[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 191 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
1st Session
S. 191
To improve patient choice by allowing States to adopt market-based
alternatives to the Affordable Care Act that increase access to
affordable health insurance and reduce costs while ensuring important
consumer protections and improving patient care.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 23, 2017
Mr. Cassidy (for himself, Ms. Collins, Mrs. Capito, and Mr. Isakson)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To improve patient choice by allowing States to adopt market-based
alternatives to the Affordable Care Act that increase access to
affordable health insurance and reduce costs while ensuring important
consumer protections and improving patient care.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Patient Freedom
Act of 2017''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--HEALTH REFORM
Sec. 100. Definitions.
Subtitle A--Insurance Market Reform
Sec. 101. Ending the ``one size fits all'' ACA approach; continuing
consumer protection policies by covering
adult children, protecting individuals with
preexisting conditions, and not applying
lifetime or annual limits.
Sec. 102. State health insurance options.
Sec. 103. State alternative option.
Sec. 104. Computation of monthly Roth HSA deposit amount for deposit
qualifying residents.
Sec. 105. State options for improved access to health insurance
coverage in each State.
Sec. 106. State flexibility in ensuring orderly health insurance market
outside of an Exchange.
Sec. 107. Expanded access and patient protections.
Sec. 108. Application of health savings accounts in relation to
Medicaid.
Subtitle B--Provider Price Transparency
Sec. 121. Ensuring access to emergency services without excessive
charges for out-of-network services.
TITLE II--REFORM OF TAX PROVISIONS RELATING TO HEALTH CARE
Subtitle A--Health Savings Accounts
Sec. 201. Transition to non-deductible HSAs.
Sec. 202. Treatment of direct primary care.
Sec. 203. Treatment of HSA after death of account beneficiary.
Subtitle B--Health Care Tax Credits
Sec. 211. Limited application of PPACA health premium credit.
Sec. 212. New Roth HSA credit.
TITLE I--HEALTH REFORM
SEC. 100. DEFINITIONS.
In this title:
(1) Patient-grant electing state.--The term ``patient-grant
electing State'' means an electing State that specifies under
section 103(a)(3)(B) that it will carry out section 103(b)
itself (and not to have section 103(b) carried out by means of
the credit under section 36C of the Internal Revenue Code of
1986).
(2) Budget neutral.--The term ``budget neutral'' with
respect to expenditures provided for in this Act, means the
same amount of expenditures as are provided for under the
Patient Protection and Affordable Care Act (Public Law 111-
148).
(3) CHIP.--The term ``CHIP'' means the Children's Health
Insurance Program established under title XXI of the Social
Security Act (42 U.S.C. 1396 et seq.).
(4) Creditable coverage.--The term ``creditable coverage''
has the meaning given such term in section 2704(c)(1) of the
Public Health Service Act (42 U.S.C. 300gg-3(c)(1)), as in
effect as of the day before the date of the enactment of this
Act.
(5) Default health insurance coverage.--The term ``default
health insurance coverage'' has the meaning given such term in
section 107(c)(2).
(6) Deposit qualifying resident.--The term ``deposit
qualifying resident'' has the meaning given such term in
section 103(b)(2).
(7) Electing state.--The term ``electing State'' means a
State that elects under section 102(a)(2) the alternative
option described in section 103.
(8) Health insurance coverage.--The term ``health insurance
coverage'' has the meaning given such term in section
2791(b)(1) of the Public Health Service Act (42 U.S.C. 300gg-
91(b)(1)).
(9) Health savings deposit.--The term ``health savings
deposit'' means a deposit made into a Roth HSA pursuant to
section 103.
(10) Medicaid.--The term ``Medicaid'' means the program
under title XIX of the Social Security Act (42 U.S.C. 1396 et
seq.).
(11) Medicare.--The term ``Medicare'' means the program
under part A or B of title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.).
(12) PPACA.--The term ``PPACA'' means the Patient
Protection and Affordable Care Act (Public Law 111-148), as in
effect on the day before the date of the enactment of this Act,
unless otherwise specified.
(13) Qualified health plan coverage.--The term ``qualified
health plan coverage'' means, with respect to residents of a
State, health insurance coverage that meets applicable
standards under State law, which standards need not be the same
as that previously required of qualified health plans under
title I of PPACA, and includes a high deductible health plan
(as defined in section 223(c)(2) of the Internal Revenue Code
of 1986) and includes coverage under a group health plan.
(14) Qualified resident.--The term ``qualified resident''
means, with respect to a State for a month, an individual who
is a resident of the State as of the first day of the month and
is a citizen or national of the United States or otherwise
lawfully residing in the State under color of law.
(15) Roth health savings account; roth hsa.--The terms
``Roth health savings account'' and ``Roth HSA'' mean a Roth
HSA established under section 530A of the Internal Revenue Code
of 1986.
(16) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(17) State.--The term ``State'' means the 50 States and the
District of Columbia.
(18) Uninsured.--The term ``uninsured'' means, with respect
to an individual, that the individual does not have creditable
coverage.
Subtitle A--Insurance Market Reform
SEC. 101. ENDING THE ``ONE SIZE FITS ALL'' ACA APPROACH; CONTINUING
CONSUMER PROTECTION POLICIES BY COVERING ADULT CHILDREN,
PROTECTING INDIVIDUALS WITH PREEXISTING CONDITIONS, AND
NOT APPLYING LIFETIME OR ANNUAL LIMITS.
(a) In General.--Subject to subsections (b) and (c), title I of the
Patient Protection and Affordable Care Act (including the amendments
made by such title) shall not apply (and the provisions of law amended
by such title are restored as if such title had not been enacted) in
the case of any State that does not have in effect the election
described in section 102(a)(1).
(b) Continuation of Policies for Extension of Dependent Coverage
for Adult Children and Prohibition of Lifetime and Annual Coverage
Limits; Preservation of Black Lung Benefits.--
(1) Public health service act provisions.--Notwithstanding
subsection (a), the following sections of the Public Health
Service Act, that were added or amended by subtitles A and C of
title I of PPACA, shall continue to apply to group health plans
and to health insurance coverage offered in the individual and
group market:
(A) No lifetime or annual limits.--Section 2711
(relating to no lifetime or annual limits), except in
the case of limited benefit insurance.
(B) Dependent coverage through age 26.--Section
2714 (relating to extension of dependent coverage).
(C) Prohibiting pre-existing condition
exclusions.--Section 2704 (relating to prohibition on
preexisting conditions).
(D) Prohibiting discrimination based on health
status.--Section 2705 (relating to prohibiting
discrimination against individual participants and
beneficiaries based on health status), subject to
subsection (c).
(E) Preservation of preventive service coverage.--
Section 2713 (relating to coverage of preventive health
services), if employers do not contribute to the
individual's Roth HSA.
(2) Preservation of non-discrimination in health care.--
Subsection (a) shall not apply with respect to section 1557 of
title I of the Patient Protection and Affordable Care Act (42
U.S.C. 18116).
(3) Preservation of coverage of mental health services, and
applicability of mental health parity.--For serious mental
illness, serious emotional disturbance, and substance use
disorder, subsection (a) shall not apply with respect to
section 1302(b)(1)(E) of title I of the Patient Protection and
Affordable Care Act (relating to coverage of mental health and
substance use treatment at limited cost sharing) (42 U.S.C.
18022(b)(1)(E)). Section 2726 of the Public Health Service Act
shall apply to qualified health plans in the same manner and to
the same extent as such section applies to health insurance
coverage and group health plans.
(4) Preservation of black lung benefits for coal miners.--
Subsection (a) shall not apply with respect to section 1556 of
title I of the Patient Protection and Affordable Care Act
(amending the Black Lung Benefits Act).
(5) Preservation of state innovations.--Subsection (a)
shall not apply with respect to section 1332 of title I of the
Patient Protection and Affordable Care Act (42 U.S.C. 18052).
