[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1628 Engrossed in House (EH)]
<DOC>
115th CONGRESS
1st Session
H. R. 1628
_______________________________________________________________________
AN ACT
To provide for reconciliation pursuant to title II of the concurrent
resolution on the budget for fiscal year 2017.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Health Care Act of 2017''.
SEC. 2. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I--ENERGY AND COMMERCE
Subtitle A--Patient Access to Public Health Programs
Sec. 101. The Prevention and Public Health Fund.
Sec. 102. Community health center program.
Sec. 103. Federal payments to States.
Subtitle B--Medicaid Program Enhancement
Sec. 111. Repeal of Medicaid provisions.
Sec. 112. Repeal of Medicaid expansion.
Sec. 113. Elimination of DSH cuts.
Sec. 114. Reducing State Medicaid costs.
Sec. 115. Safety net funding for non-expansion States.
Sec. 116. Providing incentives for increased frequency of eligibility
redeterminations.
Sec. 117. Permitting States to apply a work requirement for
nondisabled, nonelderly, nonpregnant adults
under Medicaid.
Subtitle C--Per Capita Allotment for Medical Assistance
Sec. 121. Per capita allotment for medical assistance.
Subtitle D--Patient Relief and Health Insurance Market Stability
Sec. 131. Repeal of cost-sharing subsidy.
Sec. 132. Patient and State Stability Fund.
Sec. 133. Continuous health insurance coverage incentive.
Sec. 134. Increasing coverage options.
Sec. 135. Change in permissible age variation in health insurance
premium rates.
Subtitle E--Implementation Funding
Sec. 141. American Health Care Implementation Fund.
TITLE II--COMMITTEE ON WAYS AND MEANS
Subtitle A--Repeal and Replace of Health-Related Tax Policy
Sec. 201. Recapture excess advance payments of premium tax credits.
Sec. 202. Additional modifications to premium tax credit.
Sec. 203. Small business tax credit.
Sec. 204. Individual mandate.
Sec. 205. Employer mandate.
Sec. 206. Repeal of the tax on employee health insurance premiums and
health plan benefits.
Sec. 207. Repeal of tax on over-the-counter medications.
Sec. 208. Repeal of increase of tax on health savings accounts.
Sec. 209. Repeal of limitations on contributions to flexible spending
accounts.
Sec. 210. Repeal of medical device excise tax.
Sec. 211. Repeal of elimination of deduction for expenses allocable to
medicare part D subsidy.
Sec. 212. Reduction of income threshold for determining medical care
deduction.
Sec. 213. Repeal of Medicare tax increase.
Sec. 214. Refundable tax credit for health insurance coverage.
Sec. 215. Maximum contribution limit to health savings account
increased to amount of deductible and out-
of-pocket limitation.
Sec. 216. Allow both spouses to make catch-up contributions to the same
health savings account.
Sec. 217. Special rule for certain medical expenses incurred before
establishment of health savings account.
Subtitle B--Repeal of Certain Consumer Taxes
Sec. 221. Repeal of tax on prescription medications.
Sec. 222. Repeal of health insurance tax.
Subtitle C--Repeal of Tanning Tax
Sec. 231. Repeal of tanning tax.
Subtitle D--Remuneration From Certain Insurers
Sec. 241. Remuneration from certain insurers.
Subtitle E--Repeal of Net Investment Income Tax
Sec. 251. Repeal of net investment income tax.
TITLE I--ENERGY AND COMMERCE
Subtitle A--Patient Access to Public Health Programs
SEC. 101. THE PREVENTION AND PUBLIC HEALTH FUND.
(a) In General.--Subsection (b) of section 4002 of the Patient
Protection and Affordable Care Act (42 U.S.C. 300u-11), as amended by
section 5009 of the 21st Century Cures Act, is amended--
(1) in paragraph (2), by adding ``and'' at the end;
(2) in paragraph (3)--
(A) by striking ``each of fiscal years 2018 and
2019'' and inserting ``fiscal year 2018''; and
(B) by striking the semicolon at the end and
inserting a period; and
(3) by striking paragraphs (4) through (8).
(b) Rescission of Unobligated Funds.--Of the funds made available
by such section 4002, the unobligated balance at the end of fiscal year
2018 is rescinded.
SEC. 102. COMMUNITY HEALTH CENTER PROGRAM.
Effective as if included in the enactment of the Medicare Access
and CHIP Reauthorization Act of 2015 (Public Law 114-10, 129 Stat. 87),
paragraph (1) of section 221(a) of such Act is amended by inserting ``,
and an additional $422,000,000 for fiscal year 2017'' after ``2017''.
SEC. 103. FEDERAL PAYMENTS TO STATES.
(a) In General.--Notwithstanding section 504(a), 1902(a)(23),
1903(a), 2002, 2005(a)(4), 2102(a)(7), or 2105(a)(1) of the Social
Security Act (42 U.S.C. 704(a), 1396a(a)(23), 1396b(a), 1397a,
1397d(a)(4), 1397bb(a)(7), 1397ee(a)(1)), or the terms of any Medicaid
waiver in effect on the date of enactment of this Act that is approved
under section 1115 or 1915 of the Social Security Act (42 U.S.C. 1315,
1396n), for the 1-year period beginning on the date of the enactment of
this Act, no Federal funds provided from a program referred to in this
subsection that is considered direct spending for any year may be made
available to a State for payments to a prohibited entity, whether made
directly to the prohibited entity or through a managed care
organization under contract with the State.
(b) Definitions.--In this section:
(1) Prohibited entity.--The term ``prohibited entity''
means an entity, including its affiliates, subsidiaries,
successors, and clinics--
(A) that, as of the date of enactment of this Act--
(i) is an organization described in section
501(c)(3) of the Internal Revenue Code of 1986
and exempt from tax under section 501(a) of
such Code;
(ii) is an essential community provider
described in section 156.235 of title 45, Code
of Federal Regulations (as in effect on the
date of enactment of this Act), that is
primarily engaged in family planning services,
reproductive health, and related medical care;
and
(iii) provides for abortions, other than an
abortion--
(I) if the pregnancy is the result
of an act of rape or incest; or
(II) in the case where a woman
suffers from a physical disorder,
physical injury, or physical illness
that would, as certified by a
physician, place the woman in danger of
death unless an abortion is performed,
including a life-endangering physical
condition caused by or arising from the
pregnancy itself; and
(B) for which the total amount of Federal and State
expenditures under the Medicaid program under title XIX
of the Social Security Act in fiscal year 2014 made
directly to the entity and to any affiliates,
subsidiaries, successors, or clinics of the entity, or
made to the entity and to any affiliates, subsidiaries,
successors, or clinics of the entity as part of a
nationwide health care provider network, exceeded
$350,000,000.
(2) Direct spending.--The term ``direct spending'' has the
meaning given that term under section 250(c) of the Balanced
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C.
900(c)).
Subtitle B--Medicaid Program Enhancement
SEC. 111. REPEAL OF MEDICAID PROVISIONS.
The Social Security Act is amended--
(1) in section 1902 (42 U.S.C. 1396a)--
(A) in subsection (a)(47)(B), by inserting ``and
provided that any such election shall cease to be
effective on January 1, 2020, and no such election
shall be made after that date'' before the semicolon at
the end; and
(B) in subsection (l)(2)(C), by inserting ``and
ending December 31, 2019,'' after ``January 1, 2014,'';
(2) in section 1915(k)(2) (42 U.S.C. 1396n(k)(2)), by
striking ``during the period described in paragraph (1)'' and
inserting ``on or after the date referred to in paragraph (1)
and before January 1, 2020''; and
(3) in section 1920(e) (42 U.S.C. 1396r-1(e)), by striking
``under clause (i)(VIII), clause (i)(IX), or clause (ii)(XX) of
subsection (a)(10)(A)'' and inserting ``under clause (i)(VIII)
or clause (ii)(XX) of section 1902(a)(10)(A) before January 1,
2020, section 1902(a)(10)(A)(i)(IX),''.
SEC. 112. REPEAL OF MEDICAID EXPANSION.
(a) In General.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.) is amended--
(1) in section 1902 (42 U.S.C. 1396a)--
(A) in subsection (a)(10)(A)--
(i) in clause (i)(VIII), by inserting ``and
ending December 31, 2019,'' after ``2014,'';
(ii) in clause (ii)(XX), by inserting ``and
ending December 31, 2017,'' after ``2014,'';
and
(iii) in clause (ii), by adding at the end
the following new subclause:
``(XXIII) beginning January 1, 2020--
``(aa) who are expansion enrollees
(as defined in subsection (nn)(1)); or
``(bb) who are grandfathered
expansion enrollees (as defined in
subsection (nn)(2));''; and
(B) by adding at the end the following new
subsection:
``(nn) Expansion Enrollees.--In this title:
``(1) In general.--The term `expansion enrollee' means an
individual--
``(A) who is under 65 years of age;
``(B) who is not pregnant;
``(C) who is not entitled to, or enrolled for,
benefits under part A of title XVIII, or enrolled for
benefits under part B of title XVIII;
``(D) who is not described in any of subclauses (I)
through (VII) of subsection (a)(10)(A)(i); and
``(E) whose income (as determined under subsection
(e)(14)) does not exceed 133 percent of the poverty
line (as defined in section 2110(c)(5)) applicable to a
family of the size involved.
``(2) Grandfathered expansion enrollees.--The term
`grandfathered expansion enrollee' means an expansion enrollee
who--
``(A) was enrolled under the State plan under this
title (or under a waiver of such plan) as of December
31, 2019; and
``(B) does not have a break in eligibility for
medical assistance under such State plan (or waiver)
for more than one month after such date.
``(3) Application of related provisions.--Any reference in
subsection (a)(10)(G), (k), or (gg) of this section or in
section 1903, 1905(a), 1920(e), or 1937(a)(1)(B) to individuals
described in subclause (VIII) of subsection (a)(10)(A)(i) shall
be deemed to include a reference to expansion enrollees
(including grandfathered expansion enrollees).''; and
(2) in section 1905 (42 U.S.C. 1396d)--
(A) in subsection (y)(1), in the matter preceding
subparagraph (A)--
(i) by inserting ``and that has elected to
cover newly eligible individuals before March
1, 2017'' after ``that is one of the 50 States
or the District of Columbia''; and
(ii) by inserting after ``subclause (VIII)
of section 1902(a)(10)(A)(i)'' the following:
``who, for periods after December 31, 2019, are
grandfathered expansion enrollees (as defined
in section 1902(nn)(2))''; and
(B) in subsection (z)(2)--
(i) in subparagraph (A), by inserting after
``section 1937'' the following: ``and, for
periods after December 31, 2019, who are
grandfathered expansion enrollees (as defined
in section 1902(nn)(2))''; and
(ii) in subparagraph (B)(ii)--
(I) in subclause (III), by adding
``and'' at the end; and
(II) by striking subclauses (IV),
(V), and (VI) and inserting the
following new subclause:
``(IV) 2017 and each subsequent year is 80
percent.''.
(b) Sunset of Essential Health Benefits Requirement.--Section
1937(b)(5) of the Social Security Act (42 U.S.C. 1396u-7(b)(5)) is
amended by adding at the end the following: ``This paragraph shall not
apply after December 31, 2019.''.
SEC. 113. ELIMINATION OF DSH CUTS.
Section 1923(f) of the Social Security Act (42 U.S.C. 1396r-4(f))
is amended--
(1) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by striking ``2025'' and
inserting ``2019''; and
(ii) in clause (ii)--
(I) in subclause (I), by adding
``and'' at the end;
(II) in subclause (II), by striking
the semicolon at the end and inserting
a period; and
(III) by striking subclauses (III)
through (VIII); and
(B) by adding at the end the following new
subparagraph:
``(C) Exemption from reduction for non-expansion
states.--
``(i) In general.--In the case of a State
that is a non-expansion State for a fiscal
year, subparagraph (A)(i) shall not apply to
the DSH allotment for such State and fiscal
year.
``(ii) No change in reduction for expansion
states.--In the case of a State that is an
expansion State for a fiscal year, the DSH
allotment for such State and fiscal year shall
be determined as if clause (i) did not apply.
``(iii) Non-expansion and expansion state
defined.--
``(I) The term `expansion State'
means with respect to a fiscal year, a
State that, as of July 1 of the
preceding fiscal year, provides for
eligibility under clause (i)(VIII) or
(ii)(XX) of section 1902(a)(10)(A) for
medical assistance under this title (or
a waiver of the State plan approved
under section 1115).
``(II) The term `non-expansion
State' means, with respect to a fiscal
year, a State that is not an expansion
State.''; and
(2) in paragraph (8), by striking ``fiscal year 2025'' and
inserting ``fiscal year 2019''.
SEC. 114. REDUCING STATE MEDICAID COSTS.
(a) Letting States Disenroll High Dollar Lottery Winners.--
(1) In general.--Section 1902 of the Social Security Act
(42 U.S.C. 1396a) is amended--
(A) in subsection (a)(17), by striking ``(e)(14),
(e)(14)'' and inserting ``(e)(14), (e)(15)''; and
(B) in subsection (e)--
(i) in paragraph (14) (relating to modified
adjusted gross income), by adding at the end
the following new subparagraph:
``(J) Treatment of certain lottery winnings and
income received as a lump sum.--
``(i) In general.--In the case of an
individual who is the recipient of qualified
lottery winnings (pursuant to lotteries
occurring on or after January 1, 2020) or
qualified lump sum income (received on or after
such date) and whose eligibility for medical
assistance is determined based on the
application of modified adjusted gross income
under subparagraph (A), a State shall, in
determining such eligibility, include such
winnings or income (as applicable) as income
received--
``(I) in the month in which such
winnings or income (as applicable) is
received if the amount of such winnings
or income is less than $80,000;
``(II) over a period of 2 months if
the amount of such winnings or income
(as applicable) is greater than or
equal to $80,000 but less than $90,000;
``(III) over a period of 3 months
if the amount of such winnings or
income (as applicable) is greater than
or equal to $90,000 but less than
$100,000; and
``(IV) over a period of 3 months
plus 1 additional month for each
increment of $10,000 of such winnings
or income (as applicable) received, not
to exceed a period of 120 months (for
winnings or income of $1,260,000 or
more), if the amount of such winnings
or income is greater than or equal to
$100,000.
