Sec. 131. Health insurance tax benefit
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Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section: In the case of an individual who is a qualified resident, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the health credit amount of the taxpayer for the taxable year. For purposes of this section— The term health credit amount means the sum of the amounts determined under paragraph
(2)with respect to all months of the taxpayer for the taxable year. Subject to paragraph (4), the amount determined under this paragraph with respect to any month shall be an amount equal to the sum of— 1/12 of $2,500 in the case of any month the first day of which the taxpayer is a qualified resident and is covered by creditable coverage (twice such amount in the case of a joint return if both spouses are so covered by creditable coverage and are qualified residents), plus 1/12 of an amount equal to $1,500 multiplied by the number of qualifying children (within the meaning of section 152) who are qualified residents and— for whom the taxpayer is allowed a deduction under section 151 for the taxable year in which such month ends, and who are covered by creditable coverage on the first day of such month. In the case of any month for which the credit amount determined with respect to the taxpayer under subparagraph
(A)exceeds the limitation amount determined with respect to the taxpayer for such month under paragraph (3), such excess may be carried forward to any subsequent month during the taxable year for purposes of determining the credit amount for such month under this paragraph. The amount determined under paragraph
(2)for any month of the taxpayer shall not exceed the sum of— the amounts contributed to a health savings account of the taxpayer for such month, plus the premiums paid by the taxpayer for creditable coverage. In the case of any month for which the amount determined with respect to the taxpayer under subparagraph
(A)exceeds the credit amount determined with respect to the taxpayer for such month under paragraph (2), such excess may be carried forward to any subsequent month during the taxable year for purposes of determining the limitation under subparagraph (A). In the case of a taxpayer whose only health insurance coverage for a month is limited benefit insurance (as defined in section 123(b) of the Health Care Equality and Modernization Act of 2022 ), the amount determined under paragraph
(2)shall be decreased by such proportion as the Secretary, in consultation with the Secretary of Health and Human Services, determines appropriate, taking into account the ratio of the actuarial value of such limited benefit insurance to the average actuarial value of health insurance coverage that is not limited benefit insurance. The amount determined under paragraph
(2)shall be adjusted, in a manner specified by the Secretary, in consultation with and based on data collected by the Secretary of Health and Human Services, to take into account, for a taxpayer or other covered individual of an age and residing in an area, the ratio of the average cost of typical individual health insurance coverage for an individual of such age and residing in such area to the national average cost of such typical health insurance coverage. Such adjustment shall be made in a manner so that the application of this paragraph is estimated not to change the aggregate amount of the credits allowable under this section for taxable years ending in a year. The credit allowed under this section for any taxable year shall not exceed an amount equal to the excess (if any) of— the maximum credit which would be allowed for all months of the taxpayer during the taxable year (determined under subsection (b)(2) and without regard to this subsection, the limitation under subsection (b)(3), and any reduction under subsection (d)(1)), over the taxpayer’s employer-provided health insurance tax subsidy for the taxable year. For purposes of this subsection— The term employer-provided health insurance tax subsidy means, with respect to any taxpayer for a taxable year, the sum of— the Federal income tax subsidy of the taxpayer for the taxable year, plus the Federal payroll tax subsidy of the taxpayer for the taxable year. The term Federal income tax subsidy means, with respect to any taxpayer for the taxable year, the excess (if any) of— the amount of tax that would have been imposed by this chapter for the taxable year had such tax been determined without regard to this section and by including amounts otherwise excluded from gross income which were paid by or on behalf of the taxpayer for employer-provided insurance that constitutes medical care, over the amount of tax imposed by this chapter for the taxable year (determined without regard to this section). The term Federal payroll tax subsidy means, with respect to any taxpayer for the taxable year, the excess (if any) of— the sum of— the amount of tax that would have been imposed by chapter 21 with respect to any wages of the taxpayer paid during the taxable year had such tax been determined by including amounts otherwise excluded from wages which were paid by or on behalf of the taxpayer during the taxable year for employer-provided insurance that constitutes medical care, plus the amount of tax that would have been imposed by chapter 2 on any self-employment income of the taxpayer for such taxable year had self-employment income been determined without regard to any deduction from gross income for amounts paid for insurance which constitutes medical care for the taxpayer, the taxpayer’s spouse, and any qualifying children (within the meaning of section 152) for whom the taxpayer is allowed a deduction under section 151 for the taxable year, over the amount of tax imposed with respect to the taxpayer during such taxable year under chapter 21 and for such taxable year under chapter 2. The amount of the credit allowed under this section for any taxable year (after the application of subsections
