[House Report 114-475]
[From the U.S. Government Publishing Office]


114th Congress }                                          { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                          { 114-475

======================================================================
 
     PROTECTING TAXPAYERS BY RECOVERING IMPROPER OBAMACARE SUBSIDY 
                            OVERPAYMENTS ACT

                                _______
                                

 March 23, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Brady of Texas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4723]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4723) to amend the Internal Revenue Code of 1986 to 
provide for the recovery of improper overpayments resulting 
from certain Federally subsidized health insurance, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     2
          C. Legislative History.................................     3
 II. EXPLANATION OF THE BILL..........................................3
          A. Recovery of Improper Overpayments Resulting From 
              Certain Federally Subsidized Health Insurance (sec. 
              2 of the bill and sec. 36B of the Code)............     3
III. VOTES OF THE COMMITTEE...........................................6
 IV. BUDGET EFFECTS OF THE BILL.......................................7
          A. Committee Estimate of Budgetary Effects.............     7
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     7
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     8
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......11
          A. Committee Oversight Findings and Recommendations....    11
          B. Statement of General Performance Goals and 
              Objectives.........................................    11
          C. Information Relating to Unfunded Mandates...........    11
          D. Applicability of House Rule XXI 5(b)................    11
          E. Tax Complexity Analysis.............................    12
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    12
          G. Duplication of Federal Programs.....................    12
          H. Disclosure of Directed Rule Makings.................    12
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........12
          A. Text of Existing Law Amended or Repealed by the 
              Bill, as Reported..................................    12
          B. Changes in Existing Law Proposed by the Bill, as 
              Reported...........................................    13
VII. DISSENTING VIEWS................................................44

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Protecting Taxpayers by Recovering 
Improper Obamacare Subsidy Overpayments Act''.

SEC. 2. RECOVERY OF IMPROPER OVERPAYMENTS RESULTING FROM CERTAIN 
                    FEDERALLY SUBSIDIZED HEALTH INSURANCE.

  (a) In General.--Section 36B(f)(2) of the Internal Revenue Code of 
1986 is amended by striking subparagraph (B).
  (b) Conforming Amendments.--
          (1) Clause (ii) of section 35(g)(12)(B) of such Code is 
        amended by striking ``, except that'' and all that follows and 
        inserting a period.
          (2) So much of paragraph (2) of section 36B(f) of such Code 
        as precedes ``advance payments'' is amended to read as follows:
          ``(2) Excess advance payments.--If the''.
  (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 2016.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 4723, as reported by the Committee on Ways 
and Means, amends the provisions of the Internal Revenue Code 
of 1986 relating to premium assistance credits for the purchase 
of health insurance by removing the limits on the amount of 
excess advance premium assistance payments that must be repaid. 
Thus, under the bill, the full amount of excess advance premium 
assistance payments would be required to be repaid.

                 B. Background and Need for Legislation

    Given the Federal government's current fiscal situation and 
growing financial commitment to health care services, it is 
imperative that Congress scrutinize the Federal budget to 
identify potential improper payments resulting from waste, 
fraud, and abuse. Once identified, it is incumbent on Congress 
to amend statutes and address programs that fail to fully 
protect taxpayer dollars. The Patient Protection and Affordable 
Care Act's (PPACA) design of advanceable and refundable tax 
credits for the purchase of certain government-approved health 
insurance creates the potential for such waste, fraud, and 
abuse. The combination of income determination rules, limits on 
the amount of subsidy overpayments that can be recouped, and 
the large amount of Federal funds being expended (more than 
$800 billion will be spent over the next ten years on both 
Obamacare's advanceable refundable tax credits and cost-sharing 
reductions) make the program particularly susceptible to 
improper payments. Accordingly, the bill seeks to reduce waste, 
fraud, and abuse by repealing the limit on the amount of 
improper overpayments the government can recoup.

                         C. Legislative History


Background

    H.R. 4723 was introduced by Representative Lynn Jenkins (R-
KS) on March 10, 2016, and was referred to the Committee on 
Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 4723, the 
Protecting Taxpayers by Recovering Improper Obamacare Subsidy 
Overpayments Act, on March 16, 2016, and ordered the bill, as 
amended, favorably reported by a vote of 22 yeas to 15 nays 
(with a quorum being present).

Committee hearings

    The full Committee on Ways and Means held hearings 
regarding the President's Fiscal Year 2017 budget submission on 
February 10, 2016, and February 11, 2016, with Secretary of 
Health and Human Services Sylvia Burwell and Secretary of the 
Treasury Jacob Lew, respectively, in which implementation of 
PPACA was a focal point. The President's health care law also 
was discussed at hearings on the law's implementation with 
Secretary Burwell with the full Committee on June 10, 2015, and 
on the law's mandates with the Health Subcommittee on April 14, 
2015.

                      II. EXPLANATION OF THE BILL


 A. Recovery of Improper Overpayments Resulting From Certain Federally 
  Subsidized Health Insurance (sec. 2 of the bill and sec. 36B of the 
                                 Code)


                              PRESENT LAW

Premium assistance credit--in general

    A refundable tax credit (the ``premium assistance credit'') 
is available for certain taxpayers who purchase health 
insurance (referred to as a ``qualified health plan'') for 
themselves and their families through an American Health 
Benefit Exchange (``Exchange'').\1\ The premium assistance 
credit, which is payable in advance directly to the insurer, 
subsidizes the purchase of a qualified health plan through an 
Exchange.\2\
---------------------------------------------------------------------------
    \1\Sec. 36B. Unless otherwise specified, all section references are 
made to the Internal Revenue Code of 1986, as amended.
    \2\Sections 1411 and 1412 of the Patient Protection and Affordable 
Care Act (``PPACA''), Pub. L. No. 111-148, provide rules relating to 
advance payment of the premium assistance credit.
---------------------------------------------------------------------------
    The premium assistance credit is available for taxpayers 
with household incomes between 100 and 400 percent of the 
Federal poverty level (``FPL'') for the family size involved 
who do not receive health insurance through an employer or a 
spouse's employer, as discussed below, and are not eligible for 
certain other types of coverage, such as Medicare or Medicaid. 
Household income is defined as the sum of (1) the taxpayer's 
modified adjusted gross income, plus (2) the aggregate modified 
adjusted gross incomes of all other individuals taken into 
account in determining that taxpayer's family size who are 
required to file a tax return for the taxable year. Modified 
adjusted gross income is defined as adjusted gross income 
increased by: (1) any amount excluded from gross income for 
citizens or residents living abroad,\3\ (2) any tax-exempt 
interest received or accrued during the tax year, and (3) an 
amount equal to the portion of the taxpayer's Social Security 
benefits that is not included in gross income (that is, the 
amount of the taxpayer's Social Security benefits that are 
excluded from gross income).\4\ To be eligible for the premium 
assistance credit, taxpayers who are married must file a joint 
return. Individuals who are listed as dependents on a return 
are ineligible for the premium assistance credit.
---------------------------------------------------------------------------
    \3\Sec. 911.
    \4\The amount of Social Security benefits included in gross income 
is determined under section 86.
---------------------------------------------------------------------------
    Generally, a taxpayer who is an employee and is offered 
minimum essential coverage\5\ under an employer-sponsored 
health plan is ineligible for the premium assistance credit.
---------------------------------------------------------------------------
    \5\Minimum essential coverage is defined in section 5000A(f).
---------------------------------------------------------------------------
    However, if an employee's share of the premium for self-
only coverage exceeds 9.66 percent (for 2016) of the employee's 
household income, or the plan's share of total allowed costs of 
benefits provided under the plan is less than 60 percent of 
such costs, and the employee declines the employer-offered 
coverage, the employee may be eligible for the premium 
assistance credit.

Amount of credit

    The premium assistance credit amount is generally the lower 
of (1) the premium for the qualified health plan in which the 
individual or family enrolls and (2) the premium for the second 
lowest cost silver plan\6\ in the rating area where the 
individual resides, reduced by the individual's or family's 
share of premiums.\7\ As shown in Table 1 below, an 
individual's or family's share of premiums is a certain 
percentage of household income for household income up to 133 
percent of FPL and is determined on a sliding scale in a linear 
manner as household income rises from 133 percent of FPL to 400 
percent of FPL.
---------------------------------------------------------------------------
    \6\A qualified health plan is categorized by level (bronze, silver, 
gold or platinum), depending on its actuarial value, that is, the 
percentage of the plan's share of the total costs of benefits under the 
plan. A silver level plan must have an actuarial value of 70 percent.
    \7\The premium assistance amount is determined on a monthly basis 
and the credit for a year is the sum of the monthly amounts.
    \8\Rev. Proc. 2014-62, 2014-2 C.B. 948. The percentages are indexed 
to the excess of premium growth over income growth for the preceding 
calendar year. After 2018, if the aggregate amount of premium 
assistance credits (and cost-sharing reductions under section 1402 of 
PPACA) exceeds 0.504 percent of the gross domestic product for that 
year, the percentage of income is also adjusted to reflect the excess 
(if any) of premium growth over the rate of growth in the consumer 
price index for the preceding calendar year.

           TABLE 1--TAXPAYER'S SHARE OF PREMIUMS (for 2016)\8\
------------------------------------------------------------------------
    Household income
(expressed as a percent   Initial percentage of     Final percentage of
        of FPL)              household income        household income
------------------------------------------------------------------------
     100% up to 133%                     2.03                    2.03
     133% up to 150%                     3.05                    4.07
     150% up to 200%                     4.07                    6.41
     200% up to 250%                     6.41                    8.18
     250% up to 300%                     8.18                    9.66
     300% up to 400%                     9.66                    9.66
------------------------------------------------------------------------

Reconciliation

    A taxpayer on whose behalf advance payments of the premium 
assistance credit for a taxable year are made is required to 
file an income tax return to reconcile the advance payments 
with the credit to which the taxpayer is entitled for the 
taxable year.\9\
---------------------------------------------------------------------------
    \9\A taxpayer is not required to apply for advance payments and may 
instead just claim the credit on his or her income tax return.
---------------------------------------------------------------------------
    If the advance payments of the premium assistance credit 
exceed the amount of credit to which the taxpayer is entitled, 
the excess (``excess advance payments'') is treated as an 
additional tax liability on the taxpayer's income tax return 
for the taxable year, subject to a limitation on the amount of 
liability in some cases.\10\ For persons with household income 
below 400 percent of FPL, the liability for the overpayment for 
a taxable year is limited to a specific dollar amount (the 
``applicable dollar amount'') as shown in Table 2 below (one-
half of the applicable dollar amount shown in Table 2 for 
unmarried individuals who are not surviving spouses or filing 
as head of households).
---------------------------------------------------------------------------
    \10\Section 35 also provides an advanceable, refundable credit for 
the purchase of health insurance, the health coverage tax credit 
(``HCTC''), for certain individuals. Section 35(g)(12) provides rules 
for coordination between HCTC and premium assistance credit eligibility 
and advance payments.
    \11\Rev. Proc. 2015-53, 2015-44 I.R.B. 615. The applicable dollar 
amounts are indexed to reflect cost-of-living increases, with the 
amount of any increase rounded down to the next lowest multiple of $50.

     TABLE 2.--RECONCILIATION LIMIT ON ADDITIONAL TAX LIABILITY (for
                                2016)\11\
------------------------------------------------------------------------
 Household income  (expressed as a
          percent of FPL)                  Applicable dollar amount
------------------------------------------------------------------------
               Less than 200%                                 $600
At least 200% but less than 300%                            $1,500
At least 300% but less than 400%                            $2,550
------------------------------------------------------------------------

    If the advance payments of the premium assistance credit 
for a taxable year are less than the amount of the credit to 
which the taxpayer is entitled, the additional credit amount is 
also reflected on the taxpayer's income tax return for the 
year.

                           REASONS FOR CHANGE

    The Committee believes that overpayments resulting from 
certain Federally-subsidized health insurance programs should 
be fully recouped and that failure to do so will result in the 
mismanagement of taxpayer funds. The Committee believes that it 
is appropriate to align repayment requirements for this program 
with those of similar tax credits, like the earned income tax 
credit. Given that, in the case of an exchange subsidy 
underpayment, the Federal government is required to pay the 
filer the additional appropriate amount of funds, the Committee 
believes it is appropriate for the government to be able to 
recoup overpayments. Thus, the Committee believes that 
recipients should be required to repay the full amount of any 
overpayment of the advance premium assistance credit.

