1.Short title; table of contents
(a)This Act may be cited as the
Affordable Coverage for Small
Employers Act of 2008
.
(b)The table of contents for this Act is as
follows:
Sec. 1. Short title;
table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
Sec. 4. National Health Coverage Policy Board.
Sec. 5. Health Coverage Exchange Regions.
Sec. 6. Regional Health Coverage Exchanges.
Sec. 7. Health plan offered through an Exchange.
Sec. 8. Refundable credit for health insurance
coverage.
Sec. 9. Refundable credit for small employer health insurance
expenses.
Sec. 10. Reports and evaluations.
Sec. 11. Reporting insurance status.
2.Congress makes the following
findings:
(1)Forty-seven million Americans lack
consistent access to quality, affordable health coverage. The chronic problem
of the uninsured ranks as one of the Nation’s most pressing health care
challenges.
(2)More than half of uninsured Americans are
employed by small businesses, or firms with fewer than 100 employees.
(3)Research shows that affordability is a key
barrier to small businesses purchasing coverage in the private market.
Sixty-three percent of uninsured businesses cite affordability as a major
reason that they do not offer health benefits to their employees.
(4)Surveys also indicate that 71 percent of
small employers would offer their employees health benefits if the government
provided assistance with premiums.
(5)Offering health benefits is not only good
for employees’ health, it is good for the health of businesses. Small employers
report access to affordable health insurance coverage as a key factor in their
economic performance. Of those small employers who do offer health benefits to
their employees, 64 percent believe it increases productivity by keeping
employees healthy and 58 percent claim it reduces absenteeism.
(6)While there may be varying ideas on how
best to provide affordable coverage to small employers, one thing is clear: the
solution lies in a cooperative effort between individuals, employers, and
Federal and State governments.
(7)As part of reforming the Nation’s health
care system, Congress should make it a priority to reduce the number of
uninsured by helping small businesses purchase affordable coverage for their
employees.
3.In this Act:
(1)The term employer has the
meaning given such term under section 3(5) of the Employee Retirement Income
Security Act of 1974.
(2)The term Exchange means a
Regional Health Coverage Exchange established under section 6.
(3)The term National Policy Board
means the National Health Coverage Policy Board established under section
4.
(4)The term Region means a Health
Coverage Exchange Region established under section 5.
(5)The term Regional Boards means
the board of a Regional Health Coverage Exchange established under section
6.
(6)The term Secretary means the
Secretary of Health and Human Services.
(7)
(A)The term small employer means,
with respect to a plan year, an employer who employed an average of at least 2
but not more than 100 full-time employees on business days during the preceding
calendar year and who employs at least 2 employees on the first day of the plan
year. Such term may include a sole proprietor if determined appropriate by a
Regional Board.
(B)Application of certain rules in
determination of employer sizeFor purposes of this paragraph—
(i)Application of aggregation rule for
employersAll persons treated
as a single employer under subsection (b), (c), (m), or (o) of section 414 of
the Internal Revenue Code of 1986 shall be treated as 1 employer.
(ii)Employers not in existence in preceding
yearIn the case of an
employer which was not in existence throughout the preceding calendar year, the
determination of whether such employer is a small or large employer shall be
based on the average number of employees that it is reasonably expected such
employer will employ on business days in the current calendar year.
(iii)Any reference in this subsection to an
employer shall include a reference to any predecessor of such employer.
(8)The term sole proprietor means
a business structure in which an individual and his or her company are
considered a single entity for Federal tax and liability purposes, and he or
she reports business income or losses on his or her individual income tax
return.
(9)The term State means each of
the several States of the United States, the District of Columbia, and any
territory sufficiently regulating its insurance market as determined by the
National Association of Insurance Commissioners.
4.National Health Coverage Policy
Board
(a)
(1)There shall be established as an
independent agency a National Health Coverage Policy Board that shall be
composed of 9 members, to be appointed by the President not later than 12
months after the date of enactment of this Act, by and with the advice and
consent of the Senate, for terms of 6 years, except that the terms of the
initial members of the National Policy Board shall be staggered. Upon the
expiration of their terms of office, members of the National Policy Board shall
continue to serve until their successors are appointed and have
qualified.
(2)In selecting the members of the National
Policy Board, the President shall ensure that such membership include
representatives of insurance commissioners, insurance issuers and producers,
health care providers, small employers, health plan accreditors, actuaries,
health care quality experts, and consumers, and that such members provide
geographical diversity.
(3)The Secretary of Health and Human Services
and the Secretary of the Treasury, or their designees, shall serve as ex
officio members of the National Health Coverage Policy Board.
(4)A member of the National Policy Board shall
be entitled to compensation at the per diem equivalent of the rate provided for
level IV of the Executive Schedule under section 5315 of title 5, United States
Code, and while so serving away from home and the member's regular place of
business, a member may be allowed travel expenses, as authorized by the
Chairperson of the National Policy Board.