``(ii) Counting in equal installments.--For
purposes of subclauses (II), (III), and (IV) of
clause (i), winnings or income to which such
subclause applies shall be counted in equal
monthly installments over the period of months
specified under such subclause.
``(iii) Hardship exemption.--An individual
whose income, by application of clause (i),
exceeds the applicable eligibility threshold
established by the State, may continue to be
eligible for medical assistance to the extent
that the State determines, under procedures
established by the State under the State plan
(or in the case of a waiver of the plan under
section 1115, incorporated in such waiver), or
as otherwise established by such State in
accordance with such standards as may be
specified by the Secretary, that the denial of
eligibility of the individual would cause an
undue medical or financial hardship as
determined on the basis of criteria established
by the Secretary.
``(iv) Notifications and assistance
required in case of loss of eligibility.--A
State shall, with respect to an individual who
loses eligibility for medical assistance under
the State plan (or a waiver of such plan) by
reason of clause (i), before the date on which
the individual loses such eligibility, inform
the individual of the date on which the
individual would no longer be considered
ineligible by reason of such clause to receive
medical assistance under the State plan or
under any waiver of such plan and the date on
which the individual would be eligible to
reapply to receive such medical assistance.
``(v) Qualified lottery winnings defined.--
In this subparagraph, the term `qualified
lottery winnings' means winnings from a
sweepstakes, lottery, or pool described in
paragraph (3) of section 4402 of the Internal
Revenue Code of 1986 or a lottery operated by a
multistate or multijurisdictional lottery
association, including amounts awarded as a
lump sum payment.
``(vi) Qualified lump sum income defined.--
In this subparagraph, the term `qualified lump
sum income' means income that is received as a
lump sum from one of the following sources:
``(I) Monetary winnings from
gambling (as defined by the Secretary
and including monetary winnings from
gambling activities described in
section 1955(b)(4) of title 18, United
States Code).
``(II) Income received as liquid
assets from the estate (as defined in
section 1917(b)(4)) of a deceased
individual.''; and
(ii) by striking ``(14) Exclusion'' and
inserting ``(15) Exclusion''.
(2) Rules of construction.--
(A) Interception of lottery winnings allowed.--
Nothing in the amendment made by paragraph (1)(B)(i)
shall be construed as preventing a State from
intercepting the State lottery winnings awarded to an
individual in the State to recover amounts paid by the
State under the State Medicaid plan under title XIX of
the Social Security Act for medical assistance
furnished to the individual.
(B) Applicability limited to eligibility of
recipient of lottery winnings or lump sum income.--
Nothing in the amendment made by paragraph (1)(B)(i)
shall be construed, with respect to a determination of
household income for purposes of a determination of
eligibility for medical assistance under the State plan
under title XIX of the Social Security Act (42 U.S.C.
1396 et seq.) (or a waiver of such plan) made by
applying modified adjusted gross income under
subparagraph (A) of section 1902(e)(14) of such Act (42
U.S.C. 1396a(e)(14)), as limiting the eligibility for
such medical assistance of any individual that is a
member of the household other than the individual (or
the individual's spouse) who received qualified lottery
winnings or qualified lump-sum income (as defined in
subparagraph (J) of such section 1902(e)(14), as added
by paragraph (1)(B)(i) of this subsection).
(b) Repeal of Retroactive Eligibility.--
(1) In general.--
(A) State plan requirements.--Section 1902(a)(34)
of the Social Security Act (42 U.S.C. 1396a(a)(34)) is
amended by striking ``in or after the third month
before the month in which he made application'' and
inserting ``in or after the month in which the
individual made application''.
(B) Definition of medical assistance.--Section
1905(a) of the Social Security Act (42 U.S.C. 1396d(a))
is amended by striking ``in or after the third month
before the month in which the recipient makes
application for assistance'' and inserting ``in or
after the month in which the recipient makes
application for assistance''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to medical assistance with respect to individuals
whose eligibility for such assistance is based on an
application for such assistance made (or deemed to be made) on
or after October 1, 2017.
(c) Updating Allowable Home Equity Limits in Medicaid.--
(1) In general.--Section 1917(f)(1) of the Social Security
Act (42 U.S.C. 1396p(f)(1)) is amended--
(A) in subparagraph (A), by striking
``subparagraphs (B) and (C)'' and inserting
``subparagraph (B)'';
(B) by striking subparagraph (B);
(C) by redesignating subparagraph (C) as
subparagraph (B); and
(D) in subparagraph (B), as so redesignated, by
striking ``dollar amounts specified in this paragraph''
and inserting ``dollar amount specified in subparagraph
(A)''.
(2) Effective date.--
(A) In general.--The amendments made by paragraph
(1) shall apply with respect to eligibility
determinations made after the date that is 180 days
after the date of the enactment of this section.
(B) Exception for state legislation.--In the case
of a State plan under title XIX of the Social Security
Act that the Secretary of Health and Human Services
determines requires State legislation in order for the
respective plan to meet any requirement imposed by
amendments made by this subsection, the respective plan
shall not be regarded as failing to comply with the
requirements of such title solely on the basis of its
failure to meet such an additional requirement before
the first day of the first calendar quarter beginning
after the close of the first regular session of the
State legislature that begins after the date of the
enactment of this Act. For purposes of the previous
sentence, in the case of a State that has a 2-year
legislative session, each year of the session shall be
considered to be a separate regular session of the
State legislature.
SEC. 115. SAFETY NET FUNDING FOR NON-EXPANSION STATES.
Title XIX of the Social Security Act is amended by inserting after
section 1923 (42 U.S.C. 1396r-4) the following new section:
``adjustment in payment for services of safety net providers in non-
expansion states
``Sec. 1923A. (a) In General.--Subject to the limitations of this
section, for each year during the period beginning with fiscal year
2018 and ending with fiscal year 2022, each State that is one of the 50
States or the District of Columbia and that, as of July 1 of the
preceding fiscal year, did not provide for eligibility under clause
(i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for medical assistance
under this title (or a waiver of the State plan approved under section
1115) (each such State or District referred to in this section for the
fiscal year as a `non-expansion State') may adjust the payment amounts
otherwise provided under the State plan under this title (or a waiver
of such plan) to health care providers that provide health care
services to individuals enrolled under this title (in this section
referred to as `eligible providers') so long as the payment adjustment
to such an eligible provider does not exceed the provider's costs in
furnishing health care services (as determined by the Secretary and net
of payments under this title, other than under this section, and by
uninsured patients) to individuals who either are eligible for medical
assistance under the State plan (or under a waiver of such plan) or
have no health insurance or health plan coverage for such services.
``(b) Increase in Applicable FMAP.--Notwithstanding section
1905(b), the Federal medical assistance percentage applicable with
respect to expenditures attributable to a payment adjustment under
subsection (a) for which payment is permitted under subsection (c)
shall be equal to--
``(1) 100 percent for calendar quarters in fiscal years
2018, 2019, 2020, and 2021; and
``(2) 95 percent for calendar quarters in fiscal year 2022.
``(c) Annual Allotment Limitation.--Payment under section 1903(a)
shall not be made to a State with respect to any payment adjustment
made under this section for all calendar quarters in a fiscal year in
excess of the $2,000,000,000 multiplied by the ratio of--
``(1) the population of the State with income below 138
percent of the poverty line in 2015 (as determined based the
table entitled `Health Insurance Coverage Status and Type by
Ratio of Income to Poverty Level in the Past 12 Months by Age'
for the universe of the civilian noninstitutionalized
population for whom poverty status is determined based on the
2015 American Community Survey 1-Year Estimates, as published
by the Bureau of the Census), to
``(2) the sum of the populations under paragraph (1) for
all non-expansion States.
``(d) Disqualification in Case of State Coverage Expansion.--If a
State is a non-expansion for a fiscal year and provides eligibility for
medical assistance described in subsection (a) during the fiscal year,
the State shall no longer be treated as a non-expansion State under
this section for any subsequent fiscal years.''.
SEC. 116. PROVIDING INCENTIVES FOR INCREASED FREQUENCY OF ELIGIBILITY
REDETERMINATIONS.
(a) In General.--Section 1902(e)(14) of the Social Security Act (42
U.S.C. 1396a(e)(14)) (relating to modified adjusted gross income), as
amended by section 114(a)(1), is further amended by adding at the end
the following:
``(K) Frequency of eligibility redeterminations.--
Beginning on October 1, 2017, and notwithstanding
subparagraph (H), in the case of an individual whose
eligibility for medical assistance under the State plan
under this title (or a waiver of such plan) is
determined based on the application of modified
adjusted gross income under subparagraph (A) and who is
so eligible on the basis of clause (i)(VIII) or clause
(ii)(XX) of subsection (a)(10)(A), a State shall
redetermine such individual's eligibility for such
medical assistance no less frequently than once every 6
months.''.
(b) Increased Administrative Matching Percentage.--For each
calendar quarter during the period beginning on October 1, 2017, and
ending on December 31, 2019, the Federal matching percentage otherwise
applicable under section 1903(a) of the Social Security Act (42 U.S.C.
1396b(a)) with respect to State expenditures during such quarter that
are attributable to meeting the requirement of section 1902(e)(14)
(relating to determinations of eligibility using modified adjusted
gross income) of such Act shall be increased by 5 percentage points
with respect to State expenditures attributable to activities carried
out by the State (and approved by the Secretary) to increase the
frequency of eligibility redeterminations required by subparagraph (K)
of such section (relating to eligibility redeterminations made on a 6-
month basis) (as added by subsection (a)).
SEC. 117. PERMITTING STATES TO APPLY A WORK REQUIREMENT FOR
NONDISABLED, NONELDERLY, NONPREGNANT ADULTS UNDER
MEDICAID.
(a) In General.--Section 1902 of the Social Security Act (42 U.S.C.
1396a), as previously amended, is further amended by adding at the end
the following new subsection:
``(oo) Work Requirement Option for Nondisabled, Nonelderly,
Nonpregnant Adults.--
``(1) In general.--Beginning October 1, 2017, subject to
paragraph (3), a State may elect to condition medical
assistance to a nondisabled, nonelderly, nonpregnant individual
under this title upon such an individual's satisfaction of a
work requirement (as defined in paragraph (2)).
``(2) Work requirement defined.--In this section, the term
`work requirement' means, with respect to an individual, the
individual's participation in work activities (as defined in
section 407(d)) for such period of time as determined by the
State, and as directed and administered by the State.
``(3) Required exceptions.--States administering a work
requirement under this subsection may not apply such
requirement to--
``(A) a woman during pregnancy through the end of
the month in which the 60-day period (beginning on the
last day of her pregnancy) ends;
``(B) an individual who is under 19 years of age;
``(C) an individual who is the only parent or
caretaker relative in the family of a child who has not
attained 6 years of age or who is the only parent or
caretaker of a child with disabilities; or
``(D) an individual who is married or a head of
household and has not attained 20 years of age and
who--
``(i) maintains satisfactory attendance at
secondary school or the equivalent; or
``(ii) participates in education directly
related to employment.''.
(b) Increase in Matching Rate for Implementation.--Section 1903 of
the Social Security Act (42 U.S.C. 1396b) is amended by adding at the
end the following:
``(aa) The Federal matching percentage otherwise applicable under
subsection (a) with respect to State administrative expenditures during
a calendar quarter for which the State receives payment under such
subsection shall, in addition to any other increase to such Federal
matching percentage, be increased for such calendar quarter by 5
percentage points with respect to State expenditures attributable to
activities carried out by the State (and approved by the Secretary) to
implement subsection (oo) of section 1902.''.
Subtitle C--Per Capita Allotment for Medical Assistance
SEC. 121. PER CAPITA ALLOTMENT FOR MEDICAL ASSISTANCE.
Title XIX of the Social Security Act is amended--
(1) in section 1903 (42 U.S.C. 1396b)--
(A) in subsection (a), in the matter before
paragraph (1), by inserting ``and section 1903A(a)''
after ``except as otherwise provided in this section'';
and
(B) in subsection (d)(1), by striking ``to which''
and inserting ``to which, subject to section
1903A(a),''; and
(2) by inserting after such section 1903 the following new
section:
``SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL ASSISTANCE.
``(a) Application of Per Capita Cap on Payments for Medical
Assistance Expenditures.--
``(1) In general.--If a State has excess aggregate medical
assistance expenditures (as defined in paragraph (2)) for a
fiscal year (beginning with fiscal year 2020), the amount of
payment to the State under section 1903(a)(1) for each quarter
in the following fiscal year shall be reduced by \1/4\ of the
excess aggregate medical assistance payments (as defined in
paragraph (3)) for that previous fiscal year. In this section,
the term `State' means only the 50 States and the District of
Columbia.
``(2) Excess aggregate medical assistance expenditures.--In
this subsection, the term `excess aggregate medical assistance
expenditures' means, for a State for a fiscal year, the amount
(if any) by which--
``(A) the amount of the adjusted total medical
assistance expenditures (as defined in subsection
(b)(1)) for the State and fiscal year; exceeds
``(B) the amount of the target total medical
assistance expenditures (as defined in subsection (c))
for the State and fiscal year.
``(3) Excess aggregate medical assistance payments.--In
this subsection, the term `excess aggregate medical assistance
payments' means, for a State for a fiscal year, the product
of--
``(A) the excess aggregate medical assistance
expenditures (as defined in paragraph (2)) for the
State for the fiscal year; and
``(B) the Federal average medical assistance
matching percentage (as defined in paragraph (4)) for
the State for the fiscal year.
``(4) Federal average medical assistance matching
percentage.--In this subsection, the term `Federal average
medical assistance matching percentage' means, for a State for
a fiscal year, the ratio (expressed as a percentage) of--
``(A) the amount of the Federal payments that would
be made to the State under section 1903(a)(1) for
medical assistance expenditures for calendar quarters
in the fiscal year if paragraph (1) did not apply; to
``(B) the amount of the medical assistance
expenditures for the State and fiscal year.
