SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Insurance Affordability and 
Equity Act of 2001''.

SEC. 2. CREDIT FOR HEALTH INSURANCE COSTS OF PREVIOUSLY UNINSURED 
              INDIVIDUALS.

    (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.

    ``(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 the amount paid during the taxable year 
for coverage for the taxpayer, his spouse, and dependents under 
qualified health insurance.
    ``(b) Limitations.--
            ``(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 coverage 
        months during such taxable year for each individual referred to 
        in subsection (a).
            ``(2) Monthly limitation.--
                    ``(A) In general.--The monthly limitation for an 
                individual for each eligible coverage month of such 
                individual during the taxable year is the amount equal 
                to \1/12\ of $1,500.
                    ``(B) Limitation to 2 individuals.--Not more than 2 
                individuals may be taken into account by the taxpayer 
                under this subsection.
                    ``(C) Special rule for married individuals.--In the 
                case of an individual--
                            ``(i) 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
                            ``(ii) who does not live apart from such 
                        individual's spouse at all times during the 
                        taxable year,
                only such individual may be taken into account under 
                this subsection.
            ``(3) Eligible coverage month.--For purposes of this 
        subsection, the term `eligible coverage month' means, with 
        respect to an individual, any month if--
                    ``(A) as of the first day of such month such 
                individual is covered by qualified health insurance the 
                premium for which was paid by the taxpayer, and
                    ``(B) there was at least a 12-month period 
                beginning after December 31, 2001, and ending before 
                such month throughout which the individual--
                            ``(i) was not covered by qualified health 
                        insurance, and
                            ``(ii) was not eligible to participate in 
                        any employer-provided group health plan.
    ``(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.--The term `qualified health insurance' 
        means insurance which constitutes medical care; except that 
        such term shall not include any insurance if substantially all 
        of its coverage is of excepted benefits described in section 
        9832(c).
            ``(2) Credit not allowable for certain subsidized 
        coverage.--Except for purposes of subsection (b)(3)(B), the 
        term `qualified health insurance' shall not include any 
        coverage less than 50 percent of the cost of which is borne by 
        the taxpayer.
    ``(e) Denial of Credit for Amounts Paid Under Certain Government-
Provided Programs.--
            ``(1) In general.--No credit shall be allowed under this 
        section for amounts paid under--
                    ``(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, 
                or
                    ``(D) the Indian Health Care Improvement Act.
            ``(2) Coverage under program included in determining 
        eligibility.--Coverage under any of the provisions referred to 
        in paragraph (1) shall be treated as coverage under qualified 
        health insurance for purposes of subsection (b)(3)(B).
    ``(g) 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 any deduction allowed for such year 
        under sections 162(l), 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 2002, the dollar amount in subsection 
                (b)(2)(A) and 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 2001' 
                        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.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

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 amount paid during the 
taxable year for coverage for the taxpayer, his spouse, and dependents 
under qualified health insurance (as defined in section 25B(d)).
    ``(b) 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 162(l) 
        or 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) 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, 2001.
Health Insurance Affordability and Equity Act of 2001 - Amends the Internal Revenue Code to allow a limited credit for qualified health insurance costs paid for by an individual during a period when the individual was not covered by qualified health insurance and was not eligible to participate in any employer provided group health plan.Provides for the deduction of the qualified health insurance costs of employees and the self-employed.
{"src": "billsum_test", "title": "To amend the Internal Revenue Code of 1986 to provide incentives for private health coverage for the previously uninsured, and for other purposes."}