II 112th CONGRESS 1st Session S. 1117 IN THE SENATE OF THE UNITED STATES May 26, 2011 Mr. Rockefeller (for himself, Ms. Stabenow, and Mr. Brown of Ohio) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend section 35 of the Internal Revenue Code of 1986 to improve the health coverage tax credit, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the TAA Health Coverage Improvement Act of 2011. (b)

Table of contents

The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Improvement of the affordability of the credit. Sec. 3. 100 percent credit and payment for monthly premiums paid prior to certification of eligibility for the credit. Sec. 4. Eligibility for certain pension plan recipients; presumptive eligibility. Sec. 5. Clarification of 3-month creditable coverage requirement. Sec. 6. TAA pre-certification period and PBGC recipient rule for purposes of determining whether there is a 63-day lapse in creditable coverage. Sec. 7. Continued qualification of family members after certain events. Sec. 8. Permanent extension of COBRA benefits for certain TAA-eligible individuals and PBGC recipients. Sec. 9. TAA recipients not enrolled in training programs eligible for credit. Sec. 10. Offering of Federal group coverage. Sec. 11. Additional requirements for individual health insurance costs. Sec. 12. Alignment of COBRA coverage with TAA period for TAA-eligible individuals. Sec. 13. Notice requirements. Sec. 14. Extension of national emergency grants.

2.

Improvement of the affordability of the credit

(a)

Improvement of affordability

(1)

In general

Section 35(a) of the Internal Revenue Code of 1986 (relating to credit for health insurance costs of eligible individuals) is amended by striking 65 percent (80 percent in the case of eligible coverage months beginning before February 13, 2011) and inserting 95 percent. (2)

Conforming amendment

Section 7527(b) of such Code (relating to advance payment of credit for health insurance costs of eligible individuals) is amended by striking 65 percent (80 percent in the case of eligible coverage months beginning before February 13, 2011) and inserting 95 percent. (b)

Effective date

The amendments made by this section shall apply to eligible coverage months (as defined in section 35(b) of the Internal Revenue Code of 1986) beginning after February 13, 2011.

3.

100 percent credit and payment for monthly premiums paid prior to certification of eligibility for the credit

(a)

In general

Subsection (a) of section 35 of the Internal Revenue Code of 1986, as amended by section 2(a)(1), is amended— (1)by striking the subsection heading and all that follows through “In case” and inserting “Amount of Credit.— (1)

In general

In case , and (2)by adding at the end the following new paragraph: (2)

100 percent credit for months prior to issuance of eligibility certificate

The amount allowed as a credit against the tax imposed by subtitle A shall be equal to 100 percent in the case of the taxpayer’s first eligible coverage months occurring prior to the issuance of a qualified health insurance costs credit eligibility certificate. . (b)

Payment for premiums due prior to certification of eligibility for the credit

Section 7527 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (f)

Payment for premiums due prior to issuance of certificate

The program established under subsection (a) shall provide— (1)that the Secretary shall make payments on behalf of a certified individual of an amount equal to 100 percent of the premiums for coverage of the taxpayer and qualifying family members under qualified health insurance for eligible coverage months (as defined in section 35(b)) occurring prior to the issuance of a qualified health insurance costs credit eligibility certificate; and (2)that any payments made under paragraph (1) shall not be included in the gross income of the taxpayer on whose behalf such payments were made. . (c)

Effective date

The amendments made by this section shall apply to months beginning after the date of the enactment of this Act in taxable years ending after such date.

4.

Eligibility for certain pension plan recipients; presumptive eligibility

(a)

Eligibility for certain pension plan recipients

Subsection (c) of section 35 of the Internal Revenue Code of 1986 is amended— (1)in paragraph (1)— (A)by striking and at the end of subparagraph (B), (B)by striking the period at the end of subparagraph (C) and inserting , and, and (C)by adding at the end the following new subparagraph: (D)an eligible multiemployer pension participant. , and (2)by adding at the end the following new paragraph: (5)

Eligible multiemployer pension recipient

The term eligible multiemployer pension recipient means, with respect to any month, any individual— (A)who has attained age 55 as of the first day of such month, (B)who is receiving a benefit from a multiemployer plan (as defined in section 3(37)(A) of the Employee Retirement Income Security Act of 1974), and (C)whose former employer has withdrawn from such multiemployer plan pursuant to section 4203(a) of such Act. . (b)

