[House Report 114-634]
[From the U.S. Government Publishing Office]
114th Congress } { Rept.114-634
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
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SMALL BUSINESS HEALTH CARE RELIEF ACT OF 2016
_______
June 21, 2016.--Committed to the Committee of the Whole House of 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
[To accompany H.R. 5447]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 5447) to provide an exception from certain group
health plan requirements for qualified small employer health
reimbursement arrangements, 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...........................................5
II. EXPLANATION OF THE BILL..........................................7
A. Exception From Group Health Plan Requirements for
Qualified Small Employer Health Reimbursement
Arrangements (sec. 2 of the bill and secs. 36B,
106, 4980I, 6051 and 9831 of the Code)............. 7
III. VOTES OF THE COMMITTEE..........................................11
IV. BUDGET EFFECTS OF THE BILL......................................12
A. Committee Estimate of Budgetary Effects............. 12
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 14
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 14
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......17
A. Committee Oversight Findings and Recommendations.... 17
B. Statement of General Performance Goals and
Objectives......................................... 17
C. Information Relating to Unfunded Mandates........... 17
D. Applicability of House Rule XXI 5(b)................ 17
E. Tax Complexity Analysis............................. 17
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 18
G. Duplication of Federal Programs..................... 18
H. Disclosure of Directed Rule Makings................. 18
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........18
A. Text of Existing Law Amended or Repealed by the
Bill, as Reported.................................. 18
B. Changes in Existing Law Proposed by the Bill, as
Reported........................................... 18
VII. EXCHANGE OF LETTERS WITH ADDITIONAL COMMITTEES OF REFERRAL.....120
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 ``Small Business Health Care Relief Act
of 2016''.
SEC. 2. EXCEPTION FROM GROUP HEALTH PLAN REQUIREMENTS FOR QUALIFIED
SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS.
(a) Amendments to the Internal Revenue Code of 1986 and the Patient
Protection and Affordable Care Act.--
(1) In general.--Section 9831 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(d) Exception for Qualified Small Employer Health Reimbursement
Arrangements.--
``(1) In general.--For purposes of this title (except as
provided in section 4980I(f)(4) and notwithstanding any other
provision of this title), the term `group health plan' shall
not include any qualified small employer health reimbursement
arrangement.
``(2) Qualified small employer health reimbursement
arrangement.--For purposes of this subsection--
``(A) In general.--The term `qualified small employer
health reimbursement arrangement' means an arrangement
which--
``(i) is described in subparagraph (B), and
``(ii) is provided on the same terms to all
eligible employees of the eligible employer.
``(B) Arrangement described.--An arrangement is
described in this subparagraph if--
``(i) such arrangement is funded solely by an
eligible employer and no salary reduction
contributions may be made under such
arrangement,
``(ii) such arrangement provides, after the
employee provides proof of coverage, for the
payment of, or reimbursement of, an eligible
employee for expenses for medical care (as
defined in section 213(d)) incurred by the
eligible employee or the eligible employee's
family members (as determined under the terms
of the arrangement), and
``(iii) the amount of payments and
reimbursements described in clause (ii) for any
year do not exceed $5,130 ($10,260 in the case
of an arrangement that also provides for
payments or reimbursements for family members
of the employee).
``(C) Certain variation permitted.--For purposes of
subparagraph (A)(ii), an arrangement shall not fail to
be treated as provided on the same terms to each
eligible employee merely because the employee's
permitted benefits under such arrangement vary in
accordance with the variation in the price of an
insurance policy in the relevant individual health
insurance market based on--
``(i) the age of the eligible employee (and,
in the case of an arrangement which covers
medical expenses of the eligible employee's
family members, the age of such family
members), or
``(ii) the number of family members of the
eligible employee the medical expenses of which
are covered under such arrangement.
The variation permitted under the preceding sentence
shall be determined by reference to the same insurance
policy with respect to all eligible employees.
``(D) Rules relating to maximum dollar limitation.--
``(i) Amount prorated in certain cases.--In
the case of an individual who is not covered by
an arrangement for the entire year, the
limitation under subparagraph (A)(iii) for such
year shall be an amount which bears the same
ratio to the amount which would (but for this
clause) be in effect for such individual for
such year under subparagraph (A)(iii) as the
number of months for which such individual is
covered by the arrangement for such year bears
to 12.
``(ii) Inflation adjustment.--In the case of
any year beginning after 2016, each of the
dollar amounts in subparagraph (A)(iii) shall
be increased by an amount equal to--
``(I) such dollar amount, multiplied
by
``(II) the cost-of-living adjustment
determined under section 1(f)(3) for
the calendar year in which the taxable
year begins, determined by substituting
`calendar year 2015' for `calendar year
1992' in subparagraph (B) thereof.
If any dollar amount increased under the
preceding sentence is not a multiple of $100,
such dollar amount shall be rounded to the next
lowest multiple of $100.
``(3) Other definitions.--For purposes of this subsection--
``(A) Eligible employee.--The term `eligible
employee' means any employee of an eligible employer,
except that the terms of the arrangement may exclude
from consideration employees described in any clause of
section 105(h)(3)(B) (applied by substituting `90 days'
for `3 years' in clause (i) thereof).
``(B) Eligible employer.--The term `eligible
employer' means an employer that--
``(i) is not an applicable large employer as
defined in section 4980H(c)(2), and
``(ii) does not offer a group health plan to
any of its employees.
``(C) Permitted benefit.--The term `permitted
benefit' means, with respect to any eligible employee,
the maximum dollar amount of payments and
reimbursements which may be made under the terms of the
qualified small employer health reimbursement
arrangement for the year with respect to such employee.
``(4) Notice.--
``(A) In general.--An employer funding a qualified
small employer health reimbursement arrangement for any
year shall, not later than 90 days before the beginning
of such year (or, in the case of an employee who is not
eligible to participate in the arrangement as of the
beginning of such year, the date on which such employee
is first so eligible), provide a written notice to each
eligible employee which includes the information
described in subparagraph (B).
``(B) Contents of notice.--The notice required under
subparagraph (A) shall include each of the following:
``(i) A statement of the amount which would
be such eligible employee's permitted benefits
under the arrangement for the year.
``(ii) A statement that the eligible employee
should provide the information described in
clause (i) to any health insurance exchange to
which the employee applies for advance payment
of the premium assistance tax credit.
``(iii) A statement that if the employee is
not covered under minimum essential coverage
for any month the employee may be subject to
tax under section 5000A for such month and
reimbursements under the arrangement may be
includible in gross income.''.
(2) Limitation on exclusion from gross income.--Section 106
of such Code is amended by adding at the end the following:
``(g) Qualified Small Employer Health Reimbursement Arrangement.--For
purposes of this section and section 105, payments or reimbursements
from a qualified small employer health reimbursement arrangement (as
defined in section 9831(d)) of an individual for medical care (as
defined in section 213(d)) shall not be treated as paid or reimbursed
under employer-provided coverage for medical expenses under an accident
or health plan if for the month in which such medical care is provided
the individual does not have minimum essential coverage (within the
meaning of section 5000A(f)).''.
(3) Coordination with health insurance premium credit.--
Section 36B(c) of such Code is amended by adding at the end the
following new paragraph:
``(4) Special rules for qualified small employer health
reimbursement arrangements.--
``(A) In general.--The term `coverage month' shall
not include any month with respect to an employee (or
any spouse or dependent of such employee) if for such
month the employee is provided a qualified small
employer health reimbursement arrangement which
constitutes affordable coverage.
``(B) Denial of double benefit.--In the case of any
employee who is provided a qualified small employer
health reimbursement arrangement for any coverage month
(determined without regard to subparagraph (A)), the
credit otherwise allowable under subsection (a) to the
taxpayer for such month shall be reduced (but not below
zero) by the amount described in subparagraph
(C)(i)(II) for such month.
``(C) Affordable coverage.--For purposes of
subparagraph (A), a qualified small employer health
reimbursement arrangement shall be treated as
constituting affordable coverage for a month if--
``(i) the excess of--
``(I) the amount that would be paid
by the employee as the premium for such
month for self-only coverage under the
second lowest cost silver plan offered
in the relevant individual health
insurance market, over
``(II) \1/12\ of the employee's
permitted benefit (as defined in
section 9831(d)(3)(C)) under such
arrangement, does not exceed--
``(ii) \1/12\ of 9.5 percent of the
employee's household income.
``(D) Qualified small employer health reimbursement
arrangement.--For purposes of this paragraph, the term
`qualified small employer health reimbursement
arrangement' has the meaning given such term by section
9831(d)(2).
``(E) Coverage for less than entire year.--In the
case of an employee who is provided a qualified small
employer health reimbursement arrangement for less than
an entire year, subparagraph (C)(i)(II) shall be
applied by substituting `the number of months during
the year for which such arrangement was provided' for
`12'.
``(F) Indexing.--In the case of plan years beginning
in any calendar year after 2014, the Secretary shall
adjust the 9.5 percent amount under subparagraph
(C)(ii) in the same manner as the percentages are
adjusted under subsection (b)(3)(A)(ii).''.
(4) Application of excise tax on high cost employer-sponsored
health coverage.--
(A) In general.--Section 4980I(f)(4) of such Code is
amended by adding at the end the following: ``Section
9831(d)(1) shall not apply for purposes of this
section.''.
(B) Determination of cost of coverage.--Section
4980I(d)(2) of such Code is amended by redesignating
subparagraph (D) as subparagraph (E) and by inserting
after subparagraph (C) the following new subparagraph:
``(D) Qualified small employer health reimbursement
arrangements.--In the case of applicable employer-
sponsored coverage consisting of coverage under any
qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2)), the
cost of coverage shall be equal to the amount described
in section 6051(a)(15).''.
(5) Enforcement of notice requirement.--Section 6652 of such
Code is amended by adding at the end the following new
subsection:
``(o) Failure To Provide Notices With Respect To Qualified Small
Employer Health Reimbursement Arrangements.--In the case of each
failure to provide a written notice as required by section 9831(d)(4),
unless it is shown that such failure is due to reasonable cause and not
willful neglect, there shall be paid, on notice and demand of the
Secretary and in the same manner as tax, by the person failing to
provide such written notice, an amount equal to $50 per employee per
incident of failure to provide such notice, but the total amount
imposed on such person for all such failures during any calendar year
shall not exceed $2,500.''.
(6) Reporting.--
(A) W-2 reporting.--Section 6051(a) of such Code is
amended by striking ``and'' at the end of paragraph
(13), by striking the period at the end of paragraph
(14) and inserting ``, and'', and by inserting after
paragraph (14) the following new paragraph:
``(15) the total amount of permitted benefit (as defined in
section 9831(d)(3)(C)) for the year under a qualified small
employer health reimbursement arrangement (as defined in
section 9831(d)(2)) with respect to the employee.''.
(B) Information required to be provided by exchange
subsidy applicants.--Section 1411(b)(3) of the Patient
Protection and Affordable Care Act is amended by
redesignating subparagraph (B) as subparagraph (C) and
by inserting after subparagraph (A) the following new
subparagraph:
``(B) Certain individual health insurance policies
obtained through small employers.--The amount of the
enrollee's permitted benefit (as defined in section
9831(d)(3)(C) of the Internal Revenue Code of 1986)
under a qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2) of such
Code).''.
(7) Effective dates.--
(A) In general.--Except as otherwise provided in this
paragraph, the amendments made by this subsection shall
apply to years beginning after the earlier of--
(i) the date that is 90 days after the date
of the enactment of this Act, or
(ii) December 31, 2016.
(B) Transition relief.--The relief under Treasury
Notice 2015-17 shall be treated as applying to any plan
year beginning on or before the date described in
subparagraph (A).
(C) Coordination with health insurance premium
credit.--The amendments made by paragraph (3) shall
apply to taxable years beginning after the date
described in subparagraph (A).
(D) Employee notice.--The amendments made by
paragraph (5) shall apply to notices with respect to
years beginning after the date described in
subparagraph (A).
(E) W-2 reporting.--The amendments made by paragraph
(6)(A) shall apply to calendar years beginning after
December 31, 2016.
(F) Information provided by exchange subsidy
applicants.--
(i) In general.--The amendments made by
paragraph (6)(B) shall apply to applications
for enrollment made after the date described in
subparagraph (A).
(ii) Verification.--Verification under
section 1411 of the Patient Protection and
Affordable Care Act of information provided
under section 1411(b)(3)(B) of such Act shall
apply with respect to months beginning after
October 2016.
(8) Substantiation requirements.--The Secretary of the
Treasury (or his designee) may issue substantiation
requirements as necessary to carry out this subsection.
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 733(a)(1) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1191b(a)(1)) is amended
by adding at the end the following: ``Such term shall not
include any qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2) of the Internal
Revenue Code of 1986).''.
(2) Exception from continuation coverage requirements, etc.--
Section 607(1) of such Act (29 U.S.C. 1167(1)) is amended by
adding at the end the following: ``Such term shall not include
any qualified small employer health reimbursement arrangement
(as defined in section 9831(d)(2) of the Internal Revenue Code
of 1986).''.
(3) Effective date.--The amendments made by this subsection
shall apply to plan years beginning after the date described in
subsection (a)(7)(A).
(c) Amendments to the Public Health Service Act.--
(1) In general.--Section 2791(a)(1) of the Public Health
Service Act (42 U.S.C. 300gg-91(a)(1)) is amended by adding at
the end the following: ``Except for purposes of part C of title
XI of the Social Security Act (42 U.S.C. 1320d et seq.), such
term shall not include any qualified small employer health
reimbursement arrangement (as defined in section 9831(d)(2) of
the Internal Revenue Code of 1986).''.
(2) Exception from continuation coverage requirements.--
Section 2208(1) of the Public Health Service Act (42 U.S.C.
300bb-8(1)) is amended by adding at the end the following:
``Such term shall not include any qualified small employer
health reimbursement arrangement (as defined in section
9831(d)(2) of the Internal Revenue Code of 1986).''.
(3) Effective date.--The amendments made by this subsection
shall apply to plan years beginning after the date described in
subsection (a)(7)(A).
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 5447, as reported by the Committee on Ways
and Means, establishes new rules for Qualified Small Employer
Health Reimbursement Arrangements (QSHERAs) that allow eligible
employers to provide tax-preferred reimbursements to such
arrangements and exempt those arrangements from current law
group health plan associated penalties.
B. Background and Need for Legislation
The Committee believes that exempting QSHERAs from current
law group health plan rules and associated penalties will
relieve an unfair tax burden on small employers and their
employees who use these arrangements.
The penalty currently facing those small businesses that
are engaged in employer payment arrangements are different from
the penalty that large employers are subject to through the
employer mandate. Those large employers could face $3,240 per
year per employee penalties. In contrast, a small business that
is not subject to the employer mandate that wishes to provide a
small amount of money to help an employee purchase a plan in
the individual market could face $36,500 per year per employee
penalties.
Many small businesses are not aware of this penalty and
could face significant financial hardship absent legislative
relief. Direct contributions to health care through health
reimbursement arrangements should be encouraged as it increases
coverage and leads to portability of health care benefits for
American workers and their families. While these arrangements
are not considered group health plans for purposes of the
employer penalty, H.R. 5447 is not intended to change the
extent to which these plans are employee welfare benefit plans
under ERISA.
C. Legislative History
Background
H.R. 5447 was introduced on June 10, 2016, and was referred
to the Committee on Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 5447, the
Small Business Health Care Relief Act of 2016, on June 15,
2016, and ordered the bill, as amended, favorably reported
(with a quorum being present).
Committee hearings
The policy issues associated with Health Reimbursement
Arrangements (HRAs) and need for legislative response were
discussed at three Ways and Means hearings during the 114th
Congress:
Ways and Means Committee Hearing on the Tax
Treatment of Health Care (April 14, 2016);
Subcommittee on Tax Policy Member Day
Hearing on Tax Legislation (May 12, 2016); and
Subcommittee on Health Member Day Hearing on
Tax-Related Proposals to Improve Health Care (May 17,
2016).
II. EXPLANATION OF THE BILL
A. Exception From Group Health Plan Requirements for Qualified Small
Employer Health Reimbursement Arrangements (sec. 2 of the bill and
secs. 36B, 106, 4980I, 6051 and 9831 of the Code)
PRESENT LAW
Exclusion for employer-provided health benefits
An employee may exclude from gross income amounts provided
through an arrangement under which (1) an employer pays or
reimburses premiums for health insurance for the employee and
family members purchased in the individual insurance market
(referred to as an employer payment plan) or (2) an employer
reimburses the employee for medical expenses generally of the
employee and family members (referred to as a health
reimbursement arrangement or HRA).\1\ In order for employer
payments or reimbursements under these arrangements to be
excluded from gross income, premiums and other expenses must be
substantiated and an employee must be entitled to receive
payments from the employer only if he or she incurs qualifying
expenses.\2\
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\1\Secs. 105(b) and 106; Rev. Rul. 61-146, 1961-2 C.B. 25; Notice
2002-45, 2002-2 C.B. 93, and Rev. Rul. 2002-41, 2002-2 C.B. 75. Under
section 105(h), a self-insured medical reimbursement plan must meet
certain nondiscrimination requirements in order for the benefits
provided to a highly compensated individual to be excluded from income.
For this purpose, the following groups of employees may be excluded:
employees who have not completed three years of service with the
employer, employees under age 25, part-time or seasonal employees,
employees covered by a collective bargaining agreement if health
benefits was the subject of good faith bargaining, and nonresident
aliens with no earned income from sources within the United States.
Employer payments and reimbursements for health insurance and medical
expenses are also excluded from wages for employment tax purposes.
Secs. 3121(a)(2), 3231(e)(1), 3306(b)(2), 3401(a)(20), Rev. Rul. 56-
632, 1956-2 C.B. 101.
\2\Treas. Reg. sec. 1.105-2.
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The exclusion applies also to amounts paid or reimbursed
from funds withheld from an employee's salary under a cafeteria
plan (salary reduction amounts).\3\
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\3\Sec. 125. An HRA cannot include salary reduction amounts.
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The value of employer-provided health benefits for a year
is generally required to be reported by the employer on an
employee's Form W-2, Wage and Tax Statement, for the year.\4\
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\4\Sec. 6051(a)(14).
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Group health plan requirements
The Code, the Employee Retirement Income Security Act of
1974 (ERISA), and the Public Health Service Act (PHSA) impose
various requirements with respect to employer-sponsored health
plans, referred to for this purpose as group health plans.\5\
Under the Code, an employer is generally subject to an excise
tax of $100 a day per employee if it sponsors a group health
plan that fails to meet any of these requirements.\6\ In some
cases, the excise tax does not apply if the failure is due to
reasonable cause and not to willful neglect and the failure is
corrected within a certain period. In addition, in some cases
in which failure is due to reasonable cause and not to willful
neglect, some or all of the excise tax may be waived to the
extent payment of the tax would be excessive relative to the
failure involved.
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\5\Secs. 4980B (relating to continuation coverage or ``COBRA''
requirements) and 5000 (relating to Medicare secondary payor
requirements) and Chapter 100 (secs. 9801-9834, relating to various
additional requirements, such as prohibitions on preexisting condition
exclusions and discrimination based on health status); Title I, Parts 6
and 7, of ERISA; Title XVII of PHSA.
\6\Secs. 4980B(a) and (b), 4980D(a) and (b), 5000(a). Sec.
4980B(d)(1) provides an exception for plans of employers with fewer
than 20 employees. Sec. 4980D(d)(1) provides an exception for a plan of
an employer with no more than 50 employees if coverage is provided
solely through insurance.
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IRS guidance holds that employer payment plans generally
fail to meet certain group health plan requirements.\7\ In
addition, an HRA fails to meet those requirements unless the
HRA is provided in conjunction with (or ``integrated'' with)
employer-sponsored coverage that meets the requirements. An HRA
that is integrated with such employer-sponsored coverage is
often referred to as an ``integrated'' HRA, and an HRA that is
not integrated with such employer-sponsored coverage is often
referred to as a ``stand-alone'' HRA. Thus, an employer may be
subject to an excise tax if it provides an employer payment
plan or a stand-alone HRA.
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\7\Notice 2015-17, 2015-14 I.R.B. 845, and Notice 2013-54, 2013-2
C.B. 287. Notice 2015-17 provides relief from the excise tax under
section 4980D for periods before July 1, 2015, for certain small
employers.
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Other health rules under the Code
Individuals are generally required to have health coverage,
referred to as minimum essential coverage.\8\ Unless an
exception applies, an individual who fails to have minimum
essential coverage may be subject to a tax penalty. Minimum
essential coverage includes employer-sponsored coverage under a
group health plan, other than certain types of limited
coverage, such as coverage only for vision or dental medical
services. Minimum essential coverage also includes coverage
purchased in the individual insurance market, other than
certain types of limited coverage, such as coverage only for
vision or dental medical services.
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\8\Sec. 5000A.
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An advanceable, refundable income tax credit (premium
assistance credit) is available to certain individuals who
purchase health insurance coverage in the individual market
though an American Health Benefit Exchange (Exchange
coverage).\9\ However, an individual is generally not eligible
for the credit if his or her employer offers affordable minimum
essential coverage under a group health plan.\10\ For this
purpose, coverage is affordable if the employee's share of the
premium for self-only coverage under the group health plan is
not more than 9.5 percent\11\ of the employee's household
income. An individual who applies for advance premium
assistance with respect to Exchange coverage for a year must
provide the Exchange with certain information, including
information relating to employer-provided minimum essential
coverage.\12\
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\9\Sec. 36B.
\10\The coverage offered under the group health plan must also
cover at least 60 percent of the total costs of benefits covered under
the plan, referred to as ``minimum value.''
\11\For years after 2014, this percentage is increased as needed to
reflect cost-of-living increases. The percentage for 2016 is 9.66.
\12\Sec. 1411(b) of the Patient Protection and Affordable Care Act
(``PPACA''), Pub. L. No. 110-148. This information is subject to
verification during the Exchange process under section 1411(c) and (d)
of PPACA.
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If an applicable large employer fails to offer employees
minimum essential coverage, or offers minimum essential
coverage that is not affordable (under the standard described
above), and any employee receives a premium assistance credit,
the employer may be subject to a tax penalty.\13\ For this
purpose, applicable large employer generally means, with
respect to a calendar year, an employer who employed an average
of at least 50 full-time employees on business days during the
preceding calendar year.\14\
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\13\Sec. 4980H.
\14\In determining whether an employer is an applicable large
employer (that is, whether the employer has at least 50 full-time
employees), besides the number of full-time employees, the employer
must include the number of its full time equivalent employees for a
month, determined by dividing the aggregate number of hours of service
of employees who are not full-time employees for the month by 120. In
addition, in determining applicable large employer status, members of
the same controlled group, group under common control, and affiliated
service group under section 414(b), (c), (m) and (o) are treated as a
single employer.
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Effective 2020, an excise tax (the high-cost coverage
excise tax, commonly also referred to as the ``Cadillac'' tax)
applies if the aggregate cost of employer-provided coverage
provided to an employee under an employer's group health plans
exceeds a specified amount.\15\ The aggregate cost of coverage
for this purpose generally includes the cost of all types of
coverage provided by the employer's group health plans, other
than certain types of limited coverage, such as coverage only
for vision or dental medical services.
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\15\Sec. 4980I.
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REASONS FOR CHANGE
Small employers are not required to provide health
insurance coverage to their employees and, for some small
employers, doing so may not be feasible. Nonetheless, many
small employers wish to provide pretax funds that employees may
use to purchase their own health insurance or pay for expenses
not covered by their insurance. However, under present law,
providing such funds may expose a small employer to a
substantial excise tax. The Committee wishes to enable small
employers to provide such funds without incurring an excise
tax.
EXPLANATION OF PROVISION
Qualified small employer health reimbursement arrangement
Under the provision, a ``qualified small employer health
reimbursement arrangement'' (referred to herein as a QSEHRA) is
generally not a group health plan under the Code, ERISA or PHSA
and thus is not subject to the group health plan
requirements.\16\ A QSEHRA is defined as an arrangement that
(1) is provided on the same terms to all eligible employees of
an eligible employer; (2) is funded solely by the eligible
employer and no salary reduction contributions may be made
under the arrangement; (3) provides, after an employee provides
proof of minimum essential coverage, for the payment or
reimbursement of medical expenses of the employee and family
members;\17\ and (4) the amount of payments and reimbursements
under the arrangement for a year cannot exceed specified dollar
limits.\18\ In the case of an individual not covered by the
arrangement for all 12 months of a year, the dollar amounts are
prorated to reflect the number of months of coverage.
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\16\A QSEHRA continues to be treated as a group health plan as
defined under PHSA, for purposes of applying that definition to the
privacy requirements applicable to medical information under the Health
Insurance Portability and Accountability Act of 1996 (referred to as
HIPAA), Part C of Title XI of the Social Security Act.
\17\The provision specifies that the Secretary of the Treasury or
his designee may issue substantiation requirements as necessary to
carry out the provision.
\18\For 2016, the dollar limits are $5,130 ($10,260 in the case of
expenses of an employee and family members). For years after 2016, the
dollar limits are increased as needed to reflect cost-of-living
increases.
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The maximum dollar amount of payments or reimbursements
that may be made under a QSEHRA with respect to an eligible
employee for a year is the employee's ``permitted benefit.'' An
arrangement does not fail to be provided on the same terms to
all eligible employees merely because employees' permitted
benefits vary with the price of a health insurance policy in
the individual insurance market based on the ages of the
employee and family members or the number of family members
covered by the arrangement, provided that the variation is
determined by reference to the same insurance policy for all
eligible employees.
Under the provision, ``eligible employee'' means any
employee of an eligible employer, except that the terms of the
QSEHRA may exclude employees who have not completed 90 days of
service with the employer, employees under age 25, part-time or
seasonal employees, employees covered by a collective
bargaining agreement if health benefits were the subject of
good faith bargaining, and nonresident aliens with no earned
income from sources within the United States.\19\ ``Eligible
employer'' means an employer that (1) is not an applicable
large employer as defined for purposes of the requirement that
an applicable large employer offer its employees minimum
essential coverage (that is, generally, an employer with fewer
than 50 full-time employees during the preceding year), and (2)
does not offer a group health plan to any of its employees.
---------------------------------------------------------------------------
\19\These groups are based on the groups that can be excluded in
applying the nondiscrimination requirements under section 105(h) to a
self-insured plan with 90 days of service substituted for three years
of service.
---------------------------------------------------------------------------
Income tax treatment of QSEHRA benefits
Coverage and payments or reimbursements under a QSHERA are
generally excluded from gross income.