``(b) Adjusted Total Medical Assistance Expenditures.--Subject to
subsection (g), the following shall apply:
``(1) In general.--In this section, the term `adjusted
total medical assistance expenditures' means, for a State--
``(A) for fiscal year 2016, the product of--
``(i) the amount of the medical assistance
expenditures (as defined in paragraph (2)) for
the State and fiscal year, reduced by the
amount of any excluded expenditures (as defined
in paragraph (3)) for the State and fiscal year
otherwise included in such medical assistance
expenditures; and
``(ii) the 1903A FY16 population percentage
(as defined in paragraph (4)) for the State; or
``(B) for fiscal year 2019 or a subsequent fiscal
year, the amount of the medical assistance expenditures
(as defined in paragraph (2)) for the State and fiscal
year that is attributable to 1903A enrollees, reduced
by the amount of any excluded expenditures (as defined
in paragraph (3)) for the State and fiscal year
otherwise included in such medical assistance
expenditures and includes non-DSH supplemental payments
(as defined in subsection (d)(4)(A)(ii)) and payments
described in subsection (d)(4)(A)(iii) but shall not be
construed as including any expenditures attributable to
the program under section 1928. In applying
subparagraph (B), non-DSH supplemental payments (as
defined in subsection (d)(4)(A)(ii)) and payments
described in subsection (d)(4)(A)(iii) shall be treated
as fully attributable to 1903A enrollees.
``(2) Medical assistance expenditures.--In this section,
the term `medical assistance expenditures' means, for a State
and fiscal year, the medical assistance payments as reported by
medical service category on the Form CMS-64 quarterly expense
report (or successor to such a report form, and including
enrollment data and subsequent adjustments to any such report,
in this section referred to collectively as a `CMS-64 report')
for which payment is (or may otherwise be) made pursuant to
section 1903(a)(1).
``(3) Excluded expenditures.--In this section, the term
`excluded expenditures' means, for a State and fiscal year,
expenditures under the State plan (or under a waiver of such
plan) that are attributable to any of the following:
``(A) DSH.--Payment adjustments made for
disproportionate share hospitals under section 1923.
``(B) Medicare cost-sharing.--Payments made for
medicare cost-sharing (as defined in section
1905(p)(3)).
``(C) Safety net provider payment adjustments in
non-expansion states.--Payment adjustments under
subsection (a) of section 1923A for which payment is
permitted under subsection (c) of such section.
``(4) 1903A fy 16 population percentage.--In this
subsection, the term `1903A FY16 population percentage' means,
for a State, the Secretary's calculation of the percentage of
the actual medical assistance expenditures, as reported by the
State on the CMS-64 reports for calendar quarters in fiscal
year 2016, that are attributable to 1903A enrollees (as defined
in subsection (e)(1)).
``(c) Target Total Medical Assistance Expenditures.--
``(1) Calculation.--In this section, the term `target total
medical assistance expenditures' means, for a State for a
fiscal year and subject to paragraph (4), the sum of the
products, for each of the 1903A enrollee categories (as defined
in subsection (e)(2)), of--
``(A) the target per capita medical assistance
expenditures (as defined in paragraph (2)) for the
enrollee category, State, and fiscal year; and
``(B) the number of 1903A enrollees for such
enrollee category, State, and fiscal year, as
determined under subsection (e)(4).
``(2) Target per capita medical assistance expenditures.--
In this subsection, the term `target per capita medical
assistance expenditures' means, for a 1903A enrollee category
and State--
``(A) for fiscal year 2020, an amount equal to--
``(i) the provisional FY19 target per
capita amount for such enrollee category (as
calculated under subsection (d)(5)) for the
State; increased by
``(ii) the applicable annual inflation
factor (as defined in paragraph (3)) for fiscal
year 2020; and
``(B) for each succeeding fiscal year, an amount
equal to--
``(i) the target per capita medical
assistance expenditures (under subparagraph (A)
or this subparagraph) for the 1903A enrollee
category and State for the preceding fiscal
year, increased by
``(ii) the applicable annual inflation
factor for that succeeding fiscal year.
``(3) Applicable annual inflation factor.--In paragraph
(2), the term `applicable annual inflation factor' means, for a
fiscal year--
``(A) for each of the 1903A enrollee categories
described in subparagraphs (C), (D), and (E) of
subsection (e)(2), the percentage increase in the
medical care component of the consumer price index for
all urban consumers (U.S. city average) from September
of the previous fiscal year to September of the fiscal
year involved; and
``(B) for each of the 1903A enrollee categories
described in subparagraphs (A) and (B) of subsection
(e)(2), the percentage increase described in
subparagraph (A) plus 1 percentage point.
``(4) Decrease in target expenditures for required
expenditures by certain political subdivisions.--
``(A) In general.--In the case of a State that had
a DSH allotment under section 1923(f) for fiscal year
2016 that was more than 6 times the national average of
such allotments for all the States for such fiscal year
and that requires political subdivisions within the
State to contribute funds towards medical assistance or
other expenditures under the State plan under this
title (or under a waiver of such plan) for a fiscal
year (beginning with fiscal year 2020), the target
total medical assistance expenditures for such State
and fiscal year shall be decreased by the amount that
political subdivisions in the State are required to
contribute under the plan (or waiver) without
reimbursement from the State for such fiscal year,
other than contributions described in subparagraph (B).
``(B) Exceptions.--The contributions described in
this subparagraph are the following:
``(i) Contributions required by a State
from a political subdivision that, as of the
first day of the calendar year in which the
fiscal year involved begins--
``(I) has a population of more than
5,000,000, as estimated by the Bureau
of the Census; and
``(II) imposes a local income tax
upon its residents.
``(ii) Contributions required by a State
from a political subdivision for administrative
expenses if the State required such
contributions from such subdivision without
reimbursement from the State as of January 1,
2017.
``(d) Calculation of FY19 Provisional Target Amount for Each 1903A
Enrollee Category.--Subject to subsection (g), the following shall
apply:
``(1) Calculation of base amounts for fiscal year 2016.--
For each State the Secretary shall calculate (and provide
notice to the State not later than April 1, 2018, of) the
following:
``(A) The amount of the adjusted total medical
assistance expenditures (as defined in subsection
(b)(1)) for the State for fiscal year 2016.
``(B) The number of 1903A enrollees for the State
in fiscal year 2016 (as determined under subsection
(e)(4)).
``(C) The average per capita medical assistance
expenditures for the State for fiscal year 2016 equal
to--
``(i) the amount calculated under
subparagraph (A); divided by
``(ii) the number calculated under
subparagraph (B).
``(2) Fiscal year 2019 average per capita amount based on
inflating the fiscal year 2016 amount to fiscal year 2019 by
cpi-medical.--The Secretary shall calculate a fiscal year 2019
average per capita amount for each State equal to--
``(A) the average per capita medical assistance
expenditures for the State for fiscal year 2016
(calculated under paragraph (1)(C)); increased by
``(B) the percentage increase in the medical care
component of the consumer price index for all urban
consumers (U.S. city average) from September, 2016 to
September, 2019.
``(3) Aggregate and average expenditures per capita for
fiscal year 2019.--The Secretary shall calculate for each State
the following:
``(A) The amount of the adjusted total medical
assistance expenditures (as defined in subsection
(b)(1)) for the State for fiscal year 2019.
``(B) The number of 1903A enrollees for the State
in fiscal year 2019 (as determined under subsection
(e)(4)).
``(4) Per capita expenditures for fiscal year 2019 for each
1903a enrollee category.--The Secretary shall calculate (and
provide notice to each State not later than January 1, 2020,
of) the following:
``(A)(i) For each 1903A enrollee category, the
amount of the adjusted total medical assistance
expenditures (as defined in subsection (b)(1)) for the
State for fiscal year 2019 for individuals in the
enrollee category, calculated by excluding from medical
assistance expenditures those expenditures attributable
to expenditures described in clause (iii) or non-DSH
supplemental expenditures (as defined in clause (ii)).
``(ii) In this paragraph, the term `non-DSH
supplemental expenditure' means a payment to a provider
under the State plan (or under a waiver of the plan)
that--
``(I) is not made under section 1923;
``(II) is not made with respect to a
specific item or service for an individual;
``(III) is in addition to any payments made
to the provider under the plan (or waiver) for
any such item or service; and
``(IV) complies with the limits for
additional payments to providers under the plan
(or waiver) imposed pursuant to section
1902(a)(30)(A), including the regulations
specifying upper payment limits under the State
plan in part 447 of title 42, Code of Federal
Regulations (or any successor regulations).
``(iii) An expenditure described in this clause is
an expenditure that meets the criteria specified in
subclauses (I), (II), and (III) of clause (ii) and is
authorized under section 1115 for the purposes of
funding a delivery system reform pool, uncompensated
care pool, a designated state health program, or any
other similar expenditure (as defined by the
Secretary).
``(B) For each 1903A enrollee category, the number
of 1903A enrollees for the State in fiscal year 2019 in
the enrollee category (as determined under subsection
(e)(4)).
``(C) For fiscal year 2016, the State's non-DSH
supplemental and pool payment percentage is equal to
the ratio (expressed as a percentage) of--
``(i) the total amount of non-DSH
supplemental expenditures (as defined in
subparagraph (A)(ii)) and payments described in
subparagraph (A)(iii) for the State for fiscal
year 2016; to
``(ii) the amount described in subsection
(b)(1)(A) for the State for fiscal year 2016.
``(D) For each 1903A enrollee category an average
medical assistance expenditures per capita for the
State for fiscal year 2019 for the enrollee category
equal to--
``(i) the amount calculated under
subparagraph (A) for the State, increased by
the non-DSH supplemental and pool payment
percentage for the State (as calculated under
subparagraph (C)); divided by
``(ii) the number calculated under
subparagraph (B) for the State for the enrollee
category.
``(5) Provisional fy19 per capita target amount for each
1903a enrollee category.--Subject to subsection (f)(2), the
Secretary shall calculate for each State a provisional FY19 per
capita target amount for each 1903A enrollee category equal to
the average medical assistance expenditures per capita for the
State for fiscal year 2019 (as calculated under paragraph
(4)(D)) for such enrollee category multiplied by the ratio of--
``(A) the product of--
``(i) the fiscal year 2019 average per
capita amount for the State, as calculated
under paragraph (2); and
``(ii) the number of 1903A enrollees for
the State in fiscal year 2019, as calculated
under paragraph (3)(B); to
``(B) the amount of the adjusted total medical
assistance expenditures for the State for fiscal year
2019, as calculated under paragraph (3)(A).
``(e) 1903A Enrollee; 1903A Enrollee Category.--Subject to
subsection (g), for purposes of this section, the following shall
apply:
``(1) 1903A enrollee.--The term `1903A enrollee' means,
with respect to a State and a month and subject to subsection
(i)(1)(B), any Medicaid enrollee (as defined in paragraph (3))
for the month, other than such an enrollee who for such month
is in any of the following categories of excluded individuals:
``(A) CHIP.--An individual who is provided, under
this title in the manner described in section
2101(a)(2), child health assistance under title XXI.
``(B) IHS.--An individual who receives any medical
assistance under this title for services for which
payment is made under the third sentence of section
1905(b).
``(C) Breast and cervical cancer services eligible
individual.--An individual who is entitled to medical
assistance under this title only pursuant to section
1902(a)(10)(A)(ii)(XVIII).
``(D) Partial-benefit enrollees.--An individual
who--
``(i) is an alien who is entitled to
medical assistance under this title only
pursuant to section 1903(v)(2);
``(ii) is entitled to medical assistance
under this title only pursuant to subclause
(XII) or (XXI) of section 1902(a)(10)(A)(ii)
(or pursuant to a waiver that provides only
comparable benefits);
``(iii) is a dual eligible individual (as
defined in section 1915(h)(2)(B)) and is
entitled to medical assistance under this title
(or under a waiver) only for some or all of
medicare cost-sharing (as defined in section
1905(p)(3)); or
``(iv) is entitled to medical assistance
under this title and for whom the State is
providing a payment or subsidy to an employer
for coverage of the individual under a group
health plan pursuant to section 1906 or section
1906A (or pursuant to a waiver that provides
only comparable benefits).
``(2) 1903A enrollee category.--The term `1903A enrollee
category' means each of the following:
``(A) Elderly.--A category of 1903A enrollees who
are 65 years of age or older.
``(B) Blind and disabled.--A category of 1903A
enrollees (not described in the previous subparagraph)
who are eligible for medical assistance under this
title on the basis of being blind or disabled.
``(C) Children.--A category of 1903A enrollees (not
described in a previous subparagraph) who are children
under 19 years of age.
``(D) Expansion enrollees.--A category of 1903A
enrollees (not described in a previous subparagraph)
for whom the amounts expended for medical assistance
are subject to an increase or change in the Federal
medical assistance percentage under subsection (y) or
(z)(2), respectively, of section 1905.
``(E) Other nonelderly, nondisabled, non-expansion
adults.--A category of 1903A enrollees who are not
described in any previous subparagraph.
``(3) Medicaid enrollee.--The term `Medicaid enrollee'
means, with respect to a State for a month, an individual who
is eligible for medical assistance for items or services under
this title and enrolled under the State plan (or a waiver of
such plan) under this title for the month.
``(4) Determination of number of 1903a enrollees.--The
number of 1903A enrollees for a State and fiscal year, and, if
applicable, for a 1903A enrollee category, is the average
monthly number of Medicaid enrollees for such State and fiscal
year (and, if applicable, in such category) that are reported
through the CMS-64 report under (and subject to audit under)
subsection (h).
``(f) Special Payment Rules.--
``(1) Application in case of research and demonstration
projects and other waivers.--In the case of a State with a
waiver of the State plan approved under section 1115, section
1915, or another provision of this title, this section shall
apply to medical assistance expenditures and medical assistance
payments under the waiver, in the same manner as if such
expenditures and payments had been made under a State plan
under this title and the limitations on expenditures under this
section shall supersede any other payment limitations or
provisions (including limitations based on a per capita
limitation) otherwise applicable under such a waiver.