                        EXPLANATION OF PROVISION

    The provision repeals the present-law rule under which, in 
the case of a taxpayer with household income below 400 percent 
of FPL, the additional tax liability resulting from excess 
advance payments is limited to the applicable dollar 
amount.\12\ Thus, under the provision, the full amount of the 
excess advance payments would be required to be repaid.
---------------------------------------------------------------------------
    \12\The provision includes a conforming change to section 
35(g)(12).
---------------------------------------------------------------------------

                             EFFECTIVE DATE

    The provision is effective for taxable years beginning 
after December 31, 2016.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 4723, the ``Protecting Taxpayers by 
Recovering Improper Obamacare Subsidy Overpayments Act,'' on 
March 16, 2016.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 4723, as amended, was ordered favorably 
reported to the House of Representatives by a roll call vote of 
22 yeas to 15 nays (with a quorum being present). The vote was 
as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Nunes......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Lewis........  ........        X   .........
Mr. Reichert...................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Price......................  ........  ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Buchanan...................  ........  ........  .........  Mr. Larson.......  ........        X   .........
Mr. Smith (NE).................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Ms. Jenkins....................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Mr. Pascrell.....  ........        X   .........
Mr. Marchant...................        X   ........  .........  Mr. Crowley......  ........        X   .........
Ms. Black......................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Reed.......................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Young......................        X   ........  .........
Mr. Kelly......................        X   ........  .........
Mr. Renacci....................        X   ........  .........
Mr. Meehan.....................        X   ........  .........
Ms. Noem.......................        X   ........  .........
Mr. Holding....................        X   ........  .........
Mr. Smith (MO).................        X   ........  .........
Mr. Dold.......................        X   ........  .........
Mr. Rice.......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 4723, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal fiscal year budget receipts for the period 
2016-2026:

                                                                      FISCAL YEARS
                                                                  [Billions of Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                     Item                        2016   2017   2018    2019    2020    2021    2022    2023    2024    2025    2026    2016-21   2016-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
On-budget revenues............................     --    0.3     1.6     1.7     1.7     1.7     1.8     1.8     1.9     2.0     2.0       7.1      16.6
Off-budget revenues...........................     --    \1\    -0.1    -0.1    -0.1    -0.1    -0.1    -0.1    -0.1    -0.1    -0.1      -0.3      -0.7
Outlays\2\....................................     --    2.7     4.2     4.3     4.3     4.5     4.7     4.9     5.2     5.4     5.6      19.9      45.8
Total.........................................     --    3.0     5.7     5.9     6.0     6.1     6.4     6.7     7.0     7.3     7.5      26.7      61.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details may not add to totals due to rounding.
\1\Loss of less than $50 million.
\2\Reduction in outlays.

    Pursuant to clause 8 of rule XIII of the Rules of the House 
of Representatives, the following statement is made by the 
Joint Committee on Taxation with respect to the provisions of 
the bill amending the Internal Revenue Code of 1986: The gross 
budgetary effect (before incorporating macroeconomic effects) 
in any fiscal year is less than 0.25 percent of the current 
projected gross domestic product of the United States for that 
fiscal year; therefore, the bill is not ``major legislation'' 
for purposes of requiring that the estimate include the 
budgetary effects of changes in economic output, employment, 
capital stock and other macroeconomic variables.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee further states that there are no new or increased tax 
expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 22, 2016.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4723, the 
Protecting Taxpayers by Recovering Improper Obamacare Subsidy 
Overpayments Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Nathaniel 
Frentz, who can be reached at 226-2860.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 4723--Protecting Taxpayers by Recovering Improper Obamacare 
        Subsidy Overpayments Act

    H.R. 4723 would amend the Internal Revenue Code to provide 
for the recovery of overpayments resulting from certain 
federally subsidized health insurance. Under current law, 
qualified taxpayers are eligible to receive refundable tax 
credits to assist in the purchase of health insurance through 
the health insurance marketplaces established by the Affordable 
Care Act. The amount of those premium assistance credits are 
based on family size and income, and the advance payments of 
the credits is based on income estimated for the current year. 
If taxpayers' circumstances change and their advance payments 
exceed the premium assistance credits to which they are 
entitled, they may be required to repay some or all of the 
credits, subject to certain limits based on income. Enacting 
H.R. 4723 would eliminate existing limits on the amounts 
required to be repaid by taxpayers. Taxpayers would therefore 
be liable for the full amount of overpayments, beginning in tax 
year 2017.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that relative to CBO's January 2016 baseline, the 
legislation would decrease outlays by $45.8 billion and 
increase revenues by $15.8 billion over the 2016-2026 period. 
JCT therefore estimates that the legislation would reduce 
federal budget deficits by $61.6 billion over the 2016-2026 
period. The change in revenues includes a reduction of about 
$718 million over the 2016-2026 period that would result from 
changes in off-budget revenues (from Social Security payroll 
taxes).
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending and revenues. The estimated net decrease in the 
deficit is shown in the following table. Only on-budget changes 
to outlays or revenues are subject to pay-as-you-go procedures.

                               CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4723, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MARCH 16, 2016
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in millions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                                2016      2017      2018      2019      2020      2021      2022      2023      2024      2025      2026    2016-2021  2016-2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 NET DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact..............................         0    -3,015    -5,763    -5,992    -6,024    -6,204    -6,496    -6,778    -7,076    -7,344    -7,622    -27,000    -62,315
Memorandum:a
    Change in Outlays.......................................         0    -2,724    -4,156    -4,272    -4,306    -4,478    -4,719    -4,943    -5,176    -5,386    -5,603    -19,936    -45,763
    Change in On-Budget Revenues............................         0       291     1,607     1,720     1,718     1,726     1,777     1,835     1,900     1,958     2,019      7,064     16,552
    Change in Off-Budget Revenues...........................         0         0       -64       -69       -72       -76       -80       -84       -87       -91       -94       -282       -718
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
aA negative sign for outlays indicates a reduction in outlays. A positive sign for revenues indicates an increase in revenues.

    JCT estimates that enacting the bill would not increase net 
direct spending or on-budget deficits in any of the four 10-
year periods beginning in 2027.
    JCT has determined that the bill contains no 
intergovernmental mandates but would impose a private-sector 
mandate as defined in the Unfunded Mandates Reform Act (UMRA). 
Based on information provided by JCT, the cost of the 
provision's private-sector mandate would exceed the annual 
threshold established in UMRA for private-sector mandates ($157 
million in 2017, adjusted annually for inflation) beginning in 
2017.
    The CBO staff contact for this estimate is Nathaniel 
Frentz. The estimate was approved by Mark Booth, Unit Chief, 
Revenue Estimating.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 4723 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill contains one 
private sector mandate: changes to the limitations on recapture 
of overpayments resulting from advance premium assistance 
payments for Federally-subsidized health insurance. The 
Committee has determined that the bill does not impose a 
Federal intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (``IRS Reform Act'') 
requires the staff of the Joint Committee on Taxation (in 
consultation with the Internal Revenue Service and the Treasury 
Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code of 1986 and has widespread applicability 
to individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Internal Revenue 
Code of 1986 and that have ``widespread applicability'' to 
individuals or small businesses, within the meaning of the 
rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

                     INTERNAL REVENUE CODE OF 1986

Subtitle A--Income Taxes

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CHAPTER 1--NORMAL TAXES AND SURTAXES

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Subchapter A--Determination of Tax Liability

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PART IV--CREDITS AGAINST TAX

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Subpart C--Refundable Credits

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SEC. 35. HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.

