THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY GREENLEAF, FONTANA, WILLIAMS, BROWNE, RAFFERTY, EARLL AND O'PAKE, JANUARY 20, 2009

REFERRED TO BANKING AND INSURANCE, JANUARY 20, 2009  

AN ACT

Amending the act of June 26, 2001 (P.L.755, No.77), entitled "An

act establishing a special fund and account for money

received by the Commonwealth from the Master Settlement

Agreement with tobacco manufacturers; providing for home and

community-based care, for tobacco use prevention and

cessation efforts, for Commonwealth universal research

enhancement, for hospital uncompensated care, for health

investment insurance, for medical assistance for workers with

disabilities, for regional biotechnology research centers,

for the HealthLink Program, for community-based health care

assistance programs, for PACE reinstatement and PACENET

expansion, for medical education loan assistance and for

percentage allocation and appropriation of moneys," in health

investment insurance, adding definitions, expanding adult

basic coverage insurance; and providing for a health

insurance tax credit for small employers.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 1302 of the act of June 26, 2001 (P.L.

755, No.77), known as the Tobacco Settlement Act, is amended by

adding definitions to read:

Section 1302.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Qualified adult."  A person who is self-employed or an

active employee of a small employer, and at least 19 years of

age, but less than 65 years of age and whose household income

exceeds 200% of the Federal poverty level at the time of

eligibility determination.

"Small employer."  A person, firm, corporation, partnership

or association which employed, on at least 50% of its working

days during the preceding year, at least two but not more than

50 employees.

Section 2.  The act is amended by adding sections to read:

Section 1305.  Qualified adults and small employers.

(a)  Eligibility.--A qualified adult shall be eligible to

purchase adult basic coverage insurance if the qualified adult

has not been covered by a health insurance plan, a self-

insurance plan or a self-funded plan during the three months

immediately preceding the determination of eligibility. In

addition, a small employer shall be eligible to purchase adult

basic coverage insurance if it has not provided health insurance

coverage, directly or indirectly, to qualified adults anytime

during the 12 months immediately preceding the determination of

eligibility.

(b)  Payment.--A qualified adult or small employer seeking to

purchase adult basic coverage insurance shall:

(1)  Submit an application to the department.

(2)  Be responsible for any required copayments for

health care services rendered under the benefit package in

section 1303(f)(2).

(3)  Pay the cost of the adult basic coverage insurance

actually incurred by the department or its contractors.

Section 1306.  Small employer health insurance tax credit.

(a)  Credit for health insurance expense.--

(1)  A taxpayer who incurs a qualified health insurance

expense in a taxable year may apply for a health insurance

premium tax credit as provided in this section. By September

15, a taxpayer must submit an application to the department

for a qualified health insurance expense incurred in the

taxable year that ended in the prior calendar year.

(2)  A taxpayer that is eligible under paragraph (1)

shall receive a health insurance premium tax credit for the

taxable year in an amount up to $30,000 per small employer.

(3)  By December 15 of the calendar year following the

close of the taxable year during which a qualified health

insurance expense was incurred, the department shall notify

the taxpayer of the amount of the taxpayer's health insurance

tax credit approved by the department.

(b)  Carryover, carryback, refund and assignment of credit.--

(1)  If a taxpayer cannot use the entire amount of the

health insurance tax credit for the taxable year in which the

health insurance tax credit is first approved, then the

excess may be carried over to succeeding taxable years and

used as a credit against the qualified tax liability of the

taxpayers for those taxable years. Each time that the health

insurance tax credit is carried over to a succeeding taxable

year, it shall be reduced by the amount that was used as a

credit during the immediately preceding taxable year. The

health insurance tax credit provided by this section may be

carried over and applied to succeeding taxable years for no

more than 15 taxable years following the first taxable year

for which the taxpayer was entitled to claim the credit.

(2)  A health insurance tax credit approved by the

department for a qualified health insurance expense in a

taxable year first shall be applied against the taxpayer's

qualified tax liability for the current taxable year as of

the date on which the credit was approved before the health

insurance tax credit is applied against any tax liability

under paragraph (1).

(3)  A taxpayer is not entitled to carry back or obtain a

refund of an unused health insurance tax credit.

(c)  Determination of qualified health insurance expenses.--

The department shall require the documentation it deems

necessary to determine which health insurance expense is to be

deemed a qualified health insurance expense for purposes of

computing the credit provided by this section.

(d)  Pennsylvania S corporation shareholder pass-through.--

(1)  If a Pennsylvania S corporation does not have an

eligible tax liability against which the health insurance tax

credit may be applied, a shareholder of the Pennsylvania S

corporation is entitled to a health insurance tax credit

equal to the health insurance tax credit determined for the

Pennsylvania S corporation for the taxable year multiplied by

the percentage of the Pennsylvania S corporation's

distributive income to which the shareholder is entitled.

(2)  The credit provided under paragraph (1) is in

addition to any health insurance tax credit to which a

shareholder of a Pennsylvania S corporation is otherwise

entitled under the act of March 4, 1971 (P.L.6, No.2), known

as the Tax Reform Code of 1971. However, a Pennsylvania S

corporation and a shareholder of a Pennsylvania S corporation

may not claim a credit under this section for the same

qualified health insurance expense.

(e)  Report to General Assembly.--

(1)  The secretary shall submit an annual report to the

General Assembly indicating the effectiveness of the credits

provided by this section no later than March 15 following the

year in which the credits were approved. The report shall

include the names of all taxpayers utilizing the credits as

of the date of the report and the amount of credits approved

and utilized by each taxpayer.

(2)  The report may also include any recommendations for

changes in the calculation or administration of the credits.

Notwithstanding any law providing for the confidentiality of

tax records, the information contained in the report shall be

public information.

(f)  Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection:

"Department."  The Department of Revenue of the Commonwealth.

"Qualified health insurance expense."  Fifty percent of the

expense incurred by a small employer in purchasing adult basic

coverage insurance for qualified adults.

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV or VI of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971.

"Secretary."  The Secretary of Revenue of the Commonwealth.

"Tax credit."  The health insurance tax credit authorized

under this section.

"Taxpayer."  An employer that is liable for taxes under

Article III, IV or VI of the act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971. The term shall include the

shareholder of a Pennsylvania S corporation that receives a

health insurance tax credit.

Section 3.  This act shall take effect in 60 days.