(c) Continuation of Federal Exchanges.--Subsection (a) shall not
apply with respect to Federal Exchanges established pursuant to section
1321(c) of the Patient Protection and Affordable Care Act (42 U.S.C.
18041(c)) and such Exchanges shall continue to operate as provided for
by the Secretary.
SEC. 102. STATE HEALTH INSURANCE OPTIONS.
(a) In General.--Each State may elect, through written notice to
the Secretary after the date of the enactment of this Act and in
accordance with this title, 1 of the following 3 options in relation to
the implementation of title I of the Patient Protection and Affordable
Care Act after the date of enactment of this Act:
(1) Continuing implementation of ppaca.--The State
continuing--
(A) the Federal premium and cost-sharing subsidies
for coverage offered under title I of PPACA (and the
amendments made thereby), reduced for qualified
residents of such State for any year by the amount (if
any) by which such subsidies would exceed the amount of
contributions that would have been made under section
103(b) to all such residents for such year if the State
had elected the option under paragraph (3); and
(B) all other requirements under such title.
(2) Establishing new state and market-based alternative,
with alternative per beneficiary federal deposit system.--The
State implementing the alternative option described in section
103, which includes--
(A) the waiver of most requirements imposed under
such title I; and
(B) the provision of a new, Roth HSA- and market-
based deposit system for individuals who do not
otherwise qualify for Federal or State subsidies for
health benefits coverage.
(3) Rejection of ppaca.--The State rejecting title I of
PPACA (and the amendments made thereby), except as otherwise
required in this title.
If a State fails to make an election described in this subsection
during the 1-year period beginning on the date of enactment of this
Act, the State shall be deemed to have made the election described in
paragraph (2). A State may, through written notice to the Secretary,
change an election previously made under this subsection.
(b) Relation to Current Medicaid ACA Coverage Option.--Nothing in
this section shall be construed to change the option of a State with
respect to the implementation of Medicaid ACA coverage under section
1902(a)(10)(A)(i)(VIII) of the Social Security Act (42 U.S.C.
1396a(a)(10)(A)(i)(VIII)), except that a State that elects not to
provide medical assistance to individuals under such section may make
such individuals deposit qualifying residents under this title.
SEC. 103. STATE ALTERNATIVE OPTION.
(a) In General.--In the case of a State that elects under section
102(a)(2) the alternative option under this section, subject to
subsection (d) and section 107, the following shall apply:
(1) Elimination of individual and employer shared
responsibility for health care tax requirements for residents
and employees in state.--The individual and employer health
care responsibilities under the amendments made by title I of
PPACA (including under sections 5000A and 4980H of the Internal
Revenue Code of 1986) shall no longer apply pursuant to section
101 with respect to individuals who are residents of such State
and with respect to individuals who are employed in such State,
respectively.
(2) Modification of insurance requirements.--Except as
specifically provided in this title, the requirements under
title I of PPACA (including amendments made by such title)
relating to health insurance coverage offered in the State
shall not apply except to the extent specified by the State.
(3) New deposit system through funding roth hsas.--
(A) In general.--Deposit qualifying residents (as
defined in subsection (b)(2)) who are residing in the
State are eligible for a deposit to a Roth HSA that may
be used for premiums and cost-sharing for health
insurance coverage in accordance with subsection (b).
(B) State specification of manner of carrying out
roth hsa deposit system (patient-grant electing
state).--In making the election under this subsection,
a State shall specify whether the State will carry out
subsection (b) or if such subsection shall be carried
out by means of the credit under section 36C of the
Internal Revenue Code of 1986.
(4) Additional amounts for population health initiatives
for state administered roth hsa deposit system.--A patient-
grant electing State (as defined in section 100(1)) is entitled
to receive additional funding under subsection (c) for
population health initiatives.
(b) Deposit Through Payment Into Roth HSA for Deposit Qualifying
Residents.--
(1) In general.--The subsidies described in subsection
(a)(3) for an electing State shall be furnished for each
deposit qualifying resident through the deposit of a
contribution into a Roth HSA of the individual in the amount
determined under section 104. For purposes of the Internal
Revenue Code of 1986, the amount of any contribution to a Roth
HSA made under this paragraph shall be included in the gross
income of the individual for whose benefit the Roth HSA was
established.
(2) Deposit qualifying resident defined.--In this title,
the term ``deposit qualifying resident'' means, with respect to
a State and a month, an individual--
(A) who is a qualified resident (as defined in
section 100(14)) of the State as of the first day of
the month (or such other day in the month as the
Secretary may specify);
(B) with respect to whom a Roth HSA has been
established, which Roth HSA may have been established
by the State in carrying out this section;
(C) who is enrolled in qualified health plan
coverage (as defined in section 100(13)), which
enrollment may have been effected by the State in
carrying out this section; and
(D) who is not eligible for coverage under
Medicare, is not enrolled for benefits under Medicaid
or CHIP, and is not enrolled for benefits under chapter
55 of title 10, United States Code (relating to
TRICARE), or title 39 of such Code (relating to
veterans' benefits) or chapter 89 of title 5 of such
Code (relating to the Federal Employees Health Benefits
Program).
(3) Payment administration.--
(A) State.--In the case of an electing State that
elects to carry out this subsection through the State,
the Secretary shall provide for payment to the State in
amounts and in a time and manner sufficient to permit
the State to make timely monthly contributions to Roth
HSAs under this subsection. The Secretary may provide
for payment to the State using the payment methodology
described in subsection (d) of section 1903 of the
Social Security Act for payments under subsection (a)
of such section (applied without regard to any State
matching requirement) and may condition such payments
upon the provision of such information as the Secretary
may require to ensure the proper payments under this
subsection. As a condition of receiving payment under
this section, a State shall submit such information, in
such form, and manner, as the Secretary shall specify,
including information necessary to make the
computations of amounts under this section.
(B) Federal.--In the case of a State electing to
carry out this subsection other than through the State,
subsidies described in subsection (a)(3) shall be
provided through a refundable tax credit under section
36C of the Internal Revenue Code of 1986.
(4) Construction.--Nothing in this subsection shall be
construed--
(A) to prevent an individual from affirmatively
electing not to have a Roth HSA established on the
individual's behalf and not to be enrolled in health
insurance coverage;
(B) subject to subparagraph (A), to prevent a State
from establishing a Roth HSA for each deposit
qualifying resident who does not otherwise have a Roth
HSA;
(C) subject to subparagraph (A), to prevent a State
from establishing a mechanism whereby individuals who
would be deposit qualifying residents but for paragraph
(2)(C) are enrolled in health insurance coverage; and
(D) to prevent a State from changing its State
Medicaid plan to eliminate coverage under section
1902(a)(10)(A)(i)(VIII) of the Social Security Act (42
U.S.C. 1396a(a)(10)(A)(i)(VIII)), in order that
individuals otherwise covered under such section may
qualify for subsidies under this section.
(c) Population Health Initiative Funding.--
(1) In general.--In the case of an electing State for a
year, the State is entitled to receive payment from the
Secretary after the end of such year in an amount equal to 2
percent of the actual aggregate amount deposited under
subsection (b) into Roth HSAs for residents of the State for
the year.
(2) Use of funds.--Amounts paid to a State under paragraph
(1) may only be used for population health initiatives (as
defined by the Secretary).
(3) Entitlement.--Paragraph (1) constitutes budget
authority in advance of appropriations Acts and represents the
obligation of the Federal Government to provide for the payment
to States of amounts provided under such paragraph.
(d) Requiring Rules for Computing Usual, Customary, and Reasonable
(UCR) Prices.--As a condition for a State's election of the alternative
option under this section, the State must provide, through its
department of insurance or equivalent agency, for establishment of
rules to carry out section 1867(j)(1)(A)(ii) of the Social Security
Act, as added by section 121(a)(2).