Because a QSEHRA is not a group health plan, coverage under
a QSEHRA is not minimum essential coverage and does not satisfy
the requirement that an individual have minimum essential
coverage. Under the provision, if an employee's medical care
expenses are paid or reimbursed under a QSEHRA and the employee
does not have minimum essential coverage for the month in which
the medical care was provided, the amount of the payment or
reimbursement for those expenses is includible in the
employee's income.\20\ The provision is not intended to change
the extent to which these plans are employee welfare benefit
plans under ERISA.
---------------------------------------------------------------------------
\20\The provision does not change the treatment of such payments or
reimbursements for employment tax purposes. Thus, they continue to be
excluded from wages for employment tax purposes.
---------------------------------------------------------------------------
Coordination with other Code rules
Under the provision, an eligible employee under a QSEHRA is
not eligible for the premium assistance credit for a month if
the QSEHRA constitutes affordable coverage for the month. For
this purpose, a QSEHRA constitutes affordable coverage for a
month if the excess of (1) the employee's premium for self-only
coverage under the second lowest cost silver plan offered in
the Exchange, over (2) \1/12\ of the employee's permitted
benefit under the QSEHRA, does not exceed \1/12\ of 9.5
percent\21\ of the employee's household income for the year. In
the case of an eligible employee under a QSEHRA who is eligible
for a premium assistance credit for a year (that is, the QSEHRA
does not constitute affordable coverage), the credit amount is
reduced (but not below zero) by the employee's permitted
benefit.
---------------------------------------------------------------------------
\21\For years after 2014, this percentage is increased as needed to
reflect cost-of-living increases. The percentage for 2016 is 9.66.
---------------------------------------------------------------------------
Under the provision, a QSEHRA continues to be treated as a
group health plan for purposes of the excise tax on high-cost
coverage. For that purpose, an employee's permitted benefit is
treated as the cost of coverage under the QSEHRA.
Notice and reporting requirements
The provision includes several requirements relating to
notices and reporting.
Not later than 90 days before the beginning of a year in
which an employer will fund a QSEHRA (or, if later, the date on
which an employee becomes eligible for the QSEHRA), the
employer must provide eligible employees with a written notice
containing the amount of the employee's permitted benefit and
certain other information. An employer that fails to provide
the notice may be subject to a tax penalty of $50 per employee,
subject to a maximum of $2,500 for the year.
In addition, the employer must report an employee's
permitted benefit for a year on the employee's Form W-2 for the
year. An eligible employee who applies for advance premium
assistance with respect to Exchange coverage for a year must
provide the Exchange with the amount of his or her permitted
benefit for the year.
EFFECTIVE DATE
The provision generally applies to years beginning after
the earlier of (1) the date that is 90 days after the date of
enactment of the provision, or (2) December 31, 2016 (plan
years beginning after the earlier of those two dates in the
case of the ERISA and PHSA changes).\22\ The aspects of the
provision relating to the premium assistance credit apply to
taxable years beginning after the earlier of those two dates.
The requirement that an employer report an employee's permitted
benefit on the employee's Form W-2 applies to calendar years
beginning after December 31, 2016. The requirement that an
eligible employee applying for advance premium assistance
provide the Exchange with the amount of his or her permitted
benefit applies to applications for enrollment made after the
earlier of the two dates described above.\23\
---------------------------------------------------------------------------
\22\The provision extends the excise tax relief under Notice 2015-
17 to plan years beginning on or before the earlier of the two dates.
\23\Verification of this information in the Exchange process
applies with respect to months beginning after October 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. 5447, the ``Small Business Health Care
Relief Act of 2016,'' on June 15, 2016.
The bill, H.R. 5447, as amended, was ordered favorably
reported to the House of Representatives by a voice vote (with
a quorum being present).
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. 5447, as
reported.
The bill, as reported, is estimated to have the following
effect on Federal fiscal year budget receipts for the period
2016-2026\1\\2\.
FISCAL YEARS
[Millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016-21 2016-26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
-20 -225 -120 -127 -24 6 25 49 100 136 199 -510 ............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details do not add to totals due to rounding.
\1\Estimate includes the following outlay effects:
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016-21 2016-26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
-- 27 30 32 34 36 38 40 40 42 44 159 363
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\2\Estimate includes the following off-budget effects:
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016-21 2016-26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
-12 -47 -27 -29 6 16 24 32 49 61 83 -92 157
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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 increased budget authority with respect to
outlays for refundable credits. The Committee further states
that the revenue-reducing provisions of the bill involve
increased tax expenditures. See amounts shown in the table in
Part IV.A above.
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, June 21, 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. 5447, the Small
Business Health Care Relief Act of 2016.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Nathaniel
Frentz.
Sincerely,
Keith Hall.
Enclosure.
H.R. 5447--Small Business Health Care Relief Act of 2016
H.R. 5447 would amend the Internal Revenue Code to define a
qualified small employer health reimbursement arrangement
(QSEHRA) as an arrangement where an employer pays directly for
or reimburses medical expenses of an employee and his or her
dependents. In order to be eligible for this arrangement, an
employer must generally have had fewer than 50 full-time
employees during the prior year. An employee must provide proof
of having minimum essential health insurance coverage, as
defined for purposes of the individual mandate. The payments
from an employer provided through a QSEHRA would not be counted
in the employees' gross income and would therefore be exempt
from income taxes. An employer that offered a QSEHRA would not
be subject to penalties under the Internal Revenue Code, the
Employee Retirement Income Security Act of 1974, or the Public
Health Service Act that typically apply to group health plans
that fail to meet certain requirements.
The staff of the Joint Committee on Taxation (JCT)
estimates that enacting H.R. 5447 would raise both revenues and
outlays by $363 million over the 2016-2026 period. JCT
therefore estimates that enacting the bill would have no effect
on federal budget deficits over the 2016-2026 period. The
change in revenues includes an increase of $157 million in off-
budget revenues (from Social Security payroll taxes). As a
result, on-budget deficits are expected to increase by $157
million over the 2016-2026 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
revenues or direct spending. The net changes in revenues and
direct spending that are subject to those pay-as-you-go
procedures are shown in the following table. Only on-budget
changes to revenues and direct spending are subject to pay-as-
you-go procedures.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5447, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 15, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016-2021 2016-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICIT
Statutory Pay-As-You-Go 9 178 93 98 30 11 -2 -17 -51 -74 -116 418 157
Effects......................
Memorandum:a
Change in Outlays......... 0 27 30 32 34 36 38 40 40 42 44 159 363
Change in On-Budget -9 -151 -63 -66 4 25 39 57 91 116 160 -259 206
Revenues.................
Change in Off-Budget -13 -46 -27 -29 6 16 24 32 49 61 83 -92 157
Revenues.................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
a. A positive sign for outlays indicates an increase in outlays. A positive sign for revenues indicates an increase in revenues.
Note: Components may not sum to total because of rounding.
CBO and JCT estimate that enacting the bill would not
increase net direct spending or on-budget deficits by more than
$5 billion in any of the four 10-year periods beginning in
2027.
JCT has determined that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Nathaniel
Frentz. The estimate was approved by David Weiner, Assistant
Director for Tax Analysis.
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. 5447 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 does not contain
Federal mandates on the private sector. 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
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter A--Determination of Tax Liability
* * * * * * *
PART IV--CREDITS AGAINST TAX
* * * * * * *
Subpart C--Refundable Credits
* * * * * * *
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.
* * * * * * *
Subchapter B--Computation of Taxable Income
* * * * * * *
PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
* * * * * * *
SEC. 106. CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS.
(a) General Rule.--Except as otherwise provided in this
section, gross income of an employee does not include employer-
provided coverage under an accident or health plan.
(b) Contributions to Archer Msas.--
(1) In general.--In the case of an employee who is an
eligible individual, amounts contributed by such
employee's employer to any Archer MSA of such employee
shall be treated as employer-provided coverage for
medical expenses under an accident or health plan to
the extent such amounts do not exceed the limitation
under section 220(b)(1) (determined without regard to
this subsection) which is applicable to such employee
for such taxable year.
(2) No constructive receipt.--No amount shall be
included in the gross income of any employee solely
because the employee may choose between the
contributions referred to in paragraph (1) and employer
contributions to another health plan of the employer.
(3) Special rule for deduction of employer
contributions.--Any employer contribution to an Archer
MSA, if otherwise allowable as a deduction under this
chapter, shall be allowed only for the taxable year in
which paid.
(4) Employer MSA contributions required to be shown
on return.--Every individual required to file a return
under section 6012 for the taxable year shall include
on such return the aggregate amount contributed by
employers to the Archer MSAs of such individual or such
individual's spouse for such taxable year.
(5) MSA contributions not part of COBRA coverage.--
Paragraph (1) shall not apply for purposes of section
4980B.
(6) Definitions.--For purposes of this subsection,
the terms ``eligible individual'' and ``Archer MSA''
have the respective meanings given to such terms by
section 220.
(7) Cross reference.--For penalty on failure by
employer to make comparable contributions to the Archer
MSAs of comparable employees, see section 4980E.
(c) Inclusion of Long-Term Care Benefits Provided Through
Flexible Spending Arrangements.--
(1) In general.--Gross income of an employee shall
include employer-provided coverage for qualified long-
term care services (as defined in section 7702B(c)) to
the extent that such coverage is provided through a
flexible spending or similar arrangement.
(2) Flexible spending arrangement.--For purposes of
this subsection, a flexible spending arrangement is a
benefit program which provides employees with coverage
under which--
(A) specified incurred expenses may be
reimbursed (subject to reimbursement maximums
and other reasonable conditions), and
(B) the maximum amount of reimbursement which
is reasonably available to a participant for
such coverage is less than 500 percent of the
value of such coverage.
In the case of an insured plan, the maximum amount
reasonably available shall be determined on the basis
of the underlying coverage.
(d) Contributions to Health Savings Accounts.--
(1) In general.--In the case of an employee who is an
eligible individual (as defined in section 223(c)(1)),
amounts contributed by such employee's employer to any
health savings account (as defined in section 223(d))
of such employee shall be treated as employer-provided
coverage for medical expenses under an accident or
health plan to the extent such amounts do not exceed
the limitation under section 223(b) (determined without
regard to this subsection) which is applicable to such
employee for such taxable year.
(2) Special rules.--Rules similar to the rules of
paragraphs (2), (3), (4), and (5) of subsection (b)
shall apply for purposes of this subsection.
(3) Cross reference.--For penalty on failure by
employer to make comparable contributions to the health
savings accounts of comparable employees, see section
4980G.
(e) Fsa and Hra Terminations to Fund Hsas.--
(1) In general.--A plan shall not fail to be treated
as a health flexible spending arrangement or health
reimbursement arrangement under this section or section
105 merely because such plan provides for a qualified
HSA distribution.
(2) Qualified HSA distribution.--The term ``qualified
HSA distribution'' means a distribution from a health
flexible spending arrangement or health reimbursement
arrangement to the extent that such distribution--
(A) does not exceed the lesser of the balance
in such arrangement on September 21, 2006, or
as of the date of such distribution, and
(B) is contributed by the employer directly
to the health savings account of the employee
before January 1, 2012.
Such term shall not include more than 1 distribution
with respect to any arrangement.
(3) Additional tax for failure to maintain high
deductible health plan coverage.--
(A) In general.--If, at any time during the
testing period, the employee is not an eligible
individual, then the amount of the qualified
HSA distribution--
(i) shall be includible in the gross
income of the employee for the taxable
year in which occurs the first month in
the testing period for which such
employee is not an eligible individual,
and
(ii) the tax imposed by this chapter
for such taxable year on the employee
shall be increased by 10 percent of the
amount which is so includible.
(B) Exception for disability or death.--
Clauses (i) and (ii) of subparagraph (A) shall
not apply if the employee ceases to be an
eligible individual by reason of the death of
the employee or the employee becoming disabled
(within the meaning of section 72(m)(7)).
(4) Definitions and special rules.--For purposes of
this subsection--
(A) Testing period.--The term ``testing
period'' means the period beginning with the
month in which the qualified HSA distribution
is contributed to the health savings account
and ending on the last day of the 12th month
following such month.
(B) Eligible individual.--The term ``eligible
individual'' has the meaning given such term by
section 223(c)(1).
(C) Treatment as rollover contribution.--A
qualified HSA distribution shall be treated as
a rollover contribution described in section
223(f)(5).
(5) Tax treatment relating to distributions.--For
purposes of this title--
(A) In general.--A qualified HSA distribution
shall be treated as a payment described in
subsection (d).
(B) Comparability excise tax.--
(i) In general.--Except as provided
in clause (ii), section 4980G shall not
apply to qualified HSA distributions.
(ii) Failure to offer to all
employees.--In the case of a qualified
HSA distribution to any employee, the
failure to offer such distribution to
any eligible individual covered under a
high deductible health plan of the
employer shall (notwithstanding section
4980G(d)) be treated for purposes of
section 4980G as a failure to meet the
requirements of section 4980G(b).
(f) Reimbursements for Medicine Restricted to Prescribed
Drugs and Insulin.--For purposes of this section and section
105, reimbursement for expenses incurred for a medicine or a
drug shall be treated as a reimbursement for medical expenses
only if such medicine or drug is a prescribed drug (determined
without regard to whether such drug is available without a
prescription) or is insulin.
* * * * * * *
Subtitle D--Miscellaneous Excise Taxes
* * * * * * *
CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
* * * * * * *
SEC. 4980I. EXCISE TAX ON HIGH COST EMPLOYER-SPONSORED HEALTH COVERAGE.
(a) Imposition of Tax.--If--
(1) an employee is covered under any applicable
employer-sponsored coverage of an employer at any time
during a taxable period, and
(2) there is any excess benefit with respect to the
coverage, there is hereby imposed a tax equal to 40
percent of the excess benefit.
(b) Excess Benefit.--For purposes of this section--
(1) In general.--The term ``excess benefit'' means,
with respect to any applicable employer-sponsored
coverage made available by an employer to an employee
during any taxable period, the sum of the excess
amounts determined under paragraph (2) for months
during the taxable period.
(2) Monthly excess amount.--The excess amount
determined under this paragraph for any month is the
excess (if any) of--
(A) the aggregate cost of the applicable
employer- sponsored coverage of the employee
for the month, over
(B) an amount equal to \1/12\ of the annual
limitation under paragraph (3) for the calendar
year in which the month occurs.
(3) Annual limitation.--For purposes of this
subsection--
(A) In general.--The annual limitation under
this paragraph for any calendar year is the
dollar limit determined under subparagraph (C)
for the calendar year.
(B) Applicable annual limitation.--
(i) In general.--Except as provided
in clause (ii), the annual limitation
which applies for any month shall be
determined on the basis of the type of
coverage (as determined under
subsection (f)(1)) provided to the
employee by the employer as of the
beginning of the month.
(ii) Multiemployer plan coverage.--
Any coverage provided under a
multiemployer plan (as defined in
section 414(f)) shall be treated as
coverage other than self-only coverage.
(C) Applicable dollar limit.--
(i) 2018.--In the case of 2018, the
dollar limit under this subparagraph
is--
(I) in the case of an
employee with self-only
coverage, $10,200 multiplied by
the health cost adjustment
percentage (determined by only
taking into account self-only
coverage), and
(II) in the case of an
employee with coverage other
than self-only coverage,
$27,500 multiplied by the
health cost adjustment
percentage (determined by only
taking into account coverage
other than self-only coverage).
(ii) Health cost adjustment
percentage.--For purposes of clause
(i), the health cost adjustment
percentage is equal to 100 percent plus
the excess (if any) of--
(I) the percentage by which
the per employee cost for
providing coverage under the
Blue Cross/Blue Shield standard
benefit option under the
Federal Employees Health
Benefits Plan for plan year
2018 (determined by using the
benefit package for such
coverage in 2010) exceeds such
cost for plan year 2010, over
(II) 55 percent.
(iii) Age and gender adjustment.--
(I) In general.--The amount
determined under subclause (I)
or (II) of clause (i),
whichever is applicable, for
any taxable period shall be
increased by the amount
determined under subclause
(II).
(II) Amount determined.--The
amount determined under this
subclause is an amount equal to
the excess (if any) of--
(aa) the premium cost
of the Blue Cross/Blue
Shield standard benefit
option under the
Federal Employees
Health Benefits Plan
for the type of
coverage provided such
individual in such
taxable period if
priced for the age and
gender characteristics
of all employees of the
individual's employer,
over
(bb) that premium
cost for the provision
of such coverage under
such option in such
taxable period if
priced for the age and
gender characteristics
of the national
workforce.
(iv) Exception for certain
individuals.--In the case of an
individual who is a qualified retiree
or who participates in a plan sponsored
by an employer the majority of whose
employees covered by the plan are
engaged in a high-risk profession or
employed to repair or install
electrical or telecommunications
lines--
(I) the dollar amount in
clause (i)(I) shall be
increased by $1,650, and
(II) the dollar amount in
clause (i)(II) shall be
increased by $3,450,
(v) Subsequent years.--In the case of
any calendar year after 2018, each of
the dollar amounts under clauses (i)
(after the application of clause (ii))
and (iv) shall be increased to the
amount equal to such amount as
determined for for the calendar year
preceding such year, increased by an
amount equal to the product of--
(I) such amount as so
determined, multiplied by
(II) the cost-of-living
adjustment determined under
section 1(f)(3) for such year
(determined by substituting the
calendar year that is 2 years
before such year for ``1992''
in subparagraph (B) thereof),
increased by 1 percentage point
in the case of determinations
for calendar years beginning
before 2020.
If any amount determined under this
clause is not a multiple of $50, such
amount shall be rounded to the nearest
multiple of $50.
(c) Liability to Pay Tax.--
(1) In general.--Each coverage provider shall pay the
tax imposed by subsection (a) on its applicable share
of the excess benefit with respect to an employee for
any taxable period.
(2) Coverage provider.--For purposes of this
subsection, the term ``coverage provider'' means each
of the following:
(A) Health insurance coverage.--If the
applicable employer-sponsored coverage consists
of coverage under a group health plan which
provides health insurance coverage, the health
insurance issuer.
(B) HSA and MSA contributions.--If the
applicable employer-sponsored coverage consists
of coverage under an arrangement under which
the employer makes contributions described in
subsection (b) or (d) of section 106, the
employer.
(C) Other coverage.--In the case of any other
applicable employer-sponsored coverage, the
person that administers the plan benefits.
(3) Applicable share.--For purposes of this
subsection, a coverage provider's applicable share of
an excess benefit for any taxable period is the amount
which bears the same ratio to the amount of such excess
benefit as--
(A) the cost of the applicable employer-
sponsored coverage provided by the provider to
the employee during such period, bears to
(B) the aggregate cost of all applicable
employer-sponsored coverage provided to the
employee by all coverage providers during such
period.
(4) Responsibility to calculate tax and applicable
shares.--
(A) In general.--Each employer shall--
(i) calculate for each taxable period
the amount of the excess benefit
subject to the tax imposed by
subsection (a) and the applicable share
of such excess benefit for each
coverage provider, and
(ii) notify, at such time and in such
manner as the Secretary may prescribe,
the Secretary and each coverage
provider of the amount so determined
for the provider.
(B) Special rule for multiemployer plans.--In
the case of applicable employer-sponsored
coverage made available to employees through a
multiemployer plan (as defined in section
414(f)), the plan sponsor shall make the
calculations, and provide the notice, required
under subparagraph (A).
(d) Applicable Employer-Sponsored Coverage; Cost.--For
purposes of this section--
(1) Applicable employer-sponsored coverage.--
(A) In general.--The term ``applicable
employer-sponsored coverage'' means, with
respect to any employee, coverage under any
group health plan made available to the
employee by an employer which is excludable
from the employee's gross income under section
106, or would be so excludable if it were
employer-provided coverage (within the meaning
of such section 106).
(B) Exceptions.--The term ``applicable
employer-sponsored coverage'' shall not
include--
(i) any coverage (whether through
insurance or otherwise) described in
section 9832(c)(1) (other than
subparagraph (G) thereof) or for long-
term care, or
(ii) any coverage under a separate
policy, certificate, or contract of
insurance which provides benefits
substantially all of which are for
treatment of the mouth (including any
organ or structure within the mouth) or
for treatment of the eye, or
(iii) any coverage described in
section 9832(c)(3) the payment for
which is not excludable from gross
income and for which a deduction under
section 162(l) is not allowable.
(C) Coverage includes employee paid
portion.--Coverage shall be treated as
applicable employer-sponsored coverage without
regard to whether the employer or employee pays
for the coverage.
(D) Self-employed individual.--In the case of
an individual who is an employee within the
meaning of section 401(c)(1), coverage under
any group health plan providing health
insurance coverage shall be treated as
applicable employer-sponsored coverage if a
deduction is allowable under section 162(l)
with respect to all or any portion of the cost
of the coverage.
(E) Governmental plans included.--Applicable
employer-sponsored coverage shall include
coverage under any group health plan
established and maintained primarily for its
civilian employees by the Government of the
United States, by the government of any State
or political subdivision thereof, or by any
agency or instrumentality of any such
government.
(2) Determination of cost.--
(A) In general.--The cost of applicable
employer- sponsored coverage shall be
determined under rules similar to the rules of
section 4980B(f)(4), except that in determining
such cost, any portion of the cost of such
coverage which is attributable to the tax
imposed under this section shall not be taken
into account and the amount of such cost shall
be calculated separately for self-only coverage
and other coverage. In the case of applicable
employer-sponsored coverage which provides
coverage to retired employees, the plan may
elect to treat a retired employee who has not
attained the age of 65 and a retired employee
who has attained the age of 65 as similarly
situated beneficiaries.
(B) Health FSAS.--In the case of applicable
employer- sponsored coverage consisting of
coverage under a flexible spending arrangement
(as defined in section 106(c)(2)), the cost of
the coverage shall be equal to the sum of--
(i) the amount of employer
contributions under any salary
reduction election under the
arrangement, plus
(ii) the amount determined under
subparagraph (A) with respect to any
reimbursement under the arrangement in
excess of the contributions described
in clause (i).
(C) Archer MSAS and HSAS.--In the case of
applicable employer-sponsored coverage
consisting of coverage under an arrangement
under which the employer makes contributions
described in subsection (b) or (d) of section
106, the cost of the coverage shall be equal to
the amount of employer contributions under the
arrangement.
(D) Allocation on a monthly basis.--If cost
is determined on other than a monthly basis,
the cost shall be allocated to months in a
taxable period on such basis as the Secretary
may prescribe.
(3) Employee.--The term ``employee'' includes any
former employee, surviving spouse, or other primary
insured individual.
(e) Penalty for Failure to Properly Calculate Excess
Benefit.--
(1) In general.--If, for any taxable period, the tax
imposed by subsection (a) exceeds the tax determined
under such subsection with respect to the total excess
benefit calculated by the employer or plan sponsor
under subsection (c)(4)--
(A) each coverage provider shall pay the tax
on its applicable share (determined in the same
manner as under subsection (c)(4)) of the
excess, but no penalty shall be imposed on the
provider with respect to such amount, and
(B) the employer or plan sponsor shall, in
addition to any tax imposed by subsection (a),
pay a penalty in an amount equal to such
excess, plus interest at the underpayment rate
determined under section 6621 for the period
beginning on the due date for the payment of
tax imposed by subsection (a) to which the
excess relates and ending on the date of
payment of the penalty.
(2) Limitations on penalty.--
(A) Penalty not to apply where failure not
discovered exercising reasonable diligence.--No
penalty shall be imposed by paragraph (1)(B) on
any failure to properly calculate the excess
benefit during any period for which it is
established to the satisfaction of the
Secretary that the employer or plan sponsor
neither knew, nor exercising reasonable
diligence would have known, that such failure
existed.
(B) Penalty not to apply to failures
corrected within 30 days.--No penalty shall be
imposed by paragraph (1)(B) on any such failure
if--
(i) such failure was due to
reasonable cause and not to willful
neglect, and
(ii) such failure is corrected during
the 30-day period beginning on the 1st
date that the employer knew, or
exercising reasonable diligence would
have known, that such failure existed.
(C) Waiver by Secretary.--In the case of any
such failure which is due to reasonable cause
and not to willful neglect, the Secretary may
waive part or all of the penalty imposed by
paragraph (1), to the extent that the payment
of such penalty would be excessive or otherwise
inequitable relative to the failure involved.
(f) Other Definitions and Special Rules.--For purposes of
this section--
(1) Coverage determinations.--
(A) In general.--Except as provided in
subparagraph (B), an employee shall be treated
as having self-only coverage with respect to
any applicable employer-sponsored coverage of
an employer.
(B) Minimum essential coverage.--An employee
shall be treated as having coverage other than
self-only coverage only if the employee is
enrolled in coverage other than self-only
coverage in a group health plan which provides
minimum essential coverage (as defined in
section 5000A(f)) to the employee and at least
one other beneficiary, and the benefits
provided under such minimum essential coverage
do not vary based on whether any individual
covered under such coverage is the employee or
another beneficiary.
(2) Qualified retiree.--The term ``qualified
retiree'' means any individual who--
(A) is receiving coverage by reason of being
a retiree,
(B) has attained age 55, and
(C) is not entitled to benefits or eligible
for enrollment under the Medicare program under
title XVIII of the Social Security Act.
(3) Employees engaged in high-risk profession.--The
term ``employees engaged in a high-risk profession''
means law enforcement officers (as such term is defined
in section 1204 of the Omnibus Crime Control and Safe
Streets Act of 1968), employees in fire protection
activities (as such term is defined in section 3(y) of
the Fair Labor Standards Act of 1938), individuals who
provide out- of-hospital emergency medical care
(including emergency medical technicians, paramedics,
and first-responders), individuals whose primary work
is longshore work (as defined in section 258(b) of the
Immigration and Nationality Act (8 U.S.C. 1288(b)),
determined without regard to paragraph (2) thereof),
and individuals engaged in the construction, mining,
agriculture (not including food processing), forestry,
and fishing industries. Such term includes an employee
who is retired from a high-risk profession described in
the preceding sentence, if such employee satisfied the
requirements of such sentence for a period of not less
than 20 years during the employee's employment.
(4) Group health plan.--The term ``group health
plan'' has the meaning given such term by section
5000(b)(1).
(5) Health insurance coverage; health insurance
issuer.--
(A) Health insurance coverage.--The term
``health insurance coverage'' has the meaning
given such term by section 9832(b)(1) (applied
without regard to subparagraph (B) thereof,
except as provided by the Secretary in
regulations).