``(2) Treatment of states expanding coverage after fiscal
year 2016.--In the case of a State that did not provide for
medical assistance for the 1903A enrollee category described in
subsection (e)(2)(D) during fiscal year 2016 but which provides
for such assistance for such category in a subsequent year, the
provisional FY19 per capita target amount for such enrollee
category under subsection (d)(5) shall be equal to the
provisional FY19 per capita target amount for the 1903A
enrollee category described in subsection (e)(2)(E).
``(3) In case of state failure to report necessary data.--
If a State for any quarter in a fiscal year (beginning with
fiscal year 2019) fails to satisfactorily submit data on
expenditures and enrollees in accordance with subsection
(h)(1), for such fiscal year and any succeeding fiscal year for
which such data are not satisfactorily submitted--
``(A) the Secretary shall calculate and apply
subsections (a) through (e) with respect to the State
as if all 1903A enrollee categories for which such
expenditure and enrollee data were not satisfactorily
submitted were a single 1903A enrollee category; and
``(B) the growth factor otherwise applied under
subsection (c)(2)(B) shall be decreased by 1 percentage
point.
``(g) Recalculation of Certain Amounts for Data Errors.--The
amounts and percentage calculated under paragraphs (1) and (4)(C) of
subsection (d) for a State for fiscal year 2016, and the amounts of the
adjusted total medical assistance expenditures calculated under
subsection (b) and the number of Medicaid enrollees and 1903A enrollees
determined under subsection (e)(4) for a State for fiscal year 2016,
fiscal year 2019, and any subsequent fiscal year, may be adjusted by
the Secretary based upon an appeal (filed by the State in such a form,
manner, and time, and containing such information relating to data
errors that support such appeal, as the Secretary specifies) that the
Secretary determines to be valid, except that any adjustment by the
Secretary under this subsection for a State may not result in an
increase of the target total medical assistance expenditures exceeding
2 percent.
``(h) Required Reporting and Auditing of CMS-64 Data; Transitional
Increase in Federal Matching Percentage for Certain Administrative
Expenses.--
``(1) Reporting.--In addition to the data required on form
Group VIII on the CMS-64 report form as of January 1, 2017, in
each CMS-64 report required to be submitted (for each quarter
beginning on or after October 1, 2018), the State shall include
data on medical assistance expenditures within such categories
of services and categories of enrollees (including each 1903A
enrollee category and each category of excluded individuals
under subsection (e)(1)) and the numbers of enrollees within
each of such enrollee categories, as the Secretary determines
are necessary (including timely guidance published as soon as
possible after the date of the enactment of this section) in
order to implement this section and to enable States to comply
with the requirement of this paragraph on a timely basis.
``(2) Auditing.--The Secretary shall conduct for each State
an audit of the number of individuals and expenditures reported
through the CMS-64 report for fiscal year 2016, fiscal year
2019, and each subsequent fiscal year, which audit may be
conducted on a representative sample (as determined by the
Secretary).
``(3) Temporary increase in federal matching percentage to
support improved data reporting systems for fiscal years 2018
and 2019.--For amounts expended during calendar quarters
beginning on or after October 1, 2017, and before October 1,
2019--
``(A) the Federal matching percentage applied under
section 1903(a)(3)(A)(i) shall be increased by 10
percentage points to 100 percent;
``(B) the Federal matching percentage applied under
section 1903(a)(3)(B) shall be increased by 25
percentage points to 100 percent; and
``(C) the Federal matching percentage applied under
section 1903(a)(7) shall be increased by 10 percentage
points to 60 percent but only with respect to amounts
expended that are attributable to a State's additional
administrative expenditures to implement the data
requirements of paragraph (1).
``(i) Flexible Block Grant Option for States.--
``(1) In general.--In the case of a State that elects the
option of applying this subsection for a 10-fiscal-year period
(beginning no earlier than fiscal year 2020 and, at the State
option, for any succeeding 10-fiscal-year period) and that has
a plan approved by the Secretary under paragraph (2) to carry
out the option for such period--
``(A) the State shall receive, instead of amounts
otherwise payable to the State under this title for
medical assistance for block grant individuals within
the applicable block grant category (as defined in
paragraph (6)) for the State during the period in which
the election is in effect, the amount specified in
paragraph (4);
``(B) the previous provisions of this section shall
be applied as if--
``(i) block grant individuals within the
applicable block grant category for the State
and period were not section 1903A enrollees for
each 10-fiscal year period for which the State
elects to apply this subsection; and
``(ii) if such option is not extended at
the end of a 10-fiscal-year-period, the per
capita limitations under such previous
provisions shall again apply after such period
and such limitations shall be applied as if the
election under this subsection had never taken
place;
``(C) the payment under this subsection may only be
used consistent with the State plan under paragraph (2)
for block grant health care assistance (as defined in
paragraph (7)); and
``(D) with respect to block grant individuals
within the applicable block grant category for the
State for which block grant health care assistance is
made available under this subsection, such assistance
shall be instead of medical assistance otherwise
provided to the individual under this title.
``(2) State plan for administering block grant option.--
``(A) In general.--No payment shall be made under
this subsection to a State pursuant to an election for
a 10-fiscal-year period under paragraph (1) unless the
State has a plan, approved under subparagraph (B), for
such period that specifies--
``(i) the applicable block grant category
with respect to which the State will apply the
option under this subsection for such period;
``(ii) the conditions for eligibility of
block grant individuals within such applicable
block grant category for block grant health
care assistance under the option, which shall
be instead of other conditions for eligibility
under this title, except that in the case of a
State that has elected the applicable block
grant category described in--
``(I) subparagraph (A) of paragraph
(6), the plan must provide for
eligibility for pregnant women and
children required to be provided
medical assistance under subsections
(a)(10)(A)(i) and (e)(4) of section
1902; or
``(II) subparagraph (B) of
paragraph (6), the plan must provide
for eligibility for pregnant women
required to be provided medical
assistance under subsection
(a)(10)(A)(i); and
``(iii) the types of items and services,
the amount, duration, and scope of such
services, the cost-sharing with respect to such
services, and the method for delivery of block
grant health care assistance under this
subsection, which shall be instead of the such
types, amount, duration, and scope, cost-
sharing, and methods of delivery for medical
assistance otherwise required under this title,
except that the plan must provide for
assistance for--
``(I) hospital care;
``(II) surgical care and treatment;
``(III) medical care and treatment;
``(IV) obstetrical and prenatal
care and treatment;
``(V) prescribed drugs, medicines,
and prosthetic devices;
``(VI) other medical supplies and
services; and
``(VII) health care for children
under 18 years of age.
``(B) Review and approval.--A plan described in
subparagraph (A) shall be deemed approved by the
Secretary unless the Secretary determines, within 30
days after the date of the Secretary's receipt of the
plan, that the plan is incomplete or actuarially
unsound and, with respect to such plan and its
implementation under this subsection, the requirements
of paragraphs (1), (10)(B), (17), and (23) of section
1902(a) shall not apply.
``(3) Amount of block grant funds.--
``(A) For initial fiscal year.--The block grant
amount under this paragraph for a State for the initial
fiscal year in the first 10-fiscal-year period is equal
to the sum of the products (for each applicable block
grant category for such State and period) of--
``(i) the target per capita medical
assistance expenditures for such State for such
fiscal year (under subsection (c)(2));
``(ii) the number of 1903A enrollees for
such category and State for fiscal year 2019,
as determined under subsection (e)(4); and
``(iii) the Federal average medical
assistance matching percentage (as defined in
subsection (a)(4)) for the State for fiscal
year 2019.
``(B) For any subsequent fiscal year.--The block
grant amount under this paragraph for a State for each
succeeding fiscal year (in any 10-fiscal-year period)
is equal to the block grant amount under subparagraph
(A) (or this subparagraph) for the State for the
previous fiscal year increased by the annual increase
in the consumer price index for all urban consumers
(all items; U.S. city average) for the fiscal year
involved.
``(C) Availability of rollover funds.--The block
grant amount under this paragraph for a State for a
fiscal year shall remain available to the State for
expenditures under this subsection for the succeeding
fiscal year but only if an election is in effect under
this subsection for the State in such succeeding fiscal
year.
``(4) Federal payment and state responsibility.--The
Secretary shall pay to each State with an election in effect
under this subsection for a fiscal year, from its block grant
amount under paragraph (3) available for such fiscal year, an
amount for each quarter of such fiscal year equal to the
enhanced FMAP described in the first sentence of section
2105(b) of the total amount expended under the State plan under
this subsection during such quarter, and the State is
responsible for the balance of funds to carry out such plan.
``(5) Block grant individual defined.--In this subsection,
the term `block grant individual' means, with respect to a
State for a 10-fiscal-year period, an individual who is not
disabled (as defined for purposes of the State plan) and who is
within an applicable block grant category for the State and
such period.
``(6) Applicable block grant category defined.--In this
subsection, the term `applicable block grant category' means
with respect to a State for a 10-fiscal-year period, either of
the following as specified by the State for such period in its
plan under paragraph (2)(A)(i):
``(A) 2 enrollee categories.--Both of the following
1903A enrollee categories:
``(i) Children.--The 1903A enrollee
category specified in subparagraph (C) of
subsection (e)(2).
``(ii) Other nonelderly, nondisabled, non-
expansion adults.--The 1903A enrollee category
specified in subparagraph (E) of such
subsection.
``(B) Other nonelderly, nondisabled, non-expansion
adults.--Only the 1903A enrollee category specified in
subparagraph (E) of subsection (e)(2).
``(7) Block grant health care assistance.--In this
subsection, the term `block grant health care assistance' means
assistance for health-care-related items and medical services
for block grant individuals within the applicable block grant
category for the State and 10-fiscal-year period involved who
are low-income individuals (as defined by the State).
``(8) Auditing.--As a condition of receiving funds under
this subsection, a State shall contract with an independent
entity to conduct audits of its expenditures made with respect
to activities funded under this subsection for each fiscal year
for which the State elects to apply this subsection to ensure
that such funds are used consistent with this subsection and
shall make such audits available to the Secretary upon the
request of the Secretary.''.
Subtitle D--Patient Relief and Health Insurance Market Stability
SEC. 131. REPEAL OF COST-SHARING SUBSIDY.
(a) In General.--Section 1402 of the Patient Protection and
Affordable Care Act is repealed.
(b) Effective Date.--The repeal made by subsection (a) shall apply
to cost-sharing reductions (and payments to issuers for such
reductions) for plan years beginning after December 31, 2019.
SEC. 132. PATIENT AND STATE STABILITY FUND.
The Social Security Act (42 U.S.C. 301 et seq.) is amended by
adding at the end the following new title:
``TITLE XXII--PATIENT AND STATE STABILITY FUND
``SEC. 2201. ESTABLISHMENT OF PROGRAM.
``There is hereby established the `Patient and State Stability
Fund' to be administered by the Secretary of Health and Human Services,
acting through the Administrator of the Centers for Medicare & Medicaid
Services (in this section referred to as the `Administrator'), to
provide funding, in accordance with this title, to the 50 States and
the District of Columbia (each referred to in this section as a
`State') during the period, subject to section 2204(c), beginning on
January 1, 2018, and ending on December 31, 2026, for the purposes
described in section 2202.
``SEC. 2202. USE OF FUNDS.
``(a) In General.--Subject to subsections (b) and (c), a State may
use the funds allocated to the State under this title for any of the
following purposes:
``(1) Helping, through the provision of financial
assistance, high-risk individuals who do not have access to
health insurance coverage offered through an employer enroll in
health insurance coverage in the individual market in the
State, as such market is defined by the State (whether through
the establishment of a new mechanism or maintenance of an
existing mechanism for such purpose).
``(2) Providing incentives to appropriate entities to enter
into arrangements with the State to help stabilize premiums for
health insurance coverage in the individual market, as such
markets are defined by the State.
``(3) Reducing the cost for providing health insurance
coverage in the individual market and small group market, as
such markets are defined by the State, to individuals who have,
or are projected to have, a high rate of utilization of health
services (as measured by cost) and to individuals who have high
costs of health insurance coverage due to the low density
population of the State in which they reside.
``(4) Promoting participation in the individual market and
small group market in the State and increasing health insurance
options available through such market.
``(5) Promoting access to preventive services; dental care
services (whether preventive or medically necessary); vision
care services (whether preventive or medically necessary); or
any combination of such services.
``(6) Maternity coverage and newborn care.
``(7) Prevention, treatment, or recovery support services
for individuals with mental or substance use disorders, focused
on either or both of the following:
``(A) Direct inpatient or outpatient clinical care
for treatment of addiction and mental illness.
``(B) Early identification and intervention for
children and young adults with serious mental illness.
``(8) Providing payments, directly or indirectly, to health
care providers for the provision of such health care services
as are specified by the Administrator.
``(9) Providing assistance to reduce out-of-pocket costs,
such as copayments, coinsurance, premiums, and deductibles, of
individuals enrolled in health insurance coverage in the State.
``(b) Required Use of Increase in Allotment.--A State shall use the
additional allocation provided to the State from the funds appropriated
under the second sentence of section 2204(a) for each year only for the
purposes described in paragraphs (6) and (7) of subsection (a).
``(c) Required Use of Additional Increase to Certain Waiver States
to Provide Financial Hardship Assistance.--A State shall use the
additional allocation provided to the State from the funds appropriated
under the last sentence of section 2204(a) only in accordance with such
last sentence.
``SEC. 2203. STATE ELIGIBILITY AND APPROVAL; DEFAULT SAFEGUARD.
``(a) Encouraging State Options for Allocations.--
``(1) In general.--To be eligible for an allocation of
funds under this title for a year during the period described
in section 2201 for use for one or more purposes described in
section 2202, a State shall submit to the Administrator an
application at such time (but, in the case of allocations for
2018, not later than 45 days after the date of the enactment of
this title and, in the case of allocations for a subsequent
year, not later than March 31 of the previous year) and in such
form and manner as specified by the Administrator and
containing--
``(A) a description of how the funds will be used
for such purposes;
``(B) a certification that the State will make,
from non-Federal funds, expenditures for such purposes
in an amount that is not less than the State percentage
required for the year under section 2204(e)(1); and
``(C) such other information as the Administrator
may require.
