1.Short
title; table of contents
(a)This Act may be cited
as the Small Business Health Insurance
Relief Act of 2006
.
(b)The table of contents of this Act is as follows:
Sec. 1. Short title; table of
contents.
TITLE I—Health care coverage tax incentives for small
businesses
Subtitle A—Credit for provision of health
insurance
Sec. 101. Credit for health care contributions by small
business employers.
Subtitle B—Simple cafeteria plans
Sec. 111. Establishment of simple cafeteria plans for small
businesses.
Sec. 112. Modifications of rules applicable to cafeteria
plans.
Sec. 113. Modification of rules applicable to flexible spending
arrangements.
Subtitle C—Incentives for insurance companies
Sec. 121. Special deduction for certain health insurance
companies in the small group market.
Sec. 122. Credit for licensing costs of certain health
insurance companies.
TITLE II—Small Business Health Insurance Information Pilot
Program
Sec. 201. Purpose.
Sec. 202. Definitions.
Sec. 203. Small Business Health Insurance Information Pilot
Program.
Sec. 204. Reports.
Sec. 205. Authorization of appropriations.
<enum>I</enum><header>Health care
coverage tax incentives for small businesses</header>
<subtitle id="id3E05DAB1BDF34D10A30A9D368007D52E"><enum>A</enum><header>Credit for
provision of health insurance</header>
<section id="id000BD4CA628246C18D15B2DAB99F634F"><enum>101.</enum><header>Credit for
health care contributions by small business employers</header>
<subsection commented="no" display-inline="no-display-inline" id="ID0EBA201E0AF14F468976F6BA09767509"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subpart B of part IV
of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to
other credits) is amended by adding at the end the following new
section:</text>
<quoted-block id="ID9BF53A6C1F594C92957D1B5B2DFAECE4">
<section id="IDC4A619F46E464ADBBC85948B1667B1C3"><enum>30D.</enum><header>Small employer
health care contributions</header>
<subsection id="ID9558A901BD6B4F01BAEB7532194DCFD0"><enum>(a)</enum><header>General
rule</header><text>In the case of an eligible employer, there shall be allowed
as a credit against the tax imposed by this chapter for the taxable year an
amount equal to the applicable percentage of the sum of—</text>
<paragraph id="id1E274D1A4B984B7281BB42593EE65C9C"><enum>(1)</enum><text>the amounts
contributed by such employer for qualified health insurance coverage with
respect to any full-time employee during the taxable year, plus</text>
</paragraph><paragraph id="id066460C183CD4ABAB4F7F826F2E8C8D6"><enum>(2)</enum><text>the amounts
contributed by such employer to any health savings account (as defined in
section 223(d)) of any full-time employee who is an eligible individual (as
defined in section 223(c)(1)) during the taxable year.</text>
</paragraph></subsection><subsection id="id2C61C0361B7345B3AE3A99791F118E9E"><enum>(b)</enum><header>Limitations</header>
<paragraph id="id6966D9B22E264F26B636CAAFD0C41024"><enum>(1)</enum><header>In
general</header><text>The amount of the credit allowed under subsection (a)
with respect to any employee for any taxable year shall not exceed—</text>
<subparagraph id="id5B345E67EA7B4FC6B17D538F7C799513"><enum>(A)</enum><text>in the case of an
employee with self-only coverage, $1,500, and</text>
</subparagraph><subparagraph id="id5E7D56CB98D0471BB673E1F8EA5D1FE9"><enum>(B)</enum><text>in the case of an
employee with family coverage, $3,000.</text>
</subparagraph></paragraph><paragraph commented="no" id="idDD5735EBE6BB4740ABB0A96F012C12F7"><enum>(2)</enum><header>Limitation on
premiums</header><text>The amount taken into account under subsection (a)(1)
with respect to any employee for any taxable year shall not exceed an amount
equal to the product of—</text>
<subparagraph commented="no" id="idFD74C2BECEFA4D9484929E6204CC7A3F"><enum>(A)</enum><text>$1,500 ($3,000 if
coverage for all months described in subparagraph (B)(i) is family coverage),
and</text>
</subparagraph><subparagraph commented="no" id="id174463FBE32947A3ABAE965AA0B68873"><enum>(B)</enum><text>a
fraction—</text>
<clause commented="no" id="id2BA89EDC0E3849D5BB087A66E5BA3E55"><enum>(i)</enum><text>the numerator of
which is the number of months during the taxable year for which such employee
participated in qualified health insurance coverage, and</text>
</clause><clause commented="no" id="id192BA5F8A86A43B781D0384962CF01FF"><enum>(ii)</enum><text>the denominator
of which is the number of months in the taxable year.</text>
</clause></subparagraph></paragraph><paragraph id="idBBB3130430F2492E8E111A703A047C80"><enum>(3)</enum><header>Limitation on
HSA contributions</header><text>The amount taken into account under subsection
(a)(2) with respect to any employee for any taxable year shall not exceed an
amount equal to the product of—</text>
<subparagraph id="id1CA6E2D25DBF476C83B6CA1317CB9CD7"><enum>(A)</enum><text>$1,500 ($3,000 if
coverage for all months described in subparagraph (B)(i) is family coverage),
and</text>
</subparagraph><subparagraph id="idBA3015A66B73417987F55633929EE8A1"><enum>(B)</enum><text>a
fraction—</text>
<clause id="id26465521054246B8A9A8295C4C83E110"><enum>(i)</enum><text>the numerator of
which is the number of months that the employee was covered under a high
deductible health plan (as defined under section 223(c)(2)) maintained by the
employer, and</text>
</clause><clause id="idD94D4E306350490896367E32E90CAAE0"><enum>(ii)</enum><text>the denominator
of which is the number of months in the taxable year.</text>
</clause></subparagraph></paragraph></subsection><subsection id="id776244D9F6694DC8BCCB4D642EDB1D4D"><enum>(c)</enum><header>Applicable
percentage</header><text>For purposes of subsection (a), the applicable
percentage shall be—</text>
<paragraph id="id3CDEFD5660B84BD48B7AC393120C324E"><enum>(1)</enum><text>in the case of an
eligible employer with less than 10 employees, 100 percent,</text>
</paragraph><paragraph id="id862AE8F49E1845CB95EC6D66690913CD"><enum>(2)</enum><text>in the case of an
eligible employer with more than 9 employees but less than 20 employees, 80
percent,</text>
</paragraph><paragraph id="id8B88408C4D774283AE11E2D72A4F3BBC"><enum>(3)</enum><text>in the case of an
eligible employer with more than 19 employees but less than 30 employees, 60
percent,</text>
</paragraph><paragraph id="idC5114E3A1928492AA8BFD987B0ECB4C7"><enum>(4)</enum><text>in the case of an
eligible employer with more than 29 employees but less than 40 employees, 40
percent, and</text>
</paragraph><paragraph id="id0F8D8666213A447199858C9AF77307EA"><enum>(5)</enum><text>in the case of an
eligible employer with more than 39 employees, 20 percent.</text>
</paragraph></subsection><subsection id="id772CEE73AF8A4E5CA7DF6FC14D664A33"><enum>(d)</enum><header>Eligible
employer</header><text>For purposes of this section, the term <term>eligible
employer</term> means, with respect to any taxable year, an employer—</text>
<paragraph id="id6EF2589E0B5B4CA190FA3F3F3C686C5B"><enum>(1)</enum><text>with 50 or fewer
employees, and</text>
</paragraph><paragraph commented="no" id="id7375B2DBAFD145FAB4EFFE51F5F17667"><enum>(2)</enum><text>whose average
annual gross receipts for the 3-taxable year period ending with the taxable
year preceding such taxable year does not exceed $10,000,000.</text>
</paragraph></subsection><subsection commented="no" id="id94BF338FD1E04135B2E5A3072AB26E30"><enum>(e)</enum><header>Qualified
health insurance coverage</header><text>For purposes of this section, the term
<term>qualified health insurance coverage</term> means health insurance
coverage purchased or provided by an eligible employer. Such term includes
health insurance coverage purchased through a small business health plan (as
defined in section 833(b)(4)(C)).</text>
</subsection><subsection id="id1F43D6E364E549C2B892712A103C9622"><enum>(f)</enum><header>Special
rules</header><text>For purposes of this section—</text>
<paragraph id="idBCF43EE64A274F6FAAB8C1F572F4F43C"><enum>(1)</enum><header>Determination
of number of employees</header>
<subparagraph id="id14DDD5C38BB6447E95C23B78D5A73770"><enum>(A)</enum><header>In
general</header><text>The number of employees of an employer with respect to
any year shall be determined by the using the average number of full-time
employees of the employer on business days during the 2 preceding years. For
purposes of this subparagraph, a year may only be taken into account if the
employer was in existence throughout the year.</text>
</subparagraph><subparagraph id="idED98C4E760A04980A39C5CB3267DB40E"><enum>(B)</enum><header>Employers not
in existence in preceding year</header><text>In the case of an employer which
was not in existence throughout the preceding calendar year, the determination
under subparagraph (A) shall be based on the average number of full-time
employees that it is reasonably expected such employer will employ on business
days in the current calendar year.</text>
</subparagraph><subparagraph id="idD3D387ABD3C0425DA5608205667A415B"><enum>(C)</enum><header>Special
rules</header>
<clause id="idF0A1929186CE4CC9ADEA3538C0CF37BE"><enum>(i)</enum><header>Predecessors</header><text>Any
reference in this paragraph to an employer shall include a reference to any
predecessor of such employer.</text>
</clause><clause id="ID4BD151D9843F474C83C99FD4D9F5CA55"><enum>(ii)</enum><header>Aggregation
rules</header><text>All persons treated as a single employer under subsection
(a) or (b) of section 52, or subsection (n) or (o) of section 414, shall be
treated as one person.</text>
</clause></subparagraph></paragraph><paragraph commented="no" id="id850A92D3E4714B8BB7CA90D4E2D06633"><enum>(2)</enum><header>Self-employed
individual treated as employee</header><text>For purposes of this section,