(b)The National Policy Board shall—
(1)apportion the United States into Health
Coverage Exchange Regions, pursuant to section 5;
(2)provide for the establishment, and oversee
the administration of Regional Health Coverage Exchanges pursuant to section
6;
(3)establish and appoint members to the
Regional Health Coverage Exchange Board for each of the Regions established
under section 6;
(4)determine a comprehensive, quality, and
affordable standard benefit package and cost sharing requirements in accordance
with subsection (c);
(5)develop and recommend maximum rating
guidelines for each Exchange, which shall take into consideration existing
requirements in each State in the Region;
(6)establish and update regularly the quality
and efficiency performance and reporting requirements for health plans offered
through an Exchange;
(7)provide technical assistance to Regional
Boards as necessary;
(8)submit an annual report to Congress
concerning the activities of the National Policy Board; and
(9)carry out any other activities determined
appropriate by the Secretary.
(c)
(1)The standard benefit package developed
under subsection (b)(4) shall, at a minimum, include coverage for—
(A)preventive items and services (including
well baby care, well child care, and appropriate immunizations), as recommended
by the United States Preventive Services Task Force;
(B)chronic disease care services, which may
include disease management, care coordination, and case management
programs;
(C)inpatient and outpatient hospital services
(including mental health care and maternity care);
(D)physicians’ surgical and medical
services;
(E)laboratory and imaging services; and
(F)dental and prescription drug
coverage.
(2)The initial standard benefit package
developed by the National Policy Board under subsection (b)(4) shall have
benefits that are similar to or not less than the actuarial value of health
benefits coverage in any of the 4 largest health benefits plans (determined by
enrollment) offered under the Federal Employee Health Benefit Program under
chapter 89 of title 5, United States Code. Such benefit package shall remain in
effect for a 2-year period.
(3)Not later than 2 years after the
development of the standard benefit package under subsection (b)(4), and
annually thereafter, the National Policy Board, in consultation with the
Institute of Medicine, shall review and make revisions to such benefit package
to ensure that coverage is provided for all medically reasonable and necessary
items and services. Such revisions shall be made in accordance with available
clinical practice guidelines and advances in medical science which have been
demonstrated to meaningfully improve health outcomes.
(d)The National Policy Board shall submit to
Secretary and the appropriate committees of Congress an annual financial audit
of the activities of the National Policy Board, to be conducted by an
independent party.
(e)Administrative provisions
(1)Of the individuals appointed to the
National Policy Board under subsection (a)(1), one member shall be designated
by the President, by and with the advice and consent of the Senate, to serve as
the Chairperson of the National Policy Board for a term of 6 years, and one
shall be designated by the President, by and with the consent of the Senate, to
serve as Vice Chairperson of the National Policy Board for a term of 4 years.
The Chairperson of the National Policy Board, subject to its supervision, shall
be its active executive officer.
(2)
(A)A majority of the members of the National
Policy Board shall constitute a quorum, but a lesser number of members may hold
hearings.
(B)An affirmative vote of a majority of the
members of the National Policy Board is required for approval of all National
Policy Board decisions.
(3)
(A)The National Policy Board shall meet at the
call of the Chairperson. At meetings of the National Policy Board the
Chairperson shall preside, and, in his or her absence, the vice chairperson
shall preside. In the absence of the Chairperson and the vice chairperson, the
National Policy Board shall elect a member to act as chairperson pro
tempore.
(B)In addition to other meetings the National
Policy Board may hold, the National Policy Board shall hold an annual meeting
with the Regional Boards, for the purpose of having Regional Boards report
progress towards expanding access to health coverage for employees of small
businesses and for an exchange of information.
(4)The National Policy Board may hold such
hearings, sit and act at such times and places, take such testimony, and
receive such evidence as the National Policy Board considers advisable to carry
out the purposes of this section.
(5)The National Policy Board may secure
directly from any Federal department or agency such information as the National
Policy Board considers necessary to carry out the provisions of this section.
Upon request of the Chairperson of the National Policy Board, the head of such
department of agency shall furnish such information to the National Policy
Board if the head of such department or agency determines it
appropriate.
(6)The National Policy Board may use the
United States mails in the same manner and under the same conditions as other
departments and agencies of the Federal Government.
(7)The members of the National Policy Board
shall be allowed travel expenses, including per diem in lieu of subsistence, at
rates authorized for employees of agencies under subchapter I of chapter 57 of
title 5, United States Code, while away from their homes or regular places of
business in the performance of services for the National Policy Board.
(8)The principal offices of the National
Policy Board shall be in the District of Columbia.
(9)The National Policy Board shall have the
power to employ such attorneys, experts, assistants, clerks, or other employees
as may be deemed necessary to conduct the business of the National Policy
Board. All salaries and fees shall be fixed in advance by the National Policy
Board and shall be paid in the same manner as the salaries of the members of
the National Policy Board.