``(2) Automatic approval.--An application so submitted is
approved unless the Administrator notifies the State submitting
the application, not later than 60 days after the date of the
submission of such application, that the application has been
denied for not being in compliance with any requirement of this
title and of the reason for such denial.
``(3) One-time application.--If an application of a State
is approved for a year, with respect to a purpose described in
section 2202, such application shall be treated as approved,
with respect to such purpose, for each subsequent year through
2026.
``(4) Treatment as a state health care program.--Any
program receiving funds from an allocation for a State under
this title, including pursuant to subsection (b), shall be
considered to be a `State health care program' for purposes of
sections 1128, 1128A, and 1128B.
``(b) Default Federal Safeguard.--
``(1) In general.--
``(A) 2018.--For allocations made under this title
for 2018, in the case of a State that does not submit
an application under subsection (a) by the 45-day
submission date applicable to such year under
subsection (a)(1) and in the case of a State that does
submit such an application by such date that is not
approved, subject to section 2204(e), the
Administrator, in consultation with the State insurance
commissioner, shall use the allocation that would
otherwise be provided to the State under this title for
such year, in accordance with paragraph (2), for such
State.
``(B) 2019 through 2026.--In the case of a State
that does not have in effect an approved application
under this section for 2019 or a subsequent year
beginning during the period described in section 2201,
subject to section 2204(e), the Administrator, in
consultation with the State insurance commissioner,
shall use the allocation that would otherwise be
provided to the State under this title for such year,
in accordance with paragraph (2), for such State.
``(2) Required use for market stabilization payments to
issuers.--Subject to section 2204(a), an allocation for a State
made pursuant to paragraph (1) for a year shall be used to
carry out the purpose described in section 2202(2) in such
State by providing payments to appropriate entities described
in such section with respect to claims that exceed $50,000 (or,
with respect to allocations made under this title for 2020 or a
subsequent year during the period specified in section 2201,
such dollar amount specified by the Administrator), but do not
exceed $350,000 (or, with respect to allocations made under
this title for 2020 or a subsequent year during such period,
such dollar amount specified by the Administrator), in an
amount equal to 75 percent (or, with respect to allocations
made under this title for 2020 or a subsequent year during such
period, such percentage specified by the Administrator) of the
amount of such claims.
``SEC. 2204. ALLOCATIONS.
``(a) Appropriation.--For the purpose of providing allocations for
States (including pursuant to section 2203(b)) under this title there
is appropriated, out of any money in the Treasury not otherwise
appropriated--
``(1) for 2018, $15,000,000,000;
``(2) for 2019, $15,000,000,000;
``(3) for 2020, $10,000,000,000;
``(4) for 2021, $10,000,000,000;
``(5) for 2022, $10,000,000,000;
``(6) for 2023, $10,000,000,000;
``(7) for 2024, $10,000,000,000;
``(8) for 2025, $10,000,000,000; and
``(9) for 2026, $10,000,000,000.
The amount otherwise appropriated under the previous sentence for 2020
shall be increased by $15,000,000,000, to be used and available under
subsection (d) only for the purposes described in paragraphs (6) and
(7) of section 2202(a). The amount otherwise appropriated under this
subsection shall be increased by $8,000,000,000 for the period
beginning with 2018 and ending with 2023, to be allocated to States
with a waiver in effect under section 2701(b) of the Public Health
Service Act with respect to the purpose described in paragraph (1)(C)
of such section, in accordance with an allocation methodology specified
by the Secretary that takes into account the relative allocation of
other amounts appropriated under this subsection among such States, and
to be used by (and made available under subsection (d), for any year
during such period that such waiver is in effect, to) such States for
the purpose of providing assistance to reduce premiums or other out-of-
pocket costs of individuals who are subject to an increase in the
monthly premium rate for health insurance coverage as a result of such
waiver.
``(b) Allocations.--
``(1) Payment.--
``(A) In general.--From amounts appropriated under
subsection (a) for a year, the Administrator shall,
with respect to a State and not later than the date
specified under subparagraph (B) for such year,
allocate, subject to subsection (e), for such State
(including pursuant to section 2203(b)) the amount
determined for such State and year under paragraph (2).
``(B) Specified date.--For purposes of subparagraph
(A), the date specified in this subparagraph is--
``(i) for 2018, the date that is 45 days
after the date of the enactment of this title;
and
``(ii) for 2019 and subsequent years,
January 1 of the respective year.
``(2) Allocation amount determinations.--
``(A) For 2018 and 2019.--
``(i) In general.--For purposes of
paragraph (1), the amount determined under this
paragraph for 2018 and 2019 for a State is an
amount equal to the sum of--
``(I) the relative incurred claims
amount described in clause (ii) for
such State and year; and
``(II) the relative uninsured and
issuer participation amount described
in clause (iv) for such State and year.
``(ii) Relative incurred claims amount.--
For purposes of clause (i), the relative
incurred claims amount described in this clause
for a State for 2018 and 2019 is the product
of--
``(I) 85 percent of the amount
appropriated under subsection (a) for
the year; and
``(II) the relative State incurred
claims proportion described in clause
(iii) for such State and year.
``(iii) Relative state incurred claims
proportion.--The relative State incurred claims
proportion described in this clause for a State
and year is the amount equal to the ratio of--
``(I) the adjusted incurred claims
by the State, as reported through the
medical loss ratio annual reporting
under section 2718 of the Public Health
Service Act for the third previous
year; to
``(II) the sum of such adjusted
incurred claims for all States, as so
reported, for such third previous year.
``(iv) Relative uninsured and issuer
participation amount.--For purposes of clause
(i), the relative uninsured and issuer
participation amount described in this clause
for a State for 2018 and 2019 is the product
of--
``(I) 15 percent of the amount
appropriated under subsection (a) for
the year; and
``(II) the relative State uninsured
and issuer participation proportion
described in clause (v) for such State
and year.
``(v) Relative state uninsured and issuer
participation proportion.--The relative State
uninsured and issuer participation proportion
described in this clause for a State and year
is--
``(I) in the case of a State not
described in clause (vi) for such year,
0; and
``(II) in the case of a State
described in clause (vi) for such year,
the amount equal to the ratio of--
``(aa) the number of
individuals residing in such
State who for the third
preceding year were not
enrolled in a health plan or
otherwise did not have health
insurance coverage (including
through a Federal or State
health program) and whose
income is below 100 percent of
the poverty line applicable to
a family of the size involved;
to
``(bb) the sum of the
number of such individuals for
all States described in clause
(vi) for the third preceding
year.
``(vi) States described.--For purposes of
clause (v), a State is described in this
clause, with respect to 2018 and 2019, if the
State satisfies either of the following
criterion:
``(I) The ratio described in
subclause (II) of clause (v) that would
be determined for such State by
substituting `2015' for each reference
in such subclause to `the third
preceding year' and by substituting
`all such States' for the reference in
item (bb) of such subclause to `all
States described in clause (vi)' is
greater than the ratio described in
such subclause that would be determined
for such State by substituting `2013'
for each reference in such subclause to
`the third preceding year' and by
substituting `all such States' for the
reference in item (bb) of such
subclause to `all States described in
clause (vi)'.
``(II) The State has fewer than
three health insurance issuers offering
qualified health plans through the
Exchange for 2017.
``(B) For 2020 through 2026.--For purposes of
paragraph (1), the amount determined under this
paragraph for a year (beginning with 2020) during the
period described in section 2201 for a State is an
amount determined in accordance with an allocation
methodology specified by the Administrator which--
``(i) takes into consideration the adjusted
incurred claims of such State, the number of
residents of such State who for the previous
year were not enrolled in a health plan or
otherwise did not have health insurance
coverage (including through a Federal or State
health program) and whose income is below 100
percent of the poverty line applicable to a
family of the size involved, and the number of
health insurance issuers participating in the
insurance market in such State for such year;
``(ii) is established after consultation
with health care consumers, health insurance
issuers, State insurance commissioners, and
other stakeholders and after taking into
consideration additional cost and risk factors
that may inhibit health care consumer and
health insurance issuer participation; and
``(iii) reflects the goals of improving the
health insurance risk pool, promoting a more
competitive health insurance market, and
increasing choice for health care consumers.
``(c) Annual Distribution of Previous Year's Remaining Funds.-- In
carrying out subsection (b), the Administrator shall, with respect to a
year (beginning with 2020 and ending with 2027), not later than March
31 of such year--
``(1) determine the amount of funds, if any, from the
amounts appropriated under subsection (a) for the previous year
but not allocated for such previous year; and
``(2) if the Administrator determines that any funds were
not so allocated for such previous year, allocate such
remaining funds, in accordance with the allocation methodology
specified pursuant to subsection (b)(2)(B)--
``(A) to States that have submitted an application
approved under section 2203(a) for such previous year
for any purpose for which such an application was
approved; and
``(B) for States for which allocations were made
pursuant to section 2203(b) for such previous year, to
be used by the Administrator for such States, to carry
out the Federal Invisible Risk Sharing Program in such
States under section 2205;
with, respect to a year before 2027, any remaining funds being
made available for allocations to States for the subsequent
year.
``(d) Availability.--Amounts appropriated under subsection (a) for
a year and allocated to States in accordance with this section shall
remain available for expenditure through December 31, 2027.
``(e) Conditions for and Limitations on Receipt of Funds.--The
Secretary may not make an allocation under this title for a State, with
respect to a purpose described in section 2202--
``(1) in the case of an allocation that would be made to a
State pursuant to section 2203(a), if the State does not agree
that the State will make available non-Federal contributions
towards such purpose in an amount equal to--
``(A) for 2020, 7 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(B) for 2021, 14 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(C) for 2022, 21 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(D) for 2023, 28 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(E) for 2024, 35 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(F) for 2025, 42 percent of the amount allocated
under this subsection to such State for such year and
purpose; and
``(G) for 2026, 50 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(2) in the case of an allocation that would be made for a
State pursuant to section 2203(b), if the State does not agree
that the State will make available non-Federal contributions
towards such purpose in an amount equal to--
``(A) for 2020, 10 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(B) for 2021, 20 percent of the amount allocated
under this subsection to such State for such year and
purpose; and
``(C) for 2022, 30 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(D) for 2023, 40 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(E) for 2024, 50 percent of the amount allocated
under this subsection to such State for such year and
purpose;
``(F) for 2025, 50 percent of the amount allocated
under this subsection to such State for such year and
purpose; and
``(G) for 2026, 50 percent of the amount allocated
under this subsection to such State for such year and
purpose; or
``(3) if such an allocation for such purpose would not be
permitted under subsection (c)(7) of section 2105 if such
allocation were payment made under such section.
``SEC. 2205. FEDERAL INVISIBLE RISK SHARING PROGRAM.
``(a) In General.--There is established within the Patient and
State Stability Fund a Federal Invisible Risk Sharing Program (in this
section referred to as the `Program'), to be administered by the
Secretary of Health and Human Services, acting through the
Administrator of the Centers for Medicare & Medicaid Services (in this
section referred to as the `Administrator'), to provide payments to
health insurance issuers with respect to claims for eligible
individuals for the purpose of lowering premiums for health insurance
coverage offered in the individual market.
``(b) Funding.--
``(1) Appropriation.--For the purpose of providing funding
for the Program there is appropriated, out of any money in the
Treasury not otherwise appropriated, $15,000,000,000 for the
period beginning on January 1, 2018, and ending on December 31,
2026.
``(2) Use of unallocated funds.--Funds provided under
section 2204(c)(2)(B) to carry out this section are in addition
to the amount appropriated under paragraph (1).
``(c) Operation of Program.--
``(1) In general.--The Administrator shall establish, after
consultation with health care consumers, health insurance
issuers, State insurance commissioners, and other stakeholders
and after taking into consideration high cost health conditions
and other health trends that generate high cost, parameters for
the operation of the Program consistent with this section and
consistent with the same limitation on payment with respect to
health insurance coverage that applies to payment with respect
health benefits coverage under section 2105(c)(7).
``(2) Deadline for initial operation.--Not later than 60
days after the date of the enactment of this title, the
Administrator shall establish sufficient parameters to specify
how the Program will operate for plan year 2018.
``(3) State operation of program.--The Administrator shall
establish a process for a State to operate the Program in such
State beginning with plan year 2020.
``(d) Details of Program.--The parameters for the Program shall
include the following:
``(1) Eligible individuals.--A definition for eligible
individuals.
``(2) Health status statements.--The development and use of
health status statements with respect to such individuals.
``(3) Standards for qualification.--
``(A) Automatic qualification.--The identification
of health conditions that automatically qualify
individuals as eligible individuals at the time of
application for health insurance coverage.
``(B) Voluntary qualification.--A process under
which health insurance issuers may voluntarily qualify
individuals, who do not automatically qualify under
subparagraph (A), as eligible individuals at the time
of application for such coverage.
``(4) Percentage of insurance premiums to be applied.--The
percentage of the premiums paid, to health insurance issuers
for health insurance coverage by eligible individuals, that
shall be collected and deposited to the credit (and available
for the use) of the Program.
``(5) Attachment dollar amount and payment proportion.--The
dollar amount of claims for eligible individuals after which
the Program will provide payments to health insurance issuers
and the proportion of such claims above such dollar amount that
the Program will pay.''.
SEC. 133. CONTINUOUS HEALTH INSURANCE COVERAGE INCENTIVE.
Subpart I of part A of title XXVII of the Public Health Service Act
is amended--
(1) in section 2701(a)(1)(B), by striking ``such rate'' and
inserting ``subject to section 2710A, such rate'';
(2) by redesignating the second section 2709 as section
2710; and
(3) by adding at the end the following new section:
``SEC. 2710A. ENCOURAGING CONTINUOUS HEALTH INSURANCE COVERAGE.
``(a) Penalty Applied.--
``(1) In general.--Subject to the succeeding provisions of
this section, a health insurance issuer offering health
insurance coverage in the individual market shall, in the case
of an individual who is an applicable policyholder of such
coverage with respect to an enforcement period applicable to
enrollments for a plan year beginning with plan year 2019 (or,
in the case of enrollments during a special enrollment period,
beginning with plan year 2018), increase the monthly premium
rate otherwise applicable to such individual for such coverage
during each month of such period, by an amount determined under
paragraph (2).