Presumptive eligibility for petitioners for trade adjustment assistance

Subsection (c) of section 35 of the Internal Revenue Code of 1986, as amended by subsection (a), is amended by adding at the end the following new paragraph: (6)

Presumptive status as a TAA recipient

The term eligible individual shall include any individual who is covered by a petition filed with the Secretary of Labor under section 221 of the Trade Act of 1974. This paragraph shall apply to any individual only with respect to months which— (A)end after the date that such petition is so filed, and (B)begin before the earlier of— (i)the 90th day after the date of filing of such petition, or (ii)the date on which the Secretary of Labor makes a final determination with respect to such petition. . (c)

Conforming amendments

(1)Paragraph (1) of section 7527(d) of the Internal Revenue Code of 1986 is amended by striking or an eligible alternative TAA recipient (as defined in section 35(c)(3)) and inserting , an eligible alternative TAA recipient (as defined in section 35(c)(3)), an eligible multiemployer pension recipient (as defined in section 35(c)(5), or an individual who is an eligible individual by reason of section 35(c)(6). (2)Section 173(f)(4) of the Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(4)) is amended— (A)in subparagraph (B), by striking and at the end; and (B)by inserting after subparagraph (C) the following new subparagraphs: (D)an eligible multiemployer pension recipient (as defined in section 35(c)(5) of the Internal Revenue Code of 1986), and (E)an individual who is an eligible individual by reason of section 35(c)(6) of the Internal Revenue Code of 1986, . (d)

Technical amendment clarifying eligibility of certain displaced workers receiving a benefit under a defined benefit pension plan

The first sentence of section 35(c)(2) of the Internal Revenue Code of 1986 is amended by inserting before the period the following: , and shall include any such individual who would be eligible to receive such an allowance but for the fact that the individual is receiving a benefit under a defined benefit plan (as defined in section 3(35) of the Employee Retirement Income Security Act of 1974).. (e)

Effective date

The amendments made by this section shall apply to months beginning after the date of the enactment of this Act in taxable years ending after such date.

5.

Clarification of 3-month creditable coverage requirement

(a)

In general

Clause (i) of section 35(e)(2)(B) of the Internal Revenue Code of 1986 is amended by inserting (prior to the employment separation necessary to attain the status of an eligible individual) after 9801(c)). (b)

Effective date

The amendment made by this section shall apply to months beginning after the date of the enactment of this Act in taxable years ending after such date.

6.

TAA pre-certification period and PBGC recipient rule for purposes of determining whether there is a 63-day lapse in creditable coverage

(a)

ERISA amendment

Section 701(c)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181(c)(2)) is amended by striking subparagraph (C) and by inserting the following new subparagraphs: (C)

TAA-eligible individuals

(i)

TAA pre-certification period rule

In the case of a TAA-eligible individual, the period beginning on the date the individual has a TAA-related loss of coverage and ending on the date that is 5 days after the postmark date of the notice by the Secretary (or by any person or entity designated by the Secretary) that the individual is eligible for a qualified health insurance costs credit eligibility certificate for purposes of section 7527 of the Internal Revenue Code of 1986 shall not be taken into account in determining the continuous period under subparagraph (A). (ii)

Definitions

The terms TAA-eligible individual, and TAA-related loss of coverage have the meanings given such terms in section 605(b)(4). (D)

PBGC recipients

In the case of an individual who has a loss of creditable coverage and who has a nonforfeitable right to a benefit any portion of which is to be paid by the Pension Benefit Guaranty Corporation under title IV, the period beginning on the date of such loss of coverage and ending on the date such individual receives any such benefit paid by such Corporation shall not be taken into account in determining the continuous period under subparagraph (A). . (b)

PHSA amendment

(1)

In general

Section 2701(c)(2) of the Public Health Service Act (42 U.S.C. 300gg(c)(2)) is amended by striking subparagraph (C) and by inserting the following new subparagraphs: (C)

TAA-eligible individuals

(i)

TAA pre-certification period rule

In the case of a TAA-eligible individual, the period beginning on the date the individual has a TAA-related loss of coverage and ending on the date that is 5 days after the postmark date of the notice by the Secretary (or by any person or entity designated by the Secretary) that the individual is eligible for a qualified health insurance costs credit eligibility certificate for purposes of section 7527 of the Internal Revenue Code of 1986 shall not be taken into account in determining the continuous period under subparagraph (A). (ii)