(10)The National Policy Board may act in its
own name and through its own attorneys in enforcing any provision of this Act,
regulations promulgated hereunder, or any other law or regulation, or in any
action, suit, or proceeding to which the National Policy Board is a
party.
(11)Detail of government
employeesAny Federal
Government employee may be detailed to the National Policy Board without
reimbursement, and such detail shall be without interruption or loss of civil
service status or privilege.
(12)Temporary and intermittent
servicesThe Chairperson of
the National Policy Board may procure temporary and intermittent services under
section 3109(b) of title 5, United States Code, at rates for individuals which
do not exceed the daily equivalent of the annual rate of basic pay prescribed
for level V of the Executive Schedule under section 5316 of such title.
(13)Annual request for fundingThe National Policy Board shall submit an
annual request to the Secretary for funding to carry out this section.
(14)Authorization of
appropriationsThere is
authorized to be appropriated for each fiscal year, such sums as may be
necessary to maintain the functions of the National Policy Board.
5.Health Coverage Exchange Regions
(a)The National Policy Board shall divide the
United States into Health Coverage Exchange Regions. Such Regions may be
reapportioned and new Regions may from time to time be established by the
National Policy Board. No Region may contain less than 2 States.
(b)
(1)In establishing Regions under subsection
(a), the National Policy Board shall ensure that such Regions are apportioned
with due regard to the convenience and customary course of business, including
existing State insurance rating guidelines and regulations.
(2)Regions under this section need not consist
of coterminous States. In determining whether a Region will consist of States
that are not coterminous, the National Policy Board shall consider the market
availability of health plans and whether plans in the Region can comply with
State network adequacy requirements.
(3)A State may submit an appeal to the
National Policy Board if the State desires to be assigned to another Health
Coverage Exchange Region. In such an appeal, a State shall provide reasonable
justification that the convenience and customary course of business of the
State, including existing State insurance rating guidelines and regulations,
are more similar to a Region other than the Region to which the State was
initially assigned by the National Policy Board.
(c)Within each Region, the National Policy
Board shall establish a health coverage exchange as provided for under section
6.
6.Regional Health Coverage Exchanges
(a)Regional health care
exchangesThe Board shall
establish Regional Health Coverage Exchanges to serve as central purchasing
sites for health coverage, to provide information to purchasers and consumers
about participating health plans, to facilitate enrollment, and to ensure
health plan compliance with minimum requirements for benefit design, quality,
efficiency and transparency.
(b)Establishment and appointment
(1)The National Policy Board shall establish
and appoint the members of a Regional Health Coverage Exchange Board for each
Region. The National Policy Board shall—
(A)determine the number of members of each
Regional Board which shall be dependent upon the size of the Region involved;
and
(B)establish a process whereby State officials
and other stakeholders submit nominations for appointment to each Regional
Board.
(2)At a minimum the membership of each
Regional Board shall include the State insurance commissioner from each State
in the Region involved and other members who shall be representative of health
insurance issuers and producers, health care providers, health plan
accreditors, small employers, health care quality experts, and
consumers.
(3)In appointing members of a Regional Board,
the National Policy Board shall ensure that the terms of service for such
members are staggered and that no term exceeds 6 years.
(c)The Regional Board, shall—
(1)develop common rating guidelines relating
to the health insurance market for small employers, pursuant to subsection
(d);
(2)establish and administer the Exchange to
assist small employers within the Region with purchasing health coverage for
themselves and their employees, as described in subsection (d);
(3)provide assistance to States within the
Region concerning health plan quality and efficiency compliance and
enforcement;
(4)consult with the National Association of
Insurance Commissioners and develop a mechanism to lessen such risk selection
as may occur among plans participating in the Exchange through the application
of regional risk adjustment requirements that are submitted to and approved by
the National Policy Board;
(5)collect data for evaluation, and for
reporting to the public and the National Policy Board, concerning the overall
effectiveness of the Exchange, which may include number of enrollees, types of
benefit options offered by health insurance issuers, the rating guidelines
implemented, marketing practices, quality oversight, and any enforcement
procedures applied;
(6)submit annual reports to the National
Policy Board concerning the activities and evaluation of the Exchange;
and
(7)carry out other activities determined
appropriate by the National Policy Board.
(d)Common regulatory guidelines; State
adoption
(1)Common regulatory guidelines
(A)Not later than 6 months after the date on
which the members of the Regional Board are appointed, such Regional Board
shall develop and submit common rating guidelines to the National Policy Board
for review and approval.
(B)The National Policy Board shall notify the
Regional Board of its decision with respect to common rating guidelines within
60 days of the receipt of the submission of such guidelines under subparagraph
(A). If the National Policy Board does not approve such guidelines, the
National Policy Board shall provide the Regional Board with a justification for
such decision. The Regional Board may resubmit modified common rating
guidelines for approval within the 30-day period beginning on that date of such
notification of the National Policy Board’s initial decision.
