[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6810 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 6810

To establish a Health Care Protection Program Fund to provide grants to 
 employers to ensure continuity of coverage under a group health plan 
 through the COVID-19 pandemic, to provide for premium assistance for 
                COBRA benefits, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 12, 2020

 Mr. Rodney Davis of Illinois (for himself, Mr. Schrader, Mrs. Wagner, 
 Ms. Kendra S. Horn of Oklahoma, Mr. Gonzalez of Ohio, and Ms. Torres 
Small of New Mexico) introduced the following bill; which was referred 
    to the Committee on Education and Labor, and in addition to the 
Committees on Energy and Commerce, and Ways and Means, for a period to 
      be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To establish a Health Care Protection Program Fund to provide grants to 
 employers to ensure continuity of coverage under a group health plan 
 through the COVID-19 pandemic, to provide for premium assistance for 
                COBRA benefits, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Care Protection Act''.

SEC. 2. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1) the COVID-19 pandemic has caused many individuals to 
        lose access to employer-sponsored health insurance at no fault 
        of their own;
            (2) individuals should not be forced to cover additional 
        costs associated with healthcare due to a loss of access to 
        employer-sponsored health insurance;
            (3) employers should utilize all tools provided to them by 
        the Federal Government to bring individuals back onto payroll 
        so that they may receive benefits such as employer-sponsored 
        health insurance; and
            (4) individuals unable to rejoin the workforce should 
        receive assistance equal to that received while employed so 
        that when an employer makes an offer of employment, the 
        individual does not have an incentive to reject.

SEC. 3. AMERICAN HEALTH EXCHANGES SPECIAL ENROLLMENT PERIOD.

    Section 1311(c)(6) of the Patient Protection and Affordable Care 
Act (42 U.S.C. 18031(c)(6)) is amended--
            (1) in subparagraph (C), by striking at the end ``and'';
            (2) in subparagraph (D), by striking at the end the period 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(E) a special enrollment period during the 30-day 
                period following the date of the enactment of this 
                subparagraph during which any individual who is 
                otherwise eligible to enroll in a qualified health plan 
                through the Exchange and who is not otherwise enrolled 
                in such a plan may enroll in such a qualified health 
                plan.''.

SEC. 4. PREMIUM ASSISTANCE FOR COBRA BENEFITS.