SEC. 104. COMPUTATION OF MONTHLY ROTH HSA DEPOSIT AMOUNT FOR DEPOSIT
QUALIFYING RESIDENTS.
(a) Computation.--
(1) In general.--The Secretary shall develop a standardized
methodology to determine consistent with this section a monthly
Roth HSA deposit amount for deposit qualifying residents in
each State for months in each year. Subject to paragraphs (3)
and (4), such amount shall be equal to \1/12\ of the average
per capita annual amount computed under subsection (b) for the
State for the year, as adjusted for the deposit qualifying
resident involved--
(A) for age and geographic area under subsection
(c); and
(B) for income under subsection (d).
(2) No variation based on how deposit amount distributed.--
Such amount shall be the same for a deposit qualifying
individual without regard to whether the contribution to the
individual's Roth HSA is made by a State under this section or
by the Federal Government through the operation of section 36C
of the Internal Revenue Code of 1986.
(3) Patient-grant electing state has flexibility to
maintain level of benefits for current aca beneficiaries.--A
patient-grant electing State may elect to increase the amount
of the deposit for all deposit qualifying individuals under
this section to the amounts that the Secretary estimates would
have been paid with respect to such individuals under section
36B of the Internal Revenue Code of 1986 and section 1402 of
PPACA if those sections had remained in effect in the State
with respect to such individuals. Such election shall be made
for a year and shall continue from year to year until the State
elects to terminate such election. The Secretary shall, in
conjunction with the Actuary, ensure such changes to the amount
of deposit for qualifying individuals shall remain budget
neutral.
(4) Special rule for partial deposit for low-income
individuals with employer-sponsored insurance (esi).--In the
case of an individual who is covered under a group health plan
and with respect to such coverage there is a contribution by an
employer which is excluded from the individual's gross income
under the Internal Revenue Code of 1986, insofar as the
individual is a deposit qualifying resident, the amount of the
deposit with respect to the individual shall be reduced, in a
manner specified by the Secretary in consultation with the
Secretary of the Treasury and taking into account the income of
the individual's household, by an amount that is approximately
equivalent to the estimated amount of the reduction in the
amount of income tax resulting from such exclusion (and any
reduction in taxes imposed by chapter 21 or chapter 2 of such
Code by reason of any exclusion of such contributions from
wages and self employment income).
(b) Computation of Unadjusted Average Per Capita Annual Amount.--
(1) For states that continue ppaca medicaid coverage.--
(A) In general.--In the case of a State that
provides medical assistance under section
1902(a)(10)(A)(i)(VIII) of the Social Security Act (42
U.S.C. 1396b(a)(10)(A)(i)(VIII)) during a year, subject
to paragraphs (3) and (4), the Secretary shall compute
an average per capita annual amount for the State for
the year equal to--
(i) the amount specified in subparagraph
(B), divided by
(ii) the average monthly number of deposit
qualifying residents of the State in the year.
(B) Amount based on ppaca projected federal
expenditures.--The amount specified in this
subparagraph for a State for a year is 95 percent of
the Secretary's estimate of the total payments that
would have been made (assuming the existence of a State
established Exchange in the State) under section 36B of
the Internal Revenue Code of 1986 and under section
1402 of PPACA with respect to all qualified residents
in the State in the year (or taxable year ending with
such year, if applicable). The Secretary shall, in
conjunction with the Actuary, ensure such changes to
the amount of deposit for qualifying individuals shall
remain budget neutral.
(2) For states that do not provide ppaca medicaid
coverage.--
(A) In general.--In the case of a State not
described in paragraph (1) for a year, subject to
paragraphs (3) and (4), the Secretary shall compute an
average per capita annual amount for the State for the
year equal to--
(i) the amount specified in subparagraph
(B) for the State and year, divided by
(ii) the average monthly number of deposit
qualifying residents of the State in the year.
(B) Amount based on ppaca and medicaid projected
federal expenditures.--The amount specified in this
subparagraph for a State for a year is equal to the sum
of--
(i) 95 percent of the Secretary's estimate
of the total payments that would have been made
(assuming the existence of a State-established
Exchange in the State) under section 36B of the
Internal Revenue Code of 1986 and under section
1402 of PPACA with respect to all qualified
residents in the year (or taxable year ending
with such year, if applicable); and
(ii) the Secretary's estimate of the total
payments that would have been made to the State
under title XIX of the Social Security Act for
individuals eligible to be covered under
section 1902(a)(10)(A)(i)(VIII) of the Social
Security Act assuming the election of a State
to provide Medicaid coverage under such section
and assuming the applicable Federal medical
assistance percentage were 95 percent with
respect to such individuals.
(3) Budget neutral adjustment in payments to take into
account election of higher deposits to maintain aca subsidy
levels.--If a State makes the election described in subsection
(a)(3) with respect to providing higher deposit amounts for
certain individuals described in such subsection, then the
Secretary shall adjust the average per capita annual amount
under paragraph (1) or (2), as applicable to the State, by--
(A) reducing the amount described in paragraph
(1)(B) (or, if applicable, paragraph (2)(B)(i)) by an
amount equal to 95 percent of the aggregate increased
deposit level attributable to subsection (a)(3); and
(B) not counting such an individual as a qualifying
resident for purposes of paragraph (1)(A)(ii) (or, if
applicable, paragraph (2)(A)(ii)).
The Secretary shall, in conjunction with the Actuary, ensure
changes, as outlined in this subsection, to the amount of
deposit for qualifying individuals shall remain budget neutral.
(4) Adjustment for costs of partial deposits for low-income
esi individuals.--The Secretary shall adjust the average per
capita annual amount under paragraph (1) or (2), as applicable
to the State, by--
(A) reducing the amount described in paragraph
(1)(B) (or, if applicable, paragraph (2)(B)(i)) by an
amount equal to 95 percent of the amount of payments
under this section that are attributable to individuals
described in subsection (a)(4); and
(B) not counting any individual described in
subsection (a)(4) as a qualifying resident for purposes
of paragraph (1)(A)(ii) (or, if applicable, paragraph
(2)(A)(ii)).
(c) Adjustment for Age, Geographic Area, and Income Distribution
Within State.--
(1) In general.--The Secretary shall apply such adjustments
to the per capita amount computed under subsection (b) as is
designed to take into account, in a budget neutral manner and
based on the costs estimated under paragraph (2), actuarial
differences in health care costs attributable to individuals in
different age categories and different geographic locations of
primary residences in the State and the reductions based on
income under subsection (d). No such adjustment shall be made
based on sex.
(2) Data on average costs of services.--Not later than
December 15 before the beginning of each year, the Agency for
Healthcare Research and Quality shall estimate the average cost
of health care for such year for individuals under 65 years of
age and may estimate how such average varies for different
populations of individuals under age 65. The adjustments under
paragraph (1) for age categories for a year shall be based on
such estimates made. Not later than such date, the Secretary
shall prescribe tables for purposes of making adjustments based
on age under paragraph (1) based on such determination which
shall apply for taxable years beginning in the succeeding
calendar year.
(d) Income-Related Phase-Out.--
(1) In general.--The per capita amount as computed under
subsection (b) and adjusted and applied to a deposit qualifying
individual under subsection (c) shall be multiplied by a phase-
out percentage equal to 100 percent reduced by 1 percentage
point for each $1,000 (or fraction thereof) by which the
taxpayer's modified adjusted gross income for the taxable year
exceeds $90,000 (or, in the case of a joint return, $150,000),
multiplied, for a taxable year ending in a year beginning after
December 31, 2015, by the cost-of-living adjustment for the
year as described in section 1(f)(3) of the Internal Revenue
Code of 1986, but substituting ``2015'' for ``1992'' in
subparagraph (B) of such section.
(2) Zero per capita amount for married filing separately.--
The per capita amount under this section shall be zero in the
case of a married couple filing separately.
SEC. 105. STATE OPTIONS FOR IMPROVED ACCESS TO HEALTH INSURANCE
COVERAGE IN EACH STATE.