(B) Health insurance issuer.--The term
``health insurance issuer'' has the meaning
given such term by section 9832(b)(2).
(6) Person that administers the plan benefits.--The
term ``person that administers the plan benefits''
shall include the plan sponsor if the plan sponsor
administers benefits under the plan.
(7) Plan sponsor.--The term ``plan sponsor'' has the
meaning given such term in section 3(16)(B) of the
Employee Retirement Income Security Act of 1974.
(8) Taxable period.--The term ``taxable period''
means the calendar year or such shorter period as the
Secretary may prescribe. The Secretary may have
different taxable periods for employers of varying
sizes.
(9) Aggregation rules.--All employers treated as a
single employer under subsection (b), (c), (m), or (o)
of section 414 shall be treated as a single employer.
(10) Deductibility of tax.--Section 275(a)(6) shall
not apply to the tax imposed by subsection (a).
(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out this section.
* * * * * * *
Subtitle F--Procedure and Administration
* * * * * * *
CHAPTER 61--INFORMATION AND RETURNS
* * * * * * *
Subchapter A--Returns and Records
* * * * * * *
PART III--INFORMATION RETURNS
* * * * * * *
Subpart C--Information Regarding Wages Paid Employees
SEC. 6051. RECEIPTS FOR EMPLOYEES.
(a) Requirement.--Every person required to deduct and
withhold from an employee a tax under section 3101 or 3402, or
who would have been required to deduct and withhold a tax under
section 3402 (determined without regard to subsection (n)) if
the employee had claimed no more than one withholding
exemption, or every employer engaged in a trade or business who
pays remuneration for services performed by an employee,
including the cash value of such remuneration paid in any
medium other than cash, shall furnish to each such employee in
respect of the remuneration paid by such person to such
employee during the calendar year, on or before January 31 of
the succeeding year, or, if his employment is terminated before
the close of such calendar year, within 30 days after the date
of receipt of a written request from the employee if such 30-
day period ends before January 31, a written statement showing
the following:
(1) the name of such person,
(2) the name of the employee (and an identifying
number for the employee if wages as defined in section
3121(a) have been paid),
(3) the total amount of wages as defined in section
3401(a),
(4) the total amount deducted and withheld as tax
under section 3402,
(5) the total amount of wages as defined in section
3121(a),
(6) the total amount deducted and withheld as tax
under section 3101,
(8) the total amount of elective deferrals (within
the meaning of section 402(g)(3)) and compensation
deferred under section 457, including the amount of
designated Roth contributions (as defined in section
402A),
(9) the total amount incurred for dependent care
assistance with respect to such employee under a
dependent care assistance program described in section
129(d),
(10) in the case of an employee who is a member of
the Armed Forces of the United States, such employee's
earned income as determined for purposes of section 32
(relating to earned income credit),
(11) the amount contributed to any Archer MSA (as
defined in section 220(d)) of such employee or such
employee's spouse,
(12) the amount contributed to any health savings
account (as defined in section 223(d)) of such employee
or such employee's spouse,
(13) the total amount of deferrals for the year under
a nonqualified deferred compensation plan (within the
meaning of section 409A(d)),
(14) the aggregate cost (determined under rules
similar to the rules of section 4980B(f)(4)) of
applicable employer-sponsored coverage (as defined in
section 4980I(d)(1)), except that this paragraph shall
not apply to--
(A) coverage to which paragraphs (11) and
(12) apply, or
(B) the amount of any salary reduction
contributions to a flexible spending
arrangement (within the meaning of section
125).
In the case of compensation paid for service as a member of a
uniformed service, the statement shall show, in lieu of the
amount required to be shown by paragraph (5), the total amount
of wages as defined in section 3121(a), computed in accordance
with such section and section 3121(i)(2). In the case of
compensation paid for service as a volunteer or volunteer
leader within the meaning of the Peace Corps Act, the statement
shall show, in lieu of the amount required to be shown by
paragraph (5), the total amount of wages as defined in section
3121(a), computed in accordance with such section and section
3121(i)(3). In the case of tips received by an employee in the
course of his employment, the amounts required to be shown by
paragraphs (3) and (5) shall include only such tips as are
included in statements furnished to the employer pursuant to
section 6053(a). The amounts required to be shown by paragraph
(5) shall not include wages which are exempted pursuant to
sections 3101(c) and 3111(c) from the taxes imposed by sections
3101 and 3111. In the case of the amounts required to be shown
by paragraph (13), the Secretary may (by regulation) establish
a minimum amount of deferrals below which paragraph (13) does
not apply.
(b) Special Rule as to Compensation of Members of Armed
Forces.--In the case of compensation paid for service as a
member of the Armed Forces, the statement required by
subsection (a) shall be furnished if any tax was withheld
during the calendar year under section 3402, or if any of the
compensation paid during such year is includible in gross
income under chapter 1, or if during the calendar year any
amount was required to be withheld as tax under section 3101.
In lieu of the amount required to be shown by paragraph (3) of
subsection (a), such statement shall show as wages paid during
the calendar year the amount of such compensation paid during
the calendar year which is not excluded from gross income under
chapter 1 (whether or not such compensation constituted wages
as defined in section 3401(a)).
(c) Additional Requirements.--The statements required to be
furnished pursuant to this section in respect of any
remuneration shall be furnished at such other times, shall
contain such other information, and shall be in such form as
the Secretary may by regulations prescribe. The statements
required under this section shall also show the proportion of
the total amount withheld as tax under section 3101 which is
for financing the cost of hospital insurance benefits under
part A of title XVIII of the Social Security Act.
(d) Statements to Constitute Information Returns.--A
duplicate of any statement made pursuant to this section and in
accordance with regulations prescribed by the Secretary shall,
when required by such regulations, be filed with the Secretary.
(e) Railroad Employees.--
(1) Additional requirement.--Every person required to
deduct and withhold tax under section 3201 from an
employee shall include on or with the statement
required to be furnished such employee under subsection
(a) a notice concerning the provisions of this title
with respect to the allowance of a credit or refund of
the tax on wages imposed by section 3101(b) and the tax
on compensation imposed by section 3201 or 3211 which
is treated as a tax on wages imposed by section
3101(b).
(2) Information to be supplied to employees.--Each
person required to deduct and withhold tax under
section 3201 during any year from an employee who has
also received wages during such year subject to the tax
imposed by section 3101(b) shall, upon request of such
employee, furnish to him a written statement showing--
(A) the total amount of compensation with
respect to which the tax imposed by section
3201 was deducted,
(B) the total amount deducted as tax under
section 3201, and
(C) the portion of the total amount deducted
as tax under section 3201 which is for
financing the cost of hospital insurance under
part A of title XVIII of the Social Security
Act.
(f) Statements Required in Case of Sick Pay Paid by Third
Parties.--
(1) Statements required from payor.--
(A) In general.--If, during any calendar
year, any person makes a payment of third-party
sick pay to an employee, such person shall, on
or before January 15 of the succeeding year,
furnish a written statement to the employer in
respect of whom such payment was made showing--
(i) the name and, if there is
withholding under section 3402(o), the
social security number of such
employee,
(ii) the total amount of the third-
party sick pay paid to such employee
during the calendar year, and
(iii) the total amount (if any)
deducted and withheld from such sick
pay under section 3402.
For purposes of the preceding sentence, the
term ``third-party sick pay'' means any sick
pay (as defined in section 3402(o)(2)(C)) which
does not constitute wages for purposes of
chapter 24 (determined without regard to
section 3402(o)(1)).
(B) Special rules.--
(i) Statements are in lieu of other
reporting requirements.--The reporting
requirements of subparagraph (A) with
respect to any payments shall, with
respect to such payments, be in lieu of
the requirements of subsection (a) and
of section 6041.
(ii) Penalties made applicable.--For
purposes of sections 6674 and 7204, the
statements required to be furnished by
subparagraph (A) shall be treated as
statements required under this section
to be furnished to employees.
(2) Information required to be furnished by
employer.--Every employer who receives a statement
under paragraph (1)(A) with respect to sick pay paid to
any employee during any calendar year shall, on or
before January 31 of the succeeding year, furnish a
written statement to such employee showing--
(A) the information shown on the statement
furnished under paragraph (1)(A), and
(B) if any portion of the sick pay is
excludable from gross income under section
104(a)(3), the portion which is not so
excludable and the portion which is so
excludable.
To the extent practicable, the information required
under the preceding sentence shall be furnished on or
with the statement (if any) required under subsection
(a).
* * * * * * *
CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE
PENALTIES
* * * * * * *
Subchapter A--Additions to the Tax and Additional Amounts
* * * * * * *
PART I--GENERAL PROVISIONS
* * * * * * *
SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS, REGISTRATION
STATEMENTS, ETC.
(a) Returns With Respect to Certain Payments Aggregating Less
Than $10.--In the case of each failure to file a statement of a
payment to another person required under the authority of--
(1) section 6042(a)(2) (relating to payments of
dividends aggregating less than $10), or
(2) section 6044(a)(2) (relating to payments of
patronage dividends aggregating less than $10),
on the date prescribed therefor (determined with regard to any
extension of time for filing), unless it is shown that such
failure is due to reasonable cause and not to willful neglect,
there shall be paid (upon notice and demand by the Secretary
and in the same manner as tax) by the person failing to so file
the statement, $1 for each such statement not so filed, but the
total amount imposed on the delinquent person for all such
failures during the calendar year shall not exceed $1,000.
(b) Failure to Report Tips.--In the case of failure by an
employee to report to his employer on the date and in the
manner prescribed therefor any amount of tips required to be so
reported by section 6053(a) which are wages (as defined in
section 3121(a)) or which are compensation (as defined in
section 3231(e)), unless it is shown that such failure is due
to reasonable cause and not due to willful neglect, there shall
be paid by the employee, in addition to the tax imposed by
section 3101 or section 3201 (as the case may be) with respect
to the amount of tips which he so failed to report, an amount
equal to 50 percent of such tax.
(c) Returns by Exempt Organizations and by Certain Trusts.--
(1) Annual returns under section 6033(a)(1) or
6012(a)(6).--
(A) Penalty on organization.--In the case
of--
(i) a failure to file a return
required under section 6033(a)(1)
(relating to returns by exempt
organizations) or section 6012(a)(6)
(relating to returns by political
organizations) on the date and in the
manner prescribed therefor (determined
with regard to any extension of time
for filing), or
(ii) a failure to include any of the
information required to be shown on a
return filed under section 6033(a)(1)
or section 6012(a)(6) or to show the
correct information,
there shall be paid by the exempt organization
$20 for each day during which such failure
continues. The maximum penalty under this
subparagraph on failures with respect to any 1
return shall not exceed the lesser of $10,000
or 5 percent of the gross receipts of the
organization for the year. In the case of an
organization having gross receipts exceeding
$1,000,000 for any year, with respect to the
return required under section 6033(a)(1) or
section 6012(a)(6) for such year, in applying
the first sentence of this subparagraph, the
amount of the penalty for each day during which
a failure continues shall be $100 in lieu of
the amount otherwise specified, and, in lieu of
applying the second sentence of this
subparagraph, the maximum penalty under this
subparagraph shall not exceed $50,000.
(B) Managers.--
(i) In general.--The Secretary may
make a written demand on any
organization subject to penalty under
subparagraph (A) specifying therein a
reasonable future date by which the
return shall be filed (or the
information furnished) for purposes of
this subparagraph.
(ii) Failure to comply with demand.--
If any person fails to comply with any
demand under clause (i) on or before
the date specified in such demand,
there shall be paid by the person
failing to so comply $10 for each day
after the expiration of the time
specified in such demand during which
such failure continues. The maximum
penalty imposed under this subparagraph
on all persons for failures with
respect to any 1 return shall not
exceed $5,000.
(C) Public inspection of annual returns and
reports.--In the case of a failure to comply
with the requirements of section 6104(d) with
respect to any annual return on the date and in
the manner prescribed therefor (determined with
regard to any extension of time for filing) or
report required under section 527(j), there
shall be paid by the person failing to meet
such requirements $20 for each day during which
such failure continues. The maximum penalty
imposed under this subparagraph on all persons
for failures with respect to any 1 return or
report shall not exceed $10,000.
(D) Public inspection of applications for
exemption and notice of status.--In the case of
a failure to comply with the requirements of
section 6104(d) with respect to any exempt
status application materials (as defined in
such section) or notice materials (as defined
in such section) on the date and in the manner
prescribed therefor, there shall be paid by the
person failing to meet such requirements $20
for each day during which such failure
continues.
(E) No penalty for certain annual notices.--
This paragraph shall not apply with respect to
any notice required under section 6033(i).
(2) Returns under section 6034 or 6043(b).--
(A) Penalty on organization or trust.--In the
case of a failure to file a return required
under section 6034 (relating to returns by
certain trusts) or section 6043(b) (relating to
terminations, etc., of exempt organizations),
on the date and in the manner prescribed
therefor (determined with regard to any
extension of time for filing), there shall be
paid by the exempt organization or trust
failing so to file $10 for each day during
which such failure continues, but the total
amount imposed under this subparagraph on any
organization or trust for failure to file any 1
return shall not exceed $5,000.
(B) Managers.--The Secretary may make written
demand on an organization or trust failing to
file under subparagraph (A) specifying therein
a reasonable future date by which such filing
shall be made for purposes of this
subparagraph. If such filing is not made on or
before such date, there shall be paid by the
person failing so to file $10 for each day
after the expiration of the time specified in
the written demand during which such failure
continues, but the total amount imposed under
this subparagraph on all persons for failure to
file any 1 return shall not exceed $5,000.
(C) Split-interest trusts.--In the case of a
trust which is required to file a return under
section 6034(a), subparagraphs (A) and (B) of
this paragraph shall not apply and paragraph
(1) shall apply in the same manner as if such
return were required under section 6033, except
that--
(i) the 5 percent limitation in the
second sentence of paragraph (1)(A)
shall not apply,
(ii) in the case of any trust with
gross income in excess of $250,000, in
applying the first sentence of
paragraph (1)(A), the amount of the
penalty for each day during which a
failure continues shall be $100 in lieu
of the amount otherwise specified, and
in lieu of applying the second sentence
of paragraph (1)(A), the maximum
penalty under paragraph (1)(A) shall
not exceed $50,000, and
(iii) the third sentence of paragraph
(1)(A) shall be disregarded.
In addition to any penalty imposed on the trust
pursuant to this subparagraph, if the person
required to file such return knowingly fails to
file the return, such penalty shall also be
imposed on such person who shall be personally
liable for such penalty.
(3) Disclosure under section 6033(a)(2).--
(A) Penalty on entities.--In the case of a
failure to file a disclosure required under
section 6033(a)(2), there shall be paid by the
tax-exempt entity (the entity manager in the
case of a tax-exempt entity described in
paragraph (4), (5), (6), or (7) of section
4965(c)) $100 for each day during which such
failure continues. The maximum penalty under
this subparagraph on failures with respect to
any 1 disclosure shall not exceed $50,000.
(B) Written demand.--
(i) In general.--The Secretary may
make a written demand on any entity or
manager subject to penalty under
subparagraph (A) specifying therein a
reasonable future date by which the
disclosure shall be filed for purposes
of this subparagraph.
(ii) Failure to comply with demand.--
If any entity or manager fails to
comply with any demand under clause (i)
on or before the date specified in such
demand, there shall be paid by such
entity or manager failing to so comply
$100 for each day after the expiration
of the time specified in such demand
during which such failure continues.
The maximum penalty imposed under this
subparagraph on all entities and
managers for failures with respect to
any 1 disclosure shall not exceed
$10,000.
(C) Definitions.--Any term used in this
section which is also used in section 4965
shall have the meaning given such term under
section 4965.
(4) Notices under section 506.--
(A) Penalty on organization.--In the case of
a failure to submit a notice required under
section 506(a) (relating to organizations
required to notify Secretary of intent to
operate as 501(c)(4)) on the date and in the
manner prescribed therefor, there shall be paid
by the organization failing to so submit $20
for each day during which such failure
continues, but the total amount imposed under
this subparagraph on any organization for
failure to submit any one notice shall not
exceed $5,000.
(B) Managers.--The Secretary may make written
demand on an organization subject to penalty
under subparagraph (A) specifying in such
demand a reasonable future date by which the
notice shall be submitted for purposes of this
subparagraph. If such notice is not submitted
on or before such date, there shall be paid by
the person failing to so submit $20 for each
day after the expiration of the time specified
in the written demand during which such failure
continues, but the total amount imposed under
this subparagraph on all persons for failure to
submit any one notice shall not exceed $5,000.
(5) Reasonable cause exception.--No penalty shall be
imposed under this subsection with respect to any
failure if it is shown that such failure is due to
reasonable cause.
(6) Other special rules.--
(A) Treatment as tax.--Any penalty imposed
under this subsection shall be paid on notice
and demand of the Secretary and in the same
manner as tax.
(B) Joint and several liability.--If more
than 1 person is liable under this subsection
for any penalty with respect to any failure,
all such persons shall be jointly and severally
liable with respect to such failure.
(C) Person.--For purposes of this subsection,
the term ``person'' means any officer,
director, trustee, employee, or other
individual who is under a duty to perform the
act in respect of which the violation occurs.
(7) Adjustment for inflation.--
(A) In general.--In the case of any failure
relating to a return required to be filed in a
calendar year beginning after 2014, each of the
dollar amounts under paragraphs (1), (2), and
(3) shall be increased by such dollar amount
multiplied by the cost-of-living adjustment
determined under section 1(f)(3) determined by
substituting ``calendar year 2013'' for
``calendar year 1992'' in subparagraph (B)
thereof.
(B) Rounding.--If any amount adjusted under
subparagraph (A)--
(i) is not less than $5,000 and is
not a multiple of $500, such amount
shall be rounded to the next lowest
multiple of $500, and
(ii) is not described in clause (i)
and is not a multiple of $5, such
amount shall be rounded to the next
lowest multiple of $5.
(d) Annual Registration and Other Notification by Pension
Plan.--
(1) Registration.--In the case of any failure to file
a registration statement required under section 6057(a)
(relating to annual registration of certain plans)
which includes all participants required to be included
in such statement, on the date prescribed therefor
(determined without regard to any extension of time for
filing), unless it is shown that such failure is due to
reasonable cause, there shall be paid (on notice and
demand by the Secretary and in the same manner as tax)
by the person failing so to file, an amount equal to $1
for each participant with respect to whom there is a
failure to file, multiplied by the number of days
during which such failure continues, but the total
amount imposed under this paragraph on any person for
any failure to file with respect to any plan year shall
not exceed $5,000.
(2) Notification of change of status.--In the case of
failure to file a notification required under section
6057(b) (relating to notification of change of status)
on the date prescribed therefor (determined without
regard to any extension of time for filing), unless it
is shown that such failure is due to reasonable cause,
there shall be paid (on notice and demand by the
Secretary and in the same manner as tax) by the person
failing so to file, $1 for each day during which such
failure continues, but the total amounts imposed under
this paragraph on any person for failure to file any
notification shall not exceed $1,000.
(e) Information Required in Connection With Certain Plans of
Deferred Compensation, Etc..--In the case of failure to file a
return or statement required under section 6058 (relating to
information required in connection with certain plans of
deferred compensation), 6047 (relating to information relating
to certain trusts and annuity and bond purchase plans), or
6039D (relating to returns and records with respect to certain
fringe benefit plans) on the date and in the manner prescribed
therefor (determined with regard to any extension of time for
filing), unless it is shown that such failure is due to
reasonable cause, there shall be paid (on notice and demand by
the Secretary and in the same manner as tax) by the person
failing so to file, $25 for each day during which such failure
continues, but the total amount imposed under this subsection
on any person for failure to file any return shall not exceed
$15,000. This subsection shall not apply to any return or
statement which is an information return described in section
6724(d)(1)(C)(ii) or a payee statement described in section
6724(d)(2)(Y).
(f) Returns Required Under Section 6039C.--
(1) In general.--In the case of each failure to make
a return required by section 6039C which contains the
information required by such section on the date
prescribed therefor (determined with regard to any
extension of time for filing), unless it is shown that
such failure is due to reasonable cause and not to
willful neglect, the amount determined under paragraph
(2) shall be paid (upon notice and demand by the
Secretary and in the same manner as tax) by the person
failing to make such return.
(2) Amount of penalty.--For purposes of paragraph
(1), the amount determined under this paragraph with
respect to any failure shall be $25 for each day during
which such failure continues.
(3) Limitation.--The amount determined under
paragraph (2) with respect to any person for failing to
meet the requirements of section 6039C for any calendar
year shall not exceed the lesser of--
(A) $25,000, or
(B) 5 percent of the aggregate of the fair
market value of the United States real property
interests owned by such person at any time
during such year.
For purposes of the preceding sentence, fair market
value shall be determined as of the end of the calendar
year (or, in the case of any property disposed of
during the calendar year, as of the date of such
disposition).
(h) Failure to Give Notice to Recipients of Certain Pension,
Etc., Distributions.--In the case of each failure to provide
notice as required by section 3405(e)(10)(B), at the time
prescribed therefor, unless it is shown that such failure is
due to reasonable cause and not to willful neglect, there shall
be paid, on notice and demand of the Secretary and in the same
manner as tax, by the person failing to provide such notice, an
amount equal to $10 for each such failure, but the total amount
imposed on such person for all such failures during any
calendar year shall not exceed $5,000.
(i) Failure to Give Written Explanation to Recipients of
Certain Qualifying Rollover Distributions.--In the case of each
failure to provide a written explanation as required by section
402(f), at the time prescribed therefor, unless it is shown
that such failure is due to reasonable cause and not to willful
neglect, there shall be paid, on notice and demand of the
Secretary and in the same manner as tax, by the person failing
to provide such written explanation, an amount equal to $100
for each such failure, but the total amount imposed on such
person for all such failures during any calendar year shall not
exceed $50,000.
(j) Failure to File Certification With Respect to Certain
Residential Rental Projects.--In the case of each failure to
provide a certification as required by section 142(d)(7) at the
time prescribed therefor, unless it is shown that such failure
is due to reasonable cause and not to willful neglect, there
shall be paid, on notice and demand of the Secretary and in the
same manner as tax, by the person failing to provide such
certification, an amount equal to $100 for each such failure.
(k) Failure to Make Reports Required Under Section 1202.--
In the case of a failure to make a report required under
section 1202(d)(1)(C) which contains the information required
by such section on the date prescribed therefor (determined
with regard to any extension of time for filing), there shall
be paid (on notice and demand by the Secretary and in the same
manner as tax) by the person failing to make such report, an
amount equal to $50 for each report with respect to which there
was such a failure. In the case of any failure due to
negligence or intentional disregard, the preceding sentence
shall be applied by substituting ``$100'' for ``$50''. In the
case of a report covering periods in 2 or more years, the
penalty determined under preceding provisions of this
subsection shall be multiplied by the number of such years. No
penalty shall be imposed under this subsection on any failure
which is shown to be due to reasonable cause and not willful
neglect.
(l) Failure to File Return With Respect to Certain Corporate
Transactions.--In the case of any failure to make a return
required under section 6043(c) containing the information
required by such section on the date prescribed therefor
(determined with regard to any extension of time for filing),
unless it is shown that such failure is due to reasonable
cause, there shall be paid (on notice and demand by the
Secretary and in the same manner as tax) by the person failing
to file such return, an amount equal to $500 for each day
during which such failure continues, but the total amount
imposed under this subsection with respect to any return shall
not exceed $100,000.
(m) Alcohol and Tobacco Taxes for Penalties for Failure to
File Certain Information Returns.--with respect to alcohol and
tobacco taxes, see, generally, subtitle E.
(n) Failure to Make Reports Required Under Sections 3511,
6053(C)(8), and 7705.--In the case of a failure to make a
report required under section 3511, 6053(c)(8), or 7705 which
contains the information required by such section on the date
prescribed therefor (determined with regard to any extension of
time for filing), there shall be paid (on notice and demand by
the Secretary and in the same manner as tax) by the person
failing to make such report, an amount equal to $50 for each
report with respect to which there was such a failure. In the
case of any failure due to negligence or intentional disregard
the preceding sentence shall be applied by substituting
``$100'' for ``$50''.
* * * * * * *
Subtitle K--Group Health Plan Requirements
* * * * * * *
CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS
* * * * * * *
Subchapter C--General Provisions
SEC. 9831. GENERAL EXCEPTIONS.
(a) Exception for Certain Plans.--The requirements of this
chapter shall not apply to--
(1) any governmental plan, and
(2) any group health plan for any plan year if, on
the first day of such plan year, such plan has less
than 2 participants who are current employees.
(b) Exception for Certain Benefits.--The requirements of this
chapter shall not apply to any group health plan in relation to
its provision of excepted benefits described in section
9832(c)(1).
(c) Exception for Certain Benefits if Certain Conditions
Met.--
(1) Limited, excepted benefits.--The requirements of
this chapter shall not apply to any group health plan
in relation to its provision of excepted benefits
described in section 9832(c)(2) if the benefits--
(A) are provided under a separate policy,
certificate, or contract of insurance; or
(B) are otherwise not an integral part of the
plan.
(2) Noncoordinated, excepted benefits.--The
requirements of this chapter shall not apply to any
group health plan in relation to its provision of
excepted benefits described in section 9832(c)(3) if
all of the following conditions are met:
(A) The benefits are provided under a
separate policy, certificate, or contract of
insurance.
(B) There is no coordination between the
provision of such benefits and any exclusion of
benefits under any group health plan maintained
by the same plan sponsor.
(C) Such benefits are paid with respect to an
event without regard to whether benefits are
provided with respect to such an event under
any group health plan maintained by the same
plan sponsor.
(3) Supplemental excepted benefits.--The requirements
of this chapter shall not apply to any group health
plan in relation to its provision of excepted benefits
described in section 9832(c)(4) if the benefits are
provided under a separate policy, certificate, or
contract of insurance.
* * * * * * *
----------
PATIENT PROTECTION AND AFFORDABLE CARE ACT
* * * * * * *
TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS
* * * * * * *
Subtitle E--Affordable Coverage Choices for All Americans
PART I--PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS
* * * * * * *
Subpart B--Eligibility Determinations
SEC. 1411. PROCEDURES FOR DETERMINING ELIGIBILITY FOR EXCHANGE
PARTICIPATION, PREMIUM TAX CREDITS AND REDUCED
COST-SHARING, AND INDIVIDUAL RESPONSIBILITY
EXEMPTIONS.