``(2) Amount of penalty.--The amount determined under this
paragraph for an applicable policyholder enrolling in health
insurance coverage described in paragraph (1) for a plan year,
with respect to each month during the enforcement period
applicable to enrollments for such plan year, is the amount
that is equal to 30 percent of the monthly premium rate
otherwise applicable to such applicable policyholder for such
coverage during such month.
``(b) Definitions.--For purposes of this section:
``(1) Applicable policyholder.--The term `applicable
policyholder' means, with respect to months of an enforcement
period and health insurance coverage, an individual who--
``(A) is a policyholder of such coverage for such
months;
``(B) cannot demonstrate that (through presentation
of certifications described in section 2704(e) or in
such other manner as may be specified in regulations,
such as a return or statement made under section
6055(d) or 36B of the Internal Revenue Code of 1986),
during the look-back period that is with respect to
such enforcement period, there was not a period of at
least 63 continuous days during which the individual
did not have creditable coverage (as defined in
paragraph (1) of section 2704(c) and credited in
accordance with paragraphs (2) and (3) of such
section); and
``(C) in the case of an individual who had been
enrolled under dependent coverage under a group health
plan or health insurance coverage by reason of section
2714 and such dependent coverage of such individual
ceased because of the age of such individual, is not
enrolling during the first open enrollment period
following the date on which such coverage so ceased.
``(2) Look-back period.--The term `look-back period' means,
with respect to an enforcement period applicable to an
enrollment of an individual for a plan year beginning with plan
year 2019 (or, in the case of an enrollment of an individual
during a special enrollment period, beginning with plan year
2018) in health insurance coverage described in subsection
(a)(1), the 12-month period ending on the date the individual
enrolls in such coverage for such plan year.
``(3) Enforcement period.--The term `enforcement period'
means--
``(A) with respect to enrollments during a special
enrollment period for plan year 2018, the period
beginning with the first month that is during such plan
year and that begins subsequent to such date of
enrollment, and ending with the last month of such plan
year; and
``(B) with respect to enrollments for plan year
2019 or a subsequent plan year, the 12-month period
beginning on the first day of the respective plan
year.''.
SEC. 134. INCREASING COVERAGE OPTIONS.
Section 1302 of the Patient Protection and Affordable Care Act (42
U.S.C. 18022) is amended--
(1) in subsection (a)(3), by inserting ``and with respect
to a plan year before plan year 2020'' after ``subsection
(e)''; and
(2) in subsection (d), by adding at the end the following:
``(5) Sunset.--The provisions of this subsection shall not
apply after December 31, 2019, and after such date any
reference to this subsection or level of coverage or plan
described in this subsection and any requirement under law
applying such a level of coverage or plan shall have no force
or effect (and such a requirement shall be applied as if this
section had been repealed).''.
SEC. 135. CHANGE IN PERMISSIBLE AGE VARIATION IN HEALTH INSURANCE
PREMIUM RATES.
Section 2701(a)(1)(A)(iii) of the Public Health Service Act (42
U.S.C. 300gg(a)(1)(A)(iii)), as inserted by section 1201(4) of the
Patient Protection and Affordable Care Act, is amended by inserting
after ``(consistent with section 2707(c))'' the following: ``or, for
plan years beginning on or after January 1, 2018, as the Secretary may
implement through interim final regulation, 5 to 1 for adults
(consistent with section 2707(c)) or such other ratio for adults
(consistent with section 2707(c)) as the State involved may provide
(or, in the case of a State with a waiver under subsection (b) in
effect for such a plan year, the ratio applied for such plan year in
accordance with such waiver)''.
SEC. 136. PERMITTING STATES TO WAIVE CERTAIN ACA REQUIREMENTS TO
ENCOURAGE FAIR HEALTH INSURANCE PREMIUMS.
(a) In General.--Section 2701 of the Public Health Service Act (42
U.S.C. 300gg) is amended by adding at the end the following new
subsection:
``(b) Permissible State Waiver to Encourage Fair Health Insurance
Premiums.--
``(1) In general.--A State may submit an application to the
Secretary for one or more of the following purposes:
``(A) In the case of plan years beginning on or
after January 1, 2018, to apply, subject to paragraph
(5), under subsection (a)(1)(A)(iii), instead of the
ratio specified in such subsection, a higher ratio
specified by the State (consistent with section
2707(c)).
``(B) In the case of plan years beginning on or
after January 1, 2020, for health insurance coverage
offered in the individual or small group market in such
State, to apply, subject to paragraph (5), instead of
the essential health benefits specified under
subsection (b) of section 1302 of the Patient
Protection and Affordable Care Act, essential health
benefits as specified by the State.
``(C) In the case of a State that has in place a
program that carries out the purpose described in
paragraph (1) or (2) of section 2202(a) of the Social
Security Act or participates in the program established
under section 2205 of such Act, for health insurance
offered in the individual market in such State, with
respect to an individual who is an applicable
policyholder of such coverage with respect to an
enforcement period (as defined in section 2710A(b))
applicable to enrollments for a plan year beginning
with plan year 2019 (or, in the case of enrollments
during a special enrollment period, beginning with plan
year 2018), to--
``(i) subject to paragraph (5), not apply
any increase to the monthly premium rate that
would otherwise apply under section 2710A to
such individual for such coverage; and
``(ii) instead, subject to paragraph (5)--
``(I) apply subsection (a)(1) as if
health status were included as a factor
described in subparagraph (A) of such
subsection; and
``(II) not apply section 2705(b).
``(2) Default approval.--An application submitted under
paragraph (1) is approved unless the Secretary notifies the
State submitting the application, not later than 60 days after
the date of the submission of such application, that the
application has been denied for not being in compliance with
any requirement of paragraph (3) and of the reason for such
denial.
``(3) Requirements.--The requirements of this paragraph,
with respect to an application submitted under paragraph (1),
are the following:
``(A) The application is submitted at such time,
and in such manner, as the Secretary may require.
``(B) The application specifies how the approval of
such application will provide for one or more of the
following:
``(i) Reducing average premiums for health
insurance coverage in the State.
``(ii) Increasing enrollment in health
insurance coverage in the State.
``(iii) Stabilizing the market for health
insurance coverage in the State.
``(iv) Stabilizing premiums for individuals
with pre-existing conditions.
``(v) Increasing the choice of health plans
in the State.
``(C) The application specifies the period for
which the waiver is to be effective, consistent with
paragraph (4).
``(D) In the case of an application for purposes of
paragraph (1)(A), the application specifies the higher
ratio to be applied pursuant to such paragraph.
``(E) In the case of an application for purposes of
paragraph (1)(B), the application specifies the
essential health benefits to be applied pursuant to
such paragraph.
``(F) In the case of an application for purposes of
paragraph (1)(C), the application demonstrates that the
State has in place a program that carries out the
purpose described in paragraph (1) or (2) of section
2202(a) of the Social Security Act or participates in
the program established under section 2205 of such Act.
``(4) Term of waiver.--
``(A) In general.--No waiver for a State under this
subsection may extend over a period of longer than 10
years unless the State requests continuation of such
waiver, and such request shall be deemed granted unless
the Secretary, within 90 days after the date of its
submission to the Secretary, either denies such request
in writing or informs the State in writing with respect
to any additional information which is needed in order
to make a final determination with respect to the
request.
``(B) Special rule.--A waiver applied for by a
State under paragraph (1)(C) may only be effective for
a period during which the State--
``(i) has in place a program that carries
out the purpose described in paragraph (1) or
(2) of section 2202(a) of the Social Security
Act; or
``(ii) participates in the program
established under section 2205 of such Act.
``(5) Non-application rules.--
``(A) Specified non-application provisions.--In no
case may a waiver for purposes of paragraph (1) apply
with respect to any of the following provisions:
``(i) Section 1301 of the Patient
Protection and Affordable Care Act, to the
extent that such section applies to qualified
health plans offered through the CO-OP program
under section 1322 of such Act or multi-State
plans under section 1334 of such Act.
``(ii) Sections 1312(d)(3)(D), 1331, 1332,
1333, and 1334 of such Act.
``(B) Hold harmless.--Any standard or requirement
adopted by a State pursuant to the terms of a waiver
approved under this subsection shall be deemed to
comply with section 1252 of the Patient Protection and
Affordable Care Act and subsection (a) of section 1324
of such Act, insofar as such standard or requirement
relates to a Federal or State law described in
subsection (b)(2) of such section (relating to
rating).''.
(b) Application to Essential Health Benefits.--Section 1302(a)(1)
of the Patient Protection and Affordable Care Act (42 U.S.C.
18022(a)(1)) is amended by inserting ``(or, in the case of health
insurance coverage offered in the individual or small group market in a
State for which there is an applicable waiver in effect under section
2701(b) of the Public Health Service Act for a plan year, the essential
health benefits applicable under such waiver)'' after ``subsection
(b)''.
SEC. 137. CONSTRUCTIONS.
(a) No Gender Rating.--Nothing in this Act shall be construed as
permitting health insurance issuers to discriminate in rates for health
insurance coverage by gender.
(b) No Limiting Access to Coverage for Individuals With Preexisting
Conditions.--Nothing in this Act shall be construed as permitting
health insurance issuers to limit access to health coverage for
individuals with preexisting conditions.
Subtitle E--Implementation Funding
SEC. 141. AMERICAN HEALTH CARE IMPLEMENTATION FUND.
(a) In General.--There is hereby established an American Health
Care Implementation Fund (referred to in this section as the ``Fund'')
within the Department of Health and Human Services to carry out
sections 121, 132, 202, and 214 (including the amendments made by such
sections).
(b) Funding.--There is appropriated to the Fund, out of any funds
in the Treasury not otherwise appropriated, $1,000,000,000 for Federal
administrative expenses to carry out the sections described in
subsection (a) (including the amendments made by such sections).
TITLE II--COMMITTEE ON WAYS AND MEANS
Subtitle A--Repeal and Replace of Health-Related Tax Policy
SEC. 201. RECAPTURE EXCESS ADVANCE PAYMENTS OF PREMIUM TAX CREDITS.
Subparagraph (B) of section 36B(f)(2) of the Internal Revenue Code
of 1986 is amended by adding at the end the following new clause:
``(iii) Nonapplicability of limitation.--
This subparagraph shall not apply to taxable
years beginning after December 31, 2017, and
before January 1, 2020.''.
SEC. 202. ADDITIONAL MODIFICATIONS TO PREMIUM TAX CREDIT.
(a) Modification of Definition of Qualified Health Plan.--
(1) In general.--Section 36B(c)(3)(A) of the Internal
Revenue Code of 1986 is amended--
(A) by inserting ``(determined without regard to
subparagraphs (A), (C)(ii), and (C)(iv) of paragraph
(1) thereof and without regard to whether the plan is
offered on an Exchange)'' after ``1301(a) of the
Patient Protection and Affordable Care Act'', and
(B) by striking ``shall not include'' and all that
follows and inserting ``shall not include any health
plan that--
``(i) is a grandfathered health plan or a
grandmothered health plan, or
``(ii) includes coverage for abortions
(other than any abortion necessary to save the
life of the mother or any abortion with respect
to a pregnancy that is the result of an act of
rape or incest).''.
(2) Definition of grandmothered health plan.--Section
36B(c)(3) of such Code is amended by adding at the end the
following new subparagraph:
``(C) Grandmothered health plan.--
``(i) In general.--The term `grandmothered
health plan' means health insurance coverage
which is offered in the individual health
insurance market as of October 1, 2013, and is
permitted to be offered in such market after
January 1, 2014, as a result of CCIIO guidance.
``(ii) CCIIO guidance defined.--The term
`CCIIO guidance' means the letter issued by the
Centers for Medicare & Medicaid Services on
November 14, 2013, to the State Insurance
Commissioners outlining a transitional policy
for non-grandfathered coverage in the
individual health insurance market, as
subsequently extended and modified (including
by a communication entitled `Insurance
Standards Bulletin Series--INFORMATION--
Extension of Transitional Policy through
Calendar Year 2017' issued on February 29,
2016, by the Director of the Center for
Consumer Information & Insurance Oversight of
such Centers).
``(iii) Individual health insurance
market.--The term `individual health insurance
market' means the market for health insurance
coverage (as defined in section 9832(b))
offered to individuals other than in connection
with a group health plan (within the meaning of
section 5000(b)(1)).''.
(3) Conforming amendment related to abortion coverage.--
Section 36B(c)(3) of such Code, as amended by paragraph (2), is
amended by adding at the end the following new subparagraph:
``(D) Certain rules related to abortion.--
``(i) Option to purchase separate coverage
or plan.--Nothing in subparagraph (A) shall be
construed as prohibiting any individual from
purchasing separate coverage for abortions
described in such subparagraph, or a health
plan that includes such abortions, so long as
no credit is allowed under this section with
respect to the premiums for such coverage or
plan.
``(ii) Option to offer coverage or plan.--
Nothing in subparagraph (A) shall restrict any
health insurance issuer offering a health plan
from offering separate coverage for abortions
described in such subparagraph, or a plan that
includes such abortions, so long as premiums
for such separate coverage or plan are not paid
for with any amount attributable to the credit
allowed under this section (or the amount of
any advance payment of the credit under section
1412 of the Patient Protection and Affordable
Care Act).
``(iii) Other treatments.--The treatment of
any infection, injury, disease, or disorder
that has been caused by or exacerbated by the
performance of an abortion shall not be treated
as an abortion for purposes of subparagraph
(A).''.
(4) Conforming amendments related to off-exchange
coverage.--
(A) Advance payment not applicable.--Section 1412
of the Patient Protection and Affordable Care Act is
amended by adding at the end the following new
subsection:
``(f) Exclusion of Off-Exchange Coverage.--Advance payments under
this section, and advance determinations under section 1411, with
respect to any credit allowed under section 36B shall not be made with
respect to any health plan which is not enrolled in through an
Exchange.''.