(C)The common guidelines under this paragraph
may not include—
(i)health status as an allowable rating
factor; or
(ii)waiting periods or exclusion of coverage
for pre-existing conditions.
(D)A Regional Board that desires to modify the
common rating guidelines approved by the National Policy Board under
subparagraph (A) shall submit a report to the National Policy Board that
describes the proposed modification and how such modification will affect
consumer access to affordable health coverage for review and approval. The
National Policy Board shall notify the Regional Board of its decision with
respect to such modification within 60 days of receipt of the modification
request. Approval of such proposed modifications shall be contingent upon
assurances that access to health coverage for small employers and their
employees would be maintained.
(E)If the Regional Board is unable to develop
common rating guidelines within the period provided for under subparagraph (A),
the National Policy Board may develop such guidelines to be applied by the
Regional Board or reapportion the States within the Region involved to other
Regions.
(2)
(A)Not later than 3 years after the date on
which the Regional Board is appointed, each State in the Region involved shall
enact the laws necessary to regulate its small group insurance market in
accordance with the guidelines developed by the Regional Board under paragraph
(1). The National Policy Board may permit a State to phase-in the enactment of
the guidelines developed under paragraph (1) over a period not to exceed 3
years.
(B)If a State fails to enact and implement the
guidelines developed under paragraph (1) within the period provided for under
subparagraph (A), the small employers in such State—
(i)shall not be permitted to purchase health
coverage through the Exchange; and
(ii)shall not be eligible for the refundable
income tax credit under section 36A of the Internal Revenue Code of
1986.
(C)States that have
legislatures meeting biennially and that make a good faith effort to implement
the rating guidelines for its Region may have the penalties described in
subparagraph (B) waived at the discretion of the National Policy Board. If a
State fails to fully implement the Region's common guidelines by the date that
is 1 year after the end of its next legislative session, the National Policy
Board shall enforce the penalties described in such subparagraph with respect
to such State.
(D)Determination by regions with respect to
coverage of additional populationsA Regional Board shall permit sole
proprietors and individuals to purchase coverage through the Exchange if the
State involved elects to permit such coverage. A State within a Region that
permits sole proprietors or individuals to purchase coverage through the
Exchange shall regulate the individual health insurance markets within the
State in accordance with the common rating guidelines provided for in this
subsection. To mitigate the risk of adverse selection within such markets, the
Regional Board may exercise additional flexibility by taking group size into
account when developing common rating guidelines.
(E)Determination by States with respect to
exceeding small employer size limitsStates may request that the definition of
small employer
be expanded to include those small employers with
more than 100 employees. Such request shall be made in writing and approved by
the National Policy Board. The National Policy Board shall take into
consideration the availability of refundable income tax credits under section
36A of the Internal Revenue Code of 1986, as well as potential impact on access
to health coverage for other small employers. The National Policy Board shall
act upon a request made under this section not later than 60 days after receipt
of such request.
(F)Each Regional Board shall develop a plan to
decrease adverse selection relating to health insurance coverage between the
individual market and the Exchange for individuals and sole proprietors
eligible to purchase coverage through the Health Coverage Exchange. Such plan
shall be submitted to the National Policy Board for approval in conjunction
with the submission of common rating guidelines described in this
subsection.
(G)A State may submit a request to the
National Policy Board to opt out of the requirement relating to the adoption of
the common guidelines under section 6 if the State can demonstrate that
existing State guidelines are more stringent than those recommended by the
Regional Board under such section.
(e)Establishment and administration of
exchangeA Regional Board
shall establish and administer an Exchange through the following
activities:
(1)The development of streamlined health
insurance marketing and enrollment mechanisms, through collaboration with
insurance producers, which shall include the establishment and maintenance of
an Internet website.
(2)The development of contracting processes
and the conduct of negotiations with insurance issuers that desire to
participate in the Exchange.
(3)(A)Collaboration with participating health
insurance issuers and producers to develop health coverage benefit packages to
be offered through the Exchange in addition to the standard benefit package
provided for in section 4.
(B)If
such standard benefit package does not include all mandated benefits for each
State in the Region, the Regional Board may require that health plans
participating in the Exchange offer additional, modified plans that meet the
requirements of each State in the Region concerning mandated benefits. Any
premium adjustments for such modified plans shall be based only on the cost of
the added benefits.
(4)The development of guidelines concerning
rules for enrollment periods during which employers may purchase health
coverage through the Exchange. Such guidelines shall provide employers
operating in States that have adopted the necessary laws and regulations
provided for in subsection (c), not less than 12 months for initial enrollment
once an Exchange is determined to be operational by the Regional Board.