rules similar to the rules of section 401(c) shall apply.</text>
</paragraph><paragraph id="idE41CDF5BF46A41FE9C5A4213140B87F2"><enum>(3)</enum><header>Salary
reduction contributions</header><text>For purposes of subsection (a)(1),
amounts contributed under a cafeteria plan under section 125 shall not be
considered to be amounts contributed by the eligible employer for qualified
health insurance coverage.</text>
</paragraph><paragraph commented="no" id="IDD4CA625A6892448294F32EFC33CAF9E4"><enum>(4)</enum><header>Disallowance of
deduction</header><text>No deduction shall be allowed for the taxable year for
that portion of amounts contributed for qualified health insurance coverage and
to health savings accounts during the taxable year which is equal to the credit
determined under subsection (a).</text>
</paragraph><paragraph id="ID35CB1B0E6EAE4A7CB23679C690283037"><enum>(5)</enum><header>Election not to
claim credit</header><text>This section shall not apply to a taxpayer for any
taxable year if such taxpayer elects to have this section not apply for such
taxable year.</text>
</paragraph><paragraph id="id527BFAB55EF04028BBB37D8ED690B4E8"><enum>(6)</enum><header>Special rule
for married individuals</header><text>For purposes of subsection (b)(2), rules
similar to the rules of section 223(b)(5) (other than subparagraph (B)(i)
thereof) shall apply.</text>
</paragraph></subsection><subsection id="id8410ECE474214A4C87B4774A621E74EF"><enum>(g)</enum><header>Carryover of
unused credit amounts</header>
<paragraph id="id3AF3F8DB956F4F7AB6074EA1EE094856"><enum>(1)</enum><header>In
general</header><text>If the credit allowable under subsection (a) for a
taxable year exceeds the limitation under paragraph (1) for such taxable year,
such excess shall be allowed—</text>
<subparagraph id="id51A382F1DCF741769268FF5626BF3C12"><enum>(A)</enum><text>as a credit
carryback to each of the 3 taxable years preceding such year, and</text>
</subparagraph><subparagraph id="idB3335A3D697242A3B0DE3CCE0DC8E938"><enum>(B)</enum><text>as a credit
carryforward to each of the 10 taxable years following such year.</text>
</subparagraph></paragraph><paragraph id="idDDBCEBA7933544FEB514CFDBD20A90D8"><enum>(2)</enum><header>Amount carried
to each year</header><text>For purposes of this paragraph, rules similar to the
rules of section 39(a)(2) shall apply.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id8E72ACC8C4FB4D7CA3ACCBE88F56BF73"><enum>(h)</enum><header>Cost-of-living
adjustments</header>
<paragraph commented="no" display-inline="no-display-inline" id="id823B2FC6A39A4FB28E14DA1A7C96244C"><enum>(1)</enum><header>Limitation</header><text display-inline="yes-display-inline">In the case of taxable years beginning
after 2007, each of the $1,500 and $3,000 amounts under subsection (b) shall
each be increased by an amount equal to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id9835E3877AF447D3BAD6979E6D1C6594"><enum>(A)</enum><text display-inline="yes-display-inline">such dollar amount, multiplied by</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id44C6F73955A64516804C0DA9C0A908DB"><enum>(B)</enum><text display-inline="yes-display-inline">the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting <quote>2006</quote> for <quote>1992</quote> in
subparagraph (B) thereof.</text>
</subparagraph><continuation-text commented="no" continuation-text-level="paragraph">If any dollar amount as increased
under this clause is not a multiple of $100, such dollar amount shall be
rounded to the next lowest multiple of $100.</continuation-text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idE6DDB0A3B74C4B9A81D01CCFA5F05C51"><enum>(2)</enum><header>Eligible
employer</header><text display-inline="yes-display-inline">In the case of
taxable years beginning after 2007, the $10,000,000 amount under subsection
(d)(2) shall be increased by an amount equal to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idA1FFC90DBA6B4B3DADA729ACE587F63D"><enum>(A)</enum><text display-inline="yes-display-inline">$10,000,000, multiplied by</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id499B022CAD374E37BF1A4704F772CDDE"><enum>(B)</enum><text display-inline="yes-display-inline">the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting <quote>2006</quote> for <quote>1992</quote> in
subparagraph (B) thereof.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">If any
dollar amount as increased under this clause is not a multiple of $100,000,
such dollar amount shall be rounded to the next lowest multiple of $100.</continuation-text></paragraph></subsection><subsection id="id3B3D716C25A24A23BDD413C21A402301"><enum>(i)</enum><header>Regulations</header><text>The
Secretary shall promulgate regulations to prevent employer contributions to
health savings accounts under subsection (a)(2) to be used for purposes other
than qualified medical expenses (as defined in section
223(d)(2)).</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID94AAAB538021469C9EB502879B9370D6"><enum>(b)</enum><header>Conforming
amendment</header><text>Section 6501(m) of the Internal Revenue Code of 1986 is
amended by inserting <quote>30D(f)(5),</quote> after
<quote>30C(e)(4),</quote>.</text>
</subsection><subsection id="idC3A2682DDF6E4554BAABE8A73B8677FF"><enum>(c)</enum><header>Clerical
amendment</header><text>The table of sections for subpart B 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 30C the following new item:</text>
<quoted-block display-inline="no-display-inline" id="IDF4CB3C7BBB154B02977773047B6A6591" style="USC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 30D. Small employer health care
contributions.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID963BC99403844ECAB7B3236819CAB229"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
contributions made in taxable years beginning after December 31, 2006.</text>
</subsection></section></subtitle><subtitle id="idF72D7DB0DF9248759FBC5C5B4B4BFB02"><enum>B</enum><header>Simple cafeteria
plans</header>
<section commented="no" display-inline="no-display-inline" id="ID3DC3B8380F8A4EEF94D6590A0C26D2C0" section-type="subsequent-section"><enum>111.</enum><header>Establishment of
simple cafeteria plans for small businesses</header>
<subsection commented="no" display-inline="no-display-inline" id="ID31EDAD7B22C44938A6C92057C176ECC7"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 125 of the
Internal Revenue Code of 1986 (relating to cafeteria plans) is amended by
redesignating subsections (h) and (i) as subsections (i) and (j), respectively,
and by inserting after subsection (g) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="ID64A55C1F707F488FA94DDCF1E4B4A24C" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="IDA7F11796409542DB989E8DDCAC9B1B80"><enum>(h)</enum><header>Simple
cafeteria plans for small businesses</header>
<paragraph commented="no" display-inline="no-display-inline" id="IDE6E71F7E75C64E49BA69C3B4F46D2B9D"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">An eligible employer
maintaining a simple cafeteria plan with respect to which the requirements of
this subsection are met for any year shall be treated as meeting any applicable
nondiscrimination requirement with respect to benefits provided under the plan
during such year.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID66BD32D1777A4FCCA51E282BFE724C15"><enum>(2)</enum><header>Simple
cafeteria plan</header><text display-inline="yes-display-inline">For purposes
of this subsection, the term <term>simple cafeteria plan</term> means a
cafeteria plan—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID84749800FF2543E3A1C5005147094020"><enum>(A)</enum><text display-inline="yes-display-inline">which is established and maintained by an
eligible employer, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDED38457848FA417A8F55FD4CD7FCB5CC"><enum>(B)</enum><text display-inline="yes-display-inline">with respect to which the contribution
requirements of paragraph (3), and the eligibility and participation
requirements of paragraph (4), are met.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDB233B02C2C3248E085A962D2037CFB4A"><enum>(3)</enum><header>Contributions
requirements</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID20BE9C054FB94EA9ADDCE341A9E37EAB"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The requirements of
this paragraph are met if, under the plan—</text>
<clause commented="no" display-inline="no-display-inline" id="ID7697A8336D094EFC93E38DF8FE25BC57"><enum>(i)</enum><text display-inline="yes-display-inline">the employer makes matching contributions
on behalf of each employee who is eligible to participate in the plan and who
is not a highly compensated or key employee in an amount equal to the elective
plan contributions of the employee to the plan to the extent the employee’s
elective plan contributions do not exceed 3 percent of the employee’s
compensation, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDE5C4BBBD32B841A38C879766D96748B7"><enum>(ii)</enum><text display-inline="yes-display-inline">the employer is required, without regard to
whether an employee makes any elective plan contribution, to make a
contribution to the plan on behalf of each employee who is not a highly
compensated or key employee and who is eligible to participate in the plan in
an amount equal to at least 2 percent of the employee’s compensation.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDF90F4C491DB64D89A0CAE0C993899EF5"><enum>(B)</enum><header>Matching
contributions on behalf of highly compensated and key employees</header><text display-inline="yes-display-inline">The requirements of subparagraph (A)(i)
shall not be treated as met if, under the plan, the rate of matching