  (a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by subtitle A an 
amount equal to 72.5 percent of the amount paid by the taxpayer 
for coverage of the taxpayer and qualifying family members 
under qualified health insurance for eligible coverage months 
beginning in the taxable year.
  (b) Eligible Coverage Month.--For purposes of this section--
          (1) In general.--The term ``eligible coverage month'' 
        means any month if--
                  (A) as of the first day of such month, the 
                taxpayer--
                          (i) is an eligible individual,
                          (ii) is covered by qualified health 
                        insurance, the premium for which is 
                        paid by the taxpayer,
                          (iii) does not have other specified 
                        coverage, and
                          (iv) is not imprisoned under Federal, 
                        State, or local authority, and
                  (B) such month begins more than 90 days after 
                the date of the enactment of the Trade Act of 
                2002, and before January 1, 2020.
          (2) Joint returns.--In the case of a joint return, 
        the requirements of paragraph (1)(A) shall be treated 
        as met with respect to any month if at least 1 spouse 
        satisfies such requirements.
  (c) Eligible Individual.--For purposes of this section--
          (1) In general.--The term ``eligible individual'' 
        means--
                  (A) an eligible TAA recipient,
                  (B) an eligible alternative TAA recipient, 
                and
                  (C) an eligible PBGC pension recipient.
          (2) Eligible TAA recipient.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``eligible TAA 
                recipient'' means, with respect to any month, 
                any individual who is receiving for any day of 
                such month a trade readjustment allowance under 
                chapter 2 of title II of the Trade Act of 1974 
                or who would be eligible to receive such 
                allowance if section 231 of such Act were 
                applied without regard to subsection (a)(3)(B) 
                of such section. An individual shall continue 
                to be treated as an eligible TAA recipient 
                during the first month that such individual 
                would otherwise cease to be an eligible TAA 
                recipient by reason of the preceding sentence.
                  (B) Special rule.--In the case of any 
                eligible coverage month beginning after the 
                date of the enactment of this paragraph, the 
                term ``eligible TAA recipient'' means, with 
                respect to any month, any individual who--
                          (i) is receiving for any day of such 
                        month a trade readjustment allowance 
                        under chapter 2 of title II of the 
                        Trade Act of 1974,
                          (ii) would be eligible to receive 
                        such allowance except that such 
                        individual is in a break in training 
                        provided under a training program 
                        approved under section 236 of such Act 
                        that exceeds the period specified in 
                        section 233(e) of such Act, but is 
                        within the period for receiving such 
                        allowances provided under section 
                        233(a) of such Act, or
                          (iii) is receiving unemployment 
                        compensation (as defined in section 
                        85(b)) for any day of such month and 
                        who would be eligible to receive such 
                        allowance for such month if section 231 
                        of such Act were applied without regard 
                        to subsections (a)(3)(B) and (a)(5) 
                        thereof.
                An individual shall continue to be treated as 
                an eligible TAA recipient during the first 
                month that such individual would otherwise 
                cease to be an eligible TAA recipient by reason 
                of the preceding sentence.
          (3) Eligible alternative TAA recipient.--The term 
        ``eligible alternative TAA recipient'' means, with 
        respect to any month, any individual who--
                  (A) is a worker described in section 
                246(a)(3)(B) of the Trade Act of 1974 who is 
                participating in the program established under 
                section 246(a)(1) of such Act, and
                  (B) is receiving a benefit for such month 
                under section 246(a)(2) of such Act.
        An individual shall continue to be treated as an 
        eligible alternative TAA recipient during the first 
        month that such individual would otherwise cease to be 
        an eligible alternative TAA recipient by reason of the 
        preceding sentence.
          (4) Eligible PBGC pension recipient.--The term 
        ``eligible PBGC pension recipient'' means, with respect 
        to any month, any individual who--
                  (A) has attained age 55 as of the first day 
                of such month, and
                  (B) is receiving a benefit for such month any 
                portion of which is paid by the Pension Benefit 
                Guaranty Corporation under title IV of the 
                Employee Retirement Income Security Act of 
                1974.
  (d) Qualifying Family Member.--For purposes of this section--
          (1) In general.--The term ``qualifying family 
        member'' means--
                  (A) the taxpayer's spouse, and
                  (B) any dependent of the taxpayer with 
                respect to whom the taxpayer is entitled to a 
                deduction under section 151(c).
        Such term does not include any individual who has other 
        specified coverage.
          (2) Special dependency test in case of divorced 
        parents, etc..--If section 152(e) applies to any child 
        with respect to any calendar year, in the case of any 
        taxable year beginning in such calendar year, such 
        child shall be treated as described in paragraph (1)(B) 
        with respect to the custodial parent (as defined in 
        section 152(e)(4)(A)) and not with respect to the 
        noncustodial parent.
  (e) Qualified Health Insurance.--For purposes of this 
section--
          (1) In general.--The term ``qualified health 
        insurance'' means any of the following:
                  (A) Coverage under a COBRA continuation 
                provision (as defined in section 9832(d)(1)).
                  (B) State-based continuation coverage 
                provided by the State under a State law that 
                requires such coverage.
                  (C) Coverage offered through a qualified 
                State high risk pool (as defined in section 
                2744(c)(2) of the Public Health Service Act).
                  (D) Coverage under a health insurance program 
                offered for State employees.
                  (E) Coverage under a State-based health 
                insurance program that is comparable to the 
                health insurance program offered for State 
                employees.
                  (F) Coverage through an arrangement entered 
                into by a State and--
                          (i) a group health plan (including 
                        such a plan which is a multiemployer 
                        plan as defined in section 3(37) of the 
                        Employee Retirement Income Security Act 
                        of 1974),
                          (ii) an issuer of health insurance 
                        coverage,
                          (iii) an administrator, or
                          (iv) an employer.
                  (G) Coverage offered through a State 
                arrangement with a private sector health care 
                coverage purchasing pool.
                  (H) Coverage under a State-operated health 
                plan that does not receive any Federal 
                financial participation.
                  (I) Coverage under a group health plan that 
                is available through the employment of the 
                eligible individual's spouse.
                  (J) In the case of any eligible individual 
                and such individual's qualifying family 
                members, coverage under individual health 
                insurance (other than coverage enrolled in 
                through an Exchange established under the 
                Patient Protection and Affordable Care Act). 
                For purposes of this subparagraph, the term 
                ``individual health insurance'' means any 
                insurance which constitutes medical care 
                offered to individuals other than in connection 
                with a group health plan and does not include 
                Federal- or State-based health insurance 
                coverage.
                  (K) Coverage under an employee benefit plan 
                funded by a voluntary employees' beneficiary 
                association (as defined in section 501(c)(9)) 
                established pursuant to an order of a 
                bankruptcy court, or by agreement with an 
                authorized representative, as provided in 
                section 1114 of title 11, United States Code.
          (2) Requirements for State-based coverage.--
                  (A) In general.--The term ``qualified health 
                insurance'' does not include any coverage 
                described in subparagraphs (B) through (H) of 
                paragraph (1) unless the State involved has 
                elected to have such coverage treated as 
                qualified health insurance under this section 
                and such coverage meets the following 
                requirements:
                          (i) Guaranteed issue.--Each 
                        qualifying individual is guaranteed 
                        enrollment if the individual pays the 
                        premium for enrollment or provides a 
                        qualified health insurance costs credit 
                        eligibility certificate described in 
                        section 7527 and pays the remainder of 
                        such premium.
                          (ii) No imposition of preexisting 
                        condition exclusion.--No pre-existing 
                        condition limitations are imposed with 
                        respect to any qualifying individual.
                          (iii) Nondiscriminatory premium.--The 
                        total premium (as determined without 
                        regard to any subsidies) with respect 
                        to a qualifying individual may not be 
                        greater than the total premium (as so 
                        determined) for a similarly situated 
                        individual who is not a qualifying 
                        individual.
                          (iv) Same benefits.--Benefits under 
                        the coverage are the same as (or 
                        substantially similar to) the benefits 
                        provided to similarly situated 
                        individuals who are not qualifying 
                        individuals.
                  (B) Qualifying individual.--For purposes of 
                this paragraph, the term ``qualifying 
                individual'' means--
                          (i) an eligible individual for whom, 
                        as of the date on which the individual 
                        seeks to enroll in the coverage 
                        described in subparagraphs (B) through 
                        (H) of paragraph (1), the aggregate of 
                        the periods of creditable coverage (as 
                        defined in section 9801(c)) is 3 months 
                        or longer and who, with respect to any 
                        month, meets the requirements of 
                        clauses (iii) and (iv) of subsection 
                        (b)(1)(A); and
                          (ii) the qualifying family members of 
                        such eligible individual.
          (3) Exception.--The term ``qualified health 
        insurance'' shall not include--
                  (A) a flexible spending or similar 
                arrangement, and
                  (B) any insurance if substantially all of its 
                coverage is of excepted benefits described in 
                section 9832(c).
  (f) Other Specified Coverage.--For purposes of this section, 
an individual has other specified coverage for any month if, as 
of the first day of such month--
          (1) Subsidized coverage.--
                  (A) In general.--Such individual is covered 
                under any insurance which constitutes medical 
                care (except insurance substantially all of the 
                coverage of which is of excepted benefits 
                described in section 9832(c)) under any health 
                plan maintained by any employer (or former 
                employer) of the taxpayer or the taxpayer's 
                spouse and at least 50 percent of the cost of 
                such coverage (determined under section 4980B) 
                is paid or incurred by the employer.
                  (B) Eligible alternative TAA recipients.--In 
                the case of an eligible alternative TAA 
                recipient, such individual is either--
                          (i) eligible for coverage under any 
                        qualified health insurance (other than 
                        insurance described in subparagraph 
                        (A), (B), or (F) of subsection (e)(1)) 
                        under which at least 50 percent of the 
                        cost of coverage (determined under 
                        section 4980B(f)(4)) is paid or 
                        incurred by an employer (or former 
                        employer) of the taxpayer or the 
                        taxpayer's spouse, or
                          (ii) covered under any such qualified 
                        health insurance under which any 
                        portion of the cost of coverage (as so 
                        determined) is paid or incurred by an 
                        employer (or former employer) of the 
                        taxpayer or the taxpayer's spouse.
                  (C) Treatment of cafeteria plans.--For 
                purposes of subparagraphs (A) and (B), the cost 
                of coverage shall be treated as paid or 
                incurred by an employer to the extent the 
                coverage is in lieu of a right to receive cash 
                or other qualified benefits under a cafeteria 
                plan (as defined in section 125(d)).
          (2) Coverage under medicare, medicaid, or SCHIP.--
        Such individual--
                  (A) is entitled to benefits under part A of 
                title XVIII of the Social Security Act or is 
                enrolled under part B of such title, or
                  (B) is enrolled in the program under title 
                XIX or XXI of such Act (other than under 
                section 1928 of such Act).
          (3) Certain other coverage.--Such individual--
                  (A) is enrolled in a health benefits plan 
                under chapter 89 of title 5, United States 
                Code, or
                  (B) is entitled to receive benefits under 
                chapter 55 of title 10, United States Code.
  (g) Special Rules.--
          (1) Coordination with advance payments of credit.--
        With respect to any taxable year, the amount which 
        would (but for this subsection) be allowed as a credit 
        to the taxpayer under subsection (a) shall be reduced 
        (but not below zero) by the aggregate amount paid on 
        behalf of such taxpayer under section 7527 for months 
        beginning in such taxable year.
          (2) Coordination with other deductions.--Amounts 
        taken into account under subsection (a) shall not be 
        taken into account in determining any deduction allowed 
        under section 162(l) or 213.
          (3) Medical and health savings accounts.--Amounts 
        distributed from an Archer MSA (as defined in section 
        220(d)) or from a health savings account (as defined in 
        section 223(d)) shall not be taken into account under 
        subsection (a).
          (4) Denial of credit to dependents.--No credit shall 
        be allowed under this section to 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.
          (5) Both spouses eligible individuals.--The spouse of 
        the taxpayer shall not be treated as a qualifying 
        family member for purposes of subsection (a), if--
                  (A) the taxpayer is married at the close of 
                the taxable year,
                  (B) the taxpayer and the taxpayer's spouse 
                are both eligible individuals during the 
                taxable year, and
                  (C) the taxpayer files a separate return for 
                the taxable year.
          (6) Marital status; certain married individuals 
        living apart.--Rules similar to the rules of paragraphs 
        (3) and (4) of section 21(e) shall apply for purposes 
        of this section.
          (7) Insurance which covers other individuals.--For 
        purposes of this section, rules similar to the rules of 
        section 213(d)(6) shall apply with respect to any 
        contract for qualified health insurance under which 
        amounts are payable for coverage of an individual other 
        than the taxpayer and qualifying family members.
          (8) Treatment of payments.--For purposes of this 
        section--
                  (A) Payments by Secretary.--Payments made by 
                the Secretary on behalf of any individual under 
                section 7527 (relating to advance payment of 
                credit for health insurance costs of eligible 
                individuals) shall be treated as having been 
                made by the taxpayer on the first day of the 
                month for which such payment was made.
                  (B) Payments by taxpayer.--Payments made by 
                the taxpayer for eligible coverage months shall 
                be treated as having been made by the taxpayer 
                on the first day of the month for which such 
                payment was made.
          (9) COBRA premium assistance.--In the case of an 
        assistance eligible individual who receives premium 
        reduction for COBRA continuation coverage under section 
        3001(a) of title III of division B of the American 
        Recovery and Reinvestment Act of 2009 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.
          (10) Continued qualification of family members after 
        certain events.--
                  (A) Medicare eligibility.--In the case of any 
                month which would be an eligible coverage month 
                with respect to an eligible individual but for 
                subsection (f)(2)(A), such month shall be 
                treated as an eligible coverage month with 
                respect to such eligible individual solely for 
                purposes of determining the amount of the 
                credit under this section with respect to any 
                qualifying family members of such individual 
                (and any advance payment of such credit under 
                section 7527). This subparagraph shall only 
                apply with respect to the first 24 months after 
                such eligible individual is first entitled to 
                the benefits described in subsection (f)(2)(A).
                  (B) Divorce.--In the case of the finalization 
                of a divorce between an eligible individual and 
                such individual's spouse, such spouse shall be 
                treated as an eligible individual for purposes 
                of this section and section 7527 for a period 
                of 24 months beginning with the date of such 
                finalization, except that the only qualifying 
                family members who may be taken into account 
                with respect to such spouse are those 
                individuals who were qualifying family members 
                immediately before such finalization.
                  (C) Death.--In the case of the death of an 
                eligible individual--
                          (i) any spouse of such individual 
                        (determined at the time of such death) 
                        shall be treated as an eligible 
                        individual for purposes of this section 
                        and section 7527 for a period of 24 
                        months beginning with the date of such 
                        death, except that the only qualifying 
                        family members who may be taken into 
                        account with respect to such spouse are 
                        those individuals who were qualifying 
                        family members immediately before such 
                        death, and
                          (ii) any individual who was a 
                        qualifying family member of the 
                        decedent immediately before such death 
                        (or, in the case of an individual to 
                        whom paragraph (4) applies, the 
                        taxpayer to whom the deduction under 
                        section 151 is allowable) shall be 
                        treated as an eligible individual for 
                        purposes of this section and section 
                        7527 for a period of 24 months 
                        beginning with the date of such death, 
                        except that in determining the amount 
                        of such credit only such qualifying 
                        family member may be taken into 
                        account.
          (11) Election.--
                  (A) In general.--This section shall not apply 
                to any taxpayer for any eligible coverage month 
                unless such taxpayer elects the application of 
                this section for such month.
                  (B) Timing and applicability of election.--
                Except as the Secretary may provide--
                          (i) an election to have this section 
                        apply for any eligible coverage month 
                        in a taxable year shall be made not 
                        later than the due date (including 
                        extensions) for the return of tax for 
                        the taxable year; and
                          (ii) any election for this section to 
                        apply for an eligible coverage month 
                        shall apply for all subsequent eligible 
                        coverage months in the taxable year 
                        and, once made, shall be irrevocable 
                        with respect to such months.
          (12) Coordination with premium tax credit.--
                  (A) In general.--An eligible coverage month 
                to which the election under paragraph (11) 
                applies shall not be treated as a coverage 
                month (as defined in section 36B(c)(2)) for 
                purposes of section 36B with respect to the 
                taxpayer.
                  (B) Coordination with advance payments of 
                premium tax credit.--In the case of a taxpayer 
                who makes the election under paragraph (11) 
                with respect to any eligible coverage month in 
                a taxable year or on behalf of whom any advance 
                payment is made under section 7527 with respect 
                to any month in such taxable year--
                          (i) the tax imposed by this chapter 
                        for the taxable year shall be increased 
                        by the excess, if any, of--
                                  (I) the sum of any advance 
                                payments made on behalf of the 
                                taxpayer under section 1412 of 
                                the Patient Protection and 
                                Affordable Care Act and section 
                                7527 for months during such 
                                taxable year, over
                                  (II) the sum of the credits 
                                allowed under this section 
                                (determined without regard to 
                                paragraph (1)) and section 36B 
                                (determined without regard to 
                                subsection (f)(1) thereof) for 
                                such taxable year; and
                          (ii) section 36B(f)(2) shall not 
                        apply with respect to such taxpayer for 
                        such taxable year, except that if such 
                        taxpayer received any advance payments 
                        under section 7527 for any month in 
                        such taxable year and is later allowed 
                        a credit under section 36B for such 
                        taxable year, then section 36B(f)(2)(B) 
                        shall be applied by substituting the 
                        amount determined under clause (i) for 
                        the amount determined under section 
                        36B(f)(2)(A).
          (13) Regulations.--The Secretary may prescribe such 
        regulations and other guidance as may be necessary or 
        appropriate to carry out this section, section 6050T, 
        and section 7527.