(B) Reporting.--Section 6055(b) of the Internal
Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(3) Information relating to off-exchange premium credit
eligible coverage.--If minimum essential coverage provided to
an individual under subsection (a) consists of a qualified
health plan (as defined in section 36B(c)(3)) which is not
enrolled in through an Exchange established under title I of
the Patient Protection and Affordable Care Act, a return
described in this subsection shall include--
``(A) a statement that such plan is a qualified
health plan (as defined in section 36B(c)(3)),
``(B) the premiums paid with respect to such
coverage,
``(C) the months during which such coverage is
provided to the individual,
``(D) the adjusted monthly premium for the
applicable second lowest cost silver plan (as defined
in section 36B(b)(3)) for each such month with respect
to such individual, and
``(E) such other information as the Secretary may
prescribe.''.
(C) Other conforming amendments.--
(i) Section 36B(b)(2)(A) of such Code is
amended by striking ``and which were enrolled''
and all that follows and inserting ``, or''.
(ii) Section 36B(b)(3)(B)(i) of such Code
is amended by striking ``the same Exchange''
and all that follows and inserting ``the
Exchange through which such taxpayer is
permitted to obtain coverage, and''.
(iii) Section 36B(c)(2)(A)(i) of such Code
is amended by striking ``that was enrolled in
through an Exchange established by the State
under section 1311 of the Patient Protection
and Affordable Care Act''.
(b) Modification of Applicable Percentage.--Section 36B(b)(3)(A) of
such Code is amended to read as follows:
``(A) Applicable percentage.--
``(i) In general.--The applicable
percentage for any taxable year shall be the
percentage such that the applicable percentage
for any taxpayer whose household income is
within an income tier specified in the
following table shall increase, on a sliding
scale in a linear manner, from the initial
percentage to the final percentage specified in
such table for such income tier with respect to
a taxpayer of the age involved:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``In the case of Up to Age 29 Age 30-39 Age 40-49 Age 50-59 Over Age 59
household income ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(expressed as a
percent of the
poverty line)
within the Initial % Final % Initial % Final % Initial % Final % Initial % Final % Initial % Final %
following income
tier:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Up to 133% 2............... 2............... 2............... 2.............. 2.............. 2.............. 2.............. 2.............. 2.............. 2
133%-150% 3............... 4............... 3............... 4.............. 3.............. 4.............. 3.............. 4.............. 3.............. 4
150%-200% 4............... 4.3............. 4............... 5.3............ 4.............. 6.3............ 4.............. 7.3............ 4.............. 8.3
200%-250% 4.3............. 4.3............. 5.3............. 5.9............ 6.3............ 8.05........... 7.3............ 9.............. 8.3............ 10
250%-300% 4.3............. 4.3............. 5.9............. 5.9............ 8.05........... 8.35........... 9.............. 10.5........... 10............. 11.5
300%-400% 4.3............. 4.3............. 5.9............. 5.9............ 8.35........... 8.35........... 10.5........... 10.5........... 11.5........... 11.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``(ii) Age determinations.--
``(I) In general.--For purposes of
clause (i), the age of the taxpayer
taken into account under clause (i)
with respect to any taxable year is the
age attained by such taxpayer before
the close of such taxable year.
``(II) Joint returns.--In the case
of a joint return, the age of the older
spouse shall be taken into account
under clause (i).
``(iii) Indexing.--In the case of any
taxable year beginning in calendar year 2019,
the initial and final percentages contained in
clause (i) shall be adjusted to reflect--
``(I) the excess (if any) of the
rate of premium growth for the period
beginning with calendar year 2013 and
ending with calendar year 2018, over
the rate of income growth for such
period, and
``(II) in addition to any
adjustment under subclause (I), the
excess (if any) of the rate of premium
growth for calendar year 2018, over the
rate of growth in the consumer price
index for calendar year 2018.
``(iv) Failsafe.--Clause (iii)(II) shall
apply only if the aggregate amount of premium
tax credits under this section and cost-sharing
reductions under section 1402 of the Patient
Protection and Affordable Care Act for calendar
year 2018 exceeds an amount equal to 0.504
percent of the gross domestic product for such
calendar year.''.
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years beginning after December 31, 2017.
(2) Advance payment not applicable to off-exchange
coverage.--The amendment made by subsection (a)(4)(A) shall
take effect on January 1, 2018.
(3) Reporting.--The amendment made by subsection (a)(4)(B)
shall apply to coverage provided for months beginning after
December 31, 2017.
(4) Modification of applicable percentage.--The amendment
made by subsection (b) shall apply to taxable years beginning
after December 31, 2018.
SEC. 203. SMALL BUSINESS TAX CREDIT.
(a) In General.--Section 45R of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(j) Shall Not Apply.--This section shall not apply with respect
to amounts paid or incurred in taxable years beginning after December
31, 2019.''.
(b) Disallowance of Small Employer Health Insurance Expense Credit
for Plan Which Includes Coverage for Abortion.--Subsection (h) of
section 45R of the Internal Revenue Code of 1986 is amended--
(1) by striking ``Any term'' and inserting the following:
``(1) In general.--Any term''; and
(2) by adding at the end the following new paragraph:
``(2) Exclusion of health plans including coverage for
abortion.--
``(A) In general.--The term `qualified health plan'
does not include any health plan that includes coverage
for abortions (other than any abortion necessary to
save the life of the mother or any abortion with
respect to a pregnancy that is the result of an act of
rape or incest).
``(B) Certain rules related to abortion.--
``(i) Option to purchase separate coverage
or plan.--Nothing in subparagraph (A) shall be
construed as prohibiting any employer from
purchasing for its employees separate coverage
for abortions described in such subparagraph,
or a health plan that includes such abortions,
so long as no credit is allowed under this
section with respect to the employer
contributions for such coverage or plan.
``(ii) Option to offer coverage or plan.--
Nothing in subparagraph (A) shall restrict any
health insurance issuer offering a health plan
from offering separate coverage for abortions
described in such subparagraph, or a plan that
includes such abortions, so long as such
separate coverage or plan is not paid for with
any employer contribution eligible for the
credit allowed under this section.
``(iii) Other treatments.--The treatment of
any infection, injury, disease, or disorder
that has been caused by or exacerbated by the
performance of an abortion shall not be treated
as an abortion for purposes of subparagraph
(A).''.
(c) Effective Dates.--
(1) In general.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2019.
(2) Disallowance of small employer health insurance expense
credit for plan which includes coverage for abortion.--The
amendments made by subsection (b) shall apply to taxable years
beginning after December 31, 2017.
SEC. 204. INDIVIDUAL MANDATE.
(a) In General.--Section 5000A(c) of the Internal Revenue Code of
1986 is amended--
(1) in paragraph (2)(B)(iii), by striking ``2.5 percent''
and inserting ``Zero percent'', and
(2) in paragraph (3)--
(A) by striking ``$695'' in subparagraph (A) and
inserting ``$0'', and
(B) by striking subparagraph (D).
(b) Effective Date.--The amendments made by this section shall
apply to months beginning after December 31, 2015.
SEC. 205. EMPLOYER MANDATE.
(a) In General.--
(1) Paragraph (1) of section 4980H(c) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in the case
of months beginning after December 31, 2015)'' after
``$2,000''.
(2) Paragraph (1) of section 4980H(b) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in the case
of months beginning after December 31, 2015)'' after
``$3,000''.
(b) Effective Date.--The amendments made by this section shall
apply to months beginning after December 31, 2015.
SEC. 206. REPEAL OF THE TAX ON EMPLOYEE HEALTH INSURANCE PREMIUMS AND
HEALTH PLAN BENEFITS.
Section 4980I of the Internal Revenue Code of 1986 is amended by
adding at the end the following new subsection:
``(h) Shall Not Apply.--No tax shall be imposed under this section
with respect to any taxable period beginning after December 31, 2019,
and before January 1, 2026.''.
SEC. 207. REPEAL OF TAX ON OVER-THE-COUNTER MEDICATIONS.
(a) HSAs.--Subparagraph (A) of section 223(d)(2) of the Internal
Revenue Code of 1986 is amended by striking ``Such term'' and all that
follows through the period.
(b) Archer MSAs.--Subparagraph (A) of section 220(d)(2) of the
Internal Revenue Code of 1986 is amended by striking ``Such term'' and
all that follows through the period.
(c) Health Flexible Spending Arrangements and Health Reimbursement
Arrangements.--Section 106 of the Internal Revenue Code of 1986 is
amended by striking subsection (f) and by redesignating subsection (g)
as subsection (f).
(d) Effective Dates.--
(1) Distributions from savings accounts.--The amendments
made by subsections (a) and (b) shall apply to amounts paid
with respect to taxable years beginning after December 31,
2016.
(2) Reimbursements.--The amendment made by subsection (c)
shall apply to expenses incurred with respect to taxable years
beginning after December 31, 2016.
SEC. 208. REPEAL OF INCREASE OF TAX ON HEALTH SAVINGS ACCOUNTS.
(a) HSAs.--Section 223(f)(4)(A) of the Internal Revenue Code of
1986 is amended by striking ``20 percent'' and inserting ``10
percent''.
(b) Archer MSAs.--Section 220(f)(4)(A) of the Internal Revenue Code
of 1986 is amended by striking ``20 percent'' and inserting ``15
percent''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions made after December 31, 2016.
SEC. 209. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO FLEXIBLE SPENDING
ACCOUNTS.
(a) In General.--Section 125 of the Internal Revenue Code of 1986
is amended by striking subsection (i).
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2016.
SEC. 210. REPEAL OF MEDICAL DEVICE EXCISE TAX.
Section 4191 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new subsection:
``(d) Applicability.--The tax imposed under subsection (a) shall
not apply to sales after December 31, 2016.''.
SEC. 211. REPEAL OF ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO
MEDICARE PART D SUBSIDY.
(a) In General.--Section 139A of the Internal Revenue Code of 1986
is amended by adding at the end the following new sentence: ``This
section shall not be taken into account for purposes of determining
whether any deduction is allowable with respect to any cost taken into
account in determining such payment.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2016.
SEC. 212. REDUCTION OF INCOME THRESHOLD FOR DETERMINING MEDICAL CARE
DEDUCTION.
(a) In General.--Subsection (a) of section 213 of the Internal
Revenue Code of 1986 is amended by striking ``10 percent'' and
inserting ``5.8 percent''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2016.
SEC. 213. REPEAL OF MEDICARE TAX INCREASE.
(a) In General.--Subsection (b) of section 3101 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(b) Hospital Insurance.--In addition to the tax imposed by the
preceding subsection, there is hereby imposed on the income of every
individual a tax equal to 1.45 percent of the wages (as defined in
section 3121(a)) received by such individual with respect to employment
(as defined in section 3121(b)).''.
(b) SECA.--Subsection (b) of section 1401 of the Internal Revenue
Code of 1986 is amended to read as follows:
``(b) Hospital Insurance.--In addition to the tax imposed by the
preceding subsection, there shall be imposed for each taxable year, on
the self-employment income of every individual, a tax equal to 2.9
percent of the amount of the self-employment income for such taxable
year.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to remuneration received after, and taxable years
beginning after, December 31, 2022.
SEC. 214. REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE COVERAGE.
(a) In General.--Section 36B of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED HEALTH
PLAN.
``(a) Allowance of Premium Tax Credit.--In the case of an
individual, there shall be allowed as a credit against the tax imposed
by this subtitle for the taxable year the sum of the monthly credit
amounts with respect to such taxpayer for calendar months during such
taxable year which are eligible coverage months appropriately taken
into account under subsection (b)(2) with respect to the taxpayer or
any qualifying family member of the taxpayer.
``(b) Monthly Credit Amounts.--
``(1) In general.--The monthly credit amount with respect
to any taxpayer for any calendar month is the lesser of--
``(A) the sum of the monthly limitation amounts
determined under subsection (c) with respect to the
taxpayer and the taxpayer's qualifying family members
for such month, or
``(B) the amount paid for a qualified health plan
for the taxpayer and the taxpayer's qualifying family
members for such month.
``(2) Eligible coverage month requirement.--No amount shall
be taken into account under subparagraph (A) or (B) of
paragraph (1) with respect to any individual for any month
unless such month is an eligible coverage month with respect to
such individual.
``(c) Monthly Limitation Amounts.--
``(1) In general.--The monthly limitation amount with
respect to any individual for any eligible coverage month
during any taxable year is \1/12\ of--
``(A) $2,000 in the case of an individual who has
not attained age 30 as of the beginning of such taxable
year,
``(B) $2,500 in the case of an individual who has
attained age 30 but who has not attained age 40 as of
such time,
``(C) $3,000 in the case of an individual who has
attained age 40 but who has not attained age 50 as of
such time,
``(D) $3,500 in the case of an individual who has
attained age 50 but who has not attained age 60 as of
such time, and
``(E) $4,000 in the case of an individual who has
attained age 60 as of such time.
``(2) Limitation based on modified adjusted gross income.--
The credit allowed under subsection (a) with respect to any
taxpayer for any taxable year shall be reduced (but not below
zero) by 10 percent of the excess (if any) of--
``(A) the taxpayer's modified adjusted gross income
(as defined in section 36B(d)(2)(B), as in effect for
taxable years beginning before January 1, 2020) for
such taxable year, over
``(B) $75,000 (twice such amount in the case of a
joint return).
``(3) Other limitations.--
``(A) Aggregate dollar limitation.--The sum of the
monthly limitation amounts taken into account under
this section with respect to any taxpayer for any
taxable year shall not exceed $14,000.
``(B) Maximum number of individuals taken into
account.--With respect to any taxpayer for any month,
monthly limitation amounts shall be taken into account
under this section only with respect to the 5 oldest
individuals with respect to whom monthly limitation
amounts could (without regard to this subparagraph)
otherwise be so taken into account.
``(d) Eligible Coverage Month.--For purposes of this section, the
term `eligible coverage month' means, with respect to any individual,
any month if, as of the first day of such month, the individual meets
the following requirements:
``(1) The individual is covered by a health insurance
coverage which is certified by the State in which such
insurance is offered as coverage that meets the requirements
for qualified health plans under subsection (f).