(a) State Options To Improve Access.--
(1) In general.--Each State may carry out any of the
functions described in this section in order to improve the
access of residents of the State to health insurance coverage.
(2) Repurposing state exchanges.--A State may use or adapt
an Exchange that the State has established under title I of
PPACA to carry out any such function.
(3) Repurposing federal exchange.--The Federal Government
shall make available to States current capabilities of the
Federal Exchange, including the Federal Data Services Hub and
Agent Broker Portal, to the extent requested by a State for
activities related to enrollment of citizens of the State into
health insurance coverage.
(b) Transparency Portal.--Each State may establish and operate an
open and transparent marketplace mechanism whereby qualified residents
of the State can readily compare, through the use of the Internet, the
benefits and prices between different health insurance coverage options
made available to them.
(c) Enrollment, Subject to Individual Opt-Out.--A State may provide
for the enrollment of qualified residents of the State who are
uninsured in default health insurance coverage offered under section
107(c) and establishing a Roth HSA for such residents who do not have a
Roth HSA unless the resident has affirmatively elected not to be so
enrolled and not to have a Roth HSA, respectively. Any such enrollment
under this paragraph shall be coordinated with the annual open
enrollment periods provided under section 107(b).
(d) Risk Mitigation Mechanisms and Reinsurance and Risk-Corridor
Programs.--
(1) In general.--Notwithstanding any other provision of
this title or section 223(c)(2) of the Internal Revenue Code of
1986, a State may establish--
(A) mechanisms for risk mitigation or risk
adjustment in order to limit volatility in the premiums
based on health experience to class-average premiums;
and
(B) a reinsurance and risk-corridor program that
involves no Federal funds with respect to coverage both
in the individual market and in the small group market.
(2) Basis for risk adjustment.--Mechanisms and programs
under paragraph (1) may be based on the health status score of
each individual enrolled in health insurance coverage in the
individual market and not solely based on the aggregate risk of
the risk pool with respect to each plan of health insurance
coverage.
(e) Modified Health Status Insurance Mechanism.--
(1) In general.--A State may establish a mechanism for
providing modified health status insurance in the State to
encourage health plans to implement adequate benefit designs
and services for a chronically ill individual.
(2) Requirements.--A mechanism under paragraph (1) may
implement the following requirements:
(A) During the first open enrollment period after
the date of enactment of this Act, an individual health
plan shall provide coverage for health benefits as
defined in the health plan for a period of 12 months.
(B) If an individual enrolls in a new health plan
during the open enrollment period at the end of the
first 12 months of coverage under subparagraph (A), the
plan in which the individual was enrolled prior to such
period shall be responsible for financing 75 percent of
the health benefits administered to the individual
under any other health plan in which the individual
enrolls for the initial 3-month period of coverage
under such other plan.
(C) During the 3-month period described in
subparagraph (B), the plan in which the individual was
enrolled prior to such period shall receive 75 percent
of the premiums paid for the individual's coverage
under the other health plan.
(D) During the third open enrollment period after
the date of enactment of this Act, and during all
subsequent open enrollment periods, a health plan that
has enrollees terminate their coverage in order to
enroll in other health plans shall be responsible for
financing 75 percent of the health benefits
administered to such enrollees under the other plans
and shall receive 75 percent of the premiums paid for
such enrollees' coverage under such other health plans
for the first 3 months of coverage in the new plan
year.
SEC. 106. STATE FLEXIBILITY IN ENSURING ORDERLY HEALTH INSURANCE MARKET
OUTSIDE OF AN EXCHANGE.
(a) In General.--With respect to health insurance coverage offered
in a State, the State may, in consultation with the Secretary, take
such steps, such as limiting the availability of general open
enrollment periods, imposing delays in the effectiveness for coverage,
permitting differentials in premiums based on age and other factors, as
the State determines necessary in order to ensure an orderly market for
health insurance coverage in the State that is not offered through an
Exchange. Such steps may include the establishment of an initial open
enrollment period during which qualified residents may enroll in health
insurance coverage without the imposition of any underwriting as the
State determines to be appropriate in ensuring initial access to such
coverage.
(b) Flexibility in Imposing Additional Requirements.--Nothing in
this section shall be construed as preventing a State from continuing
to apply, to health insurance coverage issued in the State,
requirements under the provisions of title XXVII of the Public Health
Service Act (as amended by subtitles A and C of title I of PPACA), that
are not continued under section 101(b).
(c) State Flexibility With Respect to Exchanges.--A State may waive
such provisions of part 2 of subtitle D of title I of PPACA, in
relation to the establishment of an Exchange in such State, as the
State determines appropriate in order for the State to implement and
administer a market-based system for the availability of health
insurance coverage throughout the State.
SEC. 107. EXPANDED ACCESS AND PATIENT PROTECTIONS.
(a) In General.--As a condition for the election of the alternative
option under section 103 in a State, the State must meet the
requirements of this section.
(b) Annual and Other Open Enrollment Periods.--
(1) In general.--The State shall require, in connection
with the offering of health insurance coverage in the
individual market in the State, that there are uniform annual
and other open enrollment periods (such as those for changes in
life events, changes in State residency, and involuntary
changes in eligibility for coverage under a group health plan)
in order to permit qualified residents to enroll in qualified
health plan coverage in a manner that promotes continuity of
coverage. Such periods shall be consistent with the open
enrollment periods established under title I of PPACA, as in
effect on the day before the date of the enactment of this Act.
(2) Initial open enrollment period.--In addition, the State
shall establish an initial open enrollment period during which
qualified residents may enroll in qualified health plan
coverage without the imposition of any underwriting described
in subsection (d)(1)(B). Such period shall be a period of not
less than 45 days and shall provide for enrollment to become
effective on January 1 of the year specified by the State in
which such State election first becomes effective.
(c) Offering of Default Health Insurance Coverage.--
(1) Enrollment, subject to individual opt-out.--Subject to
paragraph (4), a State may elect to provide for the enrollment
of residents of the State who are uninsured in default health
insurance coverage (as defined in paragraph (2)) and
establishing a Roth HSA for such residents who do not have a
Roth HSA unless the resident has affirmatively elected not to
be so enrolled and not to have such an account, respectively.
If a State makes such an election, the State shall permit
eligible residents to enroll in such coverage on a continuous
basis.
(2) Default health insurance coverage defined.--In this
subsection, the term ``default health insurance coverage''
means, with respect to a State, health insurance coverage
that--
(A) is a high deductible health plan (within the
meaning of section 223(c)(2) of the Internal Revenue
Code of 1986) with prescription drug coverage limited
to a Tier 1 formulary benefit (as commonly understood)
for a limited number of chronic conditions (commonly
referred to as tier I pharmacy benefit);
(B) meets such requirements as may apply to qualify
for the payment of plan premiums from a health savings
account under section 223 of such Code (such as age-
related premiums and limitation on imposition of
preexisting condition exclusions);
(C) has a provider network for covered benefits
that is adequate (as determined consistent with the
guidelines issued by the Secretary relating to provider
access requirements for Medicare Advantage
organizations under section 1852(d) of the Social
Security Act (42 U.S.C. 1395w-22(d))) to ensure access
to health benefits under such plan;
(D) provides for coverage of childhood
immunizations without cost sharing requirements to the
extent such immunizations have in effect a
recommendation from the Advisory Committee on
Immunization Practices of the Centers for Disease
Control and Prevention with respect to the individual
involved; and
(E) meets such other requirements as the State may
specify.
(3) Roth hsa.--In this subsection, the term ``Roth HSA''
shall have the meaning given such term by section 530A(c) of
the Internal Revenue Code of 1986.
(4) Simple process for individuals to opt-out.--As a
condition of a State providing for the enrollment function
described in paragraph (1), the State shall establish an easy-
to-use and transparent means by which individuals may elect not
to be enrolled in default health insurance coverage or to have
a Roth HSA established on the individual's behalf, or both.