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SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED HEALTH PLAN.

  (a) In General.--In the case of an applicable taxpayer, there 
shall be allowed as a credit against the tax imposed by this 
subtitle for any taxable year an amount equal to the premium 
assistance credit amount of the taxpayer for the taxable year.
  (b) Premium Assistance Credit Amount.--For purposes of this 
section--
          (1) In general.--The term ``premium assistance credit 
        amount'' means, with respect to any taxable year, the 
        sum of the premium assistance amounts determined under 
        paragraph (2) with respect to all coverage months of 
        the taxpayer occurring during the taxable year.
          (2) Premium assistance amount.--The premium 
        assistance amount determined under this subsection with 
        respect to any coverage month is the amount equal to 
        the lesser of--
                  (A) the monthly premiums for such month for 1 
                or more qualified health plans offered in the 
                individual market within a State which cover 
                the taxpayer, the taxpayer's spouse, or any 
                dependent (as defined in section 152) of the 
                taxpayer and which were enrolled in through an 
                Exchange established by the State under 1311 of 
                the Patient Protection and Affordable Care Act, 
                or
                  (B) the excess (if any) of--
                          (i) the adjusted monthly premium for 
                        such month for the applicable second 
                        lowest cost silver plan with respect to 
                        the taxpayer, over
                          (ii) an amount equal to 1/12 of the 
                        product of the applicable percentage 
                        and the taxpayer's household income for 
                        the taxable year.
          (3) Other terms and rules relating to premium 
        assistance amounts.--For purposes of paragraph (2)--
                  (A) Applicable percentage.--
                          (i) In general.--Except as provided 
                        in clause (ii), the applicable 
                        percentage for any taxable year shall 
                        be the percentage such that the 
                        applicable percentage for any taxpayer 
                        whose household income is within an 
                        income tier specified in the following 
                        table shall increase, on a sliding 
                        scale in a linear manner, from the 
                        initial premium percentage to the final 
                        premium percentage specified in such 
                        table for such income tier:

------------------------------------------------------------------------
     In the case of
    household income
(expressed as a percent    The initial premium       The final premium
of poverty line) within      percentage is--          percentage is--
  the following income
         tier:
------------------------------------------------------------------------
Up to 133%               2.0%                     2.0%
133% up to 150%          3.0%                     4.0%
150% up to 200%          4.0%                     6.3%
200% up to 250%          6.3%                     8.05%
250% up to 300%          8.05%                    9.5%
300% up to 400%          9.5%                     9.5%
------------------------------------------------------------------------

                          (ii) Indexing.--
                                  (I) In general.--Subject to 
                                subclause (II), in the case of 
                                taxable years beginning in any 
                                calendar year after 2014, the 
                                initial and final applicable 
                                percentages under clause (i) 
                                (as in effect for the preceding 
                                calendar year after application 
                                of this clause) shall be 
                                adjusted to reflect the excess 
                                of the rate of premium growth 
                                for the preceding calendar year 
                                over the rate of income growth 
                                for the preceding calendar 
                                year.
                                  (II) Additional adjustment.--
                                Except as provided in subclause 
                                (III), in the case of any 
                                calendar year after 2018, the 
                                percentages described in 
                                subclause (I) shall, in 
                                addition to the adjustment 
                                under subclause (I), be 
                                adjusted to reflect the excess 
                                (if any) of the rate of premium 
                                growth estimated under 
                                subclause (I) for the preceding 
                                calendar year over the rate of 
                                growth in the consumer price 
                                index for the preceding 
                                calendar year.
                                  (III) Failsafe.--Subclause 
                                (II) shall apply for any 
                                calendar year only if the 
                                aggregate amount of premium tax 
                                credits under this section and 
                                cost-sharing reductions under 
                                section 1402 of the Patient 
                                Protection and Affordable Care 
                                Act for the preceding calendar 
                                year exceeds an amount equal to 
                                0.504 percent of the gross 
                                domestic product for the 
                                preceding calendar year.
                  (B) Applicable second lowest cost silver 
                plan.--The applicable second lowest cost silver 
                plan with respect to any applicable taxpayer is 
                the second lowest cost silver plan of the 
                individual market in the rating area in which 
                the taxpayer resides which--
                          (i) is offered through the same 
                        Exchange through which the qualified 
                        health plans taken into account under 
                        paragraph (2)(A) were offered, and
                          (ii) provides--
                                  (I) self-only coverage in the 
                                case of an applicable 
                                taxpayer--
                                          (aa) whose tax for 
                                        the taxable year is 
                                        determined under 
                                        section 1(c) (relating 
                                        to unmarried 
                                        individuals other than 
                                        surviving spouses and 
                                        heads of households) 
                                        and who is not allowed 
                                        a deduction under 
                                        section 151 for the 
                                        taxable year with 
                                        respect to a dependent, 
                                        or
                                          (bb) who is not 
                                        described in item (aa) 
                                        but who purchases only 
                                        self-only coverage, and
                                  (II) family coverage in the 
                                case of any other applicable 
                                taxpayer.
                If a taxpayer files a joint return and no 
                credit is allowed under this section with 
                respect to 1 of the spouses by reason of 
                subsection (e), the taxpayer shall be treated 
                as described in clause (ii)(I) unless a 
                deduction is allowed under section 151 for the 
                taxable year with respect to a dependent other 
                than either spouse and subsection (e) does not 
                apply to the dependent.
                  (C) Adjusted monthly premium.--The adjusted 
                monthly premium for an applicable second lowest 
                cost silver plan is the monthly premium which 
                would have been charged (for the rating area 
                with respect to which the premiums under 
                paragraph (2)(A) were determined) for the plan 
                if each individual covered under a qualified 
                health plan taken into account under paragraph 
                (2)(A) were covered by such silver plan and the 
                premium was adjusted only for the age of each 
                such individual in the manner allowed under 
                section 2701 of the Public Health Service Act. 
                In the case of a State participating in the 
                wellness discount demonstration project under 
                section 2705(d) of the Public Health Service 
                Act, the adjusted monthly premium shall be 
                determined without regard to any premium 
                discount or rebate under such project.
                  (D) Additional benefits.--If--
                          (i) a qualified health plan under 
                        section 1302(b)(5) of the Patient 
                        Protection and Affordable Care Act 
                        offers benefits in addition to the 
                        essential health benefits required to 
                        be provided by the plan, or
                          (ii) a State requires a qualified 
                        health plan under section 1311(d)(3)(B) 
                        of such Act to cover benefits in 
                        addition to the essential health 
                        benefits required to be provided by the 
                        plan,
                the portion of the premium for the plan 
                properly allocable (under rules prescribed by 
                the Secretary of Health and Human Services) to 
                such additional benefits shall not be taken 
                into account in determining either the monthly 
                premium or the adjusted monthly premium under 
                paragraph (2).
                  (E) Special rule for pediatric dental 
                coverage.--For purposes of determining the 
                amount of any monthly premium, if an individual 
                enrolls in both a qualified health plan and a 
                plan described in section 1311(d)(2)(B)(ii) (I) 
                of the Patient Protection and Affordable Care 
                Act for any plan year, the portion of the 
                premium for the plan described in such section 
                that (under regulations prescribed by the 
                Secretary) is properly allocable to pediatric 
                dental benefits which are included in the 
                essential health benefits required to be 
                provided by a qualified health plan under 
                section 1302(b)(1)(J) of such Act shall be 
                treated as a premium payable for a qualified 
                health plan.
  (c) Definition and Rules Relating to Applicable Taxpayers, 
Coverage Months, and Qualified Health Plan.--For purposes of 
this section--
          (1) Applicable taxpayer.--
                  (A) In general.--The term ``applicable 
                taxpayer'' means, with respect to any taxable 
                year, a taxpayer whose household income for the 
                taxable year equals or exceeds 100 percent but 
                does not exceed 400 percent of an amount equal 
                to the poverty line for a family of the size 
                involved.
                  (B) Special rule for certain individuals 
                lawfully present in the United States.--If--
                          (i) a taxpayer has a household income 
                        which is not greater than 100 percent 
                        of an amount equal to the poverty line 
                        for a family of the size involved, and
                          (ii) the taxpayer is an alien 
                        lawfully present in the United States, 
                        but is not eligible for the medicaid 
                        program under title XIX of the Social 
                        Security Act by reason of such alien 
                        status,
                the taxpayer shall, for purposes of the credit 
                under this section, be treated as an applicable 
                taxpayer with a household income which is equal 
                to 100 percent of the poverty line for a family 
                of the size involved.
                  (C) 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 taxpayer shall be treated as an 
                applicable taxpayer only if the taxpayer and 
                the taxpayer's spouse file a joint return for 
                the taxable year.
                  (D) Denial of credit to dependents.--No 
                credit shall be allowed under this section to 
                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.
          (2) Coverage month.--For purposes of this 
        subsection--
                  (A) In general.--The term ``coverage month'' 
                means, with respect to an applicable taxpayer, 
                any month if--
                          (i) as of the first day of such month 
                        the taxpayer, the taxpayer's spouse, or 
                        any dependent of the taxpayer is 
                        covered by a qualified health plan 
                        described in subsection (b)(2)(A) that 
                        was enrolled in through an Exchange 
                        established by the State under section 
                        1311 of the Patient Protection and 
                        Affordable Care Act, and
                          (ii) the premium for coverage under 
                        such plan for such month is paid by the 
                        taxpayer (or through advance payment of 
                        the credit under subsection (a) under 
                        section 1412 of the Patient Protection 
                        and Affordable Care Act).
                  (B) Exception for minimum essential 
                coverage.--
                          (i) In general.--The term ``coverage 
                        month'' shall not include any month 
                        with respect to an individual if for 
                        such month the individual is eligible 
                        for minimum essential coverage other 
                        than eligibility for coverage described 
                        in section 5000A(f)(1)(C) (relating to 
                        coverage in the individual market).
                          (ii) Minimum essential coverage.--The 
                        term ``minimum essential coverage'' has 
                        the meaning given such term by section 
                        5000A(f).
                  (C) Special rule for employer-sponsored 
                minimum essential coverage.--For purposes of 
                subparagraph (B)--
                          (i) Coverage must be affordable.--
                        Except as provided in clause (iii), an 
                        employee shall not be treated as 
                        eligible for minimum essential coverage 
                        if such coverage--
                                  (I) consists of an eligible 
                                employer-sponsored plan (as 
                                defined in section 
                                5000A(f)(2)), and
                                  (II) the employee's required 
                                contribution (within the 
                                meaning of section 
                                5000A(e)(1)(B)) with respect to 
                                the plan exceeds 9.5 percent of 
                                the applicable taxpayer's 
                                household income.
                        This clause shall also apply to an 
                        individual who is eligible to enroll in 
                        the plan by reason of a relationship 
                        the individual bears to the employee.
                          (ii) Coverage must provide minimum 
                        value.--Except as provided in clause 
                        (iii), an employee shall not be treated 
                        as eligible for minimum essential 
                        coverage if such coverage consists of 
                        an eligible employer-sponsored plan (as 
                        defined in section 5000A(f)(2)) and the 
                        plan's share of the total allowed costs 
                        of benefits provided under the plan is 
                        less than 60 percent of such costs.
                          (iii) Employee or family must not be 
                        covered under employer plan.--Clauses 
                        (i) and (ii) shall not apply if the 
                        employee (or any individual described 
                        in the last sentence of clause (i)) is 
                        covered under the eligible employer-
                        sponsored plan or the grandfathered 
                        health plan.
                          (iv) Indexing.--In the case of plan 
                        years beginning in any calendar year 
                        after 2014, the Secretary shall adjust 
                        the 9.5 percent under clause (i)(II) in 
                        the same manner as the percentages are 
                        adjusted under subsection 
                        (b)(3)(A)(ii).
          (3) Definitions and other rules.--
                  (A) Qualified health plan.--The term 
                ``qualified health plan'' has the meaning given 
                such term by section 1301(a) of the Patient 
                Protection and Affordable Care Act, except that 
                such term shall not include a qualified health 
                plan which is a catastrophic plan described in 
                section 1302(e) of such Act.
                  (B) Grandfathered health plan.--The term 
                ``grandfathered health plan'' has the meaning 
                given such term by section 1251 of the Patient 
                Protection and Affordable Care Act.
  (d) Terms Relating to Income and Families.--For purposes of 
this section--
          (1) Family size.--The family size involved with 
        respect to any taxpayer shall be equal to the number of 
        individuals for whom the taxpayer is allowed a 
        deduction under section 151 (relating to allowance of 
        deduction for personal exemptions) for the taxable 
        year.
          (2) Household income.--
                  (A) Household income.--The term ``household 
                income'' means, with respect to any taxpayer, 
                an amount equal to the sum of--
                          (i) the modified adjusted gross 
                        income of the taxpayer, plus
                          (ii) the aggregate modified adjusted 
                        gross incomes of all other individuals 
                        who--
                                  (I) were taken into account 
                                in determining the taxpayer's 
                                family size under paragraph 
                                (1), and
                                  (II) were required to file a 
                                return of tax imposed by 
                                section 1 for the taxable year.
                  (B) Modified adjusted gross income.--The term 
                ``modified adjusted gross income'' means 
                adjusted gross income increased by--
                          (i) any amount excluded from gross 
                        income under section 911,
                          (ii) any amount of interest received 
                        or accrued by the taxpayer during the 
                        taxable year which is exempt from tax, 
                        and
                          (iii) an amount equal to the portion 
                        of the taxpayer's social security 
                        benefits (as defined in section 86(d)) 
                        which is not included in gross income 
                        under section 86 for the taxable year.
          (3) Poverty line.--
                  (A) In general.--The term ``poverty line'' 
                has the meaning given that term in section 
                2110(c)(5) of the Social Security Act (42 
                U.S.C. 1397jj(c)(5)).
                  (B) Poverty line used.--In the case of any 
                qualified health plan offered through an 
                Exchange for coverage during a taxable year 
                beginning in a calendar year, the poverty line 
                used shall be the most recently published 
                poverty line as of the 1st day of the regular 
                enrollment period for coverage during such 
                calendar year.
  (e) Rules for Individuals Not Lawfully Present.--
          (1) In general.--If 1 or more individuals for whom a 
        taxpayer is allowed a deduction under section 151 
        (relating to allowance of deduction for personal 
        exemptions) for the taxable year (including the 
        taxpayer or his spouse) are individuals who are not 
        lawfully present--
                  (A) the aggregate amount of premiums 
                otherwise taken into account under clauses (i) 
                and (ii) of subsection (b)(2)(A) shall be 
                reduced by the portion (if any) of such 
                premiums which is attributable to such 
                individuals, and
                  (B) for purposes of applying this section, 
                the determination as to what percentage a 
                taxpayer's household income bears to the 
                poverty level for a family of the size involved 
                shall be made under one of the following 
                methods:
                          (i) A method under which--
                                  (I) the taxpayer's family 
                                size is determined by not 
                                taking such individuals into 
                                account, and
                                  (II) the taxpayer's household 
                                income is equal to the product 
                                of the taxpayer's household 
                                income (determined without 
                                regard to this subsection) and 
                                a fraction--
                                          (aa) the numerator of 
                                        which is the poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        after application of 
                                        subclause (I), and
                                          (bb) the denominator 
                                        of which is the poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        without regard to 
                                        subclause (I).
                          (ii) A comparable method reaching the 
                        same result as the method under clause 
                        (i).
          (2) Lawfully present.--For purposes of this section, 
        an individual shall be treated as lawfully present only 
        if the individual is, and is reasonably expected to be 
        for the entire period of enrollment for which the 
        credit under this section is being claimed, a citizen 
        or national of the United States or an alien lawfully 
        present in the United States.
          (3) Secretarial authority.--The Secretary of Health 
        and Human Services, in consultation with the Secretary, 
        shall prescribe rules setting forth the methods by 
        which calculations of family size and household income 
        are made for purposes of this subsection. Such rules 
        shall be designed to ensure that the least burden is 
        placed on individuals enrolling in qualified health 
        plans through an Exchange and taxpayers eligible for 
        the credit allowable under this section.
  (f) Reconciliation of Credit and Advance Credit.--
          (1) In general.--The amount of the credit allowed 
        under this section for any taxable year shall be 
        reduced (but not below zero) by the amount of any 
        advance payment of such credit under section 1412 of 
        the Patient Protection and Affordable Care Act.
          (2) Excess advance payments.--
                  (A) In general.--If the advance payments to a 
                taxpayer under section 1412 of the Patient 
                Protection and Affordable Care Act for a 
                taxable year exceed the credit allowed by this 
                section (determined without regard to paragraph 
                (1)), the tax imposed by this chapter for the 
                taxable year shall be increased by the amount 
                of such excess.
                  (B) Limitation on increase.--
                          (i) In general.--In the case of a 
                        taxpayer whose household income is less 
                        than 400 percent of the poverty line 
                        for the size of the family involved for 
                        the taxable year, the amount of the 
                        increase under subparagraph (A) shall 
                        in no event exceed the applicable 
                        dollar amount determined in accordance 
                        with the following table (one-half of 
                        such amount in the case of a taxpayer 
                        whose tax is determined under section 
                        1(c) for the taxable year):