(5)Assessing employers that purchase health
coverage after the close of the initial enrollment period a reasonable late
enrollment penalty unless such employers are able to provide evidence of
credible coverage (as provided for in a manner similar to that provided for
under section 2701 of the Public Health Service Act) section prior to
enrollment in a health plan in the Exchange.
7.Health plan offered through an
Exchange
(a)To be eligible to offer health care
coverage through an Exchange, a health insurance issuer shall—
(1)be licensed in each State within the Region
in which the issuer operates or sells policies;
(2)offer at least the standard benefit package
developed under section 4(b)(4), and may offer other options as approved by the
Regional Board under section 6;
(3)meet quality and efficiency performance and
reporting requirements established by the National Policy Board under section
4;
(4)rate its insurance products based on the
small group market guidelines of the Region in which the product is being
offered; and
(5)comply with State network adequacy and all
other consumer protection laws.
(b)Reporting requirements for health
plans
(1)As a condition of offering health care
coverage through the Exchange, a health insurance issuer shall report to
consumers, the Regional Board, and the National Policy Board, information
concerning quality, cost, administration, and structure with respect to health
plans offered by the issuer. The National Policy Board, in collaboration with
the Institute of Medicine, may update and modify reporting requirements for
purposes of this paragraph on an annual basis.
(2)A health insurance issuer, with respect to
a health plan offered through an Exchange, shall collect, analyze, and report
to the National Policy Board and consumers, information on measures of health
care quality. Such measures shall—
(A)include evidence-based measures of
effectiveness, efficiency, patient satisfaction, and other measures as
determined appropriate by the National Policy Board; and
(B)at a minimum, incorporate existing quality
measurement requirements by health plan accrediting entities, including
measures included in the Healthcare Effectiveness Data and Information Set
(HEDIS), and the Consumer Assessment of Health Plan Survey administered by the
Agency for Healthcare Research and Quality.
(3)A health insurance issuer, with respect to
a health plan offered through an Exchange, shall report to the public and the
National Policy Board information concerning cost transparency, through the
provision of cost-sharing and common cost estimates for medical procedures,
health services and prescription drugs for network hospitals and providers.
Such cost-sharing and costs estimates shall include—
(A)hospital and emergency room fees;
(B)imaging and radiology;
(C)laboratories and testing;
(D)medical supplies and equipment;
(E)physician office services and therapy
services;
(F)costs for prescription drugs; and
(G)other data that the National Policy Board
determines appropriate.
(4)Administration; structureA health insurance issuer, with respect to
a health plan offered through an Exchange, shall report to the National Policy
Board information concerning—
(A)hospital and provider networks;
(B)methods of utilization management;
(C)economic and demographic data on
enrollment, revenues, costs, and profits, which may include medical loss
ratios;
(D)benefit packages;
(E)consumer disputes and complaints filed and
resolved; and
(F)solvency and reserves.
(5)Reporting required under this subsection
shall be submitted in print and electronic formats on at least an annual
basis.
8.Refundable credit for health insurance
coverage
(a)Subpart C of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits)
is amended by redesignating section 36 as section 37 and by inserting after
section 35 the following new section:
36.
(a)In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed by this subtitle for
the taxable year an amount equal to the applicable percentage of the premiums
paid by or on behalf of the taxpayer for qualified health insurance during such
taxable year.
(b)For purposes of this section—
(1)Except as provided in paragraph (2), the
term eligible individual means—
(A)any employee of a qualifying small employer
residing in a State which—
(i)has adopted and is applying the common
rating guidelines developed under section 6 of the
Affordable Coverage for Small Employers Act
of 2008 in the small group market of such State, or
(ii)has been permitted by the National Policy
Board to opt out of the requirement of subparagraph (A), pursuant to section
6(d)(2)(G) of such Act, or
(B)any other individual residing in such State
who is permitted to purchase qualified health insurance by a Regional Health
Coverage Exchange Board under section 6(d)(2)(D) of such Act.
(2)Such term shall not include any individual
for any month if, as of the first day of such month, such individual—
(A)is entitled to any benefits under title
XVIII of the Social Security
Act,
(B)is eligible for the program under title XIX
or XXI of such Act,
(C)is entitled to any benefit under—
(i)chapter 89 of title 5, United States
Code,
(ii)chapter 55 of title 10, United States
Code,
(iii)chapter 17 of title 38, United States Code,
or
(iv)any medical care program under the
Indian Health Care Improvement Act,
or
(D)is imprisoned under Federal, State, or
local authority.