    (a) Premium Assistance for COBRA Continuation Coverage for 
Individuals and Their Families.--
            (1) Provision of premium assistance.--
                    (A) Reduction of premiums payable.--In the case of 
                any premium for a period of coverage (not to exceed 6 
                months) beginning on or after the date of the enactment 
                of this Act and on or before January 1, 2021, for COBRA 
                continuation coverage with respect to any assistance 
                eligible individual, such individual shall be treated 
                for purposes of any COBRA continuation provision as 
                having paid the amount of such premium if such 
                individual pays (or a person other than such 
                individual's employer pays on behalf of such 
                individual) a percent of such premium such that the 
                amount of such premium so paid is equal to the amount 
                the covered employee with respect to such coverage 
                would have paid with respect to such individual for 
                such period for coverage under the group health plan 
                under which such employee was enrolled at the time of 
                the qualifying event had such event not occurred (as 
                determined without regard to this subsection).
                    (B) Plan enrollment option.--
                            (i) In general.--Notwithstanding the COBRA 
                        continuation provisions, an assistance eligible 
                        individual may, not later than 90 days after 
                        the date of notice of the plan enrollment 
                        option described in this subparagraph, elect to 
                        enroll in coverage under a plan offered by the 
                        employer involved, or the employee organization 
                        involved (including, for this purpose, a joint 
                        board of trustees of a multiemployer trust 
                        affiliated with one or more multiemployer 
                        plans), that is different than coverage under 
                        the plan in which such individual was enrolled 
                        at the time the qualifying event occurred, and 
                        such coverage shall be treated as COBRA 
                        continuation coverage for purposes of the 
                        applicable COBRA continuation coverage 
                        provision.
                            (ii) Requirements.--An assistance eligible 
                        individual may elect to enroll in different 
                        coverage as described in clause (i) only if--
                                    (I) the employer involved has made 
                                a determination that such employer will 
                                permit assistance eligible individuals 
                                to enroll in different coverage as 
                                provided for this subparagraph;
                                    (II) the premium for such different 
                                coverage does not exceed the premium 
                                for coverage in which the individual 
                                was enrolled at the time the qualifying 
                                event occurred;
                                    (III) the different coverage in 
                                which the individual elects to enroll 
                                is coverage that is also offered to the 
                                active employees of the employer at the 
                                time at which such election is made; 
                                and
                                    (IV) the different coverage is 
                                not--
                                            (aa) coverage that provides 
                                        only dental, vision, 
                                        counseling, or referral 
                                        services (or a combination of 
                                        such services);
                                            (bb) a flexible spending 
                                        arrangement (as defined in 
                                        section 106(c)(2) of the 
                                        Internal Revenue Code of 1986); 
                                        or
                                            (cc) coverage that provides 
                                        coverage for services or 
                                        treatments furnished in an on-
                                        site medical facility 
                                        maintained by the employer and 
                                        that consists primarily of 
                                        first-aid services, prevention 
                                        and wellness care, or similar 
                                        care (or a combination of such 
                                        care).
                    (C) Premium reimbursement.--For provisions 
                providing the balance of such premium, see section 6431 
                of the Internal Revenue Code of 1986, as added by 
                paragraph (12).
            (2) Limitation of period of premium assistance.--
                    (A) In general.--Paragraph (1)(A) shall not apply 
                with respect to any assistance eligible individual for 
                months of coverage beginning on or after the earlier 
                of--
                            (i) the first date that such individual is 
                        eligible for coverage under any other group 
                        health plan (other than coverage consisting of 
                        only dental, vision, counseling, or referral 
                        services (or a combination thereof), coverage 
                        under a flexible spending arrangement (as 
                        defined in section 106(c)(2) of the Internal 
                        Revenue Code of 1986), or coverage of treatment 
                        that is furnished in an on-site medical 
                        facility maintained by the employer and that 
                        consists primarily of first-aid services, 
                        prevention and wellness care, or similar care 
                        (or a combination thereof)) or is eligible for 
                        benefits under title XVIII of the Social 
                        Security Act, or
                            (ii) the earliest of--
                                    (I) July 1, 2021,
                                    (II) the date following the 
                                expiration of the maximum period of 
                                continuation coverage required under 
                                the applicable COBRA continuation 
                                coverage provision, or
                                    (III) the date following the 
                                expiration of the period of 
                                continuation coverage allowed under 
                                paragraph (4)(B)(ii).
                    (B) Timing of eligibility for additional 
                coverage.--For purposes of subparagraph (A)(i), an 
                individual shall not be treated as eligible for 
                coverage under a group health plan before the first 
                date on which such individual could be covered under 
                such plan.
                    (C) Notification requirement.--An assistance 
                eligible individual shall notify in writing the group 
                health plan with respect to which paragraph (1)(A) 
                applies if such paragraph ceases to apply by reason of 
                subparagraph (A)(i). Such notice shall be provided to 
                the group health plan in such time and manner as may be 
                specified by the Secretary of Labor.
            (3) Assistance eligible individual.--For purposes of this 
        section, the term ``assistance eligible individual'' means any 
        qualified beneficiary if--
                    (A) at any time during the period that begins with 
                March 1, 2020, and ends with December 31, 2020, such 