(a) Establishment of Program.--The Secretary shall establish
a program meeting the requirements of this section for
determining--
(1) whether an individual who is to be covered in the
individual market by a qualified health plan offered
through an Exchange, or who is claiming a premium tax
credit or reduced cost-sharing, meets the requirements
of sections 1312(f)(3), 1402(e), and 1412(d) of this
title and section 36B(e) of the Internal Revenue Code
of 1986 that the individual be a citizen or national of
the United States or an alien lawfully present in the
United States;
(2) in the case of an individual claiming a premium
tax credit or reduced cost-sharing under section 36B of
such Code or section 1402--
(A) whether the individual meets the income
and coverage requirements of such sections; and
(B) the amount of the tax credit or reduced
cost-sharing;
(3) whether an individual's coverage under an
employer-sponsored health benefits plan is treated as
unaffordable under sections 36B(c)(2)(C) and
5000A(e)(2); and
(4) whether to grant a certification under section
1311(d)(4)(H) attesting that, for purposes of the
individual responsibility requirement under section
5000A of the Internal Revenue Code of 1986, an
individual is entitled to an exemption from either the
individual responsibility requirement or the penalty
imposed by such section.
(b) Information Required To Be Provided by Applicants.--
(1) In general.--An applicant for enrollment in a
qualified health plan offered through an Exchange in
the individual market shall provide--
(A) the name, address, and date of birth of
each individual who is to be covered by the
plan (in this subsection referred to as an
``enrollee''); and
(B) the information required by any of the
following paragraphs that is applicable to an
enrollee.
(2) Citizenship or immigration status.--The following
information shall be provided with respect to every
enrollee:
(A) In the case of an enrollee whose
eligibility is based on an attestation of
citizenship of the enrollee, the enrollee's
social security number.
(B) In the case of an individual whose
eligibility is based on an attestation of the
enrollee's immigration status, the enrollee's
social security number (if applicable) and such
identifying information with respect to the
enrollee's immigration status as the Secretary,
after consultation with the Secretary of
Homeland Security, determines appropriate.
(3) Eligibility and amount of tax credit or reduced
cost-sharing.--In the case of an enrollee with respect
to whom a premium tax credit or reduced cost-sharing
under section 36B of such Code or section 1402 is being
claimed, the following information:
(A) Information regarding income and family
size.--The information described in section
6103(l)(21) for the taxable year ending with or
within the second calendar year preceding the
calendar year in which the plan year begins.
(B) Changes in circumstances.--The
information described in section 1412(b)(2),
including information with respect to
individuals who were not required to file an
income tax return for the taxable year
described in subparagraph (A) or individuals
who experienced changes in marital status or
family size or significant reductions in
income.
(4) Employer-sponsored coverage.--In the case of an
enrollee with respect to whom eligibility for a premium
tax credit under section 36B of such Code or cost-
sharing reduction under section 1402 is being
established on the basis that the enrollee's (or
related individual's) employer is not treated under
section 36B(c)(2)(C) of such Code as providing minimum
essential coverage or affordable minimum essential
coverage, the following information:
(A) The name, address, and employer
identification number (if available) of the
employer.
(B) Whether the enrollee or individual is a
full-time employee and whether the employer
provides such minimum essential coverage.
(C) If the employer provides such minimum
essential coverage, the lowest cost option for
the enrollee's or individual's enrollment
status and the enrollee's or individual's
required contribution (within the meaning of
section 5000A(e)(1)(B) of such Code) under the
employer-sponsored plan.
(D) If an enrollee claims an employer's
minimum essential coverage is unaffordable, the
information described in paragraph (3).
If an enrollee changes employment or obtains additional
employment while enrolled in a qualified health plan
for which such credit or reduction is allowed, the
enrollee shall notify the Exchange of such change or
additional employment and provide the information
described in this paragraph with respect to the new
employer.
(5) Exemptions from individual responsibility
requirements.--In the case of an individual who is
seeking an exemption certificate under section
1311(d)(4)(H) from any requirement or penalty imposed
by section 5000A, the following information:
(A) In the case of an individual seeking
exemption based on the individual's status as a
member of an exempt religious sect or division,
as a member of a health care sharing ministry,
as an Indian, or as an individual eligible for
a hardship exemption, such information as the
Secretary shall prescribe.
(B) In the case of an individual seeking
exemption based on the lack of affordable
coverage or the individual's status as a
taxpayer with household income less than 100
percent of the poverty line, the information
described in paragraphs (3) and (4), as
applicable.
(c) Verification of Information Contained in Records of
Specific Federal Officials.--
(1) Information transferred to Secretary.--An
Exchange shall submit the information provided by an
applicant under subsection (b) to the Secretary for
verification in accordance with the requirements of
this subsection and subsection (d).
(2) Citizenship or immigration status.--
(A) Commissioner of Social Security.--The
Secretary shall submit to the Commissioner of
Social Security the following information for a
determination as to whether the information
provided is consistent with the information in
the records of the Commissioner:
(i) The name, date of birth, and
social security number of each
individual for whom such information
was provided under subsection (b)(2).
(ii) The attestation of an individual
that the individual is a citizen.
(B) Secretary of Homeland Security.--
(i) In general.--In the case of an
individual--
(I) who attests that the
individual is an alien lawfully
present in the United States;
or
(II) who attests that the
individual is a citizen but
with respect to whom the
Commissioner of Social Security
has notified the Secretary
under subsection (e)(3) that
the attestation is inconsistent
with information in the records
maintained by the Commissioner;
the Secretary shall submit to the
Secretary of Homeland Security the
information described in clause (ii)
for a determination as to whether the
information provided is consistent with
the information in the records of the
Secretary of Homeland Security.
(ii) Information.--The information
described in clause (ii) is the
following:
(I) The name, date of birth,
and any identifying information
with respect to the
individual's immigration status
provided under subsection
(b)(2).
(II) The attestation that the
individual is an alien lawfully
present in the United States or
in the case of an individual
described in clause (i)(II),
the attestation that the
individual is a citizen.
(3) Eligibility for tax credit and cost-sharing
reduction.--The Secretary shall submit the information
described in subsection (b)(3)(A) provided under
paragraph (3), (4), or (5) of subsection (b) to the
Secretary of the Treasury for verification of household
income and family size for purposes of eligibility.
(4) Methods.--
(A) In general.--The Secretary, in
consultation with the Secretary of the
Treasury, the Secretary of Homeland Security,
and the Commissioner of Social Security, shall
provide that verifications and determinations
under this subsection shall be done--
(i) through use of an on-line system
or otherwise for the electronic
submission of, and response to, the
information submitted under this
subsection with respect to an
applicant; or
(ii) by determining the consistency
of the information submitted with the
information maintained in the records
of the Secretary of the Treasury, the
Secretary of Homeland Security, or the
Commissioner of Social Security through
such other method as is approved by the
Secretary.
(B) Flexibility.--The Secretary may modify
the methods used under the program established
by this section for the Exchange and
verification of information if the Secretary
determines such modifications would reduce the
administrative costs and burdens on the
applicant, including allowing an applicant to
request the Secretary of the Treasury to
provide the information described in paragraph
(3) directly to the Exchange or to the
Secretary. The Secretary shall not make any
such modification unless the Secretary
determines that any applicable requirements
under this section and section 6103 of the
Internal Revenue Code of 1986 with respect to
the confidentiality, disclosure, maintenance,
or use of information will be met.
(d) Verification by Secretary.--In the case of information
provided under subsection (b) that is not required under
subsection (c) to be submitted to another person for
verification, the Secretary shall verify the accuracy of such
information in such manner as the Secretary determines
appropriate, including delegating responsibility for
verification to the Exchange.
(e) Actions Relating to Verification.--
(1) In general.--Each person to whom the Secretary
provided information under subsection (c) shall report
to the Secretary under the method established under
subsection (c)(4) the results of its verification and
the Secretary shall notify the Exchange of such
results. Each person to whom the Secretary provided
information under subsection (d) shall report to the
Secretary in such manner as the Secretary determines
appropriate.
(2) Verification.--
(A) Eligibility for enrollment and premium
tax credits and cost-sharing reductions.--If
information provided by an applicant under
paragraphs (1), (2), (3), and (4) of subsection
(b) is verified under subsections (c) and (d)--
(i) the individual's eligibility to
enroll through the Exchange and to
apply for premium tax credits and cost-
sharing reductions shall be satisfied;
and
(ii) the Secretary shall, if
applicable, notify the Secretary of the
Treasury under section 1412(c) of the
amount of any advance payment to be
made.
(B) Exemption from individual
responsibility.--If information provided by an
applicant under subsection (b)(5) is verified
under subsections (c) and (d), the Secretary
shall issue the certification of exemption
described in section 1311(d)(4)(H).
(3) Inconsistencies involving attestation of
citizenship or lawful presence.--If the information
provided by any applicant under subsection (b)(2) is
inconsistent with information in the records maintained
by the Commissioner of Social Security or Secretary of
Homeland Security, whichever is applicable, the
applicant's eligibility will be determined in the same
manner as an individual's eligibility under the
medicaid program is determined under section 1902(ee)
of the Social Security Act (as in effect on January 1,
2010).
(4) Inconsistencies involving other information.--
(A) In general.--If the information provided
by an applicant under subsection (b) (other
than subsection (b)(2)) is inconsistent with
information in the records maintained by
persons under subsection (c) or is not verified
under subsection (d), the Secretary shall
notify the Exchange and the Exchange shall take
the following actions:
(i) Reasonable effort.--The Exchange
shall make a reasonable effort to
identify and address the causes of such
inconsistency, including through
typographical or other clerical errors,
by contacting the applicant to confirm
the accuracy of the information, and by
taking such additional actions as the
Secretary, through regulation or other
guidance, may identify.
(ii) Notice and opportunity to
correct.--In the case the inconsistency
or inability to verify is not resolved
under subparagraph (A), the Exchange
shall--
(I) notify the applicant of
such fact;
(II) provide the applicant an
opportunity to either present
satisfactory documentary
evidence or resolve the
inconsistency with the person
verifying the information under
subsection (c) or (d) during
the 90-day period beginning the
date on which the notice
required under subclause (I) is
sent to the applicant.
The Secretary may extend the 90-day
period under subclause (II) for
enrollments occurring during 2014.
(B) Specific actions not involving
citizenship or lawful presence.--
(i) In general.--Except as provided
in paragraph (3), the Exchange shall,
during any period before the close of
the period under subparagraph
(A)(ii)(II), make any determination
under paragraphs (2), (3), and (4) of
subsection (a) on the basis of the
information contained on the
application.
(ii) Eligibility or amount of credit
or reduction.--If an inconsistency
involving the eligibility for, or
amount of, any premium tax credit or
cost-sharing reduction is unresolved
under this subsection as of the close
of the period under subparagraph
(A)(ii)(II), the Exchange shall notify
the applicant of the amount (if any) of
the credit or reduction that is
determined on the basis of the records
maintained by persons under subsection
(c).
(iii) Employer affordability.--If the
Secretary notifies an Exchange that an
enrollee is eligible for a premium tax
credit under section 36B of such Code
or cost-sharing reduction under section
1402 because the enrollee's (or related
individual's) employer does not provide
minimum essential coverage through an
employer-sponsored plan or that the
employer does provide that coverage but
it is not affordable coverage, the
Exchange shall notify the employer of
such fact and that the employer may be
liable for the payment assessed under
section 4980H of such Code.
(iv) Exemption.--In any case where
the inconsistency involving, or
inability to verify, information
provided under subsection (b)(5) is not
resolved as of the close of the period
under subparagraph (A)(ii)(II), the
Exchange shall notify an applicant that
no certification of exemption from any
requirement or payment under section
5000A of such Code will be issued.
(C) Appeals process.--The Exchange shall also
notify each person receiving notice under this
paragraph of the appeals processes established
under subsection (f).
(f) Appeals and Redeterminations.--
(1) In general.--The Secretary, in consultation with
the Secretary of the Treasury, the Secretary of
Homeland Security, and the Commissioner of Social
Security, shall establish procedures by which the
Secretary or one of such other Federal officers--
(A) hears and makes decisions with respect to
appeals of any determination under subsection
(e); and
(B) redetermines eligibility on a periodic
basis in appropriate circumstances.
(2) Employer liability.--
(A) In general.--The Secretary shall
establish a separate appeals process for
employers who are notified under subsection
(e)(4)(C) that the employer may be liable for a
tax imposed by section 4980H of the Internal
Revenue Code of 1986 with respect to an
employee because of a determination that the
employer does not provide minimum essential
coverage through an employer-sponsored plan or
that the employer does provide that coverage
but it is not affordable coverage with respect
to an employee. Such process shall provide an
employer the opportunity to--
(i) present information to the
Exchange for review of the
determination either by the Exchange or
the person making the determination,
including evidence of the employer-
sponsored plan and employer
contributions to the plan; and
(ii) have access to the data used to
make the determination to the extent
allowable by law.
Such process shall be in addition to any rights
of appeal the employer may have under subtitle
F of such Code.
(B) Confidentiality.--Notwithstanding any
provision of this title (or the amendments made
by this title) or section 6103 of the Internal
Revenue Code of 1986, an employer shall not be
entitled to any taxpayer return information
with respect to an employee for purposes of
determining whether the employer is subject to
the penalty under section 4980H of such Code
with respect to the employee, except that--
(i) the employer may be notified as
to the name of an employee and whether
or not the employee's income is above
or below the threshold by which the
affordability of an employer's health
insurance coverage is measured; and
(ii) this subparagraph shall not
apply to an employee who provides a
waiver (at such time and in such manner
as the Secretary may prescribe)
authorizing an employer to have access
to the employee's taxpayer return
information.
(g) Confidentiality of Applicant Information.--
(1) In general.--An applicant for insurance coverage
or for a premium tax credit or cost-sharing reduction
shall be required to provide only the information
strictly necessary to authenticate identity, determine
eligibility, and determine the amount of the credit or
reduction.
(2) Receipt of information.--Any person who receives
information provided by an applicant under subsection
(b) (whether directly or by another person at the
request of the applicant), or receives information from
a Federal agency under subsection (c), (d), or (e),
shall--
(A) use the information only for the purposes
of, and to the extent necessary in, ensuring
the efficient operation of the Exchange,
including verifying the eligibility of an
individual to enroll through an Exchange or to
claim a premium tax credit or cost-sharing
reduction or the amount of the credit or
reduction; and
(B) not disclose the information to any other
person except as provided in this section.
(h) Penalties.--
(1) False or fraudulent information.--
(A) Civil penalty.--
(i) In general.--If--
(I) any person fails to
provides correct information
under subsection (b); and
(II) such failure is
attributable to negligence or
disregard of any rules or
regulations of the Secretary,
such person shall be subject, in
addition to any other penalties that
may be prescribed by law, to a civil
penalty of not more than $25,000 with
respect to any failures involving an
application for a plan year. For
purposes of this subparagraph, the
terms ``negligence'' and ``disregard''
shall have the same meanings as when
used in section 6662 of the Internal
Revenue Code of 1986.
(ii) Reasonable cause exception.--No
penalty shall be imposed under clause
(i) if the Secretary determines that
there was a reasonable cause for the
failure and that the person acted in
good faith.
(B) Knowing and willful violations.--Any
person who knowingly and willfully provides
false or fraudulent information under
subsection (b) shall be subject, in addition to
any other penalties that may be prescribed by
law, to a civil penalty of not more than
$250,000.
(2) Improper use or disclosure of information.--Any
person who knowingly and willfully uses or discloses
information in violation of subsection (g) shall be
subject, in addition to any other penalties that may be
prescribed by law, to a civil penalty of not more than
$25,000.
(3) Limitations on liens and levies.--The Secretary
(or, if applicable, the Attorney General of the United
States) shall not--
(A) file notice of lien with respect to any
property of a person by reason of any failure
to pay the penalty imposed by this subsection;
or
(B) levy on any such property with respect to
such failure.
(i) Study of Administration of Employer Responsibility.--
(1) In general.--The Secretary of Health and Human
Services shall, in consultation with the Secretary of
the Treasury, conduct a study of the procedures that
are necessary to ensure that in the administration of
this title and section 4980H of the Internal Revenue
Code of 1986 (as added by section 1513) that the
following rights are protected:
(A) The rights of employees to preserve their
right to confidentiality of their taxpayer
return information and their right to enroll in
a qualified health plan through an Exchange if
an employer does not provide affordable
coverage.
(B) The rights of employers to adequate due
process and access to information necessary to
accurately determine any payment assessed on
employers.
(2) Report.--Not later than January 1, 2013, the
Secretary of Health and Human Services shall report the
results of the study conducted under paragraph (1),
including any recommendations for legislative changes,
to the Committees on Finance and Health, Education,
Labor and Pensions of the Senate and the Committees of
Education and Labor and Ways and Means of the House of
Representatives.
* * * * * * *
----------
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
* * * * * * *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS
* * * * * * *
Subtitle B--Regulatory Provisions
* * * * * * *
Part 6--Continuation Coverage and Additional Standards for Group Health
Plans
* * * * * * *
SEC. 607. DEFINITIONS AND SPECIAL RULES.
For purposes of this part--
(1) Group health plan.--The term ``group health
plan'' means an employee welfare benefit plan providing
medical care (as defined in section 213(d) of the
Internal Revenue Code of 1986) to participants or
beneficiaries directly or through insurance,
reimbursement, or otherwise. Such term shall not
include any plan substantially all of the coverage
under which is for qualified long-term care services
(as defined in section 7702B(c) of such Code).
(2) Covered employee.--The term ``covered employee''
means an individual who is (or was) provided coverage
under a group health plan by virtue of the performance
of services by the individual for 1 or more persons
maintaining the plan (including as an employee defined
in section 401(c)(1) of the Internal Revenue Code of
1986).
(3) Qualified beneficiary.--
(A) In general.--The term ``qualified
beneficiary'' means, with respect to a covered
employee under a group health plan, any other
individual who, on the day before the
qualifying event for that employee, is a
beneficiary under the plan--
(i) as the spouse of the covered
employee, or
(ii) as the dependent child of the
employee.
Such term shall also include a child who is born to or
placed for adoption with the covered employee during
the period of continuation coverage under this part.
(B) Special rule for terminations and reduced
employment.--In the case of a qualifying event
described in section 603(2), the term
``qualified beneficiary'' includes the covered
employee.
(C) Special rule for retirees and widows.--In
the case of a qualifying event described in
section 603(6), the term ``qualified
beneficiary'' includes a covered employee who
had retired on or before the date of
substantial elimination of coverage and any
other individual who, on the day before such
qualifying event, is a beneficiary under the
plan--
(i) as the spouse of the covered
employee,
(ii) as the dependent child of the
employee, or
(iii) as the surviving spouse of the
covered employee.
(4) Employer.--Subsection (n) (relating to leased
employees) and subsection (t) (relating to application
of controlled group rules to certain employee benefits)
of section 414 of the Internal Revenue Code of 1986
shall apply for purposes of this part in the same
manner and to the same extent as such subsections apply
for purposes of section 106 of such Code. Any
regulations prescribed by the Secretary pursuant to the
preceding sentence shall be consistent and coextensive
with any regulations prescribed for similar purposes by
the Secretary of the Treasury (or such Secretary's
delegate) under such subsections.
(5) Optional extension of required periods.--A group
health plan shall not be treated as failing to meet the
requirements of this part solely because the plan
provides both--
(A) that the period of extended coverage
referred to in section 602(2) commences with
the date of the loss of coverage, and
(B) that the applicable notice period
provided under section 606(a)(2) commences with
the date of the loss of coverage.
* * * * * * *
Part 7--Group Health Plan Requirements
* * * * * * *
Subpart C--General Provisions
* * * * * * *
SEC. 733. DEFINITIONS.
(a) Group Health Plan.--For purposes of this part--
(1) In general.--The term ``group health plan'' means
an employee welfare benefit plan to the extent that the
plan provides medical care (as defined in paragraph (2)
and including items and services paid for as medical
care) to employees or their dependents (as defined
under the terms of the plan) directly or through
insurance, reimbursement, or otherwise.
(2) Medical care.--The term ``medical care'' means
amounts paid for--
(A) the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts
paid for the purpose of affecting any structure
or function of the body,
(B) amounts paid for transportation primarily
for and essential to medical care referred to
in subparagraph (A), and
(C) amounts paid for insurance covering
medical care referred to in subparagraphs (A)
and (B).
(b) Definitions Relating to Health Insurance.--For purposes
of this part--
(1) Health insurance coverage.--The term ``health
insurance coverage'' means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise and including items and
services paid for as medical care) under any hospital
or medical service policy or certificate, hospital or
medical service plan contract, or health maintenance
organization contract offered by a health insurance
issuer.
(2) Health insurance issuer.--The term ``health
insurance issuer'' means an insurance company,
insurance service, or insurance organization (including
a health maintenance organization, as defined in
paragraph (3)) which is licensed to engage in the
business of insurance in a State and which is subject
to State law which regulates insurance (within the
meaning of section 514(b)(2)). Such term does not
include a group health plan.
(3) Health maintenance organization.--The term
``health maintenance organization'' means--
(A) a federally qualified health maintenance
organization (as defined in section 1301(a) of
the Public Health Service Act (42 U.S.C.
300e(a))),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health maintenance
organization.
(4) Group health insurance coverage.--The term
``group health insurance coverage'' means, in
connection with a group health plan, health insurance
coverage offered in connection with such plan.
(c) Excepted Benefits.--For purposes of this part, the term
``excepted benefits'' means benefits under one or more (or any
combination thereof) of the following:
(1) Benefits not subject to requirements.--
(A) Coverage only for accident, or disability
income insurance, or any combination thereof.
(B) Coverage issued as a supplement to
liability insurance.
(C) Liability insurance, including general
liability insurance and automobile liability
insurance.
(D) Workers' compensation or similar
insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for on-site medical clinics.
(H) Other similar insurance coverage,
specified in regulations, under which benefits
for medical care are secondary or incidental to
other insurance benefits.
(2) Benefits not subject to requirements if offered
separately.--
(A) Limited scope dental or vision benefits.
(B) Benefits for long-term care, nursing home
care, home health care, community-based care,
or any combination thereof.
(C) Such other similar, limited benefits as
are specified in regulations.
(3) Benefits not subject to requirements if offered
as independent, noncoordinated benefits.--
(A) Coverage only for a specified disease or
illness.
(B) Hospital indemnity or other fixed
indemnity insurance.
(4) Benefits not subject to requirements if offered
as separate insurance policy.--Medicare supplemental
health insurance (as defined under section 1882(g)(1)
of the Social Security Act), coverage supplemental to
the coverage provided under chapter 55 of title 10,
United States Code, and similar supplemental coverage
provided to coverage under a group health plan.
(d) Other Definitions.--For purposes of this part--
(1) COBRA continuation provision.--The term ``COBRA
continuation provision'' means any of the following:
(A) Part 6 of this subtitle.
(B) Section 4980B of the Internal Revenue
Code of 1986, other than subsection (f)(1) of
such section insofar as it relates to pediatric
vaccines.
(C) Title XXII of the Public Health Service
Act.
(2) Health status-related factor.--The term ``health
status-related factor'' means any of the factors
described in section 702(a)(1).
(3) Network plan.--The term ``network plan'' means
health insurance coverage offered by a health insurance
issuer under which the financing and delivery of
medical care (including items and services paid for as
medical care) are provided, in whole or in part,
through a defined set of providers under contract with
the issuer.
(4) Placed for adoption.--The term ``placement'', or
being ``placed'', for adoption, has the meaning given
such term in section 609(c)(3)(B).
(5) Family member.--The term ``family member'' means,
with respect to an individual--
(A) a dependent (as such term is used for
purposes of section 701(f)(2)) of such
individual, and
(B) any other individual who is a first-
degree, second-degree, third-degree, or fourth-
degree relative of such individual or of an
individual described in subparagraph (A).
(6) Genetic information.--
(A) In general.--The term ``genetic
information'' means, with respect to any
individual, information about--
(i) such individual's genetic tests,
(ii) the genetic tests of family
members of such individual, and
(iii) the manifestation of a disease
or disorder in family members of such
individual.
(B) Inclusion of genetic services and
participation in genetic research.--Such term
includes, with respect to any individual, any
request for, or receipt of, genetic services,
or participation in clinical research which
includes genetic services, by such individual
or any family member of such individual.
(C) Exclusions.--The term ``genetic
information'' shall not include information
about the sex or age of any individual.
(7) Genetic test.--
(A) In general.--The term ``genetic test''
means an analysis of human DNA, RNA,
chromosomes, proteins, or metabolites, that
detects genotypes, mutations, or chromosomal
changes.
(B) Exceptions.--The term ``genetic test''
does not mean--
(i) an analysis of proteins or
metabolites that does not detect
genotypes, mutations, or chromosomal
changes; or
(ii) an analysis of proteins or
metabolites that is directly related to
a manifested disease, disorder, or
pathological condition that could
reasonably be detected by a health care
professional with appropriate training
and expertise in the field of medicine
involved.
(8) Genetic services.--The term ``genetic services''
means--
(A) a genetic test;
(B) genetic counseling (including obtaining,
interpreting, or assessing genetic
information); or
(C) genetic education.
(9) Underwriting purposes.--The term ``underwriting
purposes'' means, with respect to any group health
plan, or health insurance coverage offered in
connection with a group health plan--
(A) rules for, or determination of,
eligibility (including enrollment and continued
eligibility) for benefits under the plan or
coverage;
(B) the computation of premium or
contribution amounts under the plan or
coverage;
(C) the application of any pre-existing
condition exclusion under the plan or coverage;
and
(D) other activities related to the creation,
renewal, or replacement of a contract of health
insurance or health benefits.
* * * * * * *
----------
PUBLIC HEALTH SERVICE ACT
* * * * * * *
TITLE XXII--REQUIREMENTS FOR CERTAIN GROUP HEALTH PLANS FOR CERTAIN
STATE AND LOCAL EMPLOYEES
* * * * * * *
SEC. 2208. DEFINITIONS.
For purposes of this title--
(1) Group health plan.--The term ``group health
plan'' has the meaning given such term in 5000(b) of
the Internal Revenue Code of 1986. Such term shall not
include any plan substantially all of the coverage
under which is for qualified long-term care services
(as defined in section 7702B(c) of such Code).
(2) Covered employee.--The term ``covered employee''
means an individual who is (or was) provided coverage
under a group health plan by virtue of the performance
of services by the individual for 1 or more persons
maintaining the plan (including as an employee defined
in section 401(c)(1) of the Internal Revenue Code of
1986).