------------------------------------------------------------------------
 If the household income (expressed
 as a percent of poverty line) is:     The applicable dollar amount is:
------------------------------------------------------------------------
Less than 200%                       $600
At least 200% but less than 300%     $1,500
At least 300% but less than 400%     $2,500
------------------------------------------------------------------------

                          (ii) Indexing of amount.--In the case 
                        of any calendar year beginning after 
                        2014, each of the dollar amounts in the 
                        table contained under clause (i) shall 
                        be increased by an amount equal to--
                                  (I) such dollar amount, 
                                multiplied by
                                  (II) the cost-of-living 
                                adjustment determined under 
                                section 1(f)(3) for the 
                                calendar year, determined by 
                                substituting ``calendar year 
                                2013'' for ``calendar year 
                                1992'' in subparagraph (B) 
                                thereof.
                        If the amount of any increase under 
                        clause (i) is not a multiple of $50, 
                        such increase shall be rounded to the 
                        next lowest multiple of $50.
          (3) Information requirement.--Each Exchange (or any 
        person carrying out 1 or more responsibilities of an 
        Exchange under section 1311(f)(3) or 1321(c) of the 
        Patient Protection and Affordable Care Act) shall 
        provide the following information to the Secretary and 
        to the taxpayer with respect to any health plan 
        provided through the Exchange:
                  (A) The level of coverage described in 
                section 1302(d) of the Patient Protection and 
                Affordable Care Act and the period such 
                coverage was in effect.
                  (B) The total premium for the coverage 
                without regard to the credit under this section 
                or cost-sharing reductions under section 1402 
                of such Act.
                  (C) The aggregate amount of any advance 
                payment of such credit or reductions under 
                section 1412 of such Act.
                  (D) The name, address, and TIN of the primary 
                insured and the name and TIN of each other 
                individual obtaining coverage under the policy.
                  (E) Any information provided to the Exchange, 
                including any change of circumstances, 
                necessary to determine eligibility for, and the 
                amount of, such credit.
                  (F) Information necessary to determine 
                whether a taxpayer has received excess advance 
                payments.
  (g) Regulations.--The Secretary shall prescribe such 
regulations as may be necessary to carry out the provisions of 
this section, including regulations which provide for--
          (1) the coordination of the credit allowed under this 
        section with the program for advance payment of the 
        credit under section 1412 of the Patient Protection and 
        Affordable Care Act, and
          (2) the application of subsection (f) where the 
        filing status of the taxpayer for a taxable year is 
        different from such status used for determining the 
        advance payment of the credit.

           *       *       *       *       *       *       *


      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italics, existing law in 
which no change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
made by the bill, as reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                     INTERNAL REVENUE CODE OF 1986

Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter A--Determination of Tax Liability

           *       *       *       *       *       *       *


PART IV--CREDITS AGAINST TAX

           *       *       *       *       *       *       *


Subpart C--Refundable Credits

           *       *       *       *       *       *       *


SEC. 35. HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.