(d) Consequences Respecting Continuous Coverage.--
(1) Consequences for not maintaining continuous coverage.--
(A) Avoidance of consequences by maintaining
continuous coverage.--
(i) In general.--All qualified residents of
a State are eligible during the initial open
enrollment period provided under subsection
(b)(2) to enroll in qualified health plan
coverage and, thereafter, to maintain
continuous coverage in order to avoid the
adverse consequences described in the
succeeding provisions of this paragraph.
(ii) Special enrollment periods.--The State
may provide for special enrollment periods
based on birth, becoming 26 years of age, and
independence from family coverage, during which
certain individuals will be eligible to enroll
in qualified health plan coverage for purposes
of this subsection.
(B) Underwriting permitted.--In the case of a
qualified resident of the State who fails to maintain
continuous creditable coverage (not including any
breaks in coverage of less than 63 days), the State
shall--
(i) permit health insurance issuers for the
period specified in subparagraph (C) to
medically underwrite (through denial of health
insurance coverage, application of preexisting
condition limitations, differential premiums,
or otherwise) the issuance of health insurance
coverage, other than with respect to the
issuance of default health insurance coverage
under subsection (c); and
(ii) require health insurance issuers,
during the subsequent 2-year period in the case
of issuance of health insurance coverage other
than such default health insurance coverage, to
impose a monthly late enrollment penalty in the
amount specified in subparagraph (D)(i) and to
remit the amount of such penalty collected to
the Federal Treasury in accordance with
subparagraph (D)(ii).
(C) Period for application of underwriting.--For
purposes of subparagraph (B)(i), the period specified
in this subparagraph is, with respect to an uninsured
individual as of a date, a period (not to exceed 18
months) equivalent to the number of months in the
previous 18-month period in which the individual did
not have continuous creditable coverage described in
subparagraph (B).
(D) Monthly late enrollment penalty amount.--
(i) In general.--The monthly late
enrollment penalty amount specified in this
clause for a month is equal to the lesser of 10
percent or the product of--
(I) 1 percent of the monthly
premium amount for default health
insurance coverage with respect to the
individual and month; and
(II) the number of months during
the 2-year period (preceding the 18-
month period described in subparagraph
(B)(i)) in which the resident failed to
maintain the continuous coverage
described in paragraph (1)(D).
(ii) Payment of penalty amount to federal
treasury.--The amount of the monthly late
enrollment penalty collected under this
subparagraph shall be paid to the Treasury of
the United States in a form and manner
specified by the Secretary of the Treasury.
(2) Changes in enrollment permitted without medical
underwriting during annual open enrollment periods for those
maintaining continuous coverage.--
(A) During second open enrollment period.--In the
case of a qualified resident who maintains continuous
coverage (not including any breaks in coverage of less
than 63 days) during the period after the initial open
enrollment period under subsection (b)(2) and through
the second annual open enrollment period established by
the State consistent with subsection (b)(1), the State
shall require health insurance issuers to permit such
residents during such second annual open enrollment
period to change the qualified health plan coverage in
which the individual is enrolled without medical
underwriting.
(B) During third and subsequent open enrollment
periods.--In the case of a qualified resident who
maintains continuous coverage for a period of 18 months
or longer (not including any breaks in coverage of less
than 63 days) as of the initial date of a third or
subsequent annual open enrollment period established by
the State under subsection (b)(1), the State shall
require health insurance issuers to permit such
residents during such an open enrollment period to
change the qualified health plan coverage in which the
individual is enrolled without medical underwriting.
SEC. 108. APPLICATION OF HEALTH SAVINGS ACCOUNTS IN RELATION TO
MEDICAID.
(a) In General.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.) is amended by adding at the end the following new
section:
``SEC. 1947. PROVISIONS RELATING TO HEALTH SAVINGS ACCOUNTS.
``(a) Disregarding Roth HSA in Determining Assets and Income for
Medicaid Eligibility Determinations Other Than for Long-Term Care
Services.--The assets in a health savings account under section 223 of
the Internal Revenue Code of 1986, and any income from such assets in
such account, shall be disregarded for purposes of determining
eligibility for and amount of medical assistance under this title,
other than for purposes of determining eligibility for and the amount
of medical assistance for long-term care services (described in section
1917(c)(1)(C)(i)).
``(b) Notifications of Treasury of Medicaid Eligibility.--In order
to meet the requirements of this subsection (for purposes of section
1902(a)(78)), a State shall provide such notice to the Secretary of the
Treasury, in such form and manner as the Secretary shall specify, as
may be necessary to identify individuals who are eligible for, and
receiving, medical assistance under this title in a month in order to
carry out section 223 of the Internal Revenue Code of 1986.''.
(b) Implementation of Notification Requirement Through State
Plan.--Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a))
is amended by inserting after paragraph (77) the following new
paragraph:
``(78) provide for notice in accordance with section
1947(b) to the Secretary of the Treasury of the identity of
individuals who are eligible for and receiving medical
assistance under this title;''.
(c) Effective Date.--The amendments made by this section shall
apply to eligibility determinations with respect to medical assistance
for periods beginning on or after January 1, 2018.
Subtitle B--Provider Price Transparency
SEC. 121. ENSURING ACCESS TO EMERGENCY SERVICES WITHOUT EXCESSIVE
CHARGES FOR OUT-OF-NETWORK SERVICES.
(a) In General.--Section 1867 of the Social Security Act (42 U.S.C.
1395dd) is amended--
(1) in subsection (d), by adding at the end the following
new paragraph:
``(5) Enforcement with respect to excessive charges.--A
hospital, physician, or other entity that violates the
requirements of subsection (j)(1) with respect to the
furnishing of items and services is subject to a civil money
penalty of not more than $25,000 for each such violation. The
provisions of section 1128A (other than subsections (a) and
(b)) shall apply to a civil money penalty under this paragraph
in the same manner as such provisions apply with respect to a
penalty or proceeding under section 1128A(a).''; and
(2) by adding at the end the following new subsection:
``(j) Protections Against Excessive Out-of-Network Charges for
Emergency Services.--
``(1) In general.--In the absence of State regulations, if
items or services to screen or treat an emergency medical
condition are furnished under this section in a participating
hospital with respect to an individual and the individual has
not, directly or through a health insurance issuer, group
health plan, or other third party, negotiated a payment rate
for such items and services, subject to paragraph (2), the
charges imposed for such items and services may not be in
excess of the following:
``(A) Physicians' and other professional
services.--For physicians' services or services of a
health care provider which constitute medical care (as
defined under section 213(d) of the Internal Revenue
Code of 1986, as in effect before the date of the
enactment of this subsection) (and including drugs and
biologicals furnished in conjunction with and billed as
part of such services), the lesser of--
``(i) the cash price for such services
posted pursuant to section 121(b) of the
Patient Freedom Act of 2017; or
``(ii) 85 percent of the usual, customary,
and reasonable (UCR) charge for such services,
as determined under rules established by the
department of insurance for the State in which
the services are furnished.
``(B) Hospital services.--For inpatient and
outpatient hospital services for which payment rates
are established under this title (and including drugs
and biologicals furnished in conjunction with and
billed as part of such services), the lesser of--
``(i) the cash price for such services
posted pursuant to section 121(b) of the
Patient Freedom Act of 2017; or
``(ii) 110 percent of the payment rate
applicable to such services in the case of an
individual entitled to benefits under part A
and enrolled under part B.
``(C) Drugs and biologicals.--For drugs and other
pharmaceuticals furnished to which a previous
subparagraph does not apply, the lesser of--
``(i) twice the acquisition cost to the
hospital or other provider for the dose
involved; or
``(ii) the acquisition cost to the hospital
or other provider plus $250.