(3) Qualified beneficiary.--
(A) In general.--The term ``qualified
beneficiary'' means, with respect to a covered
employee under a group health plan, any other
individual who, on the day before the
qualifying event for that employee, is a
beneficiary under the plan--
(i) as the spouse of the covered
employee, or
(ii) as the dependent child of the
employee.
Such term shall also include a child who is born to or
placed for adoption with the covered employee during
the period of continuation coverage under this title.
(B) Special rule for terminations and reduced
employment.--In the case of a qualifying event
described in section 2203(2), the term
``qualified beneficiary'' includes the covered
employee.
(4) Plan administrator.--The term ``plan
administrator'' has the meaning given the term
``administrator'' by section 3(16)(A) of the Employee
Retirement Income Security Act of 1974.
* * * * * * *
TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
* * * * * * *
Part C--Definitions; Miscellaneous Provisions
SEC. 2791. DEFINITIONS.
(a) Group Health Plan.--
(1) Definition.--The term ``group health plan'' means
an employee welfare benefit plan (as defined in section
3(1) of the Employee Retirement Income Security Act of
1974) to the extent that the plan provides medical care
(as defined in paragraph (2)) and including items and
services paid for as medical care) to employees or
their dependents (as defined under the terms of the
plan) directly or through insurance, reimbursement, or
otherwise.
(2) Medical care.--The term ``medical care'' means
amounts paid for--
(A) the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts
paid for the purpose of affecting any structure
or function of the body,
(B) amounts paid for transportation primarily
for and essential to medical care referred to
in subparagraph (A), and
(C) amounts paid for insurance covering
medical care referred to in subparagraphs (A)
and (B).
(3) Treatment of certain plans as group health plan
for notice provision.--A program under which creditable
coverage described in subparagraph (C), (D), (E), or
(F) of section 2701(c)(1) is provided shall be treated
as a group health plan for purposes of applying section
2701(e).
(b) Definitions Relating to Health Insurance.--
(1) Health insurance coverage.--The term ``health
insurance coverage'' means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise and including items and
services paid for as medical care) under any hospital
or medical service policy or certificate, hospital or
medical service plan contract, or health maintenance
organization contract offered by a health insurance
issuer.
(2) Health insurance issuer.--The term ``health
insurance issuer'' means an insurance company,
insurance service, or insurance organization (including
a health maintenance organization, as defined in
paragraph (3)) which is licensed to engage in the
business of insurance in a State and which is subject
to State law which regulates insurance (within the
meaning of section 514(b)(2) of the Employee Retirement
Income Security Act of 1974). Such term does not
include a group health plan.
(3) Health maintenance organization.--The term
``health maintenance organization'' means--
(A) a Federally qualified health maintenance
organization (as defined in section 1301(a)),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health maintenance
organization.
(4) Group health insurance coverage.--The term
``group health insurance coverage'' means, in
connection with a group health plan, health insurance
coverage offered in connection with such plan.
(5) Individual health insurance coverage.--The term
``individual health insurance coverage'' means health
insurance coverage offered to individuals in the
individual market, but does not include short-term
limited duration insurance.
(c) Excepted Benefits.--For purposes of this title, the term
``excepted benefits'' means benefits under one or more (or any
combination thereof) of the following:
(1) Benefits not subject to requirements.--
(A) Coverage only for accident, or disability
income insurance, or any combination thereof.
(B) Coverage issued as a supplement to
liability
insurance.
(C) Liability insurance, including general
liability insurance and automobile liability
insurance.
(D) Workers' compensation or similar
insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for on-site medical clinics.
(H) Other similar insurance coverage,
specified in regulations, under which benefits
for medical care are secondary or incidental to
other insurance benefits.
(2) Benefits not subject to requirements if offered
separately.--
(A) Limited scope dental or vision benefits.
(B) Benefits for long-term care, nursing home
care, home health care, community-based care,
or any combination thereof.
(C) Such other similar, limited benefits as
are specified in regulations.
(3) Benefits not subject to requirements if offered
as independent, noncoordinated benefits.--
(A) Coverage only for a specified disease or
illness.
(B) Hospital indemnity or other fixed
indemnity insurance.
(4) Benefits not subject to requirements if offered
as separate insurance policy.--Medicare supplemental
health insurance (as defined under section 1882(g)(1)
of the Social Security Act), coverage supplemental to
the coverage provided under chapter 55 of title 10,
United States Code, and similar supplemental coverage
provided to coverage under a group health plan.
(d) Other Definitions.--
(1) Applicable state authority.--The term
``applicable State authority'' means, with respect to a
health insurance issuer in a State, the State insurance
commissioner or official or officials designated by the
State to enforce the requirements of this title for the
State involved with respect to such issuer.
(2) Beneficiary.--The term ``beneficiary'' has the
meaning given such term under section 3(8) of the
Employee Retirement Income Security Act of 1974.
(3) Bona fide association.--The term ``bona fide
association'' means, with respect to health insurance
coverage offered in a State, an association which--
(A) has been actively in existence for at
least 5 years;
(B) has been formed and maintained in good
faith for purposes other than obtaining
insurance;
(C) does not condition membership in the
association on any health status-related factor
relating to an individual (including an
employee of an employer or a dependent of an
employee);
(D) makes health insurance coverage offered
through the association available to all
members regardless of any health status-related
factor relating to such members (or individuals
eligible for coverage through a member);
(E) does not make health insurance coverage
offered through the association available other
than in connection with a member of the
association; and
(F) meets such additional requirements as may
be imposed under State law.
(4) COBRA continuation provision.--The term ``COBRA
continuation provision'' means any of the following:
(A) Section 4980B of the Internal Revenue
Code of 1986, other than subsection (f)(1) of
such section insofar as it relates to pediatric
vaccines.
(B) Part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of
1974, other than section 609 of such Act.
(C) Title XXII of this Act.
(5) Employee.--The term ``employee'' has the meaning
given such term under section 3(6) of the Employee
Retirement Income Security Act of 1974.
(6) Employer.--The term ``employer'' has the meaning
given such term under section 3(5) of the Employee
Retirement Income Security Act of 1974, except that
such term shall include only employers of two or more
employees.
(7) Church plan.--The term ``church plan'' has the
meaning given such term under section 3(33) of the
Employee Retirement Income Security Act of 1974.
(8) Governmental plan.--(A) The term ``governmental
plan'' has the meaning given such term under section
3(32) of the Employee Retirement Income Security Act of
1974 and any Federal governmental plan.
(B) Federal governmental plan.--The term ``Federal
governmental plan'' means a governmental plan
established or maintained for its employees by the
Government of the United States or by any agency or
instrumentality of such Government.
(C) Non-Federal governmental plan.--The term ``non-
Federal governmental plan'' means a governmental plan
that is not a Federal governmental plan.
(9) Health status-related factor.--The term ``health
status-related factor'' means any of the factors
described in section 2702(a)(1).
(10) Network plan.--The term ``network plan'' means
health insurance coverage of a health insurance issuer
under which the financing and delivery of medical care
(including items and services paid for as medical care)
are provided, in whole or in part, through a defined
set of providers under contract with the issuer.
(11) Participant.--The term ``participant'' has the
meaning given such term under section 3(7) of the
Employee Retirement Income Security Act of 1974.
(12) Placed for adoption defined.--The term
``placement'', or being ``placed'', for adoption, in
connection with any placement for adoption of a child
with any person, means the assumption and retention by
such person of a legal obligation for total or partial
support of such child in anticipation of adoption of
such child. The child's placement with such person
terminates upon the termination of such legal
obligation.
(13) Plan sponsor.--The term ``plan sponsor'' has the
meaning given such term under section 3(16)(B) of the
Employee Retirement Income Security Act of 1974.
(14) State.--The term ``State'' means each of the
several States, the District of Columbia, Puerto Rico,
the Virgin Islands, Guam, American Samoa, and the
Northern Mariana Islands.
(15) Family member.--The term ``family member''
means, with respect to any individual--
(A) a dependent (as such term is used for
purposes of section 2701(f)(2)) of such
individual; and
(B) any other individual who is a first-
degree, second-degree, third-degree, or fourth-
degree relative of such individual or of an
individual described in subparagraph (A).
(16) Genetic information.--
(A) In general.--The term ``genetic
information'' means, with respect to any
individual, information about--
(i) such individual's genetic tests,
(ii) the genetic tests of family
members of such individual, and
(iii) the manifestation of a disease
or disorder in family members of such
individual.
(B) Inclusion of genetic services and
participation in genetic research.--Such term
includes, with respect to any individual, any
request for, or receipt of, genetic services,
or participation in clinical research which
includes genetic services, by such individual
or any family member of such individual.
(C) Exclusions.--The term ``genetic
information'' shall not include information
about the sex or age of any individual.
(17) Genetic test.--
(A) In general.--The term ``genetic test''
means an analysis of human DNA, RNA,
chromosomes, proteins, or metabolites, that
detects genotypes, mutations, or chromosomal
changes.
(B) Exceptions.--The term ``genetic test''
does not mean--
(i) an analysis of proteins or
metabolites that does not detect
genotypes, mutations, or chromosomal
changes; or
(ii) an analysis of proteins or
metabolites that is directly related to
a manifested disease, disorder, or
pathological condition that could
reasonably be detected by a health care
professional with appropriate training
and expertise in the field of medicine
involved.
(18) Genetic services.--The term ``genetic services''
means--
(A) a genetic test;
(B) genetic counseling (including obtaining,
interpreting, or assessing genetic
information); or
(C) genetic education.
(19) Underwriting purposes.--The term ``underwriting
purposes'' means, with respect to any group health
plan, or health insurance coverage offered in
connection with a group health plan--
(A) rules for, or determination of,
eligibility (including enrollment and continued
eligibility) for benefits under the plan or
coverage;
(B) the computation of premium or
contribution amounts under the plan or
coverage;
(C) the application of any pre-existing
condition exclusion under the plan or coverage;
and
(D) other activities related to the creation,
renewal, or replacement of a contract of health
insurance or health benefits.
(20) Qualified health plan.--The term ``qualified
health plan'' has the meaning given such term in
section 1301(a) of the Patient Protection and
Affordable Care Act.
(21) Exchange.--The term ``Exchange'' means an
American Health Benefit Exchange established under
section 1311 of the Patient Protection and Affordable
Care Act.
(e) Definitions Relating to Markets and Small Employers.--For
purposes of this title:
(1) Individual market.--
(A) In general.--The term ``individual
market'' means the market for health insurance
coverage offered to individuals other than in
connection with a group health plan.
(B) Treatment of very small groups.--
(i) In general.--Subject to clause
(ii), such terms includes coverage
offered in connection with a group
health plan that has fewer than two
participants as current employees on
the first day of the plan year.
(ii) State exception.--Clause (i)
shall not apply in the case of a State
that elects to regulate the coverage
described in such clause as coverage in
the small group market.
(2) Large employer.--The term ``large employer''
means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer
who employed an average of at least 51 employees on
business days during the preceding calendar year and
who employs at least 2 employees on the first day of
the plan year.
(3) Large group market.--The term ``large group
market'' means the health insurance market under which
individuals obtain health insurance coverage (directly
or through any arrangement) on behalf of themselves
(and their dependents) through a group health plan
maintained by a large employer.
(4) Small employer.--The term ``small employer''
means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer
who employed an average of at least 1 but not more than
50 employees on business days during the preceding
calendar year and who employs at least 1 employees on
the first day of the plan year.
(5) Small group market.--The term ``small group
market'' means the health insurance market under which
individuals obtain health insurance coverage (directly
or through any arrangement) on behalf of themselves
(and their dependents) through a group health plan
maintained by a small employer.
(6) Application of certain rules in determination of
employer size.--For purposes of this subsection--
(A) Application of aggregation rule for
employers.--all persons treated as a single
employer under subsection (b), (c), (m), or (o)
of section 414 of the Internal Revenue Code of
1986 shall be treated as 1 employer.
(B) Employers not in existence in preceding
year.--In the case of an employer which was not
in existence throughout the preceding calendar
year, the determination of whether such
employer is a small or large employer shall be
based on the average number of employees that
it is reasonably expected such employer will
employ on business days in the current calendar
year.
(C) Predecessors.--Any reference in this
subsection to an employer shall include a
reference to any predecessor of such employer.
(7) State option to extend definition of small
employer.--Notwithstanding paragraphs (2) and (4),
nothing in this section shall prevent a State from
applying this subsection by treating as a small
employer, with respect to a calendar year and a plan
year, an employer who employed an average of at least 1
but not more than 100 employees on business days during
the preceding calendar year and who employs at least 1
employee on the first day of the plan year.
* * * * * * *
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
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, 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. 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.
(4) Special rules for qualified small employer health
reimbursement arrangements.--
(A) In general.--The term ``coverage month''
shall not include any month with respect to an
employee (or any spouse or dependent of such
employee) if for such month the employee is
provided a qualified small employer health
reimbursement arrangement which constitutes
affordable coverage.
(B) Denial of double benefit.--In the case of
any employee who is provided a qualified small
employer health reimbursement arrangement for
any coverage month (determined without regard
to subparagraph (A)), the credit otherwise
allowable under subsection (a) to the taxpayer
for such month shall be reduced (but not below
zero) by the amount described in subparagraph
(C)(i)(II) for such month.
(C) Affordable coverage.--For purposes of
subparagraph (A), a qualified small employer
health reimbursement arrangement shall be
treated as constituting affordable coverage for
a month if--
(i) the excess of--
(I) the amount that would be
paid by the employee as the
premium for such month for
self-only coverage under the
second lowest cost silver plan
offered in the relevant
individual health insurance
market, over
(II) \1/12\ of the employee's
permitted benefit (as defined
in section 9831(d)(3)(C)) under
such arrangement, does not
exceed--
(ii) \1/12\ of 9.5 percent of the
employee's household income.
(D) Qualified small employer health
reimbursement arrangement.--For purposes of
this paragraph, the term ``qualified small
employer health reimbursement arrangement'' has
the meaning given such term by section
9831(d)(2).
(E) Coverage for less than entire year.--In
the case of an employee who is provided a
qualified small employer health reimbursement
arrangement for less than an entire year,
subparagraph (C)(i)(II) shall be applied by
substituting ``the number of months during the
year for which such arrangement was provided''
for ``12''.
(F) Indexing.--In the case of plan years
beginning in any calendar year after 2014, the
Secretary shall adjust the 9.5 percent amount
under subparagraph (C)(ii) in the same manner
as the percentages are adjusted under
subsection (b)(3)(A)(ii).
(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.
* * * * * * *
Subchapter B--Computation of Taxable Income
* * * * * * *
PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
* * * * * * *
SEC. 106. CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS.
(a) General Rule.--Except as otherwise provided in this
section, gross income of an employee does not include employer-
provided coverage under an accident or health plan.
(b) Contributions to Archer Msas.--
(1) In general.--In the case of an employee who is an
eligible individual, amounts contributed by such
employee's employer to any Archer MSA of such employee
shall be treated as employer-provided coverage for
medical expenses under an accident or health plan to
the extent such amounts do not exceed the limitation
under section 220(b)(1) (determined without regard to
this subsection) which is applicable to such employee
for such taxable year.
(2) No constructive receipt.--No amount shall be
included in the gross income of any employee solely
because the employee may choose between the
contributions referred to in paragraph (1) and employer
contributions to another health plan of the employer.
(3) Special rule for deduction of employer
contributions.--Any employer contribution to an Archer
MSA, if otherwise allowable as a deduction under this
chapter, shall be allowed only for the taxable year in
which paid.
(4) Employer MSA contributions required to be shown
on return.--Every individual required to file a return
under section 6012 for the taxable year shall include
on such return the aggregate amount contributed by
employers to the Archer MSAs of such individual or such
individual's spouse for such taxable year.
(5) MSA contributions not part of COBRA coverage.--
Paragraph (1) shall not apply for purposes of section
4980B.
(6) Definitions.--For purposes of this subsection,
the terms ``eligible individual'' and ``Archer MSA''
have the respective meanings given to such terms by
section 220.
(7) Cross reference.--For penalty on failure by
employer to make comparable contributions to the Archer
MSAs of comparable employees, see section 4980E.
(c) Inclusion of Long-Term Care Benefits Provided Through
Flexible Spending Arrangements.--
(1) In general.--Gross income of an employee shall
include employer-provided coverage for qualified long-
term care services (as defined in section 7702B(c)) to
the extent that such coverage is provided through a
flexible spending or similar arrangement.
(2) Flexible spending arrangement.--For purposes of
this subsection, a flexible spending arrangement is a
benefit program which provides employees with coverage
under which--
(A) specified incurred expenses may be
reimbursed (subject to reimbursement maximums
and other reasonable conditions), and
(B) the maximum amount of reimbursement which
is reasonably available to a participant for
such coverage is less than 500 percent of the
value of such coverage.
In the case of an insured plan, the maximum amount
reasonably available shall be determined on the basis
of the underlying coverage.
(d) Contributions to Health Savings Accounts.--
(1) In general.--In the case of an employee who is an
eligible individual (as defined in section 223(c)(1)),
amounts contributed by such employee's employer to any
health savings account (as defined in section 223(d))
of such employee shall be treated as employer-provided
coverage for medical expenses under an accident or
health plan to the extent such amounts do not exceed
the limitation under section 223(b) (determined without
regard to this subsection) which is applicable to such
employee for such taxable year.
(2) Special rules.--Rules similar to the rules of
paragraphs (2), (3), (4), and (5) of subsection (b)
shall apply for purposes of this subsection.
(3) Cross reference.--For penalty on failure by
employer to make comparable contributions to the health
savings accounts of comparable employees, see section
4980G.
(e) Fsa and Hra Terminations to Fund Hsas.--
(1) In general.--A plan shall not fail to be treated
as a health flexible spending arrangement or health
reimbursement arrangement under this section or section
105 merely because such plan provides for a qualified
HSA distribution.
(2) Qualified HSA distribution.--The term ``qualified
HSA distribution'' means a distribution from a health
flexible spending arrangement or health reimbursement
arrangement to the extent that such distribution--
(A) does not exceed the lesser of the balance
in such arrangement on September 21, 2006, or
as of the date of such distribution, and
(B) is contributed by the employer directly
to the health savings account of the employee
before January 1, 2012.
Such term shall not include more than 1 distribution
with respect to any arrangement.
(3) Additional tax for failure to maintain high
deductible health plan coverage.--
(A) In general.--If, at any time during the
testing period, the employee is not an eligible
individual, then the amount of the qualified
HSA distribution--
(i) shall be includible in the gross
income of the employee for the taxable
year in which occurs the first month in
the testing period for which such
employee is not an eligible individual,
and
(ii) the tax imposed by this chapter
for such taxable year on the employee
shall be increased by 10 percent of the
amount which is so includible.
(B) Exception for disability or death.--
Clauses (i) and (ii) of subparagraph (A) shall
not apply if the employee ceases to be an
eligible individual by reason of the death of
the employee or the employee becoming disabled
(within the meaning of section 72(m)(7)).
(4) Definitions and special rules.--For purposes of
this subsection--
(A) Testing period.--The term ``testing
period'' means the period beginning with the
month in which the qualified HSA distribution
is contributed to the health savings account
and ending on the last day of the 12th month
following such month.
(B) Eligible individual.--The term ``eligible
individual'' has the meaning given such term by
section 223(c)(1).
(C) Treatment as rollover contribution.--A
qualified HSA distribution shall be treated as
a rollover contribution described in section
223(f)(5).
(5) Tax treatment relating to distributions.--For
purposes of this title--
(A) In general.--A qualified HSA distribution
shall be treated as a payment described in
subsection (d).
(B) Comparability excise tax.--
(i) In general.--Except as provided
in clause (ii), section 4980G shall not
apply to qualified HSA distributions.
(ii) Failure to offer to all
employees.--In the case of a qualified
HSA distribution to any employee, the
failure to offer such distribution to
any eligible individual covered under a
high deductible health plan of the
employer shall (notwithstanding section
4980G(d)) be treated for purposes of
section 4980G as a failure to meet the
requirements of section 4980G(b).
(f) Reimbursements for Medicine Restricted to Prescribed
Drugs and Insulin.--For purposes of this section and section
105, reimbursement for expenses incurred for a medicine or a
drug shall be treated as a reimbursement for medical expenses
only if such medicine or drug is a prescribed drug (determined
without regard to whether such drug is available without a
prescription) or is insulin.
(g) Qualified Small Employer Health Reimbursement
Arrangement.--For purposes of this section and section 105,
payments or reimbursements from a qualified small employer
health reimbursement arrangement (as defined in section
9831(d)) of an individual for medical care (as defined in
section 213(d)) shall not be treated as paid or reimbursed
under employer-provided coverage for medical expenses under an
accident or health plan if for the month in which such medical
care is provided the individual does not have minimum essential
coverage (within the meaning of section 5000A(f)).
* * * * * * *
Subtitle D--Miscellaneous Excise Taxes
* * * * * * *
CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
* * * * * * *
SEC. 4980I. EXCISE TAX ON HIGH COST EMPLOYER-SPONSORED HEALTH COVERAGE.
(a) Imposition of Tax.--If--
(1) an employee is covered under any applicable
employer-sponsored coverage of an employer at any time
during a taxable period, and
(2) there is any excess benefit with respect to the
coverage, there is hereby imposed a tax equal to 40
percent of the excess benefit.
(b) Excess Benefit.--For purposes of this section--
(1) In general.--The term ``excess benefit'' means,
with respect to any applicable employer-sponsored
coverage made available by an employer to an employee
during any taxable period, the sum of the excess
amounts determined under paragraph (2) for months
during the taxable period.
(2) Monthly excess amount.--The excess amount
determined under this paragraph for any month is the
excess (if any) of--
(A) the aggregate cost of the applicable
employer- sponsored coverage of the employee
for the month, over
(B) an amount equal to \1/12\ of the annual
limitation under paragraph (3) for the calendar
year in which the month occurs.
(3) Annual limitation.--For purposes of this
subsection--
(A) In general.--The annual limitation under
this paragraph for any calendar year is the
dollar limit determined under subparagraph (C)
for the calendar year.
(B) Applicable annual limitation.--
(i) In general.--Except as provided
in clause (ii), the annual limitation
which applies for any month shall be
determined on the basis of the type of
coverage (as determined under
subsection (f)(1)) provided to the
employee by the employer as of the
beginning of the month.
(ii) Multiemployer plan coverage.--
Any coverage provided under a
multiemployer plan (as defined in
section 414(f)) shall be treated as
coverage other than self-only coverage.
(C) Applicable dollar limit.--
(i) 2018.--In the case of 2018, the
dollar limit under this subparagraph
is--
(I) in the case of an
employee with self-only
coverage, $10,200 multiplied by
the health cost adjustment
percentage (determined by only
taking into account self-only
coverage), and
(II) in the case of an
employee with coverage other
than self-only coverage,
$27,500 multiplied by the
health cost adjustment
percentage (determined by only
taking into account coverage
other than self-only coverage).
(ii) Health cost adjustment
percentage.--For purposes of clause
(i), the health cost adjustment
percentage is equal to 100 percent plus
the excess (if any) of--
(I) the percentage by which
the per employee cost for
providing coverage under the
Blue Cross/Blue Shield standard
benefit option under the
Federal Employees Health
Benefits Plan for plan year
2018 (determined by using the
benefit package for such
coverage in 2010) exceeds such
cost for plan year 2010, over
(II) 55 percent.
(iii) Age and gender adjustment.--
(I) In general.--The amount
determined under subclause (I)
or (II) of clause (i),
whichever is applicable, for
any taxable period shall be
increased by the amount
determined under subclause
(II).
(II) Amount determined.--The
amount determined under this
subclause is an amount equal to
the excess (if any) of--
(aa) the premium cost
of the Blue Cross/Blue
Shield standard benefit
option under the
Federal Employees
Health Benefits Plan
for the type of
coverage provided such
individual in such
taxable period if
priced for the age and
gender characteristics
of all employees of the
individual's employer,
over
(bb) that premium
cost for the provision
of such coverage under
such option in such
taxable period if
priced for the age and
gender characteristics
of the national
workforce.
(iv) Exception for certain
individuals.--In the case of an
individual who is a qualified retiree
or who participates in a plan sponsored
by an employer the majority of whose
employees covered by the plan are
engaged in a high-risk profession or
employed to repair or install
electrical or telecommunications
lines--
(I) the dollar amount in
clause (i)(I) shall be
increased by $1,650, and
(II) the dollar amount in
clause (i)(II) shall be
increased by $3,450,
(v) Subsequent years.--In the case of
any calendar year after 2018, each of
the dollar amounts under clauses (i)
(after the application of clause (ii))
and (iv) shall be increased to the
amount equal to such amount as
determined for for the calendar year
preceding such year, increased by an
amount equal to the product of--
(I) such amount as so
determined, multiplied by
(II) the cost-of-living
adjustment determined under
section 1(f)(3) for such year
(determined by substituting the
calendar year that is 2 years
before such year for ``1992''
in subparagraph (B) thereof),
increased by 1 percentage point
in the case of determinations
for calendar years beginning
before 2020.
If any amount determined under this
clause is not a multiple of $50, such
amount shall be rounded to the nearest
multiple of $50.
(c) Liability to Pay Tax.--
(1) In general.--Each coverage provider shall pay the
tax imposed by subsection (a) on its applicable share
of the excess benefit with respect to an employee for
any taxable period.
(2) Coverage provider.--For purposes of this
subsection, the term ``coverage provider'' means each
of the following:
(A) Health insurance coverage.--If the
applicable employer-sponsored coverage consists
of coverage under a group health plan which
provides health insurance coverage, the health
insurance issuer.
(B) HSA and MSA contributions.--If the
applicable employer-sponsored coverage consists
of coverage under an arrangement under which
the employer makes contributions described in
subsection (b) or (d) of section 106, the
employer.
(C) Other coverage.--In the case of any other
applicable employer-sponsored coverage, the
person that administers the plan benefits.
(3) Applicable share.--For purposes of this
subsection, a coverage provider's applicable share of
an excess benefit for any taxable period is the amount
which bears the same ratio to the amount of such excess
benefit as--
(A) the cost of the applicable employer-
sponsored coverage provided by the provider to
the employee during such period, bears to
(B) the aggregate cost of all applicable
employer-sponsored coverage provided to the
employee by all coverage providers during such
period.
