[Senate Report 114-3]
[From the U.S. Government Publishing Office]
Calendar No. 19
114th Congress } { Report
SENATE
1st Session } { 114-3
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HIRE MORE HEROES ACT OF 2015
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February 12, 2015.--Ordered to be printed
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Mr. Hatch, from the Committee on Finance,
submitted the following
R E P O R T
[To accompany H.R. 22]
The Committee on Finance, to which was referred the bill
(H.R. 22) to amend the Internal Revenue Code of 1986 to exempt
employees with health coverage under TRICARE or the Veterans
Administration from being taken into account for purposes of
determining the employers to which the employer mandate applies
under the Patient Protection and Affordable Care Act, having
considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
I. LEGISLATIVE BACKGROUND...........................................1
II. EXPLANATION OF THE BILL..........................................2
A. Employees with Health Coverage under TRICARE or the
Veterans Administration Not Taken into Account in
Determining Employers to which the Employer Mandate
Applies under Patient Protection and Affordable
Care Act (sec. 2 of the bill and sec. 4980H of the
Code).............................................. 2
III. BUDGET EFFECTS OF THE BILL.......................................5
IV. VOTES OF THE COMMITTEE...........................................6
V. REGULATORY IMPACT AND OTHER MATTERS..............................6
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............7
I. LEGISLATIVE BACKGROUND
The Committee on Finance, having considered H.R. 22, the
``Hire More Heroes Act of 2015,'' to amend the Internal Revenue
Code of 1986 to exempt employees with health coverage under
TRICARE or the Veterans Administration from being taken into
account for purposes of determining the employers to which the
employer mandate applies under the Patient Protection and
Affordable Care Act, reports favorably thereon and recommends
that the bill do pass.
Background and need for legislative action
Members of the military (and their families) serve the
Nation with dedication and honor. After this service, veterans
deserve the best job opportunities the country can offer.
Small businesses are a primary source of job creation.
Incentives for businesses to hire veterans, especially small
businesses, play a valuable role in expanding job opportunities
for veterans.
The Affordable Care Act requires employers with 50 or more
full-time employees to offer medical coverage to their full-
time employees (and dependents) or possibly face a tax penalty.
Under the bill, an individual who already has medical coverage
under the TRICARE program or a program of the Veterans Health
Administration is disregarded in determining whether an
employer has 50 full-time employees. The bill thus allows a
small business to hire a veteran without crossing the 50 full-
time employee threshold, recognizing that an employer would not
need to incur the additional cost of offering health insurance
to a veteran already covered by the Veterans Health
Administration or TRICARE.
II. EXPLANATION OF THE BILL
A. Employees With Health Coverage Under TRICARE or the Veterans
Administration Not Taken Into Account in Determining Employers To Which
the Employer Mandate Applies Under Patient Protection and Affordable
Care Act (Sec. 2 of the Bill and Sec. 4980H of the Code)
PRESENT LAW
Employer shared responsibility for health coverage
In general
Under the Patient Protection and Affordable Care Act
(``PPACA''),\1\ as amended by the Health Care and Education
Reconciliation Act of 2010\2\ (referred to collectively as the
``Affordable Care Act'' or ``ACA''), an applicable large
employer may be subject to a tax, called an ``assessable
payment,'' for a month if one or more of its full-time
employees is certified to the employer as receiving for the
month a premium assistance credit for health insurance
purchased on an American Health Benefit Exchange or reduced
cost-sharing for the employee's share of expenses covered by
such health insurance.\3\ As discussed below, the amount of the
assessable payment depends on whether the employer offers its
full-time employees and their dependents the opportunity to
enroll in minimum essential coverage under a group health plan
sponsored by the employer and, if it does, whether the coverage
offered is affordable and provides minimum value.
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\1\Pub. L. No. 111-148.
\2\Pub. L. No. 111-152.
\3\Sec. 4980H. This is sometimes referred to as the employer shared
responsibility requirement. An applicable large employer is also
subject to annual reporting requirements under section 6056. Premium
assistance credits for health insurance purchased on an American Health
Benefit Exchange are provided under section 36B. Reduced cost-sharing
for an individual's share of expenses covered by such health insurance
is provided under section 1402 of PPACA. For further information on
these provisions, see Part III.B-D of Joint Committee on Taxation,
Present Law and Background Relating to the Tax-Related Provisions in
the Affordable Care Act (JCX-6-13), March 4, 2013, available at
www.jct.gov.
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Under the ACA, these rules are effective for months
beginning after December 31, 2013. However, in 2013, the
Internal Revenue Service (``IRS'') announced that no assessable
payments will be assessed for 2014.\4\ In addition, in 2014,
the IRS announced that no assessable payments for 2015 will
apply to applicable large employers that have fewer than 100
full-time employees and full-time equivalent employees and meet
certain other requirements.\5\
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\4\Notice 2013-45, 2013-31 I.R.B. 116, Part III, Q&A-2.