The dollar amount in clause (ii) shall be increased
from year to year (beginning with the year after the
first year in which this subsection applies) by the
same percentage as the percentage increase in the
consumer price index for all urban consumers (all
items; U.S. city average) for the year involved (as
determined by the Secretary). Any such dollar amount as
so increased that is not a multiple of $5 shall be
rounded to the nearest multiple of $5 (or, if a
multiple of $2.50, to the next highest multiple of $5).
``(D) Other items and services.--For any other
items or services, the lesser of--
``(i) the cash price for such items and
services posted pursuant to section 121(b) of
the Patient Freedom Act of 2017; or
``(ii) 110 percent of the payment basis
that would be applicable to payment for such
items and services under this title in the case
of an individual entitled to benefits under
part A and enrolled under part B.
``(2) Special rule for items and services furnished as a
bundle.--In the case of items and services for which there is a
single price for a group or bundle of such items and services,
the maximum charge permitted under paragraph (1) may not exceed
the lesser of--
``(A) the price charged for such bundled services;
or
``(B) the aggregate of the maximum charges
permitted under paragraph (1) with respect to items and
services included in such bundle.''.
(b) Reference to Price Disclosure Provision.--
(1) In general.--Persons providing medical care (as defined
in section 213(d) of the Internal Revenue Code of 1986, as in
effect before the date of the enactment of this Act) are
required to post prices under this subsection.
(2) Form of disclosure.--The disclosure of prices under
this subsection shall be in a form and manner specified by the
Secretary, in consultation with the Secretary of the Treasury,
and shall be designed--
(A) to establish a single price for related items
and services in a manner similar to the manner in which
pricing and payment for such items and services is
provided under the Medicare program under title XVIII
of the Social Security Act (42 U.S.C. 1395 et seq.);
and
(B) to make it easy for consumers to compare the
prices for similar items and services furnished by
different providers.
(c) Effective Date.--The amendments made by this section shall
apply to charges imposed for items and services furnished on or after
January 1, 2018.
TITLE II--REFORM OF TAX PROVISIONS RELATING TO HEALTH CARE
Subtitle A--Health Savings Accounts
SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS.
(a) Non-Deductible HSAs.--Subchapter F of chapter 1 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
part:
``PART IX--HEALTH SAVINGS ACCOUNTS
``Sec. 530A. Roth HSAs.
``SEC. 530A. ROTH HSAS.
``(a) In General.--With the exception of the taxes imposed by
section 511 (relating to imposition of tax on unrelated business income
of charitable organizations), a Roth HSA shall be exempt from taxation
under this subtitle. No deduction shall be allowed for any contribution
to a Roth HSA.
``(b) Dollar Limitation.--
``(1) In general.--The aggregate amount of contributions
for any taxable year to all Roth HSAs maintained for the
benefit of an individual shall not exceed the sum of the
monthly limitations for any month during such taxable year that
the individual is an eligible individual.
``(2) Monthly limitation.--The monthly limitation for any
month is \1/12\ of--
``(A) in the case of an eligible individual who has
self-only creditable coverage as of the first day of
such month, $5,000, and
``(B) in the case of an eligible individual who has
family creditable coverage as of the first day of such
month, the amount in effect under subparagraph (A) for
the taxable year multiplied by the number of
individuals (including the eligible individual) covered
under such family creditable coverage as of such day.
``(3) Additional contributions for individuals 55 or
older.--In the case of an individual who has attained age 55
before the close of the taxable year, the applicable limitation
under subparagraphs (A) and (B) of paragraph (2) shall be
increased by $1,000.
``(4) Coordination with other contributions.--The
limitation which would (but for this paragraph) apply under
this subsection to an individual for any taxable year shall be
reduced (but not below zero) by the sum of--
``(A) the aggregate amount paid for such taxable
year to Archer MSAs of such individual, and
``(B) the aggregate amount contributed to Roth HSAs
of such individual for such taxable year under section
408(d)(9).
Subparagraph (A) shall not apply with respect to any individual
to whom paragraph (5) applies.
``(5) Special rule for married individuals.--In the case of
individuals who are married to each other, if either spouse has
family coverage--
``(A) both spouses shall be treated as having only
such family coverage (and if such spouses each have
family coverage under different plans, as having the
family coverage with the lowest annual deductible), and
``(B) the limitation under paragraph (1) (after the
application of subparagraph (A) and without regard to
any additional contribution amount under paragraph
(3))--
``(i) shall be reduced by the aggregate
amount paid to Archer MSAs of such spouses for
the taxable year, and
``(ii) after such reduction, shall be
divided equally between them unless they agree
on a different division.
``(6) Denial of deduction to dependents.--No contribution
may be made to a Roth HSA under this section by any individual
with respect to whom a deduction under section 151 is allowable
to another taxpayer for a taxable year beginning in the
calendar year in which such individual's taxable year begins.
``(7) Medicare eligible individuals.--The limitation under
this subsection for any month with respect to an individual
shall be zero for the first month such individual is entitled
to benefits under title XVIII of the Social Security Act and
for each month thereafter.
``(8) Increase in limit for individuals becoming eligible
individuals after the beginning of the year.--
``(A) In general.--For purposes of computing the
limitation under paragraph (1) for any taxable year, an
individual who is an eligible individual during the
last month of such taxable year shall be treated--
``(i) as having been an eligible individual
during each of the months in such taxable year,
and
``(ii) as having been enrolled, during each
of the months such individual is treated as an
eligible individual solely by reason of clause
(i), in the same health plan in which the
individual was enrolled for the last month of
such taxable year.
``(B) Failure to maintain creditable coverage.--
``(i) In general.--If, at any time during
the testing period, the individual is not an
eligible individual, then--
``(I) the gross income of the
individual for the taxable year in
which occurs the first month in the
testing period for which such
individual is not an eligible
individual shall be increased by the
aggregate amount of all contributions
to the Roth HSA of the individual which
could not have been made but for
subparagraph (A), and
``(II) the tax imposed by this
chapter for any taxable year on the
individual shall be increased by 10
percent of the amount of such increase.
``(ii) Exception for disability or death.--
Clause (i) shall not apply if the individual
ceased to be an eligible individual by reason
of the death of the individual or the
individual becoming disabled (within the
meaning of section 72(m)(7)).
``(iii) Testing period.--The term `testing
period' means the period beginning with the
last month of the taxable year referred to in
subparagraph (A) and ending on the last day of
the 12th month following such month.
``(9) Limitation not to apply to certain contributions made
under patient freedom act.--Any contributions made under 103(b)
of the Patient Freedom Act of 2017 or as provided in section
36C shall not be taken into account for purposes of determining
whether the limitation under paragraph (1) has been met.
``(c) Roth HSA.--For purposes of this title--
``(1) In general.--The term `Roth HSA' or `Roth health
savings account' means a trust created or organized in the
United States as a Roth HSA exclusively for the purpose of
paying the qualified medical expenses of the account
beneficiary, but only if the written governing instrument
creating the trust meets the following requirements:
``(A) Except in the case of a rollover contribution
described in subsection (e)(5) or section 220(f)(5) or
223(f)(5), no contribution will be accepted--
``(i) unless it is in cash, or
``(ii) to the extent such contribution,
when added to previous contributions to the
trust for the calendar year, exceeds the sum
of--
``(I) the dollar amount in effect
under subsection (b)(2)(B), and
``(II) the dollar amount in effect
under subsection (b)(3).
``(B) The trustee is a bank (as defined in section
408(n)), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
in his account is nonforfeitable.
``(2) Qualified medical expenses.--For purposes of this
section--
``(A) In general.--The term `qualified medical
expenses' means, with respect to an account
beneficiary, amounts paid by such beneficiary for
medical care (as defined in section 213(d) as in effect
on the day before the date of the enactment of the
Patient Freedom Act of 2017) for such individual, the
spouse of such individual, and any dependent (as
defined in section 152, determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of
such individual, but only to the extent such amounts
are not compensated for by insurance or otherwise.
