On December 8, the House approved, 367-45, a bill (H.R. 6111) that would extend several expiring tax provisions through 2007. The Senate approved, 79-9, the measure on December 9. A previous version of the bill (H.R. 5970) was approved by the House on July 29, but the Senate defeated the measure on August 3 (see The Source, 8/4/06). The president is expected to sign the bill into law.
The tax provisions of interest to women and families include: an above-the-line $4,000 deduction for tuition and related expenses, which would replace the Hope and Lifetime Learning tax credits; an above-the-line $250 deduction for teachers for classroom supplies; the Work Opportunity Tax Credit (WOTC) for employers that hire workers facing barriers to employment; and the Welfare-to-Work (WTW) Tax Credit for employers hiring individuals who have received public assistance (after 2006, the WOTC and WTW credits will be combined). The legislation also extends through 2007 the penalty for group health plans that impose limits on mental health benefits, but not medical benefits, in violation of the Mental Health Parity Act of 1996 (P.L. 108-311). The bill makes several changes to Medicare, including: eliminating a five percent reduction in Medicare payments to doctors that had been required as part of the Balanced Budget Act of 1997 (P.L. 105-33); as of July 2007, offering a 1.5 percent increase to doctors who submit data on quality-of-care measures; using $6.5 billion from the Medicare stabilization fund (P.L. 108-173) to encourage preferred provider organizations (PPOs) to increase medical coverage in underserved areas; reimbursing health care providers for administering vaccines under the prescription, or Part D, Medicare benefit; and creating voluntary quality reporting for outpatient centers and ambulatory surgery centers by 2009.
The measure also incorporates the text of the Health Opportunity Patient Empowerment Act of 2006 (H.R. 6134). It allows a one-time transfer of funds in a health flexible spending account or individual retirement account (IRA) to a health savings account (HSA) before January 1, 2012. The bill also requires distribution amounts to be included in the gross income of any individual who does not continue to be enrolled in a high deductible health plan and imposes an additional 10 percent penalty tax on transferred funds. The measure repeals the deductible limitations on tax deductions for contributions to HSAs and allows individuals who establish an HSA after the beginning of a taxable year to make contributions up to the full annual limit.