contribution with respect to any elective plan contribution of a highly
compensated or key employee at any rate of contribution is greater than that
with respect to an employee who is not a highly compensated or key
employee.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDC39891D5DEB3465699885C37BE79F9BA"><enum>(C)</enum><header>Special
rules</header>
<clause commented="no" display-inline="no-display-inline" id="IDABBD4EE2BD894EAF9983ADDDAF6E6270"><enum>(i)</enum><header>Time for making
contributions</header><text display-inline="yes-display-inline">An employer
shall not be treated as failing to meet the requirements of this paragraph with
respect to any elective plan contributions of any compensation, or employer
contributions required under this paragraph with respect to any compensation,
if such contributions are made no later than the 15th day of the month
following the last day of the calendar quarter which includes the date of
payment of the compensation.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID04A9291325FB421CB3223B08D62FE671"><enum>(ii)</enum><header>Form of
contributions</header><text display-inline="yes-display-inline">Employer
contributions required under this paragraph may be made either to the plan to
provide benefits offered under the plan or to any person as payment for
providing benefits offered under the plan.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID2D5D0EB2CB8247939747E5E75AB1D08F"><enum>(iii)</enum><header>Additional
contributions</header><text display-inline="yes-display-inline">Subject to
subparagraph (B), nothing in this paragraph shall be treated as prohibiting an
employer from making contributions to the plan in addition to contributions
required under subparagraph (A).</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID45F2F01FFB1C4A15828CACDD8C732D49"><enum>(D)</enum><header>Definitions</header><text display-inline="yes-display-inline">For purposes of this paragraph—</text>
<clause commented="no" display-inline="no-display-inline" id="IDD55CC4C49E5C4678A96C14E3EA70A40D"><enum>(i)</enum><header>Elective plan
contribution</header><text display-inline="yes-display-inline">The term
<term>elective plan contribution</term> means any amount which is contributed
at the election of the employee and which is not includible in gross income by
reason of this section.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID7718B2194BB84FA5B1097C149A73F1D2"><enum>(ii)</enum><header>Highly
compensated employee</header><text display-inline="yes-display-inline">The term
<term>highly compensated employee</term> has the meaning given such term by
section 414(q).</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDE09C5ACAE497418AAC614E5A4B97700A"><enum>(iii)</enum><header>Key
employee</header><text display-inline="yes-display-inline">The term <term>key
employee</term> has the meaning given such term by section 416(i).</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID54BE4AEDA4AC4BC79BCDD972A63D61B5"><enum>(4)</enum><header>Minimum
eligibility and participation requirements</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID8909541D2A6541FFB6AC32F784BBFADE"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The requirements of
this paragraph shall be treated as met with respect to any year if, under the
plan—</text>
<clause commented="no" display-inline="no-display-inline" id="IDECD002E1A85944AAB8F23DA983E7DE10"><enum>(i)</enum><text display-inline="yes-display-inline">all employees who had at least 1,000 hours
of service for the preceding plan year are eligible to participate, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDDEBF65C4C42341F2B9C90775D02D2479"><enum>(ii)</enum><text display-inline="yes-display-inline">each employee eligible to participate in
the plan may, subject to terms and conditions applicable to all participants,
elect any benefit available under the plan.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID0D89A67A6DAF4294830BB9BC37F47392"><enum>(B)</enum><header>Certain
employees may be excluded</header><text display-inline="yes-display-inline">For
purposes of subparagraph (A)(i), an employer may elect to exclude under the
plan employees—</text>
<clause commented="no" display-inline="no-display-inline" id="ID60C7FD547B764F19920460021145FAED"><enum>(i)</enum><text display-inline="yes-display-inline">who have less than 1 year of service with
the employer as of any day during the plan year,</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID7BD9343B8A7C4702AEE2568E34B7FB91"><enum>(ii)</enum><text display-inline="yes-display-inline">who have not attained the age of 21 before
the close of a plan year,</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDAFAA47E5CD224BDDA2118906E702D4FB"><enum>(iii)</enum><text display-inline="yes-display-inline">who are covered under an agreement which
the Secretary of Labor finds to be a collective bargaining agreement if there
is evidence that the benefits covered under the cafeteria plan were the subject
of good faith bargaining between employee representatives and the employer,
or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID6C64EE3EC45F477BA85A9C55494BFA96"><enum>(iv)</enum><text display-inline="yes-display-inline">who are described in section 410(b)(3)(C)
(relating to nonresident aliens working outside the United States).</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">A plan may provide a shorter
period of service or younger age for purposes of clause (i) or (ii).</continuation-text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDCEF44BA2B65549AFBED5DFBA5FB22EC9"><enum>(5)</enum><header>Eligible
employer</header><text display-inline="yes-display-inline">For purposes of this
subsection—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="IDF45130ED92534EFE9BD50A2E5DCAE85B"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The term
<term>eligible employer</term> means, with respect to any year, any employer if
such employer employed an average of 100 or fewer employees on business days
during either of the 2 preceding years. For purposes of this subparagraph, a
year may only be taken into account if the employer was in existence throughout
the year.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDF4B2048DC1CB4BCC93407BEA917B61F2"><enum>(B)</enum><header>Employers not
in existence during preceding year</header><text display-inline="yes-display-inline">If an employer was not in existence
throughout the preceding year, the determination under subparagraph (A) shall
be based on the average number of employees that it is reasonably expected such
employer will employ on business days in the current year.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID98EABE73725A48A7B20CB26784B342E2"><enum>(C)</enum><header>Growing
employers retain treatment as small employer</header><text display-inline="yes-display-inline">If—</text>
<clause commented="no" display-inline="no-display-inline" id="IDC4AA8913A0A14417B292B79F489124BA"><enum>(i)</enum><text display-inline="yes-display-inline">an employer was an eligible employer for
any year (a <quote>qualified year</quote>), and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID2FEDB48F9729426A839384735587A902"><enum>(ii)</enum><text display-inline="yes-display-inline">such employer establishes a simple
cafeteria plan for its employees for such year, then, notwithstanding the fact
the employer fails to meet the requirements of subparagraph (A) for any
subsequent year, such employer shall be treated as an eligible employer for
such subsequent year with respect to employees (whether or not employees during
a qualified year) of any trade or business which was covered by the plan during
any qualified year. This subparagraph shall cease to apply if the employer
employs an average of 200 more employees on business days during any year
preceding any such subsequent year.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDB8E3535623BD4163A20C64D5D90EB54E"><enum>(D)</enum><header>Special
rules</header>
<clause commented="no" display-inline="no-display-inline" id="idFB5E619A52334A04B8C807027558A8F4"><enum>(i)</enum><header>Predecessors</header><text display-inline="yes-display-inline">Any reference in this paragraph to an
employer shall include a reference to any predecessor of such employer.</text>
</clause><clause id="id3316E95924D3464FB37732E48EAF93E4"><enum>(ii)</enum><header>Aggregation
rules</header><text>All persons treated as a single employer under subsection
(a) or (b) of section 52, or subsection (n) or (o) of section 414, shall be
treated as one person.</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDE649F1E1B03D4253BFC35DD9F4CAF274"><enum>(6)</enum><header>Applicable
nondiscrimination requirement</header><text display-inline="yes-display-inline">For purposes of this subsection, the term
<term>applicable nondiscrimination requirement</term> means any requirement
under subsection (b) of this section, section 79(d), section 105(h), or
paragraph (2), (3), (4), or (8) of section 129(d).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID342E6BAAF9D14F9E8F06AA8BFB1CC09A"><enum>(7)</enum><header>Compensation</header><text display-inline="yes-display-inline">The term <term>compensation</term> has the
meaning given such term by section
414(s).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="IDE44749B3A20144F1A88B022BFBF4522A"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to years beginning after December 31, 2006.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="ID616B1F9CADC64A6CA485844904FB326B" section-type="subsequent-section"><enum>112.</enum><header>Modifications of
rules applicable to cafeteria plans</header>