\5\Section XV.D.6 of the preamble to the final regulations, T.D.
9655, 79 Fed. Reg. 8544, 8574-8575, February 12, 2014.
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Definitions of full-time employee and applicable large
employer
For purposes of applying these rules, full-time employee
means, with respect to any month, an employee who is employed
on average at least 30 hours of service per week. Hours of
service are to be determined under regulations, rules, and
guidance prescribed by the Secretary of the Treasury
(``Secretary''), in consultation with the Secretary of Labor,
including rules for employees who are not compensated on an
hourly basis.
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.\6\ Solely for purposes of 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 whether an employer
is an applicable large employer, members of the same controlled
group, group under common control, and affiliated service group
are treated as a single employer.\7\
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\6\Additional rules apply, for example, in the case of an employer
that was not in existence for the entire preceding calendar year.
\7\The rules for determining controlled group, group under common
control, and affiliated service group under section 414(b), (c), (m)
and (o) apply for this purpose. If the group is an applicable large
employer under this test, each member of the group is an applicable
large employer even if any member by itself would not be an applicable
large employer. In addition, in determining assessable payments (as
discussed herein), only one 30-employee reduction in full-time
employees applies to the group and is allocated among the members
ratably based on the number of full-time employees employed by each
member.
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Assessable payments
If an applicable large employer does not offer its full-
time employees and their dependents minimum essential coverage
under an employer-sponsored plan and at least one full-time
employee is certified as receiving for the month a premium
assistance credit or reduced cost-sharing, the employer may be
subject to an assessable payment of $2,000\8\ (divided by 12
and applied on a monthly basis) multiplied by the number of its
full-time employees minus 30, regardless of the number of full-
time employees so certified. For example, in 2016, Employer A
fails to offer minimum essential coverage and has 100 full-time
employees, 10 of whom receive premium assistance credits for
the entire year. The employer's assessable payment is $2,000
for each employee over the 30-employee threshold, for a total
of $140,000 ($2,000 multiplied by 70 (100-30)).
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\8\For calendar years after 2014, the $2,000 dollar amount, and the
$3,000 dollar amount referenced herein, are increased by the percentage
(if any) by which the average per capita premium for health insurance
coverage in the United States for the preceding calendar year (as
estimated by the Secretary of Health and Human Services (``HHS'') no
later than October 1 of the preceding calendar year) exceeds the
average per capita premium for 2013 (as determined by the Secretary of
HHS), rounded down to the nearest $10.
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Generally, an employee who is offered minimum essential
coverage under an employer-sponsored plan is not eligible for a
premium assistance credit or reduced cost-sharing unless the
coverage is unaffordable or fails to provide minimum value.\9\
However, if an employer offers its full-time employees and
their dependents minimum essential coverage under an employer-
sponsored plan and at least one full-time employee is certified
as receiving a premium assistance credit or reduced cost-
sharing (because the coverage is unaffordable or fails to
provide minimum value), the employer may be subject to an
assessable payment of $3,000 (divided by 12 and applied on a
monthly basis) multiplied by the number of such full-time
employees. However, the assessable payment in this case is
capped at the amount that would apply if the employer failed to
offer its full-time employees and their dependents minimum
essential coverage. For example, in 2016, Employer A offers
minimum essential coverage and has 100 full-time employees, 20
of whom receive premium assistance credits for the entire year.
The employer's assessable payment before consideration of the
cap is $3,000 for each full-time employee receiving a credit,
for a total of $60,000 ($3,000 multiplied by 20). The cap on
the assessable payment is the amount that would have applied if
the employer failed to offer coverage, or $140,000 ($2,000
multiplied by 70 (100-30)). In this example, the cap therefore
does not affect the amount of the assessable payment, which
remains at $60,000.
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\9\Under section 36B(c)(2)(C), coverage under an employer-sponsored
plan is unaffordable if the employee's share of the premium for self-
only coverage exceeds 9.5 percent of household income, and the coverage
fails to provide minimum value if the plan's share of total allowed
cost of provided benefits is less than 60 percent of such costs.
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TRICARE and veterans health programs
The Military Health System provides active and retired
members of the armed forces and their families (including
certain survivors and former spouses) with medical coverage,
primarily through the TRICARE program.\10\ The TRICARE program
offers various health plans, including a managed care option
and fee-for-service options.\11\
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\10\10 U.S.C. chapter 55. Health care may be provided through
military treatment facilities or private health care providers. Under
section 5000A(f)(1)(A)(iv), this coverage satisfies the requirement
under ACA that individuals have minimum essential coverage.
\11\Information about the TRICARE program is available at http://
www.tricare.mil/.