(4) Responsibility to calculate tax and applicable
shares.--
(A) In general.--Each employer shall--
(i) calculate for each taxable period
the amount of the excess benefit
subject to the tax imposed by
subsection (a) and the applicable share
of such excess benefit for each
coverage provider, and
(ii) notify, at such time and in such
manner as the Secretary may prescribe,
the Secretary and each coverage
provider of the amount so determined
for the provider.
(B) Special rule for multiemployer plans.--In
the case of applicable employer-sponsored
coverage made available to employees through a
multiemployer plan (as defined in section
414(f)), the plan sponsor shall make the
calculations, and provide the notice, required
under subparagraph (A).
(d) Applicable Employer-Sponsored Coverage; Cost.--For
purposes of this section--
(1) Applicable employer-sponsored coverage.--
(A) In general.--The term ``applicable
employer-sponsored coverage'' means, with
respect to any employee, coverage under any
group health plan made available to the
employee by an employer which is excludable
from the employee's gross income under section
106, or would be so excludable if it were
employer-provided coverage (within the meaning
of such section 106).
(B) Exceptions.--The term ``applicable
employer-sponsored coverage'' shall not
include--
(i) any coverage (whether through
insurance or otherwise) described in
section 9832(c)(1) (other than
subparagraph (G) thereof) or for long-
term care, or
(ii) any coverage under a separate
policy, certificate, or contract of
insurance which provides benefits
substantially all of which are for
treatment of the mouth (including any
organ or structure within the mouth) or
for treatment of the eye, or
(iii) any coverage described in
section 9832(c)(3) the payment for
which is not excludable from gross
income and for which a deduction under
section 162(l) is not allowable.
(C) Coverage includes employee paid
portion.--Coverage shall be treated as
applicable employer-sponsored coverage without
regard to whether the employer or employee pays
for the coverage.
(D) Self-employed individual.--In the case of
an individual who is an employee within the
meaning of section 401(c)(1), coverage under
any group health plan providing health
insurance coverage shall be treated as
applicable employer-sponsored coverage if a
deduction is allowable under section 162(l)
with respect to all or any portion of the cost
of the coverage.
(E) Governmental plans included.--Applicable
employer-sponsored coverage shall include
coverage under any group health plan
established and maintained primarily for its
civilian employees by the Government of the
United States, by the government of any State
or political subdivision thereof, or by any
agency or instrumentality of any such
government.
(2) Determination of cost.--
(A) In general.--The cost of applicable
employer- sponsored coverage shall be
determined under rules similar to the rules of
section 4980B(f)(4), except that in determining
such cost, any portion of the cost of such
coverage which is attributable to the tax
imposed under this section shall not be taken
into account and the amount of such cost shall
be calculated separately for self-only coverage
and other coverage. In the case of applicable
employer-sponsored coverage which provides
coverage to retired employees, the plan may
elect to treat a retired employee who has not
attained the age of 65 and a retired employee
who has attained the age of 65 as similarly
situated beneficiaries.
(B) Health FSAS.--In the case of applicable
employer- sponsored coverage consisting of
coverage under a flexible spending arrangement
(as defined in section 106(c)(2)), the cost of
the coverage shall be equal to the sum of--
(i) the amount of employer
contributions under any salary
reduction election under the
arrangement, plus
(ii) the amount determined under
subparagraph (A) with respect to any
reimbursement under the arrangement in
excess of the contributions described
in clause (i).
(C) Archer MSAS and HSAS.--In the case of
applicable employer-sponsored coverage
consisting of coverage under an arrangement
under which the employer makes contributions
described in subsection (b) or (d) of section
106, the cost of the coverage shall be equal to
the amount of employer contributions under the
arrangement.
(D) Qualified small employer health
reimbursement arrangements.--In the case of
applicable employer-sponsored coverage
consisting of coverage under any qualified
small employer health reimbursement arrangement
(as defined in section 9831(d)(2)), the cost of
coverage shall be equal to the amount described
in section 6051(a)(15).
[(D)] (E) Allocation on a monthly basis.--If
cost is determined on other than a monthly
basis, the cost shall be allocated to months in
a taxable period on such basis as the Secretary
may prescribe.
(3) Employee.--The term ``employee'' includes any
former employee, surviving spouse, or other primary
insured individual.
(e) Penalty for Failure to Properly Calculate Excess
Benefit.--
(1) In general.--If, for any taxable period, the tax
imposed by subsection (a) exceeds the tax determined
under such subsection with respect to the total excess
benefit calculated by the employer or plan sponsor
under subsection (c)(4)--
(A) each coverage provider shall pay the tax
on its applicable share (determined in the same
manner as under subsection (c)(4)) of the
excess, but no penalty shall be imposed on the
provider with respect to such amount, and
(B) the employer or plan sponsor shall, in
addition to any tax imposed by subsection (a),
pay a penalty in an amount equal to such
excess, plus interest at the underpayment rate
determined under section 6621 for the period
beginning on the due date for the payment of
tax imposed by subsection (a) to which the
excess relates and ending on the date of
payment of the penalty.
(2) Limitations on penalty.--
(A) Penalty not to apply where failure not
discovered exercising reasonable diligence.--No
penalty shall be imposed by paragraph (1)(B) on
any failure to properly calculate the excess
benefit during any period for which it is
established to the satisfaction of the
Secretary that the employer or plan sponsor
neither knew, nor exercising reasonable
diligence would have known, that such failure
existed.
(B) Penalty not to apply to failures
corrected within 30 days.--No penalty shall be
imposed by paragraph (1)(B) on any such failure
if--
(i) such failure was due to
reasonable cause and not to willful
neglect, and
(ii) such failure is corrected during
the 30-day period beginning on the 1st
date that the employer knew, or
exercising reasonable diligence would
have known, that such failure existed.
(C) Waiver by Secretary.--In the case of any
such failure which is due to reasonable cause
and not to willful neglect, the Secretary may
waive part or all of the penalty imposed by
paragraph (1), to the extent that the payment
of such penalty would be excessive or otherwise
inequitable relative to the failure involved.
(f) Other Definitions and Special Rules.--For purposes of
this section--
(1) Coverage determinations.--
(A) In general.--Except as provided in
subparagraph (B), an employee shall be treated
as having self-only coverage with respect to
any applicable employer-sponsored coverage of
an employer.
(B) Minimum essential coverage.--An employee
shall be treated as having coverage other than
self-only coverage only if the employee is
enrolled in coverage other than self-only
coverage in a group health plan which provides
minimum essential coverage (as defined in
section 5000A(f)) to the employee and at least
one other beneficiary, and the benefits
provided under such minimum essential coverage
do not vary based on whether any individual
covered under such coverage is the employee or
another beneficiary.
(2) Qualified retiree.--The term ``qualified
retiree'' means any individual who--
(A) is receiving coverage by reason of being
a retiree,
(B) has attained age 55, and
(C) is not entitled to benefits or eligible
for enrollment under the Medicare program under
title XVIII of the Social Security Act.
(3) Employees engaged in high-risk profession.--The
term ``employees engaged in a high-risk profession''
means law enforcement officers (as such term is defined
in section 1204 of the Omnibus Crime Control and Safe
Streets Act of 1968), employees in fire protection
activities (as such term is defined in section 3(y) of
the Fair Labor Standards Act of 1938), individuals who
provide out- of-hospital emergency medical care
(including emergency medical technicians, paramedics,
and first-responders), individuals whose primary work
is longshore work (as defined in section 258(b) of the
Immigration and Nationality Act (8 U.S.C. 1288(b)),
determined without regard to paragraph (2) thereof),
and individuals engaged in the construction, mining,
agriculture (not including food processing), forestry,
and fishing industries. Such term includes an employee
who is retired from a high-risk profession described in
the preceding sentence, if such employee satisfied the
requirements of such sentence for a period of not less
than 20 years during the employee's employment.
(4) Group health plan.--The term ``group health
plan'' has the meaning given such term by section
5000(b)(1). Section 9831(d)(1) shall not apply for
purposes of this section.
(5) Health insurance coverage; health insurance
issuer.--
(A) Health insurance coverage.--The term
``health insurance coverage'' has the meaning
given such term by section 9832(b)(1) (applied
without regard to subparagraph (B) thereof,
except as provided by the Secretary in
regulations).
(B) Health insurance issuer.--The term
``health insurance issuer'' has the meaning
given such term by section 9832(b)(2).
(6) Person that administers the plan benefits.--The
term ``person that administers the plan benefits''
shall include the plan sponsor if the plan sponsor
administers benefits under the plan.
(7) Plan sponsor.--The term ``plan sponsor'' has the
meaning given such term in section 3(16)(B) of the
Employee Retirement Income Security Act of 1974.
(8) Taxable period.--The term ``taxable period''
means the calendar year or such shorter period as the
Secretary may prescribe. The Secretary may have
different taxable periods for employers of varying
sizes.
(9) Aggregation rules.--All employers treated as a
single employer under subsection (b), (c), (m), or (o)
of section 414 shall be treated as a single employer.
(10) Deductibility of tax.--Section 275(a)(6) shall
not apply to the tax imposed by subsection (a).
(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out this section.
* * * * * * *
Subtitle F--Procedure and Administration
* * * * * * *
CHAPTER 61--INFORMATION AND RETURNS
* * * * * * *
Subchapter A--Returns and Records
* * * * * * *
PART III--INFORMATION RETURNS
* * * * * * *
Subpart C--Information Regarding Wages Paid Employees
SEC. 6051. RECEIPTS FOR EMPLOYEES.
(a) Requirement.--Every person required to deduct and
withhold from an employee a tax under section 3101 or 3402, or
who would have been required to deduct and withhold a tax under
section 3402 (determined without regard to subsection (n)) if
the employee had claimed no more than one withholding
exemption, or every employer engaged in a trade or business who
pays remuneration for services performed by an employee,
including the cash value of such remuneration paid in any
medium other than cash, shall furnish to each such employee in
respect of the remuneration paid by such person to such
employee during the calendar year, on or before January 31 of
the succeeding year, or, if his employment is terminated before
the close of such calendar year, within 30 days after the date
of receipt of a written request from the employee if such 30-
day period ends before January 31, a written statement showing
the following:
(1) the name of such person,
(2) the name of the employee (and an identifying
number for the employee if wages as defined in section
3121(a) have been paid),
(3) the total amount of wages as defined in section
3401(a),
(4) the total amount deducted and withheld as tax
under section 3402,
(5) the total amount of wages as defined in section
3121(a),
(6) the total amount deducted and withheld as tax
under section 3101,
(8) the total amount of elective deferrals (within
the meaning of section 402(g)(3)) and compensation
deferred under section 457, including the amount of
designated Roth contributions (as defined in section
402A),
(9) the total amount incurred for dependent care
assistance with respect to such employee under a
dependent care assistance program described in section
129(d),
(10) in the case of an employee who is a member of
the Armed Forces of the United States, such employee's
earned income as determined for purposes of section 32
(relating to earned income credit),
(11) the amount contributed to any Archer MSA (as
defined in section 220(d)) of such employee or such
employee's spouse,
(12) the amount contributed to any health savings
account (as defined in section 223(d)) of such employee
or such employee's spouse,
(13) the total amount of deferrals for the year under
a nonqualified deferred compensation plan (within the
meaning of section 409A(d)), [and]
(14) the aggregate cost (determined under rules
similar to the rules of section 4980B(f)(4)) of
applicable employer-sponsored coverage (as defined in
section 4980I(d)(1)), except that this paragraph shall
not apply to--
(A) coverage to which paragraphs (11) and
(12) apply, or
(B) the amount of any salary reduction
contributions to a flexible spending
arrangement (within the meaning of section
125)[.], and
(15) the total amount of permitted benefit (as
defined in section 9831(d)(3)(C)) for the year under a
qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2)) with
respect to the employee.
In the case of compensation paid for service as a member of a
uniformed service, the statement shall show, in lieu of the
amount required to be shown by paragraph (5), the total amount
of wages as defined in section 3121(a), computed in accordance
with such section and section 3121(i)(2). In the case of
compensation paid for service as a volunteer or volunteer
leader within the meaning of the Peace Corps Act, the statement
shall show, in lieu of the amount required to be shown by
paragraph (5), the total amount of wages as defined in section
3121(a), computed in accordance with such section and section
3121(i)(3). In the case of tips received by an employee in the
course of his employment, the amounts required to be shown by
paragraphs (3) and (5) shall include only such tips as are
included in statements furnished to the employer pursuant to
section 6053(a). The amounts required to be shown by paragraph
(5) shall not include wages which are exempted pursuant to
sections 3101(c) and 3111(c) from the taxes imposed by sections
3101 and 3111. In the case of the amounts required to be shown
by paragraph (13), the Secretary may (by regulation) establish
a minimum amount of deferrals below which paragraph (13) does
not apply.
(b) Special Rule as to Compensation of Members of Armed
Forces.--In the case of compensation paid for service as a
member of the Armed Forces, the statement required by
subsection (a) shall be furnished if any tax was withheld
during the calendar year under section 3402, or if any of the
compensation paid during such year is includible in gross
income under chapter 1, or if during the calendar year any
amount was required to be withheld as tax under section 3101.
In lieu of the amount required to be shown by paragraph (3) of
subsection (a), such statement shall show as wages paid during
the calendar year the amount of such compensation paid during
the calendar year which is not excluded from gross income under
chapter 1 (whether or not such compensation constituted wages
as defined in section 3401(a)).
(c) Additional Requirements.--The statements required to be
furnished pursuant to this section in respect of any
remuneration shall be furnished at such other times, shall
contain such other information, and shall be in such form as
the Secretary may by regulations prescribe. The statements
required under this section shall also show the proportion of
the total amount withheld as tax under section 3101 which is
for financing the cost of hospital insurance benefits under
part A of title XVIII of the Social Security Act.
(d) Statements to Constitute Information Returns.--A
duplicate of any statement made pursuant to this section and in
accordance with regulations prescribed by the Secretary shall,
when required by such regulations, be filed with the Secretary.
(e) Railroad Employees.--
(1) Additional requirement.--Every person required to
deduct and withhold tax under section 3201 from an
employee shall include on or with the statement
required to be furnished such employee under subsection
(a) a notice concerning the provisions of this title
with respect to the allowance of a credit or refund of
the tax on wages imposed by section 3101(b) and the tax
on compensation imposed by section 3201 or 3211 which
is treated as a tax on wages imposed by section
3101(b).
(2) Information to be supplied to employees.--Each
person required to deduct and withhold tax under
section 3201 during any year from an employee who has
also received wages during such year subject to the tax
imposed by section 3101(b) shall, upon request of such
employee, furnish to him a written statement showing--
(A) the total amount of compensation with
respect to which the tax imposed by section
3201 was deducted,
(B) the total amount deducted as tax under
section 3201, and
(C) the portion of the total amount deducted
as tax under section 3201 which is for
financing the cost of hospital insurance under
part A of title XVIII of the Social Security
Act.
(f) Statements Required in Case of Sick Pay Paid by Third
Parties.--
(1) Statements required from payor.--
(A) In general.--If, during any calendar
year, any person makes a payment of third-party
sick pay to an employee, such person shall, on
or before January 15 of the succeeding year,
furnish a written statement to the employer in
respect of whom such payment was made showing--
(i) the name and, if there is
withholding under section 3402(o), the
social security number of such
employee,
(ii) the total amount of the third-
party sick pay paid to such employee
during the calendar year, and
(iii) the total amount (if any)
deducted and withheld from such sick
pay under section 3402.
For purposes of the preceding sentence, the
term ``third-party sick pay'' means any sick
pay (as defined in section 3402(o)(2)(C)) which
does not constitute wages for purposes of
chapter 24 (determined without regard to
section 3402(o)(1)).
(B) Special rules.--
(i) Statements are in lieu of other
reporting requirements.--The reporting
requirements of subparagraph (A) with
respect to any payments shall, with
respect to such payments, be in lieu of
the requirements of subsection (a) and
of section 6041.
(ii) Penalties made applicable.--For
purposes of sections 6674 and 7204, the
statements required to be furnished by
subparagraph (A) shall be treated as
statements required under this section
to be furnished to employees.
(2) Information required to be furnished by
employer.--Every employer who receives a statement
under paragraph (1)(A) with respect to sick pay paid to
any employee during any calendar year shall, on or
before January 31 of the succeeding year, furnish a
written statement to such employee showing--
(A) the information shown on the statement
furnished under paragraph (1)(A), and
(B) if any portion of the sick pay is
excludable from gross income under section
104(a)(3), the portion which is not so
excludable and the portion which is so
excludable.
To the extent practicable, the information required
under the preceding sentence shall be furnished on or
with the statement (if any) required under subsection
(a).
* * * * * * *
CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE
PENALTIES
* * * * * * *
Subchapter A--Additions to the Tax and Additional Amounts
* * * * * * *
PART I--GENERAL PROVISIONS
* * * * * * *
SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS, REGISTRATION
STATEMENTS, ETC.
(a) Returns With Respect to Certain Payments Aggregating Less
Than $10.--In the case of each failure to file a statement of a
payment to another person required under the authority of--
(1) section 6042(a)(2) (relating to payments of
dividends aggregating less than $10), or
(2) section 6044(a)(2) (relating to payments of
patronage dividends aggregating less than $10),
on the date prescribed therefor (determined with regard to any
extension of time for filing), unless it is shown that such
failure is due to reasonable cause and not to willful neglect,
there shall be paid (upon notice and demand by the Secretary
and in the same manner as tax) by the person failing to so file
the statement, $1 for each such statement not so filed, but the
total amount imposed on the delinquent person for all such
failures during the calendar year shall not exceed $1,000.
(b) Failure to Report Tips.--In the case of failure by an
employee to report to his employer on the date and in the
manner prescribed therefor any amount of tips required to be so
reported by section 6053(a) which are wages (as defined in
section 3121(a)) or which are compensation (as defined in
section 3231(e)), unless it is shown that such failure is due
to reasonable cause and not due to willful neglect, there shall
be paid by the employee, in addition to the tax imposed by
section 3101 or section 3201 (as the case may be) with respect
to the amount of tips which he so failed to report, an amount
equal to 50 percent of such tax.
(c) Returns by Exempt Organizations and by Certain Trusts.--
(1) Annual returns under section 6033(a)(1) or
6012(a)(6).--
(A) Penalty on organization.--In the case
of--
(i) a failure to file a return
required under section 6033(a)(1)
(relating to returns by exempt
organizations) or section 6012(a)(6)
(relating to returns by political
organizations) on the date and in the
manner prescribed therefor (determined
with regard to any extension of time
for filing), or
(ii) a failure to include any of the
information required to be shown on a
return filed under section 6033(a)(1)
or section 6012(a)(6) or to show the
correct information,
there shall be paid by the exempt organization
$20 for each day during which such failure
continues. The maximum penalty under this
subparagraph on failures with respect to any 1
return shall not exceed the lesser of $10,000
or 5 percent of the gross receipts of the
organization for the year. In the case of an
organization having gross receipts exceeding
$1,000,000 for any year, with respect to the
return required under section 6033(a)(1) or
section 6012(a)(6) for such year, in applying
the first sentence of this subparagraph, the
amount of the penalty for each day during which
a failure continues shall be $100 in lieu of
the amount otherwise specified, and, in lieu of
applying the second sentence of this
subparagraph, the maximum penalty under this
subparagraph shall not exceed $50,000.
(B) Managers.--
(i) In general.--The Secretary may
make a written demand on any
organization subject to penalty under
subparagraph (A) specifying therein a
reasonable future date by which the
return shall be filed (or the
information furnished) for purposes of
this subparagraph.
(ii) Failure to comply with demand.--
If any person fails to comply with any
demand under clause (i) on or before
the date specified in such demand,
there shall be paid by the person
failing to so comply $10 for each day
after the expiration of the time
specified in such demand during which
such failure continues. The maximum
penalty imposed under this subparagraph
on all persons for failures with
respect to any 1 return shall not
exceed $5,000.
(C) Public inspection of annual returns and
reports.--In the case of a failure to comply
with the requirements of section 6104(d) with
respect to any annual return on the date and in
the manner prescribed therefor (determined with
regard to any extension of time for filing) or
report required under section 527(j), there
shall be paid by the person failing to meet
such requirements $20 for each day during which
such failure continues. The maximum penalty
imposed under this subparagraph on all persons
for failures with respect to any 1 return or
report shall not exceed $10,000.
(D) Public inspection of applications for
exemption and notice of status.--In the case of
a failure to comply with the requirements of
section 6104(d) with respect to any exempt
status application materials (as defined in
such section) or notice materials (as defined
in such section) on the date and in the manner
prescribed therefor, there shall be paid by the
person failing to meet such requirements $20
for each day during which such failure
continues.
(E) No penalty for certain annual notices.--
This paragraph shall not apply with respect to
any notice required under section 6033(i).
(2) Returns under section 6034 or 6043(b).--
(A) Penalty on organization or trust.--In the
case of a failure to file a return required
under section 6034 (relating to returns by
certain trusts) or section 6043(b) (relating to
terminations, etc., of exempt organizations),
on the date and in the manner prescribed
therefor (determined with regard to any
extension of time for filing), there shall be
paid by the exempt organization or trust
failing so to file $10 for each day during
which such failure continues, but the total
amount imposed under this subparagraph on any
organization or trust for failure to file any 1
return shall not exceed $5,000.
(B) Managers.--The Secretary may make written
demand on an organization or trust failing to
file under subparagraph (A) specifying therein
a reasonable future date by which such filing
shall be made for purposes of this
subparagraph. If such filing is not made on or
before such date, there shall be paid by the
person failing so to file $10 for each day
after the expiration of the time specified in
the written demand during which such failure
continues, but the total amount imposed under
this subparagraph on all persons for failure to
file any 1 return shall not exceed $5,000.
(C) Split-interest trusts.--In the case of a
trust which is required to file a return under
section 6034(a), subparagraphs (A) and (B) of
this paragraph shall not apply and paragraph
(1) shall apply in the same manner as if such
return were required under section 6033, except
that--
(i) the 5 percent limitation in the
second sentence of paragraph (1)(A)
shall not apply,
(ii) in the case of any trust with
gross income in excess of $250,000, in
applying the first sentence of
paragraph (1)(A), the amount of the
penalty for each day during which a
failure continues shall be $100 in lieu
of the amount otherwise specified, and
in lieu of applying the second sentence
of paragraph (1)(A), the maximum
penalty under paragraph (1)(A) shall
not exceed $50,000, and
(iii) the third sentence of paragraph
(1)(A) shall be disregarded.
In addition to any penalty imposed on the trust
pursuant to this subparagraph, if the person
required to file such return knowingly fails to
file the return, such penalty shall also be
imposed on such person who shall be personally
liable for such penalty.
(3) Disclosure under section 6033(a)(2).--
(A) Penalty on entities.--In the case of a
failure to file a disclosure required under
section 6033(a)(2), there shall be paid by the
tax-exempt entity (the entity manager in the
case of a tax-exempt entity described in
paragraph (4), (5), (6), or (7) of section
4965(c)) $100 for each day during which such
failure continues. The maximum penalty under
this subparagraph on failures with respect to
any 1 disclosure shall not exceed $50,000.
(B) Written demand.--
(i) In general.--The Secretary may
make a written demand on any entity or
manager subject to penalty under
subparagraph (A) specifying therein a
reasonable future date by which the
disclosure shall be filed for purposes
of this subparagraph.
(ii) Failure to comply with demand.--
If any entity or manager fails to
comply with any demand under clause (i)
on or before the date specified in such
demand, there shall be paid by such
entity or manager failing to so comply
$100 for each day after the expiration
of the time specified in such demand
during which such failure continues.
The maximum penalty imposed under this
subparagraph on all entities and
managers for failures with respect to
any 1 disclosure shall not exceed
$10,000.
(C) Definitions.--Any term used in this
section which is also used in section 4965
shall have the meaning given such term under
section 4965.
(4) Notices under section 506.--
(A) Penalty on organization.--In the case of
a failure to submit a notice required under
section 506(a) (relating to organizations
required to notify Secretary of intent to
operate as 501(c)(4)) on the date and in the
manner prescribed therefor, there shall be paid
by the organization failing to so submit $20
for each day during which such failure
continues, but the total amount imposed under
this subparagraph on any organization for
failure to submit any one notice shall not
exceed $5,000.
(B) Managers.--The Secretary may make written
demand on an organization subject to penalty
under subparagraph (A) specifying in such
demand a reasonable future date by which the
notice shall be submitted for purposes of this
subparagraph. If such notice is not submitted
on or before such date, there shall be paid by
the person failing to so submit $20 for each
day after the expiration of the time specified
in the written demand during which such failure
continues, but the total amount imposed under
this subparagraph on all persons for failure to
submit any one notice shall not exceed $5,000.
(5) Reasonable cause exception.--No penalty shall be
imposed under this subsection with respect to any
failure if it is shown that such failure is due to
reasonable cause.
(6) Other special rules.--
(A) Treatment as tax.--Any penalty imposed
under this subsection shall be paid on notice
and demand of the Secretary and in the same
manner as tax.
(B) Joint and several liability.--If more
than 1 person is liable under this subsection
for any penalty with respect to any failure,
all such persons shall be jointly and severally
liable with respect to such failure.
(C) Person.--For purposes of this subsection,
the term ``person'' means any officer,
director, trustee, employee, or other
individual who is under a duty to perform the
act in respect of which the violation occurs.
(7) Adjustment for inflation.--
(A) In general.--In the case of any failure
relating to a return required to be filed in a
calendar year beginning after 2014, each of the
dollar amounts under paragraphs (1), (2), and
(3) shall be increased by such dollar amount
multiplied by the cost-of-living adjustment
determined under section 1(f)(3) determined by
substituting ``calendar year 2013'' for
``calendar year 1992'' in subparagraph (B)
thereof.
(B) Rounding.--If any amount adjusted under
subparagraph (A)--
(i) is not less than $5,000 and is
not a multiple of $500, such amount
shall be rounded to the next lowest
multiple of $500, and
(ii) is not described in clause (i)
and is not a multiple of $5, such
amount shall be rounded to the next
lowest multiple of $5.
(d) Annual Registration and Other Notification by Pension
Plan.--
(1) Registration.--In the case of any failure to file
a registration statement required under section 6057(a)
(relating to annual registration of certain plans)
which includes all participants required to be included
in such statement, on the date prescribed therefor
(determined without regard to any extension of time for
filing), unless it is shown that such failure is due to
reasonable cause, there shall be paid (on notice and
demand by the Secretary and in the same manner as tax)
by the person failing so to file, an amount equal to $1
for each participant with respect to whom there is a
failure to file, multiplied by the number of days
during which such failure continues, but the total
amount imposed under this paragraph on any person for
any failure to file with respect to any plan year shall
not exceed $5,000.