(c)For purposes of this section—
(1)The applicable percentage is equal to, in
the case of a taxpayer with modified adjusted gross income for the preceding
taxable year—
(A)not exceeding 150 percent of the Federal
poverty level (as defined in section 673(2) of the Community Services Block
Grant Act (42 U.S.C. 9902(2)) applicable to a family of the size involved, 25
percent,
(B)exceeding 150 percent but not exceeding 200
percent of such Federal poverty level, 20 percent,
(C)exceeding 200 percent but not exceeding 250
percent of such Federal poverty level, 15 percent,
(D)exceeding 250 percent but not exceeding 300
percent of such Federal poverty level, 10 percent, and
(E)exceeding 300 percent of such Federal
poverty level, 0 percent.
(2)Modified adjusted gross
incomeThe term
modified adjusted gross income means adjusted gross income
determined without regard to sections 103, 135, 911, 931 and 933.
(d)Qualifying small employerFor purposes of this section—
(1)The term qualifying small
employer means any small employer which is located in a State described
in subsection (b)(1)(A).
(2)
(A)The term small employer means,
with respect to a plan year, an employer who employed an average of at least 2
but not more than 100 full-time employees on business days during the preceding
calendar year and who employs at least 2 employees on the first day of the plan
year. Such term may include employers described in section 6(d)(2)(E) of the
Affordable Coverage for Small Employers Act
of 2008 and a sole proprietor if determined appropriate by a
Regional Health Coverage Exchange Board.
(B)Application of certain rules in
determination of employer sizeFor purposes of this paragraph—
(i)Application of aggregation rule for
employersAll persons treated
as a single employer under subsection (b), (c), (m), or (o) of section 414
shall be treated as 1 employer.
(ii)Employers not in existence in preceding
yearIn the case of an
employer which was not in existence throughout the preceding calendar year, the
determination of whether such employer is a small or large employer shall be
based on the average number of employees that it is reasonably expected such
employer will employ on business days in the current calendar year.
(iii)Any reference to an employer shall include
a reference to any predecessor of such employer.
(3)The term employer has the
meaning given such term under section 3(5) of the Employee Retirement Income
Security Act of 1974.
(e)Qualified health insuranceFor purposes of this section, the term
qualified health insurance means any health plan offered through a
Regional Health Coverage Exchange established under section 6 of the
Affordable Coverage for Small Employers Act
of 2008 with standard benefit package coverage developed under
section 4(b)(4) of such Act or a plan with benefits that are similar to or not
less than the actuarial value of health benefits coverage under the standard
benefit package.
(f)For purposes of this section, any term used
in this section which is also used in the Affordable Coverage for Small Employers Act of
2008 shall have the meaning given such term by such Act.
(g)Archer MSA and health savings account
contributions
(1)If a deduction would (but for paragraph
(2)) be allowed under section 220 or 223 to the taxpayer for a payment for the
taxable year to the Archer MSA or health savings account of an individual,
subsection (a) shall be applied by treating such payment as a payment for
qualified health insurance for such individual.
(2)No deduction shall be allowed under section
220 or 223 for that portion of the payments otherwise allowable as a deduction
under section 220 or 223 for the taxable year which is equal to the amount of
credit allowed for such taxable year by reason of this subsection.
(h)For purposes of this section—
(1)Married couples must file joint
return
(A)If the taxpayer is married at the close of
the taxable year, the credit shall be allowed under subsection (a) only if the
taxpayer and his spouse file a joint return for the taxable year.
(B)Marital status; certain married individuals
living apartRules similar to
the rules of paragraphs (3) and (4) of section 21(e) shall apply for purposes
of this paragraph.
(2)Denial of credit to
dependentsNo credit 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 calendar year in which such individual’s taxable year begins.
(3)No credit shall be allowed under subsection
(a) if the credit under section 35 is allowed and no credit shall be allowed
under 35 if a credit is allowed under this section.
(4)Coordination with deduction for health
insurance costsIn the case
of a taxpayer who is eligible to deduct any amount under section 162(l) or 213
for the taxable year, this section shall apply only if the taxpayer elects not
to claim any amount as a deduction under such section for such year.
(5)Medical and health savings
accountsThe credit allowed
under subsection (a) for any taxable year shall be reduced by the aggregate
amount distributed from Archer MSAs (as defined in section 220(d)) and health
savings accounts (as defined in section 223(d)) which are excludable from gross
income for such taxable years by reason of being used to pay premiums for
coverage of an individual under qualified health insurance for any
month.
(6)Election not to claim creditThis 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.
(7)Verification of coverage, etcNo credit shall be allowed under this
section with respect to any individual unless such individual’s coverage (and
such related information as the Secretary may require) is verified in such
manner as the Secretary may prescribe.
(8)Insurance which covers other individuals;
treatment of paymentsRules
similar to the rules of paragraphs (7) and (8) of section 35(g) shall apply for
purposes of this section.
(i)Reduction in credit for advance
paymentsWith respect to any
taxable year, the amount which would (but for this subsection) be allowed as a
credit to the taxpayer under subsection (a) shall be reduced (but not below
zero) by the aggregate amount paid on behalf of such taxpayer under section
7529 for months beginning in such taxable year.