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The Veterans Health Administration (``VHA''), within the
Department of Veterans Affairs, provides certain veterans and
family members (including certain survivors) with medical
coverage through its health care programs.\12\ Enrolled
veterans are provided a medical benefits package that covers a
range of medical care, including inpatient, outpatient, and
preventive services. Medical coverage for eligible family
members of veterans is provided through the Civilian Health and
Medical Program of the Department of Veterans Affairs
(``CHAMPVA'').\13\
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\12\38 U.S.C. chapters 17 and 18. Veterans are enrolled in VHA
health care programs based on specified priority categories. The
highest priority is given to veterans with a service-connected
disability. Information about VHA health care programs is available at
http://www.va.gov/health/.
\13\Under section 5000A(f)(1)(A)(v), minimum essential coverage
includes coverage under a VHA health care program, as determined by the
Secretary of Veterans Affairs, in coordination with the Secretary of
Health and Human Services and the Secretary. Under Treas. Reg. sec.
1.5000A-2(b)(1)(v), the medical benefits package that enrolled veterans
receive and CHAMPVA coverage are minimum essential coverage, as well as
the comprehensive health care program for certain children of Vietnam
Veterans and Veterans of covered service in Korea who are suffering
from spina bifida.
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REASONS FOR CHANGE
The Committee recognizes the importance of rewarding
veterans for their service to the Nation by providing them with
job opportunities. The Committee also recognizes the importance
of encouraging businesses to hire veterans. The bill allows a
small business to hire a veteran without crossing the 50 full-
time employee threshold.
EXPLANATION OF PROVISION
Under the provision, solely for purposes of determining
whether an employer is an applicable large employer for any
month (and possibly subject to an assessable payment), an
individual is not taken into account as an employee for the
month if the individual has medical coverage for the month
under (1) a program for members of the armed forces, including
coverage under the TRICARE program, or (2) under a VHA health
care program, as determined by the Secretary of Veterans
Affairs, in coordination with the Secretary of Health and Human
Services and the Secretary.
EFFECTIVE DATE
The provision applies to months beginning after December
31, 2013.
III. BUDGET EFFECTS OF THE BILL
A. Committee Estimates
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate, the following statement is made
concerning the estimated budget effects of the revenue
provisions of the ``Hire More Heroes Act of 2015'' as reported.
The bill is estimated to have the following effects on
Federal budget receipts for fiscal years 2015-2025:
FISCAL YEARS
[Millions of dollars]
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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015-20 2015-25
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- - - -64 -68 -72 -77 -82 -88 -93 -99 -104 -110 -364 -858
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NOTE: Details do not add to totals due to rounding.
Source: Estimate provided by the staff of the Joint Committee on Taxation and the Congressional Budget Office.
B. Budget Authority and Tax Expenditures
Budget authority
In compliance with section 308(a)(1) of the Congressional
Budget and Impoundment Control Act of 1974 (``Budget
Act''),\14\ the Committee states that no provisions of the bill
as reported involve new or increased budget authority.
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\14\Pub. L. No. 93-344.
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Tax expenditures
In compliance with section 308(a)(1) of the Budget Act, the
Committee states that the revenue-reducing provisions of the
bill involve increased tax expenditures (see revenue table in
Part A., above).
C. Consultation With Congressional Budget Office
In accordance with section 403 of the Budget Act, the
Committee advises that the Congressional Budget Office has not
submitted a statement on the bill. The letter from the
Congressional Budget Office will be provided separately.
IV. VOTES OF THE COMMITTEE
In compliance with paragraph 7(b) of rule XXVI of the
standing rules of the Senate, the Committee states that, with a
majority present, the ``Hire More Heroes Act of 2015,'' was
ordered favorably reported on January 28, 2015 as follows:
Final Passage of The Hire More Heroes Act of 2015--approved
by a roll call vote of 26 ayes, 0 nays.
Ayes: Hatch, Grassley (proxy), Crapo, Roberts, Enzi
(proxy), Cornyn (proxy), Thune (proxy), Burr, Isakson, Portman,
Toomey, Coats, Heller, Scott, Wyden, Schumer, Stabenow,
Cantwell, Nelson (proxy), Menendez, Carper, Cardin, Brown,
Bennet, Casey, Warner (proxy).
V. REGULATORY IMPACT AND OTHER MATTERS
A. Regulatory Impact
Pursuant to paragraph 11(b) of rule XXVI of the Standing
Rules of the Senate, the Committee makes the following
statement concerning the regulatory impact that might be
incurred in carrying out the provisions of the bill as amended.
Impact on individuals and businesses, personal privacy and paperwork
The bill is not expected to impose additional
administrative requirements or regulatory burdens on
individuals. The bill is expected to reduce administrative
requirements and regulatory burdens on some businesses.
The provisions of the bill do not impact personal privacy.
B. Unfunded Mandates Statement
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
any private sector mandates. The Committee has determined that
the bill contains no intergovernmental mandate.
C. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring 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
and has widespread applicability to individuals or small
businesses.
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 Code and that have ``widespread
applicability'' to individuals or small businesses, within the
meaning of the rule.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In the opinion of the Committee, it is necessary in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported by the Committee).