<subsection commented="no" display-inline="no-display-inline" id="ID1EE582CE09A34AD0B993C9E0CF05824A"><enum>(a)</enum><header>Application to
Self-Employed individuals</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID057F2D4091AB45AF89FBCA61FE590892"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 125(d) of the
Internal Revenue Code of 1986 (defining cafeteria plan) is amended by adding at
the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="IDCED8A8297A4647CC9362CDD0C76130CC" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="IDD6FEA3307FB442DAA101FE2CAEA20EF9"><enum>(3)</enum><header>Employee to
include self-employed</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDE53D4BBAA96B4730B49FC99D02B66043"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The term
<term>employee</term> includes an individual who is an employee within the
meaning of section 401(c)(1) (relating to self-employed individuals).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDD6E214EDA31348F1949E6EA781922688"><enum>(B)</enum><header>Limitation</header><text display-inline="yes-display-inline">The amount which may be excluded under
subsection (a) with respect to a participant in a cafeteria plan by reason of
being an employee under subparagraph (A) shall not exceed the employee’s earned
income (within the meaning of section 401(c)) derived from the trade or
business with respect to which the cafeteria plan is
established.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDFF0D7AB9A659487FBF17660581922AC5"><enum>(2)</enum><header>Application to
benefits which may be provided under cafeteria plan</header>
<subparagraph commented="no" display-inline="no-display-inline" id="IDB6C09FAF05664835A3AEC632B430BAFB"><enum>(A)</enum><header>Group-term life
insurance</header><text display-inline="yes-display-inline">Section 79 of such
Code (relating to group-term life insurance provided to employees) is amended
by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="IDFCC8DCD0D5D54873B7B66563B2059E4A" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="IDE7C7DB8DE617424BAEDBBF6B134DE54F"><enum>(f)</enum><header>Employee
includes Self-Employed</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID0250580FA4EB4F5CA43E845B9D28A3EF"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
section, the term <term>employee</term> includes an individual who is an
employee within the meaning of section 401(c)(1) (relating to self-employed
individuals).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID75416EA6D2E74FBB82B2088764615091"><enum>(2)</enum><header>Limitation</header><text display-inline="yes-display-inline">The amount which may be excluded under the
exceptions contained in subsection (a) or (b) with respect to an individual
treated as an employee by reason of paragraph (1) shall not exceed the
employee’s earned income (within the meaning of section 401(c)) derived from
the trade or business with respect to which the individual is so
treated.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDD61B863C06934CFC93C8886459A31FE1"><enum>(B)</enum><header>Accident and
health plans</header><text display-inline="yes-display-inline">Section 105(g)
of such Code is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="ID14B5A706DC3441C094932D4A07B8A74D" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID1FBE85BA186C4387A7AAAFAFE6312CFF"><enum>(g)</enum><header>Employee
includes Self-Employed</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID0928B1796C574ECE9D56CD23FA6FADA6"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
section, the term <term>employee</term> includes an individual who is an
employee within the meaning of section 401(c)(1) (relating to self-employed
individuals).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID0D5BA51CBA9C4E6FBB986EC513DC274F"><enum>(2)</enum><header>Limitation</header><text display-inline="yes-display-inline">The amount which may be excluded under this
section by reason of subsection (b) or (c) with respect to an individual
treated as an employee by reason of paragraph (1) shall not exceed the
employee’s earned income (within the meaning of section 401(c)) derived from
the trade or business with respect to which the accident or health insurance
was
established.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID46BFF51568874FA58734F5783D9002B0"><enum>(C)</enum><header>Contributions
by employers to accident and health plans</header>
<clause commented="no" display-inline="no-display-inline" id="ID5CC12E0F35284005A4B4D637C310835C"><enum>(i)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 106 of such
Code, as amended by subsection (b), is amended by adding after subsection (b)
the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="IDBD009FBAD83641F1A75F216FDE63DEDF" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID692A5256C574483DAAB89FFED9B38B60"><enum>(c)</enum><header>Employer to
include Self-Employed</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID3D2E39BE54C94904AA322E616225A030"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
section, the term <term>employee</term> includes an individual who is an
employee within the meaning of section 401(c)(1) (relating to self-employed
individuals).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID42E4DE28F9294D9E9D05B3230C058877"><enum>(2)</enum><header>Limitation</header><text display-inline="yes-display-inline">The amount which may be excluded under
subsection (a) with respect to an individual treated as an employee by reason
of paragraph (1) shall not exceed the employee’s earned income (within the
meaning of section 401(c)) derived from the trade or business with respect to
which the accident or health insurance was
established.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</clause><clause commented="no" display-inline="no-display-inline" id="ID279CED3A083C4B41BAD5C5179213C595"><enum>(ii)</enum><header>Clarification
of limitations on other coverage</header><text display-inline="yes-display-inline">The first sentence of section 162(l)(2)(B)
is amended to read as follows: <quote>Paragraph (1) shall not apply to any
taxpayer for any calendar month for which the taxpayer participates in any
subsidized health plan maintained by any employer (other than an employer
described in section 401(c)(4)) of the taxpayer or the spouse of the
taxpayer.</quote>.</text>
</clause></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID4C84920EF68A4111A9857F5090C528B3"><enum>(b)</enum><header>Long-Term care
insurance permitted to be offered under cafeteria plans and flexible spending
arrangements</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID11D82FC8DB104E09A94E27F0EE176A07"><enum>(1)</enum><header>Cafeteria
plans</header><text display-inline="yes-display-inline">The last sentence of
section 125(f) of the Internal Revenue Code of 1986 (defining qualified
benefits) is amended to read as follows: <quote>Such term shall include the
payment of premiums for any qualified long-term care insurance contract (as
defined in section 7702B) to the extent the amount of such payment does not
exceed the eligible long-term care premiums (as defined in section 213(d)(10))
for such contract.</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID46D7E39ECB6941FA9CF1D2C927F19805"><enum>(2)</enum><header>Flexible
spending arrangements</header><text display-inline="yes-display-inline">Section
106 of such Code (relating to contributions by employer to accident and health
plans) is amended by striking subsection (c).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="IDFB2A82D91DCA4AC5B0806DBAC74E25FC"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after December 31,
2006.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="ID6AAA540CCAC24D79851D589C7CF7BB75" section-type="subsequent-section"><enum>113.</enum><header>Modification of
rules applicable to flexible spending arrangements</header>
<subsection commented="no" display-inline="no-display-inline" id="ID66180EF0850141DEA1C927622137BF8F"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 125 of the
Internal Revenue Code of 1986, as amended by section 111, is amended by
redesignating subsections (i) and (j) as subsections (j) and (k), respectively,
and by inserting after subsection (h) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="ID2D2269D8451B4E9491D8C37D687A8F18" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="ID0957F8E39C1A49339DE15D2761748F0B"><enum>(i)</enum><header>Special rules
applicable to flexible spending arrangements</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID5A4FAE762FE142F09258D8E5C5FCAC59"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
title, a plan or other arrangement shall not fail to be treated as a flexible
spending or similar arrangement solely because under the plan or
arrangement—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="ID8AA3E092A887403FB21D78054EF296A0"><enum>(A)</enum><text display-inline="yes-display-inline">the amount of the reimbursement for covered
expenses at any time may not exceed the balance in the participant’s account
for the covered expenses as of such time,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID76597AE25FA341D78748E0CBB7C6A06D"><enum>(B)</enum><text display-inline="yes-display-inline">except as provided in paragraph (4)(A)(ii),
a participant may elect at any time specified by the plan or arrangement to
make or modify any election regarding the covered benefits, or the level of
covered benefits, of the participant under the plan, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID9DAA8E29E02548A5813DD3790CAD8365"><enum>(C)</enum><text display-inline="yes-display-inline">a participant is permitted access to any