                qualified beneficiary is eligible for COBRA 
                continuation coverage,
                    (B) such qualified beneficiary elects such 
                coverage, and
                    (C) the qualifying event with respect to the COBRA 
                continuation coverage consists of the involuntary 
                termination of the covered employee's employment and 
                occurred during such period.
            (4) Extension of election period and effect on coverage.--
                    (A) In general.--For purposes of applying section 
                605(a) of the Employee Retirement Income Security Act 
                of 1974, section 4980B(f)(5)(A) of the Internal Revenue 
                Code of 1986, section 2205(a) of the Public Health 
                Service Act, and section 8905a(c)(2) of title 5, United 
                States Code, in the case of an individual who does not 
                have an election of COBRA continuation coverage in 
                effect on the date of the enactment of this Act but who 
                would be an assistance eligible individual if such 
                election were so in effect, such individual may elect 
                the COBRA continuation coverage under the COBRA 
                continuation coverage provisions containing such 
                sections during the period beginning on the date of the 
                enactment of this Act and ending 60 days after the date 
                on which the notification required under paragraph 
                (7)(C) is provided to such individual.
                    (B) Commencement of coverage; no reach-back.--Any 
                COBRA continuation coverage elected by a qualified 
                beneficiary during an extended election period under 
                subparagraph (A)--
                            (i) shall commence with the first period of 
                        coverage beginning on or after the date of the 
                        enactment of this Act, and
                            (ii) shall not extend beyond the period of 
                        COBRA continuation coverage that would have 
                        been required under the applicable COBRA 
                        continuation coverage provision if the coverage 
                        had been elected as required under such 
                        provision.
            (5) Expedited review of denials of premium assistance.--In 
        any case in which an individual requests treatment as an 
        assistance eligible individual and is denied such treatment by 
        the group health plan, the Secretary of Labor (or the Secretary 
        of Health and Human Services in connection with COBRA 
        continuation coverage which is provided other than pursuant to 
        part 6 of subtitle B of title I of the Employee Retirement 
        Income Security Act of 1974), in consultation with the 
        Secretary of the Treasury, shall provide for expedited review 
        of such denial. An individual shall be entitled to such review 
        upon application to such Secretary in such form and manner as 
        shall be provided by such Secretary. Such Secretary shall make 
        a determination regarding such individual's eligibility within 
        15 business days after receipt of such individual's application 
        for review under this paragraph. Either Secretary's 
        determination upon review of the denial shall be de novo and 
        shall be the final determination of such Secretary. A reviewing 
        court shall grant deference to such Secretary's determination. 
        The provisions of this paragraph, paragraphs (1) through (4), 
        and paragraph (7) shall be treated as provisions of title I of 
        the Employee Retirement Income Security Act of 1974 for 
        purposes of part 5 of subtitle B of such title.
            (6) Disregard of subsidies for purposes of federal and 
        state programs.--Notwithstanding any other provision of law, 
        any premium reduction with respect to an assistance eligible 
        individual under this subsection shall not be considered income 
        or resources in determining eligibility for, or the amount of 
        assistance or benefits provided under, any other public benefit 
        provided under Federal law or the law of any State or political 
        subdivision thereof.
            (7) Notices to individuals.--
                    (A) General notice.--
                            (i) In general.--In the case of notices 
                        provided under section 606(a)(4) of the 
                        Employee Retirement Income Security Act of 1974 
                        (29 U.S.C. 1166(4)), section 4980B(f)(6)(D) of 
                        the Internal Revenue Code of 1986, section 
                        2206(4) of the Public Health Service Act (42 
                        U.S.C. 300bb-6(4)), or section 8905a(f)(2)(A) 
                        of title 5, United States Code, with respect to 
                        individuals who, during the period described in 
                        paragraph (3)(A), become entitled to elect 
                        COBRA continuation coverage, the requirements 
                        of such sections shall not be treated as met 
                        unless such notices include an additional 
                        notification to the recipient of--
                                    (I) the availability of premium 
                                reduction with respect to such coverage 
                                under this subsection, and
                                    (II) the option to enroll in 
                                different coverage if the employer 
                                permits assistance eligible individuals 
                                to elect enrollment in different 
                                coverage (as described in paragraph 
                                (1)(B)).
                            (ii) Alternative notice.--In the case of 
                        COBRA continuation coverage to which the notice 
                        provision under such sections does not apply, 
                        the Secretary of Labor, in consultation with 
                        the Secretary of the Treasury and the Secretary 
                        of Health and Human Services, shall, in 
                        consultation with administrators of the group 
                        health plans (or other entities) that provide 
                        or administer the COBRA continuation coverage 
                        involved, provide rules requiring the provision 
                        of such notice.
                            (iii) Form.--The requirement of the 
                        additional notification under this subparagraph 
                        may be met by amendment of existing notice 
                        forms or by inclusion of a separate document 
                        with the notice otherwise required.
                    (B) Specific requirements.--Each additional 
                notification under subparagraph (A) shall include--
                            (i) the forms necessary for establishing 
                        eligibility for premium reduction under this 
                        subsection,
                            (ii) the name, address, and telephone 
                        number necessary to contact the plan 
                        administrator and any other person maintaining 
                        relevant information in connection with such 
                        premium reduction,
                            (iii) a description of the extended 
                        election period provided for in paragraph 
                        (4)(A),
                            (iv) a description of the obligation of the 
                        qualified beneficiary under paragraph (2)(C) to 
                        notify the plan providing continuation coverage 
                        of eligibility for subsequent coverage under 
                        another group health plan or eligibility for 
                        benefits under title XVIII of the Social 
                        Security Act and the penalty provided under 
                        section 6720C of the Internal Revenue Code of 
                        1986 for failure to so notify the plan,
                            (v) a description, displayed in a prominent 
                        manner, of the qualified beneficiary's right to 
