110 STAT. 2038
PUBLIC LAW 104-191—AUG. 21, 1996
first day of such month, 75 percent of the annual deductible
under such coverage.
"(3) SPECIAL RULE FOR MARRIED INDIVIDUALS.— In the case
of individusds who are married to each other, if either spouse
has family coverage—
"(A) both spouses shall be treated as having only such
family coverage (and if such spouses each have family
coverage under different plans, as having the family coverage with the lowest annual deductible), and
"(B) the limitation under paragraph (1) (after the
application of subparagraph (A) of this paragraph) shall
be divided equally between them unless they agree on
a different division.
" (4) DEDUCTION NOT TO EXCEED COMPENSATION.—
"(A) EMPLOYEES.— The deduction allowed under subsection (a) for contributions as an eligible individual
described in subclause (I) of subsection (c)(l)(A)(iii) shall
not exceed such individual's wages, salaries, tips, and other
employee compensation which are attributable to such
individual's employment by the employer referred to in
such subclause.
"(B) SELF-EMPLOYED INDIVIDUALS.—The deduction
allowed under subsection (a) for contributions as an eligible
individual described in subclause (II) of subsection
(c)(l)(A)(iii) shall not exceed such individual's earned
income (as defined in section 401(c)(1)) derived by the
taxpayer from the trade or business with respect to which
the high deductible health plan is established.
"(C) COMMUNITY PROPERTY LAWS NOT TO APPLY.— The
limitations under this paragraph shall be determined without regard to community property laws.
"(5) COORDINATION WITH EXCLUSION FOR EMPLOYER CON-
TRIBUTIONS. —No deduction shall be allowed under this section
for 2iny amount psdd for any taxable year to a medical savings
account of an individual if—
"(A) any amount is contributed to any medical savings
account of such individual for such year which is excludable
from gross income under section 106(b), or
"(B) if such individual's spouse is covered under the
high deductible health plan covering such individual, any
amount is contributed for such year to any medical savings
account of such spouse which is so excludable.
"(6) DENIAL OF DEDUCTION TO DEPENDENTS.—No deduction
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 csdendar
year in which such individual's taxable year begins.
"(c) DEFINITIONS. —For purposes of this section—
"(1) ELIGIBLE INDIVIDUAL. —
"(A) IN GENERAL.—The term 'eligible individual' means,
with respect to any month, any individual if—
"(i) such individual is covered under a high deductible health plan as of the 1st day of such month,
"(ii) such individual is not, while covered under
a high deductible health plan, covered under any
health plan—
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