each dollar amount in subsection 
                  (c)(3) shall be increased by an amount equal to--
                              ``(i) such dollar amount, multiplied by
                              ``(ii) the cost-of-living adjustment 
                          determined under section 1(f)(3) for the 
                          calendar year in which the taxable year begins, 
                          determined by substituting `calendar year 1999' 
                          for `calendar year 1992' in subparagraph (B) 
                          thereof.
                      ``(B) Rounding.--If any amount as adjusted under 
                  subparagraph (A) is not a multiple of $100, such amount 
                  shall be rounded to the next lowest multiple of $100.''
      (b) Clerical Amendment.--The table of sections for subpart A of 
  part IV of subchapter A of chapter 1 of such Code is amended by 
  inserting after the item relating to section 25A the following new 
  item:
  
                                ``Sec. 25B. Health insurance costs of 
                                          previously uninsured 
                                          individuals and individuals 
                                          with COBRA coverage.''
      (c) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 1999.
  
  SEC. 3. DEDUCTION FOR QUALIFIED HEALTH INSURANCE COSTS OF EMPLOYEES AND 
                SELF-EMPLOYED INDIVIDUALS.
  
      (a) In General.--Part VII of subchapter B of chapter 1 of the 
  Internal Revenue Code of 1986 (relating to additional itemized 
  deductions) is amended by redesignating section 222 as section 223 and 
  by inserting after section 221 the following new section:
  
  ``SEC. 222. COSTS OF QUALIFIED HEALTH INSURANCE.
  
      ``(a) In General.--In the case of an individual, there shall be 
  allowed as a deduction an amount equal to the applicable percentage of 
  the amount paid during the taxable year for coverage for the taxpayer, 
  his spouse, and dependents under qualified health insurance.
      ``(b) Applicable Percentage.--For purposes of subsection (a)--
              ``(1) In general.--Except as provided in paragraph (2), the 
          applicable percentage shall be determined in accordance with 
          the following table:
  
                  ``For taxable years beginning
                                                           The applicable
                    in calendar year--
                                                          percentage is--
                      2000...................................      60    
                      2001...................................      70    
                      2002...................................      80    
                      2003...................................      90    
                      2004 and thereafter....................    100.    
              ``(2) Special rule.--In the case of an individual who is an 
          employee within the meaning of section 401(c)(1) and whose 
          qualified health insurance is not provided through a group 
          health plan of an employer, paragraph (1) shall be applied by 
          substituting `100' for `90' but only with respect to the lesser 
          of the taxpayer's earned income (within the meaning of section 
          401(c)) or the payments referred to in subsection (a).
      ``(c) Exclusion of Subsidized Coverage.--Subsection (a) shall not 
  apply to any taxpayer for any calendar month for which the taxpayer 
  participates in any group health plan of an employer or any other 
  entity if less than 50 percent of the cost of the taxpayer's coverage 
  under such plan is borne by the taxpayer. A rule similar to the rule of 
  the last sentence of section 162(l)(2)(B) shall apply for purposes of 
  this subsection.
      ``(d) Qualified Health Insurance.--For purposes of this section--
              ``(1) In general.--The term `qualified health insurance' 
          has the meaning given such term by section 25B(d) determined 
          without regard to paragraph (2) thereof.
              ``(2) Special rule.--
                      ``(A) In general.--In the case of an individual who 
                  is an employee within the meaning of section 401(c)(1) 
                  and whose qualified health insurance (without regard to 
                  this paragraph) is not provided through a group health 
                  plan of an employer, paragraph (3) of section 25B(d) 
                  shall not apply for purposes of this section.
                      ``(B) Limitation.--The amount taken into account 
                  under subsection (a) by reason of subparagraph (A) 
                  shall not exceed the excess of--
                              ``(i) the taxpayer's earned income (within 
                          the meaning of section 401(c)), over
                              ``(ii) the amount which would (without 
                          regard to this paragraph) be taken into account 
                          under subsection (a).
      ``(e) Special Rules.--
              ``(1) Coordination with medical deduction, etc.--Any amount 
          paid by a taxpayer for insurance to which subsection (a) 
          applies shall not be taken into account in computing the amount 
          allowable to the taxpayer as a deduction under section 213(a).
              ``(2) Deduction not allowed for self-employment tax 
          purposes.--The deduction allowable by reason of this section 
          shall not be taken into account in determining an individual's 
          net earnings from self-employment (within the meaning of 
          section 1402(a)) for purposes of chapter 2.''
      (b) Conforming Amendments.--
              (1)(A) Paragraph (1) of section 162(l) of such Code is 
          amended by striking ``the amount paid'' and all that follows 
          and inserting ``the eligible long-term care premiums (as 
          defined in section 213(d)(10)) paid during the taxable year for 
          any qualified long-term care insurance contract (as defined in 
          section 7702B(b)) covering the taxpayer, his spouse, and 
          dependents.''
              (B) Paragraph (2) of section 162(l) of such Code is amended 
          by striking subparagraph (C).
              (2) Subsection (a) of section 62 of such Code is amended by 
          inserting after paragraph (17) the following new item:
              ``(18) Costs of qualified health insurance.--The deduction 
          allowed by section 222.''
              (3) The table of sections for part VII of subchapter B of 
          chapter 1 of such Code is amended by striking the last item and 
          inserting the following new items:
  
                                ``Sec. 222. Costs of qualified health 
                                          insurance.
                                ``Sec. 223. Cross reference.''
      (c) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 1999.
target: Allows as a deduction an amount equal to the applicable percentage of the amount paid for qualified health insurance coverage for a taxpayer, his spouse, and dependents. Increases, incrementally, the percentage from 60 percent in calendar year 2000 to 100 percent for calendar years 2004 and thereafter. Excludes coverage under which less than 50 percent of the cost of coverage is borne by the taxpayer.
feat_title: Health Insurance Affordability and Equity Act of 1999