(j)The Secretary shall prescribe such
regulations and other guidance as may be necessary or appropriate to carry out
the purposes of this section, section 6050X, and section 7529, including the
application of the credit with respect to eligible individuals described in
subsection
(b)(1)(B).
.
(b)
(1)Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 (relating to information
concerning transactions with other persons) is amended by inserting after
section 6050W the following new section:
6050X.Returns relating to payments for qualified
health insurance
(a)Any person who, in connection with a trade
or business conducted by such person, receives payments during any calendar
year from any individual for coverage of such individual or any other
individual under creditable health insurance, shall make the return described
in subsection (b) (at such time as the Secretary may by regulations prescribe)
with respect to each individual from whom such payments were received.
(b)Form and manner of returnsA return is described in this subsection if
such return—
(1)is in such form as the Secretary may
prescribe, and
(2)contains—
(A)the name, address, and TIN of the
individual from whom payments described in subsection (a) were received,
(B)the name, address, and TIN of each
individual who was provided by such person with coverage under creditable
health insurance by reason of such payments and the period of such coverage,
and
(C)such other information as the Secretary may
reasonably prescribe.
(c)Creditable health insuranceFor purposes of this section, the term
creditable health insurance means qualified health insurance (as
defined in section 36(e)) other than, to the extent provided in regulations
prescribed by the Secretary, any other insurance covering an individual if no
credit is allowable under section 36 with respect to such coverage.
(d)Statements To be furnished to individuals
with respect to whom information is requiredEvery person required to make a return
under subsection (a) shall furnish to each individual whose name is required
under subsection (b)(2)(A) to be set forth in such return a written statement
showing—
(1)the name and address of the person required
to make such return and the phone number of the information contact for such
person,
(2)the aggregate amount of payments described
in subsection (a) received by the person required to make such return from the
individual to whom the statement is required to be furnished, and
(3)the information required under subsection
(b)(2)(B) with respect to such payments.
The written statement required under
the preceding sentence shall be furnished on or before January 31 of the year
following the calendar year for which the return under subsection (a) is
required to be made.(e)Returns which would be required To be made
by 2 or more personsExcept
to the extent provided in regulations prescribed by the Secretary, in the case
of any amount received by any person on behalf of another person, only the
person first receiving such amount shall be required to make the return under
subsection
(a).
.
(2)
(A)Subparagraph (B) of section 6724(d)(1) of
such Code (relating to definitions) is amended by striking or
at
the end of clause (xxi), by striking and
at the end of clause
(xxii) and inserting or
, and by adding after clause (xxii) the
following new clause:
(xxiii)section 6050X (relating to returns relating
to payments for qualified health
insurance),
.
(B)Paragraph (2) of section 6724(d) of such
Code is amended by striking or
at the end of subparagraph (CC),
by striking the period at the end of subparagraph (DD) and inserting ,
or
and by adding at the end the following new subparagraph:
(EE)section 6050X(d) (relating to returns
relating to payments for qualified health
insurance).
.
(3)The table of sections for subpart B of part
III of subchapter A of chapter 61 of such Code is amended by inserting after
the item relating to section 6050W the following new item:
Sec. 6050X. Returns relating to
payments for qualified health
insurance.
.
(c)
(1)Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting before the period , or
from section 36 of such Code
.
(2)The table of sections for subpart C of part
IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended
by striking the last item and inserting the following new items:
Sec. 36. Health insurance
costs.
Sec. 37. Overpayments of
tax.
.
(d)The amendments made by
this section shall apply to taxable years beginning after December 31,
2008.
(e)Advance payment of credit for purchasers of
qualified health insurance
(1)Chapter 77 of the Internal Revenue Code of
1986 (relating to miscellaneous provisions) is amended by adding at the end the
following new section:
7529.Advance payment of health insurance credit
for purchasers of qualified health insurance
(a)In the case of an eligible individual, the
Secretary shall make payments to the provider of such individual’s qualified
health insurance equal to such individual’s qualified health insurance credit
advance amount with respect to such provider.
(b)For purposes of this section, the term
eligible individual means any individual—
(1)who purchases qualified health insurance
(as defined in section 36(e)), and
(2)for whom a qualified health insurance
credit eligibility certificate is in effect.
(c)Qualified health insurance credit
eligibility certificateFor
purposes of this section, a qualified health insurance credit eligibility
certificate is a statement furnished by an individual to the Secretary
which—
(1)certifies that the individual will be
eligible to receive the credit provided by section 36 for the taxable
year,
(2)estimates the amount of such credit for
such taxable year, and
(3)provides such other information as the
Secretary may require for purposes of this section.
(d)Qualified health insurance credit advance
amountFor purposes of this
section, the term qualified health insurance credit advance amount
means, with respect to any provider of qualified health insurance, the
Secretary’s estimate of the amount of credit allowable under section 36 to the
individual for the taxable year which is attributable to the insurance provided
to the individual by such
provider.