  (a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by subtitle A an 
amount equal to 72.5 percent of the amount paid by the taxpayer 
for coverage of the taxpayer and qualifying family members 
under qualified health insurance for eligible coverage months 
beginning in the taxable year.
  (b) Eligible Coverage Month.--For purposes of this section--
          (1) In general.--The term ``eligible coverage month'' 
        means any month if--
                  (A) as of the first day of such month, the 
                taxpayer--
                          (i) is an eligible individual,
                          (ii) is covered by qualified health 
                        insurance, the premium for which is 
                        paid by the taxpayer,
                          (iii) does not have other specified 
                        coverage, and
                          (iv) is not imprisoned under Federal, 
                        State, or local authority, and
                  (B) such month begins more than 90 days after 
                the date of the enactment of the Trade Act of 
                2002, and before January 1, 2020.
          (2) Joint returns.--In the case of a joint return, 
        the requirements of paragraph (1)(A) shall be treated 
        as met with respect to any month if at least 1 spouse 
        satisfies such requirements.
  (c) Eligible Individual.--For purposes of this section--
          (1) In general.--The term ``eligible individual'' 
        means--
                  (A) an eligible TAA recipient,
                  (B) an eligible alternative TAA recipient, 
                and
                  (C) an eligible PBGC pension recipient.
          (2) Eligible TAA recipient.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``eligible TAA 
                recipient'' means, with respect to any month, 
                any individual who is receiving for any day of 
                such month a trade readjustment allowance under 
                chapter 2 of title II of the Trade Act of 1974 
                or who would be eligible to receive such 
                allowance if section 231 of such Act were 
                applied without regard to subsection (a)(3)(B) 
                of such section. An individual shall continue 
                to be treated as an eligible TAA recipient 
                during the first month that such individual 
                would otherwise cease to be an eligible TAA 
                recipient by reason of the preceding sentence.
                  (B) Special rule.--In the case of any 
                eligible coverage month beginning after the 
                date of the enactment of this paragraph, the 
                term ``eligible TAA recipient'' means, with 
                respect to any month, any individual who--
                          (i) is receiving for any day of such 
                        month a trade readjustment allowance 
                        under chapter 2 of title II of the 
                        Trade Act of 1974,
                          (ii) would be eligible to receive 
                        such allowance except that such 
                        individual is in a break in training 
                        provided under a training program 
                        approved under section 236 of such Act 
                        that exceeds the period specified in 
                        section 233(e) of such Act, but is 
                        within the period for receiving such 
                        allowances provided under section 
                        233(a) of such Act, or
                          (iii) is receiving unemployment 
                        compensation (as defined in section 
                        85(b)) for any day of such month and 
                        who would be eligible to receive such 
                        allowance for such month if section 231 
                        of such Act were applied without regard 
                        to subsections (a)(3)(B) and (a)(5) 
                        thereof.
                An individual shall continue to be treated as 
                an eligible TAA recipient during the first 
                month that such individual would otherwise 
                cease to be an eligible TAA recipient by reason 
                of the preceding sentence.
          (3) Eligible alternative TAA recipient.--The term 
        ``eligible alternative TAA recipient'' means, with 
        respect to any month, any individual who--
                  (A) is a worker described in section 
                246(a)(3)(B) of the Trade Act of 1974 who is 
                participating in the program established under 
                section 246(a)(1) of such Act, and
                  (B) is receiving a benefit for such month 
                under section 246(a)(2) of such Act.
        An individual shall continue to be treated as an 
        eligible alternative TAA recipient during the first 
        month that such individual would otherwise cease to be 
        an eligible alternative TAA recipient by reason of the 
        preceding sentence.
          (4) Eligible PBGC pension recipient.--The term 
        ``eligible PBGC pension recipient'' means, with respect 
        to any month, any individual who--
                  (A) has attained age 55 as of the first day 
                of such month, and
                  (B) is receiving a benefit for such month any 
                portion of which is paid by the Pension Benefit 
                Guaranty Corporation under title IV of the 
                Employee Retirement Income Security Act of 
                1974.
  (d) Qualifying Family Member.--For purposes of this section--
          (1) In general.--The term ``qualifying family 
        member'' means--
                  (A) the taxpayer's spouse, and
                  (B) any dependent of the taxpayer with 
                respect to whom the taxpayer is entitled to a 
                deduction under section 151(c).
        Such term does not include any individual who has other 
        specified coverage.
          (2) Special dependency test in case of divorced 
        parents, etc..--If section 152(e) applies to any child 
        with respect to any calendar year, in the case of any 
        taxable year beginning in such calendar year, such 
        child shall be treated as described in paragraph (1)(B) 
        with respect to the custodial parent (as defined in 
        section 152(e)(4)(A)) and not with respect to the 
        noncustodial parent.
  (e) Qualified Health Insurance.--For purposes of this 
section--
          (1) In general.--The term ``qualified health 
        insurance'' means any of the following:
                  (A) Coverage under a COBRA continuation 
                provision (as defined in section 9832(d)(1)).
                  (B) State-based continuation coverage 
                provided by the State under a State law that 
                requires such coverage.
                  (C) Coverage offered through a qualified 
                State high risk pool (as defined in section 
                2744(c)(2) of the Public Health Service Act).
                  (D) Coverage under a health insurance program 
                offered for State employees.
                  (E) Coverage under a State-based health 
                insurance program that is comparable to the 
                health insurance program offered for State 
                employees.
                  (F) Coverage through an arrangement entered 
                into by a State and--
                          (i) a group health plan (including 
                        such a plan which is a multiemployer 
                        plan as defined in section 3(37) of the 
                        Employee Retirement Income Security Act 
                        of 1974),
                          (ii) an issuer of health insurance 
                        coverage,
                          (iii) an administrator, or
                          (iv) an employer.
                  (G) Coverage offered through a State 
                arrangement with a private sector health care 
                coverage purchasing pool.
                  (H) Coverage under a State-operated health 
                plan that does not receive any Federal 
                financial participation.
                  (I) Coverage under a group health plan that 
                is available through the employment of the 
                eligible individual's spouse.
                  (J) In the case of any eligible individual 
                and such individual's qualifying family 
                members, coverage under individual health 
                insurance (other than coverage enrolled in 
                through an Exchange established under the 
                Patient Protection and Affordable Care Act). 
                For purposes of this subparagraph, the term 
                ``individual health insurance'' means any 
                insurance which constitutes medical care 
                offered to individuals other than in connection 
                with a group health plan and does not include 
                Federal- or State-based health insurance 
                coverage.
                  (K) Coverage under an employee benefit plan 
                funded by a voluntary employees' beneficiary 
                association (as defined in section 501(c)(9)) 
                established pursuant to an order of a 
                bankruptcy court, or by agreement with an 
                authorized representative, as provided in 
                section 1114 of title 11, United States Code.
          (2) Requirements for State-based coverage.--
                  (A) In general.--The term ``qualified health 
                insurance'' does not include any coverage 
                described in subparagraphs (B) through (H) of 
                paragraph (1) unless the State involved has 
                elected to have such coverage treated as 
                qualified health insurance under this section 
                and such coverage meets the following 
                requirements:
                          (i) Guaranteed issue.--Each 
                        qualifying individual is guaranteed 
                        enrollment if the individual pays the 
                        premium for enrollment or provides a 
                        qualified health insurance costs credit 
                        eligibility certificate described in 
                        section 7527 and pays the remainder of 
                        such premium.
                          (ii) No imposition of preexisting 
                        condition exclusion.--No pre-existing 
                        condition limitations are imposed with 
                        respect to any qualifying individual.
                          (iii) Nondiscriminatory premium.--The 
                        total premium (as determined without 
                        regard to any subsidies) with respect 
                        to a qualifying individual may not be 
                        greater than the total premium (as so 
                        determined) for a similarly situated 
                        individual who is not a qualifying 
                        individual.
                          (iv) Same benefits.--Benefits under 
                        the coverage are the same as (or 
                        substantially similar to) the benefits 
                        provided to similarly situated 
                        individuals who are not qualifying 
                        individuals.
                  (B) Qualifying individual.--For purposes of 
                this paragraph, the term ``qualifying 
                individual'' means--
                          (i) an eligible individual for whom, 
                        as of the date on which the individual 
                        seeks to enroll in the coverage 
                        described in subparagraphs (B) through 
                        (H) of paragraph (1), the aggregate of 
                        the periods of creditable coverage (as 
                        defined in section 9801(c)) is 3 months 
                        or longer and who, with respect to any 
                        month, meets the requirements of 
                        clauses (iii) and (iv) of subsection 
                        (b)(1)(A); and
                          (ii) the qualifying family members of 
                        such eligible individual.
          (3) Exception.--The term ``qualified health 
        insurance'' shall not include--
                  (A) a flexible spending or similar 
                arrangement, and
                  (B) any insurance if substantially all of its 
                coverage is of excepted benefits described in 
                section 9832(c).
  (f) Other Specified Coverage.--For purposes of this section, 
an individual has other specified coverage for any month if, as 
of the first day of such month--
          (1) Subsidized coverage.--
                  (A) In general.--Such individual is covered 
                under any insurance which constitutes medical 
                care (except insurance substantially all of the 
                coverage of which is of excepted benefits 
                described in section 9832(c)) under any health 
                plan maintained by any employer (or former 
                employer) of the taxpayer or the taxpayer's 
                spouse and at least 50 percent of the cost of 
                such coverage (determined under section 4980B) 
                is paid or incurred by the employer.
                  (B) Eligible alternative TAA recipients.--In 
                the case of an eligible alternative TAA 
                recipient, such individual is either--
                          (i) eligible for coverage under any 
                        qualified health insurance (other than 
                        insurance described in subparagraph 
                        (A), (B), or (F) of subsection (e)(1)) 
                        under which at least 50 percent of the 
                        cost of coverage (determined under 
                        section 4980B(f)(4)) is paid or 
                        incurred by an employer (or former 
                        employer) of the taxpayer or the 
                        taxpayer's spouse, or
                          (ii) covered under any such qualified 
                        health insurance under which any 
                        portion of the cost of coverage (as so 
                        determined) is paid or incurred by an 
                        employer (or former employer) of the 
                        taxpayer or the taxpayer's spouse.
                  (C) Treatment of cafeteria plans.--For 
                purposes of subparagraphs (A) and (B), the cost 
                of coverage shall be treated as paid or 
                incurred by an employer to the extent the 
                coverage is in lieu of a right to receive cash 
                or other qualified benefits under a cafeteria 
                plan (as defined in section 125(d)).
          (2) Coverage under medicare, medicaid, or SCHIP.--
        Such individual--
                  (A) is entitled to benefits under part A of 
                title XVIII of the Social Security Act or is 
                enrolled under part B of such title, or
                  (B) is enrolled in the program under title 
                XIX or XXI of such Act (other than under 
                section 1928 of such Act).
          (3) Certain other coverage.--Such individual--
                  (A) is enrolled in a health benefits plan 
                under chapter 89 of title 5, United States 
                Code, or
                  (B) is entitled to receive benefits under 
                chapter 55 of title 10, United States Code.
  (g) Special Rules.--
          (1) Coordination with advance payments of credit.--
        With respect to any taxable year, the amount which 
        would (but for this subsection) be allowed as a credit 
        to the taxpayer under subsection (a) shall be reduced 
        (but not below zero) by the aggregate amount paid on 
        behalf of such taxpayer under section 7527 for months 
        beginning in such taxable year.
          (2) Coordination with other deductions.--Amounts 
        taken into account under subsection (a) shall not be 
        taken into account in determining any deduction allowed 
        under section 162(l) or 213.
          (3) Medical and health savings accounts.--Amounts 
        distributed from an Archer MSA (as defined in section 
        220(d)) or from a health savings account (as defined in 
        section 223(d)) shall not be taken into account under 
        subsection (a).
          (4) Denial of credit to dependents.--No credit shall 
        be allowed under this section to 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.
          (5) Both spouses eligible individuals.--The spouse of 
        the taxpayer shall not be treated as a qualifying 
        family member for purposes of subsection (a), if--
                  (A) the taxpayer is married at the close of 
                the taxable year,
                  (B) the taxpayer and the taxpayer's spouse 
                are both eligible individuals during the 
                taxable year, and
                  (C) the taxpayer files a separate return for 
                the taxable year.
          (6) Marital status; certain married individuals 
        living apart.--Rules similar to the rules of paragraphs 
        (3) and (4) of section 21(e) shall apply for purposes 
        of this section.
          (7) Insurance which covers other individuals.--For 
        purposes of this section, rules similar to the rules of 
        section 213(d)(6) shall apply with respect to any 
        contract for qualified health insurance under which 
        amounts are payable for coverage of an individual other 
        than the taxpayer and qualifying family members.
          (8) Treatment of payments.--For purposes of this 
        section--
                  (A) Payments by Secretary.--Payments made by 
                the Secretary on behalf of any individual under 
                section 7527 (relating to advance payment of 
                credit for health insurance costs of eligible 
                individuals) shall be treated as having been 
                made by the taxpayer on the first day of the 
                month for which such payment was made.
                  (B) Payments by taxpayer.--Payments made by 
                the taxpayer for eligible coverage months shall 
                be treated as having been made by the taxpayer 
                on the first day of the month for which such 
                payment was made.
          (9) COBRA premium assistance.--In the case of an 
        assistance eligible individual who receives premium 
        reduction for COBRA continuation coverage under section 
        3001(a) of title III of division B of the American 
        Recovery and Reinvestment Act of 2009 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.
          (10) Continued qualification of family members after 
        certain events.--
                  (A) Medicare eligibility.--In the case of any 
                month which would be an eligible coverage month 
                with respect to an eligible individual but for 
                subsection (f)(2)(A), such month shall be 
                treated as an eligible coverage month with 
                respect to such eligible individual solely for 
                purposes of determining the amount of the 
                credit under this section with respect to any 
                qualifying family members of such individual 
                (and any advance payment of such credit under 
                section 7527). This subparagraph shall only 
                apply with respect to the first 24 months after 
                such eligible individual is first entitled to 
                the benefits described in subsection (f)(2)(A).
                  (B) Divorce.--In the case of the finalization 
                of a divorce between an eligible individual and 
                such individual's spouse, such spouse shall be 
                treated as an eligible individual for purposes 
                of this section and section 7527 for a period 
                of 24 months beginning with the date of such 
                finalization, except that the only qualifying 
                family members who may be taken into account 
                with respect to such spouse are those 
                individuals who were qualifying family members 
                immediately before such finalization.
                  (C) Death.--In the case of the death of an 
                eligible individual--
                          (i) any spouse of such individual 
                        (determined at the time of such death) 
                        shall be treated as an eligible 
                        individual for purposes of this section 
                        and section 7527 for a period of 24 
                        months beginning with the date of such 
                        death, except that the only qualifying 
                        family members who may be taken into 
                        account with respect to such spouse are 
                        those individuals who were qualifying 
                        family members immediately before such 
                        death, and
                          (ii) any individual who was a 
                        qualifying family member of the 
                        decedent immediately before such death 
                        (or, in the case of an individual to 
                        whom paragraph (4) applies, the 
                        taxpayer to whom the deduction under 
                        section 151 is allowable) shall be 
                        treated as an eligible individual for 
                        purposes of this section and section 
                        7527 for a period of 24 months 
                        beginning with the date of such death, 
                        except that in determining the amount 
                        of such credit only such qualifying 
                        family member may be taken into 
                        account.
          (11) Election.--
                  (A) In general.--This section shall not apply 
                to any taxpayer for any eligible coverage month 
                unless such taxpayer elects the application of 
                this section for such month.
                  (B) Timing and applicability of election.--
                Except as the Secretary may provide--
                          (i) an election to have this section 
                        apply for any eligible coverage month 
                        in a taxable year shall be made not 
                        later than the due date (including 
                        extensions) for the return of tax for 
                        the taxable year; and
                          (ii) any election for this section to 
                        apply for an eligible coverage month 
                        shall apply for all subsequent eligible 
                        coverage months in the taxable year 
                        and, once made, shall be irrevocable 
                        with respect to such months.
          (12) Coordination with premium tax credit.--
                  (A) In general.--An eligible coverage month 
                to which the election under paragraph (11) 
                applies shall not be treated as a coverage 
                month (as defined in section 36B(c)(2)) for 
                purposes of section 36B with respect to the 
                taxpayer.
                  (B) Coordination with advance payments of 
                premium tax credit.--In the case of a taxpayer 
                who makes the election under paragraph (11) 
                with respect to any eligible coverage month in 
                a taxable year or on behalf of whom any advance 
                payment is made under section 7527 with respect 
                to any month in such taxable year--
                          (i) the tax imposed by this chapter 
                        for the taxable year shall be increased 
                        by the excess, if any, of--
                                  (I) the sum of any advance 
                                payments made on behalf of the 
                                taxpayer under section 1412 of 
                                the Patient Protection and 
                                Affordable Care Act and section 
                                7527 for months during such 
                                taxable year, over
                                  (II) the sum of the credits 
                                allowed under this section 
                                (determined without regard to 
                                paragraph (1)) and section 36B 
                                (determined without regard to 
                                subsection (f)(1) thereof) for 
                                such taxable year; and
                          (ii) section 36B(f)(2) shall not 
                        apply with respect to such taxpayer for 
                        such taxable year[, except that if such 
                        taxpayer received any advance payments 
                        under section 7527 for any month in 
                        such taxable year and is later allowed 
                        a credit under section 36B for such 
                        taxable year, then section 36B(f)(2)(B) 
                        shall be applied by substituting the 
                        amount determined under clause (i) for 
                        the amount determined under section 
                        36B(f)(2)(A).].
          (13) Regulations.--The Secretary may prescribe such 
        regulations and other guidance as may be necessary or 
        appropriate to carry out this section, section 6050T, 
        and section 7527.