unused balance in the participant’s accounts under such plan or arrangement in
the manner provided under paragraph (2) or (3).</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDD4DEE6807F364B639847CDC83C8DFCB6"><enum>(2)</enum><header>Carryovers and
rollovers of unused benefits in health and dependent care arrangements</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID2E1B9CBC3DFD49B585C9E3544B644F39"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">A plan or arrangement
may permit a participant in a health flexible spending arrangement or dependent
care flexible spending arrangement to elect—</text>
<clause commented="no" display-inline="no-display-inline" id="ID2B2B615EF27D4F1DA428E3E4A3B74526"><enum>(i)</enum><text display-inline="yes-display-inline">to carry forward any aggregate unused
balances in the participant’s accounts under such arrangement as of the close
of any year to the succeeding year, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDFEF34C093CFA41F7AE60B0A6CE04E781"><enum>(ii)</enum><text display-inline="yes-display-inline">to have such balance transferred to a plan
described in subparagraph (E).</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">Such carryforward or transfer
shall be treated as having occurred within 30 days of the close of the
year.</continuation-text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID1650895E45E44FD19BD01427E7B48668"><enum>(B)</enum><header>Dollar limit on
carryforwards</header>
<clause commented="no" display-inline="no-display-inline" id="ID90A3F597D23E4C1D9FFDF8A2C6AB66E1"><enum>(i)</enum><header>In
general</header><text display-inline="yes-display-inline">The amount which a
participant may elect to carry forward under subparagraph (A)(i) from any year
shall not exceed $500. For purposes of this paragraph, all plans and
arrangements maintained by an employer or any related person shall be treated
as 1 plan.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="IDB7FE83AEB9E6407F81806EE3AF7C348E"><enum>(ii)</enum><header>Cost-of-living
adjustment</header><text display-inline="yes-display-inline">In the case of any
taxable year beginning in a calendar year after 2007, the $500 amount under
clause (i) shall be increased by an amount equal to—</text>
<subclause commented="no" display-inline="no-display-inline" id="IDB41A50EB9CC24779AF2F4D64405D70B1"><enum>(I)</enum><text display-inline="yes-display-inline">$500, multiplied by</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="ID951479792511412ABCF63107C7E6BA96"><enum>(II)</enum><text display-inline="yes-display-inline">the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year, determined by substituting
<quote>2006</quote> for <quote>1992</quote> in subparagraph (B) thereof.</text>
</subclause><continuation-text commented="no" continuation-text-level="clause">If any dollar amount as increased under
this clause is not a multiple of $100, such amount shall be rounded to the next
lowest multiple of $100.</continuation-text></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID991C77EB95EB4BCD976E76EC999BCA17"><enum>(C)</enum><header>Exclusion from
gross income</header><text display-inline="yes-display-inline">No amount shall
be required to be included in gross income under this chapter by reason of any
carryforward or transfer under this paragraph.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDDB0E60E1213E43F8BC42944542B1706B"><enum>(D)</enum><header>Coordination
with limits</header>
<clause commented="no" display-inline="no-display-inline" id="IDB70A274C89A540B4AE0339A94ED5C880"><enum>(i)</enum><header>Carryforwards</header><text display-inline="yes-display-inline">The maximum amount which may be contributed
to a health flexible spending arrangement or dependent care flexible spending
arrangement for any year to which an unused amount is carried under this
paragraph shall be reduced by such amount.</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID16DF8149C0FB4BB69A99BF30628C14FB"><enum>(ii)</enum><header>Rollovers</header><text display-inline="yes-display-inline">Any amount transferred under subparagraph
(A)(ii) shall be treated as an eligible rollover under section 219, 223(f)(5),
401(k), 403(b), or 457, whichever is applicable, except that—</text>
<subclause commented="no" display-inline="no-display-inline" id="IDBC1597AAD6D14DF7ACF8E69C5CE8E5BC"><enum>(I)</enum><text display-inline="yes-display-inline">the amount of the contributions which a
participant may make to the plan under any such section for the taxable year
including the transfer shall be reduced by the amount transferred, and</text>
</subclause><subclause commented="no" display-inline="no-display-inline" id="IDC8E4D3581C59462BAD70CDEE3CF57D9B"><enum>(II)</enum><text display-inline="yes-display-inline">in the case of a transfer to a plan
described in clause (ii) or (iii) of subparagraph (E), the transferred amounts
shall be treated as elective deferrals for such taxable year.</text>
</subclause></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDF8FA6D7E4B0744AC98DBF7BAC8C5544A"><enum>(E)</enum><header>Plans</header><text display-inline="yes-display-inline">A plan is described in this subparagraph if
it is—</text>
<clause commented="no" display-inline="no-display-inline" id="IDE1B47AA0A3574337A6C93094F1CEF4D9"><enum>(i)</enum><text display-inline="yes-display-inline">an individual retirement plan,</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID697FDF3C62664EA181525FD3A11A4CA5"><enum>(ii)</enum><text display-inline="yes-display-inline">a qualified cash or deferred arrangement
described in section 401(k),</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID92AE7CF2F46A408B9F7EE3383A5058F6"><enum>(iii)</enum><text display-inline="yes-display-inline">a plan under which amounts are contributed
by an individual’s employer for an annuity contract described in section
403(b),</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id12EC8AD00F15490591BBA96F9BB823FC"><enum>(iv)</enum><text display-inline="yes-display-inline">an eligible deferred compensation plan
described in section 457, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id09F0FB9DB1754FF4B6B2088D23C88FAE"><enum>(v)</enum><text display-inline="yes-display-inline">a health savings account described in
section 223.</text>
</clause></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDA55248A6F557448E9885960D8A48B5AE"><enum>(3)</enum><header>Distribution
upon termination</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID4F659A01D0324E3AA92DB4B5A78DA286"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">A plan or arrangement
may permit a participant (or any designated heir of the participant) to receive
a cash payment equal to the aggregate unused account balances in the plan or
arrangement as of the date the individual is separated (including by death or
disability) from employment with the employer maintaining the plan or
arrangement.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="IDD03B1D7A1E4E48A6BCCBC53CED145650"><enum>(B)</enum><header>Inclusion in
income</header><text display-inline="yes-display-inline">Any payment under
subparagraph (A) shall be includible in gross income for the taxable year in
which such payment is distributed to the employee.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="IDD8B95291C8F846D98D64360F75B03BC6"><enum>(4)</enum><header>Terms relating
to flexible spending arrangements</header>
<subparagraph commented="no" display-inline="no-display-inline" id="ID473DE5D936324CB49F173978A434913E"><enum>(A)</enum><header>Flexible
spending arrangements</header>
<clause commented="no" display-inline="no-display-inline" id="ID20F320D9F18647CC880A77CE4D7929DB"><enum>(i)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
subsection, a flexible spending arrangement is a benefit program which provides
employees with coverage under which specified incurred expenses may be
reimbursed (subject to reimbursement maximums and other reasonable
conditions).</text>
</clause><clause commented="no" display-inline="no-display-inline" id="ID9F5ECB5A86A84D50B4E61CA82701A5C9"><enum>(ii)</enum><header>Elections
required</header><text display-inline="yes-display-inline">A plan or
arrangement shall not be treated as a flexible spending arrangement unless a
participant may at least 4 times during any year make or modify any election
regarding covered benefits or the level of covered benefits.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ID839B6C5637054224A7CF51FBD0A5FA02"><enum>(B)</enum><header>Health and
dependent care arrangements</header><text display-inline="yes-display-inline">The terms <term>health flexible spending
arrangement</term> and <term>dependent care flexible spending
arrangement</term> means any flexible spending arrangement (or portion thereof)
which provides payments for expenses incurred for medical care (as defined in
section 213(d)) or dependent care (within the meaning of section 129),
respectively.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID7DFCDBC27A7A4A6B9A4FC92493D2ABDA"><enum>(b)</enum><header>Conforming
amendment</header>
<paragraph commented="no" display-inline="no-display-inline" id="ID4BA80BA2959C466C92FFF87242600D87"><enum>(1)</enum><text display-inline="yes-display-inline">The heading for section 125 of the Internal
Revenue Code of 1986 is amended by inserting <quote><header-in-text level="section" style="OLC">and flexible spending
arrangements</header-in-text></quote> after <quote><header-in-text level="section" style="OLC">plans</header-in-text></quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="ID747F8456449E4BDF8809E5F4F0DC5EE5"><enum>(2)</enum><text display-inline="yes-display-inline">The item relating to section 125 of such