(b)and (c)) shall be reduced (but not below zero) by the amount of any advance payment of such credit under subsection (e)(1). If the advance payments to a taxpayer under subsection (e)(1) for a taxable year exceed the credit allowed by this section (determined without regard to paragraph (1)), the tax imposed by this chapter for the taxable year shall be increased by the amount of such excess. In the case of a taxpayer whose household income is less than 400 percent of the poverty line for the size of the family involved for the taxable year, the amount of the increase under subparagraph
(A)shall in no event exceed the applicable dollar amount determined in accordance with the following table (one-half of such amount in the case of a taxpayer whose tax is determined under section 1(c) for the taxable year): If the household income (expressed as a percent of poverty line) is: The applicable dollar amount is: Less than 200% $600 At least 200% but less than 300% $1,500 At least 300% but less than 400% $2,500. For purpose of this section— The Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, shall establish a program— to make advance determinations with respect to the eligibility of individuals for the credit allowed under this section, and to make advance payments of the credit allowed under this section, at the election of any such individual so eligible, directly to the health savings account of any such individual, or, as a subsidy to the cost of health insurance coverage provided to any such individual, to the health insurance issuer providing such coverage or the person that administers the plan benefits with respect to such coverage. Such program shall be established under rules similar to the rules of section 1412 of the Patient Protection and Affordable Care Act, as in effect on the day before the date of the enactment of this section, except that advance determinations and advance payments shall be made on request of the individual with respect to whom the determination is to be made. Each person providing health insurance coverage which constitutes medical care, and each trustee of a health savings account, shall provide the following information to the Secretary and to the taxpayer with respect to such coverage or such account: The total premium for the coverage without regard to the credit under this section. The aggregate amount of any advance payment of such credit made with respect to such coverage or to such account. The name, address, age, and TIN of the primary insured or account holder (as the case may be) and the name, age, and TIN of each other individual obtaining coverage under such policy of insurance. Any information provided to such person necessary to determine eligibility for, and the amount of, such credit. Information necessary to determine whether a taxpayer has received excess advance payments. Subparagraph
(A)shall not apply to any coverage with respect to which reporting under section 6051 is required. In the case of any calendar year beginning after 2022, each of the dollar amounts in subsection (b)(2) and in the table contained under subsection (d)(2)(B) shall be equal to such dollar amount multiplied by the ratio of— the current dollar gross domestic product (as determined based on the third estimate of the Bureau of Economic Analysis of the Department of Commerce for the second quarter of the previous year), to the current dollar gross domestic product (as so determined) for the second quarter of 2021. If the amount of any change under subparagraph
(A)is not a multiple of $50, such change shall be rounded to the next lowest multiple of $50. For purposes of this section— The term creditable coverage has the meaning given such term for purposes of title XXVII of the Public Health Service Act. Such term shall not include coverage under any health plan that includes coverage for abortions (other than any abortion described in subparagraph (B)). The second sentence of subparagraph
(A)shall not apply to an abortion— if the pregnancy is the result of an act of rape or incest, or in the case where a woman suffers from a physical disorder, physical injury, or physical illness that would, as certified by a physician, place the woman in danger of death unless an abortion is performed, including a life-endangering physical condition caused by or arising from the pregnancy itself. Nothing in subparagraph
(A)shall be construed as prohibiting any individual from purchasing separate coverage for abortions described in such subparagraph, or a health plan that includes such abortions, so long as no credit is allowed under this section with respect to the premiums for such coverage or plan. Nothing in subparagraph
(A)shall restrict any non-Federal health insurance issuer offering a health plan from offering separate coverage for abortions described in such subparagraph, or a plan that includes such abortions, so long as premiums for such separate coverage or plan are not paid for with any amount attributable to the credit allowed under this section (or the amount of any advance payment of the credit). The term qualified resident means an individual who is a citizen or national of the United States or otherwise lawfully residing in the United States under color of law. . Section 36B(c)(1) of such Code is amended by adding at the end the following new subparagraph: In the case of an individual who is allowed a credit under section 36C for any taxable year, no credit shall be allowed under this section to such individual for such taxable year or any subsequent taxable year. . The Secretary of the Treasury shall issue such guidance as is necessary— to assist employees and employers in adjusting Federal income tax withholding to take into account the health insurance tax credit under section 36C of the Internal Revenue Code of 1986 (and any advance payment thereof), and to require employers to report to each employee with respect to periods not longer than quarterly the employer-provided health insurance tax subsidy (as defined in section 36C(c)(2) of such Code) with respect to such employee for such period. 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 inserting after the item relating to section 36B the following new item: Sec. 36C. Health insurance tax credit. . The amendments made by this section shall apply to taxable years beginning after December 31, 2021.