``(B) Limitation on health insurance purchased from
account.--Such term shall not include any payment for
health benefits coverage that is not creditable
coverage (within the meaning of title XXVII of the
Public Health Service Act).
``(C) Exceptions.--Subparagraph (B) shall not apply
to any expense for coverage under--
``(i) a health plan during any period of
continuation coverage required under any
Federal law,
``(ii) a qualified long-term care insurance
contract (as defined in section 7702B(b)),
``(iii) a health plan during a period in
which the individual is receiving unemployment
compensation under any Federal or State law, or
``(iv) in the case of an account
beneficiary who has attained the age specified
in section 1811 of the Social Security Act, any
health insurance other than a medicare
supplemental policy (as defined in section 1882
of the Social Security Act).
``(3) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the Roth HSA was
established.
``(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(f)(3) (relating to time when
contributions deemed made).
``(B) Section 219(f)(5) (relating to employer
payments).
``(C) Section 408(g) (relating to community
property laws).
``(D) Section 408(h) (relating to custodial
accounts).
``(5) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to Roth
HSAs, and any amount treated as distributed under such rules
shall be treated as not used to pay qualified medical expenses.
``(d) Eligible Individual.--For purposes of this section, the term
`eligible individual' means, with respect to any month, any individual
who is covered under creditable coverage (within the meaning of title
XXVII of the Public Health Service Act) as of the 1st day of such
month.
``(e) Tax Treatment of Distributions.--
``(1) Amounts used for qualified medical expenses.--Any
amount paid or distributed out of a Roth HSA which is used
exclusively to pay qualified medical expenses of any account
beneficiary shall not be includible in gross income in the
manner provided in section 72.
``(2) Inclusion of amounts not used for qualified medical
expenses.--Any amount paid or distributed out of a Roth HSA
which is not used exclusively to pay the qualified medical
expenses of the account beneficiary shall be included in the
gross income of such beneficiary.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any Roth HSA of an
individual, paragraph (2) shall not apply to
distributions from the Roth HSAs of such individual (to
the extent such distributions do not exceed the
aggregate excess contributions to all such accounts of
such individual for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution
described in paragraph (5) or section 220(f)(5) or
223(f)(5)) which exceeds the contribution limitation
with respect to the individual for the taxable year.
``(4) Additional tax on distributions not used for
qualified medical expenses.--
``(A) In general.--The tax imposed by this chapter
on the account beneficiary for any taxable year in
which there is a payment or distribution from a Roth
HSA of such beneficiary which is includible in gross
income under paragraph (2) shall be increased by 10
percent of the amount which is so includible.
``(B) Exception for disability or death.--
Subparagraph (A) shall not apply if the payment or
distribution is made after the account beneficiary
becomes disabled within the meaning of section 72(m)(7)
or dies.
``(C) Exception for distributions after medicare
eligibility.--Subparagraph (A) shall not apply to any
payment or distribution after the date on which the
account beneficiary attains the age specified in
section 1811 of the Social Security Act.
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from a health savings
account (as defined in section 223) or a Roth HSA to
the account beneficiary to the extent the amount
received is paid into a Roth HSA for the benefit of
such beneficiary not later than the 60th day after the
day on which the beneficiary receives the payment or
distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from a health savings account or a Roth
HSA if, at any time during the 1-year period ending on
the day of such receipt, such individual received any
other amount described in subparagraph (A) from a
health savings account or Roth HSA which was not
includible in the individual's gross income because of
the application of this paragraph.
``(6) Transfer of account incident to divorce.--The
transfer of an individual's interest in a Roth HSA to an
individual's spouse or former spouse under a divorce or
separation instrument described in subparagraph (A) of section
71(b)(2) shall not be considered a taxable transfer made by
such individual notwithstanding any other provision of this
subtitle, and such interest shall, after such transfer, be
treated as a Roth HSA with respect to which such spouse is the
account beneficiary.
``(7) Treatment after death of account beneficiary.--If an
individual acquires an account beneficiary's interest in a
health savings account by reason of the death of the account
beneficiary, such health savings account shall be treated as if
the individual were the account beneficiary.
``(f) Cost-of-Living Adjustment.--
``(1) In general.--In the case of any calendar year
beginning after 2017, the $5,000 dollar amount in subsection
(b)(2) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year,
determined--
``(i) by substituting `calendar year 2016'
for `calendar year 1992' in subparagraph (B)
thereof, and
``(ii) by substituting `CPI medical care
component' for `CPI'.
``(2) CPI medical care component.--For purposes of this
paragraph, the term `CPI medical care component' means the
medical care component for the Consumer Price Index for All
Urban Consumers published by the Department of Labor.
``(3) Rounding.--If the amount of any increase under the
preceding sentence is not a multiple of $50, such increase
shall be rounded to the next lowest multiple of $50.
``(g) Reports.--The Secretary may require--
``(1) the trustee of a Roth HSA to make such reports
regarding such account to the Secretary and to the account
beneficiary with respect to contributions, distributions, the
return of excess contributions, and such other matters as the
Secretary determines appropriate, and
``(2) any person who provides an individual with creditable
coverage to make such reports to the Secretary and to the
account beneficiary with respect to such plan as the Secretary
determines appropriate.
The reports required by this subsection shall be filed at such time and
in such manner and furnished to such individuals at such time and in
such manner as may be required by the Secretary.''.
(b) Limit on Contributions to Deductible Health Savings Accounts.--
Section 223 of such Code is amended by adding at the end the following
new subsection:
``(i) Limited Contributions After 2016.--
``(1) In general.--No contribution may be accepted by a
health savings account after the date of the enactment of this
subsection.
``(2) Exceptions.--Paragraph (1) shall not apply to a
rollover contribution described in subsection (f)(5).''.
(c) Conforming Amendments.--
(1) Section 26(b)(2) of the Internal Revenue Code of 1986
is amended--
(A) in subparagraph (S), by striking ``and
408(d)(9)(D)(i)(II)'' and inserting
``408(d)(9)(D)(i)(II), and 530A(b)(8)(B)(i)(II)'', and
(B) in subparagraph (U), by inserting ``and section
530A(e)(4)'' before the comma at the end.
(2) Section 35(g)(3) of such Code is amended--
(A) by striking ``or from'' and inserting ``,
from'', and
(B) by inserting ``or from a Roth HSA (as defined
in section 530A(c))'' after ``223(d))''.
(3) Section 220(f)(5)(A) of such Code is amended by
inserting ``or a Roth HSA (as defined in section 530A(c))''
after ``223(d))''.
(4) Section 223(f)(5)(A) of such Code is amended by
inserting ``or a Roth HSA (as defined in section 530A(c))''
after ``paid into a health savings account''.
(5) Section 408(d)(9) of such Code is amended by adding at
the end the following new subparagraph:
``(F) Application to roth hsas.--Rules similar to
the rules of the preceding subparagraphs of this
paragraph shall apply with respect to eligible
individuals (as defined in section 530A(d)) making
contributions to Roth HSAs, except that subparagraph
(C) shall be applied by substituting `section 530A(b)'
for `section 223(b)'.''.
(6) Section 848(e)(1)(B)(v) of such Code is amended by
inserting ``or a Roth HSA (as defined in section 530A(c))''
after ``223(d))''.
(7) Section 877A(e)(2) of such Code is amended by inserting
``a Roth HSA (as defined in section 530A(c),'' after ``223),''.