Code in the table of sections for part III of subchapter B of chapter 1 is
amended by inserting <quote>and flexible spending arrangements</quote> after
<quote>plans</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="IDA4E304E2ED024A0DB520643EA3E8AD90"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to years beginning after December 31, 2006.</text>
</subsection></section></subtitle><subtitle id="id0D0507946864482494A989D6B582344C"><enum>C</enum><header>Incentives for
insurance companies</header>
<section commented="no" display-inline="no-display-inline" id="idDAEAF78E2F874FCBAA03E1367E0F9929"><enum>121.</enum><header>Special
deduction for certain health insurance companies in the small group
market</header>
<subsection commented="no" display-inline="no-display-inline" id="idAA881698759548B48DB605105133BC37"><enum>(a)</enum><header>In
general</header><text>Section 833 of the Internal Revenue Code of 1986 is
amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id0ABFA01BDD344691BCDA5DBA72BA4661" style="OLC">
<section commented="no" display-inline="no-display-inline" id="id44279097A3C3458AB709AC2FE3C14CA5"><enum>833.</enum><header>Special
deduction for health insurance related to small group coverage and small
business health plans</header>
<subsection id="ID16e85d0bb64c44d7a7362896b2802f7a"><enum>(a)</enum><header>General
rule</header><text>In the case of any insurance company other than a life
insurance company, the deduction determined under subsection (b) for any
taxable year shall be allowed.</text>
</subsection><subsection id="ID8bd53f8737c640b1ac03e961a5cd8b45"><enum>(b)</enum><header>Amount of
deduction</header>
<paragraph id="ID556756f6658f4ba886ee53dae7bd47a7"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the deduction
determined under this subsection for any taxable year is the excess (if any)
of—</text>
<subparagraph id="ID3a441dcf9e9649fa94d54f46593c354d"><enum>(A)</enum><text>50 percent of the
claims incurred during the taxable year and liabilities incurred during the
taxable year under cost-plus contracts, over</text>
</subparagraph><subparagraph id="ID9cca7d8d1f0941c2b653c5c2eb4ecf53"><enum>(B)</enum><text>the adjusted
surplus as of the beginning of the taxable year.</text>
</subparagraph></paragraph><paragraph id="IDa6903f15445f41d3b54298ede37a2a6e"><enum>(2)</enum><header>Limitation</header><text>The
deduction determined under paragraph (1) for any taxable year shall not exceed
taxable income for such taxable year (determined without regard to such
deduction).</text>
</paragraph><paragraph id="IDab1fa7e365ef4d8497665e923095c63b"><enum>(3)</enum><header>Adjusted
surplus</header><text>For purposes of this subsection—</text>
<subparagraph id="ID9bde62fde9cc485cb087579280e52b1a"><enum>(A)</enum><header>In
general</header><text>The adjusted surplus as of the beginning of any taxable
year is an amount equal to the adjusted surplus as of the beginning of the
preceding taxable year—</text>
<clause id="IDc525a69c2b6c4fb68cf47b1502b99960"><enum>(i)</enum><text>increased by the
amount of any adjusted taxable income for such preceding taxable year,
or</text>
</clause><clause id="ID30c5b0c45b36435793966b50e7b2c060"><enum>(ii)</enum><text>decreased by the
amount of any adjusted net operating loss for such preceding taxable
year.</text>
</clause></subparagraph><subparagraph id="ID6f69d9e2b63d454c9f1256b7f6ac904a"><enum>(B)</enum><header>Special
rule</header><text>The adjusted surplus as of the beginning of the
organization's 1st taxable year beginning after December 31, 2006, shall be its
surplus as of such time. For purposes of the preceding sentence, the term
<term>surplus</term> means the excess of the total assets over the total
liabilities as shown on the annual statement.</text>
</subparagraph><subparagraph id="ID83a4500e0afd4b889360ddf43ea18081"><enum>(C)</enum><header>Adjusted
taxable income</header><text>The term <term>adjusted taxable income</term>
means taxable income determined—</text>
<clause id="ID324acc5b09ea4c19b7fc53b21e129002"><enum>(i)</enum><text>without regard to
the deduction determined under this subsection,</text>
</clause><clause id="ID58e65c7b19fb49ddb680476c55293a8e"><enum>(ii)</enum><text>without regard
to any carryforward or carryback to such taxable year, and</text>
</clause><clause id="IDb5892391c58f46d59e9c8713f07c9a63"><enum>(iii)</enum><text>by increasing
gross income by an amount equal to the net exempt income for the taxable
year.</text>
</clause></subparagraph><subparagraph id="ID452c87d7ff3448938f6e332b5d35aabf"><enum>(D)</enum><header>Adjusted net
operating loss</header><text>The term <term>adjusted net operating loss</term>
means the net operating loss for any taxable year determined with the
adjustments set forth in subparagraph (C).</text>
</subparagraph><subparagraph id="ID1d1dcc8d6ea34c1686ce6ef6ff06cc0f"><enum>(E)</enum><header>Net exempt
income</header><text>The term <term>net exempt income</term> means—</text>
<clause id="ID49a1394bce454081a8b2643ada92b7d4"><enum>(i)</enum><text>any tax-exempt
interest received or accrued during the taxable year, reduced by any amount
(not otherwise deductible) which would have been allowable as a deduction for
the taxable year if such interest were not tax-exempt, and</text>
</clause><clause id="ID66d2fe67dd9743d6a1fb1d379cf9b055"><enum>(ii)</enum><text>the aggregate
amount allowed as a deduction for the taxable year under sections 243, 244, and
245.</text>
</clause><continuation-text continuation-text-level="subparagraph">The
amount determined under clause (ii) shall be reduced by the amount of any
decrease in deductions allowable for the taxable year by reason of section
832(b)(5)(B) to the extent such decrease is attributable to deductions under
sections 243, 244, and 245.</continuation-text></subparagraph></paragraph><paragraph id="IDd2c3c3dd53ab449cbae9e86b067e9af2"><enum>(4)</enum><header>Only certain
health-related items taken into account</header>
<subparagraph id="id5828D21EF3E540899C5C5BBAD36D02F5"><enum>(A)</enum><header>In
general</header><text>Any determination under this subsection shall be made by
only taking into account items attributable to the qualified health-related
business of the taxpayer.</text>
</subparagraph><subparagraph id="id36FD81A88B0F44F0BDCDE2719DE9E2C6"><enum>(B)</enum><header>Qualified
health related business</header><text>For purposes of this paragraph, the term
<term>qualified health-related business</term> means health-related business
which is attributable to—</text>
<clause id="id89D7154E952544E5948CDE85D1881420"><enum>(i)</enum><text>the small group
market (as defined under section 2791(e)(6) of the Public Health Service Act),
and</text>
</clause><clause id="idE40BA4F3F05F4FB88724BB73509BC3E2"><enum>(ii)</enum><text>small business
health plans.</text>
</clause></subparagraph><subparagraph id="IDCA2F42F41DDB4C4D9BA83B2B1DF86AB2"><enum>(C)</enum><header>Small business
health plan</header>
<clause id="idD15A33E4EF20476EB108EEE70F60FFC3"><enum>(i)</enum><header>In
general</header><text>For purposes of this section, the term <term>small
business health plan</term> means a group health plan whose sponsor is (or is
deemed under this section to be) described in clause (ii).</text>
</clause><clause id="ID5D85C782393C485C821D747BC1B53390"><enum>(ii)</enum><header>Sponsorship</header><text>The
sponsor of a group health plan is described in this clause if such
sponsor—</text>
<subclause id="ID938546BA7F814B6E9080B439CFBB25CE"><enum>(I)</enum><text>is organized and
maintained in good faith, with a constitution and bylaws specifically stating
its purpose and providing for periodic meetings on at least an annual basis, as
a bona fide trade association, a bona fide industry association (including a
rural electric cooperative association or a rural telephone cooperative
association), a bona fide professional association, a bona fide chamber of
commerce (or similar bona fide business association, including a corporation or
similar organization that operates on a cooperative basis (within the meaning
of section 1381)), or a bona fide labor union, for substantial purposes other
than that of obtaining or providing medical care,</text>
</subclause><subclause id="ID41B3ADA98AF94F06ABE46A8DDB33C0B0"><enum>(II)</enum><text>is established
as a permanent entity which receives the active support of its members and
requires for membership payment on a periodic basis of dues or payments
necessary to maintain eligibility for membership in the sponsor, and</text>
</subclause><subclause id="ID853D2F2D2E0342C98E22CF2CB5A994BA"><enum>(III)</enum><text>does not
condition membership, such dues or payments, or coverage under the plan on the
basis of health status-related factors with respect to the employees of its
members (or affiliated members), or the dependents of such employees, and does
not condition such dues or payments on the basis of group health plan
participation.</text>
</subclause><continuation-text continuation-text-level="clause">Any sponsor
consisting of an association of entities which meet the requirements of
subclause (I), (II), and (III) shall be deemed to be a sponsor described in
this
clause.</continuation-text></clause></subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idE2C18884B20F4551A9C7FFD00E388E47"><enum>(b)</enum><header>Conforming
amendment</header><text>The table of section for part II of subchapter L of
chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item
relating to section 833 and inserting the following:</text>
<quoted-block id="idb5b8bece-fe43-4b54-bb91-f46ea692058d" style="OLC">
<toc>
<toc-entry idref="id44279097A3C3458AB709AC2FE3C14CA5" level="section">Sec. 833. Special deduction for health insurance related to
small group