           *       *       *       *       *       *       *


SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED HEALTH PLAN.

  (a) In General.--In the case of an applicable taxpayer, there 
shall be allowed as a credit against the tax imposed by this 
subtitle for any taxable year an amount equal to the premium 
assistance credit amount of the taxpayer for the taxable year.
  (b) Premium Assistance Credit Amount.--For purposes of this 
section--
          (1) In general.--The term ``premium assistance credit 
        amount'' means, with respect to any taxable year, the 
        sum of the premium assistance amounts determined under 
        paragraph (2) with respect to all coverage months of 
        the taxpayer occurring during the taxable year.
          (2) Premium assistance amount.--The premium 
        assistance amount determined under this subsection with 
        respect to any coverage month is the amount equal to 
        the lesser of--
                  (A) the monthly premiums for such month for 1 
                or more qualified health plans offered in the 
                individual market within a State which cover 
                the taxpayer, the taxpayer's spouse, or any 
                dependent (as defined in section 152) of the 
                taxpayer and which were enrolled in through an 
                Exchange established by the State under 1311 of 
                the Patient Protection and Affordable Care Act, 
                or
                  (B) the excess (if any) of--
                          (i) the adjusted monthly premium for 
                        such month for the applicable second 
                        lowest cost silver plan with respect to 
                        the taxpayer, over
                          (ii) an amount equal to 1/12 of the 
                        product of the applicable percentage 
                        and the taxpayer's household income for 
                        the taxable year.
          (3) Other terms and rules relating to premium 
        assistance amounts.--For purposes of paragraph (2)--
                  (A) Applicable percentage.--
                          (i) In general.--Except as provided 
                        in clause (ii), the applicable 
                        percentage for any taxable year shall 
                        be the percentage such that the 
                        applicable percentage for any taxpayer 
                        whose household income is within an 
                        income tier specified in the following 
                        table shall increase, on a sliding 
                        scale in a linear manner, from the 
                        initial premium percentage to the final 
                        premium percentage specified in such 
                        table for such income tier:

------------------------------------------------------------------------
     In the case of
    household income
(expressed as a percent    The initial premium       The final premium
of poverty line) within      percentage is--          percentage is--
  the following income
         tier:
------------------------------------------------------------------------
Up to 133%               2.0%                     2.0%
133% up to 150%          3.0%                     4.0%
150% up to 200%          4.0%                     6.3%
200% up to 250%          6.3%                     8.05%
250% up to 300%          8.05%                    9.5%
300% up to 400%          9.5%                     9.5%
------------------------------------------------------------------------

                          (ii) Indexing.--
                                  (I) In general.--Subject to 
                                subclause (II), in the case of 
                                taxable years beginning in any 
                                calendar year after 2014, the 
                                initial and final applicable 
                                percentages under clause (i) 
                                (as in effect for the preceding 
                                calendar year after application 
                                of this clause) shall be 
                                adjusted to reflect the excess 
                                of the rate of premium growth 
                                for the preceding calendar year 
                                over the rate of income growth 
                                for the preceding calendar 
                                year.
                                  (II) Additional adjustment.--
                                Except as provided in subclause 
                                (III), in the case of any 
                                calendar year after 2018, the 
                                percentages described in 
                                subclause (I) shall, in 
                                addition to the adjustment 
                                under subclause (I), be 
                                adjusted to reflect the excess 
                                (if any) of the rate of premium 
                                growth estimated under 
                                subclause (I) for the preceding 
                                calendar year over the rate of 
                                growth in the consumer price 
                                index for the preceding 
                                calendar year.
                                  (III) Failsafe.--Subclause 
                                (II) shall apply for any 
                                calendar year only if the 
                                aggregate amount of premium tax 
                                credits under this section and 
                                cost-sharing reductions under 
                                section 1402 of the Patient 
                                Protection and Affordable Care 
                                Act for the preceding calendar 
                                year exceeds an amount equal to 
                                0.504 percent of the gross 
                                domestic product for the 
                                preceding calendar year.
                  (B) Applicable second lowest cost silver 
                plan.--The applicable second lowest cost silver 
                plan with respect to any applicable taxpayer is 
                the second lowest cost silver plan of the 
                individual market in the rating area in which 
                the taxpayer resides which--
                          (i) is offered through the same 
                        Exchange through which the qualified 
                        health plans taken into account under 
                        paragraph (2)(A) were offered, and
                          (ii) provides--
                                  (I) self-only coverage in the 
                                case of an applicable 
                                taxpayer--
                                          (aa) whose tax for 
                                        the taxable year is 
                                        determined under 
                                        section 1(c) (relating 
                                        to unmarried 
                                        individuals other than 
                                        surviving spouses and 
                                        heads of households) 
                                        and who is not allowed 
                                        a deduction under 
                                        section 151 for the 
                                        taxable year with 
                                        respect to a dependent, 
                                        or
                                          (bb) who is not 
                                        described in item (aa) 
                                        but who purchases only 
                                        self-only coverage, and
                                  (II) family coverage in the 
                                case of any other applicable 
                                taxpayer.
                If a taxpayer files a joint return and no 
                credit is allowed under this section with 
                respect to 1 of the spouses by reason of 
                subsection (e), the taxpayer shall be treated 
                as described in clause (ii)(I) unless a 
                deduction is allowed under section 151 for the 
                taxable year with respect to a dependent other 
                than either spouse and subsection (e) does not 
                apply to the dependent.
                  (C) Adjusted monthly premium.--The adjusted 
                monthly premium for an applicable second lowest 
                cost silver plan is the monthly premium which 
                would have been charged (for the rating area 
                with respect to which the premiums under 
                paragraph (2)(A) were determined) for the plan 
                if each individual covered under a qualified 
                health plan taken into account under paragraph 
                (2)(A) were covered by such silver plan and the 
                premium was adjusted only for the age of each 
                such individual in the manner allowed under 
                section 2701 of the Public Health Service Act. 
                In the case of a State participating in the 
                wellness discount demonstration project under 
                section 2705(d) of the Public Health Service 
                Act, the adjusted monthly premium shall be 
                determined without regard to any premium 
                discount or rebate under such project.
                  (D) Additional benefits.--If--
                          (i) a qualified health plan under 
                        section 1302(b)(5) of the Patient 
                        Protection and Affordable Care Act 
                        offers benefits in addition to the 
                        essential health benefits required to 
                        be provided by the plan, or
                          (ii) a State requires a qualified 
                        health plan under section 1311(d)(3)(B) 
                        of such Act to cover benefits in 
                        addition to the essential health 
                        benefits required to be provided by the 
                        plan,
                the portion of the premium for the plan 
                properly allocable (under rules prescribed by 
                the Secretary of Health and Human Services) to 
                such additional benefits shall not be taken 
                into account in determining either the monthly 
                premium or the adjusted monthly premium under 
                paragraph (2).
                  (E) Special rule for pediatric dental 
                coverage.--For purposes of determining the 
                amount of any monthly premium, if an individual 
                enrolls in both a qualified health plan and a 
                plan described in section 1311(d)(2)(B)(ii) (I) 
                of the Patient Protection and Affordable Care 
                Act for any plan year, the portion of the 
                premium for the plan described in such section 
                that (under regulations prescribed by the 
                Secretary) is properly allocable to pediatric 
                dental benefits which are included in the 
                essential health benefits required to be 
                provided by a qualified health plan under 
                section 1302(b)(1)(J) of such Act shall be 
                treated as a premium payable for a qualified 
                health plan.
  (c) Definition and Rules Relating to Applicable Taxpayers, 
Coverage Months, and Qualified Health Plan.--For purposes of 
this section--
          (1) Applicable taxpayer.--
                  (A) In general.--The term ``applicable 
                taxpayer'' means, with respect to any taxable 
                year, a taxpayer whose household income for the 
                taxable year equals or exceeds 100 percent but 
                does not exceed 400 percent of an amount equal 
                to the poverty line for a family of the size 
                involved.
                  (B) Special rule for certain individuals 
                lawfully present in the United States.--If--
                          (i) a taxpayer has a household income 
                        which is not greater than 100 percent 
                        of an amount equal to the poverty line 
                        for a family of the size involved, and
                          (ii) the taxpayer is an alien 
                        lawfully present in the United States, 
                        but is not eligible for the medicaid 
                        program under title XIX of the Social 
                        Security Act by reason of such alien 
                        status,
                the taxpayer shall, for purposes of the credit 
                under this section, be treated as an applicable 
                taxpayer with a household income which is equal 
                to 100 percent of the poverty line for a family 
                of the size involved.
                  (C) 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 taxpayer shall be treated as an 
                applicable taxpayer only if the taxpayer and 
                the taxpayer's spouse file a joint return for 
                the taxable year.
                  (D) Denial of credit to dependents.--No 
                credit shall be allowed under this section to 
                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.
          (2) Coverage month.--For purposes of this 
        subsection--
                  (A) In general.--The term ``coverage month'' 
                means, with respect to an applicable taxpayer, 
                any month if--
                          (i) as of the first day of such month 
                        the taxpayer, the taxpayer's spouse, or 
                        any dependent of the taxpayer is 
                        covered by a qualified health plan 
                        described in subsection (b)(2)(A) that 
                        was enrolled in through an Exchange 
                        established by the State under section 
                        1311 of the Patient Protection and 
                        Affordable Care Act, and
                          (ii) the premium for coverage under 
                        such plan for such month is paid by the 
                        taxpayer (or through advance payment of 
                        the credit under subsection (a) under 
                        section 1412 of the Patient Protection 
                        and Affordable Care Act).
                  (B) Exception for minimum essential 
                coverage.--
                          (i) In general.--The term ``coverage 
                        month'' shall not include any month 
                        with respect to an individual if for 
                        such month the individual is eligible 
                        for minimum essential coverage other 
                        than eligibility for coverage described 
                        in section 5000A(f)(1)(C) (relating to 
                        coverage in the individual market).
                          (ii) Minimum essential coverage.--The 
                        term ``minimum essential coverage'' has 
                        the meaning given such term by section 
                        5000A(f).
                  (C) Special rule for employer-sponsored 
                minimum essential coverage.--For purposes of 
                subparagraph (B)--
                          (i) Coverage must be affordable.--
                        Except as provided in clause (iii), an 
                        employee shall not be treated as 
                        eligible for minimum essential coverage 
                        if such coverage--
                                  (I) consists of an eligible 
                                employer-sponsored plan (as 
                                defined in section 
                                5000A(f)(2)), and
                                  (II) the employee's required 
                                contribution (within the 
                                meaning of section 
                                5000A(e)(1)(B)) with respect to 
                                the plan exceeds 9.5 percent of 
                                the applicable taxpayer's 
                                household income.
                        This clause shall also apply to an 
                        individual who is eligible to enroll in 
                        the plan by reason of a relationship 
                        the individual bears to the employee.
                          (ii) Coverage must provide minimum 
                        value.--Except as provided in clause 
                        (iii), an employee shall not be treated 
                        as eligible for minimum essential 
                        coverage if such coverage consists of 
                        an eligible employer-sponsored plan (as 
                        defined in section 5000A(f)(2)) and the 
                        plan's share of the total allowed costs 
                        of benefits provided under the plan is 
                        less than 60 percent of such costs.
                          (iii) Employee or family must not be 
                        covered under employer plan.--Clauses 
                        (i) and (ii) shall not apply if the 
                        employee (or any individual described 
                        in the last sentence of clause (i)) is 
                        covered under the eligible employer-
                        sponsored plan or the grandfathered 
                        health plan.
                          (iv) Indexing.--In the case of plan 
                        years beginning in any calendar year 
                        after 2014, the Secretary shall adjust 
                        the 9.5 percent under clause (i)(II) in 
                        the same manner as the percentages are 
                        adjusted under subsection 
                        (b)(3)(A)(ii).
          (3) Definitions and other rules.--
                  (A) Qualified health plan.--The term 
                ``qualified health plan'' has the meaning given 
                such term by section 1301(a) of the Patient 
                Protection and Affordable Care Act, except that 
                such term shall not include a qualified health 
                plan which is a catastrophic plan described in 
                section 1302(e) of such Act.
                  (B) Grandfathered health plan.--The term 
                ``grandfathered health plan'' has the meaning 
                given such term by section 1251 of the Patient 
                Protection and Affordable Care Act.
  (d) Terms Relating to Income and Families.--For purposes of 
this section--
          (1) Family size.--The family size involved with 
        respect to any taxpayer shall be equal to the number of 
        individuals for whom the taxpayer is allowed a 
        deduction under section 151 (relating to allowance of 
        deduction for personal exemptions) for the taxable 
        year.
          (2) Household income.--
                  (A) Household income.--The term ``household 
                income'' means, with respect to any taxpayer, 
                an amount equal to the sum of--
                          (i) the modified adjusted gross 
                        income of the taxpayer, plus
                          (ii) the aggregate modified adjusted 
                        gross incomes of all other individuals 
                        who--
                                  (I) were taken into account 
                                in determining the taxpayer's 
                                family size under paragraph 
                                (1), and
                                  (II) were required to file a 
                                return of tax imposed by 
                                section 1 for the taxable year.
                  (B) Modified adjusted gross income.--The term 
                ``modified adjusted gross income'' means 
                adjusted gross income increased by--
                          (i) any amount excluded from gross 
                        income under section 911,
                          (ii) any amount of interest received 
                        or accrued by the taxpayer during the 
                        taxable year which is exempt from tax, 
                        and
                          (iii) an amount equal to the portion 
                        of the taxpayer's social security 
                        benefits (as defined in section 86(d)) 
                        which is not included in gross income 
                        under section 86 for the taxable year.
          (3) Poverty line.--
                  (A) In general.--The term ``poverty line'' 
                has the meaning given that term in section 
                2110(c)(5) of the Social Security Act (42 
                U.S.C. 1397jj(c)(5)).
                  (B) Poverty line used.--In the case of any 
                qualified health plan offered through an 
                Exchange for coverage during a taxable year 
                beginning in a calendar year, the poverty line 
                used shall be the most recently published 
                poverty line as of the 1st day of the regular 
                enrollment period for coverage during such 
                calendar year.
  (e) Rules for Individuals Not Lawfully Present.--
          (1) In general.--If 1 or more individuals for whom a 
        taxpayer is allowed a deduction under section 151 
        (relating to allowance of deduction for personal 
        exemptions) for the taxable year (including the 
        taxpayer or his spouse) are individuals who are not 
        lawfully present--
                  (A) the aggregate amount of premiums 
                otherwise taken into account under clauses (i) 
                and (ii) of subsection (b)(2)(A) shall be 
                reduced by the portion (if any) of such 
                premiums which is attributable to such 
                individuals, and
                  (B) for purposes of applying this section, 
                the determination as to what percentage a 
                taxpayer's household income bears to the 
                poverty level for a family of the size involved 
                shall be made under one of the following 
                methods:
                          (i) A method under which--
                                  (I) the taxpayer's family 
                                size is determined by not 
                                taking such individuals into 
                                account, and
                                  (II) the taxpayer's household 
                                income is equal to the product 
                                of the taxpayer's household 
                                income (determined without 
                                regard to this subsection) and 
                                a fraction--
                                          (aa) the numerator of 
                                        which is the poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        after application of 
                                        subclause (I), and
                                          (bb) the denominator 
                                        of which is the poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        without regard to 
                                        subclause (I).
                          (ii) A comparable method reaching the 
                        same result as the method under clause 
                        (i).
          (2) Lawfully present.--For purposes of this section, 
        an individual shall be treated as lawfully present only 
        if the individual is, and is reasonably expected to be 
        for the entire period of enrollment for which the 
        credit under this section is being claimed, a citizen 
        or national of the United States or an alien lawfully 
        present in the United States.
          (3) Secretarial authority.--The Secretary of Health 
        and Human Services, in consultation with the Secretary, 
        shall prescribe rules setting forth the methods by 
        which calculations of family size and household income 
        are made for purposes of this subsection. Such rules 
        shall be designed to ensure that the least burden is 
        placed on individuals enrolling in qualified health 
        plans through an Exchange and taxpayers eligible for 
        the credit allowable under this section.
  (f) Reconciliation of Credit and Advance Credit.--
          (1) In general.--The amount of the credit allowed 
        under this section for any taxable year shall be 
        reduced (but not below zero) by the amount of any 
        advance payment of such credit under section 1412 of 
        the Patient Protection and Affordable Care Act.
          [(2) Excess advance payments.--]
                  [(A) In general.--If the]
          (2) Excess advance payments.--If the advance payments 
        to a taxpayer under section 1412 of the Patient 
        Protection and Affordable Care Act for a taxable year 
        exceed the credit allowed by this section (determined 
        without regard to paragraph (1)), the tax imposed by 
        this chapter for the taxable year shall be increased by 
        the amount of such excess.
                  [(B) Limitation on increase.--
                          [(i) In general.--In the case of a 
                        taxpayer whose household income is less 
                        than 400 percent of the poverty line 
                        for the size of the family involved for 
                        the taxable year, the amount of the 
                        increase under subparagraph (A) shall 
                        in no event exceed the applicable 
                        dollar amount determined in accordance 
                        with the following table (one-half of 
                        such amount in the case of a taxpayer 
                        whose tax is determined under section 
                        1(c) for the taxable year):

