count benefits ratio is expected to be between 4.0 and 6.1 in 2004, The Act repeals the supplemental annuity tax.175 Supplemental Tax exemption for the Trust The Act provides tax-exempt status for the newly created Trust Effective Date The provisions generally are effective for calendar years begin- Revenue Effect The provision to repeal the supplemental annuity tax is esti- The provision to adjust the tier 2 tax rate is estimated to reduce 175 The funds in the supplemental annuity account were to be transferred to the Fund and 176 Estimate provided by the Congressional Budget Office. million in 2003, $329 million in 2004, $362 million in 2005, $366 177 Estimate provided by the Congressional Budget Office. MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2002, AND FOR OTHER PURPOSES (PUBLIC LAW 107–116) 178 A. Tax on Failure to Comply with Mental Health Parity Requirements (sec. 701 of the Act and sec. 9812(f) of the Code) Present and Prior Law The Mental Health Parity Act of 1996 amended ERISA and the Public Health Service Act to provide that group health plans that provide both medical and surgical benefits and mental health benefits cannot impose aggregate lifetime or annual dollar limits on mental health benefits that are not imposed on substantially all medical and surgical benefits. The provisions of the Mental Health Parity Act are effective with respect to plan years beginning on or after January 1, 1998, and expired with respect to benefits for services furnished on or after September 30, 2001. The Taxpayer Relief Act of 1997 added to the Internal Revenue Code the requirements imposed under the Mental Health Parity Act, and imposed an excise tax on group health plans that fail to meet the requirements. The excise tax is equal to $100 per day during the period of noncompliance and is imposed on the employer sponsoring the plan if the plan fails to meet the requirements. The maximum tax that can be imposed during a taxable year cannot exceed the lesser of 10 percent of the employer's group health plan expenses for the prior year or $500,000. No tax is imposed if the Secretary determines that the employer did not know, and exercising reasonable diligence would not have known, that the failure existed. The excise tax is applicable with respect to plan years beginning on or after January 1, 1998, and under prior law expired with respect to benefits for services provided on or after September 30, 2001. Explanation of Provision The excise tax (and the mental health parity requirements) are restored retroactively to September 30, 2001, and will expire with 178 H.R. 3061. The House Committee on Appropriations reported the bill as an original measure on October 9, 2001 (H. R. Rep. No. 107-229). The House passed the bill with amendments on October 11, 2001. The Senate passed the bill with an amendment on November 6, 2001. A Conference report was filed on the bill on December 19, 2001 (H. R. Rep. No. 107-342). The House agreed to the Conference report on December 19, 2001. The Senate agreed to the Conference report on December 20, 2001. The President signed the bill on January 10, 2002. (179) respect to benefits provided for services on or after December 31, 2002.179 Effective Date The provision is effective September 30, 2001. Revenue Effect The provision will have a negligible effect on excise tax receipts. 179 Section 610 of the Job Creation and Worker Assistance Act of 2002, described in Part Eight of this document, subsequently amended the Internal Revenue Code provision so that the excise tax on failures to comply with mental health parity requirements applies to benefits for such services provided on or after January 10, 2002, and before January 1, 2004. Pub. L. No. 107313, the Mental Health Parity Reauthorization Act of 2002, enacted December 2, 2002, amends ERISA and the Public Health Service Act to extend the mental health parity requirements through December 31, 2003. CODE OF 1986 TO SIMPLIFY THE REPORTING REQUIREMENTS RELATING TO HIGHER EDUCATION TUITION AND RELATED EXPENSES (PUBLIC LAW 107131) 180 A. Simplify the Reporting Requirements Relating to Higher Education Tuition and Related Expenses (sec. 1 of the Act and sec. 6050S of the Code) Prior Law Section 6050S of the Code imposes reporting requirements, related to higher education tax benefits, on eligible educational institutions and certain other persons. Under prior law, an eligible educational institution is subject to the reporting requirements if the institution receives payments for qualified tuition and related expenses with respect to any individual for any calendar year, or makes reimbursements or refunds (or similar amounts) of qualified tuition and related expenses to any individual. The information a person subject to the reporting requirements is required to provide includes the following: (1) the name, address, and taxpayer identification number of an individual with respect to whom payments were received; (2) the name, address, and taxpayer identification number of any individual certified by the individual described in (1) as the taxpayer who will claim the individual as a dependent for the year; and (3) the aggregate amount of payments for qualified tuition and related expenses received with respect to the individual during the calendar year, the aggregate amount of reimbursements or refunds (or similar amounts) paid to such individual during the calendar year by the person making the return, and the amount of any grant received by such individual for payment of costs of attendance and processed by the person making the return. Explanation of Provision The Act makes a number of changes to these reporting requirements. First, the Act replaces the rule described above regarding whether an educational institution is subject to the reporting requirements with a rule that provides that eligible educational institutions are subject to the reporting requirements if the institution enrolls any individual for any academic period. Second, the Act replaces the requirement in (1) above with a requirement that the in 180 H.R. 3346. The bill was introduced November 27, 2001, and passed by the House on December 4, 2001 on a motion to suspend the rules and pass the bill. The Senate passed the bill without amendment by unanimous consent on December 20, 2001. The bill was signed by the President on January 16, 2002. The bill was not reported by any Committee of the House of Representatives or the Senate. Therefore, the bill does not have any formal legislative history. This description of the provisions of the bill was prepared by the staff of the Joint Committee on Taxation. (181) |