Definitions

The terms TAA-eligible individual, and TAA-related loss of coverage have the meanings given such terms in section 2205(b)(4). (D)

PBGC recipients

In the case of an individual who has a loss of creditable coverage and who has a nonforfeitable right to a benefit any portion of which is to be paid by the Pension Benefit Guaranty Corporation under title IV of the Employee Retirement Income Security Act of 1974, the period beginning on the date of such loss of coverage and ending on the date such individual receives any such benefit paid by such Corporation shall not be taken into account in determining the continuous period under subparagraph (A). . (2)

Technical amendment

Effective on January 1, 2014, section 2704(c)(2) of the Public Health Service Act (42 U.S.C. 300gg–3(c)(2)) is amended by striking subparagraph (C) and by inserting the following new subparagraphs: (C)

TAA-eligible individuals

(i)

TAA pre-certification period rule

In the case of a TAA-eligible individual, the period beginning on the date the individual has a TAA-related loss of coverage and ending on the date that is 5 days after the postmark date of the notice by the Secretary (or by any person or entity designated by the Secretary) that the individual is eligible for a qualified health insurance costs credit eligibility certificate for purposes of section 7527 of the Internal Revenue Code of 1986 shall not be taken into account in determining the continuous period under subparagraph (A). (ii)

Definitions

The terms TAA-eligible individual, and TAA-related loss of coverage have the meanings given such terms in section 2205(b)(4). (D)

PBGC recipients

In the case of an individual who has a loss of creditable coverage and who has a nonforfeitable right to a benefit any portion of which is to be paid by the Pension Benefit Guaranty Corporation under title IV of the Employee Retirement Income Security Act of 1974, the period beginning on the date of such loss of coverage and ending on the date such individual receives any such benefit paid by such Corporation shall not be taken into account in determining the continuous period under subparagraph (A). . (c)

IRC amendment

Section 9801(c)(2) of the Internal Revenue Code of 1986 is amended by striking subparagraph (D) and by inserting the following new subparagraphs: (D)

TAA-eligible individuals

(i)

TAA pre-certification period rule

In the case of a TAA-eligible individual, the period beginning on the date the individual has a TAA-related loss of coverage and ending on the date which is 5 days after the postmark date of the notice by the Secretary (or by any person or entity designated by the Secretary) that the individual is eligible for a qualified health insurance costs credit eligibility certificate for purposes of section 7527 shall not be taken into account in determining the continuous period under subparagraph (A). (ii)

Definitions

The terms TAA-eligible individual, and TAA-related loss of coverage have the meanings given such terms in section 4980B(f)(5)(C)(iv). (E)

PBGC recipients

In the case of an individual who has a loss of creditable coverage and who has a nonforfeitable right to a benefit any portion of which is to be paid by the Pension Benefit Guaranty Corporation under title IV, the period beginning on the date of such loss of coverage and ending on the date such individual receives any such benefit paid by such Corporation shall not be taken into account in determining the continuous period under subparagraph (A). . (d)

Effective date

The amendments made by this section shall apply to months beginning after the date of the enactment of this Act in taxable years ending after such date.

7.

Continued qualification of family members after certain events

(a)

Technical amendment related to the American Recovery and Reinvestment Act of 2009

Subparagraph (A) of section 3001(a)(14) of the American Recovery and Reinvestment Act of 2009 is amended by striking is amended by redesignating paragraph (9) as paragraph (10) and inserting , as amended by this Act, is amended by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively,. (b)

Amendment to Internal Revenue Code of 1986

Paragraph (10) of section 35(g) of the Internal Revenue Code of 1986 is amended to read as follows: (10)

Continued qualification of family members after certain events

(A)

Eligible individual becomes medicare eligible

In the case of a month which would be an eligible coverage month with respect to an eligible individual but for subsection (f)(2)(A), such month shall be treated as an eligible coverage month with respect to any qualifying family member of such eligible individual (but not with respect to such eligible individual). (B)

Divorce

In the case of a month which would be an eligible coverage month with respect to a former spouse of a taxpayer but for the finalization of a divorce between the spouse and the taxpayer that occurs during the period in which the taxpayer is an eligible individual, such month shall be treated as an eligible coverage month with respect to such former spouse. (C)