------------------------------------------------------------------------
[If the household income (expressed
 as a percent of poverty line) is:     The applicable dollar amount is:
------------------------------------------------------------------------
Less than 200%                       $600
At least 200% but less than 300%     $1,500
At least 300% but less than 400%     $2,500
------------------------------------------------------------------------

                          [(ii) Indexing of amount.--In the 
                        case of any calendar year beginning 
                        after 2014, each of the dollar amounts 
                        in the table contained under clause (i) 
                        shall be increased by an amount equal 
                        to--
                                  [(I) such dollar amount, 
                                multiplied by
                                  [(II) the cost-of-living 
                                adjustment determined under 
                                section 1(f)(3) for the 
                                calendar year, determined by 
                                substituting ``calendar year 
                                2013'' for ``calendar year 
                                1992'' in subparagraph (B) 
                                thereof.
                        If the amount of any increase under 
                        clause (i) is not a multiple of $50, 
                        such increase shall be rounded to the 
                        next lowest multiple of $50.]
          (3) Information requirement.--Each Exchange (or any 
        person carrying out 1 or more responsibilities of an 
        Exchange under section 1311(f)(3) or 1321(c) of the 
        Patient Protection and Affordable Care Act) shall 
        provide the following information to the Secretary and 
        to the taxpayer with respect to any health plan 
        provided through the Exchange:
                  (A) The level of coverage described in 
                section 1302(d) of the Patient Protection and 
                Affordable Care Act and the period such 
                coverage was in effect.
                  (B) The total premium for the coverage 
                without regard to the credit under this section 
                or cost-sharing reductions under section 1402 
                of such Act.
                  (C) The aggregate amount of any advance 
                payment of such credit or reductions under 
                section 1412 of such Act.
                  (D) The name, address, and TIN of the primary 
                insured and the name and TIN of each other 
                individual obtaining coverage under the policy.
                  (E) Any information provided to the Exchange, 
                including any change of circumstances, 
                necessary to determine eligibility for, and the 
                amount of, such credit.
                  (F) Information necessary to determine 
                whether a taxpayer has received excess advance 
                payments.
  (g) Regulations.--The Secretary shall prescribe such 
regulations as may be necessary to carry out the provisions of 
this section, including regulations which provide for--
          (1) the coordination of the credit allowed under this 
        section with the program for advance payment of the 
        credit under section 1412 of the Patient Protection and 
        Affordable Care Act, and
          (2) the application of subsection (f) where the 
        filing status of the taxpayer for a taxable year is 
        different from such status used for determining the 
        advance payment of the credit.

           *       *       *       *       *       *       *


                         VII. DISSENTING VIEWS

    With the economy still recovering and hardworking Americans 
feeling left behind, we should be focusing in our Committee on 
proposals to grow the economy, create good-paying jobs, and 
strengthen the programs that reduce poverty and protect 
children and seniors, not tearing those very programs apart. 
This bill was part of a misguided effort to win support from 
extreme, right-wing Republicans for their party's budget 
resolution. Committee Democrats strongly oppose both this 
specific bill and the general tactic of appeasing hardliners by 
offering legislation that harms seniors, children, and 
Americans trying to work their way out of poverty and obtain 
health coverage for their families.
    We oppose H.R. 4723--the Protecting Taxpayers by Recovering 
Obamacare Subsidy Overpayments Act. Rather than protecting 
taxpayers, this bill really serves to scare families away from 
obtaining coverage under the Affordable Care Act (ACA).
    The ACA provides advanceable tax credits, payable directly 
to health insurance companies, so that families receive real-
time assistance in purchasing health coverage. This is a 
critical component of the health care reform law because a 
credit available several months after the close of the coverage 
and tax year is far too late to help most families afford 
coverage. In fact, 83 percent of people (10.5 million) who 
selected coverage through the ACA Marketplaces for 2016 receive 
advanced premium tax credits.
    The credits are advanced based on a family's estimated 
income and family size, since the actual income and family size 
for a tax and coverage year is not known until the end of that 
year. Sensibly, the ACA requires families to report changes in 
status during the tax and coverage year so that increases and 
decreases in income and family size are reflected in the credit 
that is advanced.
    The ACA also requires reconciliation of the advanced 
credits with the credit that a family is entitled to, based on 
the actual income and family size for the tax and coverage 
year. If too much credit has been advanced, families must pay 
back some or all of the advanced credit, depending on income; 
if too little credit has been advanced, families will receive 
additional credit on their tax return.
    Sensibly, the ACA places limits on the amount of repayment 
that families face so that they are not discouraged from 
applying for the advanceable credits that are crucial to 
coverage affordability. Families cannot predict the future--
tellingly, for the 2014 tax and coverage year, only 8% of 
taxpayers were able to accurately predict their family size and 
income for the year ahead such that their advanced credits were 
equal to the actual credits to which they were entitled.
    H.R. 4723 would completely repeal the ACA's protections 
that limit the repayment burden for advanced premium tax 
credits if a person's circumstances change.
    The Joint Committee on Taxation estimates that H.R. 4723 
will result in 220,000 to 250,000 Americans losing health 
coverage. This is because they would rather forgo coverage than 
be faced with a large year-end tax bill.
    H.R. 4723 is not a sensible change to the ACA. This is 
moving reform backward--not forward.
                                           Sander M. Levin,
                                                    Ranking Member.

                                  [all]