.
(2)The table of sections for chapter 77 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
item:
Sec. 7529. Advance payment of
health insurance credit for purchasers of qualified health
insurance.
.
(3)The amendments made by
this section shall apply to taxable years beginning after December 31,
2008.
9.Refundable credit for small employer health
insurance expenses
(a)Subpart C of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to refundable
credits), as amended by section 8, is amended by inserting after section 36 the
following new section:
36A.Small employer health insurance
expenses
(a)In the case of a qualifying small employer,
there shall be allowed as a credit against the tax imposed by this subtitle for
the taxable year an amount equal to the applicable percentage of the employer's
contribution during such taxable year towards the cost of qualified employee
health insurance expenses. No amount paid or incurred pursuant to a salary
reduction arrangement shall be taken into account under the preceding
sentence.
(b)For purposes of subsection (a), the
applicable percentage is equal to, in the case of an employer contribution
of—
(1)at least 50 but less than 60 percent of the
cost of qualified employee health insurance expenses, 10 percent,
(2)at least 60 but less than 70 percent of
such cost, 15 percent,
(3)at least 70 but less than 80 percent of
such cost, 20 percent, and
(4)at least 80 percent of such cost, 25
percent.
(c)For purposes of this section—
(1)Qualifying small employerThe term qualifying small
employer has the meaning given such term by section 36(d).
(2)Qualified employee health insurance
expenses
(A)The term qualified employee health
insurance expenses means any expenses for qualified health insurance (as
defined in section 36(e)) to the extent attributable to coverage—
(i)provided to any employee while such
employee is a qualified employee, or
(ii)for the employer, in the case of a sole
proprietor.
(B)The term qualified employee
means any individual described in section 36(b) (determined without regard to
paragraph (1)(B) thereof).
(d)Certain Rules Made ApplicableFor purposes of this section, rules similar
to the rules of section 52 shall apply.
(e)Coordination with advance payments of
creditWith respect to any
taxable year, the amount which would (but for this subsection) be allowed as a
credit to the taxpayer under subsection (a) shall be reduced by the aggregate
amount paid on behalf of such taxpayer under section 7530 for months beginning
in such taxable year. If the amount determined under this subsection is less
than zero, the taxpayer shall owe additional tax in such amount under this
chapter.
(f)Credits for Nonprofit
OrganizationsAny credit
which would be allowable under subsection (a) with respect to a qualifying
small employer if such qualifying small employer were not exempt from tax under
this chapter shall be treated as a credit allowable under this subpart to such
qualifying small
employer.
.
(b)Advance payments of creditChapter 77 of the Internal Revenue Code of
1986, as amended by section 8, is amended by inserting after section 7529 the
following new section:
7530.Advance payment of credit for health
insurance costs for qualifying small employers
(a)Not later than December 31, 2008, the
Secretary shall establish a program for making monthly payments on behalf of
any qualifying small employer to providers of qualified health insurance for
qualified employees of such employer. The amount of the monthly payment for a
qualifying small employer shall be one twelfth of the amount of the credit for
the tax year to which the qualifying small employer is entitled under section
36A. If a monthly payment is made by the Secretary for which the employer is
not entitled to a corresponding credit, the employer shall owe additional tax
in such amount under this chapter.
(b)Any term used in this section which is also
used in section 36A shall have the meaning given such term by section
36A.
.
(c)
(1)Paragraph (2) of section 1324(b) of title
31, United States Code, as amended by section 8, is amended by inserting
or 36A
after 36
.
(2)The table of sections for subpart C of part
IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as
amended by section 8, is amended by inserting after the item relating to
section 36 the following new item:
Sec. 36A. Small employer health
insurance
expenses.
.
(3)The table of sections for chapter 77 of
such Code, as amended by section 8, is amended by adding at the end the
following new item:
Sec. 7530. Advance payment of
credit for health insurance costs for qualifying small
employers.
.
(d)The amendments made by
this section shall apply to amounts paid or incurred in taxable years beginning
after December 31, 2008.
10.
(a)Annual report to CongressNot later than 1 year after the date of
enactment of this Act, and biennially thereafter, the Governmental
Accountability Office shall submit to the National Policy Board and the
appropriate committees of Congress a report concerning the activities of the
National Policy Board and the Regional Boards under this Act.
(b)Not later than 6 months after the date of
enactment of this Act, and annually thereafter, the National Policy Board shall
contract with the Institute of Medicine to review and make recommendations
concerning the standard benefit package developed under section 4 and submit
such recommendations to the National Policy Board and the appropriate
committees of Congress.
11.Reporting insurance statusThe Secretary of the Treasury shall develop
a process to enable individuals to report the health insurance status of each
member in their household on their Federal income tax return.