coverage.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id4CA6CB66A6C84E28AAE3B57AB4146283"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2006.</text>
</subsection></section><section id="IDEACAF6B2AABA47398B5D5AD019ED4E7E"><enum>122.</enum><header>Credit for
licensing costs of certain health insurance companies</header>
<subsection id="ID007386E98C7F478B9CB4A76D80CF9304"><enum>(a)</enum><header>In
General</header><text>Subpart D of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to business related credits) is amended
by adding at the end the following new section:</text>
<quoted-block id="ID45F3C7424E3F45158206A1EFB2D23161" style="OLC">
<section id="ID4CDF088108DE4F80A6C418B9E455910E"><enum>45N.</enum><header>Health
insurance licensing credit</header>
<subsection id="IDCA1EC0588591452087F1A84C178F2DA1"><enum>(a)</enum><header>Determination
of amount</header><text>For purposes of section 38, the health insurance
licensing credit determined under this section with respect to any eligible
entity for any taxable year is an amount equal to the qualified licensing costs
paid or incurred by such eligible entity in each State during the taxable
year.</text>
</subsection><subsection id="id78E02EF7940C407396E914FFEE2B491E"><enum>(b)</enum><header>Limitation</header><text>The
qualified licensing costs taken into account under subsection (a) with respect
to any State for any taxable year shall not exceed the lesser of—</text>
<paragraph id="id709A3319154D4245AC4E43B257BC9023"><enum>(1)</enum><text>50 percent of
qualified licensing costs paid or incurred by such eligible entity with respect
to such State during the taxable year, or</text>
</paragraph><paragraph id="id3FD89A47AD8C4E8AA200EFF6E8898DB3"><enum>(2)</enum><text>$10,000.</text>
</paragraph></subsection><subsection id="id9E45EBF952AD4C23BE8BDE41051B4E92"><enum>(c)</enum><header>Eligible
entity</header><text>For purposes of this section, the term <term>eligible
entity</term> means an insurance company (as defined in section 816(a)) other
than life which conducts qualified health-related business during the taxable
year in the State in which the qualifying licensing costs are incurred.</text>
</subsection><subsection id="idA6F71A2962644C8BBFD7D701AC779E38"><enum>(d)</enum><header>Qualified
licensing costs</header><text>For purposes of this section, the term
<term>qualified licensing costs</term> means costs in connection with
satisfying State licensing requirements related to conducting a qualified
health-related business in such State.</text>
</subsection><subsection id="idF31A20AA82EB4C7B9999C3ECAC19A8AD"><enum>(e)</enum><header>Qualified
health-related business</header><text>For purposes of this section, the term
<term>qualified health-related business</term> has the meaning given such term
under section 833(b)(4).</text>
</subsection><subsection id="id6ADBAB7792614489896704D568B6E322"><enum>(f)</enum><header>Regulations</header><text>Not
later than 6 months after the date of the enactment of this section, the
Secretary shall promulgate regulations on allocating qualified licensing costs
between a qualified health-related business and other businesses of an eligible
entity.</text>
</subsection><subsection id="idBC8C8BED4DEA414095B8D9FC5BF3D219"><enum>(g)</enum><header>Termination</header><text>This
section shall not apply to costs paid or incurred in taxable years beginning
after December 31,
2011.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID1748C4B4052048CEAD2CDA23F3AFE6EC"><enum>(b)</enum><header>Credit treated
as business credit</header><text>Section 38(b) of the Internal Revenue Code of
1986 (relating to current year business credit) is amended by striking
<quote>and</quote> at the end of paragraph (28), by striking the period at the
end of paragraph (29) and inserting <quote>, plus</quote>, and by adding at the
end the following new paragraph:</text>
<quoted-block id="IDFBC6FD9B1F4C4ABD825EE6144C3BDD41" style="OLC">
<paragraph id="ID936E8570772E456285FD77EDE5B6EC4E"><enum>(30)</enum><text>the health
insurance licensing credit determined under section
45N(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID6015D83F8854450387441EC26C88CFCF"><enum>(c)</enum><header>Clerical
amendment</header><text>The table of sections for subpart D of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new item:</text>
<quoted-block id="IDC3FA616A16324963AF0C97C215E9D776" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 45N. Health insurance licensing
credit.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID3F2C01FA6FCE43D1B3543F14C77EBD79"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2006.</text>
</subsection></section></subtitle><enum>II</enum><header>Small Business
Health Insurance Information Pilot Program</header>
<section commented="no" display-inline="no-display-inline" id="idC77A6B5AD1074FC49C4175077B950933" section-type="subsequent-section"><enum>201.</enum><header>Purpose</header><text display-inline="no-display-inline">The purpose of this title is to establish a
4-year pilot program to provide information and educational materials to small
business concerns regarding health insurance options, including coverage
options within the small group market.</text>
</section><section commented="no" display-inline="no-display-inline" id="id23E3DC172C4E4A45944CC07A6F810611"><enum>202.</enum><header>Definitions</header><text display-inline="no-display-inline">In this title:</text>
<paragraph commented="no" display-inline="no-display-inline" id="id52E8E11CFBE84328ACAD58FE4126AEAD"><enum>(1)</enum><header>Administrator</header><text display-inline="yes-display-inline">The term <term>Administrator</term> means
the Administrator of the Small Business Administration, acting through the
Associate Administrator for Small Business Development Centers.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id53F737FDE07D4F7E822FC1256003B365"><enum>(2)</enum><header>Association</header><text display-inline="yes-display-inline">The term <term>association</term> means an
association established under
<external-xref legal-doc="act" parsable-cite="SBA/21(a)(3)(A)">section
21(a)(3)(A)</external-xref> of the <act-name parsable-cite="SBA">Small Business
Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/648(a)(3)(A)">15 U.S.C. 648(a)(3)(A)</external-xref>)
representing a majority of small business development centers.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id4A97D16B6FFB4FBE8BC2D99ACFAA4AB8"><enum>(3)</enum><header>Participating
small business development center</header><text display-inline="yes-display-inline">The term <term>participating small business
development center</term> means a small business development center described
in <external-xref legal-doc="act" parsable-cite="SBA/21">section
21</external-xref> of the <act-name parsable-cite="SBA">Small Business
Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/648">15
U.S.C. 648</external-xref>) that—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idFEFE049292F5453CA4BA5A99F9900090"><enum>(A)</enum><text display-inline="yes-display-inline">is certified under
<external-xref legal-doc="act" parsable-cite="SBA/21(k)(2)">section
21(k)(2)</external-xref> of the <act-name parsable-cite="SBA">Small Business
Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/648(k)(2)">15 U.S.C. 648(k)(2)</external-xref>);
and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id8391DA60D13B4096A4AE053CBC6175C9"><enum>(B)</enum><text display-inline="yes-display-inline">receives a grant under the pilot
program.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idAB37561480A94B5D8CF7047EB40EFF0E"><enum>(4)</enum><header>Pilot
program</header><text display-inline="yes-display-inline">The term <term>pilot
program</term> means the small business health insurance information pilot
program established under this title.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD9C04037140345C3ACE9A5D119CE6CDA"><enum>(5)</enum><header>Small business
concern</header><text>The term <term>small business concern</term> has the same
meaning as in section 3 of the Small Business Act (15 U.S.C. 632).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id9F237014D4204C61A820DD75FC8C8D57"><enum>(6)</enum><header>State</header><text display-inline="yes-display-inline">The term <term>State</term> means each of
the several States, the District of Columbia, the Commonwealth of Puerto Rico,
the Virgin Islands, American Samoa, and Guam.</text>
</paragraph></section><section commented="no" display-inline="no-display-inline" id="idB29CEAD04A064683A0E5B844A702ACEA" section-type="subsequent-section"><enum>203.</enum><header>Small Business
Health Insurance Information Pilot Program</header>
<subsection commented="no" display-inline="no-display-inline" id="id7F4AB98A3DBC45B69DF7F3BA768930B5"><enum>(a)</enum><header>Authority</header><text display-inline="yes-display-inline">The Administrator shall establish a pilot
program to make grants to small business development centers to provide
information and educational materials regarding health insurance options,
including coverage options within the small group market, to small business
concerns.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id7A68F9C7A3CB46B1A4071BB908669386"><enum>(b)</enum><header>Applications</header>
<paragraph commented="no" display-inline="no-display-inline" id="idBAAF14029C2F4E5898AA0193697674AE"><enum>(1)</enum><header>Posting of
information</header><text>Not later than 90 days after the date of enactment of
this Act, the Administrator shall post on the website of the Small Business
Administration and publish in the Federal Register a guidance document
describing—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id132ACDD66F1C42CAA10F41A44F0C2427"><enum>(A)</enum><text>the requirements