(8) Section 4973 of such Code is amended--
(A) in subsection (a), by striking ``or'' at the
end of paragraph (5), by inserting ``or'' at the end of
paragraph (6), and by inserting after paragraph (6) the
following new paragraph:
``(7) a Roth HSA (within the meaning of section 530A),'',
and
(B) by adding at the end the following new
subsection:
``(j) Excess Contribution to Roth HSAs.--For purposes of this
section, in the case of Roth HSA (within the meaning of section
530A(c)), the term `excess contributions' means the sum of--
``(1) the aggregate amount contributed for the taxable year
to the accounts (other than a rollover contribution described
in section 220(f)(5), 223(f)(5), or 530A(e)(5)), and
``(2) the amount determined under this subsection for the
preceding taxable year, reduced by the sum of--
``(A) the distributions out of the accounts which
were included in gross income under section 530A(e)(2),
and
``(B) the excess (if any) of--
``(i) the maximum amount allowable as a
contribution under section 530A(b) for the
taxable year, over
``(ii) the amount contributed to the
accounts for the taxable year.
For purposes of this subsection, any contribution which is distributed
out of the Roth HSA in a distribution to which section 530A(e)(3)
applies shall be treated as an amount not contributed.''.
(9) Section 4975(c) of such Code is amended by adding at
the end the following new paragraph:
``(7) Special rule for roth hsas.--An individual for whose
benefit a Roth HSA (within the meaning of section 530A(c)) is
established shall be exempt from the tax imposed by this
section with respect to any transaction concerning such account
(which would otherwise be taxable under this section) if, with
respect to such transaction, the account ceases to be a Roth
HSA by reason of the application of section 530A(c)(5) to such
account.''.
(10) Section 6051(a)(12) of such Code is amended by
inserting ``and to any Roth HSA (as defined in section
530A(c))'' after ``223(d))''.
(11) Section 6693(a)(2) of such Code is amended by striking
``and'' at the end of subparagraph (E), by striking the period
at the end of subparagraph (F) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(G) section 530A(g) (relating to Roth HSAs).''.
(d) Clerical Amendment.--The table of parts for subchapter F of
chapter 1 of such Code is amended by adding at the end the following
new item:
``Part IX. Roth Health Savings Accounts''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2016.
SEC. 202. TREATMENT OF DIRECT PRIMARY CARE.
(a) HSAs.--
(1) Roth hsa.--Section 530A(c)(2)(A) of the Internal
Revenue Code of 1986, as added by this Act, is amended by
adding at the end the following: ``Such term shall include the
payment of a monthly or other prepaid amount for the furnishing
(or access to the furnishing) by a physician or group of
physicians of physician professional services (and ancillary
services).''.
(2) HSA.--Section 223(d)(2)(A) of such Code is amended by
adding at the end the following: ``Such term shall include the
payment of a monthly or other prepaid amount for the furnishing
(or access to the furnishing) by a physician or group of
physicians of physician professional services (and ancillary
services).''.
(b) Not Treated as Health Insurance Coverage.--
(1) In general.--For purposes of title XXVII of the Public
Health Service Act, subtitle B of title I of the Employee
Retirement Income Security Act of 1974, PPACA, and this Act,
the offering of direct primary care shall not be treated as the
offering of health insurance coverage and shall not be subject
to regulations as such coverage under such Acts.
(2) Direct primary care defined.--In this subsection, the
term ``direct primary care'' means the furnishing (or access to
the furnishing) by a physician or group of physicians of
physician professional services (and ancillary services) in
return for payment of a monthly or other prepaid amount.
SEC. 203. TREATMENT OF HSA AFTER DEATH OF ACCOUNT BENEFICIARY.
(a) In General.--Section 223(e)(8) of the Internal Revenue Code of
1986, as redesignated by section 201(c)(3) of this Act, is amended to
read as follows:
``(8) Treatment after death of account beneficiary.--If an
individual acquires an account beneficiary's interest in a
health savings account by reason of the death of the account
beneficiary, such health savings account shall be treated as if
the individual were the account beneficiary.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to interests acquired after the date of the enactment of
this Act.
Subtitle B--Health Care Tax Credits
SEC. 211. LIMITED APPLICATION OF PPACA HEALTH PREMIUM CREDIT.
(a) In General.--Section 36B(c)(1) of the Internal Revenue Code of
1986 is amended by adding at the end the following:
``(E) Special rule for residents of states
continuing ppaca implementation.--No credit shall be
allowed under this section to any individual who is not
a qualified resident (as defined in section 100(15) of
the Patient Freedom Act of 2017) of a State that has
elected the option under section 102(a)(1) of such Act
in relation to the implementation of title I of the
Patient Protection and Affordable Care Act.''.
(b) Limitation on Amount of Credit.--Section 36B(b) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
paragraph:
``(4) Limitation on amount of credit.--In the case of any
taxable year beginning in a calendar year which begins after
the date of the enactment of this paragraph, the Secretary
shall reduce the amount determined under this subsection
(determined before the application of this paragraph) for each
qualified resident (as defined in section 100 of the Patient
Freedom Act of 2017) of a State that makes an election under
section 102(a)(1) of such Act by an amount equal to--
``(A) the amount of the reduction described in
section 102(a)(1)(A) of such Act for such year
(calculated by only taking into account credit allowed
under this section), divided by
``(B) the total number of such qualified residents
of such State estimated by the Secretary to claim the
credit allowed under subsection (a) for such year.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after January 1, 2018.
SEC. 212. NEW ROTH HSA CREDIT.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 36B the following new section:
``SEC. 36C. ROTH HSA CREDIT.
``(a) In General.--In the case of a qualifying individual, there
shall be allowed as a credit against the tax imposed by this subtitle
for any taxable year, an amount equal to the Roth HSA credit amount of
the individual for the taxable year.
``(b) Qualifying Individual.--For purposes of this section, the
term `qualifying individual' means, with respect to any month, any
individual who for such month is a deposit qualifying resident (as
defined in section 103(b)(2) of the Patient Freedom Act of 2017) of a
State described in section 102(a)(2) of such Act that elects to have
section 103(b) of such Act carried out by way of the credit determined
under this section.
``(c) Roth HSA Credit Amount.--For purposes of this section, the
term `Roth HSA credit amount' means, with respect to any taxable year,
the sum of the Roth HSA deposit amounts determined under section 104 of
the Patient Freedom Act of 2017 with respect to the individual for all
months ending during the taxable year.
``(d) Special Rules.--For purposes of this section--
``(1) Reconciliation of credit and advance credit.--
``(A) Excess advance payments.--If the advance
payments to an individual for a taxable year under
subsection (e) exceed the credit allowed by this
section with respect to such individual for such
taxable year, the tax imposed by this chapter for the
taxable year shall be increased by the amount of such
excess.
``(B) Advance payment shortfall.--If the credit
allowed by this section (determined without regard to
this subparagraph) with respect to an individual for a
taxable year exceeds the advance payments to such
individual for such taxable year under subsection (e),
the Secretary shall, in lieu of a credit allowed
against the tax imposed by this subtitle, make a
payment on behalf of such individual to such
individual's health savings account in an amount equal
to such excess.
``(2) Married couples must file joint return.--If the
taxpayer is married (within the meaning of section 7703) at the
close of the taxable year, the credit shall be allowed under
this section only if the taxpayer and the taxpayer's spouse
file a joint return for the taxable year.
``(e) Advance Payment Program.--
``(1) In general.--The Secretary of the Treasury, in
consultation with the Secretary of Health and Human Services,
shall establish a program--
``(A) to make advance determinations with respect
to the eligibility of individuals for the credit
allowed under this section, and
``(B) to make advance payments of the credit
allowed under this section directly to the Roth HSA of
any such individual so eligible.
``(2) Program requirements.--Such program shall be
established under rules similar to the rules of section 1412 of
the Patient Protection and Affordable Care Act, except that
advance determinations and advance payments shall be made on
request of the individual with respect to whom the
determination is to be made and taking into account the
enrollment process (including any opt-out election under such
process) established under section 105(c) of the Patient
Freedom Act of 2017.
``(3) Treatment as income.--The amount of any credit
allowed under this section shall be included in gross
income.''.
(b) Clerical Amendment.--The table of sections for such subpart is
amended by inserting after the item relating to section 36B the
following new item:
``Sec. 36C. Roth HSA credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after January 1, 2018.
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