                        a reduced premium and any conditions on 
                        entitlement to the reduced premium, and
                            (vi) a description of the option of the 
                        qualified beneficiary to enroll in different 
                        coverage if the employer permits such 
                        beneficiary to elect to enroll in such 
                        different coverage under paragraph (1)(B).
                    (C) Notice in connection with extended election 
                periods.--In the case of any assistance eligible 
                individual (or any individual described in paragraph 
                (4)(A)) who became entitled to elect COBRA continuation 
                coverage before the date of the enactment of this Act, 
                the administrator of the group health plan (or other 
                entity) involved shall provide (within 60 days after 
                the date of enactment of this Act) for the additional 
                notification required to be provided under subparagraph 
                (A) and failure to provide such notice shall be treated 
                as a failure to meet the notice requirements under the 
                applicable COBRA continuation provision.
                    (D) Model notices.--Not later than 30 days after 
                the date of enactment of this Act--
                            (i) the Secretary of Labor, in consultation 
                        with the Secretary of the Treasury and the 
                        Secretary of Health and Human Services, shall 
                        prescribe models for the additional 
                        notification required under this paragraph 
                        (other than the additional notification 
                        described in clause (ii)), and
                            (ii) in the case of any additional 
                        notification provided pursuant to subparagraph 
                        (A) under section 8905a(f)(2)(A) of title 5, 
                        United States Code, the Office of Personnel 
                        Management shall prescribe a model for such 
                        additional notification.
            (8) Regulations.--The Secretary of the Treasury may 
        prescribe such regulations or other guidance as may be 
        necessary or appropriate to carry out the provisions of this 
        subsection, including the prevention of fraud and abuse under 
        this subsection, except that the Secretary of Labor and the 
        Secretary of Health and Human Services may prescribe such 
        regulations (including interim final regulations) or other 
        guidance as may be necessary or appropriate to carry out the 
        provisions of paragraphs (5), (7), and (9).
            (9) Outreach.--The Secretary of Labor, in consultation with 
        the Secretary of the Treasury and the Secretary of Health and 
        Human Services, shall provide outreach consisting of public 
        education and enrollment assistance relating to premium 
        reduction provided under this subsection. Such outreach shall 
        target employers, group health plan administrators, public 
        assistance programs, States, insurers, and other entities as 
        determined appropriate by such Secretaries. Such outreach shall 
        include an initial focus on those individuals electing 
        continuation coverage who are referred to in paragraph (7)(C). 
        Information on such premium reduction, including enrollment, 
        shall also be made available on websites of the Departments of 
        Labor, Treasury, and Health and Human Services.
            (10) Definitions.--For purposes of this section--
                    (A) Administrator.--The term ``administrator'' has 
                the meaning given such term in section 3(16)(A) of the 
                Employee Retirement Income Security Act of 1974.
                    (B) COBRA continuation coverage.--The term ``COBRA 
                continuation coverage'' means continuation coverage 
                provided pursuant to part 6 of subtitle B of title I of 
                the Employee Retirement Income Security Act of 1974 
                (other than under section 609), title XXII of the 
                Public Health Service Act, section 4980B of the 
                Internal Revenue Code of 1986 (other than subsection 
                (f)(1) of such section insofar as it relates to 
                pediatric vaccines), or section 8905a of title 5, 
                United States Code, or under a State program that 
                provides comparable continuation coverage. Such term 
                does not include coverage under a health flexible 
                spending arrangement under a cafeteria plan within the 
                meaning of section 125 of the Internal Revenue Code of 
                1986.
                    (C) COBRA continuation provision.--The term ``COBRA 
                continuation provision'' means the provisions of law 
                described in subparagraph (B).
                    (D) Covered employee.--The term ``covered 
                employee'' has the meaning given such term in section 
                607(2) of the Employee Retirement Income Security Act 
                of 1974.
                    (E) Qualified beneficiary.--The term ``qualified 
                beneficiary'' has the meaning given such term in 
                section 607(3) of the Employee Retirement Income 
                Security Act of 1974.
                    (F) Group health plan.--The term ``group health 
                plan'' has the meaning given such term in section 
                607(1) of the Employee Retirement Income Security Act 
                of 1974.
                    (G) State.--The term ``State'' includes the 
                District of Columbia, the Commonwealth of Puerto Rico, 
                the Virgin Islands, Guam, American Samoa, and the 
                Commonwealth of the Northern Mariana Islands.
                    (H) Period of coverage.--Any reference in this 
                subsection to a period of coverage shall be treated as 
                a reference to a monthly or shorter period of coverage 
                with respect to which premiums are charged with respect 
                to such coverage.
            (11) Reports.--
                    (A) Interim report.--The Secretary of the Treasury 
                shall submit an interim report to the Committee on 
                Education and Labor, the Committee on Ways and Means, 
                and the Committee on Energy and Commerce of the House 
                of Representatives and the Committee on Health, 
                Education, Labor, and Pensions and the Committee on 
                Finance of the Senate regarding the premium reduction 
                provided under this subsection that includes--
                            (i) the number of individuals provided such 
                        assistance as of the date of the report; and
                            (ii) the total amount of expenditures 
                        incurred (with administrative expenditures 
                        noted separately) in connection with such 
                        assistance as of the date of the report.
                    (B) Final report.--As soon as practicable after the 
                last period of COBRA continuation coverage for which 
                premium reduction is provided under this section, the 
                Secretary of the Treasury shall submit a final report 
                to each committee referred to in subparagraph (A) that 
                includes--
                            (i) the number of individuals provided 
                        premium reduction under this section;
                            (ii) the average dollar amount (monthly and 
                        annually) of premium reductions provided to 
                        such individuals; and
                            (iii) the total amount of expenditures 
                        incurred (with administrative expenditures 
                        noted separately) in connection with premium 
                        reduction under this section.
            (12) COBRA premium assistance.--
                    (A) In general.--Subchapter B of chapter 65 of the 
                Internal Revenue Code of 1986 is amended by adding at 
                the end the following new section:

``SEC. 6431. COBRA PREMIUM ASSISTANCE.

    ``(a) In General.--The person to whom premiums are payable under 
COBRA continuation coverage shall be reimbursed as provided in 
subsection (c) for the amount of premiums not paid by assistance 
eligible individuals by reason of section 4 of the Health Care 
Protection Act.
    ``(b) Person Entitled to Reimbursement.--For purposes of subsection 
(a), except as otherwise provided by the Secretary, the person to whom 
premiums are payable under COBRA continuation coverage shall be treated 
as being--
            ``(1) in the case of any group health plan which is a 
        multiemployer plan (as defined in section 3(37) of the Employee 
        Retirement Income Security Act of 1974), the plan,
            ``(2) in the case of any group health plan not described in 
        paragraph (1)--
                    ``(A) which is subject to the COBRA continuation 
                provisions contained in--
                            ``(i) the Internal Revenue Code of 1986,
                            ``(ii) the Employee Retirement Income 
                        Security Act of 1974,
                            ``(iii) the Public Health Service Act, or
                            ``(iv) title 5, United States Code, or
                    ``(B) under which some or all of the coverage is 
                not provided by insurance,
        the employer maintaining the plan, and
            ``(3) in the case of any group health plan not described in 
        paragraph (1) or (2), the insurer providing the coverage under 
        the group health plan.
    ``(c) Method of Reimbursement.--Except as otherwise provided by the 
Secretary--
            ``(1) Treatment as payment of payroll taxes.--Each person 
        entitled to reimbursement under subsection (a) (and filing a 
        claim for such reimbursement at such time and in such manner as 
        the Secretary may require) shall be treated for purposes of 
        this title and section 1324(b)(2) of title 31, United States 
        Code, as having paid to the Secretary, on the date that the 
        assistance eligible individual's premium payment is received, 
        payroll taxes in an amount equal to the portion of such 
        reimbursement which relates to such premium. To the extent that 
        the amount treated as paid under the preceding sentence exceeds 
        the amount of such person's liability for such taxes, the 
        Secretary shall credit or refund such excess in the same manner 
        as if it were an overpayment of such taxes.
            ``(2) Overstatements.--Any overstatement of the 
        reimbursement to which a person is entitled under this section 
        (and any amount paid by the Secretary as a result of such 
        overstatement) shall be treated as an underpayment of payroll 
        taxes by such person and may be assessed and collected by the 
        Secretary in the same manner as payroll taxes.
            ``(3) Reimbursement contingent on payment of remaining 
        premium.--No reimbursement may be made under this section to a 
        person with respect to any assistance eligible individual until 
        after the reduced premium required under section 4(a)(1)(A) of 
        the Health Care Protection Act with respect to such individual 
        has been received.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Payroll taxes.--The term `payroll taxes' means--
                    ``(A) amounts required to be deducted and withheld 
                for the payroll period under section 3402 (relating to 
                wage withholding),
                    ``(B) amounts required to be deducted for the 
                payroll period under section 3102 (relating to FICA 
                employee taxes), and
                    ``(C) amounts of the taxes imposed for the payroll 
                period under section 3111 (relating to FICA employer 
                taxes).
            ``(2) Person.--The term `person' includes any governmental 
        entity.
    ``(e) Reporting.--Each person entitled to reimbursement under 
subsection (a) for any period shall submit such reports (at such time 
and in such manner) as the Secretary may require, including--
            ``(1) an attestation of involuntary termination of 
        employment for each covered employee on the basis of whose 
        termination entitlement to reimbursement is claimed under 
        subsection (a),
            ``(2) a report of the amount of payroll taxes offset under 
        subsection (a) for the reporting period and the estimated 
        offsets of such taxes for the subsequent reporting period in 
        connection with reimbursements under subsection (a), and
            ``(3) a report containing the TINs of all covered 
        employees, the amount of subsidy reimbursed with respect to 
        each covered employee and qualified beneficiaries, and a 
        designation with respect to each covered employee as to whether 
        the subsidy reimbursement is for coverage of 1 individual or 2 
        or more individuals.
    ``(f) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out this 
section, including--
            ``(1) the requirement to report information or the 
        establishment of other methods for verifying the correct 
        amounts of reimbursements under this section, and
            ``(2) the application of this section to group health plans 
        that are multiemployer plans (as defined in section 3(37) of 
        the Employee Retirement Income Security Act of 1974).''.
                    (B) Social security trust funds held harmless.--In 
                determining any amount transferred or appropriated to 
                any fund under the Social Security Act, section 6431 of 
                the Internal Revenue Code of 1986 shall not be taken 
                into account.
                    (C) Clerical amendment.--The table of sections for 
                subchapter B of chapter 65 of the Internal Revenue Code 
                of 1986 is amended by adding at the end the following 
                new item:

``Sec. 6431. COBRA premium assistance.''.
                    (D) Effective date.--The amendments made by this 
                paragraph shall apply to premiums to which subsection 
                (a)(1)(A) applies.
                    (E) Special rule.--
                            (i) In general.--In the case of an 
                        assistance eligible individual who pays, with 
                        respect to the first period of COBRA 
                        continuation coverage to which subsection 
                        (a)(1)(A) applies or the immediately subsequent 
                        period, the full premium amount for such 
                        coverage, the person to whom such payment is 
                        payable shall--
                                    (I) make a reimbursement payment to 
                                such individual for the amount of such 
                                premium paid in excess of the amount 
                                required to be paid under subsection 
                                (a)(1)(A); or
                                    (II) provide credit to the 
                                individual for such amount in a manner 
                                that reduces one or more subsequent 
                                premium payments that the individual is 
                                required to pay under such subsection 
                                for the coverage involved.
                            (ii) Reimbursing employer.--A person to 
                        which clause (i) applies shall be reimbursed as 
                        provided for in section 6431 of the Internal 
                        Revenue Code of 1986 for any payment made, or 
                        credit provided, to the employee under such 
                        clause.
                            (iii) Payment or credits.--Unless it is 
                        reasonable to believe that the credit for the 
                        excess payment in clause (i)(II) will be used 
                        by the assistance eligible individual within 
                        180 days of the date on which the person 
                        receives from the individual the payment of the 
                        full premium amount, a person to which clause 
                        (i) applies shall make the payment required 
                        under such clause to the individual within 60 
                        days of such payment of the full premium 
                        amount. If, as of any day within the 180-day 
                        period, it is no longer reasonable to believe 
                        that the credit will be used during that 
                        period, payment equal to the remainder of the 
                        credit outstanding shall be made to the 
                        individual within 60 days of such day.
            (13) Penalty for failure to notify health plan of cessation 
        of eligibility for premium assistance.--
                    (A) In general.--Part I of subchapter B of chapter 
                68 of the Internal Revenue Code of 1986 is amended by 
                adding at the end the following new section:

``SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF CESSATION OF 
              ELIGIBILITY FOR COBRA PREMIUM ASSISTANCE.

    ``(a) In General.--Any person required to notify a group health 
plan under section 4(a)(2)(C) of the Health Care Protection Act who 
fails to make such a notification at such time and in such manner as 
the Secretary of Labor may require shall pay a penalty of 110 percent 
of the premium reduction provided under such section after termination 
of eligibility under such subsection.
    ``(b) Reasonable Cause Exception.--No penalty shall be imposed 
under subsection (a) with respect to any failure if it is shown that 
such failure is due to reasonable cause and not to willful neglect.''.
                    (B) Clerical amendment.--The table of sections of 
                part I of subchapter B of chapter 68 of such Code is 
                amended by adding at the end the following new item:

``Sec. 6720C. Penalty for failure to notify health plan of cessation of 
                            eligibility for COBRA premium 
                            assistance.''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to failures occurring after the 
                date of the enactment of this Act.
            (14) Coordination with hctc.--
                    (A) In general.--Subsection (g) of section 35 of 
                the Internal Revenue Code of 1986 is amended by 
                redesignating paragraph (9) as paragraph (10) and 
                inserting after paragraph (8) the following new 
                paragraph:
            ``(9) COBRA premium assistance.--In the case of an 
        assistance eligible individual who receives premium reduction 
        for COBRA continuation coverage under section 4(a) of the 
        Health Care Protection Act for any month during the taxable 
        year, such individual shall not be treated as an eligible 
        individual, a certified individual, or a qualifying family 
        member for purposes of this section or section 7527 with 
        respect to such month.''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall apply to taxable years ending 
                after the date of the enactment of this Act.
            (15) Exclusion of cobra premium assistance from gross 
        income.--
                    (A) In general.--Part III of subchapter B of 
                chapter 1 of the Internal Revenue Code of 1986 is 
                amended by inserting after section 139B the following 
                new section:

``SEC. 139C. COBRA PREMIUM ASSISTANCE.