Death

In the case of a month which would be an eligible coverage month with respect to an eligible individual but for the death of such individual, such month shall be treated as an eligible coverage month with respect to any qualifying family member of such eligible individual. . (c)

Conforming amendment

Paragraph (8) of section 173(f) of the Workforce Investment Act of 1998 (29 U.S.C. 2918(f)) is amended to read as follows: (8)

Continued qualification of family members after certain events

(A)

Eligible individual becomes medicare eligible

In the case of a month which would be an eligible coverage month with respect to an eligible individual but for paragraph (7)(B)(i), such month shall be treated as an eligible coverage month with respect to any qualifying family member of such eligible individual (but not with respect to such eligible individual). (B)

Divorce

In the case of a month which would be an eligible coverage month with respect to a former spouse of a taxpayer but for the finalization of a divorce between the spouse and the taxpayer that occurs during the period in which the taxpayer is an eligible individual, such month shall be treated as an eligible coverage month with respect to such former spouse. (C)

Death

In the case of a month which would be an eligible coverage month with respect to an eligible individual but for the death of such individual, such month shall be treated as an eligible coverage month with respect to any qualifying family member of such eligible individual. . (d)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to eligible coverage months (as defined in section 35(b) of the Internal Revenue Code of 1986) beginning after February 13, 2011. (2)

Technical amendment

The amendment made by subsection (a) shall apply as if included in section 3001(a)(14)(A) of the American Recovery and Reinvestment Act of 2009.

8.

Permanent extension of COBRA benefits for certain TAA-eligible individuals and PBGC recipients

(a)

ERISA amendments

Clauses (v) and (vi) of section 602(2)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)(A)) are each amended by striking the last sentence. (b)

IRC amendments

Subclauses (V) and (VI) of section 4980B(f)(2)(B)(i) of the Internal Revenue Code of 1986 are each amended by striking the last sentence. (c)

PHSA amendments

Clause (iv) of section 2202(2)(A) of the Public Health Service Act (42 U.S.C. 300bb–2(2)(A)) is amended by striking the last sentence. (d)

Effective date

The amendments made by this section shall apply to periods of coverage which would (without regard to the amendments made by this section) end on or after the date of the enactment of this Act.

9.

TAA recipients not enrolled in training programs eligible for credit

Subparagraph (B) of section 35(c)(2) of the Internal Revenue Code of 1986 is amended by inserting and any eligible coverage month beginning after the date of the enactment of the TAA Health Coverage Improvement Act of 2011, after February 13, 2011,.

10.

Offering of Federal group coverage

(a)

Provision of group coverage

(1)

In general

The Director of the Office of Personnel Management jointly with the Secretary of the Treasury shall establish a program under which eligible individuals (as defined in section 35(c) of the Internal Revenue Code of 1986) are offered enrollment under health benefit plans that are made available under FEHBP. (2)

Terms and conditions

The terms and conditions of health benefits plans offered under paragraph (1) shall be the same as the terms and coverage offered under FEHBP, except that the percentage of the premium charged to eligible individuals (as so defined) for such health benefit plans shall be equal to 5 percent. (3)

Study

The Director of the Office of Personnel Management jointly with the Secretary of the Treasury shall conduct a study of the impact of the offering of health benefit plans under this subsection on the terms and conditions, including premiums, for health benefit plans offered under FEHBP and shall submit to Congress, not later than 2 years after the date of the enactment of this Act, a report on such study. Such report may contain such recommendations regarding the establishment of separate risk pools for individuals covered under FEHBP and eligible individuals covered under health benefit plans offered under paragraph (1) as may be appropriate to protect the interests of individuals covered under FEHBP and alleviate any adverse impact on FEHBP that may result from the offering of such health benefit plans. (4)

FEHBP defined

In this section, the term FEHBP means the Federal Employees Health Benefits Program offered under chapter 89 of title 5, United States Code. (b)

Conforming amendment

Paragraph (1) of section 35(e) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (L)Coverage under a health benefits plan offered under section 8(a)(1) of the TAA Health Coverage Improvement Act of 2011. .

11.

