[Senate Report 114-3]
[From the U.S. Government Publishing Office]


                                                        Calendar No. 19
114th Congress   }                                          {  Report
                                 SENATE
 1st Session     }                                          {   114-3

======================================================================



 
                      HIRE MORE HEROES ACT OF 2015

                                _______
                                

               February 12, 2015.--Ordered to be printed

                                _______
                                

               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
----------------------------------------------------------------------------------------------------------------
- - -          -64     -68     -72     -77     -82     -88     -93     -99    -104    -110       -364      -858
----------------------------------------------------------------------------------------------------------------
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).