    ``In the case of an assistance eligible individual (as defined in 
section 4 of the Health Care Protection Act), gross income does not 
include any premium reduction provided under subsection (a) of such 
section.''.
                    (B) Clerical amendment.--The table of sections for 
                part III of subchapter B of chapter 1 of such Code is 
                amended by inserting after the item relating to section 
                139B the following new item:

``Sec. 139C. COBRA premium assistance.''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to taxable years ending after the 
                date of the enactment of this Act.
    (b) Elimination of Premium Subsidy for High-Income Individuals.--
            (1) Recapture of subsidy for high-income individuals.--If--
                    (A) premium assistance is provided under this 
                section with respect to any COBRA continuation coverage 
                which covers the taxpayer, the taxpayer's spouse, or 
                any dependent (within the meaning of section 152 of the 
                Internal Revenue Code of 1986, determined without 
                regard to subsections (b)(1), (b)(2), and (d)(1)(B) 
                thereof) of the taxpayer during any portion of the 
                taxable year, and
                    (B) the taxpayer's modified adjusted gross income 
                for such taxable year exceeds $125,000 ($250,000 in the 
                case of a joint return),
        then the tax imposed by chapter 1 of such Code with respect to 
        the taxpayer for such taxable year shall be increased by the 
        amount of such assistance.
            (2) Phase-in of recapture.--
                    (A) In general.--In the case of a taxpayer whose 
                modified adjusted gross income for the taxable year 
                does not exceed $145,000 ($290,000 in the case of a 
                joint return), the increase in the tax imposed under 
                paragraph (1) shall not exceed the phase-in percentage 
                of such increase (determined without regard to this 
                paragraph).
                    (B) Phase-in percentage.--For purposes of this 
                subsection, the term ``phase-in percentage'' means the 
                ratio (expressed as a percentage) obtained by 
                dividing--
                            (i) the excess of described in subparagraph 
                        (B) of paragraph (1), by
                            (ii) $20,000 ($40,000 in the case of a 
                        joint return).
            (3) Option for high-income individuals to waive assistance 
        and avoid recapture.--Notwithstanding subsection (a)(3), an 
        individual shall not be treated as an assistance eligible 
        individual for purposes of this section and section 6431 of the 
        Internal Revenue Code of 1986 if such individual--
                    (A) makes a permanent election (at such time and in 
                such form and manner as the Secretary of the Treasury 
                may prescribe) to waive the right to the premium 
                assistance provided under this section, and
                    (B) notifies the entity to whom premiums are 
                reimbursed under section 6431(a) of such Code of such 
                election.
            (4) Modified adjusted gross income.--For purposes of this 
        subsection, the term ``modified adjusted gross income'' means 
        the adjusted gross income (as defined in section 62 of the 
        Internal Revenue Code of 1986) of the taxpayer for the taxable 
        year increased by any amount excluded from gross income under 
        section 911, 931, or 933 of such Code.
            (5) Credits not allowed against tax, etc.--For purposes 
        determining regular tax liability under section 26(b) of such 
        Code, the increase in tax under this subsection shall not be 
        treated as a tax imposed under chapter 1 of such Code.
            (6) Regulations.--The Secretary of the Treasury shall issue 
        such regulations or other guidance as are necessary or 
        appropriate to carry out this subsection, including 
        requirements that the entity to whom premiums are reimbursed 
        under section 6431(a) of the Internal Revenue Code of 1986 
        report to the Secretary, and to each assistance eligible 
        individual, the amount of premium assistance provided under 
        subsection (a) with respect to each such individual.
            (7) Effective date.--The provisions of this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act.
                                 <all>