Additional requirements for individual health insurance costs

(a)

In general

Subparagraph (A) of section 35(e)(2) of such Code is amended by striking subparagraphs (B) through (H) of paragraph (1) and inserting paragraph (1) (other than subparagraphs (A), (I), and (L) thereof). (b)

Rating system requirement

Subparagraph (J) of section 35(e)(1) of such Code is amended by adding at the end the following: For purposes of this subparagraph and clauses (ii), (iii), and (iv) of subparagraph (F), such term does not include any insurance unless the premiums for such insurance are restricted based on a community rating system (determined other than on the basis of age).. (c)

Clarification of congressional intent To limit use of individual health insurance coverage option

Section 35(e)(1)(J) is amended by inserting , but only after under individual health insurance in the matter preceding clause (i).

12.

Alignment of COBRA coverage with TAA period for TAA-eligible individuals

(a)

ERISA

Section 605(b) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1165(b)) is amended— (1)in the subsection heading, by inserting and Coverage after Election; and (2)in paragraph (2)— (A)in the paragraph heading, by inserting and period after Commencement; (B)by striking and shall and inserting , shall; and (C)by inserting , and in no event shall the maximum period required under section 602(2)(A) be less than the period during which the individual is a TAA-eligible individual before the period at the end. (b)

Internal Revenue Code of 1986

Section 4980B(f)(5)(C) of the Internal Revenue Code of 1986 is amended— (1)in the subparagraph heading, by inserting and coverage after election; and (2)in clause (ii)— (A)in the clause heading, by inserting and period after Commencement; (B)by striking and shall and inserting , shall; and (C)by inserting , and in no event shall the maximum period required under paragraph (2)(B)(i) be less than the period during which the individual is a TAA-eligible individual before the period at the end. (c)

Public Health Service Act

Section 2205(b) of the Public Health Service Act (42 U.S.C. 300bb–5(b)) is amended— (1)in the subsection heading, by inserting and Coverage after Election; and (2)in paragraph (2)— (A)in the paragraph heading, by inserting and period after Commencement; (B)by striking and shall and inserting , shall; and (C)by inserting , and in no event shall the maximum period required under section 2202(2)(A) be less than the period during which the individual is a TAA-eligible individual before the period at the end.

13.

Notice requirements

(a)

In general

Paragraph (2) of section 7527(d) of the Internal Revenue Code of 1986 is amended by striking In the case of any statement described in paragraph (1) which is issued before February 13, 2011, such statement and inserting A statement described in paragraph (1). (b)

Effective date

The amendment made by this section shall apply to months beginning after the date of the enactment of this Act in taxable years ending after such date.

14.

Extension of national emergency grants

(a)

In general

Section 173(f)(1) of the Workforce Investment Act of 1998 (29 U.S.C. 2918(f)) is amended— (1)in subparagraph (A), by striking may be used and inserting shall be used, and (2)in subparagraph (B)(ii), by striking subclause (VI) and inserting the following: (VI)any other expenses determined appropriate by the Secretary, including start-up costs and ongoing administrative expenses, in order for the State to treat the coverage described in subparagraph (C), (D), (E), or (F)(i) of section 35(e)(1) of the Internal Revenue Code of 1986, or, only if the coverage is under a group health plan, the coverage described in subparagraph (G), (H), or (I) or clause (ii), (iii), or (iv) of subparagraph (F) of such section, as qualified health insurance under that section. . (b)

Funding

Section 174(c)(1)(A) of the Workforce Investment Act of 1998 (29 U.S.C. 2919(c)(1)) is amended— (1)by striking and at the end of clause (i), and (2)by adding at the end the following new clause: (iii)$300,000,000 for the period of fiscal years 2012 through 2014; and . (c)

Report regarding failure To comply with requirements for expedited approval procedures

Section 173(f) of the Workforce Investment Act of 1998 (29 U.S.C. 2918(f)) is amended by adding at the end the following new paragraph: (9)

Report for failure to comply with requirements for expedited approval procedures

If the Secretary fails to make the notification required under clause (i) of paragraph (3)(A) within the 15-day period required under that clause, or fails to provide the technical assistance required under clause (ii) of such paragraph within a timely manner so that a State or entity may submit an approved application within 2 months after the date on which the State or entity’s previous application was disapproved, the Secretary shall submit a report to the appropriate committees of Congress explaining such failure. . (d)

Technical amendment

Effective as if included in the enactment of the Trade Act of 2002 (Public Law 107–210; 116 Stat. 933), subsection (f) of section 203 of that Act is repealed.