(2) Notification of change of status.--In the case of
failure to file a notification required under section
6057(b) (relating to notification of change of status)
on the date prescribed therefor (determined without
regard to any extension of time for filing), unless it
is shown that such failure is due to reasonable cause,
there shall be paid (on notice and demand by the
Secretary and in the same manner as tax) by the person
failing so to file, $1 for each day during which such
failure continues, but the total amounts imposed under
this paragraph on any person for failure to file any
notification shall not exceed $1,000.
(e) Information Required in Connection With Certain Plans of
Deferred Compensation, Etc..--In the case of failure to file a
return or statement required under section 6058 (relating to
information required in connection with certain plans of
deferred compensation), 6047 (relating to information relating
to certain trusts and annuity and bond purchase plans), or
6039D (relating to returns and records with respect to certain
fringe benefit plans) on the date and in the manner prescribed
therefor (determined with regard to any extension of time for
filing), unless it is shown that such failure is due to
reasonable cause, there shall be paid (on notice and demand by
the Secretary and in the same manner as tax) by the person
failing so to file, $25 for each day during which such failure
continues, but the total amount imposed under this subsection
on any person for failure to file any return shall not exceed
$15,000. This subsection shall not apply to any return or
statement which is an information return described in section
6724(d)(1)(C)(ii) or a payee statement described in section
6724(d)(2)(Y).
(f) Returns Required Under Section 6039C.--
(1) In general.--In the case of each failure to make
a return required by section 6039C which contains the
information required by such section on the date
prescribed therefor (determined with regard to any
extension of time for filing), unless it is shown that
such failure is due to reasonable cause and not to
willful neglect, the amount determined under paragraph
(2) shall be paid (upon notice and demand by the
Secretary and in the same manner as tax) by the person
failing to make such return.
(2) Amount of penalty.--For purposes of paragraph
(1), the amount determined under this paragraph with
respect to any failure shall be $25 for each day during
which such failure continues.
(3) Limitation.--The amount determined under
paragraph (2) with respect to any person for failing to
meet the requirements of section 6039C for any calendar
year shall not exceed the lesser of--
(A) $25,000, or
(B) 5 percent of the aggregate of the fair
market value of the United States real property
interests owned by such person at any time
during such year.
For purposes of the preceding sentence, fair market
value shall be determined as of the end of the calendar
year (or, in the case of any property disposed of
during the calendar year, as of the date of such
disposition).
(h) Failure to Give Notice to Recipients of Certain Pension,
Etc., Distributions.--In the case of each failure to provide
notice as required by section 3405(e)(10)(B), at the time
prescribed therefor, unless it is shown that such failure is
due to reasonable cause and not to willful neglect, there shall
be paid, on notice and demand of the Secretary and in the same
manner as tax, by the person failing to provide such notice, an
amount equal to $10 for each such failure, but the total amount
imposed on such person for all such failures during any
calendar year shall not exceed $5,000.
(i) Failure to Give Written Explanation to Recipients of
Certain Qualifying Rollover Distributions.--In the case of each
failure to provide a written explanation as required by section
402(f), at the time prescribed therefor, unless it is shown
that such failure is due to reasonable cause and not to willful
neglect, there shall be paid, on notice and demand of the
Secretary and in the same manner as tax, by the person failing
to provide such written explanation, an amount equal to $100
for each such failure, but the total amount imposed on such
person for all such failures during any calendar year shall not
exceed $50,000.
(j) Failure to File Certification With Respect to Certain
Residential Rental Projects.--In the case of each failure to
provide a certification as required by section 142(d)(7) at the
time prescribed therefor, unless it is shown that such failure
is due to reasonable cause and not to willful neglect, there
shall be paid, on notice and demand of the Secretary and in the
same manner as tax, by the person failing to provide such
certification, an amount equal to $100 for each such failure.
(k) Failure to Make Reports Required Under Section 1202.--
In the case of a failure to make a report required under
section 1202(d)(1)(C) which contains the information required
by such section on the date prescribed therefor (determined
with regard to any extension of time for filing), there shall
be paid (on notice and demand by the Secretary and in the same
manner as tax) by the person failing to make such report, an
amount equal to $50 for each report with respect to which there
was such a failure. In the case of any failure due to
negligence or intentional disregard, the preceding sentence
shall be applied by substituting ``$100'' for ``$50''. In the
case of a report covering periods in 2 or more years, the
penalty determined under preceding provisions of this
subsection shall be multiplied by the number of such years. No
penalty shall be imposed under this subsection on any failure
which is shown to be due to reasonable cause and not willful
neglect.
(l) Failure to File Return With Respect to Certain Corporate
Transactions.--In the case of any failure to make a return
required under section 6043(c) containing the information
required by such section on the date prescribed therefor
(determined with regard to any extension of time for filing),
unless it is shown that such failure is due to reasonable
cause, there shall be paid (on notice and demand by the
Secretary and in the same manner as tax) by the person failing
to file such return, an amount equal to $500 for each day
during which such failure continues, but the total amount
imposed under this subsection with respect to any return shall
not exceed $100,000.
(m) Alcohol and Tobacco Taxes for Penalties for Failure to
File Certain Information Returns.--with respect to alcohol and
tobacco taxes, see, generally, subtitle E.
(n) Failure to Make Reports Required Under Sections 3511,
6053(C)(8), and 7705.--In the case of a failure to make a
report required under section 3511, 6053(c)(8), or 7705 which
contains the information required by such section on the date
prescribed therefor (determined with regard to any extension of
time for filing), there shall be paid (on notice and demand by
the Secretary and in the same manner as tax) by the person
failing to make such report, an amount equal to $50 for each
report with respect to which there was such a failure. In the
case of any failure due to negligence or intentional disregard
the preceding sentence shall be applied by substituting
``$100'' for ``$50''.
(o) Failure to Provide Notices With Respect To Qualified
Small Employer Health Reimbursement Arrangements.--In the case
of each failure to provide a written notice as required by
section 9831(d)(4), unless it is shown that such failure is due
to reasonable cause and not willful neglect, there shall be
paid, on notice and demand of the Secretary and in the same
manner as tax, by the person failing to provide such written
notice, an amount equal to $50 per employee per incident of
failure to provide such notice, but the total amount imposed on
such person for all such failures during any calendar year
shall not exceed $2,500.
* * * * * * *
Subtitle K--Group Health Plan Requirements
* * * * * * *
CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS
* * * * * * *
Subchapter C--General Provisions
SEC. 9831. GENERAL EXCEPTIONS.
(a) Exception for Certain Plans.--The requirements of this
chapter shall not apply to--
(1) any governmental plan, and
(2) any group health plan for any plan year if, on
the first day of such plan year, such plan has less
than 2 participants who are current employees.
(b) Exception for Certain Benefits.--The requirements of this
chapter shall not apply to any group health plan in relation to
its provision of excepted benefits described in section
9832(c)(1).
(c) Exception for Certain Benefits if Certain Conditions
Met.--
(1) Limited, excepted benefits.--The requirements of
this chapter shall not apply to any group health plan
in relation to its provision of excepted benefits
described in section 9832(c)(2) if the benefits--
(A) are provided under a separate policy,
certificate, or contract of insurance; or
(B) are otherwise not an integral part of the
plan.
(2) Noncoordinated, excepted benefits.--The
requirements of this chapter shall not apply to any
group health plan in relation to its provision of
excepted benefits described in section 9832(c)(3) if
all of the following conditions are met:
(A) The benefits are provided under a
separate policy, certificate, or contract of
insurance.
(B) There is no coordination between the
provision of such benefits and any exclusion of
benefits under any group health plan maintained
by the same plan sponsor.
(C) Such benefits are paid with respect to an
event without regard to whether benefits are
provided with respect to such an event under
any group health plan maintained by the same
plan sponsor.
(3) Supplemental excepted benefits.--The requirements
of this chapter shall not apply to any group health
plan in relation to its provision of excepted benefits
described in section 9832(c)(4) if the benefits are
provided under a separate policy, certificate, or
contract of insurance.
(d) Exception for Qualified Small Employer Health
Reimbursement Arrangements.--
(1) In general.--For purposes of this title (except
as provided in section 4980I(f)(4) and notwithstanding
any other provision of this title), the term ``group
health plan'' shall not include any qualified small
employer health reimbursement arrangement.
(2) Qualified small employer health reimbursement
arrangement.--For purposes of this subsection--
(A) In general.--The term ``qualified small
employer health reimbursement arrangement''
means an arrangement which--
(i) is described in subparagraph (B),
and
(ii) is provided on the same terms to
all eligible employees of the eligible
employer.
(B) Arrangement described.--An arrangement is
described in this subparagraph if--
(i) such arrangement is funded solely
by an eligible employer and no salary
reduction contributions may be made
under such arrangement,
(ii) such arrangement provides, after
the employee provides proof of
coverage, for the payment of, or
reimbursement of, an eligible employee
for expenses for medical care (as
defined in section 213(d)) incurred by
the eligible employee or the eligible
employee's family members (as
determined under the terms of the
arrangement), and
(iii) the amount of payments and
reimbursements described in clause (ii)
for any year do not exceed $5,130
($10,260 in the case of an arrangement
that also provides for payments or
reimbursements for family members of
the employee).
(C) Certain variation permitted.--For
purposes of subparagraph (A)(ii), an
arrangement shall not fail to be treated as
provided on the same terms to each eligible
employee merely because the employee's
permitted benefits under such arrangement vary
in accordance with the variation in the price
of an insurance policy in the relevant
individual health insurance market based on--
(i) the age of the eligible employee
(and, in the case of an arrangement
which covers medical expenses of the
eligible employee's family members, the
age of such family members), or
(ii) the number of family members of
the eligible employee the medical
expenses of which are covered under
such arrangement.
The variation permitted under the preceding
sentence shall be determined by reference to
the same insurance policy with respect to all
eligible employees.
(D) Rules relating to maximum dollar
limitation.--
(i) Amount prorated in certain
cases.--In the case of an individual
who is not covered by an arrangement
for the entire year, the limitation
under subparagraph (A)(iii) for such
year shall be an amount which bears the
same ratio to the amount which would
(but for this clause) be in effect for
such individual for such year under
subparagraph (A)(iii) as the number of
months for which such individual is
covered by the arrangement for such
year bears to 12.
(ii) Inflation adjustment.--In the
case of any year beginning after 2016,
each of the dollar amounts in
subparagraph (A)(iii) shall be
increased by an amount equal to--
(I) such dollar amount,
multiplied by
(II) the cost-of-living
adjustment determined under
section 1(f)(3) for the
calendar year in which the
taxable year begins, determined
by substituting ``calendar year
2015'' for ``calendar year
1992'' in subparagraph (B)
thereof.
If any dollar amount increased under
the preceding sentence is not a
multiple of $100, such dollar amount
shall be rounded to the next lowest
multiple of $100.
(3) Other definitions.--For purposes of this
subsection--
(A) Eligible employee.--The term ``eligible
employee'' means any employee of an eligible
employer, except that the terms of the
arrangement may exclude from consideration
employees described in any clause of section
105(h)(3)(B) (applied by substituting ``90
days'' for ``3 years'' in clause (i) thereof).
(B) Eligible employer.--The term ``eligible
employer'' means an employer that--
(i) is not an applicable large
employer as defined in section
4980H(c)(2), and
(ii) does not offer a group health
plan to any of its employees.
(C) Permitted benefit.--The term ``permitted
benefit'' means, with respect to any eligible
employee, the maximum dollar amount of payments
and reimbursements which may be made under the
terms of the qualified small employer health
reimbursement arrangement for the year with
respect to such employee.
(4) Notice.--
(A) In general.--An employer funding a
qualified small employer health reimbursement
arrangement for any year shall, not later than
90 days before the beginning of such year (or,
in the case of an employee who is not eligible
to participate in the arrangement as of the
beginning of such year, the date on which such
employee is first so eligible), provide a
written notice to each eligible employee which
includes the information described in
subparagraph (B).
(B) Contents of notice.--The notice required
under subparagraph (A) shall include each of
the following:
(i) A statement of the amount which
would be such eligible employee's
permitted benefits under the
arrangement for the year.
(ii) A statement that the eligible
employee should provide the information
described in clause (i) to any health
insurance exchange to which the
employee applies for advance payment of
the premium assistance tax credit.
(iii) A statement that if the
employee is not covered under minimum
essential coverage for any month the
employee may be subject to tax under
section 5000A for such month and
reimbursements under the arrangement
may be includible in gross income.
* * * * * * *
----------
PATIENT PROTECTION AND AFFORDABLE CARE ACT
* * * * * * *
TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS
* * * * * * *
Subtitle E--Affordable Coverage Choices for All Americans
PART I--PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS
* * * * * * *
Subpart B--Eligibility Determinations
SEC. 1411. PROCEDURES FOR DETERMINING ELIGIBILITY FOR EXCHANGE
PARTICIPATION, PREMIUM TAX CREDITS AND REDUCED
COST-SHARING, AND INDIVIDUAL RESPONSIBILITY
EXEMPTIONS.
(a) Establishment of Program.--The Secretary shall establish
a program meeting the requirements of this section for
determining--
(1) whether an individual who is to be covered in the
individual market by a qualified health plan offered
through an Exchange, or who is claiming a premium tax
credit or reduced cost-sharing, meets the requirements
of sections 1312(f)(3), 1402(e), and 1412(d) of this
title and section 36B(e) of the Internal Revenue Code
of 1986 that the individual be a citizen or national of
the United States or an alien lawfully present in the
United States;
(2) in the case of an individual claiming a premium
tax credit or reduced cost-sharing under section 36B of
such Code or section 1402--
(A) whether the individual meets the income
and coverage requirements of such sections; and
(B) the amount of the tax credit or reduced
cost-sharing;
(3) whether an individual's coverage under an
employer-sponsored health benefits plan is treated as
unaffordable under sections 36B(c)(2)(C) and
5000A(e)(2); and
(4) whether to grant a certification under section
1311(d)(4)(H) attesting that, for purposes of the
individual responsibility requirement under section
5000A of the Internal Revenue Code of 1986, an
individual is entitled to an exemption from either the
individual responsibility requirement or the penalty
imposed by such section.
(b) Information Required To Be Provided by Applicants.--
(1) In general.--An applicant for enrollment in a
qualified health plan offered through an Exchange in
the individual market shall provide--
(A) the name, address, and date of birth of
each individual who is to be covered by the
plan (in this subsection referred to as an
``enrollee''); and
(B) the information required by any of the
following paragraphs that is applicable to an
enrollee.
(2) Citizenship or immigration status.--The following
information shall be provided with respect to every
enrollee:
(A) In the case of an enrollee whose
eligibility is based on an attestation of
citizenship of the enrollee, the enrollee's
social security number.
(B) In the case of an individual whose
eligibility is based on an attestation of the
enrollee's immigration status, the enrollee's
social security number (if applicable) and such
identifying information with respect to the
enrollee's immigration status as the Secretary,
after consultation with the Secretary of
Homeland Security, determines appropriate.
(3) Eligibility and amount of tax credit or reduced
cost-sharing.--In the case of an enrollee with respect
to whom a premium tax credit or reduced cost-sharing
under section 36B of such Code or section 1402 is being
claimed, the following information:
(A) Information regarding income and family
size.--The information described in section
6103(l)(21) for the taxable year ending with or
within the second calendar year preceding the
calendar year in which the plan year begins.
(B) Certain individual health insurance
policies obtained through small employers.--The
amount of the enrollee's permitted benefit (as
defined in section 9831(d)(3)(C) of the
Internal Revenue Code of 1986) under a
qualified small employer health reimbursement
arrangement (as defined in section 9831(d)(2)
of such Code).
[(B)] (C) Changes in circumstances.--The
information described in section 1412(b)(2),
including information with respect to
individuals who were not required to file an
income tax return for the taxable year
described in subparagraph (A) or individuals
who experienced changes in marital status or
family size or significant reductions in
income.
(4) Employer-sponsored coverage.--In the case of an
enrollee with respect to whom eligibility for a premium
tax credit under section 36B of such Code or cost-
sharing reduction under section 1402 is being
established on the basis that the enrollee's (or
related individual's) employer is not treated under
section 36B(c)(2)(C) of such Code as providing minimum
essential coverage or affordable minimum essential
coverage, the following information:
(A) The name, address, and employer
identification number (if available) of the
employer.
(B) Whether the enrollee or individual is a
full-time employee and whether the employer
provides such minimum essential coverage.
(C) If the employer provides such minimum
essential coverage, the lowest cost option for
the enrollee's or individual's enrollment
status and the enrollee's or individual's
required contribution (within the meaning of
section 5000A(e)(1)(B) of such Code) under the
employer-sponsored plan.
(D) If an enrollee claims an employer's
minimum essential coverage is unaffordable, the
information described in paragraph (3).
If an enrollee changes employment or obtains additional
employment while enrolled in a qualified health plan
for which such credit or reduction is allowed, the
enrollee shall notify the Exchange of such change or
additional employment and provide the information
described in this paragraph with respect to the new
employer.
(5) Exemptions from individual responsibility
requirements.--In the case of an individual who is
seeking an exemption certificate under section
1311(d)(4)(H) from any requirement or penalty imposed
by section 5000A, the following information:
(A) In the case of an individual seeking
exemption based on the individual's status as a
member of an exempt religious sect or division,
as a member of a health care sharing ministry,
as an Indian, or as an individual eligible for
a hardship exemption, such information as the
Secretary shall prescribe.
(B) In the case of an individual seeking
exemption based on the lack of affordable
coverage or the individual's status as a
taxpayer with household income less than 100
percent of the poverty line, the information
described in paragraphs (3) and (4), as
applicable.
(c) Verification of Information Contained in Records of
Specific Federal Officials.--
(1) Information transferred to Secretary.--An
Exchange shall submit the information provided by an
applicant under subsection (b) to the Secretary for
verification in accordance with the requirements of
this subsection and subsection (d).
(2) Citizenship or immigration status.--
(A) Commissioner of Social Security.--The
Secretary shall submit to the Commissioner of
Social Security the following information for a
determination as to whether the information
provided is consistent with the information in
the records of the Commissioner:
(i) The name, date of birth, and
social security number of each
individual for whom such information
was provided under subsection (b)(2).
(ii) The attestation of an individual
that the individual is a citizen.
(B) Secretary of Homeland Security.--
(i) In general.--In the case of an
individual--
(I) who attests that the
individual is an alien lawfully
present in the United States;
or
(II) who attests that the
individual is a citizen but
with respect to whom the
Commissioner of Social Security
has notified the Secretary
under subsection (e)(3) that
the attestation is inconsistent
with information in the records
maintained by the Commissioner;
the Secretary shall submit to the
Secretary of Homeland Security the
information described in clause (ii)
for a determination as to whether the
information provided is consistent with
the information in the records of the
Secretary of Homeland Security.
(ii) Information.--The information
described in clause (ii) is the
following:
(I) The name, date of birth,
and any identifying information
with respect to the
individual's immigration status
provided under subsection
(b)(2).
(II) The attestation that the
individual is an alien lawfully
present in the United States or
in the case of an individual
described in clause (i)(II),
the attestation that the
individual is a citizen.
(3) Eligibility for tax credit and cost-sharing
reduction.--The Secretary shall submit the information
described in subsection (b)(3)(A) provided under
paragraph (3), (4), or (5) of subsection (b) to the
Secretary of the Treasury for verification of household
income and family size for purposes of eligibility.
(4) Methods.--
(A) In general.--The Secretary, in
consultation with the Secretary of the
Treasury, the Secretary of Homeland Security,
and the Commissioner of Social Security, shall
provide that verifications and determinations
under this subsection shall be done--
(i) through use of an on-line system
or otherwise for the electronic
submission of, and response to, the
information submitted under this
subsection with respect to an
applicant; or
(ii) by determining the consistency
of the information submitted with the
information maintained in the records
of the Secretary of the Treasury, the
Secretary of Homeland Security, or the
Commissioner of Social Security through
such other method as is approved by the
Secretary.
(B) Flexibility.--The Secretary may modify
the methods used under the program established
by this section for the Exchange and
verification of information if the Secretary
determines such modifications would reduce the
administrative costs and burdens on the
applicant, including allowing an applicant to
request the Secretary of the Treasury to
provide the information described in paragraph
(3) directly to the Exchange or to the
Secretary. The Secretary shall not make any
such modification unless the Secretary
determines that any applicable requirements
under this section and section 6103 of the
Internal Revenue Code of 1986 with respect to
the confidentiality, disclosure, maintenance,
or use of information will be met.
(d) Verification by Secretary.--In the case of information
provided under subsection (b) that is not required under
subsection (c) to be submitted to another person for
verification, the Secretary shall verify the accuracy of such
information in such manner as the Secretary determines
appropriate, including delegating responsibility for
verification to the Exchange.
(e) Actions Relating to Verification.--
(1) In general.--Each person to whom the Secretary
provided information under subsection (c) shall report
to the Secretary under the method established under
subsection (c)(4) the results of its verification and
the Secretary shall notify the Exchange of such
results. Each person to whom the Secretary provided
information under subsection (d) shall report to the
Secretary in such manner as the Secretary determines
appropriate.
(2) Verification.--
(A) Eligibility for enrollment and premium
tax credits and cost-sharing reductions.--If
information provided by an applicant under
paragraphs (1), (2), (3), and (4) of subsection
(b) is verified under subsections (c) and (d)--
(i) the individual's eligibility to
enroll through the Exchange and to
apply for premium tax credits and cost-
sharing reductions shall be satisfied;
and
(ii) the Secretary shall, if
applicable, notify the Secretary of the
Treasury under section 1412(c) of the
amount of any advance payment to be
made.
(B) Exemption from individual
responsibility.--If information provided by an
applicant under subsection (b)(5) is verified
under subsections (c) and (d), the Secretary
shall issue the certification of exemption
described in section 1311(d)(4)(H).
(3) Inconsistencies involving attestation of
citizenship or lawful presence.--If the information
provided by any applicant under subsection (b)(2) is
inconsistent with information in the records maintained
by the Commissioner of Social Security or Secretary of
Homeland Security, whichever is applicable, the
applicant's eligibility will be determined in the same
manner as an individual's eligibility under the
medicaid program is determined under section 1902(ee)
of the Social Security Act (as in effect on January 1,
2010).
(4) Inconsistencies involving other information.--
(A) In general.--If the information provided
by an applicant under subsection (b) (other
than subsection (b)(2)) is inconsistent with
information in the records maintained by
persons under subsection (c) or is not verified
under subsection (d), the Secretary shall
notify the Exchange and the Exchange shall take
the following actions:
(i) Reasonable effort.--The Exchange
shall make a reasonable effort to
identify and address the causes of such
inconsistency, including through
typographical or other clerical errors,
by contacting the applicant to confirm
the accuracy of the information, and by
taking such additional actions as the
Secretary, through regulation or other
guidance, may identify.
(ii) Notice and opportunity to
correct.--In the case the inconsistency
or inability to verify is not resolved
under subparagraph (A), the Exchange
shall--
(I) notify the applicant of
such fact;
(II) provide the applicant an
opportunity to either present
satisfactory documentary
evidence or resolve the
inconsistency with the person
verifying the information under
subsection (c) or (d) during
the 90-day period beginning the
date on which the notice
required under subclause (I) is
sent to the applicant.
The Secretary may extend the 90-day
period under subclause (II) for
enrollments occurring during 2014.
(B) Specific actions not involving
citizenship or lawful presence.--
(i) In general.--Except as provided
in paragraph (3), the Exchange shall,
during any period before the close of
the period under subparagraph
(A)(ii)(II), make any determination
under paragraphs (2), (3), and (4) of
subsection (a) on the basis of the
information contained on the
application.
(ii) Eligibility or amount of credit
or reduction.--If an inconsistency
involving the eligibility for, or
amount of, any premium tax credit or
cost-sharing reduction is unresolved
under this subsection as of the close
of the period under subparagraph
(A)(ii)(II), the Exchange shall notify
the applicant of the amount (if any) of
the credit or reduction that is
determined on the basis of the records
maintained by persons under subsection
(c).
(iii) Employer affordability.--If the
Secretary notifies an Exchange that an
enrollee is eligible for a premium tax
credit under section 36B of such Code
or cost-sharing reduction under section
1402 because the enrollee's (or related
individual's) employer does not provide
minimum essential coverage through an
employer-sponsored plan or that the
employer does provide that coverage but
it is not affordable coverage, the
Exchange shall notify the employer of
such fact and that the employer may be
liable for the payment assessed under
section 4980H of such Code.
(iv) Exemption.--In any case where
the inconsistency involving, or
inability to verify, information
provided under subsection (b)(5) is not
resolved as of the close of the period
under subparagraph (A)(ii)(II), the
Exchange shall notify an applicant that
no certification of exemption from any
requirement or payment under section
5000A of such Code will be issued.
(C) Appeals process.--The Exchange shall also
notify each person receiving notice under this
paragraph of the appeals processes established
under subsection (f).
(f) Appeals and Redeterminations.--
(1) In general.--The Secretary, in consultation with
the Secretary of the Treasury, the Secretary of
Homeland Security, and the Commissioner of Social
Security, shall establish procedures by which the
Secretary or one of such other Federal officers--
(A) hears and makes decisions with respect to
appeals of any determination under subsection
(e); and
(B) redetermines eligibility on a periodic
basis in appropriate circumstances.
(2) Employer liability.--
(A) In general.--The Secretary shall
establish a separate appeals process for
employers who are notified under subsection
(e)(4)(C) that the employer may be liable for a
tax imposed by section 4980H of the Internal
Revenue Code of 1986 with respect to an
employee because of a determination that the
employer does not provide minimum essential
coverage through an employer-sponsored plan or
that the employer does provide that coverage
but it is not affordable coverage with respect
to an employee. Such process shall provide an
employer the opportunity to--
(i) present information to the
Exchange for review of the
determination either by the Exchange or
the person making the determination,
including evidence of the employer-
sponsored plan and employer
contributions to the plan; and
(ii) have access to the data used to
make the determination to the extent
allowable by law.
Such process shall be in addition to any rights
of appeal the employer may have under subtitle
F of such Code.
