[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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