``(2) The individual is not eligible for--
``(A) coverage under a group health plan (within
the meaning of section 5000(b)(1)) other than coverage
under a plan substantially all of the coverage of which
is of excepted benefits described in section 9832(c),
or
``(B) coverage described in section 5000A(f)(1)(A).
``(3) The individual is either--
``(A) a citizen or national of the United States,
or
``(B) a qualified alien (within the meaning of
section 431 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C.
1641)).
``(4) The individual is not incarcerated, other than
incarceration pending the disposition of charges.
``(e) Qualifying Family Member.--For purposes of this section, the
term `qualifying family member' means--
``(1) in the case of a joint return, the taxpayer's spouse,
``(2) any dependent of the taxpayer, and
``(3) with respect to any eligible coverage month, any
child (as defined in section 152(f)(1)) of the taxpayer who as
of the end of the taxable year has not attained age 27 if such
child is covered for such month under a qualified health plan
which also covers the taxpayer (in the case of a joint return,
either spouse).
``(f) Qualified Health Plan.--For purposes of this section, the
term `qualified health plan' means any health insurance coverage (as
defined in section 9832(b)) if--
``(1) such coverage is offered in the individual health
insurance market within a State (within the meaning of section
5000A(f)(1)(C)),
``(2) substantially all of such coverage is not of excepted
benefits described in section 9832(c),
``(3) such coverage does not consist of short-term limited
duration insurance (within the meaning of section 2791(b)(5) of
the Public Health Service Act),
``(4) such coverage is not a grandfathered health plan (as
defined in section 1251 of the Patient Protection and
Affordable Care Act) or a grandmothered health plan (as defined
in section 36B(c)(3)(C) as in effect for taxable years
beginning before January 1, 2020), and
``(5) such coverage does not include coverage for abortions
(other than any abortion necessary to save the life of the
mother or any abortion with respect to a pregnancy that is the
result of an act of rape or incest).
``(g) Special Rules.--
``(1) Married couples must file joint return.--
``(A) In general.--Except as provided in
subparagraph (B), if the taxpayer is married (within
the meaning of section 7703) at the close of the
taxable year, no credit shall be allowed under this
section to such taxpayer unless such taxpayer and the
taxpayer's spouse file a joint return for such taxable
year.
``(B) Exception for certain taxpayers.--
Subparagraph (A) shall not apply to any married
taxpayer who--
``(i) is living apart from the taxpayer's
spouse at the time the taxpayer files the tax
return,
``(ii) is unable to file a joint return
because such taxpayer is a victim of domestic
abuse or spousal abandonment,
``(iii) certifies on the tax return that
such taxpayer meets the requirements of clauses
(i) and (ii), and
``(iv) has not met the requirements of
clauses (i), (ii), and (iii) for each of the 3
preceding taxable years.
``(2) Denial of credit to dependents.--
``(A) In general.--No credit shall be allowed under
this section to any individual who is a dependent with
respect to another taxpayer for a taxable year
beginning in the calendar year in which such
individual's taxable year begins.
``(B) Coordination with rule for older children.--
In the case of any individual who is a qualifying
family member described in subsection (e)(3) with
respect to another taxpayer for any month, in
determining the amount of any credit allowable to such
individual under this section for any taxable year of
such individual which includes such month, the monthly
limitation amount with respect to such individual for
such month shall be zero and no amount paid for any
qualified health plan with respect to such individual
for such month shall be taken into account.
``(3) Coordination with medical expense deduction.--Amounts
described in subsection (b)(1)(B) with respect to any month
shall not be taken into account in determining the deduction
allowed under section 213 except to the extent that such
amounts exceed the amount described in subsection (b)(1)(A)
with respect to such month.
``(4) Coordination with advance payments of credit.--With
respect to any taxable year--
``(A) 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 1412 of the Patient Protection
and Affordable Care Act for months beginning in such
taxable year, and
``(B) the tax imposed by section 1 for such taxable
year shall be increased by the excess (if any) of--
``(i) the aggregate amount paid on behalf
of such taxpayer under such section 1412 for
months beginning in such taxable year, over
``(ii) the amount which would (but for this
subsection) be allowed as a credit to the
taxpayer under subsection (a).
``(5) Special rules for qualified small employer health
reimbursement arrangements.--
``(A) In general.--If the taxpayer or any
qualifying family member of the taxpayer is provided a
qualified small employer health reimbursement
arrangement for an eligible coverage month, the sum
determined under subsection (b)(1)(A) with respect to
the taxpayer shall be reduced (but not below zero) by
\1/12\ of the permitted benefit (as defined in section
9831(d)(3)(C)) under such arrangement for each such
month such arrangement is provided to such taxpayer.
``(B) Qualified small employer health reimbursement
arrangement.--For purposes of this paragraph, the term
`qualified small employer health reimbursement
arrangement' has the meaning given such term by section
9831(d)(2).
``(C) Coverage for less than entire year.--In the
case of an employee who is provided a qualified small
employer health reimbursement arrangement for less than
an entire year, subparagraph (A) shall be applied by
substituting `the number of months during the year for
which such arrangement was provided' for `12'.
``(6) Certain rules related to nonqualified health plans.--
The rules of section 36B(c)(3)(D), as in effect for taxable
years beginning before January 1, 2020, shall apply with
respect to subsection (f)(5).
``(7) Inflation adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2020, each dollar
amount in subsection (c)(1), the $75,000 amount in
subsection (c)(2)(B), and the dollar amount in
subsection (c)(3)(A), shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined--
``(I) by substituting `calendar
year 2019' for `calendar year 1992' in
subparagraph (B) thereof, and
``(II) by substituting for the CPI
referred to section 1(f)(3)(A) the
amount that such CPI would have been if
the annual percentage increase in CPI
with respect to each year after 2019
had been one percentage point greater.
``(B) Terms related to cpi.--
``(i) Annual percentage increase.--For
purposes of subparagraph (A)(ii)(II), the term
`annual percentage increase' means the
percentage (if any) by which CPI for any year
exceeds CPI for the prior year.
``(ii) Other terms.--Terms used in this
paragraph which are also used in section
1(f)(3) shall have the same meanings as when
used in such section.
``(C) Rounding.--Any increase determined under
subparagraph (A) shall be rounded to the nearest
multiple of $50.
``(8) Rules related to state certification of qualified
health plans.--A certification shall not be taken into account
under subsection (d)(1) unless such certification is made
available to the public and meets such other requirements as
the Secretary may provide.
``(9) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section and section 1412 of the
Patient Protection and Affordable Care Act.''.
(b) Advance Payment of Credit.--Section 1412(f) of the Patient
Protection and Affordable Care Act, as added by section 202, is amended
to read as follows:
``(f) Application to Certain Plans.--The Secretary and the
Secretary of the Treasury shall prescribe such regulations as each
respective Secretary may deem necessary in order to establish and
operate the advance payment program established under this section for
individuals covered under qualified health plans (whether enrolled in
through an Exchange or otherwise) in such a manner that protects
taxpayer information (including names, taxpayer identification numbers,
and other confidential information), provides robust verification of
all information necessary to establish eligibility of taxpayer for
advance payments under this section, ensures proper and timely payments
to appropriate health providers, and protects program integrity to the
maximum extent feasible.''.
(c) Increased Penalty on Erroneous Claims of Credit.--Section
6676(a) of the Internal Revenue Code of 1986 is amended by inserting
``(25 percent in the case of a claim for refund or credit relating to
the health insurance coverage credit under section 36B)''.
(d) Reporting by Employers.--Section 6051(a) of such Code is
amended by striking ``and'' at the end of paragraph (14), by striking
the period at the end of paragraph (15) and inserting ``, and'', and by
inserting after paragraph (15) the following new paragraph:
``(16) each month with respect to which the employee is
eligible for coverage described in section 36B(d)(2) in
connection with employment with the employer.''.
(e) Coordination With Other Tax Benefits.--
(1) Credit for health insurance costs of eligible
individuals.--Section 35(g) of such Code is amended by adding
at the end the following new paragraph:
``(14) Coordination with health insurance coverage
credit.--
``(A) In general.--An eligible coverage month to
which the election under paragraph (11) applies shall
not be treated as an eligible coverage month (as
defined in section 36B(d)) for purposes of section 36B
with respect to the taxpayer or any of the taxpayer's
qualifying family members (as defined in section
36B(e)).
``(B) Coordination with advance payments of health
insurance coverage credit.--In the case of a taxpayer
who makes the election under paragraph (11) with
respect to any eligible coverage month in a taxable
year or on behalf of whom any advance payment is made
under section 7527 with respect to any month in such
taxable year--
``(i) the tax imposed by this chapter for
the taxable year shall be increased by the
excess, if any, of--
``(I) the sum of any advance
payments made on behalf of the taxpayer
under section 7527 and section 1412 of
the Patient Protection and Affordable
Care Act, over
``(II) the sum of the credits
allowed under this section (determined
without regard to paragraph (1)) and
section 36B (determined without regard
to subsection (g)(4)(A) thereof) for
such taxable year, and
``(ii) section 36B(g)(4)(B) shall not apply
with respect to such taxpayer for such taxable
year.''.
(2) Trade or business deduction.--Section 162(l) of such
Code is amended by adding at the end the following new
paragraph:
``(6) Coordination with health insurance coverage credit.--
The deduction otherwise allowable to a taxpayer under paragraph
(1) for any taxable year shall be reduced (but not below zero)
by the amount of the credit allowable to such taxpayer under
section 36B (determined without regard to subsection (g)(4)(A)
thereof) for such taxable year.''.
(f) Effective Date.--The amendments made by this section shall
apply to months beginning after December 31, 2019, in taxable years
ending after such date.
SEC. 215. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT
INCREASED TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET
LIMITATION.
(a) Self-Only Coverage.--Section 223(b)(2)(A) of the Internal
Revenue Code of 1986 is amended by striking ``$2,250'' and inserting
``the amount in effect under subsection (c)(2)(A)(ii)(I)''.
(b) Family Coverage.--Section 223(b)(2)(B) of such Code is amended
by striking ``$4,500'' and inserting ``the amount in effect under
subsection (c)(2)(A)(ii)(II)''.
(c) Conforming Amendments.--Section 223(g)(1) of such Code is
amended--
(1) by striking ``subsections (b)(2) and'' both places it
appears and inserting ``subsection'', and
(2) in subparagraph (B), by striking ``determined by'' and
all that follows through ```calendar year 2003'.'' and
inserting ``determined by substituting `calendar year 2003' for
`calendar year 1992' in subparagraph (B) thereof.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. 216. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME
HEALTH SAVINGS ACCOUNT.
(a) In General.--Section 223(b)(5) of the Internal Revenue Code of
1986 is amended to read as follows:
``(5) Special rule for married individuals with family
coverage.--
``(A) In general.--In the case of individuals who
are married to each other, if both spouses are eligible
individuals and either spouse has family coverage under
a high deductible health plan as of the first day of
any month--
``(i) the limitation under paragraph (1)
shall be applied by not taking into account any
other high deductible health plan coverage of
either spouse (and if such spouses both have
family coverage under separate high deductible
health plans, only one such coverage shall be
taken into account),
``(ii) such limitation (after application
of clause (i)) shall be reduced by the
aggregate amount paid to Archer MSAs of such
spouses for the taxable year, and
``(iii) such limitation (after application
of clauses (i) and (ii)) shall be divided
equally between such spouses unless they agree
on a different division.
``(B) Treatment of additional contribution
amounts.--If both spouses referred to in subparagraph
(A) have attained age 55 before the close of the
taxable year, the limitation referred to in
subparagraph (A)(iii) which is subject to division
between the spouses shall include the additional
contribution amounts determined under paragraph (3) for
both spouses. In any other case, any additional
contribution amount determined under paragraph (3)
shall not be taken into account under subparagraph
(A)(iii) and shall not be subject to division between
the spouses.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2017.
SEC. 217. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE
ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.
(a) In General.--Section 223(d)(2) of the Internal Revenue Code of
1986 is amended by adding at the end the following new subparagraph:
``(D) Treatment of certain medical expenses
incurred before establishment of account.--If a health
savings account is established during the 60-day period
beginning on the date that coverage of the account
beneficiary under a high deductible health plan begins,
then, solely for purposes of determining whether an
amount paid is used for a qualified medical expense,
such account shall be treated as having been
established on the date that such coverage begins.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to coverage beginning after December 31, 2017.
Subtitle B--Repeal of Certain Consumer Taxes
SEC. 221. REPEAL OF TAX ON PRESCRIPTION MEDICATIONS.
Subsection (j) of section 9008 of the Patient Protection and
Affordable Care Act is amended to read as follows:
``(j) Repeal.--This section shall apply to calendar years beginning
after December 31, 2010, and ending before January 1, 2017.''.
SEC. 222. REPEAL OF HEALTH INSURANCE TAX.
Subsection (j) of section 9010 of the Patient Protection and
Affordable Care Act is amended to read as follows:
``(j) Repeal.--This section shall apply to calendar years beginning
after December 31, 2013, and ending before January 1, 2017.''.
Subtitle C--Repeal of Tanning Tax
SEC. 231. REPEAL OF TANNING TAX.
(a) In General.--The Internal Revenue Code of 1986 is amended by
striking chapter 49.
(b) Effective Date.--The amendment made by this section shall apply
to services performed after June 30, 2017.
Subtitle D--Remuneration From Certain Insurers
SEC. 241. REMUNERATION FROM CERTAIN INSURERS.
Paragraph (6) of section 162(m) of the Internal Revenue Code of
1986 is amended by adding at the end the following new subparagraph:
``(I) Termination.--This paragraph shall not apply
to taxable years beginning after December 31, 2016.''.
Subtitle E--Repeal of Net Investment Income Tax
SEC. 251. REPEAL OF NET INVESTMENT INCOME TAX.
(a) In General.--Subtitle A of the Internal Revenue Code of 1986 is
amended by striking chapter 2A.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2016.
Passed the House of Representatives May 4, 2017.
Attest:
Clerk.
115th CONGRESS
1st Session
H. R. 1628
_______________________________________________________________________
AN ACT
To provide for reconciliation pursuant to title II of the concurrent
resolution on the budget for fiscal year 2017.