(B) Confidentiality.--Notwithstanding any
provision of this title (or the amendments made
by this title) or section 6103 of the Internal
Revenue Code of 1986, an employer shall not be
entitled to any taxpayer return information
with respect to an employee for purposes of
determining whether the employer is subject to
the penalty under section 4980H of such Code
with respect to the employee, except that--
(i) the employer may be notified as
to the name of an employee and whether
or not the employee's income is above
or below the threshold by which the
affordability of an employer's health
insurance coverage is measured; and
(ii) this subparagraph shall not
apply to an employee who provides a
waiver (at such time and in such manner
as the Secretary may prescribe)
authorizing an employer to have access
to the employee's taxpayer return
information.
(g) Confidentiality of Applicant Information.--
(1) In general.--An applicant for insurance coverage
or for a premium tax credit or cost-sharing reduction
shall be required to provide only the information
strictly necessary to authenticate identity, determine
eligibility, and determine the amount of the credit or
reduction.
(2) Receipt of information.--Any person who receives
information provided by an applicant under subsection
(b) (whether directly or by another person at the
request of the applicant), or receives information from
a Federal agency under subsection (c), (d), or (e),
shall--
(A) use the information only for the purposes
of, and to the extent necessary in, ensuring
the efficient operation of the Exchange,
including verifying the eligibility of an
individual to enroll through an Exchange or to
claim a premium tax credit or cost-sharing
reduction or the amount of the credit or
reduction; and
(B) not disclose the information to any other
person except as provided in this section.
(h) Penalties.--
(1) False or fraudulent information.--
(A) Civil penalty.--
(i) In general.--If--
(I) any person fails to
provides correct information
under subsection (b); and
(II) such failure is
attributable to negligence or
disregard of any rules or
regulations of the Secretary,
such person shall be subject, in
addition to any other penalties that
may be prescribed by law, to a civil
penalty of not more than $25,000 with
respect to any failures involving an
application for a plan year. For
purposes of this subparagraph, the
terms ``negligence'' and ``disregard''
shall have the same meanings as when
used in section 6662 of the Internal
Revenue Code of 1986.
(ii) Reasonable cause exception.--No
penalty shall be imposed under clause
(i) if the Secretary determines that
there was a reasonable cause for the
failure and that the person acted in
good faith.
(B) Knowing and willful violations.--Any
person who knowingly and willfully provides
false or fraudulent information under
subsection (b) shall be subject, in addition to
any other penalties that may be prescribed by
law, to a civil penalty of not more than
$250,000.
(2) Improper use or disclosure of information.--Any
person who knowingly and willfully uses or discloses
information in violation of subsection (g) shall be
subject, in addition to any other penalties that may be
prescribed by law, to a civil penalty of not more than
$25,000.
(3) Limitations on liens and levies.--The Secretary
(or, if applicable, the Attorney General of the United
States) shall not--
(A) file notice of lien with respect to any
property of a person by reason of any failure
to pay the penalty imposed by this subsection;
or
(B) levy on any such property with respect to
such failure.
(i) Study of Administration of Employer Responsibility.--
(1) In general.--The Secretary of Health and Human
Services shall, in consultation with the Secretary of
the Treasury, conduct a study of the procedures that
are necessary to ensure that in the administration of
this title and section 4980H of the Internal Revenue
Code of 1986 (as added by section 1513) that the
following rights are protected:
(A) The rights of employees to preserve their
right to confidentiality of their taxpayer
return information and their right to enroll in
a qualified health plan through an Exchange if
an employer does not provide affordable
coverage.
(B) The rights of employers to adequate due
process and access to information necessary to
accurately determine any payment assessed on
employers.
(2) Report.--Not later than January 1, 2013, the
Secretary of Health and Human Services shall report the
results of the study conducted under paragraph (1),
including any recommendations for legislative changes,
to the Committees on Finance and Health, Education,
Labor and Pensions of the Senate and the Committees of
Education and Labor and Ways and Means of the House of
Representatives.
* * * * * * *
----------
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
* * * * * * *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS
* * * * * * *
Subtitle B--Regulatory Provisions
* * * * * * *
Part 6--Continuation Coverage and Additional Standards for Group Health
Plans
* * * * * * *
SEC. 607. DEFINITIONS AND SPECIAL RULES.
For purposes of this part--
(1) Group health plan.--The term ``group health
plan'' means an employee welfare benefit plan providing
medical care (as defined in section 213(d) of the
Internal Revenue Code of 1986) to participants or
beneficiaries directly or through insurance,
reimbursement, or otherwise. Such term shall not
include any plan substantially all of the coverage
under which is for qualified long-term care services
(as defined in section 7702B(c) of such Code). Such
term shall not include any qualified small employer
health reimbursement arrangement (as defined in section
9831(d)(2) of the Internal Revenue Code of 1986).
(2) Covered employee.--The term ``covered employee''
means an individual who is (or was) provided coverage
under a group health plan by virtue of the performance
of services by the individual for 1 or more persons
maintaining the plan (including as an employee defined
in section 401(c)(1) of the Internal Revenue Code of
1986).
(3) Qualified beneficiary.--
(A) In general.--The term ``qualified
beneficiary'' means, with respect to a covered
employee under a group health plan, any other
individual who, on the day before the
qualifying event for that employee, is a
beneficiary under the plan--
(i) as the spouse of the covered
employee, or
(ii) as the dependent child of the
employee.
Such term shall also include a child who is born to or
placed for adoption with the covered employee during
the period of continuation coverage under this part.
(B) Special rule for terminations and reduced
employment.--In the case of a qualifying event
described in section 603(2), the term
``qualified beneficiary'' includes the covered
employee.
(C) Special rule for retirees and widows.--In
the case of a qualifying event described in
section 603(6), the term ``qualified
beneficiary'' includes a covered employee who
had retired on or before the date of
substantial elimination of coverage and any
other individual who, on the day before such
qualifying event, is a beneficiary under the
plan--
(i) as the spouse of the covered
employee,
(ii) as the dependent child of the
employee, or
(iii) as the surviving spouse of the
covered employee.
(4) Employer.--Subsection (n) (relating to leased
employees) and subsection (t) (relating to application
of controlled group rules to certain employee benefits)
of section 414 of the Internal Revenue Code of 1986
shall apply for purposes of this part in the same
manner and to the same extent as such subsections apply
for purposes of section 106 of such Code. Any
regulations prescribed by the Secretary pursuant to the
preceding sentence shall be consistent and coextensive
with any regulations prescribed for similar purposes by
the Secretary of the Treasury (or such Secretary's
delegate) under such subsections.
(5) Optional extension of required periods.--A group
health plan shall not be treated as failing to meet the
requirements of this part solely because the plan
provides both--
(A) that the period of extended coverage
referred to in section 602(2) commences with
the date of the loss of coverage, and
(B) that the applicable notice period
provided under section 606(a)(2) commences with
the date of the loss of coverage.
* * * * * * *
Part 7--Group Health Plan Requirements
* * * * * * *
Subpart C--General Provisions
* * * * * * *
SEC. 733. DEFINITIONS.
(a) Group Health Plan.--For purposes of this part--
(1) In general.--The term ``group health plan'' means
an employee welfare benefit plan to the extent that the
plan provides medical care (as defined in paragraph (2)
and including items and services paid for as medical
care) to employees or their dependents (as defined
under the terms of the plan) directly or through
insurance, reimbursement, or otherwise. Such term shall
not include any qualified small employer health
reimbursement arrangement (as defined in section
9831(d)(2) of the Internal Revenue Code of 1986).
(2) Medical care.--The term ``medical care'' means
amounts paid for--
(A) the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts
paid for the purpose of affecting any structure
or function of the body,
(B) amounts paid for transportation primarily
for and essential to medical care referred to
in subparagraph (A), and
(C) amounts paid for insurance covering
medical care referred to in subparagraphs (A)
and (B).
(b) Definitions Relating to Health Insurance.--For purposes
of this part--
(1) Health insurance coverage.--The term ``health
insurance coverage'' means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise and including items and
services paid for as medical care) under any hospital
or medical service policy or certificate, hospital or
medical service plan contract, or health maintenance
organization contract offered by a health insurance
issuer.
(2) Health insurance issuer.--The term ``health
insurance issuer'' means an insurance company,
insurance service, or insurance organization (including
a health maintenance organization, as defined in
paragraph (3)) which is licensed to engage in the
business of insurance in a State and which is subject
to State law which regulates insurance (within the
meaning of section 514(b)(2)). Such term does not
include a group health plan.
(3) Health maintenance organization.--The term
``health maintenance organization'' means--
(A) a federally qualified health maintenance
organization (as defined in section 1301(a) of
the Public Health Service Act (42 U.S.C.
300e(a))),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health maintenance
organization.
(4) Group health insurance coverage.--The term
``group health insurance coverage'' means, in
connection with a group health plan, health insurance
coverage offered in connection with such plan.
(c) Excepted Benefits.--For purposes of this part, the term
``excepted benefits'' means benefits under one or more (or any
combination thereof) of the following:
(1) Benefits not subject to requirements.--
(A) Coverage only for accident, or disability
income insurance, or any combination thereof.
(B) Coverage issued as a supplement to
liability insurance.
(C) Liability insurance, including general
liability insurance and automobile liability
insurance.
(D) Workers' compensation or similar
insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for on-site medical clinics.
(H) Other similar insurance coverage,
specified in regulations, under which benefits
for medical care are secondary or incidental to
other insurance benefits.
(2) Benefits not subject to requirements if offered
separately.--
(A) Limited scope dental or vision benefits.
(B) Benefits for long-term care, nursing home
care, home health care, community-based care,
or any combination thereof.
(C) Such other similar, limited benefits as
are specified in regulations.
(3) Benefits not subject to requirements if offered
as independent, noncoordinated benefits.--
(A) Coverage only for a specified disease or
illness.
(B) Hospital indemnity or other fixed
indemnity insurance.
(4) Benefits not subject to requirements if offered
as separate insurance policy.--Medicare supplemental
health insurance (as defined under section 1882(g)(1)
of the Social Security Act), coverage supplemental to
the coverage provided under chapter 55 of title 10,
United States Code, and similar supplemental coverage
provided to coverage under a group health plan.
(d) Other Definitions.--For purposes of this part--
(1) COBRA continuation provision.--The term ``COBRA
continuation provision'' means any of the following:
(A) Part 6 of this subtitle.
(B) Section 4980B of the Internal Revenue
Code of 1986, other than subsection (f)(1) of
such section insofar as it relates to pediatric
vaccines.
(C) Title XXII of the Public Health Service
Act.
(2) Health status-related factor.--The term ``health
status-related factor'' means any of the factors
described in section 702(a)(1).
(3) Network plan.--The term ``network plan'' means
health insurance coverage offered by a health insurance
issuer under which the financing and delivery of
medical care (including items and services paid for as
medical care) are provided, in whole or in part,
through a defined set of providers under contract with
the issuer.
(4) Placed for adoption.--The term ``placement'', or
being ``placed'', for adoption, has the meaning given
such term in section 609(c)(3)(B).
(5) Family member.--The term ``family member'' means,
with respect to an individual--
(A) a dependent (as such term is used for
purposes of section 701(f)(2)) of such
individual, and
(B) any other individual who is a first-
degree, second-degree, third-degree, or fourth-
degree relative of such individual or of an
individual described in subparagraph (A).
(6) Genetic information.--
(A) In general.--The term ``genetic
information'' means, with respect to any
individual, information about--
(i) such individual's genetic tests,
(ii) the genetic tests of family
members of such individual, and
(iii) the manifestation of a disease
or disorder in family members of such
individual.
(B) Inclusion of genetic services and
participation in genetic research.--Such term
includes, with respect to any individual, any
request for, or receipt of, genetic services,
or participation in clinical research which
includes genetic services, by such individual
or any family member of such individual.
(C) Exclusions.--The term ``genetic
information'' shall not include information
about the sex or age of any individual.
(7) Genetic test.--
(A) In general.--The term ``genetic test''
means an analysis of human DNA, RNA,
chromosomes, proteins, or metabolites, that
detects genotypes, mutations, or chromosomal
changes.
(B) Exceptions.--The term ``genetic test''
does not mean--
(i) an analysis of proteins or
metabolites that does not detect
genotypes, mutations, or chromosomal
changes; or
(ii) an analysis of proteins or
metabolites that is directly related to
a manifested disease, disorder, or
pathological condition that could
reasonably be detected by a health care
professional with appropriate training
and expertise in the field of medicine
involved.
(8) Genetic services.--The term ``genetic services''
means--
(A) a genetic test;
(B) genetic counseling (including obtaining,
interpreting, or assessing genetic
information); or
(C) genetic education.
(9) Underwriting purposes.--The term ``underwriting
purposes'' means, with respect to any group health
plan, or health insurance coverage offered in
connection with a group health plan--
(A) rules for, or determination of,
eligibility (including enrollment and continued
eligibility) for benefits under the plan or
coverage;
(B) the computation of premium or
contribution amounts under the plan or
coverage;
(C) the application of any pre-existing
condition exclusion under the plan or coverage;
and
(D) other activities related to the creation,
renewal, or replacement of a contract of health
insurance or health benefits.
* * * * * * *
----------
PUBLIC HEALTH SERVICE ACT
* * * * * * *
TITLE XXII--REQUIREMENTS FOR CERTAIN GROUP HEALTH PLANS FOR CERTAIN
STATE AND LOCAL EMPLOYEES
* * * * * * *
SEC. 2208. DEFINITIONS.
For purposes of this title--
(1) Group health plan.--The term ``group health
plan'' has the meaning given such term in 5000(b) of
the Internal Revenue Code of 1986. Such term shall not
include any plan substantially all of the coverage
under which is for qualified long-term care services
(as defined in section 7702B(c) of such Code). Such
term shall not include any qualified small employer
health reimbursement arrangement (as defined in section
9831(d)(2) of the Internal Revenue Code of 1986).
(2) Covered employee.--The term ``covered employee''
means an individual who is (or was) provided coverage
under a group health plan by virtue of the performance
of services by the individual for 1 or more persons
maintaining the plan (including as an employee defined
in section 401(c)(1) of the Internal Revenue Code of
1986).
(3) Qualified beneficiary.--
(A) In general.--The term ``qualified
beneficiary'' means, with respect to a covered
employee under a group health plan, any other
individual who, on the day before the
qualifying event for that employee, is a
beneficiary under the plan--
(i) as the spouse of the covered
employee, or
(ii) as the dependent child of the
employee.
Such term shall also include a child who is born to or
placed for adoption with the covered employee during
the period of continuation coverage under this title.
(B) Special rule for terminations and reduced
employment.--In the case of a qualifying event
described in section 2203(2), the term
``qualified beneficiary'' includes the covered
employee.
(4) Plan administrator.--The term ``plan
administrator'' has the meaning given the term
``administrator'' by section 3(16)(A) of the Employee
Retirement Income Security Act of 1974.
* * * * * * *
TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
* * * * * * *
Part C--Definitions; Miscellaneous Provisions
SEC. 2791. DEFINITIONS.
(a) Group Health Plan.--
(1) Definition.--The term ``group health plan'' means
an employee welfare benefit plan (as defined in section
3(1) of the Employee Retirement Income Security Act of
1974) to the extent that the plan provides medical care
(as defined in paragraph (2)) and including items and
services paid for as medical care) to employees or
their dependents (as defined under the terms of the
plan) directly or through insurance, reimbursement, or
otherwise. Except for purposes of part C of title XI of
the Social Security Act (42 U.S.C. 1320d et seq.), such
term shall not include any qualified small employer
health reimbursement arrangement (as defined in section
9831(d)(2) of the Internal Revenue Code of 1986).
(2) Medical care.--The term ``medical care'' means
amounts paid for--
(A) the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts
paid for the purpose of affecting any structure
or function of the body,
(B) amounts paid for transportation primarily
for and essential to medical care referred to
in subparagraph (A), and
(C) amounts paid for insurance covering
medical care referred to in subparagraphs (A)
and (B).
(3) Treatment of certain plans as group health plan
for notice provision.--A program under which creditable
coverage described in subparagraph (C), (D), (E), or
(F) of section 2701(c)(1) is provided shall be treated
as a group health plan for purposes of applying section
2701(e).
(b) Definitions Relating to Health Insurance.--
(1) Health insurance coverage.--The term ``health
insurance coverage'' means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise and including items and
services paid for as medical care) under any hospital
or medical service policy or certificate, hospital or
medical service plan contract, or health maintenance
organization contract offered by a health insurance
issuer.
(2) Health insurance issuer.--The term ``health
insurance issuer'' means an insurance company,
insurance service, or insurance organization (including
a health maintenance organization, as defined in
paragraph (3)) which is licensed to engage in the
business of insurance in a State and which is subject
to State law which regulates insurance (within the
meaning of section 514(b)(2) of the Employee Retirement
Income Security Act of 1974). Such term does not
include a group health plan.
(3) Health maintenance organization.--The term
``health maintenance organization'' means--
(A) a Federally qualified health maintenance
organization (as defined in section 1301(a)),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health maintenance
organization.
(4) Group health insurance coverage.--The term
``group health insurance coverage'' means, in
connection with a group health plan, health insurance
coverage offered in connection with such plan.
(5) Individual health insurance coverage.--The term
``individual health insurance coverage'' means health
insurance coverage offered to individuals in the
individual market, but does not include short-term
limited duration insurance.
(c) Excepted Benefits.--For purposes of this title, the term
``excepted benefits'' means benefits under one or more (or any
combination thereof) of the following:
(1) Benefits not subject to requirements.--
(A) Coverage only for accident, or disability
income insurance, or any combination thereof.
(B) Coverage issued as a supplement to
liability
insurance.
(C) Liability insurance, including general
liability insurance and automobile liability
insurance.
(D) Workers' compensation or similar
insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for on-site medical clinics.
(H) Other similar insurance coverage,
specified in regulations, under which benefits
for medical care are secondary or incidental to
other insurance benefits.
(2) Benefits not subject to requirements if offered
separately.--
(A) Limited scope dental or vision benefits.
(B) Benefits for long-term care, nursing home
care, home health care, community-based care,
or any combination thereof.
(C) Such other similar, limited benefits as
are specified in regulations.
(3) Benefits not subject to requirements if offered
as independent, noncoordinated benefits.--
(A) Coverage only for a specified disease or
illness.
(B) Hospital indemnity or other fixed
indemnity insurance.
(4) Benefits not subject to requirements if offered
as separate insurance policy.--Medicare supplemental
health insurance (as defined under section 1882(g)(1)
of the Social Security Act), coverage supplemental to
the coverage provided under chapter 55 of title 10,
United States Code, and similar supplemental coverage
provided to coverage under a group health plan.
(d) Other Definitions.--
(1) Applicable state authority.--The term
``applicable State authority'' means, with respect to a
health insurance issuer in a State, the State insurance
commissioner or official or officials designated by the
State to enforce the requirements of this title for the
State involved with respect to such issuer.
(2) Beneficiary.--The term ``beneficiary'' has the
meaning given such term under section 3(8) of the
Employee Retirement Income Security Act of 1974.
(3) Bona fide association.--The term ``bona fide
association'' means, with respect to health insurance
coverage offered in a State, an association which--
(A) has been actively in existence for at
least 5 years;
(B) has been formed and maintained in good
faith for purposes other than obtaining
insurance;
(C) does not condition membership in the
association on any health status-related factor
relating to an individual (including an
employee of an employer or a dependent of an
employee);
(D) makes health insurance coverage offered
through the association available to all
members regardless of any health status-related
factor relating to such members (or individuals
eligible for coverage through a member);
(E) does not make health insurance coverage
offered through the association available other
than in connection with a member of the
association; and
(F) meets such additional requirements as may
be imposed under State law.
(4) COBRA continuation provision.--The term ``COBRA
continuation provision'' means any of the following:
(A) Section 4980B of the Internal Revenue
Code of 1986, other than subsection (f)(1) of
such section insofar as it relates to pediatric
vaccines.
(B) Part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of
1974, other than section 609 of such Act.
(C) Title XXII of this Act.
(5) Employee.--The term ``employee'' has the meaning
given such term under section 3(6) of the Employee
Retirement Income Security Act of 1974.
(6) Employer.--The term ``employer'' has the meaning
given such term under section 3(5) of the Employee
Retirement Income Security Act of 1974, except that
such term shall include only employers of two or more
employees.
(7) Church plan.--The term ``church plan'' has the
meaning given such term under section 3(33) of the
Employee Retirement Income Security Act of 1974.
(8) Governmental plan.--(A) The term ``governmental
plan'' has the meaning given such term under section
3(32) of the Employee Retirement Income Security Act of
1974 and any Federal governmental plan.
(B) Federal governmental plan.--The term ``Federal
governmental plan'' means a governmental plan
established or maintained for its employees by the
Government of the United States or by any agency or
instrumentality of such Government.
(C) Non-Federal governmental plan.--The term ``non-
Federal governmental plan'' means a governmental plan
that is not a Federal governmental plan.
(9) Health status-related factor.--The term ``health
status-related factor'' means any of the factors
described in section 2702(a)(1).
(10) Network plan.--The term ``network plan'' means
health insurance coverage of a health insurance issuer
under which the financing and delivery of medical care
(including items and services paid for as medical care)
are provided, in whole or in part, through a defined
set of providers under contract with the issuer.
(11) Participant.--The term ``participant'' has the
meaning given such term under section 3(7) of the
Employee Retirement Income Security Act of 1974.
(12) Placed for adoption defined.--The term
``placement'', or being ``placed'', for adoption, in
connection with any placement for adoption of a child
with any person, means the assumption and retention by
such person of a legal obligation for total or partial
support of such child in anticipation of adoption of
such child. The child's placement with such person
terminates upon the termination of such legal
obligation.
(13) Plan sponsor.--The term ``plan sponsor'' has the
meaning given such term under section 3(16)(B) of the
Employee Retirement Income Security Act of 1974.
(14) State.--The term ``State'' means each of the
several States, the District of Columbia, Puerto Rico,
the Virgin Islands, Guam, American Samoa, and the
Northern Mariana Islands.
(15) Family member.--The term ``family member''
means, with respect to any individual--
(A) a dependent (as such term is used for
purposes of section 2701(f)(2)) of such
individual; and
(B) any other individual who is a first-
degree, second-degree, third-degree, or fourth-
degree relative of such individual or of an
individual described in subparagraph (A).
(16) Genetic information.--
(A) In general.--The term ``genetic
information'' means, with respect to any
individual, information about--
(i) such individual's genetic tests,
(ii) the genetic tests of family
members of such individual, and
(iii) the manifestation of a disease
or disorder in family members of such
individual.
(B) Inclusion of genetic services and
participation in genetic research.--Such term
includes, with respect to any individual, any
request for, or receipt of, genetic services,
or participation in clinical research which
includes genetic services, by such individual
or any family member of such individual.
(C) Exclusions.--The term ``genetic
information'' shall not include information
about the sex or age of any individual.
(17) Genetic test.--
(A) In general.--The term ``genetic test''
means an analysis of human DNA, RNA,
chromosomes, proteins, or metabolites, that
detects genotypes, mutations, or chromosomal
changes.
(B) Exceptions.--The term ``genetic test''
does not mean--
(i) an analysis of proteins or
metabolites that does not detect
genotypes, mutations, or chromosomal
changes; or
(ii) an analysis of proteins or
metabolites that is directly related to
a manifested disease, disorder, or
pathological condition that could
reasonably be detected by a health care
professional with appropriate training
and expertise in the field of medicine
involved.
(18) Genetic services.--The term ``genetic services''
means--
(A) a genetic test;
(B) genetic counseling (including obtaining,
interpreting, or assessing genetic
information); or
(C) genetic education.
(19) Underwriting purposes.--The term ``underwriting
purposes'' means, with respect to any group health
plan, or health insurance coverage offered in
connection with a group health plan--
(A) rules for, or determination of,
eligibility (including enrollment and continued
eligibility) for benefits under the plan or
coverage;
(B) the computation of premium or
contribution amounts under the plan or
coverage;
(C) the application of any pre-existing
condition exclusion under the plan or coverage;
and
(D) other activities related to the creation,
renewal, or replacement of a contract of health
insurance or health benefits.
(20) Qualified health plan.--The term ``qualified
health plan'' has the meaning given such term in
section 1301(a) of the Patient Protection and
Affordable Care Act.
(21) Exchange.--The term ``Exchange'' means an
American Health Benefit Exchange established under
section 1311 of the Patient Protection and Affordable
Care Act.
(e) Definitions Relating to Markets and Small Employers.--For
purposes of this title:
(1) Individual market.--
(A) In general.--The term ``individual
market'' means the market for health insurance
coverage offered to individuals other than in
connection with a group health plan.
(B) Treatment of very small groups.--
(i) In general.--Subject to clause
(ii), such terms includes coverage
offered in connection with a group
health plan that has fewer than two
participants as current employees on
the first day of the plan year.
(ii) State exception.--Clause (i)
shall not apply in the case of a State
that elects to regulate the coverage
described in such clause as coverage in
the small group market.
(2) Large employer.--The term ``large employer''
means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer
who employed an average of at least 51 employees on
business days during the preceding calendar year and
who employs at least 2 employees on the first day of
the plan year.
(3) Large group market.--The term ``large group
market'' means the health insurance market under which
individuals obtain health insurance coverage (directly
or through any arrangement) on behalf of themselves
(and their dependents) through a group health plan
maintained by a large employer.
(4) Small employer.--The term ``small employer''
means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer
who employed an average of at least 1 but not more than
50 employees on business days during the preceding
calendar year and who employs at least 1 employees on
the first day of the plan year.
(5) Small group market.--The term ``small group
market'' means the health insurance market under which
individuals obtain health insurance coverage (directly
or through any arrangement) on behalf of themselves
(and their dependents) through a group health plan
maintained by a small employer.
(6) Application of certain rules in determination of
employer size.--For purposes of this subsection--
(A) Application of aggregation rule for
employers.--all persons treated as a single
employer under subsection (b), (c), (m), or (o)
of section 414 of the Internal Revenue Code of
1986 shall be treated as 1 employer.
(B) Employers not in existence in preceding
year.--In the case of an employer which was not
in existence throughout the preceding calendar
year, the determination of whether such
employer is a small or large employer shall be
based on the average number of employees that
it is reasonably expected such employer will
employ on business days in the current calendar
year.
(C) Predecessors.--Any reference in this
subsection to an employer shall include a
reference to any predecessor of such employer.
(7) State option to extend definition of small
employer.--Notwithstanding paragraphs (2) and (4),
nothing in this section shall prevent a State from
applying this subsection by treating as a small
employer, with respect to a calendar year and a plan
year, an employer who employed an average of at least 1
but not more than 100 employees on business days during
the preceding calendar year and who employs at least 1
employee on the first day of the plan year.
* * * * * * *