of an application for a grant under the pilot program; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id42C45A8F3EC04826AFF6A2EB0374D1F0"><enum>(B)</enum><text>the types of
informational and educational materials regarding health insurance options to
be created under the pilot program, including by referencing such materials
developed by the Healthcare Leadership Council.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idAFB80517DF164324B40569F5E01D0001"><enum>(2)</enum><header>Submission</header><text>A
small business development center desiring a grant under the pilot program
shall submit an application at such time, in such manner, and accompanied by
such information as the Administrator may reasonably require.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idF2E7C6C42DF54A13BF5724493FE388B9"><enum>(c)</enum><header>Selection of
participating SBDCs</header>
<paragraph commented="no" display-inline="no-display-inline" id="id6F353BAF3F1C4648AFF13E6F30267709"><enum>(1)</enum><header>In
general</header><text>The Administrator shall select not more than 20 small
business development centers to receive a grant under the pilot program.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id1D7BBB880C0243DBA49FD50DB4F3A02D"><enum>(2)</enum><header>Selection of
programs</header><text>In selecting small business development centers under
paragraph (1), the Administrator shall not select—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idFB7EFA07A93D4B66BDA3B3554AFC87EB"><enum>(A)</enum><text>more than 2
programs from each of the groups of States described in paragraph (3);
and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idCEBB9D9EBC874B38989BDAE641D12325"><enum>(B)</enum><text>more than 1
program in any State.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id382A9123D54641088FBBDD46E617598A"><enum>(3)</enum><header>Groupings</header><text display-inline="yes-display-inline">The groups of States described in this
paragraph are the following:</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idE0F06EAA4FAB4B79A4E28C83A5DF522E"><enum>(A)</enum><header>Group
1</header><text display-inline="yes-display-inline">Group 1 shall consist of
Maine, Massachusetts, New Hampshire, Connecticut, Vermont, and Rhode
Island.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id1D4F87D3F42A4F0399AD8A4FA600C838"><enum>(B)</enum><header>Group
2</header><text display-inline="yes-display-inline">Group 2 shall consist of
New York, New Jersey, Puerto Rico, and the Virgin Islands.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id7C75720420CB432F862A5F6D13BBF580"><enum>(C)</enum><header>Group
3</header><text display-inline="yes-display-inline">Group 3 shall consist of
Pennsylvania, Maryland, West Virginia, Virginia, the District of Columbia, and
Delaware.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idF1FCE38D2326448891BCF49711D6C7B6"><enum>(D)</enum><header>Group
4</header><text display-inline="yes-display-inline">Group 4 shall consist of
Georgia, Alabama, North Carolina, South Carolina, Mississippi, Florida,
Kentucky, and Tennessee.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id45AB21FB85A44C4EA4F0FBA73F5953A9"><enum>(E)</enum><header>Group
5</header><text display-inline="yes-display-inline">Group 5 shall consist of
Illinois, Ohio, Michigan, Indiana, Wisconsin, and Minnesota.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idDA9F6257CD694265B85B7E5172E41412"><enum>(F)</enum><header>Group
6</header><text display-inline="yes-display-inline">Group 6 shall consist of
Texas, New Mexico, Arkansas, Oklahoma, and Louisiana.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id0608CBDC3C5B4CCBB68217706812B3A4"><enum>(G)</enum><header>Group
7</header><text display-inline="yes-display-inline">Group 7 shall consist of
Missouri, Iowa, Nebraska, and Kansas.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id2ECF7FD321B44A90B75CE4CDD769589B"><enum>(H)</enum><header>Group
8</header><text display-inline="yes-display-inline">Group 8 shall consist of
Colorado, Wyoming, North Dakota, South Dakota, Montana, and Utah.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idED50D73DF53B4089A71189CDAD8D852E"><enum>(I)</enum><header>Group
9</header><text display-inline="yes-display-inline">Group 9 shall consist of
California, Guam, American Samoa, Hawaii, Nevada, and Arizona.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idBF4FF59A09E0487F9C1902A72DA7060F"><enum>(J)</enum><header>Group
10</header><text display-inline="yes-display-inline">Group 10 shall consist of
Washington, Alaska, Idaho, and Oregon.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id43BF113236FE47298AEED3EAB92A4110"><enum>(4)</enum><header>Deadline for
selection</header><text display-inline="yes-display-inline">The Administrator
shall make selections under this subsection not later than 6 months after the
later of the date on which the information described in subsection (b)(1) is
posted on the website of the Small Business Administration and the date on
which the information described in subsection (b)(1) is published in the
Federal Register.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idDEA5BD5CCB434315B90A2BE4BA28C4D3"><enum>(d)</enum><header>Use of
funds</header>
<paragraph commented="no" display-inline="no-display-inline" id="id9D4E9240DAA84D27937AD4A6E1DA1EC1"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">A participating small
business development center shall use funds provided under the pilot program
to—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idD07DD3F5B86447068EA8680499609DA4"><enum>(A)</enum><text>create and
distribute informational materials; and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idDD5547B5958D4590BAFAAC9164660F3C"><enum>(B)</enum><text display-inline="yes-display-inline">conduct training and educational
activities.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0B03E594A58D4FC7B96E63B7FC440460"><enum>(2)</enum><header>Content of
materials</header><text>In creating materials under the pilot program, a
participating small business development center shall evaluate and incorporate
relevant portions of existing informational materials regarding health
insurance options, such as the materials created by the Healthcare Leadership
Council.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id3CB00D7408894C04AD3B031266D61BE9"><enum>(e)</enum><header>Grant
amounts</header><text display-inline="yes-display-inline">Each participating
small business development center program shall receive a grant in an amount
equal to—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id76EBD3B5C3634358A45402892A74F448"><enum>(1)</enum><text display-inline="yes-display-inline">not less than $150,000 per fiscal year;
and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idC566236E606A4F288FAFF975E825F551"><enum>(2)</enum><text display-inline="yes-display-inline">not more than $300,000 per fiscal
year.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id1DC3658A4DA54647B24188209C33ECC1"><enum>(f)</enum><header>Matching
requirement</header><text display-inline="yes-display-inline">Subparagraphs (A)
and (B) of <external-xref legal-doc="act" parsable-cite="SBA/21(a)(4)">section
21(a)(4)</external-xref> of the <act-name parsable-cite="SBA">Small Business
Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/15/648(a)(4)">15 U.S.C. 648(a)(4)</external-xref>) shall
apply to assistance made available under the pilot program.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id4F0C4DC6A0CF435DAD3DD5538C9911B9"><enum>204.</enum><header>Reports</header><text display-inline="no-display-inline">Each participating small business
development center shall transmit to the Administrator and the Chief Counsel
for Advocacy of the Small Business Administration, as the Administrator may
direct, a quarterly report that includes—</text>
<paragraph commented="no" display-inline="no-display-inline" id="idADA86CB231B547E38D4E57A7F1C4B020"><enum>(1)</enum><text display-inline="yes-display-inline">a summary of the information and
educational materials regarding health insurance options provided by the
participating small business development center under the pilot program;
and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id9EA75B571758496AB55A6108EE66CD65"><enum>(2)</enum><text display-inline="yes-display-inline">the number of small business concerns
assisted under the pilot program.</text>
</paragraph></section><section commented="no" display-inline="no-display-inline" id="idFD27258066B348769C2890586DE1E0E6"><enum>205.</enum><header>Authorization
of appropriations</header>
<subsection commented="no" display-inline="no-display-inline" id="id024E5C3FC4FA47D0862965918F4DB835"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">There are authorized
to be appropriated to carry out this title—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id7139373532C646EF8B0BDA46A1BF30A1"><enum>(1)</enum><text display-inline="yes-display-inline">$5,000,000 for the first fiscal year
beginning after the date of enactment of this Act; and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idC4854A44CB704A3BA3EBDCFD11890958"><enum>(2)</enum><text display-inline="yes-display-inline">$5,000,000 for each of the 3 fiscal years
following the fiscal year described in paragraph (1).</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id9E6E3F2FBE55443B9891571E0CE250E3"><enum>(b)</enum><header>Limitation on
use of other funds</header><text display-inline="yes-display-inline">The
Administrator may carry out the pilot program only with amounts appropriated in
advance specifically to carry out this title.</text>
</subsection></section>