text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Health Care Relief Act of 2007''.
  
  SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE COSTS OF PREVIOUSLY 
                UNINSURED INDIVIDUALS.
  
      (a) Allowance of Credit.--
              (1) In general.--Subpart C of part IV of subchapter A of 
          chapter 1 of the Internal Revenue Code of 1986 (relating to 
          refundable personal credits) is amended by redesignating 
          section 36 as section 37 and by inserting after section 35 the 
          following new section:
  
  ``SEC. 36. HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED INDIVIDUALS.
  
      ``(a) Allowance of Credit.--In the case of a previously uninsured 
  individual, there shall be allowed as a credit against the tax imposed 
  by this subtitle for the taxable year an amount equal to the amount 
  paid by the taxpayer during such taxable year for health insurance 
  coverage for the taxpayer and the taxpayer's spouse and dependents.
      ``(b) Limitation.--The amount allowed as a credit under subsection 
  (a) for the taxable year shall not exceed $1,000 ($2,000 in the case of 
  a joint return filed by 2 previously uninsured individuals).
      ``(c) Definitions.--For purposes of this section--
              ``(1) Previously uninsured individual.--The term 
          `previously uninsured individual' means any individual who had 
          no health insurance coverage at any time during the 6-month 
          period before the earliest date that such individual has health 
          insurance coverage by reason of the payments taken into account 
          under subsection (a).
              ``(2) Health insurance coverage.--The term `health 
          insurance coverage' has the meaning given to such term by 
          section 9832(b)(1).
      ``(d) Special Rules.--
              ``(1) Coordination with other benefits.--The amount which 
          would (but for this paragraph) be taken into account by the 
          taxpayer under sections 35, 162(l), 213, 220, or 223 for the 
          taxable year shall be reduced by the credit allowed by this 
          section to the taxpayer for such year.
              ``(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.''.
      (b) Conforming Amendments.--
              (1) Paragraph (2) of section 1324(b) of title 31, United 
          States Code, is amended by inserting ``, 36,'' after ``35''.
              (2) The table of sections for subpart C of part IV of 
          subchapter A of chapter 1 of the Internal Revenue Code of 1986 
          is amended by striking the last item and inserting the 
          following:
  
  ``Sec. 36. Health insurance costs of previously uninsured individuals.
  ``Sec. 37. Overpayments of tax.''.
      (c) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 2007.
  
  SEC. 3. CREDIT FOR HEALTH INSURANCE EXPENSES OF SMALL BUSINESSES.
  
      (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:
  
  ``SEC. 45O. SMALL BUSINESS HEALTH INSURANCE EXPENSES.
  
      ``(a) General Rule.--For purposes of section 38, in the case of a 
  small employer, the health insurance credit determined under this 
  section for the taxable year is an amount equal to 35 percent of the 
  expenses paid by the taxpayer during the taxable year for health 
  insurance coverage for such year provided under a new health plan for 
  employees of such employer.
      ``(b) Limitations.--
              ``(1) Per employee dollar limitation.--The amount of 
          expenses taken into account under subsection (a) with respect 
          to any employee for any taxable year shall not exceed--
                      ``(A) $800 in the case of self-only coverage, and
                      ``(B) $2,000 in the case of family coverage.
          In the case of an employee who is covered by a new health plan 
          of the employer for only a portion of such taxable year, the 
          limitation under the preceding sentence shall be an amount 
          which bears the same ratio to such limitation (determined 
          without regard to this sentence) as such portion bears to the 
          entire taxable year.
              ``(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 
          establishes a new health plan.
              ``(3) Employer must bear 65 percent of cost.--Expenses may 
          be taken into account under subsection (a) only if at least 65 
          percent of the cost of the coverage (without regard to this 
          section) is borne by the employer.
      ``(c) Definitions.--For purposes of this section--
              ``(1) Health insurance coverage.--The term `health 
          insurance coverage' has the meaning given such term by section 
          9832(b)(1).
              ``(2) New health plan.--
                      ``(A) In general.--The term `new health plan' means 
                  any arrangement of the employer which provides health 
                  insurance coverage to employees if--
                              ``(i) such employer (and any predecessor 
                          employer) did not establish or maintain such 
                          arrangement (or any similar arrangement) at any 
                          time during the 2 taxable years ending prior to 
                          the taxable year in which the credit under this 
                          section is first allowed, and
                              ``(ii) such arrangement provides health 
                          insurance coverage to at least 70 percent of 
                          the qualified employees of such employer.
                      ``(B) Qualified employee.--The term `qualified 
                  employee' means any employee of an employer and shall 
                  include a leased employee within the meaning of section 
                  414(n).
              ``(3) Small employer.--The term `small employer' has the 
          meaning given to such term by section 4980D(d)(2); except 
          that--
                      ``(A) only qualified employees shall be taken into 
                  account, and
                      ``(B) such section shall be applied by substituting 
                  `100 employees' for `50 employees'.
      ``(d) Special Rules.--
              ``(1) Certain rules made applicable.--For purposes of this 
          section, rules similar to the rules of section 52 shall apply.
              ``(2) 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).
              ``(3) Inflation adjustment.--In the case of any taxable 
          year beginning in a calendar year after 2008, each dollar 
          amount contained in subsection (b) shall be increased by an 
          amount equal to--
                      ``(A) such dollar amount, multiplied by
                      ``(B) 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 2006' for `calendar year 1992' in 
                  subparagraph (B) thereof.
          Any increase determined under the preceding sentence shall be 
          rounded to the nearest multiple of $50.
      ``(e) Termination.--This section shall not apply to expenses paid 
  or incurred by an employer with respect to any arrangement established 
  on or after January 1, 2014.''.
      (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 (30), by striking the period 
  at the end of paragraph (31) and inserting ``, plus'', and by adding at 
  the end the following:
              ``(32) in the case of a small employer (as defined in 
          section 45O(c)(3)), the health insurance credit determined 
          under section 45O(a).''.
      (c) Denial of Double Benefit.--Section 280C of such Code is amended 
  by adding at the end the following new subsection:
      ``(e) Credit for Small Business Health Insurance Expenses.--
              ``(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 45O 
          for the taxable year which is equal to the amount of the credit 
          determined for such taxable year under section 45O(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.''.
      (d) 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. 45O. Small business health insurance expenses.''.
      (e) Effective Date.--The amendments made by this section shall 
  apply to amounts paid or incurred in taxable years beginning after 
  December 31, 2007, for arrangements established after the date of the 
  enactment of this Act.
target: Health Care Relief Act of 2007 - Amends the Internal Revenue Code to allow: (1) a refundable tax credit up to $1,000 for the health insurance coverage costs of a previously uninsured taxpayer, the taxpayer's spouse, and dependents; and (2) certain small business employers a business tax credit for amounts paid under a new health plan for employee health insurance coverage.
feat_title: To amend the Internal Revenue Code of 1986 to allow previously uninsured individuals a refundable credit for health insurance costs and to provide tax incentives to encourage small business health plans.